Want to learn about how you can improve your financial health to prepare for retirement? Charles Verruggio, the Senior Financial Advisor of Wolf Group Capital Advisors, was kind enough to answer our questions. Read on to learn the first steps you can take to save and how to know whether you're on the right track to building a sound financial future.
What is your professional background? How has it served you in your position with Wolf Group Capital Advisors?
I've worked in a wealth management capacity for the vast majority of my career. Whether it be an issue involving financial planning, investment management or tax planning, I've most likely seen it in a prior position or while working at Wolf Group Capital Advisors. Having that robust and varied background really serves me well when solving problems for clients or in coming up with the optimal solution for a client's particular situation.
Who should be visiting the The Wolf Group's website and why? What can they expect to find there?
Just about any high net worth individual with questions about their financial life should be visiting the website. I say this because at The Wolf Group, we serve individuals who have needs in financial planning, investment management, tax planning/consulting and/or tax preparation. That said, individuals with international interests may find even more value on the website, as we tend to cater towards those who have international ties of some sort.
The website is helpful in that you can find out more about our team, our culture, and the services we provide our clients. Many of our firm's quarterly letters and blog posts are contained within the website, so one can read up on our investment philosophy or even get a better perspective on our take on current events if they so choose.
What do you think most people need to learn about personal finances?
When it comes to personal finances, there are so many important things to keep in mind that it is difficult to choose. If pressed, I would say that having a comprehensive financial plan would be the most crucial piece to getting yourself on track towards a fulfilling financial life. As basic as it sounds, simply having a plan will put you well ahead of the average person.
Additionally, it serves as a great guidepost for keeping one on track and making the most of your earning years and beyond. A plan does this by putting into focus what is most important and providing a roadmap for how to get there. We all know there are detours in life; however, with a financial roadmap, you are typically able to get back on course much faster than someone who never took the time or effort to put together a plan.
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How soon should someone start saving for retirement, and what are the first steps they should take?
As soon as possible is a great time to start. Maxing out the amount of contribution to your qualified plan where the company is matching is a great first step to take. For example, if your employer provides free matching up to 5% of salary, your annual contribution should be no less than 5%. You do want to keep in mind that you'd like to have diversified asset bases, so saving regularly in a taxable investment account is also a good initial step.
How can the average person get started with investing?
It is much easier to get started these days than it was in the past. Now there are dozens of financial firms out there willing to take on smaller clients. You can simply call up a well-known financial firm and let them know you'd like to open a taxable account with $x, and they are typically more than happy to help you. Buying a handful of ETFs to produce a well-diversified portfolio is typically a good way to get started for those under $100,000.
For those individuals who have assets of $500,000 or more, we typically recommend they hire an advisor. When you start dealing with higher levels of wealth, you often begin running into more complicated issues. Additionally, many wealth managers are able to help clients sift through the various investment vehicles available to help in crafting a portfolio with particular goals in mind. An advisor can help put together a portfolio with certain risk and return metrics in mind that the average person may have great difficulty doing on his or her own.
Is there anything else you'd like to share with our readers?
I'd like to share one last tip by quickly mentioning the often overlooked aspect of one's lifestyle on wealth accumulation. Most individuals tend to focus on how high they can get their income. Rare is the person who brags about how low they have gotten their expenses.
In American society, it's much more common to talk about high incomes. Think about it from a conversational point of view. How often do people talk about other people's salaries? Pretty often. Having a conversation around other people's spending is much more rare.
People often forget that no matter how much income is earned, the only way to accumulate wealth is to live below one's means. The individual who makes $40,000 per year on an after-tax basis and spends $25,000 per year is saving more than the person who makes $140,000 per year and spends $135,000.
The person with the higher income may have more "stuff," but ultimately when it comes time for retirement, $15,000 of savings per year (over one's entire working career) growing at a reasonable rate of return may be enough for the lower income person on which to retire. The person with the lesser income may not even have to alter his or her lifestyle! On the other hand, it would be next to impossible to retire on $5,000 per year growing at a reasonable rate of return. This is especially true for someone spending $135,000/year.
Ultimately, everyone has to keep in mind there are two parts to the equation. Certainly, income is important. I think that point is understood and possibly overemphasized in our society. It could be argued that the spending side of the coin is equally important. Unfortunately, it often gets overlooked and people tend to "kick the can down the road" when it comes to getting spending in check.
The earlier one realizes that spending today has huge implications for tomorrow, the earlier that individual will be on an easier path to financial freedom in his or her retirement years. Lastly, spending less during one's working years has a compounding effect during retirement, as most individuals keep about the same lifestyle in retirement. So, spending less when one is 35, 45 and 55 almost always leads to spending less when one is 65.
If anyone has any questions, please feel free to contact us via firstname.lastname@example.org or reach us at (703) 502-9500.
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Charles Verruggio wishes to state regarding his answers in this interview:
"This interview is for informational purposes only, and does not constitute, and should not be construed as, investment advice or recommendations with respect to the securities listed.
Investing in securities is speculative and carries a high degree of risk. You should carefully consider your investment objectives, potential risks, advisory fees and expenses before investing. Past performance is not an indicator of future performance and investment results may vary.
Additional information including advisory fees and expenses is provided in Wolf Group Capital Advisors' Form ADV Part 2, available upon request.
Wolf Group Capital Advisors does not provide tax or legal advice; its affiliated accounting firm, The Wolf Group, P.C. may provide certain tax advice under separate arrangement. Wolf Group Capital Advisors recommends you consult with your tax and/or legal adviser for such guidance."