Investment in Minority Interests May Offer Huge Potential for Wall Street

Even as Wall Street recovers from the financial crisis, it may be missing out of billions of dollars of potential investment from an untapped resource—minority investors.

“It’s a very untapped market with enormous potential,” says Dr. Tahira Hira, a professor of financial literature at Iowa State University and who conducted a survey on trends of minority investing.

“Like women—Hispanics, African-Americans and Asian-Americans all have financial needs and I think it’s easy to say they have not become a big player on Wall Street yet,” Hira adds.


Toni Braxton files brankruptcy owing between $10 to $50 million in debts

Braxton — who sold more than 40 million albums in her career — just filed for Chapter 7 bankruptcy in California … and in the docs, the singer claims she’s only worth somewhere between $1 mil and $10 mil … but she could have up to $50 mil in debts.

In the docs, 43-year-old Braxton lists a ton of creditors to whom she thinks she may owe money… including:

— AT&T
— The Four Seasons Hotels
— Cedars-Sinai Medical Center
— Various medical bills
— DirecTV
— Neiman Marcus
— The William Morris Agency
— Tiffany & Co.
— Orkin Pest Control
— The Internal Revenue Service
— BMW Financial Services
— ADT Security
— American Express
— Flamingo Las Vegas
— Mesa Air Conditioning
— Nevada Power Company
— Screen Actors Guild
— The Westin
— Wells Fargo Bank

Braxton also claims she may owe money to the City of L.A. Parking Violations Bureau — and the DMV in both California and Nevada.

Braxton has a storied history of financial problems — she filed for bankruptcy back in 1998 … and earlier this year, the IRS filed a lien against her for $396k.

Work + Life

The 800lb Gorilla in the Room – Retirement

As I began writing this editorial I started to recall a very interesting story that occurred in my office just a few weeks ago. One of my associates told me of an introductory conversation he had with a new client where they began to discuss some preliminary retirement planning. As he went into some of the specifics of a well designed roadmap for retirement, he noticed that after a steady dialogue, the client fell noticeably silent on the other end of the phone. In an attempt to elicit feedback from the client, he gently asked: “How do you feel about retirement?” That’s when he noticed that she was literally weeping. That’s when she said to him in a very shaky voice, “you know Kevin (not his actual name), I just don’t think its going to happen” and she abruptly ended their conversation after producing a flimsy excuse. True story.

I realized that this disconcerting event is telling of the overall sentiment towards retirement. The more people you talk to, the more you notice that there is a huge disparity between when people “want” to retire and when people “can” retire. Why, so often, is this the case? No one wants to work forever, but why have people started to embrace the possibility that they may have to. Why don’t more of us plan for retirement?

Perhaps the biggest and most common roadblock to retirement planning is the tendency of many working people to use their full after-tax income to support their current standard of living. Now as hard as it may be nowadays, clients must follow a budget that allows them to live within their current means and that also provides for retirement savings. Carefully analyzing your monthly cash inflows and outflows can sometimes yield a monthly surplus that will allow you to stash a few pennies away for your long term goals such as retirement.

Procrastination can also be a huge challenge that we face. While its never too early or late to plan for retirement, it requires a completely different approach to plan for a client’s retirement when it is too late to influence the client’s ability to retire with financial security. We should realize that saving is possible only for a limited time during ones life, but consumption occurs throughout ones entire life and can increase at any time due to a number of factors including inflation or illness. This imbalance makes it essential for us to save sufficient assets during our working years to ensure attainment of retirement goals.

So if you haven’t imagined your ideal retirement yet, take a few minutes out of your busy day to do so. I have found that every individual has their own unique definition of retirement. However, the one common denominator among all future retirees is their desire to retire with a sense of financial security. So have that conversation with your family, loved ones, and your financial professional. Get that gorilla out of the room.

Be well

Andrew Bedward
Financial Advisor
Nemec Financial Group
New York, NY

Work + Life

Paying for College, without Student Loans

If you loved attending your college, but hated paying for it raise your hand. Those of us who were forced to take out student loans to pay for our education can probably remember those frustrating days in the A-Building trying to sort out our financial situations to get that coveted validation sticker. Without a generous financial aid package college can be very expensive.

Now a little bit of bad news for those of you who have small children. If you were fearful of the costs of a college education when you went to school, please brace yourself for the following. According to the Bureau of Labor Statistics, the college education inflation rate is above 6% (that exceeds general inflation by more than 200 bps). Unless your child is academically or athletically inclined or both, it’s a good chance that you will bear the tremendous costs of education out of pocket or with help from the federal government or a private institution. The majority of us know the financial distress that student loans can cause. I would say that paying back student loans is probably the #1 concern among all the young professionals that I work with; especially for those who have borrowed privately @ very high variable rates.

Well here’s some Education Planning 101 for you parents, and aspiring students. Preparing for the costs of higher education doesn’t always have to be such an arduous task. There are ways to send your kids and yourselves to college without having to rely solely on the modest financial packages these schools offer and those dreaded student loans. 529 ways to be exact. A 529 plan, is an investment vehicle that allows individuals to save for education expenses at an eligible education institution. This includes any post-secondary educational institution eligible to participate in a student aid program administered by the Department of Education, not just colleges and universities.

So what’s so great about a 529 plan other than the fact that, using it to save aggressively could potentially put a dent in your future educations costs? The TAX ADVANTAGES! Earnings in a 529 plan are tax free if used for qualified education expenses. I must highlight the value of tax-deferred investing. Investing in a tax deferred investment plan allows you to accumulate money for your child’s education over time without the government taxing you and slowing its growth. There is also the opportunity for investors to deduct the contributions made to the plan depending on your state of residence. Not to mention, contributing to a 529 plan puts your investment dollars in a much better position to keep pace with the rising costs of college tuition.

With my investment practice, clients who have children or are expecting to have children will not leave my office without establishing some type of foundation for education planning. Especially because it is so easy. Now there are several tools one could use to accumulate assets for future education, and a 529 Plan is a great way to start. If you haven’t already asked your financial professional about the advantages of a 529 Plan, do yourself a favor and ask now. Start planning for tomorrow’s commencement today. The question we have to ask ourselves is, do we want to invest now, or borrow later? Personally, I prefer the former.

Andrew Bedward
Financial Advisor
Nemec Financial Group
New York, NY 10167