Tag: Michael W. K. Yee

  • Big Plans for Small Businesses

    How to plan for retirement as a small business owner

    If you’re a small-business owner, protecting yourself and your business goes beyond securing proper insurance agreements and building an emergency financial cushion — it also means ensuring that your savings will sustain you throughout retirement.

    Most people have retirement savings plans sponsored by their company, however, in the absence of such a plan, the process may be more complex. You must determine how to keep your income flowing after retirement or how to capitalize by selling your business and creating a nest egg.

    It’s never too early to begin planning for retirement and there are several things you can do as a small-business owner to prepare.

    Make saving a priority. As other financial goals or needs arise, saving for retirement may get overlooked. It’s tempting to re-invest a large portion of your profit into your business, but you may regret not socking away more savings for your personal financial security, especially if retirement comes along faster than you expected. If you don’t have a retirement savings plan, consider contributing to an IRA or other qualified investment plan. It’s less tempting to pull money from accounts that are earmarked for a specific goal.

    Develop a succession plan. It’s important to think about how to protect the resources you’ve invested into your company and plan for its future. Research the legal procedures for transferring ownership (to a family member or employee). Document in writing who you intend to take over your business after you’ve retired. There may be tax ramifications when you sell or transfer your business, so be aware of these so you can prepare for the financial impact.

    Prepare to sell. If you intend to sell your business, be realistic about its value. It’s difficult to consider accepting less than you believe it’s worth, but if you retire in a down market or sooner than you planned, you may need to compromise on an offer. Keep in mind that selling your business may be emotional. Learning about the selling process before you consider offers may make it less stressful and ensure the decisions you make are financially sound.

    Retirement can be especially confusing and complicated for small-business owners, so consider working with a professional financial advisor who can help you balance your business needs with your personal ones. Everyone has different priorities and values, but it is up to each individual to prepare for his/her own retirement. The earlier you begin planning, the easier it will be to fulfill your long-term financial goals and avoid difficult trade-offs.

    For more information, please contact Michael W. K. Yee at (808) 952-1240.

    Advisor is licensed/registered to do business with U.S. residents only in the states of Hawaii. Brokerage, investment and financial advisory services are made available through Ameriprise Financial Services, Inc. Member FINRA and SIPC. Some products and services may not be available in all jurisdictions or to all clients. ©2010 Ameriprise Financial, Inc. All rights reserved.

    How to plan for retirement as a small business owner If you’re a small-business owner, protecting yourself and your business goes beyond securing proper insurance agreements and building an emergency financial cushion — it also means ensuring that your savings will sustain you throughout retirement. Most people have retirement savings plans sponsored by their company, however, in…

  • The Dollar is Up? The Dollar is Down?

    What does this all mean? You hear it regularly in the news: “The dollar rose today against other major currencies,” or “The dollar lost ground today on foreign exchange markets.” Just like stocks or bonds, currency’s value can fluctuate in comparison to each other on a daily basis.

    For example, at the start of 2011, it would have cost approximately $1.34 to purchase one euro (the European common currency). By the end of April, the U.S. dollar lost value, and $1.48 was required to buy a single euro.

    Why should you care? Because currency fluctuations affect anyone who buys goods made in other countries, travels abroad or invests globally. In other words, almost all of us are impacted on some level.

    The impact of fluctuating currency values

    Consider what happens if you are traveling overseas. If the dollar loses value compared to the currency of the country you’re visiting, it will cost more to make purchases in that region. If the dollar strengthens, your buying power will improve.

    In terms of the larger economy, U.S. companies seeking to sell products overseas will benefit when the dollar is weaker because this makes it cheaper for other countries to purchase American-made goods. In general, multi-national companies that sell American goods around the world will generate more profits from sales during periods of a weak dollar.

    As an investor in overseas stocks, you also may benefit when the dollar is declining in value. Suppose you invest $1,000 in a European company at a time when the exchange rate is $1.25 U.S. per euro. Your investment would be worth 800 euros. If after one year, the investment appreciates by five percent, it will be worth 840 euros. But if at the same time, the U.S. dollar had weakened to $1.35 per euro, your investment would be equivalent to $1,134, representing a much more sizable gain of 11 percent. The bulk of the return, in this case, comes from the euro gaining strength. By contrast, if the dollar gained ground during that period, your investment, when sold, would be worth less after being converted back into U.S. currency.

    An unpredictable market

    One of the significant challenges of the currency market is that it is very unpredictable in the short run. Any number of factors can come into play in determining the strength of a specific currency. A currency tends to become more valuable when the demand for it exceeds available supply. A number of factors can affect the exchange rate. For example, the dollar may be more attractive to others if interest rates here are higher and bond investors can gain a yield advantage by putting their money in bonds from U.S. issuers. Currencies may also thrive if a nation’s economy is strong (relative to other world markets) and business activity is high.

    But movements in currency values can also be affected by the actions of speculators who may try to take actions that affect the short-term direction of the exchange rate.

    Overall, it is important to understand that the changing value of the dollar is a factor to consider when investing in global companies or purchasing foreign products, though the risk associated may not be largely influential.

    For more information, please contact Michael W. Yee at (808) 952-1240.
    Advisor is licensed/registered to do business with U.S. residents only in the states of Hawaii. Brokerage, investment and financial advisory services are made available through Ameriprise Financial Services, Inc. Member FINRA and SIPC. Some products and services may not be available in all jurisdictions or to all clients.© 2010 Ameriprise Financial, Inc. All rights reserved.

    What does this all mean? You hear it regularly in the news: “The dollar rose today against other major currencies,” or “The dollar lost ground today on foreign exchange markets.” Just like stocks or bonds, currency’s value can fluctuate in comparison to each other on a daily basis. For example, at the start of 2011,…

  • Financial: Time For You To Refinance?

    According to research done by Freddie Mac, the average rate on a 30-year mortgage in the U.S. dropped below 4% for the first time ever in 2011. Rates on shorter-term, 15-year mortgages are even lower.

    For some, this creates a great opportunity to refinance the mortgage. But it’s not the right decision for everyone. Here are four questions to consider:

    1. How much equity do you have?

    Refinancing may be a priority for homeowners with disadvantageous loan terms or who owe more on their home than it is worth. But these situations can make it difficult to qualify for refinancing. Consult with your mortgage company about whether a different financing package can be structured for your home.

    If you do have equity in your home, it’s possible to structure a payment that may be dramatically lower than your current monthly mortgage. If the amount of equity is not much different than the current value, the payment will be closer to what you already have, but would likely be an improvement due to the recent decline in interest rates.

    2. Why do you want to refinance?

    Locking in a historically low rate can be appealing, but if you are within a few years of paying off your mortgage, it may not make sense for you to re-start with another 15- or 30-year mortgage.

    3. Are you in a position to refinance?

    If you have run into credit problems, refinancing may not be as easy as it used to be. Households need to have a sufficient credit score — usually 700 or higher — to qualify for a conventional mortgage.

    Employment status could be another factor. A number of Americans, some involuntarily, have recently left the workforce and started their own business. If you don’t have an established record of income, it might be difficult to obtain a new mortgage. Ask your mortgage company whether it’s worthwhile for you to pursue the mortgage application process.

    4. Determine the terms that suit your needs

    The final question is whether to opt for a 15-year or 30-year mortgage. An adjustable-rate mortgage is also an option, but since the terms of those loans are subject to change.

    If your primary goal is the lowest possible payment, a 30-year loan makes sense. If your focus is to reduce debt and accumulate wealth, a shorter-term loan may be better; the total interest paid on a 15-year loan will be significantly lower than with a 30-year mortgage. While monthly payments will be higher, a 15-year loan offers more long-term advantages for these homeowners since the financial obligation of a mortgage will no longer exist after 15 years, allowing you to concentrate on retirement or education savings.

    If you decide to refinance, be sure to compare costs of different lenders. The breakeven point on the cost of the loan (the number of years you need to keep the mortgage before the costs of obtaining a new loan are overcome) is a critical measure of whether refinancing is a worthwhile move for you.

    For more information, please contact Michael W. Yee at (808) 952-1240. Advisor is licensed/registered to do business with U.S. residents only in the states of Hawaii. Brokerage, investment and financial advisory services are made available through Ameriprise Financial Services, Inc. Member FINRA and SIPC. Some products and services may not be available in all jurisdictions or to all clients.© 2010 Ameriprise Financial, Inc. All rights reserved.

    According to research done by Freddie Mac, the average rate on a 30-year mortgage in the U.S. dropped below 4% for the first time ever in 2011. Rates on shorter-term, 15-year mortgages are even lower. For some, this creates a great opportunity to refinance the mortgage. But it’s not the right decision for everyone. Here…

  • Stay Uplifted Amid Economic Downturns

    Investors are being forced to cope with what many perceive as unprecedented circumstances in the economic and political environment. At the same time that the U.S. economic recovery appears to be slowing, Standard & Poor downgrades the U.S. credit rating on debt issued by the U.S. Treasury. Confidence that government policymakers can do anything significant to help improve the environment is low.

    These and other concerns are contributing to a sense of unease for many investors. How should these major shifts in global politics and financing affect your personal portfolio strategy?

    Here are three realities to give you an appropriate perspective on the challenges that lie ahead:

    1] The downgrade may be justified, but might have been premature.

    Standard & Poor’s shifted the nation’s credit rating from AAA to AA+. Part of their rationale appeared to center around concerns that a dysfunctional political environment will prevent budget issues from being resolved in an effective manner. However, history is filled with examples of how American politicians have forged deals to resolve crises. It may not be fair to discount the potential that policymakers will come to agreement not just on budget issues, but other legislation designed to give the economy a boost.

    2] Good news is often hidden.

    In periods like these when troubling news leads the headlines, investors are often surprised when markets perform well. This is due to the fact that some market observers are looking beyond the headlines to see other trends that are favorable. The same is true in today’s environment. Corporate profits remain strong and companies in the U.S. and elsewhere generally have solid balance sheets. Emerging markets are growing robustly and will likely help spur ongoing economic activity in other parts of the world, including the U.S. prices for gasoline have moderated in recent weeks, boosting consumer purchasing power. Even in difficult times, seeds of future prosperity are planted.

    3] Stocks may offer more attractive value than bonds.

    Many individuals have been pulling money out of the stock market and investing in bonds (or bond funds). Yet with interest rates on U.S. Treasury securities near their historic lows there appears to be an limited upside. Worse yet, bonds paying extremely low interest rates can be risky for investors. If interest rates begin to rise, bondholders could be in for a negative surprise. That’s because bond prices decline when interest rates rise. Stock values, meanwhile, remain well below the peak they reached in the fall of 2007 before the dramatic, 50 percent downturn occurred. At that time, the S&P 500 Index topped out at 1,565. Today the S&P 500 is 20 percent to 25 percent below that all-time peak. This indicates that upside potential remains over the long run, though the market will likely continue to suffer through ups and downs along the way.

    Investors are being forced to cope with what many perceive as unprecedented circumstances in the economic and political environment. At the same time that the U.S. economic recovery appears to be slowing, Standard & Poor downgrades the U.S. credit rating on debt issued by the U.S. Treasury. Confidence that government policymakers can do anything significant…

  • How to Invest Amid Downgrades, Downturns & Slowdowns

    In this economic and political environment, investors are being forced to cope with unprecedented circumstances. At the same time that our economic recovery appears to be slowing, the S&P downgrades the U.S. credit rating for the first time. Confidence that government policymakers can do anything significant to help improve the environment is low.

    Here are two realities to give you an appropriate perspective on the challenges that lie ahead:

    1. The economy is being tested, but a repeat of 2008 is not inevitable.

    Recent memory can have a significant impact on investor behavior. The fall 2008 financial crisis that pushed the global economy to the brink (and contributed to a 50 percent-plus drop in the value of the S&P 500 stock index) remains etched in most of our memories. Now, as European governments (Greece, Ireland and Spain to name a few) try to manage their debt, fears grow that the U.S. may face a similar situation soon. But it is not a foregone conclusion that we’re headed for the same result as three years ago. Circumstances are different today. For instance, many of the economic problems in the last downturn were related to the housing market bubble and excessive consumer debt. Today, housing prices are dramatically lower and consumers have begun to wind down their debt. There are other challenges facing the economy today, but a “double-dip” recession in the U.S. is far from certain.

    2. Market gyrations should not overtake your investment strategy.

    Are you a long-term investor? Most everybody should be, at least with a portion of your portfolio. Even if you are retired or close to it, you may need to invest some of your money in stocks to help meet increasing income needs over the course of what could be a long retirement. If you are uneasy with your current asset mix, review your holdings to determine if there is a more appropriate investment for your circumstances. Keep your portfolio well diversified. Avoid putting too much of your money into a single asset or asset class. This will limit the risk of a dramatic change in its price.

    Yes, there’s a lot of unnerving financial news out there, but don’t let today’s headlines overwhelm your long-term investment decisions.

    For more information, please contact Michael W. Yee at (808) 952-1240.

    Advisor is licensed/registered to do business with U.S. residents only in the states of Hawaii. Brokerage, investment and financial advisory services are made available through Ameriprise Financial Services, Inc. Member FINRA and SIPC. Some products and services may not be available in all jurisdictions or to all clients.© 2010 Ameriprise Financial, Inc. All rights reserved.

    In this economic and political environment, investors are being forced to cope with unprecedented circumstances. At the same time that our economic recovery appears to be slowing, the S&P downgrades the U.S. credit rating for the first time. Confidence that government policymakers can do anything significant to help improve the environment is low. Here are…

  • At Home With Parents

    As parents age, it often becomes more difficult for them to live independently and manage their own affairs without outside help. The thought of mom or dad leaving the comfort of the family home can be a painful and challenging proposition for everyone, but when it’s no longer safe or practical for them to live alone, adult children often intervene to find an alternative living arrangement. At that point, the question becomes whether you should invite Mom or Dad to live with you or help facilitate a move to a nursing home or other senior living facility.

    Consider the following when deciding how to address an elderly parent’s living situation.

    The emotional roller coaster

    It helps to realize you’re entering a very emotional territory—for you and your parents—when you broach the subject of a move. Adult children often feel guilt and anxiety. You may also be frustrated by a parent’s lack of cooperation or combativeness. For the parent, there most likely will be sadness and, in some cases, anger. Understandably, parents will mourn their status as independent adults, which may be compounded by grief over a lost spouse, failing health or the prospect of dying. Be patient and respectful of one another. Avoid rushing the decision-making process as best you can.

    Available accommodations

    Before you ask Mom or Dad to move in with you, think about the realities of this scenario. Does your home have the necessary space and amenities? You may need to remodel to accommodate special needs, such as a ramp for wheelchair access, safety bars in the bathrooms and so on.

    Level of care

    Be honest with yourself about how much care you can give. Will you be able to provide supervision, assistance with daily cares, medication, rides to the doctors’ office and more? Are you ready to prepare three meals a day, manage the extra laundry and give up your privacy? You may have the time, energy and willingness to joyfully take on these responsibilities. Or you may not. Don’t take on more than you can handle. Seek the help of professionals if you are able to do so.

    The costs and who will pay them

    Whether you open your home to a parent or help find a suitable alternative, there will be costs involved. A financial advisor can help you sort out the ramifications of having another boarder under your roof or paying for nursing home care. If you are paying for more than half of a parent’s living expenses or paying for medical expenses, you may be eligible for a tax break. Talk to your tax preparer to see if you qualify for deductions.

    Seek help with decision making

    No one can tell you what to do when the time comes to care for an elderly parent. Rally your extended family members and wise family friends to explore your options. Enlist the insights of your financial advisor and tax preparer to determine how expenses can be managed and shared. Keep a positive attitude and take advantage of the opportunity to help make things easier for your parent at this stage of life. By thinking it through, you can find a solution that works for the entire family. For more information, please contact Michael W. Yee at (808) 952-1240.

     

    As parents age, it often becomes more difficult for them to live independently and manage their own affairs without outside help. The thought of mom or dad leaving the comfort of the family home can be a painful and challenging proposition for everyone, but when it’s no longer safe or practical for them to live…