Savant Blog

Savant offers perspective on a variety of topics. Entries range from current events to timeless insights in the world of finance and investments.

16 May
May 16, 2014

Investment advice and financial planning services come in many different shapes and sizes. Just researching the different types of firms can be overwhelming. So it isn’t surprising that many investors just ask friends or family who they use – often signing-up with the recommended advisor without examining alternatives or understanding what type of an advisory firm is right for their personal situation. This post attempts to provide some clarity on the types of financial firms offering investment advice.

Types of Financial

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08 May
May 08, 2014

When working with a financial advisor, it can be difficult to fully realize some of the intangible or behind-the-scenes work done on your behalf.  While successful financial plans begin with an appropriate asset allocation based on your investment time horizon, an awareness of your risk tolerance, and a clear understanding of your goals and objectives, many believe that half of the benefit of having an advisor is the behavioral counseling! Advisors can help keep clients from deviating from their financial

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05 May
May 05, 2014

After spending the last several weeks meeting with 401(k) participants, I am reminded how confusing 401(k) options can be.   Choices are never easy, and there is a lot to know and understand.   Many participants want to know “how to do retirement right.”  What I have assembled below are the top 10 most common pitfalls 401(k) investors fall into, and some steps to take to help avoid these.

1)    Rollovers processed incorrectly
If you worked at an employer where you had a 401(k)

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29 Apr
April 29, 2014

At face value giving your home to your children may seem like an ideal way to pass on wealth, reduce the size your estate, and improve your chances of being eligible for Medicaid’s long-term care benefits.

However, gifting your home may not be the best way to accomplish these goals and could also trigger unintended tax consequences.

When passing on wealth, the goal is to avoid or minimize taxes. Gifts are taxed differently than an inheritance. When gifting your home, your child’s

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22 Apr
April 22, 2014

Now that the 2013 tax due date is essentially behind us and Tax Freedom Day – the day when the nation as a whole has earned enough money to pay its total tax bill for the year – is expected to be April 21, 2014 (three days later than last year), it’s good to know that we all get to keep every dollar we earn for the balance of the year. For those who take a little more pragmatic approach,

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21 Apr
April 21, 2014

Starting January 1, 2015, individual retirement account (IRA) owners will only be allowed to make an IRA-to-IRA rollover one time in any 365-day period.  An IRA-to-IRA rollover is simply a distribution from one IRA that gets sent to another IRA.  Typically, an individual will have more than one IRA when they have worked for several employers.  Each time they leave one employer for another they role their employer-sponsored retirement plan, such as a 401(k), into an IRA.  This can also

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14 Apr
April 14, 2014

By now many of you have heard the news of a recent website security issue called the Heartbleed Bug. This issue that was identified last week has to do with vulnerability in a popular website security mechanism called OpenSSL. The purpose of OpenSSL is to encrypt traffic to and from a client computer and a web server. It is used by many websites, and it’s suggested that over 500,000 sites were using the version of OpenSSL that was flawed. Essentially,

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03 Apr
April 03, 2014

First, I must disclose to you that I actually have three sons; each has his own personality and his own ambitions. It’s my oldest son, the quintessential student, who at the age of 14 already has a strong desire and motivation to attend Notre Dame.  I’m not exactly sure why he became such a big fan of the school, either, other than the fact that he is a huge sports fan, and it might have to do with Notre Dame’s

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01 Apr
April 01, 2014

Myth or Fact #1: You can only contribute to a 529 plan sponsored by your home state.

Myth. U.S. residents can take advantage of 529 plans available in any state across the country. Though there sometimes can be benefits of contributing to your home state plan, more often than not, the out-of-state choice is much better from a total cost and ease of use standpoint. Even if your home state plan offers a tax incentive for participation, make sure

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27 Mar
March 27, 2014

I read an interesting article this week about a financial advisor in New Jersey that put forth the idea that the age of an advisor and experience level of an advisor are not always synonymous. Being part of the “Millennial” generation, I have to admit I have a bias where this is concerned, but there is definitely some truth in the words he wrote.

Mr. Zagarola contends that individuals seeking a long-term relationship with a financial advisor

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11 Mar
March 11, 2014

A few days ago, I was surprised to read that the estate of former actor James Dean is suing Twitter because a fan is posting under the Twitter handle “@JamesDean.” I was surprised because James Dean died in 1955, and 59 years later his estate is STILL open! In fact, Forbes magazine reported in 2004 that Dean’s estate was earning about $5 million per year.

It’s not unusual for an estate to remain open. In my book When Life Strikes: Weathering

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07 Mar
March 07, 2014

Marriage often involves the well-known phrases “For better or worse” and “In sickness and in health.”  Should these apply to only matters of the heart, mind, and body?   What if one spouse has substantial debt?  This question may not need to be answered on the honeymoon; however, it does need to be addressed with high priority since financial issues can greatly impact the relative happiness of your union. Consider:

67% of all college graduates have debt as the result of college

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03 Feb
February 03, 2014

For all the honest, good people out there trying to live their lives the right way, there are groups of con artists trying to steal it away. Identity theft is one of the fastest growing crimes in the United States, and yet it seems we can do little to stop it. Most often identity theft makes the news because of online shopping security breaches. However, identity theft victims aren’t limited to those who shop online—another serious threat is tax identity

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17 Jan
January 17, 2014

What would you say if I told you that the company your financial advisor works for received revenue sharing payments of approximately $164,000,000 in 2012 from offering certain mutual funds, 529 plan programs, and insurance products? And that virtually all transactions related to these financial products involve product partners that pay revenue sharing to that company? The $164,000,000 spent on revenue sharing could have been added to your investment returns!!

As a result of a class-action lawsuit, the company now fully

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17 Jan
January 17, 2014

January is Financial Wellness Month, so each year at this time, I take a few moments to reflect on my own personal financial planning. I think about what I did well and where I can improve. Because it is the beginning of the year, I feel more comfortable implementing any changes that I need to make. As I was keeping track of my budgeting and tax return preparation items throughout 2013, I found a couple of tips worth sharing that

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30 Dec
December 30, 2013

Imagine buying a car and not being informed of all aspects that were pertinent to your decision.  What if the car dealership did not tell you about bad gas mileage, a leaky sunroof, rebates, financing specials, no spare tire, numerous recalls on previous models, or other expensive ongoing maintenance?  Would that affect your buying decision? Obviously, most of us would not make such a purchase without that information.

Details are important.  However, in the area of 401(k) plans, many of us

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03 Dec
December 03, 2013

How many times have you found yourself saying, “I can’t believe it’s almost the end of the year!” What little extra time we have to spare over the last couple months of the year is often spent decorating for the holidays, scheduling time with our families, and making several trips to the store. After all, ‘tis the season!

Well, in the financial planning world, ‘tis the season to do some other things as well. For instance, there are a slew of

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20 Nov
November 20, 2013

As you consider saving for retirement, a simple rule of thumb can be very useful in determining what your investments will be worth in the future. It is called the “Rule of 72.” This simple rule quickly tells you how long it takes to double your money at a given rate of return (or interest rate). Here’s how it works: to determine the time required to double your money, divide 72 by the expected rate of return. The result

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15 Nov
November 15, 2013


The ghouls and ghosts of the season were hushed by positive returns and healthy economic reports this October despite the U.S. federal government shutdown. The partial government shutdown combined with the debt ceiling limit being reached had the world on watch making for nervous investors. The returns, however, were not reflective of that stress as global equities (MSCI World IMI Index) advanced 3.9% for the month and have gained 19.7% year-to-date. More specifically, the U.S. and developed international equity markets

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15 Nov
November 15, 2013

I’m not talking about an exercise plan. I’m talking about stretching the benefits of your IRA.

Many people will not spend all the money in their IRAs and they are looking for multigenerational planning techniques. A Stretch IRA can be the perfect solution. A stretch IRA is a wealth transfer method that allows you to potentially “stretch” your IRA over several future generations.

As an IRA owner, you are required

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15 Oct
October 15, 2013

Each year advisors recommend a list of review considerations for year end planning. The importance of reviewing your beneficiary designations cannot be minimized.

Beneficiaries are named in account types such as 401k, 403b, IRA, life insurance, annuities, payable on death accounts and certain pension accounts (i.e. 5 or 10 year certain pension options).

Generally the owner of the asset is allowed to choose who will inherit the account upon the owner’s death. There are a few exceptions regarding ERISA Accounts (401k, 403b);

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10 Oct
October 10, 2013

Contributions to an IRA are made to supplement income during retirement. Letting your retirement assets grow before retirement is usually critical to ensuring your retirement goals are met. However, there are times when unforeseen circumstances and expenses force you to consider taking funds from your IRA to meet those financial hurdles. Traditional IRA distributions are always taxable income to you for the gross amount of the distribution taken. In addition to the income, withdrawals taken prior to 59 ½ years

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08 Oct
October 08, 2013

Bonds have long been a staple of most investment portfolios, especially for those in retirement. With historically low interest rates, should investors continue to maintain the bond exposure within their portfolios? The short answer is yes. Let’s look at a couple reasons why bonds still make sense as part of a diversified portfolio.

Perhaps the most important aspect of bonds for retirees is the fact that they provide stability within a portfolio, which ultimately reduces volatility. The inherent stability of bonds

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02 Oct
October 02, 2013

Jimi Hendrix. Howard Hughes. Abraham Lincoln.

Different eras, different professions, different abilities, same problem.

No, the problem was not because all three had drug issues, obsessive compulsive disorder, or other eccentricities. The problem was simply that all three failed to plan for life beyond the grave!

It probably does not surprise you that Jimi Hendrix failed to plan, given the lifestyleand times in which he lived. But how could Howard Hughes leave an estate valued at more than $2 billion without any intentions?

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02 Oct
October 02, 2013

I live just outside of Washington, DC, and I am surrounded by friends and family members who are either government employees or government contractors. Just a few days into this government shutdown, I am surprised by the number of people in the area who are already worrying about how they will pay their monthly bills. I sympathize with my friends who are losing their paychecks, but at the same time I’m surprised they have ignored one of the primary recommendations

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26 Sep
September 26, 2013

Most of us realize that money can be a great motivator. For those of us with kids or teenagers, they certainly know where to go (Mom or Dad) when their coffers are running a little short. The challenge comes when their request is for something they WANT but feel they NEED. Teaching children the difference and how to make wise financial choices can have a profound effect on their own financial future.

One way to help demonstrate good financial management to

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27 Aug
August 27, 2013

Whenever I hear anyone say, “Trust me,” my instincts are to run! It’s a sure sign the person cannot be trusted. How can you know whether to trust someone? More specifically, how can you as an investor gain the confidence to put your faith in a financial advisor?

Politics and religion are two subjects we generally avoid. But sometimes it is inevitable these topics become part of the conversation. For example, it is difficult to discuss the economy and markets,

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06 Aug
August 06, 2013

Q: My wife and I hired Savant to monitor our investments and help avoid drops in value. Given recent events, we are concerned about the lack of recommendations to improve performance of the portfolio.Why hasn’t Savant made adjustments to my account to take advantage of changes in the market?

A:We get asked similar questions by many people. We have seen an increase lately in the number of questions from clients regarding the markets and what Savant is doing in

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23 Jul
July 23, 2013

October 10th is my wife’s birthday. One birthday in particular will always stand out in my mind: October 10th, 2007. You see, this was the day the stock market took an extreme plunge, leading us into the dark period of ’07-’09. At the end of that very long day, I waited in line at a flower shop to get my wife a bouquet of flowers. I can still recall the question I was asking myself (in somewhat of a

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16 Jul
July 16, 2013

How are we going to keep the skyrocketing price of college affordable for parents and students? Well, as of last week it just got a lot more difficult. The U.S. Senate failed to reach a compromise in their efforts to restore lower interest rates on student loans. The result? Congress was not able to send a bill to President Barack Obama for signature, and rates on subsidized Stafford loans doubled from 3.4% to 6.8%!

Student loans were a major component

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