Hesperian Wealth

10/24/2024

Placing a credit freeze (also known as a security freeze) is an easy way to protect against fraudulent new account openings. It’s one of the standard pieces of advice I give every client I work with.

While setting a credit freeze is usually a task my clients and I get to once higher-priority critical issues are addressed, it’s a fairly simple and free thing to do. Making this recommendation is just one of the many financial fraud prevention and financial emergency planning tips I share with my financial planning clients.

For more details:
https://hesperianwealth.com/protecting-against-fraud-with-a-credit-freeze/

09/03/2024

This week, I want to share one of the more popular articles on my website. I recently reviewed Vanguard’s new Cash Plus account as an interesting alternative to a high-yield savings account (note, I have no affiliation with Vanguard or any other institution). This is just one of the many ideas I’ve presented to my clients to help them level-up their wealth creation.

Now while the Vanguard Cash Plus account doesn’t have the absolute highest yield available, though it’s over 4% still, that’s not the whole story. Unlike traditional savings accounts, it has bill pay functionality! This allows you to move more of your money out of checking accounts where your money is likely earning next to nothing and get it working harder for you—without impacting the liquidity you need to pay bills. That can mean hundreds if not thousands of dollars of more interest income each year, risk-free and FDIC-insured.

Vanguard Cash Plus is not for everybody, but I discuss it further here, including how I fit it into my own household’s cash management and liquidity plans:

I review the Vanguard Cash Plus account as a new cash management option to get more of your cash reserves working for you.

06/25/2024

“Account sprawl” is an especially common issue, especially among married couples who have never taken stock of their combined financial picture. There are few practical reasons to hold multiple accounts of the same type. Consider simplifying your financial life by merging accounts and rolling over old retirement plans. Hesperian Wealth’s latest blog discusses the account management framework we use to help our clients simplify:

Multiple financial accounts of the same type make account management unnecessarily complex. We suggest clients simplify their lives.

06/06/2024

The nonprofit United Policyholders is holding a webinar for California residents discussing (1) what to do if you’re dropped by your homeowner’s insurance and (2) the last-resort FAIR plan. Get your questions answered here:

01/22/2024

Hesperian Wealth recently completed its research on carbon markets. We are always looking for innovative ways to help impact-oriented clients invest their savings more sustainably while at the same time support the environmental issues they care about. And now we believe impact investors can move beyond stock funds and green bond strategies and directly support the cap-and-trade programs designed to decarbonize the global economy. And investors in such Carbon Solutions can potentially earn an attractive return in the process. Our latest research explains how:

www.hesperianwealth.com/carbon-solutions-investing-an-introduction

From Hesperian Wealth’s founding, we have been building portfolios for impact-oriented clients under a dual mandate: (1) deliver the returns they need to meet their financial goals; and (2) make a positive impact on the world around them. Reach out if you're interested in a sustainable portfolio that has the potential to truly drive change.

Impact investors can now invest in Carbon Solutions to support the green transition and potentially earn an attractive return in the process.

09/13/2023

Current homeowners, prospective sellers, and recent homebuyers have worried that would fall due to rising rates. They did, but in many parts of the country, home prices have completely recovered from what turned out to be a blip, not a crash. Mortgage rates are important to home prices. But as the late, great comedian Mitch Hedberg once said of making homemade Sprite with just lemons and limes: “There’s more to it than that”.

Sometimes the relationship between and home prices can move counter to conventional wisdom. From 1950 all the way through 1981, home prices appreciated very steadily despite rising interest rates.* (See chart.)

*The reason why may be because while home prices have been NEGATIVELY correlated with interest rates they have also been POSITIVELY correlated with inflation. So when inflation is behind why interest rates are rising, home prices can still appreciate.

So there’s no guarantee that home prices will fall (or become more affordable, depending on your perspective) just because of higher mortgage rates.

Other things are going on: Yes, demand has fallen off a cliff because prospective homebuyers have been priced out. But supply has also fallen because many current homeowners feel “stuck” with a low mortgage rate they’ll lose if they sell and move, which they otherwise might do.

Paradoxically, homes might not become cheaper until interest rates fall (not rise further). It depends on why interest rates are falling. Are they falling just because has been put under control (a benign outcome) or is it also because a recession is looming?

This short commentary is based on a longer article in Hesperian Wealth’s most recent quarterly newsletter to clients.

09/08/2023

What are the big differences between parent loans (particularly Parent Plus loans) and ? As Hesperian wealth manager Eric Figueroa describes in a recent quote on MoneyGeek, higher origination fees, much higher interest rates, no transferability, limited alternative repayment plans, and no paths to forgiveness:

https://www.moneygeek.com/student-loans/best-student-loans-for-parents/ =eric-figueroa-cfp

Might private parent loans be a better option? Maybe. Interest rates on Parent Plus loans are so high because everyone gets the same rate after meeting a low bar of creditworthiness. You might get a lower rate with a private loan if your financials and credit are strong, but …

"Usually, if you’re even considering taking out parent loans, it means the investment in college you and your student are planning to make is very high and may not make economic sense."

If we were helping you , we’d ideally try to help you avoid debt entirely. But our next goal would be to avoid borrowing more than the Direct student loan limits (that means no parent loans). Or at least keep the total debt load at or below your student’s expected salary in their first year out of college for their major. The return on investment on a larger college debt load is rarely attractive.

Parent student loans allow parents to help their child fund higher education. Finding the best rates and lenders can make college a financial reality.

09/07/2023

Permanent is being pushed on consumers for whom it is likely inappropriate all across social media. These insurance salespeople or unlicensed/unregistered “finfluencers” often outright claim and similar tax-advantaged retirement accounts are some kind of scam. A Q&A with Hesperian Wealth founder Eric Figueroa recently published on the MoneyGeek website sets the record straight.

Choosing life insurance vs. 401(k) for retirement can be difficult. Learn the purposes of each and determine how you can maximize the benefits they offer.

08/29/2023

Parents of high school underclassmen, while elder siblings and your friends’ income Seniors work through season, don’t be idle. There are opportunities to enhance future eligibility you can exploit—right now.

The income that will be assessed on will be from the prior-prior year (the year your child enters Junior year). Starting with that year, you want to reduce assessed income if you can. Waiting until Senior year will be too late!

A financial planner who knows how to navigate the college funding maze is your key resource.

In this article, we provide examples of some of the recommendations we might make to you and your student if we were working together on late-stage college planning: www.hesperianwealth.com/enhancing-financial-aid-eligibility-starts-earlier-than-you-think

There are things parents of high school underclassmen can do to enhance financial aid eligibility. Waiting until Senior year may be too late!

08/28/2023

season launched on August 1; next comes maximizing eligibility. Are you a parent going through this process with your incoming Senior? It’s not too late for asset-related optimization and then savvy college shopping.

Find more details on how a financial planner can help here: www.hesperianwealth.com/maximize-financial-aid-this-application-season






Our Financial Aid Strategy & School Selection Framework:

We understand the college planning maze. Let us help you save early, shop smart, and maximize financial aid for your child.

07/27/2023

For the first time in a long time, you can get a decent return on a savings account or Certificate of Deposit (or CD). But beware of banking products. We’ve seen banks not raise yields for their current customers and roll maturing CDs into products with lower-than-market yields.

Instead, we use a mix of investment alternatives to build our clients segregated, diversified Cash Alternatives portfolios to replace part of their cash reserves in the bank. We can do the same for you. And since we don’t charge on the first $50,000 in portfolio assets no matter what, most clients can outsource cash management to us for free.

In our latest article, we discuss some of the options available to investors, why they might be superior to savings accounts and CDs, and how we can apply our deep knowledge in this area to get your cash working harder for you—but in a tax-smart way.

You can get a decent return on a savings account or CD. But professional cash management can get your money working even harder for you.

07/07/2023

Last week, the Supreme Court struck down the Biden Administration’s plan to forgive up to $20,000 in federal student loan debt for every borrower. Student loan payments resume October 1 no matter what, so if you hold federal student loan debt, you have until then to fit them back into your budget. There’s never been a better time than this summer to make a plan for student loan repayment. And you might as well address the rest of your financial situation at the same time!

The new SAVE plan is much more generous than other alternate repayment options. And it will expand access to the universal path to loan forgiveness: applying to make income-based payments and receiving forgiveness after the required payment term (which varies by loan type). For those with income under the SAVE plan’s exemption, it can effectively mean total loan forgiveness.

In any event, as your wealth manager, we would evaluate all your options (repayment plan, open forgiveness paths, refinancing, lump-sum payoff, etc.) and help you eliminate your student loans one way or another. But you need to take the first step and reach out.

Read more here:

Student loan payments resume October 1. There’s never been a better time to get your financial house in order.