Why aspire for financial freedom?
Wonder what your life would be like if you did not have to work for money? We think it’s a very relevant question that merits your attention. In this webinar, recorded on Dec 17, 2022 we discuss this all important question - Why aspire for financial freedom?
Wonder what your life would be like if you did not have to work for money? We think it’s a very relevant question that merits your attention. In this webinar, recorded on Dec 17, 2022 we discuss this all important question - Why aspire for financial freedom? We explore the following areas:
* What is financial freedom? And, what it’s not.
* The reasons to aspire for financial freedom.
* What to expect on your journey.
* Reflection exercises that will help you explore this topic personally.
We hope you enjoy the webinar and find it useful.
Disclaimer: The content of this webinar is not meant to be specific investment advice for any individual. Please consult your advisor or CPA on your specific situation.
6 Things you might never hear from a financial planner
Here are 6 things that can have a direct impact on your finances, but are seldom talked about by financial planners. At Empower Financial we concern ourselves with anything that has to do with your financial wellbeing. We really mean it when we call ourselves ‘comprehensive’. So, it shouldn’t be a surprise that you see a list like this from us.
Here are 6 things that can have a direct impact on your finances, but are seldom talked about by financial planners. At Empower Financial we concern ourselves with all things that have to do with your financial well-being. We really mean it when we call ourselves ‘comprehensive’. So, it shouldn’t be a surprise that you see a list like this from us.
Without further ado, let’s jump right into the topic at hand - here’s the list:
Create a digital estate plan - Think how much of your data and information is stored online these days. Everything from financial, social, personal, to downright mundane like utility bills - practically everything lives online. The last thing you want your loved ones to go through in the unfortunate situation of your death or incapacitation is to be stranded without access to your digital assets. It is absolutely essential in this day and age to have a digital estate plan. The details of what exactly constitutes your digital estate and how to plan a transfer are an entire topic unto itself, but this blog post from 1Password should give you an idea.
Take advantage of the solar Incentive Tax Credit (ITC) - If you own a home where you get access to the roof, then you should consider going solar. There are many financial and non-financial considerations before you decide if this is right for you, but I want to focus on one specific financial consideration here - the solar incentive tax credit. The federal government incentivizes homeowners to install solar on their properties by giving a one-time 30% tax credit on the cost of the installation (exclusions apply). In short, what this means is that if you spend $20,000 for a solar installation, then you get back up to $6000 as a tax credit. A tax credit means that you will not receive a check for $6000, but instead your federal income tax is reduced by that amount. So, it’s important that your federal tax liability is high enough to avail the full credit. In addition to the tax credit, there are many benefits of going solar - a big drop in your electricity bills, an increase in your home value, free charging (if you own an EV), and being friendly to Mother Earth are some of them. EnergySage is a great place to start your research on solar.
Make sure your primary home is adequately insured - It is very common for homeowners to forget about their home insurance policy after they purchase their property. They only think about it when they need to make a claim. However, we recommend you check your policy coverage every few years, or when you make significant improvements like a remodel or an addition. Most insurance companies follow the “80% rule”, which in short says that you need to carry insurance for at least 80% of your home’s replacement cost, for them to pay 100% of the claim (up to the face value). Note that your home replacement cost is usually different from the market value - which is the price you can expect your home to sell for, or the purchase price - which is the price you bought your home for. Replacement cost depends on construction costs (which in turn depend on inflation), quality of construction, and the square footage of your home among other factors.
Consider buying umbrella insurance - Umbrella insurance is a type of insurance that provides protection beyond existing limits and coverages of other policies. Umbrella insurance can provide coverage for injuries, property damage, certain lawsuits, and personal liability situations. Umbrella policies are generally cheaper than other types of insurance. There are many resources online, such as this one, which explain in depth the purpose, costs and nuances of an umbrella policy. We recommend you refer to them for further details.
Get a dashcam for your car - This might seem rather strange, but dashcam footage can be the difference between a smooth claims process with your auto insurance company or a prolonged process involving appeals and third party valuations in the aftermath of an auto accident. Dashcams can cost less than a couple of hundred dollars and are well worth the money. If you choose to install one, then make sure you test retrieving footage frequently to make sure they are usable when you actually need them.
Consider adding an ADU to your home - It is no secret that adding square footage is the best way to increase the value of your home. An ADU takes this a step further - not only are you adding square footage, but you’re adding an entire unit. This study in Portland, OR found that ADUs account for 25-34% of property value. An ADU can be a standalone unit in your backyard, or a garage conversion, or a basement conversion. The end result is a full unit that can be used in multiple ways - as a long term rental, a short term rental, or as an in-law unit. Empty nesters can also move into the ADU themselves and rent out their main unit which can be a great source of income in your retirement. From a financial standpoint, ADUs can be one of the most lucrative investments. The rental income from an ADU (which can be very high in certain parts of the country, like the San Francisco Bay area) goes on Schedule E of your taxes which means you get all benefits of a real estate investment like depreciation and maintenance, taxes, interest, and other expenses on your ADU will reduce your taxable rental income.
If you’d like to learn more about any of the aforementioned items, then feel free to get in touch with us, or schedule a complimentary consultation.
DISCLAIMER
* None of these are specific individual recommendations. Please consult your financial advisor or your CPA for advice specific to your situation.
* Links, resources, and examples provided are for educational / illustrative purposes only.
* Insurance, building, local, and estate laws vary from region to region, state to state. Not all recommendations might be suitable or applicable to every individual.
Investing in current market conditions
High inflation coupled with rising interest rates, supply-chain woes and geopolitical uncertainty have made this a turbulent and challenging time to be investing. In this webinar, we discuss strategies to navigate the current market conditions.
High inflation coupled with rising interest rates, supply-chain woes and geopolitical uncertainty have made this a turbulent and challenging time to be investing. In this webinar, recorded on Oct 13, 2022, we discuss how to approach investing in the current volatile market conditions. We focus on:
* Current state of the economy and the markets
* Lessons learned
* Investing for the short and long term
* Opportunities & silver linings
We hope you enjoy the webinar and find it useful.
Disclaimer: The information presented in the webinar does not constitute specific investment advice. Please consult your financial advisor or your CPA for your specific situation.
The Origin Story: Why I became a financial advisor
The short answer: Because I enjoy doing it. It gives me a sense of meaning and purpose to help people with their finances.
The long answer…I used to be a Software Engineering Manager at Google. I quit Google in 2019 as I did not feel fully aligned with what I was doing. My job at Google had many great benefits like working with smart and motivated people, freedom to explore and take on different types of challenges, great compensation and benefits, and a fairly flexible work schedule. But somehow I did not feel that I was making a difference. I lacked purpose and meaning. So, when I quit Google, it was an open-ended exploration to find a job, a vocation, a hobby, a project, or something that would help me find this elusive thing called “purpose”. Knowing the open-ended nature of my break, we had set up our finances to be able to afford this extended loss of a paycheck.
So what exactly is ‘purpose’? As they say, a picture is worth a thousand words, so here is a picture that captures the concept of purpose.
Image source: imperativeeducation.org
After years of education and a 15-year career in software engineering, I knew my strengths were in numbers, logic, problem solving, and analysis. I knew I could be paid for it as well, as I had made a successful career out of it. The question really was where and how do I apply these skills that would meet my other needs for contribution and growth.
Shortly after quitting Google, I sent an email to my friends with the subject line ‘Do you need a financial buddy?’. I was offering to chat with my friends about personal finance - money, investments, real estate, and our relationship with money. I had spent more than a decade learning and applying this knowledge to my own finances. So, I thought sharing it would be a good way to connect more deeply with my friends, while also contributing to their financial wellbeing.
Over the next several months, several of them took me up on my offer and I had very meaningful exchanges. These conversations brought two very important realizations for me:
That I really enjoyed sharing my knowledge about personal finance. I liked listening to people, understanding what they were trying to achieve, and applying my knowledge to help them achieve it.
That I had something of value to offer. The overwhelming feedback was that I had helped my friends discover or learn something that they were not aware of.
At this point, the gears started turning and I knew I wanted to take this to the next level. I started taking courses online to fill my knowledge gaps, and at the same time I started thinking of how to better serve and reach more people. It took me a year to finally decide on launching an independent practice.
I wanted my practice to reflect my aspirations and values, so I had to think keenly about its design. What would be the core principles of my service? Here’s what I landed on:
Comprehensive financial advice - Personal finance can never be planned in isolation. They are deeply entwined with other parts of our lives - career, family, values, and life goals. So, it is critical for me to fully understand my client’s context before I can help them.
Empowerment - My goal is not only to help people solve the financial problem immediately in front of them, but to educate them by providing a framework to think about their finances. This is a primary reason that I chose to be an ‘advice-only’ financial advisor, and not manage my clients’ investments for them.
Access - I chose to charge my clients a reasonable hourly rate. I hope to serve all types of clients, no matter their income level, their net worth, or the scope of their problem. Furthermore, I intend to offer my services at minimal cost to the socio-economically disadvantaged.
Simplicity - Handling one’s own finances is simple. It might seem intimidating at the outset, but that’s where I come in. With a simple yet effective plan - a plan that works for you, managing one’s finances should take no longer than few hours in a year.
Fiduciary - A fiduciary financial planner always puts their client’s interests first. I believe the above principles lend themselves to an offering that’s free of any conflicts of interest and enable me to focus solely on my clients and their best interest.
So, all this brings me to where I am now - launching Empower Financial with the primary aim of helping people in their financial journey. And I’m certain that if I am able to achieve that, I will also have met my own goals of finding purpose, growth, and contribution.