Money Talks Blog by Oxford Planning Group

As many of us watch current market volatility as well as US and World news, it may seem daunting to project into the future.  Will you reach your savings goals on time?  What will retirement look like?  First, remember that the markets generally operate in cycles.  Market timing rarely works.  Long term planning and adequate diversification are generally your friends in these challenging markets.  Remember too, that past performance does not guarantee future performance, but it is often all we have to estimate into the future. 

So how do you best plan in a down market?  One of the most important aspects is to continue to commit to ongoing savings and controlling expenses.  Continuing to invest in a down market is a form of Dollar Cost Averaging which has generally been shown to enhance long term returns.  Goals can't be reached if you stop saving for the future, so this ongoing commitment continues to build your investment portfolio and during a down market, allows you to buy investment shares at cheaper prices.

So, don’t panic and stop saving just because the markets are down.  Remember that long term savings commitment should pay off.

If you are a government employee or a company affected by the government shut down, you may be experiencing some current cash flow squeeze.  If that’s the case, do the best you can.  Cut back on expenses where possible, keep up as much of your savings as possible, and if any cut backs are required, get back to normal as quickly as you can after the crisis is over.  After the cash flow crunch has subsided, consider continuing to operate under a reduced expense environment until your savings goals are caught up.  This commitment will really pay off into the future.

We are here to help, problem solve and to discuss ideas to keep you on track. 

Happy Holidays from all of us at Oxford Planning Group. 

We wish you peace and time spent surrounded by loved ones.  

Happy Thanksgiving

Thanksgiving - a time for gratitude, memories and for caring about others. At Oxford Planning, we have much to be thankful for.  We are blessed with a great family, friends, clients, associates and a wonderful community with so many great people. 

We hope you enjoy the spirit of this holiday.  Additionally, we hope that your favorite team wins, that you enjoy watching the Thanksgiving Day parade and that your favorite dog wins the Westminster dog show.

Thank you all for your continued confidence in our firm.  We are here to support your needs and you always come first to us.

Today we stand tall and proud in honor of our Veterans who have served tirelessly and bravely to maintain and protect the freedoms that we are accustomed to. 

At Oxford Planning Group, we are focused on our client’s futures and we thank our Veterans for making these futures possible.  We strive to take advantage of the gifts we have been afforded and work hard every day to help our clients achieve their goals and to make their best financial decisions. 

This recent election day will be remembered by many as highly contested political races.  These political races reflect the passion and diverse beliefs held by our countries’ citizens.  Now as the election has ended, it’s our hope that we will support our leaders as best we can, continue to push forward for what we believe in and stay active in our communities. 

After all, the freedoms we live with reflect the hard work and service of our Veterans.  Outside of the United States, many are not so fortunate, do not have as much freedom and live in countries plagued by corruption. 

So today, on Veterans Day, let’s remember to celebrate our veterans, both Democrats and Republicans, who have served our great country.  We thank you for your service.  

It seems like such a simple question, but whether to pay off your mortgage or to build up an investment account may not be a simple answer.   

First, all mortgages come with a minimum payment.  Either Principal and interest, or in some cases interest only.  Either way, there is a minimum amount that must be paid each month.  The question of whether to invest or to pay off your mortgage only applies to any amount you have available above your minimum payment. 

We are currently in a rising interest rate environment.  Rates currently remain fairly low, but as they rise further, it’s important to decide at what interest rate investing any extra payments no longer makes sense.  Generally, a mortgage rate of 6% or lower may make sense to invest the extra payments instead of paying down your mortgage.  This is based on the 6% rate netting to an even a lower rate based on an individual's tax bracket, deductions for mortgage interest and an assumption that over a long-term period the equity market has exceeded this lower net rate.  There is in fact no one size fits all answer for everyone. 

Risk tolerance is a big consideration.  Let's say you have a mortgage and you are making minimum payments.  Over time, you build up an investment account of $50,000 that would have otherwise been used to pay down you mortgage.  How would you feel in the event of a market correction?  It's critical that you think of these types of results in deciding whether to invest or not.  Truthfully, most people really don’t know how they would feel in the event of a market correction unless they have experienced it. 

For this strategy to be successful, your portfolio will need to have a net return (after taxes on dividends and capital gains) that is higher than your mortgage interest rate after your mortgage tax deduction. 

Calculating the math related to this transaction is only a part of this decision.  Evaluating how you feel about having a higher mortgage and money at risk or having an ever-decreasing mortgage is just as important. 

Oxford Planning Group, LLC can help you walk through this process.  What's right for you?  We are here to help.  We are Focused on Your Tomorrows.