The following is a hypothetical financial planning scenario presented for illustrative purposes only. It should not be construed as an investment recommendation or solicitation. Please consult a financial professional to discuss your individual situation prior to making any investment decision. Past performance is not a guarantee of future results. The rates of return do not represent any actual investment and cannot be guaranteed. Any investment involves potential loss of principal.
Life doesn’t always work out how we planned. You get married, raise a family, and realize your marriage isn’t what you thought it would be. Divorce happens. Too often women are left not understanding how to handle their finances and investments post-divorce. A financial professional can help.
Let’s look at Carol’s situation as an example.
Five years ago Carol was 47 years old, recently divorced, and ready to start a new chapter in her life. Her three children were grown with careers and families of their own.
She was awarded $575,000 in assets plus a monthly alimony payment in her divorce settlement.
Carol loves her work as an administrative assistant and doesn’t plan to retire for at least another 10-15 years. She wanted to use the settlement to plan her financial future.
While she understood some about investing from participating in her employer-sponsored retirement plan, she didn’t know if she should hire a financial professional to guide her through this transition and beyond.
After a process of asking friends for referrals and meeting different advisors, she finally decided to work with a financial professional to create a financial and investment plan that took her long-term goals as a single woman into consideration.
Once the plan was in place her financial professional recommended an implementation and ongoing management of her portfolio that was aligned with her plan. This included investing the $300,000 traditional IRA and the $75,000 Roth IRA and systematically rebalancing it with the professional’s guidance.
While Carol’s three children were out of the house and on career path of their own, she often wondered how she would care for herself as she aged. She’d watched her father take care of his mother for five years before she died. At the end, her father was emotionally and financially exhausted. Carol didn’t want to do that to her children.
She purchased insurance to pay for care in her home or a care facility if she needed it in the future. She took $50,000 from her settlement to fund the policy.
She then reviewed options for purchasing or renting a home. While she liked renting because the management company provided upkeep, she wondered if owning a home was in her financial best interests.
Interest rates were low. Supply of homes in her price range were plentiful. She decided to use $100,000 as a down payment on a home. Her mortgage would be less than her monthly rent plus she’d have a real estate investment to add to her portfolio.
Not soon after the divorce was final, Carol received a tip from a friend about a tech stock that was poised for growth. After researching herself and asking her financial advisor, Carol opted not to purchase the stock. It didn’t fit her portfolio or long-term financial goals.
That turned out to be a smart choice. The following year the stock took big losses. The company eventually went bankrupt when a competitor copied their yet-to-be patented technology.
Carol is confident her settlement is invested with professionals her understand her family and financial goals. She meets with her advisor annually and is able to call or email as often as she needs. She trusts that her financial professionals are the experts which allows her to focus on her newly single life knowing her portfolio is positioned for positive results.
Shanna Tingom uses clear guidance from financial planning and investment management strategies to help you, as her client, achieve your financial goals. The principles she utilizes have been studied by Vanguard with their Advisor’s Alpha research and have been demonstrated to be an effective method to save clients time while adding value.