My Retirement → Pro Athletes & Entertainers
We know what it takes to become the best and more importantly stay the best. We also know it's important to celebrate the victories and to have the right team around you through the tough times. That's why at Russell we have established an ELITE division of our Total Wealth Management team to help you enjoy what you've earned while also preparing for a bright future. Through our Total Wealth Review process we bridge the common gaps between tax planning (to keep more in your pocket), wealth management (to keep and create more wealth) and estate planning (to keep what you earned where it belongs).
You've already proven yourself at a professional level - now get professional advice that's tailored to you. Whether you’re a shoe-in for the next chart-topping endorsement deal, nominated for an Emmy or finally made it to the big leagues, here are three common rookie mistakes that you should avoid:
1. Know Who You Can Trust (& Who You Can’t)
At a young age our parents instilled in us the belief that one of the most precious things in life is your word…that your promise to others should be ironclad. While this valuable lesson still holds true today, investing is no place for promises that aren’t backed by more than a word. Far too often, investors get duped into investing in promissory notes, which are basically a loosely written contract (with no teeth) to pay someone interest payments based on the amount they have deposited. These “empty promissory notes” pay attractively high rates of interest and sound like such a great deal…until you find out they're worthless.
Never invest into promissory notes, super exotic investments or companies that you can’t check out with state and federal authorities. Lastly, our wealth managers will suggest that not only do you spread your money among different investments but also different custodians to achieve true diversification.
If you had to write a check for what you owe in federal taxes (line 63 on your 1040 tax return) you would be shocked. To say that our tax system is fair is ludicrous, with the top 10 percent of income earners paying over 70 percent of the tax revenue, but it is fair to say that it isn’t about how much you make in income this year, it’s about how much you keep after taxes that counts.
Consider this…would you be OK with losing 50 percent of your investment portfolio? Of course not, but the top income tax rates are approaching 50 percent, so why would you be OK with losing that much in taxes? Especially when there’s a variety of approaches to minimizing your tax bill. There are a host of strategies for reducing your tax bill from tax free investments, to tax-deferred retirement accounts and even investments that offer tax shelters to reduce the amount of your income that is actually being taxed. The problem is that most financial advisors fail to take your tax return into account when offering investing advice, which is why we integrate your tax planning with your investment plan. If you have a trusted tax team we can work side-by-side with them, if not, we can bring a highly trained tax team to the table.
Many times the quickest and easiest way to boost your investment return is to lower your total investment fees. For example, consider this is a hypothetical scenario:
Two identical investment portfolios earning 8 percent average per year over 30 years with the total investment fees of Portfolio A at 1 percent per year versus Portfolio B at 2 percent per year.
At the end of 30 years, Portfolio A is worth $761,255 while Portfolio B is worth $574,349 – the fees in portfolio B gobbled up almost $187,000!
Rarely do we meet anyone who truly knows and understands their total fees and that’s because they’re so darn convoluted. For example, our team recently met with a married couple and they had no idea of the fees they were paying or risk they were taking so they asked us for some perspective. After some detailed fee analysis we estimated their total investment fees were 2.11 percent annually, which to them amounted to over $50,000 a year in investment fees – most of which they couldn’t see because they were hidden or difficult to uncover. We found that not only were we able to secure their retirement savings by hedging their market risk, but we also were able to lower their fees by over $34,000 per year.
Obviously, lower investment fees are critical to your financial success, but the focus is on the value provided to you. Do you feel like you're getting tremendous value from your team of advisors? Undoubtedly, you have a gift for throwing or catching, or acting or singing for the camera - we too have a gift and we would love to share it with you and how we may be able to help you celebrate your success, achieve your next big dream and plan your lasting legacy.