Joel’s Published Column



The ABCs of Investing

My clients and friends often tell me that the investing industry is confusing to them. There are so many abbreviations and acronyms in the industry it all ends up getting clustered together like alphabet soup. Financial decisions are difficult enough without terminology confusion, so I have compiled a short list of definitions for you that will hopefully break concepts down in an understandable manner.

                     Full Name          
IRA                                     Individual Retirement Account
A retirement account set up in the name of an individual. Contributions to an IRA are typically deducted from the individual’s income, thereby avoiding the income tax on the funds deposited into the account that year. The idea is to avoid paying taxes on the money while you invest it and hopefully pay lower taxes when you make withdrawals after age 59 and ½.

                     Full Name
MRD                                   Minimum Required Distribution
This is the government-required amount that someone has to start taking from their combined retirement accounts to ensure that they are paying taxes on all of the gains that they have made. This is mandatory for investors after they reach the age 70 and ½.

                     Full Name
Roth IRA                            Roth – Individual Retirement Account
This is a retirement account that does not allow an individual to deduct their contributions from their income, but later, when you withdraw (qualified) amounts from this plan, they are completely tax free.

                     Full Name
401K                                   401K
A qualified retirement plan set up at a for-profit organization or business on behalf of their employees. Oftentimes, an employer will match a certain amount of the employees contributions in order to incent their employees to help save for their future retirement.

                     Full Name
403B                                  403B
A qualified retirement plan set up at a non-profit organization on behalf of their employees. These retirement accounts are often offered by employees of hospitals, municipalities, and universities.

Now the last and most important Financial Acronym that I want to explain is one that may hit closer to home. That is an IOU. This is just a fancy term for “I Owe You” money. Many a family member has utilized the “IOU,” and in the industry we jokingly call that “high risk debt.” I hope that your alphabet soup is full to the brim of IRAs and 401Ks and not many IOUs!

It is not possible to invest directly into an index. Past performance is no guarantee of future investment performance.

This article is for informational purposes only and should not be construed as investment advice.

Freedom to Make Change

As Americans, we live in the most forward-thinking, rewarding country in the world. Our celebrations of Independence Day reflect on the sacrifices made to ensure our way of life.

When talking financial freedom, the Golden Rule of Finances states: He who holds the gold makes the rules. Today, a better translation may be, He who holds the debt makes the rules. The average American taxpayer is taught that a home-mortgage is “good debt,” and is encouraged to use a mortgage interest deduction to decrease their taxes.

While spending time with some Canadian friends who were not yet 40, I learned they only had five payments left before owning their $200,000 home. In Canada, there is no tax break to influence homeowners to keep their mortgage debt; perhaps that is why Canadians are motivated to pay off their mortgages early.

If you take out a $150,000 mortgage at 6% interest for 30 years, you’ll have paid roughly $173,000 in interest alone – $323,000 for your $150,000 house. The government loses revenue because of the mortgage tax credit. The homeowner pays over double for their house! The only group to benefit is the bank that holds the debt. I wonder if banking lobbyists have anything to do with this longstanding tax deduction.

Let’s look at the same mortgage with the same interest rate but decrease the term to 15 years. Your payment goes up from roughly $900 to $1,250 a month; however, you pay only $77,000 in interest. When the house is paid for in 15 years, you saved nearly $100,000. Let’s say you now take that $1,250 payment and invest it for the next 15 years. Growth in a moderate portfolio with $1,250 per month at 7% for 15 years could amass to $396,202!

As we ponder freedom this time of year – free yourself from “good debt.” If you cannot afford the payment of a 15-year mortgage, this may not be in your best interest to buy. You could be in a better place financially if you wait.

Rate of return is for illustrative purposes only and is not indicative of any particular investment; your results will vary. This is for informational purposes only and should not be construed as tax, legal or financial advice. Consult your tax, legal or financial advisor regarding your specific situation.

Protect Your Family

Father’s Day is upon us, and as a father, I am grateful for my two beautiful and talented daughters. My wife and I focus on instructing and instilling core values within our girls in order to equip them to be successful and contributing members of society. However, as important as nurturing is, I feel a father’s natural instinct is to protect his family.

Let me ask you: if you are not able, who will care for your family and how? I know it’s probably not comfortable to talk about death around Father’s Day, but as a financial planner, the one guarantee I can offer is that each of our lives will come to an end.

Planning for his family’s security remains the ultimate way a father can exercise his protective instinct and demonstrate his love. Let me encourage you as a father of children, regardless of their age, to get your details in order. Dads, with input from our spouses, we need to answer the tough questions: who is going to watch over the children if something happens to both of us? Who is going to pay our bills if we are disabled? Who can we trust to watch over life insurance proceeds and pay for future education or wedding costs if we aren’t here?

These questions can be addressed in four simple estate planning documents:
• A Will
• Durable Power of Attorney for health care
• Durable Power of Attorney for finances
• A Trust for personal control over your assets

If you need guidance, consult an estate planning attorney or a qualified professional. Most of these documents can also be produced at a discounted rate through reputable Internet outlets.
As fathers, protecting our families is as natural as breathing; but planning for our demise isn’t. From one father to another, be sure to take the time to make the tough decisions.♦

Reading the Landscape

A caddie knows the course; he would say that the green will break toward the water.
You have no caddie, and your gut tells you this putt will not break toward the water. The slope and the grain confirm your instincts and your golfing buddies agree. Taking advantage of your sixth sense, your putter connects, the ball begins to roll, the speed is correct and you cannot wait to see it drop into the hole!
But the ball is no longer headed to the hole. Your face flushes, your knuckles turn white as your grip tightens; disbelief is swept away by anger, followed by a grunt of frustration. Later, haunted by that putt, it dawns on you – you needed a caddie! A caddie would have scoffed at illusions and encouraged playing the ball left-to-right. A caddie shares opinion about the challenges and obstacles ahead.
A caddie does not have secret skills. However, a worthy caddie knows the game of golf. His experience in game situations has taught him best practices for maneuvering traps and hazards. He remains a faithful assistant who partners with you, offering pertinent advice and moral support.
The value a caddie can add to your game is similar to the impact an advisor can have upon your financial planning. Both a good caddie and a respected advisor want success for your personal goals. Short-term and real-time changes happen, and both stay aware of outside influences that can affect the end result.
A caddie or an advisor is prepared to direct you through the twists and turns of the course. As a caddie helps you avoid the pitfalls caused by a poor swing or unplayable balls, an advisor can help guide you away from knee-jerk selling or emotional decisions. An admirable caddie or seasoned advisor guides you through decisions based on years of experience and an understanding of your goals. In the games we play, on the course or in life, collaborating with a partner might be what you need to shoot below par, so to speak. ♦

Spring Cleaning – Doesn’t only apply to housework

As a CERTIFIED FINANCIAL PLANNER™ professional, working through spring cleaning with our clients takes on a different spin. The tax due date looms, 1099 forms need to be gathered and documents piled up from the year past need to be sorted and organized. A common question from clients and others continues to arise: how long do I need to keep my financial documents? Although not an expert in document storage, here are a few general “rules of thumb.”


Documentation Duration
Vehicle Titles Until sold or discarded
Loan Documentation Until paid in full
Mortgage Statements Until property sold
Credit Card Records Until paid in full unless needed for taxes

Social Security Statements One year
Monthly Investment Statements One year
Reconciled Bank Statements One

State and Federal Income Tax Returns Seven years along with supporting documentation including W-2 and 1099 forms, charitable contribution and tax deduction receipts, real estate records
Annual Investment Statements Seven years

Birth Certificates Forever
Social Security Cards Forever
Passports Forever
Marriage/Divorce Papers Forever
Wills and/or Trust Documents Forever
Insurance Policies
(annually update household inventory)
Pension and Retirement Plan Records Forever
Medical Records Forever
Education Records Forever


I would also recommend scanning your documents into readable format and then storing these documents on your computer or separate hard drive. If that is not an option, make copies of your most important documents, place them in sealable bags and invest in a safety deposit box to store these forms.

Putting things in order sometimes appears to make more of a mess, so as you systematize your files, be sure to properly and safely discard sensitive paperwork. As you work through your “spring cleaning” and find you have questions about financial planning for your future, feel free to give us a call at OLV Investment Group at 810-744-4450.


This is for informational purposes only and should not be construed as tax or legal advice. Consult your tax or legal advisor regarding your specific situation.