Being Financially Prepared Today with Gabrielle Mollick

Gabrielle Mollick, CFP®, CSRIC®, of Mercer Advisors talks about being financially prepared through literacy, investing, estate planning, and more.

 

Today on Women and Money, we have Gabrielle Mollick, CFP®, CSRIC®, with us. Gaby is a financial advisor at Mercer Advisors in Denver, Colorado, and a Purse Strings-approved professional. We’re so excited to have her on the show today to share her passion for empowering women to build financially fearless futures.

Gaby has a powerful story, watching her parents’ commitment to education, hard work, and intentional financial choices from a young age. However, following the unexpected passing of her father, she and her family faced challenges due to an absence of proper end-of-life planning.

Listen in as she talks about the importance of financial literacy, breaks down some common misconceptions about investing, and highlights the value of early financial planning. Throughout our conversation, she’ll share insights into Mercer’s goals-based planning approach and encourages women to seek holistic financial guidance that accounts for estate planning essentials.

 

Here’s some of what we discuss in this episode:

 

1:43 – Gaby’s financial advising journey + upbringing

8:41 – The sudden passing of Gaby’s father

14:00 – Mercer’s goals-based approach

17:13 – End-of-life planning and incapacitation planning

21:53 – Gaby’s advice for getting started

 

Learn a little more about Gaby:

 

Gaby is primarily responsible for guiding her clients toward financial success through tax planning, investment management, and strategizing retirement decisions. She also serves on the Mercer Advisors Investment Committee ESG Investments Subcommittee and the InvestHERS Steering Committee, and she leads the Financial Literacy employee program.

Gaby’s expertise revolves around a deep-rooted passion for empowering professionals and families of all backgrounds, serving the unique planning needs of women investors, and ESG/values-based investing.

Prior to joining Mercer Advisors, Gaby worked with a top brokerage firm. She graduated from the University of Akron, earning a Bachelor of Business Administration degree in financial planning. She holds the FINRA Series 65 license and is a CERTIFIED FINANCIAL PLANNER™ professional and a Chartered SRI CounselorSM.

 

Episode Links:

 

Resources

Gaby on Purse Strings

https://pursestrings.co/professional/financial-advisor/colorado/denver/gabrielle-mollick-cfp-csric/

Mercer Advisors

https://www.merceradvisors.com/meet-our-team/gabrielle-mollick/

https://www.merceradvisors.com/

Gaby on Linkedin

https://www.linkedin.com/in/gabrielle-mollick-cfp%C2%AE-csric%C2%AE-440762a6/

 

Investing Does Not Equal Financial Planning

Purse Strings Approved Professional

Blog Series

Investing ≠ Financial Planning

When the subject of personal finance and planning for the future comes up, the topic of investing often dominates the conversation. While investing is indeed important and plays a significant role in achieving financial goals, it should not overshadow other essential components of a comprehensive financial plan.

Financial planning is the process of developing a roadmap for your journey towards achieving well-defined goals and objectives. However, it’s important to recognize that the route will undoubtedly encounter roadblocks and other obstacles along the way which will require detours and updates in order to arrive at your final destination – financial freedom.

Picking the “best” mutual funds, ETFs, individual stocks and “alternative” investments or trying to outperform the S&P 500 Index is not financial planning. Don’t let anyone tell you otherwise. It’s much more. It involves assessing your current financial situation, addressing your concerns and questions, establishing goals, and developing strategies – including, but not exclusively, investing – to reach those goals effectively.

Financial planning recognizes the relationships between a number of equally important components and prioritizes financial well-being, adaptability and flexibility over the pursuit of short-term investment gains. These include: 

9

Budgeting and Cash Flow Management:

Develop a detailed spending plan outlining income sources and all expenses, including fixed costs (e.g., rent/mortgage, utilities) and discretionary spending (e.g., entertainment, dining out).
Track expenses to identify areas for potential savings and ensure that income exceeds expenses, allowing for savings and investments.

9

Debt Management:

Evaluate existing debts, including credit card balances, student loans, auto loans, and mortgages.
Develop a plan to prioritize debt repayment, potentially consolidating high-interest debts and utilizing debt repayment strategies to reduce interest costs and accelerate payoff.

9

Emergency Fund:

Establish an emergency savings fund to cover at least 3-6 months’ worth of living expenses.
Keep emergency funds in a readily accessible, low-risk account (e.g., savings account or money market fund) to address unexpected financial setbacks without relying on debt or liquidating investments. 

9

Insurance Coverage:

Assess insurance needs to protect against unforeseen risks, including health insurance, life insurance, disability insurance, property insurance (homeowners/renters), and liability insurance.
Ensure adequate coverage levels based on personal circumstances, family composition, and financial obligations.

9

Tax Planning:

Optimize tax efficiency by leveraging tax-advantaged accounts (e.g., 401(k), IRA, HSA) and maximizing deductions, credits, and tax-deferral strategies.
Strategically manage taxable events (e.g., capital gains, retirement distributions) to minimize tax liabilities and maximize after-tax returns.

9

Retirement Planning:

Estimate retirement needs based on desired lifestyle, expected expenses, and retirement age.
Develop a retirement savings strategy, including contributions to employer-sponsored retirement plans (e.g., 401(k), 403(b)) and individual retirement accounts (e.g., IRA, Roth IRA).
Consider factors such as Social Security benefits, pension plans, and potential healthcare costs in retirement.

9

Life Happens (Scenario) Planning:

The best laid plans do not stop life from happening.
Typical scenarios requiring special, or sometimes immediate, attention range from marriage, children, leaving the workforce to care for aging parents and inheritances to divorce, career transitions, and early retirement.

9

Estate Planning:

Create or update essential estate planning documents, including wills, trusts, powers of attorney, and healthcare directives.
Designate beneficiaries for retirement accounts, life insurance policies, and other assets to ensure proper distribution according to your wishes.
Minimize estate taxes and probate costs by implementing appropriate estate planning strategies.

So, while there is no argument that investing is an important piece of the equation, it is not financial planning.

True financial planning involves examining your entire financial picture, understanding how all of the pieces fit together and educating and empowering you to make informed decisions with confidence.

• This post is general education – not investment, tax, or legal advice •

 Christopher Lazzaro, ChFC®

Christopher Lazzaro, ChFC®

Founder and President at Plan For It Financial, LLC

Following a more than 30-year career in investment management and insurance, I founded Plan For It Financial. In doing so, I followed my passion for helping others gain a deeper understanding of their personal finances. Distilling complex financial topics and presenting them in a straightforward manner is central to my approach and process. I take great pride in and am grateful for the opportunity to guide clients as they navigate the challenge of balancing living for today, while maintaining an eye toward the future. Bridging this gap through education, realistic goal setting, establishing priorities, and practical, actionable advice without the unnecessary layers of financial jargon and complexity is my firm’s primary value proposition.

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HerMoney: Empowering Women’s Wealth with Jean Chatzky

Jean Chatzky, founder and CEO of the multimedia company HerMoney, is dedicated to empowering women’s wealth. She’s here to talk about the transference of wealth to women, the financial impact of caregiving responsibilities, investing, and more.

Jean Chatzky is a journalist, personal finance columnist, personal finance ambassador, and founder and CEO of the multimedia company HerMoney. With a career spanning over three decades, Jean has been a pioneer in empowering women to take control of their finances. From her bestselling books to her impactful podcast and coaching programs, Jean’s mission is to help women navigate all aspects of money management with confidence and clarity.

As a significant portion of wealth is anticipated to shift into the hands of women in the upcoming decades, it is more important than ever for women to be engaged in financial decisions and well-informed. It’s just as important for financial professionals to adapt and meet the unique needs of their female clients. Join us as we dive into these evolving dynamics with Jean, and cover topics like understanding your money type, the financial impact of caregiving responsibilities, investing, and more!

 

Here’s some of what we discuss in this episode:

 

  • How HerMoney has grown from a podcast to a comprehensive financial platform for women
  • The progress made in women’s financial empowerment + the persistent challenges due to industry jargon and lack of inclusivity
  • The impending wealth transfer to women + the need for financial professionals to adapt and better serve female clients
  • Understanding your money type with HerMoney’s MoneyType quiz
  • The financial impact of stepping out of the workforce + complexities of childcare decisions

 

Learn a little more about Jean:

 

Jean Chatzky is the CEO of HerMoney.com and host of the podcast HerMoney With Jean Chatzky. The financial editor of NBC Today for 25 years and the Financial Ambassador for AARP, she appears frequently on CNN, MSNBC and was a recurring guest on The Oprah Winfrey Show. She is a New York Times and Wall Street Journal best-selling author.

Her latest book is Women with Money: The Judgment-Free Guide to Creating the Joyful, Less Stressed, Purposeful (and Yes, Rich) Life You Deserve. An in-demand motivational speaker and fierce advocate for financial literacy, in 2015, she partnered with the PwC Charitable Foundation and Time for Kids to launch Your $, an in-school magazine that reaches 2 million school children each month.

 

Episode Links:

 

Resources

HerMoney Newsletter

https://hermoney.com/subscribe/

HerMoney Podcast

https://hermoney.com/t/podcasts/

Take the MoneyType Personality Test

https://moneytype.hermoney.com/?utm_source=story&utm_medium=rotating_sidebar&utm_campaign=moneytype

InvestingFixx

https://portal.investingfixx.com/s/

Where you can find Jean:

Jean’s website 

https://jeanchatzky.com/

Linkedin

https://www.linkedin.com/in/jeanchatzky/

Instagram

https://www.instagram.com/hermoneymedia/

https://www.instagram.com/jeanchatzky/

Facebook

https://www.facebook.com/JeanChatzky

Investments got you puzzled? What the heck is a stock, bond or mutual fund?

Purse Strings Approved Professional

Blog Series

Investments got you puzzled?

What the heck is a stock, bond or mutual fund?

It’s a fact. Stock investors sometimes lose money on their way to wealth. Get over it.

One of the questions many women investors ask is: “What’s a stock, bond, mutual fund, and how do I use them in my portfolio of investments?” They also say, make it simple, easy to understand, and don’t make me feel stupid when I’m reading it. I hear you! You want to know enough to ask intelligent questions and even start investing on your own!

This is a great question so I wanted to dive deeper into this conversation. My goal is to give you more information so you have a better understanding of what each is and how you can use them without fear and trepidation.

I love this quote by Jane Bryant Quinn:  “It’s a fact. Stock investors sometimes lose money on their way to wealth. Get over it.”

You control the volatility (up and down value) by diversifying your asset allocation,(mix) of stocks, bonds, and cash. Of these three, stocks are the riskiest, bonds a little less risky, and cash is safe. This is where you balance your return and the amount of risk you’re willing to take. (I’m not going to address real estate and commodities in detail here.)

There are a total of five asset (investment) classes which include:

Stocks • Bonds • Real Estate • Cash • Commodities

That’s it! Only 5 asset classes. And it gets simpler. Let’s break them down into two categories.

Own • Loan

Let’s discuss each Asset Class in one of the two categories:

Stocks

Own

Companies that sell stock to shareholders are called public companies. When you buy shares in a company, you own a piece of the company. Some companies share their profits with investors/shareholders through dividends.

Cash

Loan

You typically lend it to the bank and get interest in return for their use of your funds. This is in the way of savings, certificate of deposits, treasuries, and money market funds.

 

Real Estate

Own

You buy houses, apartments, office buildings, or raw land. Real Estate is not very liquid so it takes time to convert your investment into cash. Technically, you don’t count owning your own home as an investment. You don’t want to have to sell if you need money.

Bonds

Loan

Companies borrow your money and promise to pay you, the bondholder, back in full at an agreed-upon time plus interest on the loan.

Commodities

Own

These are tangible products like gold, oil, wheat, which are bought or sold on various commodities exchanges. They are very risky.

Respect the Time Factor:

No one knows what the market is going to do, except it will go down and it’ll go up. So stack the odds in your favor. Here’s a general guideline:

  • Money you’ll need in 1-3 years – put into cash
  • Money you’ll need in 3-10 years – put into dividend paying, large stocks; high rated A bonds; and cash
  • Money you’ll need in 10+ years – put into stocks, real estate, commodities

If you don’t know when you’ll need the money, err on the safe side.

Average per Year Historical Investment Returns for 1926-2020:

3.0% 3.5% 5.7% 10.19%

Inflation T-Bills LT Bonds Stocks

These are long term historical averages which means, you’re investing for the long-term and they are averages. Like a good girdle or spanx, it can hide a lot of jiggles. In any individual year, any of these categories can fluctuate better or worse than the average. “Historically, it has paid to own stocks because 74% of the time, the U.S. equity (stock) market has posted calendar year returns above zero!” (Russell Investments)

Let’s talk about the mechanics of investing.

There are two ways most people invest in stocks:

Individual Stocks

Buy a piece of ownership in an individual company by selecting the stock you want to buy at a specific price. You are responsible for deciding when to buy and sell your shares of stock.

 

 

 

Mutual Funds

Hiring someone else (fund manager) to buy a “basket” of stocks for you. A mutual fund is a bucket of money that is used to purchase individual stocks on behalf of the people who contributed the money. The benefit of this approach is that with a relatively small amount of money you can get pieces of ownership in many different companies (diversification). This helps lower your risk and involves a lot less work on your part in researching individual companies to invest in.

Mutual Funds come in two types:

Actively Managed Mutual Funds

Professional fund managers use different strategies to decide what stocks to buy and sell in their respective mutual fund each day. There are more than 7,000 such funds in the US today. You are essentially betting on the skill of the professional fund manager. There is a cost for this management ranging from .50% to 2.5%. Here’s an example from Warren Buffet about what an impact a 1% fee can have.Buffett made his first investment in March 1942 (when he was 11 years old!). In the 78 years since then, the S&P 500’s value has increased 5,288 times over, including reinvested dividends — turning a $1 million investment into $5.3 billion.But if the exact same investment, with the exact same returns, was managed by an advisor taking a 1% annual management fee, the gain would have been cut in half. In other words, paying a seemingly small 1% fee would have cost this investor a staggering $2.65 billion. Fees matter. If you pay them, make sure you’re getting your value!

 

 

Passively Managed Index Funds

The basket of stocks is decided up front – the index it is tracking. There is not a lot of daily buying and selling because it mirrors the index. You are investing in stocks as an overall investment category without trying to bet on the skill of an individual money manager. Index funds have historically done better than more than 80% of active, professionally managed mutual funds.
If you want to keep your life simple (Marie Kondo anyone?) use index funds to invest in stocks.

Another advantage of Index Funds is their cost. They are much LESS expensive than actively managed mutual funds, averaging 0.09%.

  

 

 

So keep it simple: For money you don’t need to spend for at least FIVE years, put it in an S&P 500 Index Fund.

Passively Managed Exchange-Traded Fund (ETF) –

Static Basket of Stocks, traded all day long like a stock. Cost of trading is a commission each time you buy or sell. They are more expensive than Index Funds, 0.44%, so recommend Index Funds over ETFs unless you want more complexity in your portfolio.
Investing in Bonds is very similar:

Buying Individual Bonds:

You lend your money directly to a corporation or municipality and obtain their promise to pay a stated interest rate, and coupon payments usually every six months, with a guarantee to repay your principal at a specific time. Bonds come in a variety of terms, 30 days to 30 years. Shorter term bonds pay less in interest and longer term bonds usually pay higher interest rates.

Mutual Bond Funds:

You invest your money in a “basket” of bonds that are bought and sold by a mutual fund money manager. You rely on the manager to pick bonds in keeping with the mutual funds objective (short term or long term income). In return you pay a management fee and your interest is a combination of all the interest paid by all of the bonds in the mutual fund. The manager replaces maturing bonds with new bonds, so the mutual fund does not terminate with the maturity of any given bond.

ETF Bond Funds:

Bond ETFs offer many of the same features of an individual bond, including a regular coupon payment. Since Bond ETFs hold assets with different maturity dates, at any given time some bonds in the portfolio may be due for a coupon payment. For this reason, bond ETFs pay interest each month with the value of the coupon varying from month to month. An investor’s initial investment is at greater risk in an ETF and mutual fund than an individual bond. Since a bond fund never matures, there isn’t a guarantee the principal will be repaid in full.
Generally speaking, when saving for retirement, stocks are appropriate for most people up to age 50. By then you should start adding bonds into your portfolio to lessen the volatility and start preparing for retirement. There are many different models illustrating how to allocate your money based on your age and the amount of risk you’re willing to take on. As I’ve shown you above, historically speaking, you’ll get the most growth and return out of your stock portfolio. Your bonds are more like the foundation of your portfolio.

A general guideline is for women to invest in stocks equal to 110 or 120 minus your age. So 120-50=70% of your investments in stocks. If you are a risk taker, then keep more invested in stocks. Bonds and cash equivalents are appropriate for the other 30% of your portfolio. This helps you transition to a more conservative portfolio as you approach your retirement, because you are growing your investments as you prepare for retirement. Then you will draw income off your investments in retirement when you want a more stable portfolio.

Personally, I like stocks, and still have 90% of my portfolio in stocks. It’s an individual decision, but you have to be aware of the risks associated with it.

 

What’s Holding You Back?

Women NEED to Invest because investing helps close the gap:

  • We still only make 80 cents on the $1.00 compared to men.
  • We dip in and out of the workforce taking care of kids and parents.
  • Women’s average balance in 401(k) is 50% less than that of men.
  • We live longer, 5 years longer on average than men.

 

Investment Obstacles:

You don’t want to do something you don’t understand. The only way you’re going to gain confidence is by doing it. Doing it helps you understand it. Take one small step at a time and keep it simple.

You don’t want to lose money. Investing is not a competition (like trading) no one has to lose. If you invested your money in the S&P 500 over the worst thirty-year period in history, you would still have made about 8 percent/year.

You think investing is the same as gambling. It’s not and here’s why. Gambling is wagering your money on a particular outcome. If your lottery numbers aren’t called, you lose out. Investing is buying something which has value. Over time that value can go up or down, but by diversification and investing over time, you greatly increase your chances of making money, not losing it.

You don’t trust the financial industry. You need to shop smart and find a firm or online brokerage that you want to work with. There are many choices, and I’m happy to recommend a few.
I’ve given you an overview of stocks, bonds, mutual funds and ETFs. You’ve already taken the first step by learning more about this topic. Now start saving, however small. Your future you will thank you!

 

Linda Lingo

Linda Lingo

Financial Coach

I educate women to achieve financial freedom. Financial health and emotional wealth empower women for a successful, stress-free approach to money. Through inspiration and education, I guide women to understand their money mindset, define their values, establish money goals in alignment with their values so they can spend less, save more, implement their intentional money spending plan (budget), understand investments, build wealth, leave a legacy, and live the life they desire.

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