Safeguarding Your Identity: Essential Tips to Consider

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Statistics show that nearly 33% of Americans have faced some identity theft attempts in their lives, and experts estimate there is a new case of identity theft every 22 seconds. As financial professionals, one of our primary goals is to help our clients create a financial strategy and protect their wealth. In today’s digital age, identity theft threatens your finances, so it’s crucial to understand the risks and take proactive measures.1

This blog aims to equip you with practical strategies for protecting your personal and financial information with the goal of maintaining your financial well-being.

The most common types of identity theft are1:

  •  Credit card fraud
  •  Government documents or benefits fraud
  •  Loan or lease fraud

How Identity Theft Impacts Your Finances

The financial hardships caused by identity theft can last for months or even years after your personal information is exposed. Depending on the type of data identity thieves obtain, the recovery process can involve several hurdles. Victims often need to dispute fraudulent activities in their credit files and work to restore their good credit. This may include cleaning up and making changes to compromised bank accounts.2

If an identity thief uses your Social Security number to obtain employment, you may need to work with the Social Security Administration. Similarly, if you become a victim of tax refund identity theft or an identity thief’s income makes it appear you are under-reporting your income, you may need to work with the IRS.2

Identity theft involving sensitive, personally identifiable information like your Social Security number can have long-lasting effects. Thieves may wait months or even years to use your information, or they might sell it on the dark web, requiring you to stay vigilant indefinitely. Legal fees and other costs could add to the financial impact if your identity theft issue is complex. Some victims even need to seek government assistance during recovery, highlighting the potential magnitude of identity theft hardships.2

Steps You Can Take to Help Protect Yourself

It can be difficult for victims to deal with identity security issues because bad actors are becoming more sophisticated all the time. You can use technology-enabled safeguards to help protect your identity and personal data, such as antivirus protection software, password managers, identity theft protection, virtual personal networks, and two-factor authentication on devices and accounts. There are also other actions you can take to help manage the risk of becoming a victim, including:

1. Check your mail often.

A low-tech way criminals can steal your identity is to simply take bank or credit card statements, utility bills, health care or tax forms, or pre-approved credit card offers out of your mailbox. So, don’t let your mail sit uncollected too long. Also, if you are going away, have a trusted neighbor bring in your mail or put your mail on hold with the post office.3

2. Review credit card and bank statements regularly.

By reviewing your credit card and bank statements, you may be able to spot any suspicious activity. Thieves with your credit card number or bank account information could make small purchases to see if they can get away with it. These transactions can go unnoticed. Thieves may try to make large purchases if they get away with minor ones.3

3. Freeze your credit.

In some cases, you may want to consider freezing your credit file so no one can look at or request your credit report. That means no one can open an account, apply for a loan, or get a new credit card while your credit is frozen. Remember, a credit freeze applies to you as well. To get started, contact each of the three major credit reporting agencies. In some instances, credit freezes are free and won’t impact your credit score.3

4. Don’t use the same password twice.

According to the Federal Trade Commission (FTC), secure passwords are longer, more complex, and unique. Many people use the same password for multiple accounts, which could be problematic. You should consider creating different passwords for various accounts and avoid using information related to your identity, such as the last four digits of your Social Security number, your birthday, your initials, or parts of your name.3

The FBI and the National Institute of Standards and Technology have issued guidelines stating that passwords should consist of at least 15 characters because these are more difficult for a computer program or hacker to crack. Regarding security questions, the FTC’s guidelines suggest questions that only you can answer; avoid information that could be available online, such as your ZIP code, city of birth, or mother’s maiden name.3

5. Consider shredding documents with personal information.

As stated earlier, not all identity theft is high-tech. Old-fashioned dumpster diving might sound like a thing of the past, but it still happens. Consider buying a household shredder and destroying sensitive paperwork, such as credit card and bank statements, utility bills, and other documents containing personally identifiable information.3 

6. Opt out of prescreened credit card offers.

Credit card companies often send prescreened offers to open new accounts, and criminals can intercept these mailed or emailed offers and open accounts in your name. One way to help avoid a potential identity theft issue is to opt out of receiving these offers.2

Day-to-Day Security Best Practices

Small steps can make a big difference when it comes to keeping your information safe. Here are a few suggestions, starting with cleaning out your wallet.

1. Keep your Social Security card at home in a safe location—not in your wallet.

Those nine digits can help an identity thief to obtain loans or credit card accounts in your name. A bad actor could also use your Social Security number with the IRS.

2. Leave checks and deposit slips at home.

Consider leaving checks and deposit slips at home. These items may contain more information than you think, including your name, address, bank name, routing number, and account number.

3. Shred and trash any password cheat sheets.

Scraps of paper with sensitive information, such as PINs and passwords, can be risky, so dispose of any you have in your wallet after noting them in a password manager at home

4. Limit the number of credit cards in your wallet.

It may be best to limit the number of credit cards in your wallet. The same goes for excess cash and gift cards.

5. Bypass the PIN at the gas pump.5

One of the most common schemes is when criminals install a skimming device directly over the credit card slot at a gas pump. These skimmers capture and store your card data when you insert or swipe your card. If something looks off, don’t use that pump. Also, if you use a debit card to pay for your gas, bypass the PIN if possible and use your zip code instead. That may prevent someone from stealing your PIN using a pinhole camera.

Dispose of Old Devices Safely

Improper disposal of old digital devices is a key but often overlooked aspect of identity theft. Simply deleting files may not be enough on some digital devices, as thieves may be able to recover the data. Therefore, safe disposal is critical. Many communities have secure electronics recycling events where devices can be disposed of. However, it’s important to note that different devices and storage media types may require different disposal methods.

Identity Theft Protection Services

Identity theft protection services offer a range of features designed to detect identity theft, alert you to identity theft, and help you recover from identity theft. These services typically monitor credit reports, dark web activity, and public records for signs of fraudulent use of personal information. When suspicious activity is detected, they alert the user and provide next steps. While these services can be helpful, their effectiveness can vary. However, these services can be a valuable first step for those who lack the time or expertise to monitor their credit and personal information.

What to Do if Your Identity Has Been Stolen

You may not know that you have been a victim of identity theft immediately when it happens, but there are warning signs you can look out for, such as:6

  • Bills for items you did not buy
  • Debt collection calls for accounts you did not open
  • Information on your credit report for accounts you did not open
  • Denials of loan applications
  • Mail stops coming to or is missing from your mailbox

If you are a victim of identity theft, you may want to place fraud alerts or security freezes on your credit reports. A fraud alert requires creditors to verify your identity before opening a new account, issuing an additional card, or increasing the credit limit on an existing account based on a consumer’s request.

Pro tip: When you place a fraud alert on your credit report at one of the nationwide credit reporting companies, it must notify the others.7

Protecting your identity is an integral part of maintaining your overall financial health. As financial professionals, we believe safeguarding your personal information can be as crucial as making sound investment decisions. By implementing these preventive measures and staying vigilant, you can help manage the risk of becoming a victim of identity theft. Remember, your financial security encompasses every aspect of your financial life.

If you have any concerns about identity theft or would like to discuss how it fits into your broader financial strategy, don’t hesitate to contact us. We’re here to help provide you with information that can help improve your personal finances.

Emily Balmages, CFP®

Director of Financial Planning, Warren Street Wealth Advisors

Investment Advisor Representative, Warren Street Wealth Advisors, LLC., a Registered Investment Advisor

The information presented here represents opinions and is not meant as personal or actionable advice to any individual, corporation, or other entity. Any investments discussed carry unique risks and should be carefully considered and reviewed by you and your financial professional. Nothing in this document is a solicitation to buy or sell any securities, or an attempt to furnish personal investment advice. Warren Street Wealth Advisors may own securities referenced in this document. Due to the static nature of content, securities held may change over time and current trades may be contrary to outdated publications. Form ADV available upon request 714-876-6200.

This blog is for informational purposes only and is not a replacement for real-life advice. We encourage you to consult your tax, legal, and accounting professionals if you believe identity theft involves using your tax records.2

Sources: 

1. IdentityTheft.org, 2024  
https://identitytheft.org/statistics/

2. Lifelock.Norton.com, February 4, 2021
https://lifelock.norton.com/learn/identity-theft-resources/lasting-effects-of-identity-theft

3. U.S. News & World Report, May 4, 2024
https://www.usnews.com/360-reviews/privacy/identity-theft-protection/10-ways-to-prevent-identity-theft

4. Discover, May 23, 2023
https://www.discover.com/online-banking/banking-topics/7-things-you-should-never-carry-in-your-wallet/ 

5. YahooFinance.com, April 9, 2024
https://finance.yahoo.com/news/9-ways-protect-yourself-credit-110028832.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuYmluZy5jb20v&guce_referrer_sig=AQAAAD-gSiSE0XJ4TWsBMPswXbQ5dvIqZd65QlTQ7IXt-m1XzrWMsaa_1MJICs9I8f3JbANzT4n7V2tWEAP1dx0qWGul0i5wMwqthwwMKxqL0N6wGUqqXW4I_mvPqqTUNIbzHK15PB-7gsKpc3nXnYuSeR_Jup4_lqpxahaoyv7L-nW

6. USAGove.com, July 28, 2024
https://www.usa.gov/identity-theft#:~:text=Identity%20theft%20happens

7. Consumer Financial Protection Board, February 27, 2024
https://www.consumerfinance.gov/ask-cfpb/what-do-i-do-if-i-think-i-have-been-a-victim-of-identity-theft-en-31/

I’ve Got a Lump Sum in Cash, Should I Invest It Right Away?

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What should you do if you’ve just received a big bonus at work, inherited some money, sold a business, or come into a financial windfall? Should you invest it all at once, even if the market feels high or low, or take a gradual approach by investing in smaller increments over time?

This is a common question we hear from clients and investors alike. It’s no surprise—deciding how to invest a significant sum of money can feel overwhelming. What if you invest it now and the market drops? Or, what if you wait and the market takes off? It’s natural to worry about making the wrong choice or missing out on potential gains.

Both investing a lump sum immediately and spreading it out over time come with their pros and cons. Let’s explore some key factors to help guide your decision.

Start with Your Goals

Before making any investment decisions, consider your financial goals.

If you need the money for short-term purposes, like upcoming college tuition, the market’s volatility could be a concern. In this case, conservative options like short-term bonds, bond funds, or CDs might be better suited to protect your funds.

For long-term goals, such as retirement, investing in the stock market may be a better choice. Despite short-term fluctuations, the market has historically trended upward over time.

Compare Lump-Sum Investing vs. Dollar-Cost Averaging

Investing a lump sum means your money is fully exposed to the market immediately, allowing you to benefit from any immediate gains if the market is rising. However, since markets are unpredictable, a downturn could occur soon after you invest.

If the risk of short-term losses makes you uneasy, dollar-cost averaging (DCA)—where you invest a fixed amount at regular intervals—might be a more comfortable approach. For instance, you could invest $12,000 by putting in $1,000 monthly over a year. This way, you buy more shares when prices are low and fewer when they’re high, helping you manage the average cost over time.

Keep in mind, though, that research shows lump-sum investing outperforms DCA 68% of the time. If maximizing returns is your main goal, lump-sum investing could be the better option. However, if you’re worried about losses and potential emotional reactions, DCA may be worth the slight reduction in expected returns.

Don’t Wait to Invest

Historically, stocks and bonds outperform cash over the long term, so it’s important to start investing as soon as possible. Holding off is essentially an attempt to time the market, which is notoriously difficult. In 2023, equity fund investor returns trailed the S&P 500 by 5.5%, largely due to market timing efforts.

Both lump-sum investing and DCA help you avoid this pitfall, letting you benefit from the market’s long-term growth. The key is choosing the strategy that aligns with your risk tolerance and long-term plan.

If you’re unsure which strategy is best for you, reach out—we’d be happy to help you decide.

Justin D. Rucci, CFP®

Wealth Advisor, Warren Street Wealth Advisors

Investment Advisor Representative, Warren Street Wealth Advisors, LLC., a Registered Investment Advisor

The information presented here represents opinions and is not meant as personal or actionable advice to any individual, corporation, or other entity. Any investments discussed carry unique risks and should be carefully considered and reviewed by you and your financial professional. Nothing in this document is a solicitation to buy or sell any securities, or an attempt to furnish personal investment advice. Warren Street Wealth Advisors may own securities referenced in this document. Due to the static nature of content, securities held may change over time and current trades may be contrary to outdated publications. Form ADV available upon request 714-876-6200.

Financial Readiness: Preparing Yourself Before Disaster Strikes

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These past two weeks, wildfires swept through Southern California, devastating communities and forcing thousands to evacuate. The fires have been described as some of the worst in California’s history, fueled by dry conditions and powerful winds. At least 29 people have died in the fires across the Los Angeles area and more than 15,000 structures have burned across 40,500 acres.s. Our hearts go out to all who have been affected during this challenging time.

Extreme weather events like these seem to be becoming more frequent. While we can’t control disasters, we can prepare. 

With that in mind, let’s consider a few time-tested steps to help you proactively safeguard your financial affairs.

1. Organize Your Financial Information

In the event of a disaster, access to your financial information will help you work with insurance companies, apply for disaster relief, and keep up with everyday bills.  

Store important documents in a waterproof safe, a safety deposit box, or in the cloud for easy access during a disaster. Incidentally, make sure you aren’t the only person who knows where the information is. 

Ensure you have access to the following:

  • Tax statements, which you’ll need to apply for FEMA disaster assistance    
  • Insurance policies
  • Proof of income, such as pay stubs
  • Housing payments

For a more detailed list, check out the financial preparedness checklists available from FEMA.  

2. Keep Cash on Hand for a Crisis 

If you don’t already have an emergency savings account, consider starting one you can tap into in a crisis. Aim to save three to six months’ worth of expenses. Still,  during a disaster, it may be difficult—or even impossible—to take a quick trip to the bank. So keep a small amount of cash at home in case credit cards and local ATMs don’t work in an emergency and you need to buy food, fuel, or other supplies. 

3. Have the Right Insurance

Make sure you have appropriate homeowner’s or renter’s insurance. 

A homeowner’s policy generally covers your dwelling and other structures, personal property, personal liability, and medical protection. It also typically offers loss-of-use compensation if you need to relocate temporarily. Renter’s insurance should provide roughly the same coverage except for protection for structures, which is a landlord’s responsibility.  

If you are a business owner, make sure to have business insurance to protect your business property and employees. 

Importantly, neither homeowner’s nor business insurance cover flooding or earthquakes. If either are a possibility in your area, consider purchasing separate policies to cover each if such policies are available. (In some particularly risky areas, earthquake and flood damage coverage may be cost-prohibitive or otherwise unavailable.)  

4. Inventory Your Property

Maintain a detailed inventory of your house to help you prove the value of items you own that may be lost or damaged during a disaster. An up-to-date inventory can help you determine how much insurance to purchase, and it can speed the insurance claim process. It can also provide the documentation needed to deduct losses on your tax return. 

Take photos or videos to help you record your belongings and where appropriate, write down descriptions. For higher priced items, add as much detail as you can. For instance, instead of simply listing “camera,” note the specific model number and the year you bought it. Also consider having especially valuable items appraised. There are often local services that can help you create audiovisual inventories or even apps that can help keep you organized. Store your inventory and appraisal documents with your other important financial documents. 

What To Do After a Disaster

If disaster strikes, consider taking a bit of time to yourself before springing into action, if that’s possible. Grieving the losses you’ve endured is an important step in the recovery process, and acknowledging your emotions may take precedence over the financial harm done. 

Once you’re ready, contact your insurance company to report the damage. Document and prepare a list of damaged items, and keep the items, if possible, until a claims adjuster has visited.  

You’ll also want to hang on to receipts for expenses you incur, such as supplies, repairs, and lodging if you can’t stay in your home. These expenses may be covered by insurance. 

If you can’t stay at home, notify your utility providers and have them pause or discontinue services. You’ll still be on the hook to pay certain bills after a disaster. Prioritize paying your insurance premium and mortgage, which you must pay even if your house is damaged. If it becomes difficult to pay debts, including your credit card bill, contact your creditor who may be willing to work with you on a payment plan. 

No one expects to be on the receiving end of a life-changing disaster. But being prepared can help ensure you can pick up the pieces more quickly. If you have any questions about putting together a disaster plan of your own, reach out and we can help. 

Emily Balmages, CFP®

Director of Financial Planning, Warren Street Wealth Advisors

Investment Advisor Representative, Warren Street Wealth Advisors, LLC., a Registered Investment Advisor

The information presented here represents opinions and is not meant as personal or actionable advice to any individual, corporation, or other entity. Any investments discussed carry unique risks and should be carefully considered and reviewed by you and your financial professional. Nothing in this document is a solicitation to buy or sell any securities, or an attempt to furnish personal investment advice. Warren Street Wealth Advisors may own securities referenced in this document. Due to the static nature of content, securities held may change over time and current trades may be contrary to outdated publications. Form ADV available upon request 714-876-6200.

Your 2024 Year-End Planning Guide

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As the year winds down, the hustle and bustle of the season can leave little room for financial reflection. But taking some time to review your finances now can help you close out the year on a strong note—and get your new year off to a great start. 

Here are some key items to consider before December 31 rolls around:

Unstick Your Cash … and Put It to Work

We all try to make the best decisions we can around money, but we’re not perfect. Despite our best efforts, we can miss things from time to time. 

Consider the “flypaper effect.” Jason Zweig, of The Wall Street Journal, uses the term to describe how money has a tendency to stick where it lands, even when we had other ideas for where it should end up. For many, this can happen when rolling over their employer-sponsored 401(k) retirement account into a personal IRA. According to research from Vanguard, nearly a third of savers who transferred their 401(k) balances into IRAs in 2015 still had those funds sitting in cash seven years later. This inertia can be costly. Vanguard estimates that cash-heavy IRAs cost Americans $172 billion annually in missed growth opportunities. 

As the end of the year approaches, take some time to review all your accounts to make sure all your savings have landed where you wanted them. 

It’s also okay—and in fact, often wise—to keep some money in cash, such as an emergency fund. But even these accounts are worth a review. If cash in your emergency fund is just sitting in a basic, zero-interest checking account, consider placing it in a money market, high-yield savings, or similar FDIC-backed account. There, the money should remain safe and readily accessible, while still offering a bit of interest income—especially while interest rates are still relatively high. 

Stay Updated on Retirement Account Rules

Typically, any required minimum distributions (RMDs) from your own or an inherited retirement account are due by year-end—so there’s no time to waste if you’ve not yet made any RMDs due. However, there are new rules for 2024 that could delay, or even eliminate, the need to make an RMD. As always, we recommend consulting with a tax specialist before taking any tax-planning action.

  • Roth 401(k) changes: Starting in 2024, RMDs are no longer mandatory for Roth 401(k) accounts. This was already true of Roth IRAs. If you don’t need income from your Roth 401(k) this year, leave it alone and let your savings continue to grow tax-free for as long as you like.
  • New spousal IRA benefits: If a younger spouse with an IRA passes away, the surviving spouse can now delay RMDs until the deceased would have turned 73. This allows for more years of tax-deferred growth, which can make a big difference in retirement savings over time.
  • RMD age increasing: For younger investors looking ahead, the age for RMDs will rise to 75 in 2033, again providing more time for tax-deferred growth as well as more flexibility in withdrawal strategies.

Maximize Your Gifts to Charity with Higher QCD Limits

December is a peak time for charitable giving. It’s the holidays, after all, and giving offers a meaningful way to support causes you care about while potentially reducing your 2024 tax bill. 

If you have RMDs due, one way to participate in tax-wise year-end giving is to replace some or all of your RMDs with qualified charitable distributions (QCDs) from your IRA directly to charity. This year, you may give up to $105,000 in QCDs, according to the IRS. This in turn, can lower or eliminate your RMDs, which would otherwise have been taxed at ordinary income rates. Lowering your reportable income may also help you avoid being pushed into a higher income tax bracket or subject to other tax deduction phaseouts.

Important Date Reminders

Some best practices are perennial, including keeping an eye on important dates. Naturally, there are a number of deadlines associated with year-end. For those who are itemizing deductions, it’s the deadline for 2024 tax-deductible charitable contributions. It’s also the last day you can fund your 401(k). You can contribute up to $23,000 in a 401(k) this year, and next year that limit increases to $23,500. Catch-up contributions for 401(k)s for individuals aged 50 and older is $7,500 for 2024. It will remain that way in 2025, but there will also be a higher catch-up contribution limit of $11,250 for those aged 60 through 63. 

IRAs and health savings accounts allow you to make 2024 contributions up until April 15, 2025. You’ve got a little bit of time, but the sooner you invest, the quicker you can put your money to work and take advantage of the power of compounding returns.

Rest and Recharge

While financial planning is essential, don’t overlook the importance of self-care. Amid the year-end flurry, a good night’s sleep might be one of the best investments you can make in your overall well-being, especially during the holidays. In fact, research suggests that better sleep health can reduce loneliness, spark stronger social connections, and foster positive emotional experiences.

And if it’s not better sleep, please take some time for yourself, whether it’s curling up with a good book, having dinner with friends, or taking a long walk with the dog. After all, one of the most important reasons we put so much effort into financial well-being is so we can build a more fulfilling life for ourselves and the ones we love. 

Wondering how else you can wind down 2024 and prepare for a fruitful 2025? Reach out and let’s talk.

Justin D. Rucci, CFP®

Wealth Advisor, Warren Street Wealth Advisors

Investment Advisor Representative, Warren Street Wealth Advisors, LLC., a Registered Investment Advisor

The information presented here represents opinions and is not meant as personal or actionable advice to any individual, corporation, or other entity. Any investments discussed carry unique risks and should be carefully considered and reviewed by you and your financial professional. Nothing in this document is a solicitation to buy or sell any securities, or an attempt to furnish personal investment advice. Warren Street Wealth Advisors may own securities referenced in this document. Due to the static nature of content, securities held may change over time and current trades may be contrary to outdated publications. Form ADV available upon request 714-876-6200.

Planning Your Perfect Summer Trip: Budgeting Made Easy

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Get ready to have some fun in the sun! Whether you’re heading to a tropical paradise or exploring a new city, proper budgeting can make your summer trip stress-free and enjoyable. Here are some key categories to remember when planning your budget:

1. Travel

Whether you’re taking a bus, train, car, airplane, or a combination of all these, set aside a portion of your budget for travel expenses. This includes not only the main mode of transportation but also any additional costs like gas, tolls, or rideshares.

2. Accommodations 

Don’t forget to budget for where you’ll be staying. Whether it’s a hotel room, vacation rental, or even a cozy cabin, make sure you allocate enough funds for your accommodations. Comfort is key to a relaxing vacation!

3. Dining

Dining out can get expensive quickly, especially if you plan to eat out for most of your meals. Be realistic and allocate a generous portion of your budget to dining. Trying new restaurants and local cuisines is one of the best parts of traveling!

4. Experiences

Life is meant for living, so don’t forget to budget for experiences. Whether you’re renting bicycles for a day of exploration or going on an exciting excursion, make sure you set aside some funds for fun activities, because life is meant for living. 

By keeping these categories in mind and planning accordingly, you’ll be all set for a fantastic summer adventure. Need help planning your summer travel budget or have other financial planning needs? Reach out to us today, and let’s make your dream vacation a reality! Happy travels! 

Bryan Cassick, MBA, CFP®

Wealth Advisor, Warren Street Wealth Advisors

Investment Advisor Representative, Warren Street Wealth Advisors, LLC., a Registered Investment Advisor

The information presented here represents opinions and is not meant as personal or actionable advice to any individual, corporation, or other entity. Any investments discussed carry unique risks and should be carefully considered and reviewed by you and your financial professional. Nothing in this document is a solicitation to buy or sell any securities, or an attempt to furnish personal investment advice. Warren Street Wealth Advisors may own securities referenced in this document. Due to the static nature of content, securities held may change over time and current trades may be contrary to outdated publications. Form ADV available upon request 714-876-6200.

How to Cultivate Financial Literacy in Children and Create a Pathway to Lifelong Success

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At the core of financial literacy lies a set of values and behaviors that extend beyond mere dollars and cents. As parents, caregivers, and educators, we have the unique opportunity to shape the financial mindsets of the next generation by imparting timeless wisdom that transcends monetary transactions. 

As we celebrate Financial Literacy Month this April, let’s commit to empowering our children with the knowledge, skills, and values they need to thrive in an increasingly interconnected world. Teach your children these  four fundamental lessons that build financial savviness over time.

  1. Believe in Yourself: Confidence is the cornerstone of success in any endeavor. Encourage children to believe in their abilities and to recognize the value they bring to the table. By fostering a sense of self-assurance, we empower our youth to navigate the complexities of the financial landscape with poise and resilience.
  1. Listen to Others: Effective communication is a two-way street that involves not only speaking but also actively listening. Teach children the importance of lending an ear to others, as every voice has the potential to impart valuable insights. By honing their listening skills, children cultivate a sense of empathy and discernment that serves them well in both personal and professional spheres.
  1. Put in the Hard Work: Success seldom comes without effort. Encourage children to embrace the virtue of hard work by involving them in household chores, encouraging academic diligence, or exploring part-time employment opportunities. By instilling a strong work ethic, we equip children with the tools they need to pursue their goals with diligence and determination.
  1. Budget, Save, & Invest: Introduce children to the concepts of budgeting, saving, and investing in a manner that is accessible and relatable. Emphasize the connection between hard work and financial resources, illustrating how responsible financial management enables individuals to achieve their aspirations. Encourage children to set aside a portion of their earnings for savings and explore the possibilities of investment, laying the groundwork for a secure financial future.

By integrating these principles into everyday interactions and activities, you can nurture a generation of financially literate individuals who are equipped to navigate the complexities of an ever-evolving economic landscape. Together, we can pave the way for a brighter, more prosperous future for generations to come.

Bryan Cassick, MBA, CFP®

Wealth Advisor, Warren Street Wealth Advisors

Investment Advisor Representative, Warren Street Wealth Advisors, LLC., a Registered Investment Advisor

The information presented here represents opinions and is not meant as personal or actionable advice to any individual, corporation, or other entity. Any investments discussed carry unique risks and should be carefully considered and reviewed by you and your financial professional. Nothing in this document is a solicitation to buy or sell any securities, or an attempt to furnish personal investment advice. Warren Street Wealth Advisors may own securities referenced in this document. Due to the static nature of content, securities held may change over time and current trades may be contrary to outdated publications. Form ADV available upon request 714-876-6200.

Do I Have Enough to Sell My Business?

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As a business owner, you’ve spent your life’s work growing your business, taking care of employees, managing your product or service, and looking after your people. Now, you may be getting to a point where your spouse tells you you work too much. Or perhaps you’re watching the clock more than you used to, counting down the minutes until you can head home and unplug from your “boss” responsibilities.

Whatever your reasoning, if you’re starting to ask questions like, “Do I have enough to sell?” and “Will that be enough?” then it’s time to focus on you for a change.

Why Business Owners Need Specialized Financial Planning

Business owners face a unique set of financial challenges and opportunities. Whether you are a small business owner or running a large corporation, the following considerations are critical:

  • Maximizing tax efficiency
  • Choosing the most appropriate retirement account type
  • Evaluating your retirement account options
  • Managing 401(k) and pension investments
  • Considering a defined benefit plan, i.e., “pension”
  • Aligning company benefits offerings with company goals

Our team specializes in helping business owners handle these and other issues while they’re still working. During those years, we help you work through proper planning techniques to diversify your assets, reduce risk, optimize your taxes, and offer competitive benefits. All of these steps help streamline and strengthen your business at the time — but they also set you up for a successful transition into retirement or your next business opportunity.

When you do get to the point of exiting, we help you bring all of this planning together into one critical decision: whether or not you have what you need to move on from your business and into your ideal retirement, whatever that looks like for you. 

Creating a Dream Retirement

At Warren Street, we’ve helped many business owner clients over the years answer the “Do I have enough to sell?” question and develop their exit strategies accordingly. 

If you choose to work with us during your own exit process, we’ll play a key role on your professional team alongside your attorney. While your attorney looks after the legal structure of the deal, we’ll handle related asset management and tax mitigation. For example, if you’re involved in an all-cash sale with multiple payments coming in the next few years, we will discuss tax deferral opportunities to add into your transition plan. Or, if you’re struggling with a go/no-go decision, we’ll conduct scenario planning to help you make an informed choice based on your current financial situation, projected future state, and personal goals.

No matter where you are in the exit planning process, we can help evaluate your current assets, investments, estate planning, and legacy goals, so you can make a clear and confident decision on what next steps are right for you.

If this sounds like you and you’re a current Warren Street client, please mention your interest to your Lead Advisor! Or, if you’re not a client but are interested in learning how we can help, schedule a complimentary introductory call with us. We hope to hear from you and look forward to exploring how we can make your post-exit dreams a reality.

Cary Facer

Partner Emeritus, Warren Street Wealth Advisors

Investment Advisor Representative, Warren Street Wealth Advisors, LLC., a Registered Investment Advisor

The information presented here represents opinions and is not meant as personal or actionable advice to any individual, corporation, or other entity. Any investments discussed carry unique risks and should be carefully considered and reviewed by you and your financial professional. Nothing in this document is a solicitation to buy or sell any securities, or an attempt to furnish personal investment advice. Warren Street Wealth Advisors may own securities referenced in this document. Due to the static nature of content, securities held may change over time and current trades may be contrary to outdated publications. Form ADV available upon request 714-876-6200.

3 Financial Best Practices for Year-End 2023

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Scan the financial headlines these days, and you’ll see plenty of potential action items vying for your year-end attention. Some may be particular to 2023. Others are timeless traditions. Here are our three favorite items worth tending to as 2024 approaches… plus a thoughtful reflection on how to make the most of the remaining year.  

1. Bolster Your Cash Reserves

With some high yield savings options currently offering ~5%+ annual interest rates, your fallow cash is finally able to earn a nice little bit while it sits. Sweet! Two thoughts here: 

Mind Where You’ve Stashed Your Cash: If your cash savings is still sitting in low- or no-interest accounts, consider taking advantage of the attractive rates available in other options. If you’re unsure where to start, we can help you figure out whether a high yield savings account, a CD, or treasury bonds may make sense for you. Your cash savings typically includes money you intend to spend within the next year or two, as well as your emergency, “rainy day” reserves.

Put Your Cash in Context: While current rates across many accounts are appealing, don’t let this distract you from your greater investment goals. Even at today’s higher rates, your cash reserves are eventually expected to lose their spending power in the face of inflation. Today’s rates don’t eliminate this issue … remember, inflation is also on the high side, so that 5% isn’t as amazing as it may seem. Once you have your cash stashed in those high-interest savings accounts, you’re likely better off allocating your remaining assets into your investment portfolio—and leaving the dollars there for pursuing your long game.  

2. Polish Your Portfolio

While we don’t advocate using your investment reserves to chase money market rates, there are still plenty of other actions you can take to maintain a tidy portfolio mix. For this, it’s prudent to perform an annual review of how your investments are growing. Year-end is as good a milestone as any for this activity. For example, you can: 

Rebalance: In 2023, year-to-date stock returns may warrant rebalancing back to plan, especially if you can do so within your tax-sheltered accounts. If you are an existing Warren Street client, this is already being handled on your behalf.

Relocate: With your annual earnings coming into focus, you may wish to shift some of your investments from taxable to tax-sheltered accounts, such as traditional or Roth IRAs, HSAs, and 529 College Savings Plans. For many of these, you have until next April 15, 2024 to make your 2023 contributions. But you don’t have to wait if the assets are available today, and it otherwise makes tax-wise sense. 

Redirect: Year-end can also be a great time to redirect excess wealth toward personal or charitable giving. Whether directly or through a Donor Advised Fund, you can donate highly appreciated investments out of your taxable accounts and into worthy causes. You stand to reduce current and future taxes, and your recipients get to put the assets to work right away. 

3. Minimize Your Taxes

Speaking of taxes, there are always plenty of ways to manage your current and lifetime tax burdens—especially as your financial numbers and various tax-related deadlines come into focus toward year-end. For example:

RMDs and QCDs: Retirees and IRA inheritors should continue making any obligatory Required Minimum Distributions (RMDs) out of their IRAs and similar tax-sheltered accounts. With the 2022 Secure Act 2.0, the penalty for missing an RMD will no longer exceed 25% of any underpayment, rather than the former 50%. But even 25% is a painful penalty if you miss the December 31 deadline. If you’re charitably inclined, you may prefer to make a year-end Qualified Charitable Distribution (QCD), to offset or potentially eliminate your RMD burden. 

Harvesting Losses … and Gains: Depending on market conditions and your own portfolio, there may still be opportunities to perform some tax-loss harvesting in 2023, to offset current or future taxable gains from your account. As long as long-term capital gains rates remain in the relatively low range of 0%–20%, tax-gain harvesting might be of interest as well. Work with your tax-planning team to determine what makes sense for you. If you are an existing Warren Street client, we will automatically tax loss harvest for you.

How else can we help you tend to your 2023 plans and till the soil for 2024? Please be in touch for additional ideas and best-practice advice. 

Cary Facer

Partner Emeritus, Warren Street Wealth Advisors

Investment Advisor Representative, Warren Street Wealth Advisors, LLC., a Registered Investment Advisor

The information presented here represents opinions and is not meant as personal or actionable advice to any individual, corporation, or other entity. Any investments discussed carry unique risks and should be carefully considered and reviewed by you and your financial professional. Nothing in this document is a solicitation to buy or sell any securities, or an attempt to furnish personal investment advice. Warren Street Wealth Advisors may own securities referenced in this document. Due to the static nature of content, securities held may change over time and current trades may be contrary to outdated publications. Form ADV available upon request 714-876-6200.

Financial Quick Takes: Making Mistakes

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Nobody wants to make investment mistakes. And yet, we’re human; mistakes happen. Here’s how to minimize the ones that matter the most, and make the most of the ones that remain. 

Bad Decisions vs. Bad Outcomes

First, let’s define what we’re talking about: 

Investment mistakes happen when you make bad decisions, regardless of whether the outcome is good or bad. 

Bad decisions are the ones a rational investor would not make. For example: 

  • Failing to spread your risks around: Concentrating in too few securities, instead of diversifying across many, and many types of investments. 
  • Confusing speculating with investing: Chasing or fleeing hot trends, instead of structuring your total portfolio to capture expected market growth over time. 
  • Taking on too much or too little investment risk for your circumstances: Investing too conservatively or too aggressively for your financial goals and risk tolerances.  
  • Overlooking taxes: Spending more than necessary to participate in the market’s expected long-term growth. 
  • Succumbing to harmful behavioral biases: Acting on gut feel over rational resolve. 

These common investment mistakes share a recurring theme: By making wise decisions about that which you can control, you can best prepare for that which you cannot. 

Damage Control

Consider auto insurance as an analogy with similar controllable choices and random risks. From hail storms to hit-and-runs, misfortunes happen. They are not your fault; they are not your mistake. But you insure against them anyway, since they can still generate a substantial loss. 

You also do all you can to minimize your “at fault” errors. You don’t drive while impaired. You keep your vehicle in safe repair. You observe traffic laws. None of these sound decisions guarantee success, but they appreciably increase the odds you’ll remain accident-free. 

As an investor, you can take a similar approach:

Mistake-free investing does not guarantee success. Rather, it improves your odds for happy outcomes, while softening the blow if misfortune strikes.

It’s worth noting, even if you make all the right investment decisions for all the right reasons, random misfortune can still strike. If it does, it would be a mistake to decide your prudent investment strategy was to blame. It would be an even worse mistake to abandon that strategy because you’ve encountered the equivalent of a market hit-and-run. This would be like dropping your insurance coverage because it didn’t prevent the accident to begin with.  

The Upside of Making Investing Mistakes

“I’ve failed over and over and over again in my life. And that is why I succeed.” — Michael Jordan

As just about any star athlete will tell you, the path to success is paved with errors. The same can be said about investing. The occasional misguided decision may even be good for you as an investor—especially if it’s made when the stakes are smaller and time is on your side. 

The point is, if you’ve made investment mistakes in the past, don’t beat yourself up over them, or make more mistakes trying to “fix” the past (such as deciding you’ll never invest again after being burned by the market). Often, your best move is to identify which investment mistakes were involved, embrace the lessons learned, and give yourself permission to move on. 

Admittedly, if you made an investment that didn’t pay off as you hoped for, it may be hard to know just what went wrong. Was it you, the whims of the market, or both? 

Among our chief roles as a financial advisor is to help you sort out investment errors from market misfortunes, so you can move forward with greater resolve. Sometimes, this means adjusting your portfolio to reflect evolving personal financial goals or targets. Often, it means convincing you to stay the course with your already-solid plan. Either way, your future is not yet written. Reach out to us today if we can help you make the most of your next steps.

WSWA

Warren Street Wealth Advisors

Warren Street Wealth Advisors, LLC., a Registered Investment Advisor

The information presented here represents opinions and is not meant as personal or actionable advice to any individual, corporation, or other entity. Any investments discussed carry unique risks and should be carefully considered and reviewed by you and your financial professional. Nothing in this document is a solicitation to buy or sell any securities, or an attempt to furnish personal investment advice. Warren Street Wealth Advisors may own securities referenced in this document. Due to the static nature of content, securities held may change over time and current trades may be contrary to outdated publications. Form ADV available upon request 714-876-6200.

3 Ways to Apply the 80/20 Rule to Your Financial Pursuits

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Ever heard of the 80/20 rule? It suggests 80% of an outcome is often the result of just 20% of the effort you put into it. 

Often, by prioritizing the 20% of your efforts that make the biggest splash, you can reduce excess commotion. In that spirit, here are 3 financial best practices that pack a lot of value per “pound” of effort. 

1. Investing: Be There, and Stay There

You could do far worse than invest, according to a sentiment attributed to Woody Allen: 

“80% of success is showing up.”

Going back to 1926 and after adjusting for inflation, U.S. stocks have delivered about 7.3% annualized returns to investors who have simply been there, earning what the markets have to offer over the long haul. Those who instead fixate on dodging in and out of hot and cold markets are expected to reduce, rather than improve their end returns. That’s because, when markets recover from a downturn, they often more than make up for the stumble quickly, dramatically, and without warning. Instead of chasing trends, simply stay invested over time.  

2. Portfolio Management: Use Asset Allocation, and Don’t Monkey With the Mix

Asset allocation is about investing in appropriate percentages of security types, or asset classes, based on their risk/return “personality.” For example, given your financial goals and risk tolerances, what ratio of stocks versus bonds should you hold?

Both practical and academic analyses have found that asset allocation is responsible for a great deal of the return variability across and among different portfolios. So, to build an efficient portfolio, we advise paying the most attention to your overall asset allocation, rather than fussing over particular securities. Luckily, if you’re a client of ours we’ve already taken care of this for you. 

3. Financial Planning: Do It, But Don’t Overdo It

Also in 80/20 rule fashion, an ounce of financial planning can alleviate pounds of doubt. Planning connects your resources with your values and priorities. It’s your touchstone when uncertainty eats away at your resolve. And it guides how and why you’re investing to begin with. 

Here’s some good, 80/20 news: Your plan need not be elaborate or time-consuming to be effective. In The One-Page Financial Plan, author Carl Richards describes: 

“Your one-page plan simply represents the three to four things that are the most important to you: some action items that need to get done along with a reminder of why you’re doing them.”

If you’d like to do more, great. But even a one-page plan will give you a huge head start. Write it down, as Richards describes. When in doubt, read what you’ve written. Is it still “you”? If so, your work is done; stick to plan. If not, consider what’s changed, and update your plan accordingly. I

Building Lifetime Wealth, 80/20 Style

Properly applied, the 80/20 rule can help minimize the time and energy you have to put into maximizing your financial well-being. Whether you’re saving for retirement, funding your kids’ college education, preparing for a wealth transfer, applying for insurance, or otherwise managing your hard-earned wealth, we can help you identify and execute these and other actions that matter the most, so you can get back to the rest of your life. 

Ready to put the 80/20 Rule in action for yourself? Give us a call today.

Cary Facer

Partner Emeritus, Warren Street Wealth Advisors

Investment Advisor Representative, Warren Street Wealth Advisors, LLC., a Registered Investment Advisor

The information presented here represents opinions and is not meant as personal or actionable advice to any individual, corporation, or other entity. Any investments discussed carry unique risks and should be carefully considered and reviewed by you and your financial professional. Nothing in this document is a solicitation to buy or sell any securities, or an attempt to furnish personal investment advice. Warren Street Wealth Advisors may own securities referenced in this document. Due to the static nature of content, securities held may change over time and current trades may be contrary to outdated publications. Form ADV available upon request 714-876-6200.