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.

By Douglas Goldstein, CFP®

“Bet $100 to see if you can squeeze a drop out of a lemon that our weight-lifting bartender has squeezed dry!” said the sign in a local bar. One day, a geeky-looking fellow wandered in and dropped a $100 bill on the bar. “I’ll take that bet,” he said. The barman, a former commando, squished the life out of a lemon with his bare hands. He put the seemingly parched fruit on the counter and said, “OK, man. If you can get another drop out you win.” The contender grabbed the shriveled fruit and, to everyone’s amazement, drew not just a drop, but almost a spoonful of liquid. He took his winnings and turned to leave. “Who are you?” the barman queried. Turning back with an evil grin, the new champion answered, “I work for the tax authority.”

Though the tax man can siphon off cash when none seems available, it’s more difficult for the average investor to find that extra money. Yet, with some creative thinking, you may be able to increase the yield on your money. Recently, I met with a retired couple who had kept all their money in checking accounts and money-market funds. The interest they earned was between 0.0% (yes, that’s zero) and 0.4%. While the funds may have been relatively safe, the couple wasn’t protected against the risk of inflation.

Increase your income
After designing an in-depth financial plan, we determined that they could put some of their money in FDIC-insured bank deposits and in some corporate bonds issued by some of the biggest companies in the world. This move increased their current income from hundreds of dollars to thousands, without significantly increasing their exposure to risk. While at times it may be tempting to go for the large returns, realize that the risk associated with hefty returns may not be appropriate for everyone. Nevertheless, there may be ways to have your money work harder, so take the time to speak to an investment advisor to see what’s available.

Please let me know if you have stories about very low-yielding deposits and how you have considered increasing the return: info@profile-financial.com.

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, SIFMA and NFA. 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 I made aliya, I rolled my 401(k) pension into an IRA (individual retirement account), and it hasn’t done well,” a woman told me recently. I asked her how she invested the funds, and she replied, “You mean I have a choice?”

One of the most common types of accounts that I see are IRA accounts which, unlike some pensions, allow the owners to decide on the portfolios’ specific investments. You can own stocks, bonds, mutual funds, and even bank deposits in your IRA. In fact, if you worked in America and have an IRA account, its contents can be as varied as the rest of your portfolio, if you so choose. When planning your IRA account, keep in mind the rest of your investment portfolio and diversify accordingly. While “cash is king” for safety, remember it may not be a wise long-term investment vehicle, particularly in an IRA account. Many people choose to own stocks or stock mutual funds in these special accounts, even though they may go down in value, since they believe that the stock market will do well over the long term.

What if my money is held in a pension plan?
In many cases, you can easily roll over your U.S. pension plans into an IRA, and then you can work with a financial adviser to take control of your financial destiny. It may not necessarily be a good idea to leave the pension plan where it is. Effectively, doing nothing is the same as making an investment choice, so if you just keep the funds as they are, you might be making a huge mistake.

While retirement accounts are earmarked for one’s future, don’t set up an account and forget about it. Regular reviews of your IRA and retirement accounts are necessary to ensure that there will be enough money in them to meet your fiscal needs in retirement.

Sit with a licensed financial adviser who understands your U.S. programs to determine if you can improve your situation. For more ideas about handling your retirement funds, order the free “Retirement article series” from www.profile-financial.com.

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, SIFMA and NFA. 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®

Risk is an integral part of investing. If you remove volatility, you eliminate some of the chance of realizing profits. The problem with volatility is two-fold: it can’t be predicted, and all too often it causes sizeable losses.

Just because a stock may drop, this doesn’t mean that it’s cheap. When you buy a new car at a discounted price, you’ve gotten a great deal. But the same doesn’t necessarily hold true with stocks. This is because prices often drop for a reason. The fundamentals or management of the company may have changed, or consumers may no longer be interested in the product. Sometimes stock prices are intrinsically too high and the “devaluation” is a correction. Remember Polaroid? It traded at $28 in 2000, and then at $2.80. Today it no longer trades.

When buying a stock, it is prudent to assume that at some point during your holding period, the stock will drop in value. It may fall in price immediately after you purchase it, or it may not decline in value for several months, but assume that eventually the price will go down. Therefore, to avoid panic-selling it’s wise to anticipate a drop in price and prepare your action accordingly. Then, you can hope that in the long term, the value will appreciate.

While “risk-free” sounds as if you can’t lose, by removing the potential for growth you introduce the possibility that your investment may not maintain its value. This is because inflation can decrease the real value of your money. Therefore, some degree of risk is needed if you want your investments to maintain their long-term purchasing power.

At times, it may seem like balancing on a tightrope may be easier than maintaining the right amount of risk in your portfolio. In both situations, sudden moves may spell disaster, but careful planning and keeping your wits about you may help you keep your investment portfolio – and financial future – on the right 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, SIFMA and NFA. 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.