By Douglas Goldstein, CFP®

Wouldn’t it be nice to have the perfect investment? One that pays a high yield, is totally safe, and allows you immediate access to your money. Unfortunately, such a deal doesn’t exist. But in seeking investments, you may find choices that fulfill enough of your needs that you can be satisfied. One idea that has piqued the interest of many is a long-term, callable certificate of deposit.

Certificates of deposit (CDs) that are issued by banks in the United States are usually insured by the FDIC (the Federal Deposit Insurance Corporation). If you’ve deposited under $250,000 in an FDIC-insured bank, and if the bank fails, then you will get your money back (see all the details at www.FDIC.gov). (That limit is temporary until December 31, 2013, at which point the limit drops to $100,000 per depositor.) This insurance will protect you if regardless if you’re an American citizen or not.

Short-term deposits these days don’t pay much interest. Just look at the near-0% you get on your bank deposits in Israel, the United States, or almost anywhere else. If you are willing to lock up your money for the long term, though, say ten to twenty years, you can normally receive a more substantial return. However, that comes with risks. Let’s say you need your money sooner. Or what happens if there is inflation? In these cases, if you try to get your money out, you will probably suffer a loss. Therefore, you would want to consider only putting a piece of your portfolio in such a CD. Many long-term CDs have a death provision that allows the heirs to take out the money of someone who dies without having to wait until the end of the term. As such, elderly people may want to ask their investment advisors if these CDs are appropriate for them.

“Callable” means that the bank, at its discretion, is allowed to pay you back your money, plus all the interest due to you up until that point, before the CD’s maturity date. Be sure to read all the terms of these types of CDs if you are considering them. (Learn more at the “Education” tab of www.profile-financial.com.) You might find that even though there is no perfect investment, they might be right for 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 Building Wealth in Israel 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®

Someone on Wall Street once coined the term “correction” to replace the word “drop.” It sounds so much nicer to say, “The market had a correction last week,” rather than exclaiming, “The stock market dropped!” The difference in the two expressions is explained depending on who is looking at the situation. A short-term investor or stock trader may feel the panic of the day-to-day turmoil. He would comment on the Greek debt crisis, the flagging confidence in Europe, and the prospect of inflation as examples of reasons why the market might tumble.

On the other hand, long-term investors consider that the most recent spate of stock volatility comes on the heels of a strong economic recovery. In the United States and Asia, this past year has been filled with a fair amount of positive news, including improving corporate earnings, banks repaying their huge government bailout loans, and a strong surge in the stock market. Short-term drops are always to be expected in the stock market. In fact, the correction that we suffered recently was typical of such moves in the market.

When you look at the returns on the U.S. stock market all the way from 1928, you see that the bull markets were always tempered by some retreats. The question is how you will deal with the corrections/drops. Regardless of whether the statistics suggest you should have a proportion of your assets in stocks, if you can’t stand the ups and downs, then you should not be in the market. However, for those people who have money that they can put at risk, and if their goal is to try to make that money grow, there are many opportunities in the stock market. And, when the news is bad and the economy is weak, that’s often the time to begin shopping for good investment bargains.

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 Building Wealth in Israel 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®

“As far as I’m concerned,” a client told me, “I don’t invest in Europe, I’m not going to Europe, and I don’t know anyone who lives there. So why does the European economic crisis matter to me?”

There are two sides to the global economic coin: We enjoy the benefits of importing/exporting and profit from a wide range of investment choices. On the other hand, increased interconnectedness means we may feel European fiscal stress even in Israel.  The troubles of Greece and Portugal, which represent only about 3% of Europe’s economic output, may affect us. Consider how the highly indebted governments of Greece, Portugal, and Spain may have problems repaying their loans to the governments and financial institutions of Europe. The European lenders may have under-capitalized coffers, which means that the defaults of the borrowers could shake the whole continental infrastructure.

The 27 members of the European Union are collectively the world’s largest economy. If that monolith wobbles, then countries who sell to the Europeans will see their largest export market diminish. Beyond that, however, lies the damaged confidence in the world’s economic recovery. For over a year, the world economy seemed to be strengthening. But with talk of a financial contagion infecting the world, the still-frail recovery may suffer from increased volatility. Though the weak Euro may help economies retrench by allowing them to open up export markets, the fruits of these new opportunities may take time to ripen. During the wait, individual investors will probably continue to feel the dramatic shakes of an unstable, prolonged recovery.

Other positives that may have come about as a result of the European problem include a cooling off in oil and other commodity prices. Had these continued to run up, inflation would likely have increased. That’s not to say that we shouldn’t expect to see an increase in the cost of living, but hopefully it will be contained so that our currencies won’t become worthless. With the continued low interest rate environment, governments, corporations, and even individuals can continue to borrow money to fund expansion (for things like building roads and factories, and taking out mortgages to buy homes).

So even if you’re not going to a Greek beach or a Portuguese pub, the events there may affect your life. But if you do end up going, consider spending (within your budget) to help strengthen their economies.

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 Building Wealth in Israel 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®

Wouldn’t it be so much easier to make investment decisions if you had all the information, and more, than everyone else? Imagine if you had unlimited financial resources for research, and a brilliant team of people to guide you. That’s the position of Bill Gates, the second richest man in the world. You would think that Gates, with above average intelligence, and with access to so much data, especially in the high-tech world, would be able to have a good sense of what technology is on the brink of development.

Bill Gates gets it wrong

In an article that appeared in The Atlantic, “Bill Gates: More Profit Than Prophet,” Gates’ ability to predict the future is challenged. The article looks at his book, The Road Ahead, published 15 years ago, and examines how his predictions have or have not materialized. They note that he missed the mark on predicting the path of e-mail, wireless networks, online shopping, the internet and the web, privacy and more. A smart man learns from his mistakes, but a wise man learns from other people’s mistakes. So what can we learn from Billionaire Bill?

Access to all the information you can possibly want does not translate into accurate predictions of what may happen.  When determining which stock to pick, don’t assume that past performance will help you determine future events.  And if your advisor, friend, bus driver, or other pundit spews some adroit analysis, ask yourself if he has greater resources than Bill Gates to make that prediction. Unless he’s Carlos Slim, the richest man in the world, he doesn’t have anything more than Gates himself.

It’s possible to gather all the information you want.  It’s possible to hire analysts to interpret the information for you and draw charts predicting the future.  But no one, not even Bill Gates, can compel the future to match predictions.  Since neither Mr. Gates nor the novice investor can depend on prophecy, they stand on the same playing field.  Proper investment portfolios come from assembling a responsible portfolio, given your situation in life, your goals, and your resources.  Your financial planner may be in a better position to help your financial portfolio than the best economic prophet.

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®

While the official statistics seem to show that unemployment is holding steady, if not declining, these statistics may offer little consolation to the currently unemployed.  Even if you are gainfully employed, your job may not be as secure as you would like it to be.

If you ask people what their biggest asset is, they might answer their house, their car, or their investment portfolio.  But, your earning potential is an asset that trumps all of the above.  You can think of your regular paycheck as a bond, providing income on a regular basis. It can also be thought of as a stock, with an unlimited potential to increase.  Either way, though, there are risks – bonds can default, stocks can drop in price, etc.

When considering the asset allocation of your portfolio, it may be wise to take your paycheck into consideration.  If you have a dependable source of income, that can weigh as a bond.  But if your paycheck is based on commissions or is otherwise unstable, this aspect of your financial portfolio resembles the risk inherent in stocks, so you might want to limit the other risk in your investments.  However, this analogy only holds true if your paycheck is guaranteed.  And, like bonds and stocks, next month’s paycheck may not be guaranteed.

The golden rule of investing is that younger workers, who have longer until retirement, can afford greater risk in their investments.  Using the analogy of a paycheck as a stock, the younger workers may be able to take greater risk in their employment.  But, as one approaches retirement, the possibility of unemployment (and not receiving a regular paycheck) is more dangerous.   If you feel as if your salary is less secure than it once was, consider decreasing your stock exposure and increasing your fixed-income investments.  If your salary begins to resemble a risky stock, you might want to safeguard your investments by minimizing the risk in your investment portfolio.

Your paycheck plays an important role in your investments.  Keep it in mind when determining your asset allocation for your investments. Today’s paycheck should not only pay your current expenses, but help finance your retirement.

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 Building Wealth in Israel 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®

Are you a member of the sandwich generation?  By that, I don’t mean the type of lunch you eat, but the family members for whom you’re responsible.  If you care for both your children and your parents, you’re the proverbial peanut butter and jelly in the sandwich.

While it’s difficult to pay for parents’ care, save for retirement, and keep up with the expenses of children, there is hope for those who feel squeezed between conflicting interests.  Careful planning and open conversations may help alleviate some emotional and fiscal tension.

The 2010 Families & Money Survey revealed that four in ten sandwich generation parents are providing some level of financial support to their adult children.  If my meetings with Israelis can serve as an indication of what is happening in Israel, I would venture to say that the statistic here is even higher.  I don’t know if this is due to the fact that large families come with large bills, or due to certain segments of society’s expectations that the parents buy an apartment for their children.  Whatever the reason, the sandwich generation needs to evaluate its priorities in order to juggle its various responsibilities efficiently and effectively.

Parents need to teach their children to be money savvy.  Ideally, this should start when they are young.  But, if this hasn’t happened for whatever reason, and your adult children expect you to pay their cell phone bills, buy an apartment, or finance their new business venture, now is the time to start teaching them about unreasonable expectations.  If your financial situation isn’t as strong as you wish it were, consider bringing in a professional financial planner, budget counselor, or organization like Paamonim to teach the fiscal facts of life.  By enabling your adult children to keep to a standard of living that they might not be able to otherwise afford (and jeopardize your own financial future), you may be perpetuating a negative fiscal cycle.

Education and honest conversations are the keys to relieving the financial stress of the sandwich generation.  Tell your adult children what help they can expect from you, explain why, and teach them to make their own wise financial decisions.  And then, prepare your own financial future to make it easier on your children when the time comes.

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 Building Wealth in Israel 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®

There’s a world of difference between a good financial plan and a mediocre plan.  While you may think that having a mediocre financial plan is better than having nothing at all, that’s not true.  If your plan can’t help you to achieve your goals, it is of little value to you.  A good financial plan is customized, taking into consideration your individual needs and hopes for the future.

While an average plan can be thrown together quickly, a solid financial program takes time to build.  It needs a solid foundation (an understanding of your spending habits and of your current and potential assets) in order to help you to prepare for a stable and comfortable future.  A good financial plan reflects an entire financial experience: past, present, and future assets, debts, and expected changes (i.e., large upcoming expenses or an anticipated inheritance).

There are many steps in formulating a financial plan.  Four of the most important are:

1. Realism - If a person’s salary is in the $50,000 range, it’s unrealistic to establish a plan with the goal of saving $10 million. Numbers and goals must add up and make sense.
2. Flexibility – Plans should be “user friendly.”  If they are too rigid, and restrict or severely alter one’s lifestyle, in essence they aren’t workable and are useless.
3. Resilience - A good financial plan lasts both through hard times and good times. It’s not a New Year’s resolution that can easily be broken.
4. Simplicity – A financial plan is the map one uses to help realize his dreams.  It should provide guidelines on how to make financial decisions, detail the actions to be taken, and contain benchmarks to measure progress.

A financial plan paves the path to your future.  Since it is impossible to predict what will happen to you or to the markets, a solid financial plan helps prepare you to handle the uncertainties of what lies ahead.  By using these four concepts as a starting point, a well-designed financial plan can be established to help you deal with the many possibilities that may come your way.

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

By Douglas Goldstein, CFP®

Money is one of the most common causes of marital disputes.  Couples often fight over spending habits, accumulated debts (either from before or during the marriage), and other issues.

However, although financial issues can impact the stability of a marriage, money (or the lack of it) is rarely the culprit.  There are plenty of happy poor couples as well as grumpy rich ones.  Money becomes the scapegoat when miscommunication is a bigger problem.  Not understanding your partner’s fiscal attitudes and actions has serious repercussions.

Before you propose, make sure you and your Significant Other have spoken about the following.  And, if you have children or grandchildren of marriageable age, make sure that they are discussing the following on their dates:

Assets and liabilities

Determine where you stand financially and where you would like to go.  Discuss whether you’ll be a one, two, or even three-income family.  Talk about your saving goals, your dreams, your donations, vacations, house, etc.  If relevant, the conversation should include a discussion of how to pay off pre-existing debt, and how to avoid similar problems in the future.

Financial history

Talk about your relationship with money.  Attitudes towards money are deeply ingrained from our childhood experiences.  Do you want to pass along to your children the same experiences?  Understanding your partner’s past provides insight into understanding your joint future.

Team work

Discuss how you intend to handle money together as a couple.  Are you comfortable with overdraft, or, do you need a safety cushion in the bank account in order to feel secure? Remember that as marriage is about compromise, the best solution is not having one partner choose a path, but to develop an approach for successful money management as a couple.  Discuss who will pay the bills, do the shopping, and balance the checkbook.

Both spouses have a responsibility to participate in the family’s financial picture.  Make sure there are no surprises.  Sometimes it seems as if the “power of the purse” is the power to break up what may otherwise be a happy marriage.

Money cannot buy happiness, but a successful marriage must include open, frank conversations about money.

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.