Why Business Owners Need Financial Planning

Financial planning is something that everyone should partake in, regardless of your status and reach, within society. Your assets need to be properly allocated to ensure that your financial health and wellness is locked in for now and the foreseeable future. This is especially true for those who are conducting financial planning as a business owner. While we can acknowledge that business owners/entrepreneurs have a lot on their plate, there is always time to meet up with a certified financial planner in Connecticut. Let’s take a closer look at some common practices for this specific type of financial planning and why it’s important.

Managing Risk & Working Around Financial Issues

Before we discuss the specifics of financial planning for your business, we must define the concept of financial planning, as it’s a very broad umbrella term. Simply put, a financial plan is an evaluation of someone’s current pay and future financial state, by using certain variables to determine future income, asset value, and plans for withdrawal. Your certified financial planner in Connecticut will act as your pillar of strength, wearing many different hats throughout the process to ensure that your wealth is properly managed. It’s a necessary process, as it takes care of people and their families, or business owners and entities in other scenarios. 

Business owners go into the workforce with an open mind, understanding that they will incur more risk than the individuals who work under them. Whether it’s from a passing or removal of someone who is the epicenter of the business’ success, personal loss and other disruptions could cause irreparable damage to your business, if you didn’t plan ahead. In order to garner protection from these situations, specialized insurance protection to include the business and coverage for workers will pay dividends in the event of unforeseen circumstances. The financial plan for your business is a financial section of your overall business plan. Evaluate your business goals and clearly define the level of investment you’re willing to make, to achieve these goals and desires. 

Benefits Of Financial Planning For Your Business

Now that we’ve laid out how a financial plan can protect the well-being of your organization, let’s examine the benefits of having a plan!

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  Clearly defines company goals: This is a good jumping off point for a financial plan. How will your organization achieve their goals on a quarterly, yearly, or long term basis? From the get-go, you should establish the need for your business and how it accommodates the needs of others. 

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  Proper cash flow management: A structured plan should also have clear expectations for cash flow. This refers to the amount that’s coming in and out of your company. For start ups, it’s common to spend more than you make, but regardless, you need to determine what’s an acceptable level of expense, and how will you stay on track? Part of this involves measuring the cash flow. Your financial planner will use his or her expertise to monitor the movement of your money.

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  Budget allocation: There is a close affiliation between budget and cash flow. Once the amount of funding that you need to spend is established, and this can come from sales income or investments, you’ll need to assess the best ways to spend it. Every company has an overall budget or “burn rate”, for each quarter or calendar year. Break this up into specific team budgets, and that any dedicated amounts reflect the importance.

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  Cost reductions: Apart from determining how much you can afford, a financial plan can also help business owners catch savings ahead of time. As you continue to set out your budget, it’s warranted to refer to previous spending, which makes it easier to identify unwanted or over-inflated costs.

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  Chance to implement Keyman/key person insurance: This is another example of planning ahead for your future. Key person insurance is a life insurance policy that a company purchases on the life of an owner, a top executive, or another person who is imperative for the success of a business. In this case, the company is the beneficiary of the policy and will incur the premium costs.

• Ability to use a  Buy/Sell agreement amongst partners: A buy and sell agreement is a legally binding contract that determines how a partner’s business share could be reassigned, if the partner passes way or leaves the company. The buy and sell agreement dictates that the available shares be sold to the remaining partners or to the partnership.

Custom Financial Plans With A Certified Financial Planner In Connecticut

If you’re looking to position your business in a comfortable position, our team with Armah Financial Services is ready to assist. Contact us today to learn more about the process! 

Preparing For The 2022 Tax Season

2021 is now behind us and while we can take in the freshness of the new year, this doesn’t mean we are devoid of responsibility. Q1 of every new year requires that we all plan for the same thing, tax season! Paying taxes on time and correctly is one of the many responsibilities we must uphold as American citizens. While everyone is welcome to take care of their taxes on their own, this is usually not recommended. 

The more you make and the more assets and beneficiaries that are associated with you, the harder it is to file on your own. You can coordinate with your certified financial advisor in Connecticut and your local accountant, to properly account for everything that is subject to taxation. We’re going to be discussing best practices for tax preparation/planning and how your assets and income come into the fold.

Understanding How Taxes Work

You’ll want to make sure that everything is in order before diving into tax planning for the new year. In addition to working with an accountant, your certified financial advisor in Connecticut can help you put together a financial plan that is both tax efficient and compliant. These professionals can help you keep your ducks in a row, taking the guesswork out of financial planning and easing the process to the point where it begins to feel therapeutic, since you have a team doing all of the heavy lifting. This kind of planning is paramount when it involves your family, personal assets, and other miscellaneous responsibilities. Securing your long-term wealth can’t be achieved without a sufficient plan, and following these steps will do just that.

Before we dive into the best practices for effective tax planning, it’s important to understand the basics of taxes. Filing is not an enjoyable task for most people, but proper planning alleviates much of this stress. Tax season usually runs from January through mid April. Typically speaking, this is a fair window of time to work with, but if need be, you can request extensions to file. To learn more about this, you can read more from the IRS resources. 

How you pay taxes also depends on the kind of employment you’re retaining. You can be 1099 or a full-time W2 employee. 1099 employees are self-employed independent contractors, while W2 employees receive regular wages and benefits. The self-employment tax rate for contractors is about 15.3%, with 12.4% allocated for social security and 2.9% for medicare. Conversely, W2 employees pay 7.65%, and their employers pay 7.65% for your medicare and social security taxes.

Now that we’ve covered the basics of taxes, it’s time to discuss some tips for coming out on top during tax season.

How To Prepare

The following are effective methods for handling your taxes for the upcoming season:

• Creating Folders For Your Forms: Half of the process of filing taxes is ensuring that you have all of the necessary forms. Your tax forms will begin to show up in late January or early February. To keep everything organized, you should consider getting a folder to keep all of these documents in one place. On the other hand, if you get them electronically, then save them as soon as they come in. 

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  Look At Last Year’s Tax Returns: You won’t be starting from scratch every tax year. Looking at tax returns from the previous year is a good indicator for understanding what you need to do this year. This can surely include looking at interest, dividends, and charitable deductions (if applicable).

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  Looking At Withholdings: If your tax bill or refund was larger than normal and you’re looking to balance it out, you’ll want to consider adjusting your withholdings. This means increasing or lowering how many taxes are taken out of your paycheck.

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  Checking Your Receipts: For those who itemize their deductions, putting together your receipts can be the most excruciating part of doing taxes, regardless of your organizational skills. Start organizing your deductions by category such as medical, charity, or taxes. Electronic apps and spreadsheets can be used to track this information. Once these have been established, you can email this info to a tax professional or use a tax filing software.

Sorting Out Taxes With A Certified Financial Advisor In Connecticut

If you’re interested in learning more about the importance of taxes and its relation to financial planning, look no further than our team of professionals at Armah Financial Services. Contact us today to set up an appointment!

3 Ways First Generation Americans Can Build Wealth

3 Ways That First Generation Americans Can Build Wealth For The Future

We’ve emphasized in previous articles on how important it is to secure a financial cushion, especially if it will be a nest egg for your future. When it comes to being a first generation American, on top of building out a roadmap for your financial health, you will shoulder many other responsibilities. You will have many interactions with various cultures and will be granted access to opportunities that your parents and grandparents weren’t fortunate enough to dabble in. Your loved ones up until this point, have more than likely reminded you of the success that comes when pursuing the “American Dream”. 

Children of immigrants have surely recognized the sacrifices their parents have made for them, in order to be aligned for success. While this comes with its own sets of challenges, it’s still possible to reign supreme and make your impact known in this world. We’re going to be looking at 3 key ways to build out wealth for your future and what this can look like. For any additional insight on financial planning, you should coordinate with your certified financial planner in Fairfield, to discuss the specifics of an individualized plan.

Building Wealth While Being A Provider In The Sandwich Generation

As mentioned in other posts, financial wellness is something that is within reach for all of us who pursue it and plan for it accordingly. Whether it’s from having a structured portfolio or comprehensive life insurance policy, etc, there is a lot of room to get creative with the planning process. While planning for your future can leave you riddled with much anxiety and stress, it’s a necessary course of action to take, in order to prepare for the curveballs that life will throw at us. Your certified financial planner in Fairfield will extend a helping hand and humanize the experience of financial planning. In order to be fully invested in the journey of financial wellness, the terms and conditions need to be simplified to ensure that everyone is on the same page. Once this has been hashed out, you and your loved ones can trudge along and focus on what really matters.

When discussing the term “sandwich experience or sandwich generation”, from first glance, it may not be a term that people are familiar with. Simply put, it’s a generation of people that are in their 30s or 40s, who are responsible for caring for their children and aging parents. A plethora of first generation Americans can attest to the fact that they not only support themselves, but extended family within the US or from their country of origin. This can be arduous, as many in the BIPOC community are established in professions that underpay them, compared to their caucasian peers. Because their earnings are lower, this requires that these workers be quick on their feet and stretch their income to support the multiple generations and households. The balance between securing your future and caring for your parents will seem trivial, but rest assured, there is a work around.

3 Key Strategies To Secure Wealth And Assist Your Family

With all of these elements in mind, here are 3 key strategies you can use to build wealth and support your family:

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  Attending To Your Needs: It goes without saying. If your physical, emotional well-being is not intact, it will be hard for you to help others in your life. More importantly, don’t impulsively give away all of your money if it means you’re going to incur debt. You need to continually enhance your wealth through investing, saving, and paying down debt, so that you can function as a formidable asset for your family's sake.

• Determine How Much You Can Give Others: For anyone that is depending on you for financial support, your financial advisor will recommend that you adhere to a “family contribution quotient”. For instance, you can dedicate a percentage of your income to your family. This will calculate how much, for whom, and what causes you are going to support. These clearly defined terms will allow you the freedom to balance your financial goals in tandem with what your family requires. 

• Supporting Your Family In The Future, If You Aren’t Already: Maybe you’re not currently supporting family members, but at some point your assistance might be needed. This can weigh heavily on your conscience and can act as a barrier to your financial health. In order to cast many of these feelings to the wayside, it can be helpful to paint a picture of your family members' predicament. Having a heart to heart conversation is important in order to understand the full scope of the situation. Whether it’s setting up an emergency savings account or some kind of investment fund, as long as they can access this safety net at a moment’s notice, it will alleviate much heartache and attend to everyone involved.

Devising A Plan With A Certified Financial Planner In Fairfield

If you are interested in learning more about attending to your family’s needs, our team at Armah Financial Services is ready to assist. Contact us today to learn more

What To Know: Traditional 401ks Vs Roth 401ks

We’ve continually discussed in previous posts, the importance of having your investments and assets in check, when building out your financial bandwidth. While stocks and cryptocurrencies are a few ways to build up your portfolio, conventional retirement accounts will also pay dividends for your financial health as well. The types of retirement accounts that are available to consumers is enough to make all of us feel stressed out, because there are so many choices. This is where a certified financial planner in Connecticut comes into the fold. 

With their expertise and guidance, putting together a comprehensive plan is not only feasible, but it will put you and your loved ones on the path for success. Two investments that can be yours for the taking are both traditional 401ks and Roth 401ks. While all 401ks are retirement accounts, there is a distinction between the types and we’re going to be discussing this at length.

Traditional 401ks Vs. Roth 401ks: The Overview

401Ks and Roth 401ks are two of the most popular savings plans for retirement. While both types of accounts offer tax advantages, knowing the difference between these two types can help you determine which plan works best for your personal needs and financial goals. We always emphasize the importance of educating our consumers on what their options are and how a certified financial planner in Connecticut can handle most of the heavy lifting. This doesn’t need to be a painful experience and you’ll come to know that learning about these rules and regulations will make you feel more secure with your financial choices.

Before we discuss the differences & similarities between regular 401ks and Roths, it’s important to know how they’re defined and how they function. A traditional 401k is a type of employer-sponsored defined contribution plan that allows employees to defer paying taxes on income that they contribute to their account within the plan. Contributions made by both the employee and employer are typically tax deductible. Employees do not pay income tax on either their contributions or earnings until they withdraw money from their account, which must begin no later than age 70½. Employers offering a traditional 401K typically also match a portion of an employee's contributions up to a certain percentage.

Conversely, Roth 401k is a type of employer-sponsored defined contribution plan with after-tax dollars and allows employees to defer paying taxes on income that they contribute to their account within the plan. In other words, you pay the taxes when you fund your account, but not when you withdraw money from your Roth 401K at retirement. Employers offering a Roth 401k typically do not match an employee's contributions into the account. 

The basic difference between the two is when you pay the taxes. You will pay at your current tax rate, and state taxes can apply depending on where you live. Roth 401ks require no upfront tax deductions, and as previously stated, contributions are made with after-tax dollars. On a Roth, withdrawals of contributions and earnings are tax-free at age 59.5, as long as the account has been held for 5 years. With a traditional 401k, contributions are made with pre-tax dollars and you will get a tax break up front, which will lower your current income tax bill. The money will grow tax deferred until you draw it. The Roth can be a good option for younger investors because they’re starting off in a lower tax bracket, and the up-front tax deduction of a traditional retirement account is less valuable now, compared to the tax-free withdrawal of a Roth down the road. Let’s take a closer look at how you can decide on a plan, and why having both can potentially benefit your financial situation. One of the greatest benefits is that you will always have a choice.

Hedging Your Chances With Both

The good news is that you aren’t expected to make an all or nothing choice. You can have both types, but the conversation needs to be had with your financial advisor to decide how you make your contributions year by year. If your employer’s plan approves it, you can potentially split your contributions between your Roth and Traditional account. Back in 2020, you can contribute as much as $19,500 to a 401k, coupled with an additional $6500 if you’re 50 and older. 

Some added thoughts that will aide in your decision making:

• If you’re looking ahead to estate planning, inheriting money in a Roth could pay dividends for heirs, provided that the account is at least 5 years old, they are not required to pay income taxes on the distributions from the inherited Roth.

• If you’re young and confident that you’ll earn more in the future and as a result, will slide into a higher tax bracket. However, if you end up in a lower income tax bracket by the time you retire, withdrawals from the traditional accounts can kick into the higher tax bracket, which can augment your overall tax bracket-including your taxes with social security. Talk to your financial planner to learn how you can better plan for these situations.

Securing Your Retirement Plans With A Certified Financial Planner In Connecticut

If you are looking for comprehensive guidance on formulating your financial plans, look no further than Armah Financial Services. We are committed to providing you with much-needed “financial therapy” to ensure that your assets and retirement are locked in. Contact us today to learn more!

When Should You Exercise Your Stock Options?

As mentioned in previous articles, financial wellness is something that is in reach for all of us, if we take the time and effort to plan for it under the appropriate circumstances. There are a lot of resources that fall under the umbrella of financial planning or as we like to call it “financial therapy”. Stocks, being one of those resources that can help you in gaining much capital for your portfolio and the well-being of your assets as a whole. In more recent times, equity valuations have begun to steadily increase, which has prompted many to ask the question: “When is a good time to exercise my stock options?” 

It’s not exactly something that is straight forward which is why it’s important to gauge the noise in the market while simultaneously working alongside a certified financial planner in Fairfield, to better understand the nuances of your personal stocks. Let’s deep dive into the factors that should be considered when exercising stock options and why having a financial planner in your corner will help in streamlining the process. 

What Are Stock Options And Why Are They Important?

When exploring topics on this blog series, we always strive to educate our audience on the importance of viewing your personal finances from a more holistic lens. In doing so, it takes the guesswork out of financial planning and makes for an easier time in structuring your portfolios/assets in ways that is suitable for you, and your loved ones-who will presumably benefit from the fortune of your wealth too!

Before we deep dive into the steps of exercising stock options, it’s important to understand the basics of how stocks function and how they serve their users. Typically speaking, there are two main types of stock options, those being exchange-traded options and employee stock options. Employee stock options are a type of equity compensation that gives you permission to purchase a certain amount of company shares at a designated price, upon vesting. 

Vesting is the point at which you will receive ownership of your options and how you can exercise them. Stock options are an extension of the organization and will closely align your interests with those of your employer. The higher the shares, the more that your personal options will be worth, which motivates employees to work even harder to augment the success of the company.

In terms of their function, employee stock options start on the grant date, which is the day you receive a stock option contract from your employer. The contract will explain how many company shares you’re able to purchase. The expiration date will also be set, so you’ll be fully aware of the time frame to exercise your options. It’s important to note that you’re not obligated to exercise your stocks. You have the right to hold or offload your shares at your convenience/

The two primary employee stock options are as follows:

• ISOs (Incentive Stock Options): Also referred to as statutory or qualified stock options, ISOs will receive preferential tax treatment. When exercised shares are kept for a certain period of time, they check off the “qualifying disposition” box and will be taxed when a company sells their shares, with the shares being sold at capital gain rates. You can read more about the capital gains tax from this list of findings.

• Nonstatutory Options (NSOs): NSOs or nonqualified stock options are taxed when exercised at income tax rates, and once more when the shares are sold. Any gains made will be taxed at capital gain tax rates. Outside providers, advisors, and consultants, are all eligible to receive NSOs.

Being aware of your options and the tax implications that accompany them is significant. Every piece of information that pertains to your stocks is vital in helping you to make an informed decision for the sake of your financial health and wellness. Any additional questions or feedback should be brought to the awareness of your financial advisor who has a full understanding of these elements. 

When Should I Exercise My Stock Options?

Now that we’ve taken the time to grasp the fundamentals of stock options, it will be much more feasible to exercise them with the knowledge you’ve acquired. Simply put, if you stay employed at the company that provided you with stock options, you are capable of exercising your stocks at any point upon vesting until the expiration date (which is upwards of 10 years). In the event that you leave your employer, thoroughly comb through the fine print in your contract to see the allotted time given to exercise your options.

The following factors should be considered when exercising your stock options:

• Do Your Options Have Value? You should only exercise your options if they have significant value. When they do have value, this is known as “in-the-money”, which is when the strike prices of your stocks are lower than the market price of your company shares that are traded on the exchange. In this situation, you could choose to exercise your options and purchase company shares at the lower strike price. There is room to be flexible, especially if your timeline to make decisions is stretched out.

• Is your Company Publicly Or Privately Traded? This makes a huge difference. Shares of private companies are not usually traded on the stock exchange, so you will need to pay out of pocket to fund these purchases. Should a company file for an IPO, this could be a good indicator of exercising your incentive stock options, as they are subject to holding periods where if consumers wait at least two years post-grant, they can qualify for favorable tax treatment.

• How It Fits Into Your Financial Situation: When making sound financial decisions, it all comes down to timing and how it fits into your long-term goals. Your financial planner will help you to evaluate your assets and the proper ways to manage them.

Working With A Certified Financial Planner in Fairfield

The decision to exercise your stock options is a personal one, meaning it will vary from person to person. Once you feel ready to make a decision, do so with diligence and patience. Our team at Armah Financial Services will serve as your financial anchor, acting as a reinforcement for your overall financial bandwidth. Contact us today to learn more about our process! 

Bitcoin and Inflation: Is it A Good Inflation Hedge?

In previous posts, we’ve touched on the efficacy of cryptocurrency and how it can potentially benefit many young and seasoned investors in diversifying their portfolios. As it relates to financial wellness, we all want the same thing- to have a secure financial cushion upon retiring and settling into the later stages of our lives. With inflation looming, following the onslaught of COVID-19, many are asking the question: Is cryptocurrency a good inflation hedge? While crypto has demonstrated much potential, there is still much to learn in terms of how inflation impacts its value, which will ultimately dictate how people invest, if at all. 

Because your long-term wealth is at stake, these are the kinds of decisions that require patience, diligence, and guidance from professionals. When working with a certified financial planner in Westport, CT (we also help clients all over the nation!), you can take an in-depth look at what’s going on in the market and how your portfolio should complement these changes. Let’s analyze the correlation between inflation and cryptocurrency, and why those investing need to pay close attention.

What Is Bitcoin And How Can It Factor Into My Financial Plan?

When discussing niche topics on this blog, we always emphasize the importance of looking at your finances from a holistic lens. “Financial therapy” sounds much better, as opposed to using other jargon that can ordinarily stress you out when putting together a financial portfolio or financial plan. Financial planning can be centered around your preferences as well as what’s essential for securing you and your family’s interpersonal wealth. Prior planning will give you the power to prepare for situations that would ordinarily be difficult, had you not established a financial foundation with a certified financial planner in Westport, CT. These professionals will serve as a guiding light, and will always keep your best interest in mind when creating these plans.

When it comes to Bitcoin, a variety of us are familiar with the term, but others may not fully understand how it’s executed. Bitcoin is a decentralized digital currency that is not tied to an administrator or central bank. Users can send their funds on a secure peer-to-peer network, without the need for supervision. Each bitcoin functions like a computer file, which is then stored in a “digital wallet” app on your computer or smartphone.

All of the transactions are recorded in a public list known as a blockchain. If you’re confident and want to rally behind the idea of Bitcoin, ensure that you open up the floor for discussion with a financial professional, to learn how to properly introduce this into your portfolio. You can discuss its potential as well as the benefits of other kinds of investments (401ks, life insurance policies, disability insurance, etc).

The Potential Of Bitcoin As An Inflation Hedge

On the subject of Bitcoin and inflation, since it’s looked at as a form of “digital gold”, a plethora of users are turning to its potential in the midst of inflation, and for good reason. Despite inflation reaching 6.2% in the US, Bitcoin reached an all-time high of more than $68,000 per token, based on recent findings. In order to understand how it can reign supreme as an inflation hedge, this will depend on a few factors. One factor to pay close attention to is the limited supply of Bitcoin tokens. There will only be 21 million tokens in circulation. 

Based on recent estimates, we will reach this threshold by the year 2140. Since the supply of tokens is limited, in theory, it should retain its value. Typically speaking, gold has been dubbed as the strongest inflation hedge. Its supply remains steady over time and it usually has an inverse relationship with inflation. The past year has shown otherwise, with Bitcoin making the case for its efficacy over gold. With that in mind, there are a few other factors that need to be taken into consideration when making this argument.

Bitcoin isn’t affiliated with a certain currency or economy. It won’t be controlled by smaller companies or stakeholders, either. It’s an international asset that reflects global demand. In these times of inflation, certain investors are keeping an open mind on incurring the risk, in order to offset the decline in existing values of assets. The role of Bitcoin here will work to control many of the economic and political risks within the US stock market. 

Another element to keep in mind is the convenience and flexibility of making these funds interchangeable. Unlike gold, Bitcoin is easily transferable and portable. The supply of gold is usually controlled by the US, China, Germany, and other countries in Europe. Conversely, Bitcoin isn't controlled and it's much easier to protect than gold.

Key Takeaways:

• Bitcoin’s limited supply makes it a better inflation hedge over other forms of crypto

• It’s easily transferable and is not hindered by any constraints

• Bitcoin is not tied to a particular currency or economy

The data on bitcoin as an inflation hedge is limited compared to what is available on gold as an inflation hedge. There is some upside, but arguably, the data on gold has more extensive history than that of Bitcoin.

Structuring A Portfolio With Your Certified Financial Planner In Westport, CT

The decision to invest in Crypto to weather the storm of inflation is a personal choice. Its benefits have shown much promise, and you can continue to have these conversations with your designated financial advisor. Contact our team at Armah Financial Services to learn more!

How a Structured Portfolio Can Combat the Hardships Of Inflation

It’s a question that many novice and seasoned investors are curious about: What will inflation do to my investment portfolio? It’s a fair question to ask, as the state of the economy is a driving force for how people invest and how well their stocks and assets perform. While the early onslaught of COVID-19 caused many economies to weaken, many have since recovered, even in the face of inflation. By doing your own research and working alongside a qualified financial planner in Fairfield CT, the process of structuring your portfolio will become feasible and so too will the intentions of securing your families intergenerational wealth for years to come. We will go over the various strategies when creating a portfolio that can combat the intricacies of inflation, as well as analyzing how those in the BIPOC community can make sound investments for their portfolios as well!

Putting Together Your Portfolio: What To Know

When discussing the importance of financial wellness on this blog, we opt to view it from more of a holistic lens which we like to call “financial therapy”. Financial planning doesn’t need to be a strenuous task. If you approach it from this perspective, it will certainly make the process of planning much more enjoyable, and it will yield much more involvement from the consumers. As we’ve discussed in previous blogs, there are many aspects of our lives that we can deal with as they come and hope for the best. This is not the way to approach your financial wellness as prior planning prevents you and your loved ones from dealing with unnecessary ramifications.

Simply put, inflation is when there is an increase in prices over a given period of time. Things like food, gas, and energy, are a few examples of products/services that are impacted by inflation. According to findings compiled on Reuters, food prices jumped 0.9% after increasing 0.4% from the previous month. This was deemed the biggest rise in food prices since April of 2020, and much of this was driven by an increase in the price of meat. Gasoline prices have also been affected, with US oil prices exceeding $80 dollars a barrel for the first time in 7 years.

As for energy prices, these are on the surge as well and the economy is feeling the effects. With that in mind, economists are chiming in and emphasizing that the rise in energy prices would need to be more powerful than how it is currently, in order to cause a recession. Regarding the state of the entire supply chain, as it stands, crises could remain in place through 2022.

The bottlenecks have slowed down international commerce, and experts are weighing in and advising consumers to get their holiday shopping done earlier. Even though many of these updates can leave you in disarray, it’s still possible to navigate around these hardships and trudge along with smart investment ventures.

Inflation is one of those factors that imposes unique challenges for investors. Your investments could be growing in their value, but inflation can be reducing the value on the back end. The only way to weather the storm is by investing in initiatives that can benefit from inflation. There are no guarantees but speaking best case scenario, certain investments can be inflation-safe. Inflation is expected to reach 5.5% by December, but it will fall back around 2% in 2022, based on findings from Kiplinger. While this is indicative of better long-term outcomes, it’s important to keep your guard up at all times. These types of situations are sufficient in keeping investors on their feet, that way they can strategize and make informed decisions.

Here are 3 key strategies you can implement in your portfolio:

Keeping Cash in Money Market Funds or TIPS

While money market funds don’t pay out all that much, their popularity is continuing to soar, during periods of inflation. The rates will continually fluctuate and will adjust upwards as interest rates increase. Since they increase with the general market, you won’t need to endure any losses in market value which ordinarily affects fixed-rate investments during these times.

Real Estate and Inflation

Real estate ventures respond well to inflation. It’s a hard asset and it often sees an immense price appreciation during periods of high inflation. Investors can invest directly in residential or commercial properties, or investing in the REIT (real estate investment trusts) is another option too.

Fixed-Income Investments Might be Challenged

These are deemed the worst kinds of investments to put money into, during moments of inflation. The biggest problem with these investments is that when interest rates increase, values with underlying security will flatline, as investors scurry to obtain higher-yielding options.

While these 3 methods are viable for taking on inflation, you should set up a time to speak with a qualified financial planner in CT, to discuss additional options, based on your personal situation.

Putting Together A Portfolio With A Financial Planner in Fairfield CT

If you’re looking to learn more about the fundamentals of financial wellness and prosperity, then look no further than Armah Financial Services. We are committed to providing you with the knowledge to make smart financial decisions that will secure you and your families for the foreseeable future! Contact us today to set up a time to speak!

Does Cryptocurrency Fit Into Your Financial Planning?

Cryptocurrency has made waves in the world of investing in recent years. Many avid and novice investors who are trying to build up their investment portfolio are enticed by what Crypto has and will continue to offer. Dogecoin, Bitcoin, Ethereum, while these names sound humorous, these are the few types of cryptocurrency that are garnering much attention from consumers who are trying to build a stream of passive income. 

 If the pandemic has taught us anything, it’s that we should be prepared for all kinds of situations that are thrown our way and being financially stable is important for securing wealth that you can pass onto your children or loved ones. Cryptocurrency can be a viable choice for those looking to get their feet wet with investing, but like with most investment ventures, there is some risk that can be incurred. It’s important to assess the pros and cons so that you can make informed decisions for your financial investments.

 Financial planning in Fairfield CT for cryptocurrency portfolios has the potential to allow those to significantly restructure their wealth and status in society. 

What Is Crypto And Why Should You Invest?

In this blog, we typically discuss the importance of financial therapy and why working alongside a professional who specializes in financial planning will ensure that your personal assets are kept in check. This will secure your family’s interpersonal wealth for years to come and alleviate much of the stress that would come if you were doing the planning all on your own. While you can certainly wing some decisions in your life, your financial wellness is not one of those things you should gamble with. 

Think of crypto as another method to augment your overall financial health and wellness. Typically speaking, cryptocurrencies are digital assets that people will use as investments to make purchases. Users can exchange real currency to buy coins or tokens and in certain places, you can use it like real money at businesses that accept them. It’s a great way to diversify your portfolio and its popularity has soared since the inception of COVID. 

For instance, when the pandemic started, Bitcoin could be purchased for $7,300. Today, the same coin goes for $46,800 which is a 640% increase. The fever pitch reached an all time high when BTC achieved its highest value at $64,863 on April 14 (the same day Coinbase went public). If you invested in April during the mania, you were unknowingly facing a disappointing loss of money when the crypto market inevitably crashed and BTC dropped to $30,000. To say that cryptocurrencies are volatile is an understatement!

Personal Investing in Your Pocket

Cryptocurrencies are riding a wave of which can only be called a renaissance in personal investing. Apps such as Coinbase or Robinhood provide ease of access for anyone to simply download and start investing their money that same day, putting real power (and financial vulnerability) into the hands of the investor.

This is especially true of the rising tide of black Americans who--according to Forbes, are receptive to cryptocurrencies, with Bloomberg also covering the growing interest of black investors in both cryptocurrencies and traditional stocks. It’s clear that these new asset classes are tied to a belief that they can help close the wealth gap that many disenfranchised ethnic groups have felt held back by.

You can read more about this empirical analysis from Columbia Law School’s blog regarding corporations and the state of the capital market. This information is vital for those who are looking to make a sound investment as a means of enhancing their personal wealth. 

Based on the findings and continual upswing for crypto, the decision to invest in digital currency is a personal one, but it could prove resourceful for those who are trying to build out their financial bandwidth. It’s not a perfect system by any stretch of the imagination as certain places have cracked down in usage; example being with China banning Bitcoin and Ethereum but conversely, El Salvador has started to create an infrastructure that would make bitcoin a legal tender. It is interesting to see how some countries are attempting to crack down on cryptocurrencies as much as possible while others are wholeheartedly embracing it.

In summary, the appeal and downsides of crypto lie in:

·         Huge gains yet high volatility

·         New and exciting but does not have the same credibility as traditional investments

·         Part of a perceived financial shift in society but changes could be overly idealistic

Should you invest in crypto? There’s a lot to consider, but a qualified financial planner can assess your situation and help you come to a decision that you feel comfortable with.

Financial Planning in Fairfield CT

Cryptocurrency should not be the only investment that you have at your disposal. Instead of following an influencer who centers their content around pushing crypto, you should coordinate with a professional that focuses on financial planning in Fairfield CT, who can evaluate your personal situation and determine the best approach for properly handling your assets so that you can make the most of them for yourself and your loved ones. Contact us today to set up a time to speak!

One of The Biggest Mistakes Small Businesses Make

Being a small business owner places one in a difficult position. You must keep yourself within profitable margins to continue operating, and yet somehow find ways to be competitive, hire good talent, and more. There are many mistakes small businesses owners make every day which contribute to the large percentage of businesses that fail every year. Today, we’ll talk about what we think one of the biggest mistakes small businesses make: not focusing on employee benefits.

Throughout the years, employees have come to expect that they will receive full benefits for the organizations that they choose to work with. Seasoned and dedicated workers in all industries work tirelessly to accurately represent these businesses. Your employees are the extension of your company and while having a good salary to match the level of work and expertise is enticing, so too is a robust benefits package. Employee benefits such as PTO, access to a 401k, vacation time, are some of the most popular benefits for a reason—they can drastically improve one’s quality of life far more than just salary increases across the board.

As a small business owner, it goes without saying that your bandwidth and access to resources won’t go as far as some of these C-level executives within these larger corporations. With that in mind, there are still effective methods in acquiring comprehensive benefits packages that can serve your employees and their families. When determining what’s in the best interest of your valued employees, it’s important to be educated on the benefit laws and the plans that accompany them. This is where a qualified financial planner can you help you.

Benefits That Are Legally Required

When broaching topics for this blog, we often discuss some of the core services you can take advantage of to generate and preserve wealth for your family. Salary isn’t everything, benefits are also important financial assets. Your financial assets will serve as a nest egg for when you need them the most.

Typically speaking, the five primary benefits that employers are legally required to offer are Medicare & social security, unemployment benefits, workers’ compensation, health insurance, and the use of the Family Medical Leave Act (FMLA). As a small business owner who is considering the implementation of employee benefits in CT, you have to devise strategies that will align your employees for success within their professional careers and personal lives.

What’s interesting is that only half of America’s smallest businesses offer health coverage to their workers. Many of these owners claim that the hikes in pricing have made it unaffordable to get a sufficient plan. This study from The Kaiser Family Foundation cited that 44% of small businesses don’t offer benefits because of the price, while another 17% said their company was too small to offer coverage. Conversely, the same study shows that 50% of businesses with fewer than 50 employees will provide health care benefits.

The summary of the study emphasizes the discrepancies with affordability but also mentions that a variety of employers intentionally won’t offer benefits for employees who were on their spouse’s plan or perhaps they were only working on a part time or temporary basis. Some employers even chose to give their employees more money to buy coverage within the individual market.

While these are some valid concerns to raise, it shouldn’t dissuade small business owners from testing the waters. You’ll come to realize that many of your workers will settle for smaller salaries if it means they’re getting a hefty benefits package that protects their livelihood for the long term.

The choice to offer your employees certain benefits will go a long way in solidifying the company culture, morale, and reputation in the community.

We Help Small Businesses Understand Employee Benefits

So the question stands, should small businesses focus on employee benefits? The answer is a resounding yes! Quality employee benefits are a must as your high-performing employees value the fundamental qualities of security and longevity as it pertains to their financial wellness. Offering benefits indicates that you believe in the mission and success of your company. By speaking with our qualified financial planner in Fairfield CT, you can have a better understanding of what is necessary to utilize for the sake of your employee’s success and level of comfort.

Contact us to set up a call today to discuss this further!

COVID-19 and Life Insurance

COVID-19 has made an impact across virtually every industry and service in some way, shape, or form. Whether that is through hard supply shortages across key manufacturing areas or the psychological impact that a global pandemic has on the way people view today’s topic—life insurance.

The impact of the pandemic was not just felt in economic terms, there was also a psychological impact. The pandemic has made people rethink their perspectives on life insurance, with various insurance companies keeping a close eye on the market and some opting to modify premiums. On the consumer side, people are giving more serious thought to what could happen to them if they were to be infected and the worst case scenario occurs.

Your Life Insurance Policy and the Long Term Effects of COVID

 On this blog, we often discuss the importance of financial planning and setting up your estate so that you and your family or loved ones can financially succeed in this world. We can agree that life is not just a game of aggregating resources, and yet this tends to be the failing point for many individuals who with just a bit of preparation, could have set themselves and family up for financial success.

 Part of our concept of financial therapy must surely include health and wellness. Anyone living in the United States knows the cost of healthcare. The looming threat of medical emergencies that people experience is only outsized by the fear of what treating that threat will cost! Even worse, without a suitable life insurance policy, families are left open to not only be emotionally devastated but also financially as well.

The pandemic and the discourse around vaccination has made this even more apparent. Many people are falling prey to misinformation or downplaying the health implications of the virus. Nobody benefits from this, not the people involved nor do the communities they belong to.

 The AMA (American Medical Association) put out a fairly comprehensive PDF to demystify and help impart awareness of what is known as COVID-19 “long-hauler” syndrome. The summary of this published work is to outline the effects of COVID-19 post infection. This information is important to know for anyone—especially those who are on the fence about vaccination.

Some long term COVID symptoms are as follows:

• Fatigue & dyspnea

• Brain fog

• Insomnia

• Vertigo

• Stroke

• Neuropathy

• Tachycardia/chest pain, palpitations, etc

And a whole host of other effects ranging from mild to life-threatening. Just because COVID infection does not result in mortality, does not mean that the long haul effects cannot make existing complications worse and increase chances of mortality.

The choice to get vaccinated should be made with this information in hand. 

Does Life Insurance Cover COVID-Related Deaths?

What you first need to know is yes, life insurance policies will cover you for COVID-19 and mostly premiums have not changed, though it is unforeseen whether down the line if disclosing vaccination status is required.

 As a consumer, applying and receiving life insurance before contracting COVID is the best-case scenario, though not always possible. The American Council of Life Insurers put out a press release attempting to fight some of the emerging myths about life insurance and seeking coverage.

 Regardless of whether you choose to get vaccinated or not, a quality life insurance policy is a must have, especially nowadays. Far too many people in the past two years have unexpectedly passed from this terrible virus. In our post about costly delays, we zeroed in on the idea that a little planning and foresight can translate into immense generational benefits and lessen the impact of family tragedy.

Financial Planning with Armah Financial Services

Instead of trusting a large company with hundreds of accounts to listen and work with the intimate details of your needs, get in touch with us to speak with someone who can truly listen to your circumstances and holistically assess which policies are best for your financial needs.

Contact us to set up a call today.

Should I Get Group Disability Insurance?

Group disability plans are a necessary component to treat disabled employees who are unable to resume their normal work duties. The global pandemic has shed light on the importance of these topics and it’s made a variety of consumers reassess the importance of long-term security and coverage. Life is full of uncertainties and while you shouldn’t always ponder on the what if’s, planning ahead for group disability coverage is something that can drastically change the course of your life. Armah Financial Services strongly believes in considering taking precautions such as group disability insurance in CT that can safeguard your financial wellbeing in the event of misfortune.

Being proactive is something that can protect you and your family for the foreseeable future. Employer-sponsored plans are a good place to start, but you should also look into adding supplemental coverage with an individual policy.

Group Disability Insurance and the Supplementation of an Individual Policy

When discussing niche topics on this blog, we typically emphasize the importance of financial wellness and why it’s important to have your assets, investments, and other valuables in check, to ensure that you and your loved ones can attain financial success and freedom. We aim to take a more holistic approach which we like to call “financial therapy”, making the process of planning and strategizing enjoyable so that you can get the most out of your experience with your trusted advisor.

A component of financial therapy will surely include the topic of group disability insurance in CT. Many employees have gotten a general education on group disability insurance, but until recently, consumers have undermined its importance in their lives. For those who are temporarily or permanently disabled, without a comprehensive group disability plan, you will miss out on the opportunity to earn back some of the income that you’ve lost. Life can be unpredictable, no one is exempt from suffering a disability, regardless of age. Disability plans typically pay out benefits that are equivalent to 60% of your salary.

The social security administration put out an interesting study that indicates that 1 in 4, 20 year olds will deal with a disability before reaching retirement age. While many people can recover from these setbacks, they may be forced to take on other jobs that don’t pay as much.

It’s important to note that group disability with one employer will not follow you to your next job, an individual plan will, because underwriters set it up this way. Some employers will grant you the option of purchasing additional coverage that is upwards of 70% of your earnings. But if they don’t offer it, it’s very feasible to acquire an individual plan.

To sum it up, Group Disability Plans Vs. Individual Plans are as follows:

-       Group disability plans are tied to your job, therefore they are not transferable when you switch or lose jobs.

-       Conventional group disability plans are a good stomping ground, but supplemental (individual) plans can do wonders in guaranteeing optimal coverage

Should you apply for disability coverage? The short answer is yes. There’s a lot to evaluate here, but a qualified financial planner will make you wary of some viable choices that can enhance your personal situation.

Integrating Other Benefits

Employers will offer benefits that consumers will know very little about. Anything that can boost your financial morale is worth looking into and in order to come to these conclusions, it would be in your best interest to coordinate with a financial advisor who can prepare you for the hardships that come with life-changing disabilities.

Long-term disability plans are more impactful than most would assume. Interesting enough, Social Security Disability Insurance (SSDI) can be integrated with your long-term disability plans. Investopedia has put out a comprehensive article of what this looks like for those who can take advantage of it. 

Group Disability Insurance in CT

Group disability plans are something that consumers can save for a rainy day. It’s scary to think of how quickly your work circumstances can change, but sometimes fear is a driving force for implementing an effective plan. For more information on how to get started, you can contact us today to learn more about our process!

The Importance of Planning Your Estate (No Matter Who You Are)

No matter who you are, plan your estate. Whether you have achieved great financial and material success, are struggling to make ends meet, or are somewhere in between, planning your estate is something you should do! Take it from us, Armah Financial has provided estate planning in Westport, CT to help many individuals secure their family’s future.

What is Estate Planning?

Estate planning is essentially the arrangement of your affairs in the event that you should pass on. An estate can be defined as everything you own; your home, properties, vehicles, bank accounts in your name, insurance policies, and other possessions.

Without estate planning, many families are put in an uncomfortable position of grieving their loss while dealing with the uncertainty about what is available and what goes where. At a time when family members and loved ones need to support one another, this lack of estate planning can lead to arguments and family fractures.

Estate Planning Isn’t Just for the Wealthy

A misconception about estate planning is that it is something that only wealthy people need to concern themselves with. This couldn’t be farther from the truth! Ask yourself, what does wealth mean to you? At what point are you considered “wealthy”?

What wealth have you built? Is it a business? A family home? Heirlooms restored? Traditions and customs? What were you given in this life?

Wealth is a mindset, not a number in an account.

It is important to meaningfully pass your wealth on to where YOU feel it belongs as opposed to letting courts and attorneys impersonally make those decisions.

No matter where you are along the spectrum of material success, you need to delegate what will happen to your total assets when you are gone.

Plan Your Affairs Sooner than Later (or too late)

Many people avoid writing a will or planning their estate because it is viewed as a morbid activity. However, death is a fact of life, why should we not plan our contingencies for this eventuality?

There is a belief that in our old age with a steady hand we will pen a will or get our affairs in order amidst our loving family. However, like most things we put off for the future, they tend to go undone, and there is no assurance we will be physically and mentally able to engage in this important activity. Most people mean to do something about what will happen to their estate should they pass, but far too many people do not get around to it. In 2017, approximately 4 in 10 US adults had a will. Something worth exploring in a separate post is how COVID has impacted estate planning.

Estate Planning Saves Your Family Money

Intestacy is when a person passes on without having a will or plan for their estate. Such a person is considered intestate. Intestacy is a costly condition for your estate to be in. When you lack an official plan for your estate and you pass on, the courts have to arrange for the proper legal authorities to decide what to do with your assets and belongings.

Naturally, the cost of these services are taken from the estate and once you are gone you have no control over those numbers. It would be a shame for your children or loved ones to lose an unnecessary amount from their inheritance for such a trivial reason.

A proper estate plan can also potentially greatly reduce the amount of taxes that are required to be paid by the heirs.

Estate Planning in Westport, CT with Armah Financial

Armah Financial is here to help with estate planning in Westport, CT. We don’t just help our clients with financial planning, we focus on what really matters—understanding how our financial planning intersects with our emotional, social, and familial wellbeing.

Contact Armah Financial today so that we can discuss your unique circumstances and the best course of action to securing your future.

Business Planning

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Tax Planning

Are you ready for Tax season?

Many are caught by surprise when they file their taxes, and it is typically not a pleasant one!

Tax planning season used to be such a stressful season that I would have sleepless nights. On a few occasions, I stayed up until midnight on tax filing day, trying to comb through receipts of all my donations to charities and emails to find tax deductions. At the end of all that work, I would have a huge tax liability or bill.

After filing my taxes and paying my tax liability, I would promise myself not to go through the same pain the following year. I would review and analyze the effective tax rates of individuals in my tax bracket and then convince myself that I have the answer.

When I asked an esteemed and extremely successful business owner what I needed to do about my tax planning in CT, his response was “make more money”. This answer created more questions in my mind. In order not to worry about taxes, I needed to make a lot more money. If the taxman took 90% of my earnings I would still be ok.

What I did not realize then is that tax planning—especially in the case of my clients, tax planning in CT is a necessary undertaking. Through tax planning, all the elements of a financial plan would work together in the most tax-efficient manner possible. Making more money helps, especially as a business owner. However, putting a tax plan in place is paramount.

Don’t get caught unawares, giving the government money you hoped to save. Instead, be prepared by making some important choices that will alter your taxable income and provide you with more deductions. Contact Armah Financial for assistance with tax planning in CT. Video calls are certainly available for anyone out of state as well!

Costly Delays

“The benefit of a little advanced planning can positively impact the financial well-being of a family for generations upon generations.”

— Joseph Armah

Costly Delays

I received a tragic call from a close friend just before the New Year. The night before, her husband had passed on. He was the type of person you could spend hours talking to. A true family man, hilarious to boot, and an amazing chef. The week before he and I had reconnected, we were overdue for a visit and talked about planning time to meet with the families. He was a small business owner, and I cared about his family and their well being, so I had planned to discuss his financial planning, business protection for his catering company and restaurant. Thinking we had plenty of time, I thought I would wait until the beginning of the year. I had no idea that would be the last opportunity we would ever have to speak.

At his wake, person after person rose to speak of the impact he had on their lives. His daughter wrote a beautiful poem and prose that she dedicated to him. His wife held others up as they broke down from the pain of the loss. As I watched from my seat, I could not stop worrying about the future of this beautiful family without their patriarch. I also could not shake off the incredible disappointment that I had with myself that I had not moved sooner. What if I had intervened and supported him in meeting his health goals. What if I had reached out sooner and helped him to protect his business in the event of a tragedy like this. With a daughter too young to take on his business but with that as her life goal, perhaps I could have had an impact on this family that would have completely changed their financial trajectory. Why should they both suffer this loss of life and financial hardship.

After this most recent loss, I realized that there is no room for hesitation. I will not permit myself to experience this unnecessary regret again. The cost of a little delay, can hurt one's children and their children's children. The benefit of a little advanced planning can positively impact the financial well-being of a family for generations to come.

Estate Planning

It is never too early to let your loved ones know your wishes.

What are your wishes?

I have always avoided the topic of estate planning. Initially, I thought I was alone in this realm. However, I quickly learned that most people do not want to discuss issues pertaining to their death. It’s only natural, estate planning is inherently a morbid topic.

There are even famous and wealthy individuals who never bothered to write their wishes on paper. One recurring comment that I run into is the following: “the people who are left behind will take care of the problem.”

I am now getting to a point in my life where I strongly believe that such a notion is irresponsible. COVID-19 has made this point more salient. We really do not have an infinite amount of time on this earth. Neither can we trust that we will have all our faculties till the end. Time might run out.

Wouldn’t it be liberating to know we have done our part? We have an opportunity to make sure that we have put in place a process that ensures that our loved ones are taken care off, don’t have to pay exorbitant income taxes, and don’t need to guess our wishes.

Armah Financial offers estate planning in CT. If you live elsewhere and have chanced upon this page, don’t feel excluded! We would love to get on a video call to discuss your estate or other financial planning needs. Contact us today!

Retirement Planning

I am affiliated with SilverSource, a group dedicated to providing a safety net for older residents in Stamford, CT. Through SilverSource’s work, I have come to learn that most of its program participants - ages 74 years and above - have outlived their retirement savings. In addition, the social security benefits that they receive are barely enough to pay rent, leaving very little to buy food and other basic necessities.

Pension payments, once a reliable source of income for older adults, are no longer offered by employers . With rising costs and bloated liabilities on balance sheets, companies have sought to either restrict or restructure pension payments. Furthermore, recent regulations by both democratic and republican controlled legislative bodies have created the need for individuals to manage their own retirement investments.

The question that comes to mind then is “ how do we save enough to be able to spend quality time with our children and our grandchildren in our old age?” This is where goal oriented investing is needed. Unfortunately with each downtown in the market, we become increasingly alarmed and start making short term decisions instead of long-term ones.