As is so often the case, this show was inspired by actual life events taking place. Unfortunately, this week’s episode is not light and jovial as many of our shows are. In today’s episode, Bo shares the unfortunate and tragic loss that he and his family have recently endured. Our hope is that, through Bo’s willingness to open up his personal life, today’s show may serve as the needed push to begin the process of making sure you and your family are prepared and protected from unknown and unexpected life events.

An EZLaw Wills & Estate Planning Survey shows that less that 40% of American parents with minor children have wills.  Although at least 60% of Americans believe that all adults should have a will or estate planning arrangements, few have the necessary documents in place.  Additionally, more than one third of Americans do not believe that wills or estate plans are as important to have on hand as birth certificates or titles/deeds for property and vehicles.  Even though the majority of parents (75%) understand that a court will decide legal guardians for their children in the absence of a will, only 39% have any estate planning documents in place.

The survey also broke down the top excuses given for not having a will:

• 37% cite a current focus on “essentials”, such as paying bills and buying groceries

• 18% say estate planning is not necessary

• 16% say it is too complicated to deal with right now

• 14% say it is too expensive

• 13% believe that their spouse and/or children will receive their assets automatically

• 6% say it is too time consuming

In addition to parents failing to develop wills, there is also evidence that shows many parents lack life insurance.  In fact, according to UPI.com, 69% of single parents with children living in the household have no life insurance, while 45% of married parents with children in the household have no life insurance.  A good rule of thumb is to have at least 10 times the income earner’s annual salary in coverage.  We also recommend minimal coverage for nonworking spouses to account for grieving time, childcare expenses, etc.  A great resource is this quote estimator, provided by the Michael Gasses Agency, which allows you to input your information and generate a quote.  You may be surprised by how affordable coverage can be for the peace of mind that your family will be taken care of.

The truth is that planning for these types of events can be difficult and create some very dark conversations for you and your loved ones.  The benefit is that the more you prepare in advance, the less difficult the entire process will be for them when you are gone.  For our clients, we actually provide a will creation checklist/questionnaire to help them organize before meeting with an attorney.  The more information that you can bring to the table, the less complicated and expensive it will be.  Some things you should put together before the meeting include:

• Net worth statement
• Any life insurance owned
• Expected inheritances
• Special circumstances (i.e. disabled children or parents)
• Power of Attorney information
• Burial/funeral arrangement wishes

As Bo mentioned, there has been a donation account set up for his sister-in-law and their two children. 100% of the donations will go directly to the family. Donations can be made at any Bank of America location. When making a donation, please reference the Jay Ingram Family Contribution Account. You are welcome to email the family attorney, Evan Kaine, with any questions: ekaine@elawpractice.com.

In past shows, we have often covered the topic of proper asset allocation when investing, but today’s podcast focuses on the importance of asset location.  This means focusing not only on diversification across asset classes in your portfolio, but also tax diversification within all account types.

Today’s show topic is a response to an email from a listener who was curious about our strategies for asset placement within all the different types of available investment accounts.  Below, our thoughts on asset location is broken down by account type:

• Taxable accounts:  This includes any individual or joint brokerage accounts.  We typically like to hold investments with long term-growth potential, as well as those assets that have potential for loss harvesting.  The reason for this is that any income received in these accounts is taxable in that given year.  Holding riskier assets that may produce losses can help offset taxable income.  Investments that pay dividends can also work well in a taxable account because they offer a preferential tax rate.

• Tax-deferred accounts:  This category is for your IRAs,  401ks, 403bs, Rollover accounts, etc.  In tax-deferred accounts, you don’t pay tax until you pull the money out in retirement.  Oftentimes with these accounts, you have to “love the one you’re with”, meaning you have to choose from the limited options that are offered to you within a plan.  It is important to choose the best options available to you within these accounts and then massage the rest of your portfolio to work together for the big picture.  We typically like to hold fixed income assets in tax-deferred accounts to put off paying tax on the income that is produced until retirement.

• Roth accounts:  Roth accounts have the incredible advantage of being tax-free.  You essentially put money in now, let it grow, and never pay tax on it.  We obviously want to hold assets that have potential for significant growth in order to take advantage of that growth being tax free.  That being said, you only want to hold relatively safe, comfortable assets because losses are not allowed.  In Roth accounts, we commonly hold commodities, small and mid cap investments, and large cap growth investments.

We hope this gives you guys a good idea of what to consider when constructing your own portfolio.  You should also keep in mind that if you hold fixed income and equity investments in different accounts, performance for each account will not be the same.  You should always be looking at all of your accounts working together as a team, rather than each one separately.

Also in today’s show:  Brian gives his thoughts on the journey of a small business man and why he thinks entrepreneurship is harder than ever.

We would love to hear your feedback on today’s show as well as suggestions for future shows.  You can comment below or on our Facebook and YouTube pages.

Happy New Year from the Money-Guy team!  It is great to be back after our holiday break, and we are very excited to share our thoughts on the economic outlook for 2012 in today’s show.

Before we jump into 2012, we’d like to take a look back at The Wall Street Journal’s Top 5 Economic Charts of 2011:

1.  Jobs – This chart shows the history of job creation after past recessions, breaking it down by industry.  Highlight:  6.6 million jobs currently need to be added to the economy to regain the pre-2008 downturn level.

2.  Comparing Recoveries – This chart compares the current economic recovery to past expansions based on GDP, jobs, home prices, incomes, and corporate profits.  Highlight:  The current recovery is the slowest in terms of disposable personal income and bank lending, but above average for exporting goods and services and corporate profits.

3.  Consumer Spending – This chart illustrates consumer spending patterns since the recovery began.  Highlight:  Spending on discretionary services has continued to decrease.

4.  Debt – This chart shows debt patterns of households, businesses, and the federal government since 1970.  Highlight:  While households are reducing their debt burden, the government’s load is growing heavier.

5.  Trade - This chart follows U.S. trade with other countries since 1990.  Highlight:  China replaced Japan in the top 3 destinations for U.S. exports and imports, along with Canada and Mexico.

Now that we have taken a look back, let’s focus on the future.  Kiplinger’s Personal Finance magazine recently released Our Investing Outlook for 2012 and opened with Benjamin Graham’s theory:   “In the short run, the stock market is a voting machine, considered by many the ultimate investing sage.  But in the long run, it’s a weighing machine, meaning that over time a company’s shares will command the price its business prospects deserve, measured by such basic yardsticks as profit growth, balance-sheet strength and management vision.

Kiplinger’s outlook:

They predict continued volatility with both breakout rallies and occasional downward spikes for 2012.  They also predict that profits for companies in the S&P will improve by 6% to 7% in the coming year.  The housing market will be boosted by the government’s latest loan-modification efforts.  Politics will weigh on markets.  Successful investors will be those who take advantage of the ups and downs by dollar-cost-averaging.  They also think the best opportunities lie in stocks as opposed to bonds, and in U.S. stocks rather than foreign companies.

Here are some of our tips for improving your financial well-being this year:

• Set up adequate cash reserves (3-6 months of expenses, depending on your situation)
• Save 15-20% of your gross wages
• Design a net worth statement to assess your current financial situation
• Take advantage of any employer matches in company sponsored retirement plans

Here at the Money-Guy Show, we are optimistic about things in the coming year.  While market volatility may persist, it is encouraging to see balance sheets on the consumer and business side improving.  There are a lot of positive things happening and we are excited to see where 2012 takes us.  We would love to hear your questions and comments below or on our Facebook page.   Also, don’t forget to check us out on YouTube.

It is extremely exciting, rewarding, and humbling to be mentioned with the likes of Clark Howard and NPR. Our ultimate goal is to make a difference in the financial lives of our listeners, and honors like this make all the hard work worth it!

We would not be where we are today without you, our listeners, so thank you so much for your continued support!

If you haven’t had a chance to check out the YouTube channel yet, you can check it out here.