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The Evolution of an Investor’s Worries

I recently had an enlightening conversation with a client who shared what he finds most valuable in our relationship. He says he hired me as his financial advisor to focus on the details to create his financial plan and to ensure that he is on track to reach his goals.

Having a plan allows him to “think about the big picture of achieving my objectives and worry about very little else” — yet this was not always the case.

We reminisced over the journey we have taken together. He shared how his financial concerns have ultimately evolved to a place where they no longer interrupt his daily life or consume unneeded mental energy. During our initial meetings, however, he wondered if I would be a trustworthy advisor and he was understandably apprehensive about the specific investment vehicles we selected, as investing was new to him. Soon after, he became preoccupied with the short-term performance of his investments and how the volatility of the global markets impacted his portfolio.

As we have grown together, he shifted his focus toward the plan we created that is specifically designed, and regularly updated, to meet his financial goals. Here’s how we got there.

Investment selection. In our first meeting he was most worried about the specific mix of stocks, bonds, mutual funds and exchange-traded funds that we were going to select, and how risky those investments would be.

Initially, he shared he didn’t really understand why we were focusing so much of our conversation on his goals as opposed to focusing only on the investments. We discussed how his goals, timeline for achieving each of those goals and his risk tolerance would determine and shape his appropriate investment mix. Without knowing what he is hoping to achieve, coupled with a timeline for reaching his objectives and how much risk he was comfortable taking along the way, we could not construct an appropriate asset allocation strategy.

Short-term performance. He says some of the angst he experienced in the years to follow was often driven by the most recent media headline — the apocalypse of the day. He worried, for example, about how the results of a presidential election would affect his investments or what kind of impact economic instability in a foreign country may have on his portfolio.

Over time, we discussed how sensational news headlines are certainly attention-grabbing, but that it would be imprudent to let the “noise” of short-term events influence his long-term investment decisions. We regularly discussed how market volatility is a normal part of the investment process and, instead, agreed to focus only on what he could control. He was going to maintain a well-balanced, globally diversified portfolio built around his goals, risk tolerance and time horizon. He would invest regularly in good markets and bad and not worry so much about trying to time the market.

While it is still tough to stomach a short-term market decline, it makes it much easier to do when it is viewed as an opportunity to build positions in quality assets for the long term.

Sticking to and updating the plan. Through the years of market experiences, learning about normal fluctuations, he says that he now finds that the best way to focus his mental energy on his finances is to think about his financial plan. He has shifted his concerns and worries toward the big picture, as he calls it, and says that he “now can almost ignore the short-term ups and downs” as volatility is to be expected.

He likes to think about putting his children through college and getting ready for retirement. He has built up an emergency savings fund and has automated his savings to ensure he pays himself first before paying his other bills. My client, over time, has decided that he can focus on his goals and stick to his plan.

By doing so, as he puts it, he lets his advisor “worry about the rest.”

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The Evolution of an Investor’s Worries originally appeared on usnews.com

Don’t Settle for Student Loans to Pay for Online Education

Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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