Clay Smith, Founder & Chief Financial Strategist, CS Premier Financial

09/19/2024

The SPY price has increased by 8.46% per year over the past 20 years, while the total return, including reinvested dividends, is 10.55% per year. The difference of 2.09% represents the contribution from reinvested dividends, accounting for about 20% of the overall return.

When investments are held in tax-advantaged accounts such as a 401(k), IRA, or Roth IRA, dividends are reinvested and benefit from tax-sheltered growth, allowing you to experience the full 10.55% total return. Conversely, in a non-tax-advantaged account, dividends are typically taxed at capital gains rates, which means you pay tax on approximately 20% of your total return. While this tax impact may not be immediately visible in your account balance, it results in out-of-pocket expenses and can significantly affect your net worth over time as your investment grows.

09/13/2024

Many people come to me with substantial amounts of cash sitting. This often occurs because there’s no clear plan or system in place. For example, clients might let their money accumulate, waiting for the "right time" to invest in the market. Unfortunately, this approach often results in missing out on earlier gains while they wait.

Automating the investment process ensures that funds are invested promptly, allowing clients to benefit from market growth and navigate market volatility, rather than attempting to time the market—a strategy that rarely succeeds.

09/11/2024

HENRYs (High Earners, Not Rich Yet) are one of my specialties in financial planning.

These individuals have the financial capacity to begin their wealth accumulation journey, yet many firms hesitate to take on clients with less than $500,000 to $1 million in investable assets. However, for high earners, strategically accumulating assets in the right places and holding the correct types of investments in the right accounts can have a significant impact over 20, 30, or even 40 years.

09/09/2024

To recover from losses, the required gains are as follows:

- 20% loss requires a 25% gain
- 30% loss requires a 43% gain
- 40% loss requires a 67% gain
- 50% loss requires a 100% gain
- 60% loss requires a 150% gain

This concept is particularly critical in retirement when drawing down or taking distributions, as there is often less time and money available to recover from market downturns.

https://money.usnews.com/investing/articles/how-to-recover-after-loss-in-the-stock-market

Stock market losses are never pleasant, but how you deal with them can make a big difference.

09/06/2024

The total amount that can be contributed to a 401(k) in 2024 is $69,000, not just the $23,000 limit.

While the maximum an employee can contribute to the pre-tax and Roth 401(k) combined is $23,000, an additional $46,000 can be added through employer contributions and after-tax contributions, provided the plan allows for it.

https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-401k-and-profit-sharing-plan-contribution-limits

08/08/2024

If you have questions about anything related to personal finance, talk to an professional!

And please make sure they have a cute dog!

Free Consultations:
- Portfolio Review
- Life Insurance Audit
- Financial Planning Strategies Overview
- College Planning
- Any Questions You May Have

08/06/2024

ANNUITIES

Most people have a negative connotation with that word.

EVERY FINANCIAL PRODUCT EXISTS FOR A REASON. Annuities are not inherently bad; they are just often misunderstood and oversold.

A few use cases where annuities can make sense include:
-Lowering investment risk
-Providing retirement income
-Pushing back RMDs (Required Minimum Distributions)

If you talk to someone who is only recommending annuities, think twice and talk to an professional with a cute dog.

08/05/2024

“What type of life insurance should I get?”
“I heard someone talking about infinite banking with life insurance.”
“I saw a video online about how 401(k)s are bad and that I should be using a life insurance retirement plan.”

The first one is the most reasonable and frequently asked question, but I do get the other ones from time to time. The main reason people ask about these is because, in my opinion, permanent life insurance is over sold.

If someone needs insurance to protect people who are financially dependent on them, term insurance is usually the best route. I am not saying that permanent insurance is bad, I use it with my clients. ALL FINANCIAL PRODUCTS EXIST FOR A REASON, such as whole life, annuities, VULs, etc. However, these products typically have a more niche use case.

Some use cases for permanent insurance:
- Estate Planning
- LTC Planning
- Special Needs Planning
- Divorce Planning
- Tax Planning (Business owners, High Net Worth, not the average person)

If you ever talk to someone who is only recommending life insurance, think twice and talk to an professional with a cute dog.

08/01/2024

The Fed's meeting yesterday resulted in about what we expected. The Fed did not cut rates at this meeting but took another step closer to making the first cut at their next meeting in September.

There will be a lot of data that comes out between now and then since the next meeting is not for a month and a half, but as long as the data continues to support a rate cut, there is a good chance they will do it at the next meeting.

In terms of what that means for YOU, check out this article.

The Federal Reserve will keep rates where they are, for now — but the first cut in four years is on deck.

07/19/2024

People always ask me, “Is hiring a Financial Advisor worth it?” With my very unbiased opinion, I always say, it’s not for everyone. I believe that if someone does their own research, doesn’t maximize their employer-sponsored plan, and is younger, they don’t necessarily need an advisor. Most people will be fine having their emergency fund, contributing as much as they can to their employer plan, investing in index funds, and getting a cheap term life insurance policy if needed.

However, as you get closer to retirement, maximize your contributions through your employer, or if your situation is more complicated with RSUs, ESPPs, or company stock, an advisor can provide more value.

According to an article entitled "Evaluating Financial Planning Strategies And
Quantifying Their Economic Impact" that appeared in "The Kitces Report Volume 3, 2015" here is how much value an Advisor brings in percentages and in what areas:

Planning/Advice: 0-70bps
Asset Allocation: 0-67bps
Cost Management/Investment Selection: 0-82bps
Rebalancing: 0-44bps
Tax-Efficient Withdrawals: 0-70bps
Asset Location: 0-75bps
Behavioral Coaching: 0-150bps
Tax Loss Harvesting: 0-100bps

Overall, the study found a benefit of 1.59% to over 3% annually. As you can see, some of these benefits are more geared towards people who are closer to retirement or those in the more complex situations I described. This is why I give people the response I do.

06/26/2024

Last month, Morgan Stanley raised their year-end price target for the S&P 500 from 4,500 to 5,400, representing a 20% increase. When people think they know what is going to happen in the market, they are often wrong. Neither I nor anyone else knows what is to come or when the next downturn will be. That is why the best path forward is with a plan. Are you young and have time to ride the waves of the market? Can your plan withstand a downturn? If not, how can we stay invested while putting measures in place to protect your assets? As always, if you need any help, you know where to come!

You may also ask, why is there a picture of Yoshi in this post?

1. Because everyone loves her.
2. She knows what is going to happen in the market just as much as Morgan Stanley, myself, and everyone else.

06/11/2024

I am thrilled to share the beginning of the next stage of my career. After a year and a half of hard work and preparation, I am proud to announce the launch of my own financial planning practice, CS Premier Financial!

My commitment to clients and personalized service remains my top priority, and I am committed to ensuring CS Premier Financial exemplifies these values.

Services I offer:

- Financial Planning

-Tax Strategies

-Wealth Management

-Retirement Planning

I want to thank everyone who has helped me learn and grow along the way. Also, all of my clients for putting their financial futures in my hands. The trust people put in me is something I will never take lightly.

Visit www.cspremierfinancial.com and stay tuned for more updates.

Thank you for your continued support!

Whether you’re a first-time investor, reimagining your retirement, or anything in between, you need a team of financial professionals in your corner. It’s our mission to coordinate all aspects of your financial picture to get you guidance and insights.