A Fool’s Errand

“If you want to live a happy life, tie it to a goal, not to people or things.”
 - Albert Einstein 

Dear Friend, 

Ever work really hard at something only to realize it has been a fruitless exercise in futility? If you are like most people, the answer is yes because almost everyone has been on a fool’s errand at one point or another in their lives. I personally have engaged in countless activities that have done nothing to bring me closer to my respective goal, or worse, have actually moved me in the opposite direction.

When viewed with the knowledge of hindsight, our actions seem absurd and perhaps even comic. A fool’s errand becomes tragic, however, when repeated again and again by a perpetrator unconscious of his error. Then we are like Sisyphus rolling the boulder up the hill, devoting precious time and energy and in the end achieving nothing.  

I know I have sermonized before about the importance of setting goals, but goals are the equivalent of an inner compass that guides us through life. Without them, we ramble aimlessly; with them, our efforts are directed toward achieving a particular vision. Articulating your goals is like finding true north. Once found, you must stay on course, but you always know in which direction you are headed.  

From the moment we awaken in the morning, our minds are consumed by an endless number of relatively minor choices. No one decision is all that important, so it is easy for us to act without much forethought. The difficulty is that these little decisions add up, and cumulatively they come to define our quality of life.  

Thus our precise location on the map of life is influenced by all of the small choices we have ever made. While no one begins with the same set of advantages or disadvantages, examining how actions affect our present circumstances forces us to take responsibility for the future. Having goals helps us make better choices when confronted with the thousands of otherwise insignificant decisions of everyday life.

Your trusted guide and friend,

Brad F Fortier, CFP®

Certified Estate Planner™
President, Fortier Financial

The Fool’s Errand of Investing

"If you do not change the direction in which you are going, you will end up where you are headed." - Confucious

At face value, most people accept the importance of goal-setting, and yet nearly all of the free world, including the “brightest minds” on Wall Street, has failed to apply this fundamental wisdom to investing. For so long, we have mistakenly substituted “winning” for reaching goals by relying on performance benchmarks as the sole barometer of success. We analyze the strength of a portfolio by the relative manner in which it has outperformed a given index, rather than looking at whether we are on track to achieve our long-term goals. 

Measuring your performance against something arbitrary like the S&P 500 index is like determining whether or not you are fat by finding the average weight of everyone living on your block. If you weigh less than the average, you may feel better about yourself comparatively, but this measure provides no information about your true health and well-being. You would never set a fitness goal to be less fat than the average person in your neighborhood, so why do we consider beating an index to be an effective method for measuring investments?

Here’s one more example in case you are not yet convinced. As the last vestiges of winter linger, now is the time many of us begin to dream about our summer vacations. At its most basic level, planning a vacation is a lot like goal-setting. Imagine your family has gathered for dinner and decided that this is the year you will finally make the trek over to Disney World. After months of anticipation, when the vacation has finally arrived, how do you measure its success? Will you be satisfied seeing smiles on the faces of your loved ones or will you only be happy if your family enjoyed itself more than every other visitor at the park?

By the same token, merely trying to beat an index is and always will be the fool’s errand of investing. Worse yet, it is a key indication that your investment strategy lacks direction. Treating life like a race that must be won is a recipe for suffering and disappointment. Instead try measuring your success in life by how well you are achieving a defined vision. You may find you have the ability to exceed your greatest expectations.

Top 4 Tax Tips for 2011

1. Ready, Set…Wait!
Everyone knows it is a good idea to prepare your taxes well in advance of the April deadline. If you are like the majority of Americans, you filed your returns by the end of February last year. This year, however, early filers should be prepared to wait a little longer because of Congress’s last minute 2010 Tax Relief Act. Not everyone will be affected by the delays as the Internal Revenue Service updates its systems, but it is a good idea to hold off on submitting until the IRS gives the green light.

That being said, now is the time to get organized. You know the drill. Collect all of the documents you will need including last year’s tax return, W2s, 1099s, receipts, etc. If you have a lot of papers, group similar documents together into a system you will easily remember. While you are at it, develop a filing plan for 2011, so all of your important documents will be easy to access next year.

When you have everything you need, go ahead and start preparing your returns. Just hold off on actually submitting if you are claiming any of the newly instated deductions or you itemize on Form 1040 Schedule A.

If you are typically among the ranks of the last minute filers, you may be interested to know that the deadline this year has been moved back to April 18th, due to a holiday in Washington DC.

2. Max Out Traditional or Roth IRA Accounts
You have until April 18th to make contributions for 2010. The maximum annual contribution to an IRA account is $5,000 for individuals under the age of 50 or $6,000 for those 50 and over. Contributions to a traditional IRA account may be tax deductible saving you money now. For those investing in a Roth IRA, the tax benefit comes later when qualified withdrawals during retirement are tax free. Your financial advisor can provide more information about the best retirement investment strategies given your age, income level and personal circumstances.

To learn more about Roth IRA's visit: http://fortierfinancial.net/2010-the-year-of-the-roth/

3. Go Ahead and Give
For the last decade, an individual was allowed to give away up to $1 million tax-free during their lifetime. This year the limit was raised to $5 million, but the new rules will not last for long. What will happen at the end of 2012 is anyone’s guess, so now is the time to consider giving if you may benefit from the higher limit. Just like under the previous rules, individual gifts of up to $13,000 do not count toward the $5 million total. Accordingly, if a gift of $100,000 was made, only $87,000 of those dollars would count toward the lifetime exemption. For those who have already reached the limit of $1 million, this is a particularly valuable opportunity.

4. Consult an Estate Planner
The tax law approved in December also affects federal estate taxes. The good news is that the new rules are beneficial for most, but you may need to update your estate plan to take advantage of the higher exemption.

Consult with an estate planner to see if there are any changes you should make to your will. Also be aware that the new rules expire in two years, so be prepared to make adjustments again in 2013 if necessary.

This information is not intended to be a substitute for specific individualized tax advice. We suggest you discuss your specific tax issues with a qualified tax advisor. 

Fortier Financial is Moving to Lakeview

Fortier Financial is relocating its office to Lakeview this spring. Our new address will be 230 Polk Street, Suite A, New Orleans, LA 70124. Once we're settled, feel free to come by, say hello and have a cup of coffee. 

Have you converted?

The Roth IRA presents an amazing opportunity to save a lot of money for many people. Time is running out for many investors, though. If you have not explored the possibilities, you should right now. If you would like to learn more and find out if the conversion is right for you, contact my office to set up a time to talk. 

Learn more by viewing this video presentation or reading about the conversion here.

All content in this newsletter is 100% original and is written and copyrighted by Fortier Financial.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investigating. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly.

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