Divorce Rich with Jacki Roessler, CDFA
Welcome to the Divorce Rich Podcast! Join your host, highly sought-after speaker and experienced Certified Divorce Financial Analyst, Jacki Roessler, CDFA in this engaging and down to earth show. Along with her guests, Jacki offers clear and detailed advice to improve your financial decisions before, during and after divorce so you can survive divorce rich! New episodes are posted every other Thursday! You can reach Jacki through her Michigan-based firm, Roessler Divorce Consulting, located at 600 S. Adams, Suite 300, Birmingham, MI 48009 or by email at jacqueline@roesslerdivorce.com.
Divorce Rich with Jacki Roessler, CDFA
Investing Myths Busted, with Melissa Fradenburg, Wealth Advisor
Can investing outside of a bank account or CD be safe for those navigating a divorce? Tune in as we shatter the myth of high investment risk with my special guest, Melissa Fradenburg, CDFA, AIF, a seasoned wealth advisor with Antonelli Financial in Grosse Pointe, Michigan. Together, we unpack the essential strategies for maintaining your purchasing power and combating inflation through long-term investments. Learn how balancing financial safety with diversified investments can set you on the path to financial security. Let Melissa's practical advice guide you through this transformative period, ensuring your financial decisions are well-aligned with your long-term goals.
We also delve into the significance of setting clear financial goals during life changes like divorce. Whether it’s planning for retirement, buying a home, or funding your child's education, we explore how to choose the right financial instruments—like IRAs, Roth IRAs, and 529 plans. Discover the therapeutic benefits of goal-setting and budgeting, and how automating your savings can simplify your financial life.
Follow Divorce Rich on Apple or your favorite podcast platform, and spread the word to friends and family who could benefit from our insights.
RESOURCES
- To schedule an appointment with Melissa, email mfradenburg@antonelliadvisors.com or call 313-290-2602
- CLICK BELOW to contact Melissa and schedule an appointment
https://www.antonelliadvisors.com/our-team
- To schedule an initial complimentary consult with Jacki to discuss divorce financial planning, click below or email Jacki at jacqueline@roesssler.divorce.com
https://www.roesslerdivorce.com/contact-us/
Visit us at https://www.roesslerdivorce.com/ to learn more about Jacki's practice and to find valuable resources for your case.
Welcome to the Divorce Rich Podcast. I'm your host, jackie Ressler. I've been a certified divorce financial analyst for 28 years, helping clients and their attorneys navigate the often complex and confusing financial issues in divorce. If you're in the process of, or considering, divorce, now is the time for you to take a deep breath and give yourself permission to find clarity on the financial issues you're facing. Rich means many things. To many people. I believe the best definition of being rich is someone who has access to many resources. Along with my guests on this podcast, I will be bringing you a wide variety of information so that you can make sound and informed financial decisions for your financial future.
Speaker 1:And welcome back to the Divorce Rich Podcast. This is Jackie Ressler, and I am very excited to have as my guest today my former coworker colleague, melissa Friedenberg. Melissa is a wealth advisor based in Grosse Pointe, michigan, with Antonelli Financial Advisors, and she is a wealth advisor. She works with men and women, but I know that her sweet spot is working with women through life transitions. She's worked with a lot of my clients and I always send clients to her. She's been working with individuals since 2016. And prior to that, she worked on the asset management distribution side of the business. So, melissa, welcome.
Speaker 2:Thank you. I'm so excited to be back podcasting with you, Jackie. I miss you so much.
Speaker 1:I miss podcasting with you too. I miss hearing you podcast. So still holding out for when you start your own podcast that I can be a subscriber to that. What I want to talk about today is a lot of my clients I focus on divorce topics but sometimes we skim over in meetings that they don't have a lot of investment basic information, and I feel like having some of this information would give them some sense of control when they're getting divorced and also just a little bit more confidence. So today we're going to be talking about investment myths and we're going to bust a few of those myths.
Speaker 2:I like that, I like the format of this, this listing myths. So, yeah, there's definitely the need for confidence. I feel like is one of the biggest things. I would say men and women, but specifically women and then, of course, post divorce, especially if their spouse was previously doing a lot of the investment part. But the good news is that when women actually learn some of these things about investing, I think they're better investors.
Speaker 1:So we'll see how I agree 100%, and these are the kinds of conversations that I often don't have time to have with clients because I'm so focused on the divorce, so I'm so glad to have your expertise talking about this today. The first myth that I would love to bust is that you have to have your, that it's too risky to invest your money in anything other than a bank account or a CD and this is really common for my post-divorce clients, and again, it's one of those things that I don't have the ability to really delve into. But what's your take on that? Is investing too risky for people that are facing a transition or haven't invested in the past?
Speaker 2:The short answer to that is no, it is not too risky. In fact it's very risky if you're looking at longer term goals, so something 10 years or longer to just put your money in savings because of the risk of purchasing power or inflation, which the only good thing about our grocery bills doubling in the last year or two is. It's easier to explain what this mythical creature of inflation is Because over time, historically it's been you know basically retirement savings that when people save their money in cash or yield type accounts that have the feeling that they are safe or safer, they lose purchasing power. When it comes time for retirement their bucket of money buys less goods because historically inflation has been around 2% or 3% a year and right now yields are really good on savings accounts and you're getting about 4%. So you figure if you get 4% over time and, yes, you're guaranteed that in most cases with a savings account or even money, markets are quite safe as far as market volatility risk. But again, over time you're looking at before taxes, about a 1% to 2% return on that money. So you figure if your grocery bill 20 years from now, if you're going to get half the goods for what you used to be able to get. You're actually really working against yourself with that.
Speaker 2:Now, again, that is something I see all too often. But I will say, especially after a life transition, if you're feeling overwhelmed and you're just not sure about investing, or if you have not found somebody, an advisor, that you trust, it is perfectly okay to put your money in a savings account for a set period of time even a year or so after the divorce and meet with some people till you find someone that you trust to invest that. So I just want to clarify, because I think that's so important after such a traumatic life transition. So I'm talking about as far as in a vehicle or an investment for long-term investments. You're going to want to look at reversifying that out a little bit.
Speaker 1:Right, that's good advice, and for I think the biggest concern that I have is people that are not working with a financial advisor who put their money into something very safe after the divorce is done, that it might be two, three years that goes by before they think about it again, and that is again one of the benefits of working with a financial advisor is hopefully that doesn't happen. You have somebody else watching the ship for you.
Speaker 2:Yeah, and I think it's really important to talk about financial planning, not just an advisor who's going to invest that money, because through financial planning we figure out how much do you have to have in emergency savings which should be in a savings account. And just a side note to anybody listening if you have money in a savings account at a bank right now that's getting like half a percent. You should look into high yield savings for that long-term savings, because you can get about 4% and the bank's never going to call you and say, hey, we're not giving you enough interest. So that's just kind of an aside there. But I do see that with people they're not going to be like we could pay you more but you haven't asked.
Speaker 1:Did most banks have a high yield savings account? How do people find those?
Speaker 2:Yes, unfortunately, though, a lot of their savings like if you go to the ATM, they'll usually advertise like a really nice rate on savings. Sometimes that's for new customers that they'll give that rate to, but if you have current savings account at the bank, you could always call and say you know, I'm looking at moving my money elsewhere. They may say if you have a minimum balance, or increase that balance that you have in there, you could get a higher rate. There are online options, though, that are very safe and everything nowadays is done electronically, so you could move that from an online bank account like an Ally Bank or even a Marcus by Goldman Sachs usually has a pretty good online rate, so you can move some of that emergency savings to still a savings account. It would be called a high yield savings account, so it doesn't lock up your money like a CD does. But again, I would check with your current bank, especially if you like banking there, but usually those higher yields are for new bank customers at many places.
Speaker 1:Okay, melissa. So let's put some context to this for our listeners. Let's say you have your money in a savings account. Right now, the average rate of return on a savings, according to the FDIC, is 0.13%. If you put $10,000 in a savings account today, by the end of 12 months you'll have earned $13 on your $10,000. Today, by the end of 12 months, you'll have earned $13 on your $10,000. Now if you switched your money to a high-yield savings account, even one that's, let's say, earning 5%, at the same end of that 12-month period, you would have earned $500 on your $10,000 instead of $13. So if we think about that exponentially over time, that's a big difference, same as if it's a much larger amount. Let's switch to talking about long-term money or money that's already earmarked in a retirement account Another myth that a lot of my clients believe.
Speaker 1:After the divorce is done, they haven't had any investing experience. They're going to get, let's say, a lump sum from their spouse's quadro and they are going to either roll it over into an IRA or into their own 401k and they're really nervous about where to put the money. So a common myth would be that we don't do anything with it or that we put it just into an S&P 500 fund or a target income fund that picks a certain date for retirement and we just let it ride? Are those good options?
Speaker 2:I see people who think they're I'm like, okay, well, where are your retirement assets? And they're like it's in an IRA or it's in a 401k and that's really just the vehicle that it's in the investment underlying sometimes people, the default would be like what's called a stable value fund, which is more like a savings account, and so I have had people that have missed some of the best years in the market because they didn't know that their 401k or their IRA was not invested. So this is a common thing that happens. If this is you and you're realizing this if you log in after listening to this podcast and realize that your money has not been invested, don't panic. But that would be one of the things I tell people. Even if you have it in one of these target retirement dates which, if you're not familiar, is basically if you're going to retire in the year 2045 or that's when you're going to be 65 or 60, whatever you pick that is going to get progressively less risky the closer to that target date. So what I find with those it's a good option because it does rebalance. So if it's like a 60% stock, 40% fixed income, it is going to rebalance over time.
Speaker 2:But a problem with.
Speaker 2:That is, sometimes your risk is different.
Speaker 2:It doesn't necessarily time is one factor in your risk, but it may have you in something if you're younger, that's too risky for your personal risk tolerance, which means if we have a bad month or two or a year in the market and you panic, then you may not stick with that investment.
Speaker 2:So it is really, again, a better option than just randomly picking some funds or not investing at all. But it definitely is something where, if you work with an advisor or even a lot of these websites have like a risk questionnaire. So if you want to do it yourself, you absolutely can. But when you take a risk questionnaire it's going to ask you a lot of questions. You can even find them. If your particular 401k plan doesn't have one, just Google it and you can get a risk questionnaire. It'll give you a score and a recommendation of how much you should have invested in stocks, how much you should have invested in bonds, and make sure that it's not just based on an arbitrary date of when you may retire and that it really is about how much you can tolerate as far as fluctuations on your statements, that's a great, a great point.
Speaker 1:Okay, Melissa, I hear this from clients all the time. I want to invest and my only goal is just to make more money. So the myth is is it better to just start investing without any goal in mind, just to start, or do you really need to have a goal other than just I want to make more money to be a smart investor?
Speaker 2:investor. Yeah, so I personally nerd out on goal setting. I think this is what makes it fun. I mean, that's the whole fun part of financial planning with people is my favorite question is what do you want to be, have and do in 5, 10, 20 years? And the reason I love this is because, if you ask me like I always dread the question in an interview when people say, like what are your hobbies? And I'm like I think I have a hobby, right.
Speaker 2:So I think the same thing happens. I mean, I guess I do. You know petting my dog and drinking coffee in silence? Is that a hobby? I'm not sure, but it's something I like to do, right?
Speaker 2:But the idea being that when somebody asks you what your goals are, that's a loaded question and also one that sometimes you really can't answer. But I want you to close your eyes and think about what would be your ideal life and what would you spend money on if you had money to spend, and that really, I think, helps kind of clarity to goals, because, especially moms, working moms, single working moms, anything like that we are so busy caring for others that we don't really think about ourselves. Not just goals, but, like you know, what do we want to have for lunch today? That's like a harder question than what do we want to do in 20 years. But really really think about it.
Speaker 2:Because it's important for two reasons when it comes to investing. One is you know how is this money going to be invested? What level of risk? Because a timeframe matters. But the most important thing is what is vehicle that this investment is going to be saved in, because if it's retirement, there are tax savings vehicles such as IRAs or Roth IRAs, that may make the most sense and your money is going to grow more for that goal in those vehicles.
Speaker 2:If it's something like a five-year or a 10-year goal of purchasing a home or traveling or maybe your kid's college education, those things are going to be, in different types of vehicles, either a taxable account or, in the case of, you know, saving for college, a 529 plan may make sense and again, it may save you money in taxes. So that's the biggest reason to really clarify what this money is being saved for. And if you want to just say, okay, I'm going to have this X amount of money that I'm just going to invest, and if it's there, I'm going to do something fun within five years because you like to live on the edge and surprise yourself, that's different. But if this money is earmarked for something to give some, just take some time to really think about what that something is.
Speaker 1:And that to me is fun, I agree. I think to me that's the secret sauce actually in having your money work for you is trying to think about what you want it to do for you. It's almost like you know if you got in the car and you didn't have any idea where you were going, and you know you don't have a map but you just kind of hope that you get somewhere. Good, you know it's. It's very much the same kind of idea.
Speaker 2:And you, jackie, working with people during the divorce process. During that like I'm lucky in that I often get them after and so they're a little bit more excited Things are starting to look up. They know they have certainty in what their financial picture looks like. But for you, when you're working with people during that divorce process, I think it's fun to sort of imagine and maybe you haven't been able to imagine what your life would be like if you didn't have a partner limiting that right. So to really get into that goal setting, even before you know the outcome or the financials from the divorce process, I think can be therapeutic in a sense.
Speaker 2:Where would you want to live? What would you imagine your apartment looking like? Paint color would you put on the wall? I mean, that's not necessarily a financial thing, but these things can help you really get clarity as to what you're saving up for and also, like I said, very therapeutic when you really have been in a life where it's been about somebody else, or you and somebody else, and now maybe you're a little bit scared of what that new life looks like. It can be fun, but again, put some some visualization, maybe even do like a vision board of what your dream house would look like. I used to do that as a kid, did you?
Speaker 1:ever do that? I did. Yeah, well, I mean aside from also the other posters that I had on my wall of like rock stars that I thought were cute I did do. I did put together different boards of what you know what I wanted my life to turn out like. It's too bad. I don't do that anymore.
Speaker 1:Actually, come to think of it, I think we should both do that this weekend. Yeah, I think that's a good idea. That's a great idea. I have a little bit of time, why not? But I do think you know we get away from those kinds of thoughts in the busyness of our days.
Speaker 1:I know that, as working women and working moms, it's really easy to stop. You know, to forget that all of the work that you're doing is for. You know there are some purposes that you can clarify. To me, the cornerstone of all good financial plans is having a budget, and having an idea of what your financial goals are also helps you hone down on your spending. Because if my goal is that I want to retire in X number of years and I work with a financial advisor like you to figure out how much do I need to save to do that, I know that when I'm making spending decisions that might be derailing my goal, but if I don't have the goal and I don't take time to sit down and plan out how I'm going to get there, that's where I think people kind of get lost with their money and feel like they don't have any control.
Speaker 2:That's a really good point and if I could add to that you just sparked my memory something One is automating. So once you figure out your goals, to automate the savings for them. I think is so important because of that nasty B word that you brought up budget. People don't like a budget, but the nice thing about it is you only have to do the budget initially once and then sort of revisit, I would say, annually. It doesn't have to be a painful monthly after month thing. If you figure out what's coming in, what's going out and what extra you have, you can set aside a certain amount every month to go towards those goals and then you can just YOLO with the rest right Once those things are paid for and that people can be freeing once those things are paid for and that people can be freeing Right, and I mean, I'm sure you see this too.
Speaker 1:I think another investment or money myth is that people who make a lot of money have a lot of money, and I would say that's a big myth. It's a huge myth. I think, that most of my clients you know I work mainly with high net worth clients but a lot of them don't have any assets and they're just spending every penny that they make and I think it's because they didn't set aside those kinds of goals. And now that they're getting divorced and, let's say, it's someone who's been out of the workforce, now you have less in assets, but it's not too late to start again with setting up some new goals. But yeah, I think that that is a big myth that people that make a lot of money and seem like they have a lot of money because they have fancy cars and a fancy house and a boat or those other kinds of luxury items, that they are wealthy and a lot of times their net worth is zero or negative.
Speaker 2:Oh, absolutely. And again, there is always more behind the scenes that you don't see, but Jackie and I get to see when we really peel back the layers of the finances. So really just try and get better, improve your financial situation every year, every month, and chip away at it and don't want to look at what other people are doing Great advice.
Speaker 1:So, melissa, do you have any other big myths that I haven't brought up, that you want, that you have a burning desire to talk about, or have we covered the big ones?
Speaker 2:We've covered the big ones, but I want to. The biggest myth that I see people make is thinking that oh, if you're good at investing, you have to be really good at math, and you have to be. You have to have all this information on markets and you know the economy and interest rates and the election coming up and all these things that you don't have time to do research on, so you wouldn't be a good investor. Or I hear women say I'm really I've never been a numbers person. The truth is common sense. Good investor behavior go a much further way than stock picking trading. I mean, we're not talking. Even myself.
Speaker 2:I'm not sitting here trading my client's accounts throughout the day, day by day. There are certain times that I will obviously rebalance and I will take advantage of things. I like to compare shopping when we're looking at things and it's cliche, but if you're looking at something and it's now half off and it was something that was a cute sweater you thought about like a year ago or a month ago, now it's even a better deal when it comes to investing. My phone is ringing off the hook and months like these where the market's at a market high, and if we were to have a market correction, people would not be wanting to invest more money in the market, but it's actually the opposite. You want to buy low and sell high. Actually, you don't want to sell most of the time you're holding for long-term it's so hard.
Speaker 1:psychologically. It's very hard to do that. When you see the market going up, up, up, up up, you want to be part of it and then, yeah, I think that that is definitely so. When you say common sense, trump's having this, really you know intensive math or investment background.
Speaker 2:Tell me more about that are the ones who know that they should put money aside when they have it and they have clarity on their goals and they know what's coming in and going out and they're investing for the long term. So they're not getting super excited about something they saw in the news about how the market could sell off with the upcoming election. They're really looking at their statements regularly to see what they're doing, but not panicking. But again, the common sense is it's okay if you panic or you get nervous, as long as you're not moving the money around. On the other hand, I have very many clients like this because I usually set the ground rules when we start working together. But I do know that there are investors who I've seen who maybe managed assets on their own and then they finally give up and bring it to me because they're getting a much lower return than the market return or the average person working with a financial advisor. And the reason is they're almost like overcooking it, like I don't know if you try to cook stuff on the grill and you flip it over like a thousand times and it's all mangled and stuck in the grill grate. That's like the over traders, the over thinkers, who are like oh, I think that you know I should buy Facebook right now because I just read an article about you know this new technology that they're coming out with? There's something like that where you're trying to really stock, pick and time the market. You will end up with a mangled steak. I will tell you that. Yeah.
Speaker 2:But I would say yeah, overthinking and overcooking your account, whether you're a professional because some professionals do that too or an individual investor. Again, it's a balance between looking at your statement, knowing what you have, making adjustments when things in your life change or risk situation, changes based on money coming in, money going out and goals. That is a good investor. Somebody who is making changes based off of short-term geopolitical or market conditions and really trying to move things around and beat the experts, that is a losing game. Don't do that. So that goes back to the myth of, like, I have to be some sort of mathematical genius in order to get good investment returns. No, whether you're doing it on your own or working with an advisor, you just have to kind of cancel out the noise and go back to the fundamentals of investing and stick with those and you'll do great.
Speaker 1:Great tips. Thank you so much. I'm so glad that you brought that up. That is a great piece of advice. I am gonna link your contact information in the show notes and, whether or not you're local in Michigan here or you're out of state, melissa can work with you and help you. She's worked with many of my clients in state and also out of state. So again, thank you, melissa. We'll have to do this again sometime soon and catch up, because you always give such great information.
Speaker 2:Oh, thank you so much for having me, jackie, I feel the same. I missed podcasting with you, and you always take such great care of clients during the divorce process that when people work with me after, they are in much better shape. So I really appreciate it and I would love to do more podcasts with you. We'll see. I'm working on one for early 2025. So I may host again and you're going to be my guest.
Speaker 1:I can't wait. That would be awesome. Thanks everyone for listening Thanks. Thank you so much for taking time out of your day to listen to Divorce Rich Podcast. If you like this podcast, please follow us on Apple or anywhere that you download podcasts and share this link with any friends or family that you think might benefit from this information.
.jpg)
