By Douglas Goldstein , CFP®

When I participated in Maslulim’s advanced driving course (www.maslulim.co.il), the first thing I noticed was their slogan hanging on the wall: “Changing the driving culture in Israel to personal responsibility and cooperation.” Maslulim teaches that every driver must focus not only on his own situation, but must work together with others around him. I realized that the same motto could be hanging in my office. As a financial planner and investment adviser, I often direct clients to take control of their money, and to combine forces with their family and advisers in order to have a safe financial journey.

Look over there!
In order to allow drivers to respond better to an emergency, Maslulim’s trainers insist on drivers looking further ahead than they are accustomed. When walking, individuals often pay attention to only five meters ahead them. Unfortunately, when driving, they also only look a few meters ahead. However, when sitting behind the wheel, people have to look way into the distance to help them anticipate what might happen. This increases their response time. In fact, one study showed that the vast majority of accidents could be avoided if drivers had reacted one second earlier. In heavy traffic, you can even look through the windshield of the car in front of you in order to know what to expect.

Like average drivers, most folks focus on the short term in planning their investments. They think so much about paying the next bill that they don’t look further down the line to see what they’ll need next year, in five years, or in twenty years. Then, when those points come near, they have no time to plan and end up failing. If investors spent more time now thinking, they might be able to avoid the accidents that occur with last-second decisions.

If you want to have a successful financial future, you must take responsibility for your own situation, and work in cooperation with your family and professional team. And, if you really want to make an improvement in your life, be sure to take the advanced driving course at Maslulim. Drive and invest safely!

Douglas Goldstein, CFP®, is the director of Profile Investment Services. He is a licensed financial professional both in the U.S. and Israel. He offers securities through Portfolio Resources Group, Inc., Member FINRA, SIPC, MSRB, NFA, SIFMA. Accounts carried by National Financial Services LLC. Member NYSE/SIPC, a Fidelity Investments company. His book is available in bookstores, on the web, or can be ordered at: www.profile-financial.com (02) 624-2788 or (03) 524-0942.

By Douglas Goldstein, CFP®

When Ron, the instructor at Maslulim’s advanced driving course (www.maslulim.co.il), introduced the idea that drivers normally follow their instincts, he said that such reactions are usually wrong. He stressed that training can help refine your actions to prevent a crisis. This concept also applies in investing.

When should I slam on the brakes?
Maslulim teaches that in the face of danger, you should slam on the brakes with full force, even if you’re afraid to do so. Today’s advanced ABS braking systems allow you to control the car even as you come skidding to a halt. But with stocks, it’s different. While it may be instinctive to pull the brakes when faced with a crashing market, selling in a panic may not be your best move.

What is even better than slamming on the brakes is looking ahead and foreseeing the danger. Create a financial plan and/or rebalance your portfolio as needed. Then hopefully you won’t need to battle the urge to sell when the market crashes.

The Maslulim instructor also pointed out that your side mirrors should tilt out further than they are normally set. This allows you a wider perspective on the cars coming up beside you, providing a better a sense of what is about to happen. Knowledge is empowering, but when it comes to both driving and investing, past performance can’t predict the future. While yesterday your neighbor stopped at the red light, you can’t assume he’ll stop today, so be prepared for all alternatives. Similarly, past investing history can’t predict future returns, so plan for different scenarios.

Maslulim’s course made me a better driver, and I strongly encourage all drivers … even if you’ve been driving for decades … to sign up now. You’ll be amazed at how much you will learn, and how much fun you can have. After all, not crashing your car is a good investment decision. After you’ve fine-tuned your driving, fine-tune your investment portfolio. If you feel you’re not driving your investments well enough, you can also take a course or speak to a professional financial adviser to get you back on track.

Douglas Goldstein, CFP®, is the director of Profile Investment Services. He is a licensed financial professional both in the U.S. and Israel. He offers securities through Portfolio Resources Group, Inc., Member FINRA, SIPC, MSRB, NFA, SIFMA. Accounts carried by National Financial Services LLC. Member NYSE/SIPC, a Fidelity Investments company. His book is available in bookstores, on the web, or can be ordered at: www.profile-financial.com (02) 624-2788 or (03) 524-0942.

By Douglas Goldstein, CFP®

Don’t make financial decisions based on what you wish will happen. After all, you wouldn’t neglect your savings plan in favor of purchasing a lottery ticket on the eve of your retirement. Hoping for high returns or never-ending real-estate booms can overshadow the reality of today’s economy.

Instead, base your expectations on solid research. Before buying a product, ask yourself if it sounds reasonable. If something sounds too good to be true, chances are it’s a scam. I’m amazed at how often, post-Bernie Madoff, I’ve met with people who have told me that they gave a sum of money to a friend/relative/organization to invest, don’t receive monthly statements, and are unsure about how their money is faring. When I draw the comparison between their “safe” investment and the recent Ponzi scheme, I’m told, “But this is different – I’ve known the guy for the longest time.”

After you invest, make sure you review your monthly statements and stay abreast of your finances. Ignorance is not bliss. While you shouldn’t lose sleep over every market movement (after all, volatility is the natural state of the market), don’t file your statements without reading them. Financial firms like green (both money and trees); they wouldn’t send you mail if it wasn’t important. Legal requirements obligate the firms to send out reports for the investor’s benefit. Even if you’re invested for the long term, it behooves you to look at your trade confirmations and monthly statements carefully.

Everyone wishes that their investments would constantly increase in value. However, closing your eyes, blowing out the candle, and making a wish won’t help your bottom line as much as doing due diligence, proper diversification, and risk control. Turn to a financial adviser for help, but realize that at the end of the day, your financial adviser is just that – your adviser. Unless you’ve given him discretionary powers, the final decision of any investment is up to you. Make a well-educated decision, not a wish.

Douglas Goldstein, CFP®, is the director of Profile Investment Services. He is a licensed financial professional both in the U.S. and Israel. He offers securities through Portfolio Resources Group, Inc., Member FINRA, SIPC, MSRB, NFA and SIFMA. Accounts carried by National Financial Services LLC. Member NYSE/SIPC, a Fidelity Investments company. His book is available in bookstores, on the web, or can be ordered at: www.profile-financial.com (02) 624-2788 or (03) 524-0942.

By Douglas Goldstein, CFP®

Regardless of whether you invest in Israel or in the United States, the turmoil in the U.S. housing market has probably affected your portfolio. Plummeting U.S. home prices have caused severe economic developments, including:
1. shaking consumer confidence,
2. eliminating billions of dollars of value in the mortgage-backed securities market,
3. contaminating the balance sheets of financial institutions,
4. and slamming the brakes on the economy.

With interest rates now at rock bottom, people looking for income from their bank deposits are having a hard time. Governments keep interest rates low to try to stimulate the economy. If companies and individuals can borrow money for a low price, they are tempted to increase spending. This, in turn, can lead to growth. On the other hand, I’ve helped many people purchase FDIC-insured CDs (certificates of deposits in U.S. banks) because they wanted a high degree of safety.

Signs of Life

Recently, we’ve begun to see some indications that the housing lull may have begun to abate. Analysts have noted that since the beginning of the year, building-permit issuance and the number of homes sold have increased significantly. Will that growth continue? Some market experts have pointed out that home development had to improve from its ultra-low levels in order to keep pace with home destruction (when supply is removed from the market due to deterioration from age and other factors).

Does selling a home in Jacksonville help me in Jerusalem?

As many Americans feel the recession is ending, they’re investing in housing. This, in turn, creates more building activity, banking services, and general growth. Perhaps people will start taking out home equity loans to finance other purchases, fueling corporate profits, too. So, if your investments are directly or indirectly connected to the U.S. economy, you may start to feel a piece of the economic excitement.

Naturally, there are no guarantees in the world of investments. With the rising current foreclosure rates and high unemployment, the housing stabilization may be somewhat subdued. But keep a close eye on the biggest global housing markets to see how it affects you.

Douglas Goldstein, CFP®, is the director of Profile Investment Services. He is a licensed financial professional both in the U.S. and Israel. He offers securities through Portfolio Resources Group, Inc., Member FINRA, SIPC, MSRB, NFA, SIFMA. Accounts carried by National Financial Services LLC. Member NYSE/SIPC, a Fidelity Investments company. His book is available in bookstores, on the web, or can be ordered at: www.profile-financial.com (02) 624-2788 or (03) 524-0942.

By Douglas Goldstein, CFP®

Traditionally, the rule of thumb as to how much one should spend on a house was three and a half times your annual income, with monthly mortgage payments of around 25% of your monthly net salary. However, treat this generality with caution since it relates to the average guy on the street and not to any one individual. For instance, if you think that your job may be at risk or your car is on the fritz, now may not be the ideal time to commit to monthly mortgage payments based on your current salary.

An important point to keep in mind is the difference between a new property’s price and the total cost of acquisition. The total cost of acquisition includes the cost of the property, lawyer fees, renovations, moving costs, and miscellaneous expenses such as curtains and new towel rods in the bathroom. The hidden costs can really add up, so they should be part of your total housing budget.

Once you know what you can afford to spend, consider buying a less expensive property. After all, since the future is always unknown, it may not be wise to overextend yourself financially.

Keep an eye on your current housing costs. If it’s difficult to meet your current obligation, it may be impossible (and unwise) to commit to a larger monthly mortgage. Consider your lifestyle: is your family (and by extension monthly budget) growing? Are you planning an expensive vacation? Are wedding bells – and bills – ringing for your children? Make sure that your future financial obligations and goals won’t conflict with the property’s purchase, since your house needs to fit into your overall financial plan.

Buying a house may be a solid way of building equity over the long term, but before you make the investment, assess whether you can afford it.

Douglas Goldstein, CFP®, is the director of Profile Investment Services. He is a licensed financial professional both in the U.S. and Israel. He offers securities through Portfolio Resources Group, Inc., Member FINRA, SIPC, MSRB, NFA and SIFMA. Accounts carried by National Financial Services LLC. Member NYSE/SIPC, a Fidelity Investments company. His book is available in bookstores, on the web, or can be ordered at: www.profile-financial.com (02) 624-2788 or (03) 524-0942.

By Douglas Goldstein, CFP®

Unfortunately, very few new arrivals in Israel are lucky enough to have a great job lined up for them when they get off the plane. Rather, the vast majority of new olim need to learn Hebrew, set up their homes, and adjust to a new culture. Olim who are around retirement age may have a hard time meeting a similar income level to what they had back in the Old Country.

Bonds provide income

One traditional asset class used by folks looking for predictable income is bonds. Bonds are a loan that you make to a government (i.e., Treasury Bonds, Israel Bonds) or a company for a certain period of time. During the life of the loan, you receive periodic interest payments that you can use to supplement your income. At the bond’s maturity, you get back your principal, presuming the issuer is still solvent.

Are they safe?

Though bonds are traditionally less volatile than stocks, there are still risks. The bond market has ups and downs, and in certain circumstances, you could sell bonds for lower than the purchase price. Also, if the issuer of the bond defaults, you might end up with nothing.

How should I set up my bond portfolio?

A 60-something couple recently came to my office and said they wanted to switch a piece of their investment accounts to bonds. We constructed a diversified portfolio using corporate bonds issued by major corporations. We then prepared a table showing when each of the bonds would pay its interest, so the couple had a clear sense of the ongoing cash flow and could budget accordingly. If you want to examine the pros and cons of using bonds, speak to a financial adviser, or call (02-624-2788) to order your copy of Building Wealth in Israel, which dedicates a whole chapter to bond investing.

By Douglas Goldstein, CFP®

There really is no end to paperwork. In addition to balancing your checkbook and reviewing your bank statements and credit card bills, there are other things to do in order to keep your financial house in order.

Review your pension plans and tax-deferred savings plans on an annual basis. Make sure that they are based on your current salary and you are making the maximum contributions allowable. If you had another child, or married off a child, consider re-evaluating your life-insurance coverage as necessary. Review the beneficiary to make sure it is still relevant. Don’t neglect to review your disability insurance policy, supplementary health care, and long-term health-care policy. Though you hope never to have to use them, having them in place could save you huge sums in the event they are needed. As for your powers of attorney, they expire after ten years, so make sure they are legally current. If you created a will before you made aliya, make sure that the will is acceptable by Israeli courts. If, for instance, you named an American guardian for your underage children, an Israeli court may not allow that and instead assign an Israeli guardian.

I met recently with a widow whose spouse left her the house and retirement plans, but bequeathed the rest of his assets to their children. When the couple created their wills decades ago, the wife happily agreed to this division of the estate. The problem is, in the interim, the housing market declined and the stock market nose-dived, and the current value of the house and pension plan aren’t sufficient for her to live on. The couple’s other assets were promised elsewhere, and now the widow will have to take a significant cut in her lifestyle. This situation could have been avoided if the couple’s wills were reviewed on a regular basis, after they were created. A regular review will ensure that decisions made in the past jive with your current wishes.

If you would like to download free trackers to help you organize your insurance policies and other financial paperwork, go to www.profile-financial.com and look under the “financial planning” tab.

Douglas Goldstein, CFP®, is the director of Profile Investment Services. He is a licensed financial professional both in the U.S. and Israel. He offers securities through Portfolio Resources Group, Inc., Member FINRA, SIPC, MSRB, NFA and SIFMA. Accounts carried by National Financial Services LLC. Member NYSE/SIPC, a Fidelity Investments company. His book is available in bookstores, on the web, or can be ordered at: www.profile-financial.com (02) 624-2788 or (03) 524-0942.

By Douglas Goldstein, CFP®

A middle-aged couple that recently made aliya told me that they were concerned about how to handle the IRAs (Individual Retirement Accounts) that they left back in the United States. They thought that they either needed to leave these assets with a broker in a different time zone or open the accounts, pay taxes and early-withdrawal penalties, and move the money into their Israeli shekel account.

If you have U.S. retirement funds, you do not need to move the accounts. In fact, by taking the money out of IRAs and bringing it to Israel, you might be creating an unexpected tax bill. Along with having to pay tax on the amount you move, you may also get hit with a 10% penalty for early withdrawal.

You can still handle the accounts from Israel
I generally advise olim who have IRAs to leave the account with an SIPC-insured brokerage firm. Even if you created a financial plan while living in the United States, you should create a new post-aliya plan. Choose a financial planner who is familiar with both your American investments and life in Israel to guide you through this process. And when it’s time to implement the new plan, choose a local firm that provides quality service while holding your account in America with the familiar investments (stocks, bonds, mutual funds, CDs, etc.).

New olim should consider how much of their money they should they bring to Israel with them. After all, your new life is in a shekel-based market. Determine your cash-flow needs, consider the importance of currency diversification, and divide up your money in proportion with the asset allocation model you have developed in your financial plan… You don’t have a financial plan? Get to work on it right away, since that will be the blue-print for your successful financial aliya. Since the focus of your new life, your salary, your checking account, and your new pension plans will now be based in Israel, having geographical diversity (by keeping your IRAs in America) may be prudent. At the end of the day, know that you have choices about where to place your funds and that you can handle your U.S. investments from your new home.

Douglas Goldstein, CFP®, is the director of Profile Investment Services. He is a licensed financial professional both in the U.S. and Israel. He offers securities through Portfolio Resources Group, Inc., Member FINRA, SIPC, MSRB, NFA and SIFMA. Accounts carried by National Financial Services LLC. Member of NYSE/SIPC, a Fidelity Investments company. His book is available in bookstores, on the web, or can be ordered at: www.profile-financial.com (02) 624-2788 or (03) 524-0942.

By Douglas Goldstein, CFP®

Now that you’ve decided to tie the knot, the soul-searching begins. No, I’m not referring to choosing the perfect caterer, but to the realities of everyday life. Ideally, when you were still dating you discussed finances, and perhaps even commented on how your parents run their own households. But now that there’s a new life ahead of you, you can determine your own financial future.

Discuss your single credit card bills and spending habits. Decide whether you’ll have a joint account or a combination of separate and joint accounts. Discuss your long-term financial goals as well as the daily technical stuff, such as who will balance the checkbook and pay the bills. Most importantly, be open and honest about your finances.

Take care of the paperwork
Make or update your will. Review health and life insurance policies (and rental insurance if you’ll be renting). Do names need to be changed on bank statements and cell phone bills? Calculate a combined net worth to know where you are as a couple and then develop a budget. If you begin your married life with a clear financial picture and goals, you have a greater chance of avoiding the finance-related conflicts that plague many couples.

Overspending strains budgets and relationships. All too often, financial difficulties are a key factor in divorce. One client, in the midst of a divorce, told me, “We made some poor financial decisions when married, but now that I’m leaving her, it’s impossible to escape the consequences of those decisions. I’ll be paying off the accumulated joint debt and child support for decades.” Indeed, there’s a reason why divorcees frequently have a lower life style when separated than while living together: two households are more expensive to run than one. If you see your ex living it high, while you’re keeping to a tight budget, don’t assume s/he knows what s/he’s doing and is living the good life. Being practical and budget-minded may not be fun, but these are the characteristics of building a solid fiscal foundation.

Whether newly married or newly divorced, when you’re standing at the crossroads of your life, make sure the decisions you make are financially sound.

Douglas Goldstein, CFP®, is the director of Profile Investment Services. He is a licensed financial professional both in the U.S. and Israel. He offers securities through Portfolio Resources Group, Inc., Member FINRA, SIPC, MSRB, NFA, SIFMA. Accounts carried by National Financial Services LLC. Member NYSE/SIPC, a Fidelity Investments company. His book is available in bookstores, on the web, or can be ordered at: www.profile-financial.com (02) 624-2788 or (03) 524-0942.