“Happiness is not all about money.” This is a famous Russian saying and it often characterizes the attitude of the Slavic culture towards money.
On one hand, we are known for our generosity and open souls. However, on the other hand, we often neglect to prepare for tomorrow. Instead, most people prefer to live in the moment. This is a predominant attitude of many immigrants from the former Soviet Union.
When business is going well, we tend to buy luxury cars, expensive-brand clothes, and vacation at expensive resorts. Not many people choose to think about the future and plan for a “rainy day”. These two things represent the difference between American and Slavic cultures. Americans believe that success isn’t measured by the amount of money that you have in your account now, but how well you manage your finances and how much money you have for your future needs (i.e. emergencies, opportunities, and retirement).
Unfortunately, even nowadays, Slavic people believe several myths related to investments and insurance. To dispel them, I decided to turn to one of the top professionals in this field. My expert is Vlad Donets, Risk Management Advisor with Solera Asset Managers, a company which helps its customers increase their financial assets by managing almost two billion dollars.
Investing Requires a Lot of Money
This is a very common myth which I gladly refute. We have clients who invest millions, but we also have those who can afford to invest only $200 a month. A modest amount of cash set aside at regular intervals can result in a big nest egg upon retirement. At our firm, we recommend saving at least 15% of your net income which will eventually turn into significant savings. Consider this example, a person who is making $50,000 a year and setting aside 15% of his income for 35 years will end up with $1,400,000.* Everyone must start somewhere, and if one wants to retire wealthy, one needs to start by saving in small amounts first. After that, experts recommend paying bills next and then purchasing luxuries last. Most of my successful clients prefer to maintain the same freedom of choice after they officially retire. Some of them are working until the age of 70 or 80. However, it’s not because they must but rather it’s because they want to. Retiring early is not their main goal. A much better goal is to enjoy life knowing that you have protected your family and yourself from the “rainy days” at any given point of life.
I Need Less Income When I Retire
This myth is very popular until people actually retire. I have never had a person in my office who said they really needed less money after age 65. The sad truth is that 2/3 of Americans reach retirement without any savings. Every client wants two things: 1) to have enough money for the next 20-30 years and 2) to minimize their tax payments. When the Social Security System was created in 1935, for each retiree there were 40 working people. Now, according to the latest statistics, there are only three working people for every retiree. By 2030, there will be only two workers for every retiree. Social Security in its current structure is financially unsustainable and is doomed for a major failure. The government will have to make changes to the Social Security system, whether by increasing the eligible age to receive benefits or by increasing taxes. If the choice is made to increase taxes, say you earn $50,000 per year and pay 18% taxes, in a few years this figure may increase to 50%. This example illustrates our need to plan for retirement as soon as possible.
I Don’t Need Professional Advice
This myth can be very deceptive. Although a person may understand simple math, that knowledge may not help them to understand all the details associated with investing. There are so many risk factors to consider: inflation, market risk, taxes, new laws, and other fees. If the investor wants to avoid these risks, then they must constantly update their strategies that are being used. Did you know that today’s taxes are the lowest in recent history? If my financial plan does not factor in future tax increases, then how can I expect to receive one amount or another? That is why we, at Solera Asset Managers, consider all the factors we possibly can to satisfy our client’s expectations now as well as in the future. Managing money wisely is a full-time job which takes experts with significant experience and skill!
Life Insurance Is Too Expensive
Every time a client tells me that life insurance is too expensive, I reply that it’s too expensive not to have it. When you scroll through your Facebook feed, it is common to see fundraising posts. I wish I could have helped those people before their tragedy occurred.
For a 30-35 years old person who earns $50,000 a year, life insurance will cost around $40 to $50 a month with $1,200,000 of coverage. Is that too expensive?
The problem is that many buyers look for life insurance online and get confused with so many options. Often, it is hard to find the perfect plan that will satisfy all of your needs. That is why I strongly recommend getting help from a professional before deciding which type of life insurance is best for you and your family. Finally, purchasing life insurance makes the most sense when you’re young since the premiums are less expensive and you have fewer assets to pass on to heirs. For example, I bought a life insurance policy for my son who is one month old. Also, if you choose the best plan with the help of a professional advisor, then it can be a great part of your investment strategy.
Real Estate Is The Best Investment
A famous quote from John Rockefeller is, “The major fortunes in America have been made in land.” A wise saying. But if you invest all your money in one source, then you need to accept all the risks that come with it; just remember the crisis that happened in 2008-2009. Many people lost their properties and ended up in bankruptcy. Another myth is that you should invest only in businesses. Do you know that statistically, eight out of ten businesses fail in the first five years? If you want to become a successful investor, then remember the main rule: you need to stick with diversification. Diversification is the fancy name for: don’t put all your eggs in one basket. We recommend having at least six or seven areas where you invest money. Diversification will help you avoid the worst of the financial market’s ups and downs. With enough variety in your portfolio, you will usually own some investments that are in favor even while others may be performing poorly.
Solera’s Approach – 6 components which make up our approach:
- Our Transparency
- Our Efforts to Keep You Informed
- Our Investment Philosophy
- Our Understanding of Expenses & Taxes
- Our Understanding of Financial Discipline
- Our View on Risk Management
Our approach is a significant factor in our success, which translates into success for our clients.
At Solera, we recognize that each client is unique. We provide clients with an alternative to traditional portfolio management. As a full-service financial advisory firm, we provide a fresh perspective to asset management. This approach helps clients protect against catastrophic loss and potentially still grow their portfolio by utilizing a diversified strategy of risk allocation. Solera employs a multitude of strategies, products, and services to help achieve each client’s objective.
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Solera Asset Managers, a state-registered investment advisor.
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Solera Asset Managers, LLC does not attempt to furnish personalized investment advice or services through this editorial.
This editorial should not be construed by any consumer and/or prospective client as Solera Asset Managers’ solicitation to effect, or attempt to effect, transactions in securities or the rendering of personalized investment for compensation, over the editorial.
*Investing $7,500 a year compounding at 8% for 35 years will equal $1,400,000. Past Performance is no guarantee of future performance. Investment returns will fluctuate based on investment risk. Results will vary and may be worth more or less than their original costs, including possible loss of principal invested. No portion of the editorial content should be interpreted as legal or accounting advice of Solera Asset Managers, LLC.