Virtual Financial Advisor for Business Owners - Certified Financial Planner™ - Investments & Financial Planning

Legacy: I Lost My Dad, and Now That Word Means More

Thu, 29 Sep 2022 06:21:38 -0700

Legacy: I Lost My Dad, and Now That Word Means More

by Diane Pascua

I recently lost my dad, Frank. He was truly my favorite human outside my husband of 26 years. During his time with me, up to his passing and through this loss of his earthly life, I experienced considerable joy.

The word for my dad is Legacy. By definition, legacy is something tangible, of value, left behind, mostly associated with money or property. For my dad, it means the gift of character. He lived out his legacy for years by his example of integrity, humility of spirit, and attentiveness to others.

My Dad passed the torch of his legacy with a good game plan clearly laid out for his descendants. For me, that is now being modeled in my husband as he manages our household with strong leadership and faith-building charisma and character. My Dad also carefully planned for my mom and me monetarily so that we could achieve success in our community without the worry or research of how to have financial freedom and independence.

Modeling your character and having a monetary plan for your family, kids, and ministry gift-giving should already be started. Do not wait for the end to fuss over a game plan, medical debt, or how your hard work should be carried on.

With a fresh perspective and a firm grasp on what matters most, here is my tip for your success and protection: work with a firm like Ridgeline Private Wealth that goes the extra mile for creative and innovative ways to prepare your tribe for current and...Read More

When Should A Business Owner Get A Financial Advisor?

Sun, 03 Oct 2021 16:47:56 -0700

Picture this: Early one morning Caleb was sitting down in his seat on a flight from Phoenix to Atlanta, and a friend and colleague that lived on a lake near Atlanta texted him: “You’re going to wakesurf this afternoon.” And then he had to turn his phone to airplane mode. When he packed for the trip, he had no plans to be on a boat let alone be in the water. Can you imagine the rest of that flight? He’d never even heard of wakesurfing!

Caleb is not an expert about really anything on the water, but he HAS specialized in giving advice to business owners for most of his professional life, and we want to share with you the important lesson he learned in this experience. Here’s the main idea: You don’t know what you don’t know, and that could be keeping you from substantial opportunities to reduce taxes and build wealth. You might be missing out if you don’t have a trusted guide inspiring you to bigger and better things.

So that afternoon as they headed out to the lake, he was coached on the proper form and what to expect. Surprisingly, he was up on the water on the first try, and even more startling, on his third try he felt comfortable to drop the rope and simply surf the wake. Eight hours before he didn’t even know wakesurfing was a “thing!”

Business Owners Need a Guide Right Away

Follow us here: You know what you know. And you even know about some things that you don’t know enough about. But there are things you don’t even know that you don’t know. What do we mean by that? Yes, Caleb could Google or research how to start wakesurfing pretty easily, but...Read More

What is the best way to donate to charity?

Tue, 08 Jun 2021 18:41:46 -0700

Do you give tax-deductible cash gifts to charities and want to do that even more efficiently to reduce future taxes beyond just this year?

Would you like to avoid the scramble to gather your gift receipts at tax time?

I’m going to show you how to do just that with one simple tool that’s growing like wildfire, but most people don’t use yet.

This is a tool that I’ve helped dozens of my private wealth management clients start using to be more generous, more intelligently, and with greater potential tax benefits for their business, or for them personally.

If you wait to start using the tool, you’ll continue to scramble at tax time in order to show and deduct all your charitable donations. Think about it, have you ever missed one? What if you DID miss one that you still don’t know about? How much is that costing you?

The other thing is that the more tax years that go by without this tool, the less impact it can have on your lifetime tax expense.

The tool is called a Donor-Advised Fund, or DAF for short. A DAF is a charitable giving vehicle that a public charity or foundation administers to help manage donations on behalf of donors like you. Think of it like a standalone “giving account” that exclusively serves as a holding tank and investment account for assets that will ultimately be distributed as cash to 501(c)(3) organizations at your request.

Here’s how it works:

You give cash or other appreciated assets to a foundation and receive an immediate tax deduction.
While the funds are sitting in your DAF, they can be invested (on a scale from cash to conservative to aggressive growth) until you recommend grants to your preferred charities in the amounts that you want.
Then you direct those funds over time, whether it’s this year or beyond by requesting grants to the charities that you support, such...Read More

How Business Owners Can Get the Most from a Virtual Financial Advisor for Private Wealth Management

Tue, 01 Jun 2021 14:59:30 -0700

Today, we'll discuss working with a virtual financial advisor and how to get the most value from your relationship. Specifically, we're going to address the big issue with not being able to see your advisor in person and how to develop a sense of trust that you want and deserve to have. We'll also share the unique and surprising benefits of a remote relationship including the one thing most business owners don’t consider until it’s too late.

Here’s why you should care about this: If you‘re a business owner and haven’t considered working with a virtual financial advisor, then you may be missing out on a specialist who can help you avoid big mistakes and build wealth faster. That could end up being the difference between mediocre wealth potential and confidence that you have more than enough ideas to minimize taxes and invest wisely. To give you some background, about 50% of my current clients reside outside of the state where I live, and I have never met about one-third of my client families in person. We still have a remarkably deep relationship, and our financial and investment planning conversations are highly productive.We'll use the term Financial Advisor, but for our purposes here, that could also refer to a professional Financial Planner or Private Wealth Advisor.

Building Trust to Work with a Virtual Financial Advisor as a Business Owner

As a business owner, you need to make fast decisions based on extreme levels of trust in people and processes. To quickly build that “bridge of trust” with a Financial Advisor even if you never or rarely meet in person, your default first step might be to ask your CPA, attorney, or fellow business owners for a recommendation. But don’t stop there. Go beyond getting a name or two and starting up a relationship.

Vet those advisors in the following three ways:

Most financial experts recommend getting to where you can save about 15% of your income into retirement accounts as quickly as possible on an automated basis. By doing that, you are more likely to retire or achieve financial independence while you still have plenty of time to enjoy your new freedom.

If you are debt free and have an emergency fund set aside, then this should be your next target.

Now, let’s talk about how to maximize your 401k benefit for wealth building and tax savings:

Very simply, search something like “401k Contribution Limits this Year.” Then you can...Read More

What is EBITDA and Why Is It Important for Business Owners?

Mon, 01 Feb 2021 14:15:12 -0800

A number of our clients have sold all or portions of their business to private equity groups, industry roll up firms, individual buyers, and even their competitors.

Some form of EBITDA was a factor in every sale.

If you want to get the maximum value from your business, you have to look at the same metrics that your buyer will. Otherwise, you’ll leave value on the negotiating table and your buyer will benefit at your expense.

EBITDA is an acronym for “Earnings Before Interest, Taxes, Depreciation and Amortization.” It’s a way to compare the gross profitability of one company to another. This is regardless of owner debt, tax profile, and some other unique factors that may not be reflective of the business itself.

EBITDA is a way to look at profits before these expenses of interest, taxes, depreciation, and amortization in order to more clearly determine what a buyer may be willing to pay for those profits.

Oftentimes you’ll also hear the word “multiple” in reference to a rough value of a company. For example, a company with an EBITDA of $1M and a potential “multiple” of three could lead to a rough business valuation of $3M. Both the framework of using an EBITDA and the formula of multiplying by some number to determine a business value is generic at best. The number of valuation factors unrelated to EBITDA are significant.

However, by understanding how EBITDA is calculated and the concept of multiples to arrive at value, you CAN strategically plan for selling your business with these factors in mind.

So here’s what you can do right now: ask your CERTIFIED...Read More

Should I invest Roth or pre-tax in my 401(k)?

Tue, 19 Jan 2021 21:40:21 -0800

When it comes to making decisions about your 401k, one of the biggest questions you may face is whether to contribute on a traditional pre-tax basis, or Roth after-tax basis.

Let’s talk about the why behind a 401k: If your company offers a 401k plan, this is one of the best personal financial tools to minimize taxes over your lifetime and build wealth for your future.

When you have a small portion of your paycheck withheld on an automated basis and diverted directly into a 401k plan, you are saving money for your future when you no longer can or want to work. And you get potentially huge lifetime tax savings for doing so.

Now, when you set up this paycheck withholding to make a 401k contribution, there are two main choices: Traditional pre-tax or Roth post-tax.

First, let’s talk about Traditional pre-tax:

Any money you contribute to your 401k in this category does not get included in your taxable income and does not get taxed now. Once in your 401k account, these funds can grow and earn income tax-deferred, which just means that you don’t pay taxes on those funds while they are protected by the 401k.
However, in the future at the time you remove a portion or all of those funds from your 401k, whatever amount you withdraw is taxed at that time. And, if you do so before age 59.5, there is also a 10% penalty on what you remove...though there are some helpful exceptions to the penalty.
So, to summarize the traditional 401k category, no taxes now and no taxes along the way, but all of what you withdraw in the future is considered taxable income.
If you are married and have a household income of more than $120,000 or single and have an income of more than $60,000, then it may make sense to lean towards Traditional pre-tax contributions.

Next, let’s talk about Roth post-tax:

Any money you contribute to your 401k in this category DOES get included in your taxable income and gets taxed...Read More

How Do I Choose My 401(k) Investments?

Tue, 12 Jan 2021 16:39:56 -0800

Are you new to 401(k)s? We’d like to simplify how you choose the investments in your 401(k), because if you are not yet investing in your 401(k), or are afraid to invest more because you aren’t confident in your investment choice, then you could be missing out on a more prepared future.

There are two main approaches, and one of these approaches makes this whole process very easy for you.

First, you could choose the default investment option, also known as an age-based investment allocation. This is typically in the form of a target date fund. Sometimes this is called a lifecycle fund.

Target date funds have predetermined investment mixes depending on the date you plan to retire. The funds will automatically adjust the amount of volatility and risk as you move towards the target retirement date. This option means you can select just one fund and have intelligent diversification. If you want to keep things simple, start here.

The other thing you can do is choose a custom investment strategy utilizing multiple funds from what's available in your 401(k). These funds might range from conservative to aggressive, with nothing attached to your age. Or, they may be funds that invest in asset classes such as large companies, small companies, bonds, real estate, and many variations or mixes of these assets.

If you go this custom route, be sure you fully understand the short-term volatility of the various funds you are selecting. By having a handle on how quickly and violently they can increase and decrease in value over the short-term, you may end up with great results over the long-term.

No matter what your experience level is with investments, the most important thing is that you choose something to get started and develop the key habit of saving towards your retirement. You can always change your investments over time, so even the super simple target date funds are a great place to...Read More

What Personal Accounts Should a Business Owner Consider?

Mon, 04 Jan 2021 11:09:21 -0800

There are seven types of personal financial accounts every growing, profitable business owner should know about and consider having in place. These are all important family wealth building tools. The 7th account type is our favorite and the one very few business owners know about. At the very end, even though it’s not for everyone, we'll share a sort of bonus eighth type of account that we call the tax-slashing triple-threat!

As a whole, this is the same account planning framework we use with our business owner clients, and we've had a number of these conversations just in the last few weeks.

All of this is important because knowing about and using these account types may help you minimize taxes this year and even more so in the years. And, your financial life will be more organized and you’ll feel like you’re making quick progress to your most important goals in life.

So let’s jump right in:

The first two account types are easy: a local personal checking and local personal savings account. You probably already have these, but here’s an important point: the local personal savings account is NOT there so you earn a lot of interest. The goal of this account is to serve as a local holding tank for very near-term “big” expenses and, more importantly, a place to easily sweep and move excess cash over from your checking account so you don’t spend it too easily.

You CAN keep a portion or all of your emergency fund in this local savings account.

Or, you can keep that emergency fund in the third type of account, which is a high yield savings account. This is typically an online bank that can get you higher yields than a local savings account but transferring funds might take a business day or two. This is where you can keep your emergency fund and cash for other big expenses coming up in the next 6, 12, or 24 months...or whatever makes you comfortable.

Next, you’ll also want to have an...Read More

As a business owner, when should I start a 401(k) plan?

Tue, 29 Sep 2020 15:53:08 -0700

One of the common questions we receive is whether our clients should provide a 401k to their employees. There are three triggers we believe should prompt you, as a business owner, to look into setting up a 401k for your business. Any one of these can be enough by itself, but if two or three apply, then you know it’s time to get started.

Here are the three triggers that will indicate if a 401k is right for your business:

1) If you are looking for more ways to potentially reduce your income tax bill personally and accumulate wealth outside or from your business.

2) If you care about your team and want to help them save and invest for their future.

3) If you want to offer an employment benefit that attracts and retains above average talent.

Teammates that value the benefits of a 401k are the people who think long-term and will probably perform better in their work for your business.

The great thing is that without committing much time or any money, you can get a personalized education and proposal from a professional advisor and Third-Party Administrator. You’ll be able to see how a 401k would work in your business and how it would provide you a personal benefit as well.

And here’s a quick side note: if you’re like us and LOVE the tax benefits of the Roth IRA, you can make sure your 401k plan has a Roth feature. This gives you the potential to put more than three times the normal Roth IRA limits into your Roth 401k. You can do this even if your income is too high to contribute to a normal Roth IRA. THAT is a very powerful tax planning tool!

Through the process of evaluating a 401k, you may find that it is not the best fit right now. You won’t want to rule out the whole idea though, because a SIMPLE IRA can still provide many of these benefits to you and your team. A simple IRA can be a stepping stone to a full blown 401K down the road.

The final thing to...Read More