December 2007

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Taking the Mystery Out of Financial Planning Newsletter 

Our goal at eFinPLAN is to demystify financial planning by providing common sense usable information and the best easy-to-use financial planning software for consumers

‘Taking the Mystery Out Of’ Articles         Digest of Monthly Columns 

1. Financial planning

2. Investing: Are there secrets only the rich know?

3. Quick Solutions: Financial Magic Wands & Silver Bullets

4. Financial Crystal Balls: Indications for the future?

5. Investment Terms

1. What is eFinPLAN

2. eFinPLAN software:

    -  Nuts and bolts of retirement planning & “what-ifs”

    -  You have your financial planning report, now what?

3. Personal note from the founders

4. Featured Affiliate: Mary Hunt and Debt Proof Living 

Is Financial Planning a Mystery?

Dictionary.com (v 1.1) defined a mystery as

1.  Anything that is kept secret          2.  Presents features or qualities so obscure as to arouse curiosity or speculation

3.  A story that remains puzzling       4. Obscure, puzzling, or mysterious quality or character

5.  Any truth that is unknowable except by divine revelation.

Financial planning remains a mystery for many people, like the definition above, because:

1.       It remains unexplained or is kept a secret by some planners. At eFinPLAN we realize this. That is why our Web site, software and financial planning report contains common everyday information to help you.

2.       Until now financial planning was obscure, because the software planners use is very complex—even for many professionals. Planners sometimes can use the software to their advantage to craft solutions that might favor the sale of a product, or to hide planning mistakes. eFinPLAN takes the software out of the box in the planners back office and delivers it to the consumer’s desk top with easy-to-use questionnaires and understandable reports.

3.       Financial planning is a process, much like a story! You write your financial story, your uniqueness, within the construct of planning software. The key mystery is your future; however, the mist that clouds your forward vision can be made clearer by the plans you are making today.

4.       Planning is puzzling, that is true. Why? Because life is complex when you consider taxes, insurance, legal issues, and investments, to mention a few. It is even more complex when you make a change in one area, because it will affect all of the other areas. Planning software is designed to handle the complex interaction of the moving parts.

5.       The best financial planners are worth their weight in gold, but financial planning doesn’t require divine revelation. You are an intelligent, capable person who can take control of your personal finances with good information, the use of technology, and help from trusted advisors. 

Investment Secrets?

People always ask me…

►       Are there investment secrets that only the wealthy know about?

►       Do the wealthy know things about money management that others don’t?

Despite the headlines of popular financial books that read something like, ‘Financial secrets that the rich don’t want you to know about,’ there is no conspiracy; there are no secrets that only the rich have access to that give them an edge over everyone else. It used to be that only the rich had access to the best professional money managers, but with the popularity of mutual funds, everyone has access to the best money managers. There are some investment firms that have minimums beyond the reach of the average person, sometimes referred to has SMA or separately managed accounts; however, they have not proven as a group to outperform the top mutual funds. What about secret information? Yes, some people have access to information that you and I don’t; however, if they act upon this “inside information” with their purchase of stocks and they are caught, they will face severe fines and jail time.

If there are no investment secrets, are there other secrets that give wealthy people an advantage? Again, there are no secrets; no one has hidden the facts. Those that save and invest over a long period of time, minimize debt, spend less than they earn, are hard/dependable/honest workers, and are frugal and invest in education are usually better off financially. These ‘secrets’ are often related to habits and decisions (per Thomas Stanley and William Danko’s book The Millionaire Next Door) and shift away from cultural patterns (per Ruby Payne’s book Bridges Out of Poverty).

Lastly, a few overlooked things can make a big financial difference: financial education and having other sources of income.  I encourage ongoing learning of financial fundamentals through reading books, receiving financial and money-saving newsletters, attending evening courses taught about various financial matters, and reading your eFinPLAN financial plan. Also, I encourage having additional sources of income, perhaps from small businesses or other ventures in areas in which you have a passion – only be very careful of hyped real estate or any get-rich-quick scheme, since fraud is rampant. 

Quick Financial Solutions

Are there financial Magic Wands and Silver Bullets? I can’t remember how many times clients have requested magic solutions to quickly resolve financial problems, or that special “silver bullet” to kill a financial monster. There are, however, two Secret Ingredients: patience and perspective.

There are no quick and easy single answers to resolve most issues. In fact, the opposite is true. Solutions often involve many resources (time, knowledge, information and money). Envision a ship being blown off course. The rigging and rudder can direct the ship in the right direction, but it will take time to make up the increased distance. The waiting period as you make adjustments to your ship’s direction requires the secret ingredient of patience.

Before the ship returns to the correct course or reaches its destination, challenges will be faced along the way. Sometimes the wind will be at your back, sometimes it will be against you. Challenges provide the opportunity for growth. When we learn from our challenges we become better people. A friend of mine with both financial and social work backgrounds says that people generally go through many difficulties all at once, and financial problems are always in the mix. It is their perspective or how they view their situation that can make all the difference.  Those who can see their situation with a glimmer of hope are often those that find their way to successful solutions and happiness.

Financial Crystal Balls

Everyone in the financial services industry fields questions from time to time about future expectations for inflation, recession, interest rates and the stock market. No one knows what is going to happen in the future. No computer model, investment, or economic team can predict the future. Economics and politics change rapidly and are too complex.

Since no one can accurately predict when changes will occur, most people should not try to ‘time the market.’ Timing the market is putting your money either into cash or cash equivalents like CDs, stocks or bonds, or sectors (e.g., real estate or utilities) because you expect a spike, or a sudden or short-term increase in hopes of gaining a higher than average rate of return.  Mutual fund managers will make very educated investment decisions about market sectors that may involve in part economic and political forecasts. Most people who try to ‘time the market’ base their decisions more on gut feelings then analytical data, and they end up investing in the wrong things at the wrong time—in other words, they lose money. 

My crystal ball tells me that if you are like most people and are not good at seeing into the future, then timing the market may not be for you.

You might ask, “Should we just ignore political and financial indicators?” On the contrary, if you are going to be an educated investor you need to be tuned in to the news. Careful monitoring of your investments and your investment managers is very important, and being ‘in the know’ will help you do this.

Lastly, being aware of economic conditions is important from a financial planning point of view. There are some indications that we may be headed for some degree of recession in some areas of the economy. Some experts believe that this is very possible, considering the housing and sub-prime mortgage market, stock market decreases, and oil prices nearing $100 a barrel. There are many experts that don’t believe we are heading for a recession, but there are probably more today than a few months ago saying that recession is possible in some parts of the country. Most don’t think it will be long term. You may want to consult your investment advisor to see how a recession in your area could affect your investment decisions and your plan. My article entitled “How to prepare for a recession” is on the eFinPLAN.com Web site. You may read it by clicking here.

If your dreams have gotten dusty, breathe new life into them or dream new ones, set goals and make plans for an exciting future. Shine that glimmer of hope into your own situation and believe that your best years are ahead of you.  If you can do that, you will have more incentive to work diligently at managing your finances.

Regardless of a coming economic storm or a blue sky, make good financial plans and decisions, learn about financial matters, stay informed, and use trusted professional advisors. If you do these things, you will more likely weather difficult times and leverage the good times.

For more information on eFinPLAN articles pertaining to investments, click here. 

Mysterious Financial Terms

Do you ever come across a financial term that is just ‘A Mystery?’ The financial world, like everything else, has its own vocabulary. If you want to know about a hedge fund, ETF, or nearly anything else financial, just go to the Investor Words Web site. This is a pretty good site for learners to quickly find out definitions for words they will encounter in The Wall Street Journal, or their hometown newspaper’s business page, or on TV business news programs. This is a commercial site unaffiliated with eFinPLAN. Don’t forget to return to eFinPLAN.com for financial planning software.

What is eFinPLAN?

It is the first and only consumer-friendly, comprehensive financial planning platform that is:

►     Online – no software to download

►     Convenient & private 24/7 access

►     Low fee 

►     Comprehensive: covering all critical areas essential for effective wealth management (unlike Web sites’ calculators)

It also provides an:

►     Easy-to-understand & educational financial planning report

►     Easy-to-use online questionnaire

►     Instant output 60-page report

►     Action step checklist for ease of implementation 

Find out more about eFinPLAN; simply click  to view a video or visit eFinPLAN.com. Consider starting your eFinPLAN financial plan today or purchase it as a Holiday present for yourself or a loved one. 

eFinPLAN Retirement

eFinPLAN software calculates your income needs during your retirement years based on the number you input for your living expenses (Step 4a) plus inflation. It looks at your current savings, investments and retirement plans, including social security. It takes into consideration the current balances, additions utilizing return assumptions indicated in Step 10. If there is a shortfall, the financial planning report makes several suggestions. One of the suggestions you might find a little interesting is to lower your life expectancy; people chuckle at this one. The default in the software is age 100 for each person. This is a high range to help plan in hopes that people won’t outlive their income. This is a personal preference, but you can change this number and then re-run the report and examine the results.

The eFinPLAN report may suggest that you need to work longer, save more, and spend less; this is where the software can teach you about financial matters. Enter varying degrees of each suggestion until you find spending and savings amounts that work for you so that you can retire at a realistic age. 

Top 12 Reasons to Update Financial Plans

1.     Receiving a large amount of money

2.     Incurring Large Expenses

3.     Buying or Selling Property or a Business 

4.     Assuming or Paying Off Debt

5.     Having a Child

6.     Changing your Marital Status

Click here for more detailed explanation 

7.     Changing your Employment or Income 

8.     Changing Employee Benefits

9.     Receiving Updated Investment Information

10. Buying/increasing Life, Disability & Long-Term Care Insurance

11. Drafting New Legacy Planning Documents

12. Making Changes to Your Plan

Note from founders

Right before we formed eFinPLAN, I was a fee only financial planner (with 25 years of experience in the financial services industry) providing advice to wealthy people during the day and counseling people in financial distress in the evening through a community center. It occurred to my wife and me that there are many people that need a financial plan but either can’t afford one, prefer privacy, or want to do some of the planning themselves.

Thank you for visiting our website and for your purchase of eFinPLAN. We hope that you have a happy Holiday season. 

Featured Affiliate: Mary Hunt and Debt Proof Living

It is our philosophy that personal comprehensive financial plans provide an organized framework for all of your finances.  But plans are only part of the picture; the other pieces are financial education, using trusted professional advisors and smart household financial management. These aspects are interwoven into our software and material— and in the materials of those with whom we affiliate.

If you are not familiar with Mary Hunt and Debt Proof Living, we encourage you to check out her Web site by clicking on Debt Proof Living. There you will find a wealth of information about household financial management. I encourage you to sign up for her daily e-newsletter Everyday Cheapskate, subscribe to her monthly newsletter, and purchase one or a few of her many valuable books. Following her wise advice will help you immensely!

We recently purchased her newly updated Debt-Proof Living and her new book Debt Proof the Holidays. We read the original Debt-Proof Living book a few years ago, and are enjoying reading both now. Whether you are a new financial student, or experienced, there is always a lot more to learn or be reminded of. 

Final eFinPLAN Tips

If you have purchased eFinPLAN, the following tips are for you. The eFinPLAN report is packed with a lot of information specific to you, as well as a lot of educational information. I encourage you to read and re-read it several times; grab a red pen and mark it up. This will help you really understand financial planning better. Lastly, refer to the implementation checklist in the back and begin making progress on your Action Step checklist. 

eFinPLAN reports, newsletters and Web site are designed to increase your knowledge of financial matters and permit you to take greater control of your financial future. The resources provided are to assist you as you advance up the financial learning curve. No single company or person has all the financial knowledge you need or can address everyone’s individual situation and show all possible solutions. Therefore, we encourage you to utilize other resources, and when appropriate, rely upon trusted professional advisors. This not intended to, and does not, provide specific legal, tax, accounting, insurance, and investment, financial or other professional advice. eFinPLAN is not your financial planner or investment advisor. For specific advice on these aspects of your overall financial plan we encourage utilizing trusted professional advisors. This is not an advertisement or solicitation for any specific investment or investment strategy. Information contained herein is not a substitute for consultation with a competent legal professional or tax advisor and should only be used in conjunction with professional advice.

Copyright 2007 All rights reserved. eFinPLAN LLC, & Taking the mystery out of financial planning are service marks of eFinPLAN, LLC