While we are all sheltering in place, The Lake Avenue Group at Morgan Stanley offers the following advice when it comes to investing and money matters in 2021. Laura M. Raulinaitis, CFP®, Senior Vice President, Financial Advisor at Morgan Stanley, a leading global investment bank and wealth management firm that has three main units: institutional securities, wealth management and investment management, provides financial insight into 2021.
Q. When it comes to investing and money matters during 2021, what is the biggest myth/misunderstanding? And thus, what is the truth/reality?
A. Generally, I think people are fearful of change. In my experience every time something new happens, it feels like this time it is different. This time it isn’t different. Companies are making money and the country is rising through the first global pandemic of our lifetime in the same way we went through other trying times. Americans spend. We are a consuming economy and things will reopen; life might be different than before, but investing in diversified stocks and longer term investments may help to secure your future. Please note diversification does not guarantee a profit or protect against loss in a declining financial market.
Q. What should people avoid?
A. I believe people should avoid the fear trade-staying in cash. At this point money markets and CDs are at all-time lows. Let’s find a way together to diversify your risk. Get educated—The Lake Avenue Group offers monthly conference calls and Zooms on a variety of topics. Reach out to us to get on our information list!
Q. For people who have lost hope regarding investing and money matters during today’s incredibly challenging times, what hope can Morgan Stanley offer?
A. The Lake Avenue Group at Morgan Stanley offers personalized advice. We have five advisors, so pick one that you most connect with and let that person be your main point of contact. Ask lots of questions. Each of our clients has a full financial plan included as part of our business model. Let’s review and update a financial plan.
Q. What adjustments has Morgan Stanley made during this time of COVID-19?
A. I believe that small- and medium-sized companies have been out of favor in recent years. We are seeing a shift to these asset classes along with a slow shift from growth stocks to value stocks. Readers can reach out to me if they’d like to learn more.
Q. What is Morgan Stanley’s ultimate goal during this time?
A. Morgan Stanley as a whole is very philanthropic; we also have a renewed desire to be diverse. We have a new diversity council, which partner Carlos Garcia, Financial Advisor, and I both sit on as members. The Lake Avenue Group is interested in getting further involved with charities at a local level. Let us know how we can help!
Morgan Stanley is here for you
The Lake Avenue Group has been doing a lot of community outreach and hosting many conference calls and Zoom events. We want the community to know that we can answer questions and be a resource for you, not only for your wealth management needs. At this point our business is mature, and we are here to help. Personally, my husband and I are Westlake Yacht Club members and very involved there too—we like to say, “Life is better at the lake!”
Morgan Stanley Smith Barney LLC is a registered Broker/Dealer, Member SIPC, and not a bank. Where appropriate, Morgan Stanley Smith Barney LLC has entered into arrangements with banks and other third parties to assist in offering certain banking-related products and services.
Investment, insurance and annuity products offered through Morgan Stanley Smith Barney LLC are: NOT FDIC INSURED | MAY LOSE VALUE | NOT BANK GUARANTEED | NOT A BANK DEPOSIT | NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY
Laura Raulinaitis is a Financial Advisor with the Wealth Management Division of Morgan Stanley in Westlake Village, CA. The information contained in this article is not a solicitation to purchase or sell investments. Any information presented is general in nature and not intended to provide individually tailored investment advice. The strategies and/or investments referenced may not be suitable for all investors as the appropriateness of a particular investment or strategy will depend on an investor's individual circumstances and objectives. Investing involves risks and there is always the potential of losing money when you invest. The views expressed herein are those of the author and may not necessarily reflect the views of Morgan Stanley Wealth Management, or its affiliates. Information contained herein has been obtained from sources considered to be reliable, but we do not guarantee their accuracy or completeness. Morgan Stanley Smith Barney, LLC, member SIPC.
CRC 3420236 1/21
Financial To-Do Checklist While You’re at Home
The Lake Avenue Group at Morgan Stanley offers several tasks you can do to potentially improve your financial situation and preparedness from the comfort of home. Do one each day for the next seven days.
Make or review your budget
Whether you’re reviewing your budget or starting from scratch, now is an ideal time to analyze your income and expenses. Take the past year’s bank statement and color-code, or tally up money spent in the following categories: housing costs, healthcare, food, transport and travel, education, personal care, entertainment and misc.
You should keep track of this data regularly and review your spending several times a year. Tools like Asset Aggregator at www.morganstanley.com can help.
Consolidate your retirement accounts
Now is a great time to clean up your financial accounts. If you have an old 401(k) still held at previous companies, this is the perfect opportunity to roll those into an IRA. Contact your company’s HR Department to request the necessary paperwork. The Lake Avenue Group’s qualified administrative professionals can call and assist upon request.
Typically, a retirement plan participant leaving an employer's plan has the following four options (and may be able to use a combination of these options depending on their employment status, age and the availability of the particular option):
1. Cash out the account value and take a lump sum distribution from the current plan subject to mandatory 20% federal income tax withholding, as well as potential income taxes and 10% early withdrawal penalty tax, or continue tax-deferred growth potential by doing one of the following:
2. Leave the assets in the former employer’s plan (if permitted)
3. Roll over the retirement assets into the new employer’s qualified plan, if one is available and rollovers are permitted, or
4. Roll over the retirement savings into an IRA
Other factors to consider when making a rollover decision include (among other things) the differences in (1) investment options, (2) fees and expenses, (3) services, (4) penalty-free withdrawals, (5) creditor protection in bankruptcy and from legal judgments, (6) required minimum distributions or “RMDs,” (7) the Tax Treatment of Employer Stock, and (8) the availability of plan loans (e.g., loans are not permitted from IRAs, and the availability from an employer’s qualified retirement plan will depend on the terms of the plan).
Confirm your beneficiaries and review your will
Review all of your account beneficiaries to ensure your estate is in good order. Don’t forget about your former 401(k) beneficiaries, annuities and pensions. Be especially sure to review if you have gone through divorce. It’s a good idea to review your trust or will at the same time to confirm your wishes haven’t changed.
Is 2021 a year for a Roth IRA conversion or a backdoor Roth?
If your small business or job has been affected by COVID-19, 2021 may be a year to consider a partial or full Roth IRA conversion, or doing a backdoor Roth conversion. Review your estimated income and tax situation to determine if a conversion makes sense without pushing you into a higher marginal tax bracket. Call The Lake Avenue Group to learn more.
Organize your online security and protect your virtual identity
Have you changed your banking password within the past 90 days? Is it truly complex and unique? Does it match other passwords you have? Review and update all of your online passwords. Use a password manager (LastPass, Dashlane and Keeper are just a few), or simply keep a list of important accounts, usernames and passwords for your loved ones in a secure location.
Build your home inventory
Create a spreadsheet of all your important belongings. Include receipts and Certificates of Authenticity (if possible), descriptions of your items and take photos of everything. Store this information safely in the Cloud (Google docs) in case of an emergency.
Review all insurance docs
Do you have life insurance? An umbrella policy? Long-term care insurance? Do you have your art, jewelry or other collectibles insured?
For any questions, feel free to contact The Lake Avenue Group at Morgan Stanley: 805.494.0236.
Life insurance, disability income insurance, and long-term care insurance are offered through Morgan Stanley Smith Barney LLC's licensed insurance agency affiliates.
Since life insurance and long term care insurance are medically underwritten, you should not cancel your current policy until your new policy is in force. A change to your current policy may incur charges, fees and costs. A new policy will require a medical exam. Surrender charges may be imposed and the period of time for which the surrender charges apply may increase with a new policy. You should consult with your own tax advisors regarding your potential tax liability on surrenders.
Guarantees and contractual obligations are backed by the claims-paying ability of the issuing insurance company.
Tax laws are complex and subject to change. Morgan Stanley Smith Barney LLC (“Morgan Stanley”) , its affiliates and Morgan Stanley Financial Advisors and Private Wealth Advisors do not provide tax or legal advice and are not “fiduciaries” (under the Investment Advisers Act of 1940, ERISA, the Internal Revenue Code or otherwise) with respect to the services or activities described herein except as otherwise provided in writing by Morgan Stanley and/or as described at www.morganstanley.com/disclosures/dol. Individuals are encouraged to consult their tax and legal advisors (a) before establishing a retirement plan or account, and (b) regarding any potential tax, ERISA and related consequences of any investments made under such plan or account.