By Glenn J. Downing, MBA, CFP®

I thought I’d put together a short list of the most important ages in financial planning.  The ages on the list changed a bit in 2020, so a review is in order.  Look up your age and see what’s happening for you!

Age 21 – UTMA account becomes the child’s 

An account registered as a Uniform Transfers to Minors Act is one in which a trust is created by the donor for the benefit of the minor child.  The donor retains his status as trustee until the child reaches the age of majority – 21 in Florida.  Be careful if you’re using an UTMA for college funding:  at age 21 the minor comes of age and can use the money in the account for anything he wants, including blowing it on a Ferrari.  There’s nothing the donor can do at that point – he’s lost all control. 

Age 30 – Coverdells must be distributed

A Coverdell is the original education savings account. ...

By Glenn J. Downing, MBA, CFP®

Some of the biggest fortunes made in the United States have been made in real estate.  Think about it:  you use someone else’s money (via a mortgage) to make a purchase.  It is a passive investment in that you collect the rents, pay the bills, and keep what’s left over.  Not only that, but while you’re collecting those rents, the property is appreciating in value, and you’re paying the mortgage down.  So by the end of the year you have profited in three ways!

Previously, in Part I, I used an example of a rental condo apartment.  Here in Part II I'll evaluate the purchase of a single-family home.  

In this example the numbers work 

Income

I’ll use a different data set than in Part I.  Now you’re purchasing a single family residence for $350,000, again with 20% down.  You can rent the house for $2800/month.  The annual income is $33,600.

Expenses...

By Glenn J. Downing, MBA, CFP®

I get a lot of questions on this topic, particularly for people thinking of real estate investing as sort of a retirement pastime.  So I thought I’d go into a little bit.  Here in Part I I’ll address cash flow issues, and how to determine if a particular property will work for you as an investment.  In Part II I’ll build on that, and show you how I as a professional financial planner would evaluate an income property held as an investment by a client. 

Cash Flow

It’s all about the cash flow – rents received less expenses incurred must be positive!  But there are expenses you might not have considered. 

Income

First, project out your income.  That is the potential market rent times 12 months less a vacancy factor – typically 5% to 10%.  Your rental units will most likely not be rented for a solid 12 months each year.  When one tenant moves out, there is preparation to...

By Glenn J. Downing, MBA, CFP®

This is a really personal list.  It is complied from years of observing the human condition and reading good novels.  It is intended to be humorous, yet I’m fully aware that it might hit some raw nerves.  So for the intrepid souls out there, read on . . .

Counting down to number one, we have:

#10.  Beer

Now I enjoy a brew as much as the next guy, but why spend a lot of money on something you’re going to literally piss away?  Why not get a whisky instead?  You’ll get the same buzz and not have to keep running to the gents.

#9.  Cine Bistro

Go once if you don’t believe me, but you’re going to drop $100 on a movie and a meal for two.  How much nicer to dine at a proper restaurant and then go see a show afterwards for the same money. 

#8.  True Religion jeans

One of my daughters used to work at True Religion in Dadeland Mall.  Spending $300 for denim that is faded and...

By Glenn J. Downing, MBA, CFP®

As many of my readers know, I have been teaching the CFP® curriculum to those preparing for the exam for several years now.  Most are experienced professionals; all must have at least a bachelor’s degree; many have advanced degrees or are practicing attorneys or CPAs.  In other words, it is my privilege to teach la crème de la crème.  Still, it surprises me sometimes that even amongst this group, there is so little understanding of the financial benefits of legal marriage.  So I thought I’d blog about it.

My My My how things have changed!

Lucy and Ricky Ricardo slept in twin beds.  So did Rob and Laura Petrie.  (I Love Lucy and the Dick VanDyke Show references, for my young readers).  My my my how times have changed!  Now people hook up on television.  Who even needs a bed?  Maybe there’s a vacant stairwell, or there’s always the back seat. ...

By Glenn J. Downing, MBA, CFP®

This blog post builds upon a previous one:  No, Darling, because we can’t afford that.  I’m sharing some thoughts about teaching children to be financially responsible. 

What Was the First Trip?

My second trip?  What was the first?  My first trip to Europe I was 13, and my grandparents took me on vacation with them.  My maternal grandmother had come over from Italy at about age 5, and was raised in Connecticut, where I was born.  Her husband, my maternal grandfather, one of 16 children, was born in Connecticut, but some of the siblings were, I believe, born in Italy.  Grandpa was a successful business owner in New Haven, and they went to Europe on vacation most years.  In turn, they took each of their four grandchildren with them once – a gift I’d like to return some day.

The Deal with Dad

The second trip is the one I want to write about.  My Uncle Joe, my Dad’s...

By Glenn J. Downing, MBA, CFP®

As a financial planner, I work with a lot of couples planning for retirement.  Retirement brings on a sea-change in thinking.  Up until then most people have been in an accumulative stage of money management – saving up against the day they stop working.  Come retirement, what is saved is spent down over many years.  The fundamental question:  Will I outlive my money?

Will I Outlive My Money?

With software, we can answer the question, and with some specificity.  To model the answer, though, requires good data inputs.  Those inputs include spending requirements, inflation and earnings assumptions, future medical expenses, and a host of other things, both quantitative and qualitative.  But we always begin at the beginning, which is the spending plan, aka the budget. 

We recently worked with a couple on retirement planning.  We found them to be in enviable financial shape.  But one spouse...

By Glenn J. Downing, MBA, CFP®

A friend recently suggested that I write a piece about children and money.  At first I thought myself unqualified, as I have no formal education in this area.  But then I got to thinking that, as a father and now grandfather, and since I’ve been graduated from life’s School of Hard Knocks, that I might have something useful to contribute.  Hence this effort.  This is actually Part I of a two-part series.  Part II is all about my Second Trip to Europe.  

I love children.  Always have.  I don’t like unrestrained screaming, but I do enjoy hearing children happily play.  My wife and I have two married daughters and two grandchildren, all of whom we love dearly.  But children, as they are delivered to us, are loud, messy, demanding, have appalling table manners, and think the world revolves around them.  Furthermore, they don't come with manuals.  Yet it is our job as...

By Glenn J. Downing, MBA, CFP®

This is a big topic and a big part of financial planning for retirement.  The statistic is that by age 75, 75% of us will have needed some long-term care.  So the question is, how can I prepare for this risk financially? 

A principle of risk management is to insure risks of low frequency and high severity.  We insure our homes against hurricanes, and our cars against collisions.  We insure our lives against premature death, and our incomes against disability.  So it makes sense to insure our retirement assets against a financially devastating long term illness.  The point is not to spend all the accumulated assets on the first spouse to become sick, leaving the surviving spouse impoverished. 

Long Term Care Policies

The insurance industry introduced long-term care policies roughly a generation ago.  Policy benefits were triggered by needing substantial help and assistance in performing 2 of 6 ADLs...

By Glenn J. Downing, MBA, CFP®

What is the best tax bargain out there? 

Is it the 529 college savings plan?  Let’s see.  That is funding with after tax dollars, but the funds grow without taxation and come out without taxation when used for qualified higher education expenses.  That’s a double tax advantage.

How about the Roth IRA?  Same thing as the 529.  A double tax advantage. 

How about a Traditional IRA?  Here I deduct on the way in and have growth without taxation.  The tax bill comes when I distribute.  So this is another double tax advantage. 

Is there a triple tax advantage out there?

Yes!  There is one to my knowledge, and that is the Health Savings Account. 

The HSA is used in conjunction with a high deductible health insurance plan (HDHP).  This is one which, per IRS regulations, has a deductible of at least $1400 for an individual or twice that for family coverage. ...