We hope you find the brief answers below helpful.
If you have a question not addressed here, of if you find yourself coming up with additional questions, please contact us.
Q: How much do I need for retirement?
A: This is a question we get maybe more than any other. It starts with you answering two questions:
- When will you start drawing living expenses off your nest egg? (i.e., at what age do you plan to retire?)
- How much money will you draw off the nest egg each year (in today’s dollars)?
If you know the answers to those two questions, we can come up with some pretty good estimates/projections, based on:
- how much you have saved now
- how much you’re investing each month
- any employer match that you may have
- various assumed rates of return on your investments
- the impact of inflation over time.
Ultimately, we will end up answering another (implied) question— “How many dollars should I save each month between now and then in order to have enough money to live out my retirement years at a certain lifestyle/income level?” Ultimately, we will end up answering another (implied) question— “How many dollars should I save each month between now and then in order to have enough money to live out my retirement years at a certain lifestyle/income level?”
Q: How much should I save for college expenses?
A: Again, the answer to this question begins with you answering a philosophical question… “What kind of education, and what portion of that education, do you want to fund for your child?”
Some parents want to set aside enough money to pay for at least four years at a private, out-of-state, university. Others plan for four years at a mid-level state university, or two years at a community college while s/he lives at home. There are good reasons and logic to support any of these choices, and lots of others across a wide spectrum.
It’s important, then, for the parents to agree conceptually on what they want to provide for the child. Once that step is taken, it’s just a matter of running some calculations, and starting a systematic saving plan that can help you reach your goal, along with a reasonable rate of return.
Q: Which is better… a Roth IRA or a traditional IRA?
A: It depends! Both Roth and Traditional IRAs are simply tax shelters for the asset in which you invested your money. The biggest difference lies mostly in WHEN the asset is sheltered from the tax. The whole idea is to try to incur the tax when your tax rate is lower than at some other point in time.
Contributions to Traditional IRAs result in a tax deduction for your tax return now, and when the investment grows, it grows tax-deferred. Then, during retirement years, you pay tax on every dollar you withdraw from that investment, because you’ve not yet paid any tax on the principal or the earnings.
Contributions to Roth IRAs do not result in a tax deduction for your tax return now, but when the investment grows, it grows tax-free. Then during retirement years, you can pull dollars out of that investment without paying any tax at all on any amount distributed from that account. In order to pull out tax-free, you must be 59 ½ years old and the account must have been held for five years to avoid a penalty.
Q: Do you offer life insurance?
A: Yes. We are an independent provider, so we don’t work for any one life insurance company. Instead, we talk about how much term life insurance you need, and then shop it among dozens of the best companies in the industry, so that you end up with the least expensive policy available from one of the finest companies available.
Q: Should I apply for long-term disability insurance?
A: Probably. If you are working, and if the absence of that income would create a financial hardship for you and/or your family, you should look into the cost of long-term disability insurance. Again, we can look at several companies to see which one has the best product at the best price for your age, health, and occupation class.
Q: Should I apply for long-term care insurance?
A: Maybe. Long term care insurance can be expensive and complicated. We need to look at your age, your health, and your assets, and talk through the issues surrounding the product. There are many companies that offer the product, and we can shop the reputable ones to find a product and a price that works for your situation. Joan Adrian is on staff expressly to assist our clients with this challenging and important area.
Q: How do financial advisors get paid?
Financial advisors get paid one of two ways; either by commissions, or by fees.
Commission-based investments mean that the advisor earns a one-time, up-front payment for their services. Oftentimes this payment is called a “load,” or a “sales charge.” In a mutual fund account, for example, the load is deducted from the initial investment. The load is normally expressed in terms of a percentage, is determined by the mutual fund companies, and is usually 5% – 6% of the money invested. This percentage can go down as increasingly larger amounts of money are invested with one particular mutual fund family. This is known as the investor hitting “breakpoints.”
Fee-based investing employs a different account structure, where there are no up-front commissions. Instead, investors pay an annual advisory expense, expressed as a percentage of the assets being managed. Common percentages range from 1.0% to 1.5%, depending on the amount under management. Fee-based advisors are required to hold additional licenses, and are held to a higher regulatory standard.
There are pros and cons to both methods of compensation, depending on the client’s situation and perspective. The advisors at Vision Financial are licensed to conduct business in both commission-based, and fee-based, situations. We welcome the opportunity to explain how your circumstances may point you toward one, and/or away from the other.
Q: Are you a fiduciary?
Yes. We are not salespeople; we are advisors. We are legally obligated, due to the licenses we hold and the account types that we service, to put our client’s best interests first. Fiduciaries have a “duty to care,” and a responsibility to continually monitor the client’s investments and financial situation.
Non-fiduciaries are permitted under law to confine the client relationship to one meeting… the meeting where the prospect becomes a client. In contrast, as fiduciaries, we analyze your investments at least quarterly, applying our investment philosophy to evaluating the markets and your holdings, so as to provide you with frequent and understandable explanations of what we believe is in your best interest, and why.
Q: Do I need a financial advisor?
It depends. Financial advisors are service providers who analyze, guide, and coach. Some investors enjoy the analysis and decision-making process, and so are apt to act as their own financial advisor. If you plan to do your investing without an advisor, you need three things:
1. Time. It takes a tremendous amount of time on an ongoing basis to analyze the market conditions, sift through the media noise to find meaningful data, and evaluate the pros and cons of thousands of investment vehicles and strategies available to investors.
2. Tools. We spend thousands of dollars annually on software and research tools that provide us with a breadth and depth of data analysis not ordinarily found in magazines and online searches. These tools, used correctly, help us scour the industry for trends and opportunities for our clients.
3. Confidence. Conducting the research with the right tools is only worthwhile if the analyst acts on his/her findings. Confidence developed through decades of investment research and client interaction provides VFAC clients the assurance of knowing a seasoned guide is charting their course.
We are quick to tell prospective clients that if they truly have the Time and Tools to do proper research, and the Confidence to pull the appropriate levers, then they should not absorb the cost of hiring a financial advisor. And, if they are missing any one (or more) of those three ingredients, they should avoid the risk of not hiring a financial advisor.
Q: How is Vision Financial connected with Dave Ramsey?
John VanDyke became a Dave Ramsey ELP (Endorsed Local Provider) in 2001. Brent VanderZwaag became an ELP a few years later and, in 2012, Joan Adrian also joined the team as an ELP. Over the years, we have attended several Dave Ramsey Live Events, taught Financial Peace courses, visited Dave’s studio in Nashville, participated in the ELP Investment Council, and worked with thousands of Dave Ramsey listeners. These listeners make up the majority of our clients, and regularly refer others to us.
The VFAC financial advisors manage their practices, and their personal finances, in a manner consistent with the principles taught by Dave Ramsey. We truly believe in the overall investment strategy, and personal finance lessons that Dave teaches. While new regulation forced changes to the ELP program that prompted us to step away in 2018, we remain committed to doing business with “the heart of a teacher,” and advising people to do today what they will wish tomorrow they had done yesterday.
This site is published for residents of the United States and is for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any security or product that may be referenced herein. Persons mentioned on this website may only offer services and transact business and/or respond to inquiries in states or jurisdictions in which they have been properly registered or are exempt from registration. Not all products and services referenced on this site are available in every state, jurisdiction or from every person listed.
Securities offered through Securities America, Inc., Member FINRA/SIPC. Advisory services offered through Securities America Advisors, Inc. Vision Financial Advisory Corp, Vision Tax Planning and Securities America are separate entities.