Fiduciary – An Important Term to Know

• Fiduciary noun. From the Latin fiducia, meaning “trust,” a person (or company) who has the power and obligation to act for another under circumstances which require total trust, good faith, and honesty. (Free Dictionary)

Fiduciary

As a registered investment adviser, we work as a fiduciary when we give advice and manage money.

We often try to approach our blog topics with a light touch and a sense of fun. We believe a little humor helps us communicate important financial issues more effectively. With this in mind, we think many people often feel that having to deal with financial matters is like having to visit the dentist – it may be necessary but not exactly something to look forward to. No disrespect meant to our dentist friends. They understand.

This article, however, is about something we take very seriously: Our fiduciary obligation to you, our client. Put simply, a fiduciary duty is the duty to put your interests ahead of our own in everything we do. It’s a legal standard we follow, but in our view, also a moral obligation we willingly accept.

Not all financial advisors are fiduciaries. As a matter of fact, the majority aren’t. Read the rest of this entry »

What is Annuitization? What is an Immediate Annuity?

One of the most confusing and least understood terms for the investing public is annuitization. Unlike stocks, bonds, mutual funds and exchange traded funds (“ETF’s”), annuitization does not come up in cocktail party or water cooler conversation very often. What does it mean?

Many investors have money saved and invested in a fixed or variable annuity – two types of contracts issued by insurance companies. Annuitization is the process of converting annuity funds into a stream of income, usually paid on a monthly basis. Choosing whether to annuitize or not is very important because often you can’t change your mind once payouts begin.

There are several ways to “annuitize an annuity” including but not limited to: Read the rest of this entry »

Happy 4th of July, Lessons From Our Forefathers

Perseverance and spirit have done wonders in all ages. – General George Washington

Have you read David McCullough’s book 1776?  If you haven’t, you might not find a better addition to your summer reading list – particularly over this long holiday weekend.  First published in 2005, it’s an entertaining must read not only for its historical recounting of our nation’s first year, but for its lessons in courage and perseverance.

For today’s investors, the book is a reminder of the old saying, “that which is well achieved is usually well earned!” Read the rest of this entry »

How Are My Investments Doing? Methods For Measuring Investment Performance

 

This is a common question we receive. Over the years, a frequent method I’ve observed investors use to answer this question is a simple rate of return, generally known as a holding period return. But there are two other methods available, and for various reasons I’ll show below, they are usually more appropriate to use.

Holding Period Return (HPR)

Also referred to as your cumulative return, this value does not take into account the impact of time (did it take 1 year or 9 to earn the return?), and does not adjust for the impact of what dollars were invested, and when. It is generally reported as a single return percentage.

Internal Rate of Return (IRR) Read the rest of this entry »

The Difference Between Mutual Funds and ETFs

This is a question we get a lot here at Callahan Financial Planning, and with all the recent news and new options, I thought it would be a good topic to revisit.

As a refresher, let’s start with a quick note on what Mutual Funds are:

  • An Investment Company that invests shareholders money in a (usually) diversified portfolio of securities like individual stocks or bonds.
  • Assets are held in custody at a third-party bank, and are subject to regular inspection by the SEC in addition to any independent auditors to the bank and mutual fund. Read the rest of this entry »

The Benefits Of Budgeting

When it comes to personal finance there is one word that makes almost everyone cringe… Budgeting. Most people feel that maintaining a budget means that it will be the end of all of the “fun”. In reality, establishing and following a sound budget does just the opposite. It not only allows you to control your spending, but also is the foundation to achieve the financial goals you truly desire.

Here at Callahan Financial Planning we simply define a budget as providing for your needs within scarcity, which is the limited amount of money available to you. This means living within the amount of money you earn while taking care of your needs. The goal of having a budget isn’t to restrict your spending, but to cover all your necessities and focus any remaining money on what is most important to you. Budgeting forces you to take an in depth look at where your money is currently going and decide if that’s where it should go in order to accomplish your true goals. Read the rest of this entry »

Selecting Investments Or An Investment Advisor

This is the fourth in a four-part series designed to help you determine the best way to proceed with your previous employer’s company retirement plans, including 401(k)s, 403(b)s and more. Part 1 | 2 | 3 | 4

Whether or not you choose to keep your previous employer’s 401(k) where it’s at, roll it over to your current employer or move it to an IRA, you will still be responsible for its management and investment direction.  As discussed in the previous post, that can be a challenge if investing is not your specialty.  Don’t worry – we can help.

Our investment management service ensures that a financial planner can help you identify the advantages and disadvantages to holding your investments in a employer retirement plan or an IRA. Read the rest of this entry »

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