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Special Needs Financial Planning

While caring for a child with special needs can be uniquely gratifying, it also is generally fraught with daily worries and obstacles. Attending to unique health care and educational requirements is time consuming. Stigma and social challenges are frequent. It can be overwhelming. Thinking beyond the needs of the moment to advance special needs financial planning is often too much to even consider for many parents.

Yet, creating a financial plan that addresses your child’s needs today and in the future can go a long way in easing overall anxiety.

Creating a will and naming a guardian for minor children are important tasks for every parent. For parents of children with special needs, these tasks have even deeper financial and emotional factors to address. How might an inheritance affect your child’s government benefits? And, how do you prepare a potential guardian financially, intellectually and emotionally for the intense needs of your extraordinary child?

Perspective Financial provides special needs planning as part of our Core Client Services. Working with one of our advisors will help you address short- and long-term needs, as well as ascribe one more expert and ally to your child’s support team.

One of the most important steps to take is creating a special needs trust. This is where you can put money that you save, that others give your child as gifts, or that you receive from an insurance settlement without worrying it will interfere with your child’s eligibility for federal benefits like Medicaid and Supplemental Security Income (SSI).

Another critical planning aspect is building your cash savings. A harsh lesson parents of special needs kids quickly learn is that necessary treatments, therapies and accommodations aren’t always covered by insurance or readily provided by school systems. Budgeting for savings to cover such expenses or to hire an advocate to help you navigate the health care and educational systems can save you time, money and stress in the long run.

Special needs financial planning helps provide peace of mind, and that can give you the extra boost you need to better hurdle day-to-day challenges.

By |2020-12-13T12:49:55-07:00December 28th, 2020|Financial Planning|

Market Volatility Lessons Learned

Our firm is dedicated to guiding individuals, families and business owners through an uncertain financial landscape. In this short video, Patrick Eng shares some of the lessons we’ve learned through years in helping our clients get through volatile markets – market volatility lessons learned with a broader perspective.

Key take-aways:

  • Market corrections are a normal part of the economic cycle.
  • Understanding your emotional response to volatility, can help you avoid common investor pitfalls.
  • Perspective Financial Services follows a simple process that creates peace of mind and helps take the emotion out of investing.
  • Long-term, consistent investing increases your chances for a positive return.

Full video transcript: Market Volatility Lessons Learned with a Broader Perspective

I’m Patrick Eng, a financial planner with Perspective Financial Services. Our firm is dedicated to guiding individuals, families and business owners through an uncertain financial landscape. In this short video, I’m going to share some of the lessons we’ve learned through years in helping our clients get through volatile markets.

Ups and downs. Bulls and Bears. Stock market volatility. In our business, we call it market corrections. Uneasy investors may call it nauseating.

Call it what you will…  market corrections are a normal part of the economic cycle. How you respond to those corrections is what will impact your success over the long term. By understanding your emotional response to volatility, you can avoid common investor pitfalls.

For some context, let’s start with some historical perspective.

By utilizing a wide range of industry data, DALBAR examines the difference in growth between the average investor and the S&P 500 index. Over the last 20 plus years, the analysis has shown a consistent gap between the two.

Time and again, investor returns trail the overall market benchmarks. Carl Richards attributes this phenomenon to investor behavior, and called it The Behavior Gap, which is also the title of his best-selling book.

Why does this gap exist? Well . . .  it’s pretty easy to get caught up in the emotion of market volatility. When we’re under stress, we tend to make decisions based on emotion rather than reason. It’s not instinctive to think, “Maybe I’ll just wait . . . and see what happens.”

Our brains are hardwired to engage in a Fight or Flight response. This can lead us into any number of investing pitfalls called Behavior Biases. As you can see from this chart created by Cerulli & Associates, the list is a long one.

At Perspective, we develop long-term relationships with our clients, based on two-way communication. Getting to know them on a personal level enables us to know which biases they may lean toward, and then to develop strategies to help them to avoid those pitfalls.

As an example, I’ll briefly explore the top two biases – the recency bias and loss aversion.

An investor with a recency bias may incorrectly conclude that the most recent market move is indicative of what will happen in the future, even though historical data and long-term averages show otherwise.

The study of human psychology reveals our concern of failure weighs far heavier on our minds than the hope of success. Thus, the loss aversion bias is a tendency to make decisions with the goal of avoiding loss, rather than the goal of making a gain.

Now, consider two very powerful human emotions  . . .  greed and fear . . .  and how they impact investment decisions. When stocks are high, people tend to put their money in, hoping for a big gain. When markets drop, both recency and loss aversion biases can lead investors to sell, fearing more loss. They repeatedly buy high, and sell low…   a vicious cycle that creates the Behavior Gap.

How do we close that gap for our clients? By removing emotion from the investment process.

Removing emotion may sound impossible. We are talking about your money and your future, after all. Yet, at Perspective, we follow a simple process that creates peace of mind and helps take the worry out of investing.

We begin by working with you to create a financial plan and investment strategy that takes into account your goals and your personality … a plan with a broad perspective, to help ensure you have what you need today… and in the future. Then we put that plan into action . . . reviewing your investment portfolio often, rebalancing when needed, and communicating with you regularly to keep all the pieces of the plan on track. Finally, when the markets get bumpy, and they always do, our team is quick to respond and adapt, so you don’t have to worry.

Keeping a long-term perspective is key. That broad view makes it much more tolerable to be an investor during occasional volatility.

Here’s some market data that explains why. This chart contains 90 years of data, examining rolling ten-year periods of both consistent and inconsistent investing. The yellow portions indicate money lost, and the orange portions indicate money gained. Look at the first circle . . .  It shows that jumping in and out of the market frequently, say every month, creates a 37 percent probability of losing money. However, if you’re patient and stay invested for years, the probability of losing money drops dramatically. At ten years, the probability of making money is nearly 95 percent.

So, long-term, consistent investing increases your chances for a positive return.

This is just one element of Perspective’s broad range of expertise and services. To learn more, watch our other videos at MoneyAZ.com, or give us a call.

(Market Volatility Lessons Learned with a Broader Perspective)

By |2020-10-01T20:57:43-07:00October 1st, 2020|Investing, Video Blog|