FINANCIAL FOCUS – Is a Managed Account Right for You?

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As an investor, you’ll face many decisions over the years. How much should you invest? Where should you put your money? When is it time to sell some investments and use the proceeds to buy others? Some people enjoy making these choices themselves – but not everyone. Consequently, the type of investor you are will influence your thinking about whether to open a managed account.

As its name suggests, a managed account – sometimes known as an “advisory” account – essentially is a portfolio of stocks, bonds and other investments chosen by a professional investment manager who makes the buy and sell decisions. Typically, each managed account has an investment objective based on your goals, and you may have some voice in investment choices – for example, you may be able to request that the manager avoid certain investments. Or, you might still work with a personal financial advisor who can help you identify and quantify your goals, define your risk tolerance, and track changes in your family situation – and who can then use this information to help guide the investment manager’s choices.

Beyond this basic structure, managed accounts can vary greatly in terms of administration, reporting, fees and minimum balance.

So, assuming you meet the requirements for a managed account, should you consider one? There’s really no one right answer for everyone. But three factors to consider are cost, control and confidence.

  • Cost – Different managed accounts may have different payment arrangements. However, it’s common for a money manger to be paid based on a percentage of assets under management. So, if your manager’s fee is 1% and your portfolio contains $100,000, the manager earns $1,000 per year, but if the value of your portfolio rises to $200,000, the manager earns $2,000. Because the manager has a personal stake in the portfolio’s success, this arrangement could work to your advantage. Be aware, though, that other fees may be associated with your account.
  • Control – With any managed account, you will give up some, or perhaps all, of your power to make buy-and-sell decisions. If you have built a large portfolio, and you’re busy with work and family, you may like the idea of delegating these decisions. And, as mentioned above, you can still oversee the “big picture” by either working through a financial advisor or, at the least, having your goals, risk tolerance and investment preferences dictate a money manager’s decisions. But you will have to decide for yourself how comfortable you are in ceding control of your portfolio’s day-to-day transactions.
  • Confidence – It’s essential that you feel confident in a managed account’s ability to help you meet your goals. And the various elements of a managed account may well give you that assurance. For example, some managed accounts include automatic rebalancing of assets, which, among other things, can help you achieve tax efficiency. Other features of a managed account – such as the experience and track record of the manager – also may bolster your confidence.

Ultimately, you’ll need to weigh all factors before deciding whether a managed account is right for you. In any case, it’s an option worth considering.

This article was written by Edward Jones for use by your local Edward Jones Financial Advisor.

Marques Young
Edward Jones Investments
8001 Centerview Parkway, Suite 112
Cordova, TN 38018
Office: (901) 751-0634
Email: marques.young@edwardjones.com
Member SIPC

marques-young

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FINANCIAL FOCUS – Can You Afford to Retire Early?

Some people dream of retiring early. Are you one of them? If so, you’ll need to plan ahead – because a successful early retirement can’t be achieved through last-minute moves.

So, if you’re determined to retire early, consider taking the following steps:

  • Pick a date. Early retirement means different things to different people. But it’s important to pick an exact age, whether it is 60, 62, 64, or whatever, so you can build an appropriate retirement income strategy.
  • Think about your retirement lifestyle. You may know that you want to retire early – but have you thought about what you want to do with your newfound time? Will you simply stay close to home and pursue your hobbies? Do you dream of spending two months each winter on a tropical island? Or are you thinking of opening your own small business or doing some consulting? Different retirement lifestyles can have vastly different price tags. Once you’ve envisioned your future, you can develop a saving and investment plan to help you get there.
  • Boost contributions to your retirement plans. If you want to retire early, you may well need to accelerate your contributions to your retirement accounts, such as your IRA and your 401(k) or other employer-sponsored plan. You may need to cut back in other areas of your life to maximize the amounts you put into your retirement plans, but this sacrifice may be worth it to you.
  • Invest for growth. Your investment strategy essentially should be based on three key factors: your goals, risk tolerance and time horizon. When you change any one of these variables, it will affect the others. So, if you shorten your time horizon by retiring early, you may well need to reconsider your risk tolerance. Specifically, you may need to accept a somewhat higher level of investment risk so you can invest for greater growth potential.
  • Keep a lid on your debt load.  It’s easier said than done, but try to manage your debt load as tightly as possible. The lower your monthly debt payments, the more you can contribute to your retirement plans.

Life is unpredictable. Even if you take all the steps described above, you may still fall short of your goal of retiring early. While this may be somewhat disappointing, you might find that adding just a few more years of work can be beneficial to building resources for your chosen retirement lifestyle. For one thing, you can continue contributing to your IRA and your 401(k) or similar employer-sponsored plan.

Plus, if you’re still working, you may be able to afford delaying your Social Security payments until you’re closer to your “normal” retirement age, which, as defined by the Social Security Administration, likely will be 66 or 67. The longer you put off taking these benefits, the bigger your monthly checks, although they will max out once you reach 70.

And even if you are not able to retire early, some of the moves you took to reach that goal – such as contributing as much as you could afford to your IRA and 401(k), controlling your debts, and so on – may pay off for you during your retirement – whenever it begins.

This article was written by Edward Jones for use by your local Edward Jones Financial Advisor.

Marques Young
Edward Jones Investments
8001 Centerview Parkway, Suite 112
Cordova, TN 38018
Office: (901) 751-0634
Email: marques.young@edwardjones.com
Member SIPC

marques-young

10 mistakes smart people never make twice

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Everybody makes mistakes — that’s a given — but we don’t always learn from them. Sometimes we make the same mistakes over and over again, fail to make any real progress, and can’t figure out why.

“Mistakes are always forgivable, if one has the courage to admit them.” — Bruce Lee

When we make mistakes, it can be hard to admit them because doing so feels like an attack on our self-worth. This tendency poses a huge problem because new research proves something that common sense has told us for a very long time: fully acknowledging and embracing errors is the only way to avoid repeating them.

Yet many of us still struggle with this.

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