What's the difference between people who accomplish big goals in life and those who muddle along? Based on my nearly 20 years as a financial advisor, the answer is clear: Successful people are those who not only have a vision, but who work with experts who can help them create and execute a plan.

Achieving big life goals usually means creating the means to pay for them. And that is where the guidance of a financial advisor is crucial. A good advisor will work with you to create and follow a financial plan, which you should think of as a roadmap to your goals.

The difference between building wealth and failing to build wealth boils down to understanding your cash flow and making smart decisions about your money. This is right in a good advisor's wheelhouse. An advisor should help you pinpoint unnecessary spending and maximize your savings.

And with that savings, he or she can help you achieve superior investment returns. Vanguard, the mutual fund company, estimates that investors who work with an advisor enjoy additional net gains every year of around 3%.

Whether it's retirement, college funding, a big purchase or another important goal, your advisor will be able to tell you exactly how much money you need to save, and how you need to invest it, so that you can successfully fund the goal.

It's critical though, that you work with a qualified financial advisor. Literally anyone can hang out a shingle and use the title "financial advisor." It's wise to make sure that your advisor is registered with the Securities and Exchange Commission or financial regulators in their state as a fiduciary. Fiduciary simply means that the advisor cannot put his or her own financial interests ahead of yours.

Bear in mind that "advisors" are distinct from "brokers," who are investment salespeople and are registered with FINRA, the regulator for brokers. Brokers earn more by selling you certain products. Advisors are paid a fixed rate, and so they don't face this conflict of interest.

Make sure they don't have complaints against them and that they have the experience in working with others similar to you. A good place to start your research is by going to the SEC site, entering the advisors name and finding their Form ADV (Part 1 only).

Don't hesitate to contact us with questions about your financial goals or about selecting a financial advisor.

Why is it that so many of us, even those with stable careers, end up in poor financial shape?

In a recent study, the Federal Reserve Bank of St. Louis found not only that most Americans had saved little or nothing for retirement, but that only the top 10% of households had savings greater than $310,000. Even $300,000 or $400,000 isn't enough for a comfortable retirement for many people.

What's going on? As a financial advisor, I've reviewed hundreds of people's financial situations over the years. And it's clear that self-inflicted financial damage is taking a major toll. In other words, many of us are making costly mistakes that sabotage our financial futures. I've seen three of these mistakes over and over again:

--Cashing out your 401(k) when switching jobs. It can be tempting to dip in to your employer-sponsored retirement plan when you leave a job. But doing that can set your retirement savings way back. If you're below retirement age, and cash out $10,000 from your 401(k), for example, you could up paying $3,000 in taxes and early-withdrawal penalties. Worse, the lost compound-interest opportunity on that $10,000, over 40 years, could be about $450,000. If you need money between jobs, there are better solutions, such as taking a personal loan or rolling the money into an IRA within 60 days.

--Avoiding tax planning until the end of the year. Investors are happy when they're able to sell a large position and take profits. But that turns to disappointment when they are hit with a big capital gains tax, and when the additional income pushes them into a higher tax bracket. There are ways around these unpleasant surprises, but the key is to do tax planning earlier in the year. One solution involves tax-loss harvesting: selling stocks that have done poorly and don't figure to turn around any time soon, thus reaping tax losses that can be used to offset capital gains elsewhere.

--Not raising your retirement contribution as your earnings increase. This is a common trap that 401(k) participants fall into. They get pay raises over the years, and become accustomed to higher and higher standards of living. Yet they keep their contribution percentages the same, which leaves them unable to continue their accustomed lifestyles in retirement. Often, people don't recognize that they've got a retirement-funding shortfall under a last few years of their career—and that leaves them in a position where they need to sock away 15% or 18% of their earnings every year in order to catch up.
The bottom line is this: Don't think that having a good income and contributing to your retirement plan will necessarily guarantee you financial success in the long run.

To make smart decisions and avoid the kinds of mistakes discussed above, it can help to have a good financial advisor review your situation and guide you as you navigate your finances through the years. Don't hesitate to contact us with questions.

We're deep into the second longest bull market for stocks in history. From 2009 through 2018, the S&P 500 returned about 11%, not including re-invested dividends.

Because returns have been so elevated for so long, investors may expect them to continue at those levels. But taking a longer perspective, it's very likely that a period of more modest returns lies ahead. From 1980 through 2018, the S&P has returned a little more than 8%, not including re-invested dividends. Against this backdrop, the past decade looks like the exception, not the norm.

There's no doubt that the current bull market's hefty returns were fueled by low interest rates and economic stimulus engineered by the Federal Reserve to steer us out of the Great Recession. Ultra-low interest rates and the Fed's aggressive bond buying helped stocks soar, increasing their price to earnings ratios to expensive territory. Those high prices, along with the Fed's interest-rate hikes and stimulus drawdown, helped to trigger the big selloff in December.

The Fed recently signaled that it will hold off on further rate hikes, but that could prove to be a pause rather than a stopping point. Corporate earnings growth has also been slowing this year, even as the 2017 tax cuts continue to provide some fuel. Could the federal government stimulate the economy again in the near future? Of course-- particularly if a recession seems likely, or if lawmakers pass an infrastructure spending package.

While there will always be developments that nudge stocks upward or downward, it's wise to assume that stock returns will be more moderate over the next few years than they were during the past 10. Keep in mind too that the past decade has been one of unusually low market volatility. The kind of big market dips we've seen in the past few months are more of the historical norm, and investors should expect them to continue intermittently.

Investors who want to keep reaping the kind of returns that characterized the past few years will have to take on more risk. But with volatility making a comeback. overly aggressive bets could derail your retirement and other long-term goals.

As we cycle into a new market environment, it's critical to make sure you're prepared. Your financial advisor can help you make sure you're saving enough for your goals, and that your portfolio reflects your time horizon and comfort level with risk and volatility.

A good approach right now is to rebalance into high-quality companies with low debt and a track record of increasing dividends. Those dividends can be reinvested to help compound your gains more quickly, or they provide reliable income if you're retired. Furthermore, investors have historically flocked to high-quality companies in times of market uncertainty, which has provided price support for the stocks.

If you expect market volatility ahead, look at it as an opportunity to buy on the dips, creating a diversified portfolio that will carry you successfully through the changing conditions ahead. Investing isn't about what happened in the past, it's about navigating through a continually changing future.

One of the most important parts of successful investing is making course corrections on a regular basis.

In a nutshell, this means well-thought-out buying and selling designed to a) help keep your portfolio safe and b) ensure you'll be able to fund the goals you're investing for. I approach this in two main ways: Portfolio rebalancing and sector rebalancing.

Portfolio rebalancing means selling an asset type (stocks and bonds, for example) after they've been doing well, and buying them after they've been doing poorly. Against the current backdrop, where stocks are down 5% from a month ago, that might mean selling bonds, which are generally slightly up over the same period, to buy more stocks.

Selling the good performers to buy more of the bad performers is definitely counter-intuitive for many investors. Here's why it makes sense:

Any investor working toward funding retirement or other big goals should have balanced portfolios. These portfolios contain a mix of stocks, bonds and possibly other asset types that serve as counterweights. Depending on a typical investor's goals and risk tolerance, a balanced portfolio might be 60% stocks and 40% bonds. The idea is that if stocks plunge, bonds may fare better, and you'll own enough of them to mitigate the stock losses. And vice-versa. Hedging against big portfolio losses in this way is s proven way to earn higher returns over time.

By rebalancing, you restore the original, optimum ratio of stocks to bonds in your portfolio. When stocks soar, as they did for many years after the 2008/09 market crash, you might end up with a portfolio that's overweighted to stocks. The solution in such cases is to sell stocks and use the proceeds to buy bonds.

There's no need to go overboard with rebalancing; generally once a year is enough, and it's rarely necessary to do it more than twice. I recommend rebalancing when your stocks or bonds are 5% above or below their original level in relation to the other.

While rebalancing asset types has traditionally been enough to keep portfolios strong, it's been a little less effective in recent years. That's because stocks' and bonds' traditional behavior, in which one typically did well while the other struggled, has changed. For much of the past decade, the two asset classes have begun moving more in-step with each other. As a result, traditional rebalancing by itself hasn't been enough.

That brings us to sector rebalancing. This is similar to asset-class rebalancing in that it involves selling strength and buying weakness. In sector rebalancing, we sell sectors that have done well and buy struggling ones that may be poised to improve. An example right now might be technology, where stocks have tumbled dramatically over the past few months. Again, it may be counter-intuitive to buy a struggling sector and sell one that's done well. But the cardinal rule of investing is to sell high and buy low—and sector rebalancing can help us to do that.

Especially if you have not done rebalancing in some time, the beginning of the year is a good opportunity to meet with an advisor and make sure your investments are striking the right balance of risk and potential reward. Your future goals are riding on it. Please reach out to us if
you'd like to schedule a review of your portfolio.

With the year winding to a close, it's important to take specific steps in regard to your finances. Below are five actions that can help save you significant amounts of money and become more confident about reaching your financial goals.

1. Plan to avoid retirement-account withdrawals that will trigger taxes. Often, end-of-year distributions from IRAs and other retirement accounts will cause Social Security taxes to kick in. That's a scenario that's avoidable with a little planning. For example, if your annual combined income from Social Security, pension benefits, IRA distributions, etc. exceeds $32,000, then you'll owe taxes on your Social Security. Based on the level of your annual combined income, up to 85% of your Social Security proceeds in a given year may be subject to tax.

So if it's December and you're close to that tax threshold, you may want to adjust your plans. For instance, if you plan to withdraw money from your IRA for a new car, you might be better off taking out part of the total now and the rest next year.

2. Harvest tax losses. The end of the year can be a good time to pull the trigger and sell stocks that are down and no longer seem promising. Booking these losses gives you the equivalent of credits that you can use now or in the future to offset the tax consequences of capital gains. A very simple example: You just sold shares of stock A and stock B. Stock A was up 20% from when you bought it, which means you owe tax on the gain. However, stock B was down 20%. Having "harvested" the loss from stock B, you can use it to offset stock A's gain and eliminate the tax liability.

3. Revisit your magic number. If you've put together a retirement plan with a good advisor, you should know exactly how much money you'll need to retire on the date of your choice. Now is a good time to huddle with your advisor and make sure that the amount you're contributing to your retirement plan, and the rate at which it's grown, have you on track to retire when you want to. If your savings are growing ahead of schedule, you might be able to reduce your ongoing contribution amount. If you're behind schedule—or if you foresee weaker investment returns going forward, you may want to increase it.

4. Plan for RMDs. You'll need to start taking required minimum distributions (RMDs) from your IRA by April of the year after you turned 70 ½. If you withdraw less than your RMD, expect to be slapped with a 50% penalty tax on the difference. It's important to note that if you've inherited an IRA account, you may need to start paying RMDs right away even if you're under 70 ½. You should visit your accountant or financial advisor soon so that you understand your obligations.

5. Plan your charitable giving. It's the season for giving. But you always want to give to charity in ways that will be most beneficial to you from a tax standpoint. Your advisor can help you make sure that your gifts are tax deductible. He or she can help with timing as well: For instance, if you've taken a lot of tax writeoffs this year, you may want to wait until next year to make that large donation you've been planning.

I strongly advise that you take some time today to set up a meeting with a professional financial advisor. By reviewing your situation and helping you make smart decisions, they can help ensure your financial wellbeing in 2019 and beyond.