busted

Financial Myth

Truth:

First of all, let's break down an annuity: ⁣⁣⁣⁣

⛔️Annuities are insurance products.⁣⁣

⛔️They are guaranteed by the insurer that underwrites the policy.⁣⁣

⛔️They are commission-based products.⁣

⛔️They're often times misunderstood and sold in confusing ways.⁣⁣⁣⁣⁣

This is a common myth because the “bonus” that’s paid on an annuity often only applies to the “benefit base” of the policy. The benefit base is only used if the product is ever annuitized -- and most annuities never reach this stage. ⁣⁣⁣⁣Annuities are complex financial products, and there can be certain situations in which they make sense. We don't sell annuities at Lockshield Partners because they are commission-based products, and we are a fee-only firm. However, if you ever have any questions, we are here to help.⁣⁣⁣⁣

Accounting Myth

Truth:

False! Tax planning can be a year-round process.⁣⁣

The goal of tax planning is twofold:⁣⁣

1. Be as tax efficient as possible. ⁣Although we realize that taxes are symptomatic of God’s provision, we don't want to have to pay more tax than we have to. Tax planning throughout the year can help to identify tax efficiency opportunities.⁣⁣

2. Surprises are no fun at tax time. ⁣Ideally, taxpayers are close to breakeven when their return is filed in the spring. Receiving a large refund means that we could have had more monthly cash flow instead, and a large payment is never fun.⁣⁣

Accounting Myth

Truth:

While this isn't necessarily untrue, it is more than just handing it all over to your accountant and expecting everything to be easily fixed. Our team is here to provide advice and clarity on money issues, we can put your tax affairs in order, and help you find ways to cut costs, BUT it is ultimately up to you whether your business succeeds or fails. Our advice? Put in the time and effort now, and have an accountant supplement your success.

Financial Myth

Truth:

Market drops are no fun to be a part of, but they are a part of the normative economic cycle. In fact, we've experienced 10 bear markets over the last 40 years. While our natural human reaction is to want to decrease risk and take chips off the table during a down market, history shows us this is not a good idea.  It is impossible to perfectly time the market and know when to pull our funds out and put them back in.  Data shows us that if we miss just a few of the top-performing days, it has a drastically negative impact on our portfolio.  Although it can be difficult to watch account balances drop, the proper approach is to maintain the correct allocation for your situation over a long-term time frame.  For some people, it may even be prudent to take on more risk in a down market.  This is, of course, situation-dependent.

Financial Myth

Truth:

While spending and savings are one of the major areas included in a financial plan, it is only one part to the bigger plan. A budget is specifically designed to track your spending and savings habits, helping you become more efficient with your personal cash flow. A financial plan on the other hand, encompasses all of the areas of your financial life—savings, spending, income, and housing, to insurance, estate plans, and retirement.

Accounting Myth

Truth:

It is not only important to have separate bank accounts for personal and business expenses, it is essential. By separating the two, you make yourself less likely to be audited and even if your business does go through an audit, separate business finances provide a clear audit trail that will make the whole process much smoother.