I'm used to getting at least one credit card application every day. Most times, I toss them away. Now, my son, a 20-year-old college student, has started receiving them also.
Unfortunately, the credit card companies have enlisted some high profile organizations to hawk their wares. The latest was a Bank of America card that came with the endorsement of Kappa Delta Pi, an honor society in education committed to recognizing excellence and fostering support for education professionals.
The front of the application, shows a 0 percent APR until August 2009 and no annual fee, with a credit line up to $15,000. Sounds pretty good so far.
Turn the application over for the rest of the story. Not only does the student have to start paying for purchases in 2009 (just in time to compete with student loan repayments) but the rate becomes 14.24 percent or 21.24 percent for cash advances. However, should the student be late on one payment, the rate can become 30 percent.
Kevin's Contributions to the National Press
click on the book icon to see kevin's contributions to this newly released book Penn State Lehigh Valley’s Adult Learner Success Series will offer a session focused on "Financial Planning for the Future" from 5:00 – 6:30 p.m., Tuesday, October 21, in the Atrium at the Fogelsville campus. Registration will begin at 4:30 p.m. and dinner will be provided. Reservations are requested by October 14. This informational session, sponsored by the Career Services office, will feature interactive presentations by local financial experts followed by an open Q & A period. In addition, a representative from Merrill Lynch will be on site with an information table. Kevin Brosiouswill present tips on investing, budgeting, and decreasing debt. Participants can download a cash flow worksheet that will be part of his presentation. Click here to download the worksheet. Brosious is the founder and president of Wealth Management, Inc., a fee-Only financial planning and Registered Investment Advisory firm. He is a CFP® practitioner, a CPA, and a member of the American Institute of Certified Public Accountants (AICPA). In addition, he is a Personal Financial Specialist (PFS) and is a registered financial advisor with the National Association of Personal Financial Advisors (NAPFA). Brosious is also an adjunct professor at both Penn State and DeSales Universities where he teaches personal finance, investments, and other business courses. He received his B.S. in Accounting from Villanova University and an M.B.A. from Wilkes University. September, 2008: Money-Market Funds still good for liquidity, risk, advisers say: Some investors are switching to funds that invest in Treasury bonds, said Kevin Brosious, president of Wealth Management Inc. in Allentown, Pennsylvania. ``I guess you can't blame them,'' Brosious said of clients making that choice. ``I did get a couple of calls on staying in the market with all the turbulence, and my answer is an emphatic `yes.''' http://www.chicagotribune.com/business/chi-thu-money-markets-sep25,0,4529190.story
Session Offers Financial Planning for the Future - Oct 21, 2008
Kiplingers Retirement Report: Protect yourself from rising prices
Kevin Brosious, president of Wealth Management in Allentown, Pa., says that as inflation rises, so do rents on commercial properties. “REITs will keep you abreast of inflation,” he says. For a diversified fund, Brosious likes Vanguard REIT Index ETF (VNQ, 7.7% annualized three-year return). http://www.kiplinger.com/letters/KRR.pdf
August, 2008: "I like [large-caps] more," said Kevin Brosious, president of Wealth Management Inc. of Allentown, Pa., which does not disclose assets. "I wouldn't shy away from them at all, because of the dividend yield. http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20080818/REG/491717037
August 10, 2008: The Morning Call: Kevin's letter to the editor concerning credit card solicitations to college students:
P.M., via e-mail
A: There's little reason to believe that private companies will perform better than public ones. But Kevin Brosious, a fee-only financial planner in Allentown, Pa., says we'll never really know because they don't make any public report of their finances. In some cases, Mr. Brosious believes that public companies may actually be better off due to their larger size and vast resources to draw on (they can sell stock, for instance). The vast majority of private companies are small and may, in his opinion, be exposed during bad times to limitations that come with having a smaller resource base.
Q: I contribute about $20,000 a year tax-deferred into a 401(k). My employer does not contribute. Since in the future (I'm two years from retirement), I'll roll this over into an IRA, would it be better to pay taxes now on the $20,000 and just invest in a regular account? Otherwise, when the money is withdrawn from an IRA, I'll be paying taxes on the entire investment as regular income, not just on the capital gains. I'm assuming that my tax bracket will be the same at retirement.
K.K., via e-mail
A: If your company doesn't match your contributions, Brosious believes that you should make contributions first to a Roth IRA. Then he suggests investing in your company-provided 401(k).
Having both a 401(k) or traditional IRA, and a Roth IRA will allow you to have a mix of tax-deferred and tax-free investments when you retire. The tax landscape in the year you withdraw your savings will determine whether you pull from the tax-deferred account (and pay the tax) or pull from the tax-free one (Roth IRA).
If you still have money after you have maximized your pretax contribution to your 401(k), then Brosious suggests that you consider Exchange Traded Funds for your taxable investments. ETFs will allow you to defer most of the capital gains on your investment until you sell; then they are taxed at the long-term rate. http://www.csmonitor.com/2008/0707/p16s01-wmgn.html
"Fees have everything to do with that decision," said Kevin Brosious, president of Wealth Management Inc. of Allentown, Pa., which does not disclose assets under management.
"I would probably lean more towards an ETF rather than mutual fund indexes. You cannot get any lower fees than that."
http://www.financialweek.com/apps/pbcs.dll/article?AID=/20080702/REG/228399128/1036
....Individual Securities: Downturns in the market or within an industry can hit individual stocks pretty hard. "With an individual security you pick up something that is called nonsystemic risk, and that is the risk associated with one particular stock, associated with the management team of the company, their financial situation and the industry that they're in," says Kevin Brosious, CPA, CFP and president of Wealth Management Inc., in Allentown, Pa
....Index Funds: "Index funds outperform some 80 percent of the actively managed funds," says Brosious. "Over the long term they will outperform."
.... Mutual Funds: Convenience also factors into mutual funds' popularity. "Most people elect to have their dividends and capital gains reinvested, and most mutual funds will do it for free; they just roll it right back into the fund," says Brosious.
.... Bonds: "The returns on bonds will not move in the same direction as the returns on stocks, says Brosious. "So that tends to smooth out your portfolio earnings. One year you might have bonds gaining 5 percent and stocks maybe losing 10 percent. The next year you might have stocks gaining 15 percent and bonds being a little flat."
....Gov't TIPS: "It keeps abreast of inflation and is a stabilizer for a portfolio. It's a guaranteed low-risk investment. I think it's a great vehicle for everybody's portfolio," says Brosious.
....Reits: Commonly used as a tool for diversifying within a portfolio, REITs and other asset classes, such as commodities and natural resources, have a low correlation to the stock market. "Noncorrelating means that returns don't move in the same direction all the time. That tends to smooth out your portfolio earnings," says Brosious.
....ETF's: Exchange-traded funds, or ETFs, have been gaining in popularity in recent years, though they have been around for a while, says Brosious. Good for tax-conscious investors looking to pay less in expenses, ETFs work essentially like a mutual fund with some characteristics of stocks. "These actually trade like an individual security but they are a basket of individual securities, just like a mutual fund," Brosious explains. However, ETFs also lack a little bit of the convenience of mutual funds. "Because they trade like a stock, the option of having dividends and capital gains automatically reinvested is unavailable," says Brosious. http://biz.yahoo.com/brn/080620/23438.html?.v=1
"Asset allocation will actually drive about 94 percent of the total return in your portfolio. That's been documented in a number of different places. That's why you need the right asset mix within the portfolio," says Kevin Brosious, CPA, CFP and president of Wealth Management Inc., in Allentown, Pa.
"Risk profiles show me whether a person is willing to accept risk, is willing to accept a lot of risk or if they are risk-averse and want a very conservative portfolio," says Brosious, an adjunct professor of investments and other business courses at Penn State and DeSales University.
However, Brosious would like to see those with a long investment time horizon develop a thick hide with which to weather market volatility. "I tell my younger clients, you are going to be rewarded for assuming this short-term volatility by being more aggressive. In the long-term the market has, over time, returned 10 (percent) or 11 percent. That's the historical return. In the short-term, don't even look at your portfolio," he says.
....In an ideal world, asset classes would move in opposite directions, but that will never exist, says Brosious. The best you can do is spread out investments into many different segments that have little to do with one another.
Kevin's Note: This article originally appeared in Bankrate.com in October 2007, reprinted in December for Yahoo Finance, in April, 2008 for MarketWatch and The Boston Globe , in May, 2008 by Fox Business and July, 2008 by NY Daily News. I contributed 3 portfolios to the reporter for this article. You can find them at the following link. http://www.bankrate.com/cbsmw/news/Financial_Literacy/Oct_07_building_portfolio_a1.asp?caret=64c
http://www.bankrate.com/foxbz/news/Financial_Literacy/Oct_07_building_portfolio_a1.asp?caret=64c
http://www.bankrate.com/nydn/news/Financial_Literacy/Oct_07_building_portfolio_a2.asp?caret=64c
“As the economy’s going down, the retailers are certainly hurt and they want people to come in,” he says. “I understand the purpose of it is to stimulate the economy.” http://www.mainstreet.com/retailers-want-your-stimulus-check-here%E2%80%99s-list-five-big-store-deals
Brosious focuses on asset classes that are available as mutual funds or ETFs. http://www.advisorperspectives.com/newsletters08/The_Four_Top_Investment_Strategy_Challenges_for_Financial_Advisors.html
April, 2008: Healthcare without Medicare: Kevin was asked by Financial Planning Magazine to comment about healthcare coverage for retirees younger than age 65.... Nevertheless, there are times when association plans work well. Kevin Brosious, president of Wealth Management, Inc, Allentown, PA., has as clients a married, early retiree couple who opened a business and got group health insurance via the local chamber of commerce. They save $500 a month with this group plan, versus getting health insurance on their own. http://www.financial-planning.com/asset/article/559431/healthcare-without-medicare.html?pg=
March, 2008: Mutual fund firms offer clients access to private equity: Kevin was asked to comment on the new mutual funds that offer clients access to private equity investments. Of course, investing in private equity has its advantages, said Kevin Brosious, president of Wealth Management Inc., a fee-only financial planning firm in Allentown, Pa.
"Private equity doesn't correlate with the returns of the broader market and the returns are as good as the market," he added. "They're good investments if they are used properly." http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20080317/REG/297137382&ht=
March, 2008: Lipper to Launch Fund Classifications: Kevin was asked to comment on the new Lipper fund classifications. The new categories are helpful, said Kevin Brosious, president of Wealth Management Inc., a fee-only financial planning firm in Allentown, Pa. "I often recommend international-real-estate funds," said Mr. Brosious. "This will be helpful to me to get a better handle on the risk-reward relationships between funds. I like to put a lot of non-correlating assets in people's portfolios."
The diversified leveraged fund is another helpful addition, he said. "The long-short funds perform best when the market is going the other way," added Mr. Brosious. "I put it in as a stabilizer to mitigate some of the downside risk in a bear market." http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20080317/REG/902233767/1030/MUTUALFUNDS
On Wednesday, February 6, 2008 Kevin Brosious, president of Wealth Management, Inc, presented Portfolio 101: Building and Maintaining Wealth, at the Penn State Lehigh Campus in Fogelsville, Pa. The lecture is part of the 2008 faculty lecture series and is open to the public free of charge.
February, 2008: Janus Rebound in Works Reporter Sue Asci asked Kevin to comment about the revival of the Janus Funds. "Caution is the word," said Kevin Brosious, President of Wealth Management, Inc, a fee-only financial planning firm in Allentown, Pa. "I see no reason to rush into these funds at this point. The departure of three of its seasoned managers from a couple of their top funds gives me pause." http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20080204/REG/877181776&ht=
January, 2008: Advisers Wary About Magellan's Reopening Reporter Sue Asci asked Kevin to comment about the reopening of the Fidelity Magellan Mutual Fund. "I'm not going to jump in on [Magellan]," said Kevin Brosious, president of Wealth Management Inc., a fee-only financial planning firm in Allentown, Pa. "If I buy index funds or [exchange traded funds] I know exactly what I'm getting and how to measure performance. Magellan is a very big fund with average performance." http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20080121/REG/113042052&ht=
December, 2007: Steady Income in Unsteady Times Reporter Lauren Young asked Kevin about income focused mutual funds.... For investors in search of an all-in-one dividend option, several advisers are recommending the Alpine Dynamic Dividend Fund, a mutual fund that tries to increase the dividend flow through adroit trading. "The fund has a significant portion of its holdings in financials and business services, so it is not without risk," says Kevin Brosious, president of Wealth Management in Allentown, Pa. Keep in mind that turnover is high, so you'll be on the hook for capital gains tax, too. However, with a fat dividend of 14.1%, it could be worth the stretch. http://www.businessweek.com/magazine/content/07_53/b4065072292447.htm
December, 2007: Hedge Your Nest Egg Against Rising Prices Reporter Joe Lisante asked Kevin to comment on how an investor might protect themselves against future inflationary pressures in the economy...Large companies have greater financial flexibility and often have more exposure to overseas markets. As the dollar falls, that can help boost earnings. More than 44% of sales of companies in the S&P 500-stock index came from outside the U.S. in 2006. Fee-only certified financial planner Kevin Brosious, of Allentown, Pa. - based Wealth Management, Inc., advocates a 60% allocation in equities for a moderate-growth portfolio, even for retirees.
...For moderate-growth investors, Brosious recommends holding 10% of assets in TIPS. You can buy them through Vanguard Inflation-Protected Securities (VIPSX) or iShares Lehman TIPS Bond (TIP), which is an ETF. http://www.compassbank.com/personal/preferred/pdf/KRR2007_12_compass.pdf
December, 2007: Fitness and friends bigger concerns than money, survey finds
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Kevin Brosious, president of Wealth Management Inc., a fee-only financial planning firm in Allentown, Pa., recommends a few simple steps: paying credit card bills on time and increasing savings at work through a 401(k) plan. "Clients need to clear up their credit card debt and then get back to their retirement savings plan," said Mr. Brosious. "The last thing they should do is go into retirement with a lot of credit card debt." |
November, 2007: Japan's economy stuck in neutral while China thrives. Reporter Joe Lisante asked Kevin to comment on the overheated China Stock Market.
"We go through these cycles," said Kevin Brosious, a fee-only financial planner at Wealth Management in Allentown, Pa. "We went through the same thing with Nasdaq," he said, referring to the bursting of the dot-com bubble in 2000.
So how should an investor approach China, whose companies' stocks represent 1.7% of the world's market? Or any hot region?
Brosious believes asset allocation is the key to a successful investment strategy. In an allocation of 60% stocks, 40% bonds and cash, which he recommends for people seeking moderate growth, Brosious suggests 1% of the portfolio be invested in funds tracking Chinese stocks. If the Chinese market continues to soar, he will sell some of the position to lock in profits and return to the 1% threshold.
Although Brosious thinks Chinese stocks are overvalued and possibly due for a correction, the modest allocation limits risk and still allows some upside exposure.
"I don't want to leave any money on the table," he said.The juggernaut of the 1980s is stuck in neutral while a new one thrives. The lesson for investors: Don't lose your head. http://www.nydailynews.com/money/2007/11/12/2007-11-12_japans_economy_stuck_in_neutral_while_ch.html
October, 2007: Retire Rich Reporter Rich Laliberte asked Kevin to comment about saving for retirement......if you set aside 6% of a $50,000 salary -- $3,000 a year -- your company will add another $1,500, boosting your annual savings to 9%. "That's close to the 10% goal people should shoot for," says Kevin Brosious, president of Wealth Management in Allentown, PA. Family Circle Magazine, October 2007 issue: Retire Rich, What You Really Need to Save
September, 2007: Do You Have an Age-Appropriate Portfolio?
Reporter David Bogoslaw asked Kevin if retirees should consider more conservative portfolios. "There's a lot of debate among financial planners about how conservative someone between 45 and 55 should be. Kevin Brosious, president of Wealth Management in Allentown, Pa., usually assumes each client will live into his early 90s and believes portfolios need to be designed for the long haul. "Don't change everything to a conservative portfolio," he said, just because you're getting ready to retire or are retired. "You're going to need [to plan for] the long term with growth [of assets] through retirement to maintain pace with inflation and purchasing power over that time."
...International securities are another way to diversify away from U.S. stocks. The more risk-adverse investor may want to stick to developed countries such as Japan and Britain, but for those hungry for bigger returns, emerging markets like China, India, and the Middle East are the places to be. Wealth Management's Brosious urges clients to limit their exposure to these markets to 7% or 8%. Often, foreign companies have a low correlation to U.S. equities because they don't hedge their currency risk. http://uk.biz.yahoo.com/04092007/244/age-appropriate-portfolio.html
September 2007: Are Savings Bonds a Good Way to Save for College? and Can I Use Some of my 401K Money to Pay for College? Reporter Rachelle Laliberte asked Kevin to add his comments about these two topics to the Babycenter.com website. http://www.babycenter.com/400_can-i-use-some-of-my-401k-money-to-pay-for-college_506566_1001.bc
September 2007 : Road to Income Paved with Good Withdrawal Strategies– Reporter Jim Connolly asked Kevin to comment about an appropriate portfolio withdrawal rate.
A withdrawal rate of around 4%, adjusted for inflation, is a good rule of thumb, according to Kevin Brosious, a certified financial planner and president of Wealth Management,
However, he cautions, this drawdown rate assumes “a healthy allocation to stocks.” By healthy allocation, Brosious suggests at least 50%, including international stocks. If there is not a healthy stock allocation, then both rates of return and withdrawals will be lower, he continues." http://www.lifeandhealthinsurancenews.com/cms/NULH/Weekly%20Issues/Issues/2007/33/Focus/L33Incomeplanning?searchfor=