Reduce Your Investment Stress

Investing can be a stimulating diversion from the demands of work or just added stress. If you’re in the second camp, there’s an investment approach that might appeal to you.


Dollar-cost (DCA) averaging emphasizes consistent investing regardless of market ups and downs. With DCA, you invest in a security over time in regular, equal amounts rather than a lump sum. That way, you don’t have to worry about timing your investment to buy it at the lowest price. You’ll be investing at both low and higher prices, which can potentially even out your purchase costs and provide more consistent investment returns over time.


Dollar-cost averaging doesn’t guarantee a profit or protect against loss. At times, it can underperform lump sum investing. And you need to consider whether you’re comfortable weathering short-term market ups and downs.

But if implementing DCA and simply keeping yourself updated on your portfolio sounds attractive, this strategy may be the way for you to go for long-term investments. Your financial and tax professionals can provide guidance.

ESG Investing Trends from 2020

Approximately one-third of all U.S. assets — $17.1 trillion — under professional management are placed in sustainable investments.


New business? It’s a good time to start a retirement plan

If you recently launched a business, you may want to set up a tax-favored retirement plan for yourself and your employees. There are several types of qualified plans that are eligible for these tax advantages:

  • A current deduction from income to the employer for contributions to the plan,
  • Tax-free buildup of the value of plan investments, and
  • The deferral of income (augmented by investment earnings) to employees until funds are distributed.

There are two basic types of plans.

Defined benefit pension plans

defined benefit plan provides for a fixed benefit in retirement, based generally upon years of service and compensation. While defined benefit plans generally pay benefits in the form of an annuity (for example, over the life of the participant, or joint lives of the participant and his or her spouse), some defined benefit plans provide for a lump sum payment of benefits. In certain “cash balance plans,” the benefit is typically paid and expressed as a cash lump sum.

Adoption of a defined benefit plan requires a commitment to fund it. These plans often provide the greatest current deduction from income and the greatest retirement benefit, if the business owners are nearing retirement. However, the administrative expenses associated with defined benefit plans (for example, actuarial costs) can make them less attractive than the second type of plan.

Defined contribution plans

defined contribution plan provides for an individual account for each participant. Benefits are based solely on the amount contributed to the participant’s account and any investment income, expenses, gains, losses and forfeitures (usually from departing employees) that may be allocated to a participant’s account. Profit-sharing plans and 401(k)s are defined contribution plans.

A 401(k) plan provides for employer contributions made at the direction of an employee under a salary reduction agreement. Specifically, the employee elects to have a certain amount of pay deferred and contributed by the employer on his or her behalf to the plan. Employee contributions can be made either:

  1. On a pre-tax basis, saving employees current income tax on the amount contributed, or
  2. On an after-tax basis. This includes Roth 401(k) contributions (if permitted), which will allow distributions (including earnings) to be made to the employee tax-free in retirement, if conditions are satisfied.

Automatic-deferral provisions, if adopted, require employees to opt out of participation.

An employer may, or may not, provide matching contributions on behalf of employees who make elective deferrals to the plan. Matching contributions may be subject to a vesting schedule. While 401(k) plans are subject to testing requirements, so that “highly compensated” employees don’t contribute too much more than non-highly-compensated employees, these tests can be avoided if you adopt a “safe harbor” 401(k) plan. A highly compensated employee in 2020 is defined as one who earned more than $130,000 in the preceding year.

There are other types of tax-favored retirement plans within these general categories, including employee stock ownership plans (ESOPs).

Other plans

Small businesses can also adopt a Simplified Employee Pension (SEP), and receive similar tax advantages to “qualified” plans by making contributions on behalf of employees. And a business with 100 or fewer employees can establish a Savings Incentive Match Plan for Employees (SIMPLE). Under a SIMPLE, generally an IRA is established for each employee and the employer makes matching contributions based on contributions elected by employees.

There may be other options. Contact us to discuss the types of retirement plans available to you.

© 2020

Raising Money-Savvy Kids

Teach your kids that money doesn’t grow on trees—it’s earned. Likewise, teach them to earn and save up money for things they want. Don’t be their money tree every time they want to buy something.


Every kid should have expectations for being a responsible family member. Homework, picking up toys, grooming and maybe something like emptying the dishwasher each day. Beyond that, make a list of age-appropriate chores that they can do to earn money. Mowing the lawn pays $10 while taking out the trash pays $1. Let them decide what they’re willing to do to get that new toy.


For older kids, teaching them that saving money isn’t enough. Teach that investing is just as important. Explain the basics of the stock market, bonds, bank accounts, charge cards and short versus long term planning. Make sure they understand the concept of time and money and eventually house down payments and retirement savings. When they start working, they will need to understand the concept of income taxes.

Forecasting Financial Results For A Start-Up Business

There’s a bright side to today’s unprecedented market conditions: Agile people may discover opportunities to start new business ventures. Start-ups need a comprehensive business plan, including detailed financial forecasts, to drum up capital from investors and lenders. Entrepreneurs may also use forecasts as yardsticks for evaluating and improving performance over time.

However, forecasting can be challenging for a business with no track record, especially during today’s unprecedented conditions. Here’s an objective approach to developing forecasts based on realistic, market-based assumptions.

Starting point

Revenue is a critical line item in the forecast, because it drives many other accounts, such as direct costs, accounts receivable and inventory. To create a credible estimate of your start-up’s revenue-generating potential, consider the following questions:

  • What’s the size of the potential market?
  • How many competitors are vying for market share? What positioning strategies will the start-up use to compete?
  • How will the start-up price its products and services? Will its prices fall below, match or surpass those of competitors?
  • How will the start-up distribute products or services?
  • How many customers can the start-up support with its existing infrastructure? How will the start-up scale its operations to meet forecasted increases in demand?

It’s generally a good idea to develop multiple revenue scenarios — best, worst and most likely case. Then weight each scenario based on how likely it is to happen.

Costs and investments

Next, the costs directly attributable to producing revenue, such as materials, utilities and labor, need to be identified and quantified. These variable costs are typically stated as a percentage of forecasted revenue.

Some expenses — such as rent, insurance and administrative salaries — are fixed. That is, they remain constant over the short run, though they often have limited capacity. For example, you might need to add office space and headcount once a start-up grows beyond a certain level.

Besides expenses that are recorded on the income statement, start-ups may need working capital to ramp up operations. They may also need to invest in fixed assets, such as equipment, furniture and software. These expenditures are typically capitalized (reported) on the balance sheet and gradually depreciated their useful lives.

Finally, it’s time to focus on the missing puzzle piece: financing. You may need an initial round of capital to acquire (or produce) inventory, purchase essential assets and generate buzz about your new offering. Plus, start-ups often need ongoing access to capital — such as a revolving line of credit — to help fund the cash conversion cycle as the business grows.

Don’t let a competitor beat you to the punch!

Time is of the essence if you want to capitalize on emerging opportunities. So that you can focus on starting the business, we can help create an objective, defensible financial forecast for your start-up and benchmark your forecasted results against other successful businesses. This diligence will help impress prospective investors and lenders — and build value over the long run.

© 2020

August 2020 Client Profile

Lori is retired and concerned about the fallout from the pandemic affecting her finances. What steps should she take to help protect her investments?

Start by evaluating your income needs and sources. If you rely heavily on investments for income, but your portfolio took a hit, you may have to reduce your spending and withdrawal rate for a while to prevent having too little in your later years.

On the flip side, if you have been taking required minimum distributions (RMDs), but do not need the income, you can skip it this year, because the CARES Act suspended the RMD requirement for 2020. That would leave you with more money invested and save the taxes you’d have to pay on the distribution amount.

Next, meet with your financial professional to review how recent market volatility has impacted your portfolio. Rebalance the asset allocation if necessary, to align with your risk tolerance, and short- and long-term needs and goals.

Client Profile is based on a hypothetical situation. The solutions we discuss may or may not be appropriate for you.