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NavStar Financial Services

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Suite 2202
Mooresville, NC 28117

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e-mail:larry@navfs.com

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Larry Jones

Lake Norman Financial Planner, blue water ocean sailor, dangerous golfer, and PADI scuba instructor (in another life)
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Recent Posts

Estate Planning Case Study: Too Much Life Insurance?

Posted by Larry Jones on Jun 20, 2019 9:30:00 AM

The Scenario:

Jack Howard, age 70, and his wife Marcy, 64, are very comfortable financially. Jack made a large amount of money from a series of successful patents obtained through the years. The value of Jack and Marcy's estate is calculated to be $11.9 million. Included in that amount will be a $1 million life insurance payout, from a policy on Jack, to Marcy. The life policy currently has a cash value of $700,000

Unfortunately, that million dollars will be included in Marcy's estate when she dies, and it will push her over the Estate and Gift Tax exemption, which is $5.45 million for the first to die, and then is rolled over to the surviving spouse, for a total exemption of $10,900,000. That will leave an estate tax bill of around $400,000. Now, that amount can easily be obtained from the life insurance payout. But is there a better way?

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Topics: Case Studies

Can Life Insurance Be a Sensible Investment?

Posted by Larry Jones on Jun 18, 2019 9:30:00 AM

The Hare vs. the Tortoise

Let's face it, Wall Street is sexy. Where else can the lure of 150% returns and the calculation of standard deviation, variance, and geometrically weighted returns create such excitement? Wall Street is the red Ferrari, the F-16 fighter, the Rocky Balboa of earning money. Just remember that Rocky took some hard knocks along the way!

But what about "good old, boring life insurance?" Can it be a good investment?

Many advisors today would tell you that the answer to that question is no. Certainly those advisors who also happen to be stockbrokers would say that. But our parents would have had a different idea. To the “greatest generation” the idea of risking money in the market brought back unpleasant memories of losing everything in the great depression.

But it's just not sexy, insurance. Ugh! Why would anyone want the tortoise when they can have the rabbit?

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Topics: Investment Advice

How will your family handle a long term care situation?

Posted by Larry Jones on Jun 13, 2019 9:30:00 AM

Are you a reasonable person?

What a question, huh? Of course you are!

Why would I even ask such a question of a reader? "After all, isn't the fact that I faithfully read this blog, and am nearly physically ill when I miss one, proof enough that I'm a reasonable person?", you might say. Point taken.

Well then, this blog is for you! The subject is your family....or more specifically, your family and how your need for long term care might affect them, and their lifestyle. Is that important to you?

If so, read on.

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Topics: Long Term Care

4 Great Strategies to Manage Investment Risk

Posted by Larry Jones on Jun 11, 2019 9:30:00 AM

Are you a risk taker?

If you have investments on Wall Street, you are. You might not be a skydiver, scuba diver, or venture capitalist, but you're a risk taker. Your money is at risk of loss. Investors know that the amount of money they are likely to earn on their investment is directly related to the amount of risk they are willing to accept to generate that return.

What continually amazes me, however, is how misinformed most investors have as to the amount of risk they actually have. I'd say that 75% of the folks I interview who tell me they are "very conservative" when it comes to their tolerance for risk, have no idea that their stockbroker has them heavily invested in high to moderate risk funds!

We know that we need to take some risk. What we don't seem to know is this: we should always take the least amount of risk necessary to generate a required return. In other words, if you can earn 8% a year taking a low risk, why on earth would you want to take a moderate risk to get that same 8%?

In a sane world, you wouldn't. Is your broker living in a sane world?

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Topics: Investment Advice

Wealth Accumulation Financial Services

Posted by Larry Jones on Jun 6, 2019 9:30:00 AM

It's Just Math (isn't it?)

Why on earth would anyone pay a fee to have a financial advisor help them? After all, isn't it just a matter of common sense? As one gentleman once exclaimed to me, "It's just math."

As someone who hates to pay for anything that I can do myself, I feel your pain. But it just may be that we need to turn this rock over a bit more and look under it. 

There's no reason to believe that just because you know how to quantitatively analyze a math problem with more than six variables, that you are familiar with the tax code, which even Albert Einstein said was "more philosophy than mathematics."

The typical electrical engineer would not be expected to understand how it's possible to generate a consistently positive growth in an IRA north of 7% without market risk.

Your average rocket scientist, if there is such a thing, might be surprised to find that there are ways to prevent the government from taking a large chunk of money from his family after he dies.

You see, the math is easy. It's the financial expertise that's missing. Just because you are a prodigy in your own field doesn't mean you are an expert in all the mysteries of the universe.

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Topics: Wealth Accumulation, Financial Services

Can Tactical Investing Save the Day for Your Investment Portfolio?

Posted by Larry Jones on Jun 4, 2019 9:35:00 AM

Have you ever wondered why your broker doesn't protect your portfolio when the market is crashing?

It seems like a reasonable question to me. In 2008-09 when the market was in a serious free-fall the protection that the average investor thought he had through diversification was absent. That's because diversifying your portfolio is no protection when the entire market is declining. Many portfolios declined by half. It wasn't pretty.

Yet, the mutual funds that constitute the vast majority of American investment remained 100% in the market. You'd think that a professional fund manager would move to protect his clients, but the investor usually expects his stockbroker to do that. The average stockbroker, however, is constrained by the firm he works for. It's a fact that most mutual funds stay at least 80% invested in the market, even when it's crashing.

Why?

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Topics: Investment Advice

Investment Advice for the Average Investor

Posted by Larry Jones on May 30, 2019 9:33:00 AM

Of all those reading this, half are below average!

Am I insulting my readers?

No, of course not! I'm making a mathematical statement. Half of any group is necessarily below the average of all of them. When it comes to investing, however, studies have shown that there is a huge gap between what the average investor should earn, and what they actually do. For example, the S&P 500 over the long term has historically earned north of 7%. The average investor doesn't quite reach that level, and comes in at around 3%!

What?! How can that be?

According to Terrance Odean, a finance professor at the University of California at Berkely,

"Many of the mistakes that investors make come from a lack of understanding of the innate disadvantages they face."

According to Odean, individual investors are anything but rational, and can be their own worst enemies. My experience also bears this out.

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Case Study - 81 Year Old Widow

Posted by Larry Jones on May 28, 2019 9:30:00 AM

Although the person I'll reference in this study is fictional (I'll call her Mary), her circumstances are certainly not. Let's take a look at Mary's financial situation:

Mary is a widow, and her husband Bud passed away five years ago. Her financial situation is still very similar to what it was before Bud died.

She has $350,000 in a brokerage account, which is an IRA, and another $50,000 in bank CD's. She has an accountant who does her taxes, a financial advisor from her bank, and an attorney who has helped her prepare legal documents, such as her will. She has no trusts. Her sources of income are social security, a survivors pension from Bud, and a 4% drawdown each year from her IRA. 

One afternoon Mary has a stroke. She loses the ability to speak and all mobility.

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Topics: Case Studies

Investment Advice: Five Things That Your Stockbroker Won't Say

Posted by Larry Jones on May 23, 2019 9:30:00 AM

Did you know...

that before 1980 less than 5% of Americans were invested in the stock market? That's kind of hard to believe when you've just seen the latest report on the Dow in the evening news, followed by several commercials from investment firms, and even a cable channel devoted to Wall Street!

But our parents were probably not part of all this. They accumulated wealth in more traditional ways, and took much less risk. Why do we take such risk with our money today? Because we have been educated by the Wall Street machine to believe that we have to.

As an investment advisor, and a financial planner, I would agree that over the long-term there isn't a better way to grow assets than in the market, which has traditionally returned north of 7% year after year OVER THE LONG HAUL. But what if you are a retiree, or getting close to retirement? Can you really be happy about losing half of your portfolio in a few months, and then waiting six years for it to come back? That's what happened in 2008-09. What if you suddenly had to pay for long-term care just as your portfolio hit bottom? Would you still be excited about Wall Street? By the way, in the 30's, after the stock market crash, an entire generation never trusted Wall Street again, or banks!

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Topics: Investment Advice

How About Financial Services That Come to You!

Posted by Larry Jones on May 21, 2019 9:30:00 AM

Is your time important to you?

Have you ever scheduled a service call only to have them tell you that someone will stop by your home sometime between 8AM and 5PM....as long as they can get to you that particular day? Aargh!!

If you're like me, your time is a very valuable resource to you. Few things get my goat like someone presuming that they know better how to spend my time than I do. Come on. In this day of instant communication can't we do better than this?

It might come as a surprise to your cable technician, but many TV viewers have jobs. We might even consider it more important to keep that job than to watch Dr. Phil's latest episode about gender-confused insecure college dropouts who hate their lives. 

When you need to see a doctor you must take time off from work. Your car needs repair and you have to be absent from work...again. Your aging parent needs care, and ...well, you get it.

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Topics: Financial Services

What you don't know can hurt you!

As a fiduciary I am required to always act in your best interests, and as a professional planner, it's my job to be familiar with all types of possible solutions and financial vehicles. In short, I have no interest in selling any particular product or any affiliation with a particular company. I work for my clients.

Are you:

  • concerned that your tax bill is too high?
  • tired of watching your nest egg decline by significant amounts every 5-7 years?
  • wishing you could find more free time?
  • looking for ways to help protect yourself against litigation that could destroy all you have worked for?
  • worried that Uncle Sam is going to enjoy your retirement more than you are?

If any of the above describes you and you'd like to get a question answered then just click the button below and we'll be in touch.

Let's Meet!

p.s. we have the ability to meet virtually regardless of your location! Give us a shout!

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