Why Financial Planning Is Crucial to Women?


Financial planning is a pathway to independence and empowerment for women. Having control over one’s finances enables autonomy, the ability to make informed decisions, and a sense of security irrespective of life’s changes or unforeseen circumstances.

Historically, women have faced unique challenges in the financial realm, making strategic planning and preparation all the more crucial.

Challenges Women Facing Today

  • Longevity and Retirement

Women typically live longer than men, which means their retirement savings must stretch further. Yet, due to earning disparities and career breaks for care-giving roles, many women have smaller pensions or retirement funds. Therefore, robust financial planning becomes essential to ensure financial security during retirement years.

  • Career Interruptions and Flexibility

Women often encounter interruptions in their careers due to family obligations or care-giving responsibilities. These interruptions can impact income and savings, making it vital for women to plan and manage finances to navigate these transitions effectively. Creating financial strategies that accommodate career breaks and flexible work arrangements becomes imperative.

  • Healthcare Costs and Long-Term Care

Women generally have higher healthcare expenses, including longer life expectancies and potential long-term care needs. Financial planning must account for these factors, ensuring sufficient savings and insurance coverage to address healthcare costs effectively.

Steps Towards Financial Empowerment

1. Education and Awareness

Promoting financial literacy through education and workshops tailored for women can foster confidence and informed decision-making.

2. Long-Term Financial Planning

Developing comprehensive financial plans that account for diverse career trajectories, family dynamics, and potential life changes is key.

3. Support Networks and Resources

Encouraging supportive networks and access to financial expertise/resources can provide guidance and mentorship crucial for women navigating financial complexities.

4. Encouraging Investment

Promoting investment education and showcasing the benefits of long-term investment strategies can empower women to grow their wealth effectively.

Financial planning is not just a matter of numbers; it’s a catalyst for empowerment and independence, especially for women. And that is why financial planning holds particular significance for women in today’s world.

Plan for Year 2021


As I am reflecting back on year 2020 there is no doubt that coronavirus pandemic is the biggest theme of this year. The pandemic has not only disrupted global economy, it also changed our lives more or less. Last December when I wrote an article on looking into year 2020, “uncertainty” and “change” were the two words that came to my mind at that time. This time, I think “resilience” and “recovery” will be the two theme words of year 2021.

Resilience is the US economy which bounced back from its second quarter low on a tear. Resilience also is human spirit that carries us over despite lock-downs and remote working/learning. Now that we have clinically proven effective vaccines we see light at the end of this dark tunnel. We are entering the stage of recovery.

But we are still vulnerable coming out of this pandemic. Recent weeks’ numbers of US initial jobless claims were still stubbornly high, pointing to a slow-down and weak recovery well into the year 2021. Many economists pointed out that it is highly likely that we will not have a full economic recovery until after the end of year 2022.

It is hard to predict the short term trend of the stock market. Due to the pandemic caused economic downturn, the Fed and the government will continue to support the US economy with fiscal and monetary policies at least in the short term. These temporary stimulus policies in turn will most likely sustain the stock market’s high valuations in much of the year 2021.

We probably will not see drastic changes in tax law in 2021 if the Republicans win the Senate majority. However, several rounds of economic stimulus packages passed during the Pandemic widen the government deficits. Therefore, mid-term to long-term there could be quite significant changes to current tax law, especially rolling back of 2017 tax cuts for the rich and corporations.

When it comes to personal finance, there are a few strategies for you to plan for year 2021. That is, budget and track your spending; manage your debt and increase your emergency reserve.  

If you have not had money set aside for rainy days, start building your rainy day reserve fund as soon as possible. Build the fund to cover at least three months of family expenses. If you already have three months of expenses of emergency fund set aside, preferably in savings account or money market fund, increase the reserve to cover six months of expenses. If personal financial situation allows it, it is better to increase the emergency reserve to cover 12 months of expenses at this time.

The reason I am recommending the increase in emergency reserve is because entering 2021 there are still many uncertainties, including possible continued pandemic, relatively high stock market volatility and weaker than expected economic recovery that may all affect your job and financial stability. It is wise to have a larger than usual monetary cushion to carry you over during these unprecedented times. And if the economy recovers much faster than we predicted, then you will need less emergency reserve and have some extra money to take advantage of the opportunities emerged in the financial market and elsewhere in the coming year. 

Thanks for reading and have a very happy holiday season!

Coping with Coronavirus Crisis


Since March 24, 2020 Collin County, Texas has officially implemented its seven-day shelter-in-place law. Even before this order, residents in North Texas have been coping with the crisis that has drastically changed their lives.

Historically significant news and data used to come in once in a while now have come in almost daily since the end of last February, causing global financial markets to swing up and down wildly. And the word “unprecedented” has been used many, many times to describe the simultaneous global health crisis and financial crisis.

The speed of interest rates dropping was unprecedented. “Unprecedented” is this time that investors flight to cash abandoning stocks and safe haven assets like US treasuries at the same time. The number of Americans filing for unemployment benefits skyrocketed to a record–breaking 3.283 million for the week ended March 21. Consensus expectations were for 1.64 million claims. The previous record was 695,000 claims filed the week ended October 2, 1982. We are indeed living in an unprecedented time.

Amid this historical backdrop the central banks, especially the Fed, had adopted extraordinary measures to fight the financial fallout caused by this health crisis. And the Congress had just passed an unprecedented 2.2 trillion rescue/stimulus bill to relive financial burdens off Americans’ shoulders.

Based on a report by the Wall Street Journal, the bill will provide one-time checks of $1,200 to Americans with adjusted gross income up to $75,000 for individuals and $150,000 for married couples. Individuals and couples are eligible for an additional $500 per child. The one-time payment will be reduced by $5 for each $100 of income over those thresholds, completely phasing out for individuals whose incomes exceed $99,000, $146,500 for head of households with one child, and $198,000 for joint filers who don’t have children.

If you have recently filed tax return and the IRS has your refund account information on file, you can expect the direct payment into your refund account as early as in three weeks. It will take much longer to receive the payments by checks. The income figures above are based on the adjusted gross income from the 2019 return, or if that return hasn’t been filed, the 2018 return, said Jeff Levine of Kitces.com and Buckingham Wealth.

According to the bill it expands unemployment insurance to cover freelance and gig workers. The current unemployment assistance will be increased by $600 a week for four months.

The bill also includes $350 billion in loans to small businesses that can be used to cover payroll expenses, rent, and interest on mortgage obligations.

The IRS has also taken some steps to relieve Americans’ tax burden. It has officially postponed the deadline for filing income tax returns of year 2019 by 90 days. The new deadline will be July 15, 2020. “All taxpayers and businesses will have this additional time to file and make payments without interest or penalties,” said Treasury Secretary Steven Mnuchin in a recent tweet.

In an article written by Ben Werschkul for Yahoo! Finance, the IRS announced that it “will generally not start new field, office and correspondence examinations” during this period (April 1-July 15). The agency also announced that field collection activities will be suspended from April 1 to July 15. Liens and levies will be suspended during this period, too. However, the IRS underlined “field revenue officers will continue to pursue high-income non-filers”.

As this crisis rages on, there has already been some debate of whether the eventual recovery will be V shaped or U shaped. Given the unique nature of this economic crisis, whether the recovery will be V shaped or U shaped will largely depend on the progress of the medical research on effective treatment/vaccine against coronavirus. If the medical breakthrough comes earlier we may see a V shaped recovery. If not, we may see a U shaped recovery. Another interesting point made by Robert Rodriguez, former CEO of First Pacific Advisors in a latest interview by ThinkAdvisor pointing to a stock market rebound in the shape of a “lower-case “v”, not a rocket ship capital “V” — because of factors such as stock buybacks by companies benefiting from the fiscal stimulus will be banned.

Others like Jeremy Siegel, professor of finance at Wharton School of Business echoed a call by some financial professionals of rethinking the traditional “gold stand” of “60/40” portfolio strategy. Last Wednesday during a market update webcast sponsored by WisdomTree Asset Management he argued for the “need to pivot to a 75/25” portfolio strategy from the traditional 60/40 strategy “because interest rates are going to stay lower.” His point is based on historical real return index data from January 1802 through December 2019 showing that the real return from stocks was 6.8%, 3.5% for bonds, 2.6% for bills, 0.6% for gold and -1.4% for the dollar.

As with crisis in the past, there are opportunities for investors amid the market rout. For one, with the recent market sell-off, you may have a smaller tax bill if you convert your traditional IRA assets into Roth IRA. However, you need to consult your financial advisor before the conversion as the move is non-reversible and potentially complicated. For another, there are some solid companies priced attractively after the recent broad-market sell-off. But, I agree with what Peter Mallouk, president and CEO of Creative Planning said in another ThinkAdvisor interview that some of the worst things investors could do include getting into an industry that doesn’t recover, like energy, or betting on a company that can’t recover.

In the meantime, how do we as individuals go about our daily lives? I would like to share my personal experience of living through the coronavirus crisis.

I try as much as I can to keep my family’s pre-crisis routine . While staying at home, resist making too many trips to the pantry, though it is easier said than done. I make sure everybody in the family stay healthy by taking multivitamin supplements besides eating healthy meals, exercising at least 30 minutes daily and sunbathing for 15 minutes whenever the sun comes out. I sip water throughout my waking time almost daily. Since we do not need to commute to school or work, it is easier for us to get plenty of sleep everyday, another boost for our immune systems. To beat the feeling of isolation we get in touch with our friends as much as possible. We also spray letters and packages with disinfecting spray and wash our hands thoroughly after handling.

As a parent I would like to point out that now is an opportunity to teach our kids life lessons and build characters such as resilience and patience. It is also an opportunity to show solidarity among our neighbors and communities. If we are unable to volunteer, we can donate to local charities such as North Texas Food Banks. For those of us who have pets, we will have more time spent with them. Maybe, half an hour of dedicated play with our pets will strengthen our bonds. If your dog likes being touched, a little massage would be nice, too.   

Last, I want to say that generations of human beings have gone through and prevailed over wars, pandemics and financial crisis. Scientists worldwide are racing towards creating vaccines against coronavirus. If history can be of any indication I am confident that we will pull out of this twin crisis, too. Most importantly, we will have gained invaluable lessons and be better prepared for the future.

Making Sense of the Latest Market Rout


Oh boy, what a (market) roller coaster ride we have been on this week! This is not the planned topic for my February blog post. But in light of what has been happening in the market since this past Monday, I felt like pitching in with my own two cents and try to make sense of this stock market “carnage”. Even if you are someone who doesn’t pay attention to stock market daily, you probably have learned the recent market rout that has been going on for the past four days here in the States and beyond. To give you a sense of how bad the sell-off is, let’s look at it in a historical perspective. “S&P drops 10% in six days, fastest correction in history,” says one online financial news website. “US stocks slide into correction, on track for the biggest weekly loss since 2008” says another well-known financial newspaper. Sensational headlines abound.

As I am writing this article on Friday morning, Dow lost another 1000 points at one point. Though no one knows for certain how soon this sell-off will end, plenty of venerable news sources point to the coronavirus outbreak as the major culprit of this adrenaline rush market sell-off. The news reporting about the coronavirus outbreak in China has been going on for over a month, and the market participants are well aware of this and seemed to have shrugged it off. Then, why, all of a sudden, the market seems to be panicking about this coronavirus outbreak? Just last week we had market record highs. Is the coronavirus outbreak the only reason that has caused this stock market stampede? This advisor does not think so. There had been flashing warning signs throughout 2019 already: twice inverted treasury yield curve; continuing decline of US manufacturing activities; the credit crunch in the repo market at the end of 2019, and US stock market valuation that well exceeded its historical average.  Given the US stock market’s gravity-defying stellar performance in as late as of January 2020, this late stage bull market needs great fundamentals to sustain such high valuation. In my December 2019 article titled “A Look into Year 2020”, I mentioned that there could be two potential disruptions to the world economy and market in 2020: disruption of world supply chain and US presidential election. What a coincidence that during the weekend right before Monday, February 24 market first plunge, news broke out that Italy and South Korea were hit hard by the rapid spread of coronavirus, which means the world supply chain could be disrupted even further. At the same time, America learned that Senator Bernie Sanders won the Nevada caucus, thus unofficially put him as Democrat’s front-runner for the party’s presidential nominee. All of a sudden, the market realized that the narrative has changed from business as usual to this could go even worse. 

What is happening right now taught us several things. One, there is no such thing as this time is different for the market. Two, fundamentals do matter. Three, bubbles will pop. Sound familiar? But, when irrational exuberance is abundant, people tend to think this time IS different, from Dutch tulip mania all the way to dot.com bubble and up until this recent longest run bull market. Another thing learned from this episode is that as global economies become greatly interlinked the world markets seemed to have synchronized sell-offs in the same intensity, diminishing the effectiveness of geographic diversification. This is why people flocked to the usual safe haven assets such as US treasuries, rapidly depressing the 10 year treasury yields.

Who will save the market out of this misery? As always all eyes are on the Fed. There have already been some speculations that Fed will probably cut rates three times this year. Fed had never explicitly stated that it would cut rates this year. However, Fed did hint it would take any action it needs to stabilize the US economy. Granted, stock market is not equal to economy. Still, Fed is closely monitoring the situation. According to Wall Street Journal, Federal Reserve Chairman Jerome Powell signaled Friday that the central bank was prepared to cut interest rates if needed. Ah, talking about the market’s reliably dependable ally. But, don’t forget that the stock bull market was fueled by last year’s Fed’s rate cuts as well as corporate tax cut. Also, don’t forget that the coronavirus outbreak is a health issue not a financial issue. What is worse, given central banks of major developed countries have already cut their benchmark rates so low before this market sell-off that rate cutting may have limited effects on the market and/or world economy. What about fiscal policy? President Trump’s administration just released a $4 trillion spending budget. A further fiscal stimulus will further aggregate the problem of record US deficit. So, if the US economy slips into recession, it will be in a difficult situation this time.

As an individual investor, you are probably searching for answers and trying to make sense of those giddy headline news. You may hear noises such as “sell all”, “buy the dip”, or “do nothing”. These can all make sense depending on individual situations. I think now one of the silver linings for individual investors is the strong US jobs market. It is a big contrast between this time and the financial crisis of 2008-2009 where the unemployment rate once reached 10%. I also agree with what Fed Chair Mr. Powell said in a statement released Friday afternoon: “The fundamentals of the U.S. economy remain strong. However, the coronavirus poses evolving risks to economic activity.” So, how can an investor ride out this market volatility? If you have been working with an advisor, I am sure you and your advisor have already hashed out a plan precisely for times like this. If you don’t have a formal plan, don’t panic. The market goes up and down. Volatility is part of the market. If you are antsy and feel like doing something, instead of guessing where the market bottom is, take a deep breath and do the following things. After you go through these steps, you will probably have an idea of what you need to do next. Here is the list:

  • Check if you have stashed away 3-6 months of your living expenses in a safe investment vehicle such as a savings account or money market fund. This is your emergency fund. If you don’t have one, then start by saving $5-$10 per day or more if you can afford to do so.
  • Check if you have adequate insurance for you and your family. The reason why you need to do this especially now is that if you don’t have adequate insurance, say, a large medical bill in the near future that is not covered by your health insurance could force you to sell some or all of your investments in a downward spiraling market.
  • Talk to your loved ones and together write down your family’s financial goals. Sort them into three groups: near, inter medium and long term goals. Then, estimate to your best knowledge the amount of funds each goal needs. Near term goal means it is happening within 2-3 years. Inter medium term goal means anywhere between 5-9 years. A long term goal means anything in 10 or more years. After you finish this step, you will pretty much have a ball park idea of how much money you need for near, far future and in between.   

If you still feel queasy about the current situation, talk to your advisor and address your concerns together. Remember for all the advice out there the ones appropriate for your friends or coworkers are not necessarily suitable for your situation; it all depends on your individual circumstances.

A Look into Year 2020


Dear readers,

Do you have the feeling of toasting the coming of year 2019 seems to have happened just yesterday? I do. Seems to me that writing an article forecasting year 2019 is not a distant memory. Yet, right now I am writing a blog looking back at 2019 and looking forward to 2020. Time just flies by and life must go on.

Looking back at 2019, I think two words stand out and aptly summarize the year: uncertainty and change. Beginning 2019 we have two biggest uncertainties: trade war between China and the US, and Brexit drama. These two biggest uncertainties hung over our heads until the end of 2019.  Last Friday, it is reported that the US and China have agreed on a so-called Phase One trade deal while Boris Johnson’s Conservative Party won big and he will return to Downing Street with a big majority.  In 2019 we see changes going on in world’s supply chains, and investment trends such as the ESG (environmental, social and corporate governance) movement in the world of investing. Amid these changes and uncertainties there is one shining spot that stands out: the return of US equity. For example, the iShares Core S&P Total Us Stock Market ETF returned 28.15% so far this year thanks to US corporate tax cut, good jobs market, resilient consumer spending and the Fed rate cut.

So, what is year 2020 going to be like in economic, market and business perspectives? The advisor at NorStar Financial thinks the themes of “uncertainty” and “change” will continue into 2020. For one thing, 2020 will be US presidential election year. This is big enough of an uncertainty given the stark contrast of economic policies between the President and likely Democrat presidential nominees. In addition, a recently published World Economic Outlook by IMF sees coming economic weakness worldwide. However, based on a survey of financial advisors by Financial Planning Association (FPA), majority of advisors don’t see a recession in the US in 2020, but rather an economic slowdown. Fortune magazine predicted in its December issue that US GDP growth will be hovering around 2% throughout 2020. During 2019, the Fed has cut its benchmark rate three times with its rate now in a range of 1.5% to 1.75%. Will the Fed cut rate again in 2020? Right now, it signals that it has no plan to do so in 2020. But Fed Chairman Powell also said that Fed will do whatever it is needed to support the US economy. With Fed rate once again under 2%, investors who seek current income will have to be creative in 2020 for higher yields.  On trade, US and China will probably not further escalate during 2020, but the damages resulted from the trade war since 2018 have already been done to the world economy. And the negative effects will continue to be felt in 2020 in areas such as commodity prices and energy sector. All these uncertainties have already affected business sentiment and business investments. Given this overall macroeconomic backdrop, investors may see single digit returns in stock market in general.  Despite the impressive run of the so-called “passive investing” since the last Financial Crisis, where investors just buy index funds to catch market return, individual stock picking maybe come back in favor in 2020. However, individuals need to assess their own financial situations or talk to their financial advisors to develop best investment strategies based on their unique situations. At the same time, another “trade war” among brokerage houses to race to zero commission fee for online trading, the merger of Charles Schwab and TD Ameritrade, and the emerging trend of ESG investment will continue to be changing and shaping the world of investing. In the meantime, the undergoing disruption and change happening to worldwide supply chain will continue into 2020. Artificial Intelligence will pick up momentum, and so will 5G. It is no business as usual anymore.

Thanks for reading and have a great holiday!