When our clients come to us for assistance, one of the most common concerns is figuring out how they should address a diverse range of financial goals. This challenge is especially prevalent among younger clients, who are faced with both opportunities and challenges when structuring their investments. 

Young professionals need to carefully balance how they manage their investments in order to meet both short-term and long-term goals, and must also regularly update their portfolios as their circumstances change. When done successfully, they will be well-positioned for the future.

The Financial Circumstances of Young Professionals

Before deciding how they should prioritize their financial goals, young professionals should first assess their financial circumstances. Naturally, each person’s income, expenses, and goals will be different, so creating an investment budget is a useful first step.

Starting a career may be the first time a young professional is handling a complete household budget. Once they have accounted for rent, utilities, groceries, and other essential expenses, along with how much they want to spend on non-discretionary items like dining out and entertainment, they can determine the goals they want to achieve with their leftover income.

Some common aspirations for young professionals include:

The Risks of Hyper-Focusing on a Single Goal

We sometimes see that young clients are zeroing in on one goal, such as supercharging their retirement portfolio or tackling their student loan debt, and giving less attention to others. In doing so, they hope that they can achieve a goal more quickly and be better positioned to address others. Unfortunately, this strategy risks the possibility that some goals may go unfulfilled.

Here’s how hyper-focusing on a single financial objective can be detrimental:

Investment timelines

Each financial goal will come with its own timeline, which can also guide the investment strategy that is best suited to meet it. Short-term goals include the down payment for a house, paying off credit card debt, establishing an emergency fund, or acquiring enough capital to start a business. Saving for these goals should focus on building up the assets, keeping them liquid so they are easily accessible, and minimizing risk.

Medium-term goals, which can take up to a decade to complete, include paying off student loans, saving for a child’s higher education, completing significant home renovations, and starting a family. Investments toward these goals can assume more risk due to the longer timeline, though a gradual adjustment toward lower-risk investments should occur over time.

Longer term goals include retirement and general wealth accumulation. Investing toward these goals can take place over several decades, and use more aggressive strategies at the outset to maximize gains. By regularly contributing to these funds, periodically rebalancing a portfolio, and taking advantage of compounding interest, the lengthy investment period can potentially build up a substantial balance.

Balancing investments as a young professional

The challenge for investing as a young professional is that so many goals still lie before them, and they are often trying to achieve several goals over varying periods of time. Some general strategies that can be useful for young professionals to work toward these goals include:

To set up a meeting with one of the financial advisors at Grey Ledge Advisors, call 203-453-9075 or use our online contact form.

2025 is shaping up to be a transformative year for markets, with the U.S. presidential election behind us and President-elect Donald Trump’s policies expected to set the tone for economic and sectoral dynamics. The outlook remains cautiously optimistic, but investors must navigate a landscape rife with opportunities and risks. Here we offer a concise breakdown of our market outlook for the new year; the full report from Grey Ledge Advisors is attached at the end of this article.

Economic and Sectoral Highlights

Energy Sector: Traditional energy companies will thrive under deregulation, boosting profitability in oil and gas. However, renewable energy projects may face challenges with reduced infrastructure funding.

Financial Sector: Deregulation and a steeper yield curve will favor banks, driving improved net interest margins. The deal-making environment also looks ripe, but systemic risks persist due to reduced oversight.

Industrial and Manufacturing: With proposed corporate tax cuts to 15% and tariff protections, domestic manufacturers will benefit. However, increased input costs from tariffs could disrupt companies reliant on global supply chains.

Small Caps: Small-cap companies stand to gain disproportionately from tariff protections and lower taxes while trading at a significant valuation discount to large caps.

Japan’s Market Opportunities: A unique investment destination, Japan combines stable inflation, corporate governance reforms, and innovative sectors like semiconductors, robotics, and advanced materials to attract global investors.

Key Themes in Technology

AI Revolution: Advances in AI are reshaping industries, driving efficiency and innovation. Companies investing in AI are expected to gain first-mover advantages.

Cybersecurity Challenges: The rise of AI-driven cyberattacks demands significant investment in robust cybersecurity measures, creating opportunities in this critical sector.

Macroeconomic Landscape

Federal Reserve: Persistent inflation, hovering at 3.5%, complicates the Fed’s balancing act between rate cuts and economic growth.

Trade Policies: Aggressive tariffs may bolster domestic industries but could stoke inflation and disrupt global trade.

Geopolitical Risks: Escalating regional conflicts and shifting global alliances could disrupt capital markets in unexpected ways. While trade tensions dominate headlines, geopolitical unpredictability may create ripple effects on currency stability, commodity pricing, and cross-border investments.

Key Risks to Watch

Inflation and Unemployment: Persistent inflation and rising unemployment (projected at 4.5%) signal an economic slowdown.

Debt Refinancing: Higher refinancing costs could drive increased default risks for speculative-grade firms.

Market Valuations: Elevated equity valuations heighten correction risks if earnings fall short.

Household Debt: Increasing debt levels may weigh on consumer spending, dampening growth.

Closing Thoughts

The year 2025 presents a dual narrative of opportunities and challenges. Sectors like technology, energy, and small caps offer significant upside potential. However, investors must remain vigilant against macroeconomic risks and geopolitical shocks. With careful positioning and a focus on resilience, portfolios can be aligned to capitalize on emerging trends while mitigating downside risks.

To read the complete Market Outlook Report, please download the report here: Market Outlook 2025

Each holiday season, people try to come up with gift options that are just right for their loved ones. In recent years, this has increasingly meant shying away from the purchase of a physical gift item.

In its annual survey, the National Retail Federation found that gift cards were the second most popular gift purchase this holiday season. A separate survey by Deloitte found that the growing popularity of giving experiences instead of items is showing no signs of slowing down, with spending on experiences expected to grow by 18 percent this year.

There are several reasons influencing the move away from the purchase of physical gifts. Gift cards can simplify the holiday shopping experience and minimize the possibility of purchasing something the recipient won’t enjoy. Both gift cards and experiences are in line with the growing popularity of more minimalist lifestyles, as people cut down on unnecessary belongings to reduce the clutter in their home and reduce their impact on the environment.

Despite these trends, giving cash as a gift remains fairly taboo. Writing someone a check or giving them an envelope of cash is often regarded as lazy, impersonal, or insulting. Even when someone requests money to help with a larger purchase, it’s easy for life to intervene and the cash to simply get mixed in with regular savings and expenses.

Thankfully, there are still financial gift options that can provide a truly meaningful gift for your loved ones. Here’s a look at how you can do some financial gift giving for the holidays, and what important considerations you should keep in mind when doing so.

Financial gift options

The following financial gift options go beyond a simple contribution to someone’s bank account. Each one supports a specific financial goal or overall financial wellness, with a potential to grow the recipient’s assets.

Important considerations for financial gifts

While these types of financial gifts can be very meaningful, they can still cause complications if you aren’t careful. Take the following into consideration before committing to this type of gift:

Finally, accompanying a financial gift with a heartfelt letter is always a good idea. This will demonstrate why you chose the gift you did and show that you are well aware of the recipient’s interests and needs.

Between the tree trimming, gift purchases, and all the other assorted tasks of the holiday season, the end of the year is a hectic time. It’s also a time when we try to relax, enjoy time with our families, and think back on all that’s happened during the year.

Naturally, this often means that the end of the year is when we start thinking ahead to what we hope to accomplish in the year ahead. As you consider your financial goals for the coming months, you should also take the time to develop a comprehensive year-end review to assess your current financial situation and guide your decisions in the future.

By taking the following steps, you’ll be able to outline useful information for you and your financial advisor to determine your next steps.

Update your income and expenses

Take a look at all sources of income you’ve had over the past year. This should include your salary along with any additional income, such as bonuses, money earned through freelance work or other side jobs, and passive income such as stock dividends or earnings from rental properties. You should also consider any income from pensions, Social Security, or other retirement funds.

Do a similar review for your spending over the past year. This should include expenses for housing (rent or mortgage, utilities, insurance, maintenance costs, and property taxes), transportation (car payments, maintenance, gas, and insurance), food, clothing, healthcare, education, and debt payments. Add up any non-essential expenses as well, including money spent on entertainment or dining out.

This assessment will let you determine where you may be able to reduce your spending or expenses. You can also consider getting a budgeting app or starting a spreadsheet for real-time expense and income tracking in the new year.

Analyze your assets

A review of your assets should include anything of value. This includes cash, real estate, vehicles, investments, intellectual property, retirement savings, and valuables.

When reviewing your investment portfolio, check its performance against market benchmarks. If the portfolio is underperforming, you may want to rebalance it so it can better align with your investment goals and risk tolerance.

Be cautious when considering the value of certain assets. For example, when valuing your real estate holdings you should be mindful of any anticipated maintenance or repair costs, along with any factors that may influence property values. Make conservative estimates when valuing items like jewelry or artwork, as their value can vary significantly based on their condition and market demand.

Your review should also assess the current liquidity of your assets, or how easily they can be converted to cash value if necessary. If you anticipate that you’ll need higher liquidity in the new year, you’ll want to begin taking steps to adjust your holdings.

Review your debts

Evaluate any debts, or liabilities, that you currently owe. These may include your mortgage, vehicle loans, credit card debt, student loans, or personal loans. 

Once you have this information, you can calculate your debt-to-income ratio to determine how much of your gross monthly income is going toward debt repayment. A debt-to-income ratio of 36 percent or less is ideal, since it allows for greater financial flexibility.

By regularly reviewing your debts, you can determine a debt repayment plan that works for you. Focusing on higher interest debts will help you save money over the long term. You may also be able to use debt consolidation strategies to save on monthly payments.

Calculate your net worth

Once you’ve completed the steps above, you can simply subtract your debts from your assets to determine your net worth. This measure provides a useful look at your overall financial well-being, helps measure how well you are progressing toward your financial goals, and identifies where you might need to make improvements.

If you want to track your net worth over time, you can create a net worth statement to update the value of your assets and debts at regular intervals.

Review your retirement savings

Check the current balance of your 401(k), IRA, or other retirement accounts. Estimate how much retirement income you are likely to need based on your desired lifestyle, healthcare costs, inflation, and other factors.

Using this information, you can assess your current savings strategy and determine if it is adequate to meet your retirement savings goals. Your financial advisor can review this information with you and determine what changes you may need to make.

Check your insurance coverage

Check your health and disability insurance to ensure that you have adequate coverage for potential medical expenses and lost income. You can also review any life insurance policies you have to determine if their coverage is enough to meet your family’s needs. Review additional insurance policies as well — such as those for your home, vehicles, and valuables — to see if they accurately reflect the value of these possessions.

Depending on your insurance coverage, you may want to update your insurance coverage to better reflect the value of your possessions. You can also review rates and coverage options to find potential savings.

Get ready for tax season

A financial advisor can help you identify strategies like charitable donations and contributions to tax-advantaged retirement accounts that can help you save money on your taxes. You can also review tax credits and deductions that may be available to you when it comes time to prepare your tax documents in the new year.

Consult with a tax professional for further information on maximizing your tax benefits.

Set your financial goals for the new year

A year-end financial review is an excellent way to get a complete view of your financial situation and identify any areas for improvement. This will help you identify specific goals to address in the new year.

Common financial resolutions for the new year include:

Once you’ve determined your financial priorities for the new year, you can create a plan for how to address them. A financial advisor can help you come up with strategies to address your goals, review your progress, and make any adjustments as needed.

Each presidential election year brings plenty of rhetoric over which candidate will be most beneficial for the American people. Each candidate promises that their administration’s policies will help the economy, and usually warns that their opponent’s plans will hinder it.

These policy disagreements have become more contentious in recent decades as political polarization has become more pronounced. Thankfully, there’s still one place where presidential elections remain decidedly nonpartisan: the stock market.

Election years can sometimes bring some degree of uncertainty to the markets. But with the global reach of the stock market, and the numerous large-scale factors that influence it, the decision about who will be the next occupant of the White House has a rather minimal impact.

Key influences on market performance

Investor sentiment is largely driven by major economic indicators. When these indicators are strong, it drives better market performance; when they are weaker, it leads to market declines or diminished returns. In the United States, market swings tend to happen with the release of updated information on the following:

Similar factors can affect the value of individual assets traded on major stock exchanges. A company’s value will change based on its earnings reports as well as the overall health of the sector in which it operates. News about the company can also impact investor sentiment; positive developments such as its acquisition by another business can drive its stock up, while negative developments like the announcement of layoffs or product recalls can diminish its value. 

Other large-scale developments can affect the value of individual assets, sectors, or the market as a whole. These include wars, trade disputes, and natural disasters, all of which can cause significant disruptions to markets, supply chains, and economic growth.

The limited effect of elections

If we consider the circumstances in play during the presidential elections in the United States in the 21st century, we can see why the races had little impact on overall economic trends. 

The election of 2000 took place against the backdrop of the dot-com bust and a slowing economy, which were major contributors to market declines. The election of 2008 took place amid the worsening conditions of the Great Recession, which also saw severe market losses. The elections in 2004, 2012, 2016, and 2020 occurred during market gains as a result of growing or stable economies (with an added boost in 2020 as the development of the COVID-19 vaccines heralded a return to normalcy after the pandemic).

Some of the main reasons presidential elections have a more muted impact on the markets include:

Conclusion

The leadup to Election Day can sometimes lead to a more volatile period in the stock market, as investors react with greater caution or uncertainty about what the result might mean for the economy. Once a winner is selected, it might result in a modest market fluctuation based on what investors think the economy will be like under the new or continuing President, or how certain sectors might perform. However, any such effects in recent elections have been short-lived, with investors soon refocusing on macroeconomic factors.

Investors will have expectations of how the next administration might affect the overall economy through policies on corporate tax rates, trade policies, government spending, regulatory environments, and so on. However, the market is unlikely to react significantly until such policies are actually implemented.

When you visit a local cafe to buy a cup of coffee, you’ll have several quick and easy payment options which allow you to get your morning caffeine. You might get some cash out of your wallet or the ATM, or use a credit card, or even write a check if you’re so inclined.

Chances are you have other assets beyond these payment methods, but your friendly neighborhood cafe won’t be inclined to accept them. If you walk up to the barista and try to buy your drink with a stock certificate or a piece of artwork, it makes the transaction a lot more complicated.

This, in a nutshell, is the concept of liquidity, or how quickly an asset can be bought or sold without a significant change to its price. For some assets, this can be done rapidly and efficiently; for others, more time, deliberation, and uncertainty is involved.

Understanding liquidity is an important part of creating a balanced portfolio that fits your personal circumstances. In this blog, we’ll be exploring the concept of liquidity and how it can affect your investment decisions.

Liquid and illiquid assets

Liquid assets have a known value, allowing a purchase or sale to be done quickly. Cash is considered to have the highest liquidity, since it is a universally accepted method of payment, can be exchanged for goods and services, and can be used for purchases without any dickering over valuation.

Other assets are considered liquid since they can be quickly sold and converted to cash if need be. Some examples include government bonds, shares in publicly traded companies, and exchange-traded funds.

Illiquid assets are any investments that are more challenging to buy or sell without having a significant impact on their price. These transactions also tend to take longer since they involve negotiation over the value of the asset. Illiquid assets include real estate, private equity investments, some bonds (such as municipal bonds), and collectibles like art or antiques.

What affects the liquidity of assets?

There are numerous factors affecting the liquidity of assets, including:

How can I manage liquidity risk?

Liquidity risk refers to the possibility that an asset can’t be bought or sold at a reasonable price, which in turn means that you might be stuck with the investment and unable to convert it to its fair value in cash. While this risk is higher with illiquid assets, it can also happen with more liquid assets such as stocks and bonds if market stress, an economic downturn, or negative news about a company’s stock makes investors more cautious about buying or selling these assets.

Just as your investment portfolio should have a diverse range of investment options, it should also strike the right balance with liquidity. This strategy helps avoid a concentration of your investments in either liquid or illiquid assets.

Having at least part of your portfolio dedicated to short-term investments that can quickly be converted to cash, such as government bonds, ensures that you can quickly tap into the value of some of your assets. Some investments, such as ETFs and mutual funds, offer liquidity management tools to help ensure that they can meet redemption requests from investors.

What should my portfolio’s liquidity mix look like?

Deciding how much of your portfolio should be invested in liquid assets will depend on your financial goals, as well as your risk tolerance. Naturally, these will vary for each client.

If you plan to access your funds frequently, or have a specific time when you know you’ll want to do so, your portfolio should have higher liquidity. For example, an investment portfolio such as a 529 plan to save money for a child’s higher education expenses should have high liquidity, since you’ll need to access this at a known point to pay for tuition bills and other expenses.

Rebalancing your portfolio is an important part of liquidity balance. While a retirement portfolio is well-suited for illiquid assets due to its long time horizon, you’ll want to increase the liquidity of this portfolio as you grow closer to the date you’d like to start using these savings. You should also be comfortable with the amount of funds you can easily access through an emergency fund or other options, since market volatility can limit your ability to get a fair price on liquid assets.

Working with a financial advisor can help you find a liquidity strategy that fits your goals. Grey Ledge Advisors has five investment strategies (Capital Preservation, Conservative Income, Balanced, Growth, and Aggressive Growth) designed to suit your circumstances and access your assets when you need them. Contact us today by calling 203-453-9075 or using our online contact form.

At Grey Ledge Advisors, we’re always keeping our eye on the markets as well as the trends affecting the investment landscape. In this blog, we’ll take a look at the market’s recent performance, ongoing debates over the fiduciary standard and socially conscious investing, the role of AI in financial advising, and how young workers are saving for retirement.

Market update

Recent market performance generated some troubling headlines, including a single-day drop in the Dow of more than 1,000 points and the S&P 500 posting its worst day in two years. This downturn occurred during a tumultuous week as investors reacted to economic data that was significantly weaker than anticipated.

Non-farm payrolls in July grew by just 114,000, falling well short of the expected 185,000, while unemployment rose to 4.3%, its highest level since October 2021, sparking fears of a recession. The Bank of Japan unexpectedly increased its interest rate by 0.25%, which shocked the markets and triggered a steep decline, with losses of 5.2% and 12.2% in a single day. The Nasdaq and S&P 500 also fell by more than 3% each. 

However, after a week, the market regained its footing with positive economic data and lower weekly jobless numbers, recovering all the losses. The unwinding of the yen carry trade, where traders and hedge funds borrow in the cheaper yen and invest in dollars, caused the initial panic. Investors should brace for upcoming election-related volatility as candidates unveil their policies and more economic data reveals the state of the economy, setting expectations for 2025.The Federal Reserve may implement interest rate cuts if the job market weakens as expected by the central bank.

Despite these fluctuations, this performance remains within the parameters of a normal market correction, which helps temper overenthusiasm about certain investments, brings stock prices back to more realistic values, and reduces the risk of bubbles forming in specific sectors. Looking at long-term trends, all major indexes have been trending positively. 

The Dow is up about 12 percent year-over-year and 4.7 percent year-to-date. The S&P 500 has grown nearly 20 percent year-over-year and 14 percent year-to-date, with the Nasdaq showing a similar trend.

Debate continues on fiduciary standard update 

Financial advisors have long been legally required to follow the fiduciary standard, which stipulates that they must act in the best interests of their clients and avoid conflicts of interests. This requirement was set with the Investment Advisers Act of 1940, while the Employee Retirement Income Security Act (ERISA) of 1974 established similar fiduciary responsibilities to parties exercising control or influence over the assets of a retirement plan.

Earlier this year, the U.S. Department of Labor released a new rule expanding the definition of which professionals qualify as fiduciaries under ERISA. The department said there are a “plethora of investment professionals” who are currently exempt from the law’s protections, and that the expanded rule aims to have these parties follow the fiduciary standard as well.

Although the rule was set to go into effect on September 23rd, it was challenged by certain groups (including insurance brokers) who claim it exceeds the Department of Labor’s authority and would create excessive compliance requirements. The U.S. District Court for Northern Texas recently stopped implementation of the rule, and the Department of Labor is likely to appeal.

While this matter works its way through the court, the current ERISA rules will remain in effect. Grey Ledge Advisors is a fiduciary under ERISA, and its advisors act in the best interest of their clients.

ESG “tiebreaker” rule back in the courts 

An investment strategy that has developed political overtones is also back in the courts. Following the Supreme Court’s decision to scrap the Chevron deference, a U.S. appeals court ordered a Texas judge to reconsider his opinion upholding a rule from the Biden administration on environmentally and socially conscious investment strategies.

The rule, established in February 2023, allows 401(k)s and other investment plans to take environmental, social, and corporate governance (ESG) considerations into account when choosing between two or more similar investment options. This rule has been challenged by the oil company Liberty Energy as well as 25 Republican-led states.

ESG investing has gained popularity as a way for people to consider factors such as a company’s labor practices, transparency, and commitment to environmental sustainability when choosing where to invest their assets. This allows investors to support companies that share their values, though it also has certain drawbacks such as a more limited pool of investment options and the potential to miss out on investments that post substantial gains. The trend has also inspired a wave of state-level legislation either supporting or blocking ESG in public investments

In another recent court decision regarding ESG investments, a federal judge in Missouri recently struck down a state law that would have required financial advisors to disclose whether they were taking ESG factors into account and obtain consent from their clients in order to do so. Opponents of the law argued that this was unnecessary since financial advisors already follow the fiduciary standard in considering the best investment options for their clients.

The growing role of AI in wealth management

During the writing of this blog, we asked an artificial intelligence (AI) platform if it had any investment advice based on current trends. It returned a few paragraphs of general advice, encouraging us to diversify our portfolio, consider long-term investments…and to go talk with a flesh-and-blood financial advisor.

It’s clear that AI still has room for improvement. There are a growing number of robo-advisor options that will set up and periodically rebalance portfolios based on information a person provides when setting up their account, and consumers often find this to be a convenient way to invest. However, robo-advisors also have a more constricted range of investment options, struggle to keep up with volatile market conditions, and generally fail to connect meaningfully with human social behavior.

Many industries have been alarmed at the growth of AI and its potential to supplant human jobs, only to find that it is better to implement AI as a supportive tool rather than a replacement one. AI has been a useful way for financial advisors to streamline certain services and dedicate more time to creating customized portfolios that meet the changing circumstances, ambitions, and concerns of clients.

Gen Z gets a jump on retirement planning

Now that Millennials are careening into middle age and Gen Z is entering the workforce, it’s their turn to be on the receiving end of criticism from older generations about their spending habits. But hold that barb about avocado toast…several studies are showing that these young adults are quite budget conscious.

MSN recently wrote about Gen Z workers who have been making a strong effort to put aside a substantial portion of their income early in their careers to start a foundation for their retirement savings. A study by the British bank NatWest also found that 69 percent of Gen Z respondents in a recent survey had created a budget to manage their finances, compared to just 42 percent of Baby Boomers.

The wide availability of retirement savings plans has also been beneficial to younger workers. A recent report by the Morningstar Center for Retirement and Policy Studies found that Gen X and Baby Boomers are most likely to be affected by employers’ move away from defined benefit pension plans, and estimated that 52 percent of Baby Boomers and 47 percent of Gen Xers may experience retirement insecurity. 

By contrast, Millennials and Gen Z are more familiar with today’s more common defined contribution plans like 401(k)s, and have also been able to benefit from features such as auto-enrollment and auto-escalation. Morningstar estimates that a lower share of the younger generations (44 percent of Millennials and 37 percent of Gen Z) may face retirement insecurity.

Changing jobs is an exciting time, but in the midst of the transition it’s easy to forget about your retirement savings. One common mistake people make is leaving their 401(k) behind with their old employer, which can also leave you with less control of your investments and awareness of how your portfolio is performing. 

As frequent career changes become more commonplace, it has become even more likely for retirement funds to be dispersed across multiple accounts. Research shows that the average person holds 12 jobs during their working life, or about once every four years. This can lead to quite a trail of retirement accounts at previous workplaces.

Rather than leaving your 401(k) in the hands of the former employer, you should consider rolling over these funds to an IRA when you switch jobs. This action will help you manage your retirement savings more easily and allow you to make more informed decisions about your financial future.

Why You Shouldn’t Leave Your 401(k) Behind

Keeping your 401(k) with a former employer’s plan is usually allowed as long as you have a sufficient amount of money in the account — $5,000 in most plans. Employees sometimes opt to keep their retirement funds with a previous employer because they’re satisfied with how the account is being managed. This approach is also much preferable to cashing out the fund when you depart a job, which can often result in an early withdrawal penalty plus a tax on the distribution.

In many cases, however, employees simply leave their 401(k) behind because they don’t think to move over the funds to a new retirement account, or because they think it will be too complicated or time-consuming to do so. They may believe that it’s wiser to leave the funds to mature in a separate account as a way of diversifying their retirement investments.

Unfortunately, leaving your 401(k) with a previous employer can also create several disadvantages for your retirement savings:

Why Rolling a 401(k) Over to an IRA Benefits You

Rolling over your 401(k) savings to an IRA is a convenient way to update your retirement savings strategy when you switch jobs. There are several compelling reasons to consider taking this action:

Rolling Over Your 401(k) with Grey Ledge Advisors

Rolling over your 401(k) to an IRA is a relatively straightforward process. As a first step, you can   contact  Grey Ledge Advisors to assist you in setting up your new account with a new IRA custodian. Then you contact your current 401(k) administrator and request a direct rollover to the new IRA. Since this action transfers funds from one qualified retirement account to another and does not withdraw them, you will not incur any taxes or penalties.

If a direct transfer is not available, you’ll need to do an indirect transfer by requesting a check payable to the new IRA custodian. However, you have only 60 days from receiving the check to deposit it into your IRA to avoid tax penalties.

Working with a financial advisor like Grey Ledge Advisors will not only help you complete the rollover process efficiently, but also provide you with a valuable partner as you pursue your retirement goals. An advisor can also guide you through any unique circumstances, such as what to do when a 401(k) with a previous employer includes company stock.

Grey Ledge Advisors also abides by the fiduciary standard, which means we act in our clients’ best interests. Rather than chasing commissions, we seek out the lowest cost investments that have a higher probability of maximizing our clients’ returns — including options for minimizing IRA fees.

Contact Grey Ledge Advisors using our online form or give us a call at 203-453-9075 to begin a 401(k) rollover process.

Financial advisors handle portfolios of all sizes. Some clients have a modest sum left over to invest after accounting for their regular expenses. Others have millions of dollars they’re willing to put into the market in pursuit of strong returns.

With the growing awareness of accessible portfolio options, the misconception that you need a large amount of money to begin investing is fading. However, the amount you invest can still influence your investment strategies and goals.

Here are a few points to keep in mind:

Smaller investments won’t always affect your risk tolerance

Investing offers the potential to grow your assets more quickly than if you simply put your money into a savings account. People are sometimes wary of investing, though, since there is the possibility that your portfolio will lose value if the market dips or your investments underperform.  

For this reason, it’s important to create a budget as a first step. This allows you to compare your income, expenses, and contributions to other funds to determine how much money you can comfortably invest. 

Individuals who have a substantial amount of money available to invest will have a higher risk capacity, which means they’ll be better equipped to absorb losses on their investments without it affecting their financial well-being. For this reason, people who can afford to put more money into investing may have more risk tolerance and will pursue more aggressive high risk, high reward strategies.

People who have less money to put aside for investing are considered to have a lower risk capacity. Since a larger share of their income goes toward essential expenses, they may be more concerned about potential losses and financial difficulties if their portfolio loses value. As such, people investing smaller sums may prefer low-risk investments that offer lower returns but also greater stability.

Even if you only have a modest amount of money available to invest, you may be able to pursue a more risk-tolerant strategy if you take steps to ensure financial stability. One key step is to establish an emergency fund with enough money to cover three to six months of regular expenses. By having this dedicated account, you’ll have a safety net to address unexpected emergency expenses such as a major medical bill. This will give you a way to remain financially stable even if your portfolio loses value, allowing you to pursue investments that carry higher risks but can also produce higher returns.

Similarly, having a high risk capacity doesn’t necessarily mean that you’ll want to pursue a high-risk investment strategy. For example, if your goal is to set up an investment fund to leave to your children as part of your estate planning, you may opt for a lower risk capital preservation strategy.

Short-term goals may be prioritized with smaller portfolios

Whenever you invest your money, you should have your personal financial goals in mind. These may include long-term objectives, such as putting aside enough money to retire, and short-term objectives, such as building capital for the purchase of a home or your children’s college education.

If you have a large amount of money to invest, it’s easier to establish multiple investment strategies to pursue different goals. You’ll also likely want to contribute more money toward long-term goals, since adding capital to these investments will allow for stronger gains over the long timeframe. 

Those investing smaller amounts will need to weigh their options more carefully. It may be more challenging to pursue multiple goals with a smaller amount of funds, as this could minimize your gains. Short-term goals may take precedence over long-term ones; this priority could also necessitate a lower risk strategy, since you’ll want greater stability for certain goals (such as accumulating enough money to pay for a down payment on a house).

At the same time, investors with smaller portfolios shouldn’t lose focus on long-term investments, especially contributions to a retirement fund. Since these have a longer timeframe in which to gain value, even small contributions toward these goals can have substantial returns over time. 

Smaller portfolios should pursue more tax efficient investments

If you only have a modest amount of money to invest, you’ll want to minimize the tax impact on your portfolio in order to maximize your gains. This is particularly important for long-term investments like retirement accounts, which offer tax-advantaged options like IRAs or 401(k)s.

Some more short-term investment options will also allow greater tax efficiencies for smaller investments. These include 529 funds for education savings, where earnings are tax-exempt, and dividend-paying stocks.

Investors with larger portfolios will be more capable of spreading their investments across both tax-advantaged options and taxable accounts where gains are taxed as ordinary income. Even though these accounts will lose some value to taxation, they can also offer other advantages such as greater flexibility and higher returns.

Financial advisors provide helpful guidance for all portfolio sizes

Whether you have a lot of money to invest or a small amount, financial advisors are valuable partners who can assist you in building and maintaining your portfolio.

With smaller portfolios, a financial advisor can help you set realistic goals and create a sustainable plan for your investments. They can assist you with investment options that are well-suited for smaller portfolios, such as fractional shares and exchange-traded funds, and help adjust your strategy as your portfolio matures. 

Larger portfolios require more complex financial strategies and investment decisions, and financial advisors provide in-depth knowledge to assist with them. A financial advisor can also walk these investors through options for minimizing their tax liabilities and offer guidance on matters such as estate planning.

To set up a meeting with a financial advisor, contact Grey Ledge Advisors online or call us at 203-453-9075.

The start of a new year is often when people set goals for the next 12 months and begin making plans to achieve them. Naturally, this means it’s the perfect time to assess your financial situation and determine how much you might invest in the coming year. 

By researching your current budget, you’ll be able to determine how much of your money you can comfortably contribute toward your investment goals. This process also provides useful information for your financial advisor to help guide your decisions.

Whether you’re creating your first investment budget or updating a current one, there are four basic steps you should follow. These ensure that you’ll be able to maximize your investments while still being able to comfortably meet your other financial obligations.

1. Assess your current financial situation

Take a look at your current budget to get a sense of how much money you’re taking in each month, how much you’re spending, and how much you’ll be able to set aside. This process will also update you on the progress you’re making toward any short-term or long-term goals.

Check the past two or three months of your financial activity and plot out the following:

Creating this budget will show how much of your income you could potentially contribute to an investment portfolio. It will also let you determine if there are any areas where you might be able to adjust your spending. For example, you may opt to reduce the amount you spend each month on dining out or cancel some subscriptions in order to have more discretionary income available to invest.

2. Determine how much you can invest

One common recommendation for dividing up your after-tax income is a 50/30/20 distribution, which aims to strike a balance between meeting your basic needs, spending on discretionary items, and addressing long-term goals. This distribution commits:

Investments complicate this model to some degree, as you can consider them as a form of both savings and discretionary spending. Depending on your personal financial situation, you may opt to invest a larger share of your income (such as 25 percent) or a smaller share (10-15 percent).

Even if a larger share of your income goes toward covering basic needs and you only have a small share of your budget available for investing, you can still take this step. One common misconception is that you need to have a substantial amount of money available in order to invest. In reality, you can start an investment portfolio with a modest sum that fits your budget. You can even opt to commit a set dollar amount for investing each month rather than a specific share of your income.

Time is the most important consideration when investing. The earlier you start an investment portfolio, the longer it will have to grow. Committing to regular contributions toward your portfolio, even if it’s just a small amount of money, will allow you to grow your assets more quickly over time.

Look into setting up automations to help support your investment goals. These could include an automatic transfer to shift some of your income to your investment portfolio each time you receive a paycheck. 

3. Set your goals for investing

Once you know how much you can comfortably set aside, you should set goals you’d like to accomplish through your investments. Some common goals include having enough money to:

Your goals will dictate your investment strategies, since they will help you decide how much risk you’re willing to take on and how long you’ll need to save. For example, saving for retirement takes place over a long period of time and usually includes an adjustment of risk strategy (from higher-risk investments at a young age to more conservative investments as you near retirement). Saving for a children’s college fund is also a long-term process, typically accomplished with a tax-advantaged 529 plan. By contrast, investments intended for wealth accumulation often have a shorter timeframe and may pursue more of a high risk, high reward strategy. 

You may decide that short-term financial obligations should take precedence over investing. These could include paying off high-interest debts or building up an emergency fund sufficient to cover at least three months of living expenses. Once you have achieved these goals, you’ll be in a better financial situation and can invest more comfortably.

4. Make adjustments as necessary

An investment plan is not something you set and forget. You’ll need to revisit it periodically and make adjustments to reflect changes to your budget as well as your investment goals. 

You may be able to invest more of your income if you receive a raise, pay off a debt, or no longer need to pay for an expense such as child care. However, you may also want to reduce the amount you invest if you have taken a pay cut or are coping with higher expenses.

You should ideally review your investment plan at least once a month with your financial advisor. This will allow you to make adjustments quickly based on any changes to your circumstances.

To set up a meeting with Grey Ledge Advisors, contact us online or call 203-453-9075.