Cortburg Speaks Retirement

Cash Flow Management

November 18, 2020 Miguel Gonzalez, MBA, AIF®, CPFA®, CRC® Season 2020 Episode 10
Cortburg Speaks Retirement
Cash Flow Management
Chapters
0:00
Introduction
0:59
Weekly Educational Update
6:32
Week on Wall Street
10:41
Weekly Tax Tip
12:33
Healthy Lifestyle Advice
14:35
Green Living Idea
16:09
Quote of the Week
17:07
Conclusion
Cortburg Speaks Retirement
Cash Flow Management
Nov 18, 2020 Season 2020 Episode 10
Miguel Gonzalez, MBA, AIF®, CPFA®, CRC®

Cortburg Speaks Retirement

Cortburg Speaks Retirement / Investment in Stock Market, Financial Planning, Retirement Planning, Money Management

1.Educational Update = Cash Flow Management
 
2. Week on Wall Street


3.Tax Tip =  IRS website resources

4.Healthy Lifestyle Advice = Get Your Daily Dose of Vitamin D

5.Green Living Idea = Plastic-free shampoo and conditioner 

 6. Quote of the Week

Show Notes Transcript Chapter Markers

Cortburg Speaks Retirement

Cortburg Speaks Retirement / Investment in Stock Market, Financial Planning, Retirement Planning, Money Management

1.Educational Update = Cash Flow Management
 
2. Week on Wall Street


3.Tax Tip =  IRS website resources

4.Healthy Lifestyle Advice = Get Your Daily Dose of Vitamin D

5.Green Living Idea = Plastic-free shampoo and conditioner 

 6. Quote of the Week

INTRODUCTION

Welcome to Cortburg Speaks Retirement

An audio podcast about investing in the stock market, financial planning, money management and retirement planning.  Each Wednesday, we help investors at all stages of life learn how to grow and preserve their money from first job through retirement.

Now here is your host, Miguel Gonzalez.

 

HOST

Hello and welcome to the CORTBURG SPEAKS RETIREMENT audio podcast.   On this episode, I am going to help you manage your emotions with the upcoming election, review last week on wall street and provide a tax tip for parents looking to adopt a child.  I will also share important information from the FDA website regarding the best way to store food and the important to keeping house plants.  As always, I will finish with a motivational quote of the week.  

 

 1st – weekly educational update
Cash Flow Management

You’ve probably heard the saying that “cash is king,” and that truth applies whether you own a business or not. Most discussions of business and personal “financial planning” involve tomorrow’s goals, but those goals may not be realized without attention to cash flow, today.  

Management of available cash flow is a key in any kind of financial strategy. Ignore it, and you may inadvertently sabotage your efforts to grow your company or even build personal wealth.

Cash flow statements (CFS) are important for any business. They can reveal so much to the owner(s) and/or CFO, because as they track inflows and outflows, they bring expenditures to light. They denote your sources and uses of cash, per month and per year. Income statements and P&L statements may provide inadequate clues about that, even though they help you forecast cash flow trends.   

Cash flow statements can tell you what P&L statements won’t. Are you profitable, but cash poor? If your company is growing by leaps and bounds, that can happen. Are you personally taking too much cash out of the business? That may inadvertently transform your growth company into a lifestyle company. Are your receivables getting out of hand? Is inventory growth a concern? If you’ve arranged a loan, how much is your principal payment each month and to what degree is that eating up cash in your business? How much money are you spending on capital equipment?

A good CFS tracks your operating, investing, and financing activities. Hopefully, the sum of these activities results in a positive number at the bottom of the CFS. If not, the business may need to change. 

In what ways can a small business improve cash flow management? There are some fairly simple ways to do it, and your CFS can typically identify the factors that may be sapping your cash flow. You may find that your suppliers or vendors are too costly; maybe you can negotiate (or even barter) with them. Like many companies, you may find your cash flow surges during some quarters or seasons of the year and wanes during others. Maybe you could take steps to improve it outside of the peak season or quarter. 

What kind of recurring, predictable sales can your business generate? You might want to work on the art of continuity sales – turning your customers into something like subscribers to your services. Perhaps price points need adjusting. As for lingering receivables, swiftly preparing and delivering invoices tends to speed up cash collection. Another way to get clients to pay faster: offering a slight discount if they pay up, say, within a week (and/or a slight penalty to those who don’t). Before you go to work for a client or customer, think about asking for some cash up front (if you don’t do this already).

Relatively few small business owners look to home equity as a source of a business loan or a line of credit. Only 7%, in fact, according to the Federal Reserve. Meanwhile, only 6% explore a mortgage refinancing. But why are there so few? It could be that the repayment terms might be intimidating as well as the inherent risk of placing your home on the line. That said, it may be a suitable option for some seeking to start a small business.[i]

Be that as it may, there is a temptation for an owner of a new venture to get a high-limit business credit card. It might be better to shop for one with cash back possibilities or business rewards in mind. If your business somehow isn’t set up to receive credit card payments, think about how the potential for added cash flow could render the processing fees utterly trivial.1

  • These strategies may not be suitable for everyone and alternative options may be available.  

How can a household better its cash flow? One quick way to do it is to lessen or reduce your fixed expenses, specifically loan and rent payments. Another step is to impose a ceiling on your variable expenses (ranging from food to entertainment), and you may also save some money in separating some or all those expenses from credit card use. Refinancing – if you can do it – and downsizing can certainly help. There are many free cash flow statement tools online where you can track family inflows and outflows. (Your outflows may include items like long-term service contracts and installment payment plans.) Selling things you don’t want could make you money in the short term; converting a hobby into an income source or business venture might help in the long term.  

Better cash flow boosts your potential to reach your financial goals. A positive cash flow can contribute to investment, compounding, savings – all the good things that tend to happen when you pay yourself first.

 

2nd – Week on Wall Street
Vaccine Triggers Rally 

News of a COVID-19 vaccine ignited a rally in economically sensitive stocks and a broad retreat in technology companies last week, though enthusiasm was tempered by reports of rising new infections and fresh lockdowns.  

The Dow Jones Industrial Average surged 4.08%, while the Standard & Poor’s 500 rose 2.16%. The Nasdaq Composite index fell 0.55% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, jumped 4.01%.[ii],[iii],[iv]

Vaccine Hopes 

Reports of an effective COVID-19 vaccine sent stocks soaring on Monday as the end to economic uncertainty appeared to be in sight. Stocks that had been pummeled by economic lockdowns surged on the news, while the stay-at-home stocks suffered steep declines. Bond yields and oil prices both moved higher on expectations of increased economic activity.

Market enthusiasm evaporated in the days that followed, however, as higher COVID-19 infections, new lockdowns, and low expectations for a new fiscal stimulus package dampened the optimism brought on by the pending vaccine. 

Stocks closed the week on a higher note, with cyclical stocks adding to their gains and technology companies shaving part of their losses.  

Clouds Over Chinese Capitalism?

The market was caught by surprise last week when Chinese regulatory authorities issued draft guidelines to address concerns over abusive monopolistic practices. Shares in some of the biggest Chinese technology companies dropped on the news. This follows the prior week’s suspension of a listing of a large initial public offering for one of the country’s leading fintech companies.

It’s difficult to say whether Chinese regulators are acting on concerns that western nations have with the dominance of Big Tech companies, or if they are attempting to rein in the power and influence of privately owned corporations. An answer may not be clear anytime soon, but investors will be watching.

THIS WEEK: KEY ECONOMIC DATA

Tuesday: Retail Sales.

Wednesday: Housing Starts.

Thursday: Existing Home Sales, Jobless Claims, Index of Leading Economic Indicators.  

Source: Econoday, November 13, 2020

The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

 

THIS WEEK: COMPANIES REPORTING EARNINGS

Monday: Palo Alto Networks (PANW), Tyson Foods, Inc. (TSN), JD.com, Inc. (JD)

Tuesday: Walmart (WMT), The Home Depot (HD) 

Wednesday: Nvidia Corp. (NVDA), Target Corp. (TGT), Lowe’s Companies (LOW), The TJX Companies (TJX)

Thursday: Workday, Inc. (WDAY), Ross Stores (ROST), Intuit (INTU), Netease, Inc. (NTES) 

Source: Zacks, November 13, 2020

Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.

 

3rd – weekly tax tip
You’re Not Alone: The Many IRS Resources Available

The thought of filing taxes might be overwhelming to some, but the IRS has many resources available to help make it easier. These include their Frequently Asked Questions page, some basic tools about PTIN requirements, contact information, disaster relief resources, and more. In addition, they also make it easy to access some of their most-popular publications, including:

●       Publication 5307, Tax Reform Basics for Individuals and Families

●       Circular 230, Regulations Governing Practice Before the Internal Revenue Service

●       Publication 4557, Safeguarding Taxpayer Data

●       Publication 5293, Data Security Resource Guide for Tax Professionals

If you have questions before, during, or after filing your tax return, the IRS is happy to help. You can also reach out to enrolled agents and find out more information about what EAs are and how you can become one. 

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

Tip adapted from IRS.gov[v]

 

4th – healthy lifestyle advice
Get Your Daily Dose of Vitamin D, Even in the Winter

Vitamin D is the vitamin we produce when our skin is exposed to UV rays from the sun as well as certain dietary sources, and many people are actually vitamin D deficient (even if they live in a sunny part of the country). As winter approaches, it might seem hard to get your daily dose of vitamin D, but luckily, there are plenty of ways to get this important nutrient. 

Eating vitamin D-rich foods is the best way to get the nutrient during the winter months. These foods include fatty fish (like salmon), mushrooms, eggs, and milk (and milk alternatives, such as soymilk) fortified with vitamin D. Just 4 ounces of salmon have 265% of the dietary reference intake (DRI) of vitamin D, which means that just 2.5 servings of salmon a week would get you all the vitamin D you need. If you don’t like fish, milk and eggs are another great option. 

If you’re concerned that you might have a vitamin D deficiency, call your doctor and talk to them about how to get checked for one. They can provide you with more information and alternate methods to increase your blood levels of vitamin D, if needed. 

Tip adapted from Intermountain Healthcare[vi]

 

5th – Green Living Idea
Plastic-Free Shampoo and Conditioner

Shampoo, conditioner, and body wash often come in large, bulky plastic bottles. In fact, 80 billion bottles from shampoo and conditioner are used around the world every year. What happens to these bottles when you’re done with them? Too often, they end up in landfills or are sent to be recycled, which takes a lot of energy and multiple processes in order to repurpose the raw materials. 

Instead, many people are switching to plastic-free shampoo and conditioner bottles. Some new options include:

●       Buying shampoo and conditioner from bulk stores and refilling your bottles.

●       Using a bar shampoo and conditioner, such as these ones by Ethique. Ethique even offers bar shampoo and conditioner for different hair types as well as corresponding body wash. 

●       Buying refillable shampoo and conditioner bottles, usually made out of glass. 

Tip adapted from Treading My Own Path[vii]

 

6th – quote of the week

“Brave men rejoice in adversity, just as brave soldiers triumph in war.” 

- Lucius Annaeus Seneca

 

Make sure to visit our website, www.CortburgRetirement.com.  Our site is filled with educational videos, eBooks, publications, and financial calculators designed to help you learn more about your finances.  As you search our site, send us a note regarding any questions you may have about any particular investment concepts or products. We will get back to you quickly with a thoughtful answer.

This is Miguel Gonzalez, Retirement Specialist and Managing Partner, with Cortburg Retirement Advisors signing off for this week’s educational update.  

 

DISCLOSURES  

Opinions expressed are subject to change without notice and are not intended as investment advice or a solicitation for the purchase or sale of any security. Please consult your financial professional before making any investment decision. 

All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

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

CRC conferred by The International Foundation for Retirement Education.

Securities offered through LPL Financial. Member FINRA/SIPC. Investment advice offered through Private Advisor Group, LLC, a registered investment advisor.  

Private Advisor Group, LLC and Cortburg Retirement Advisors, Inc. are separate entities from LPL Financial.

Investing involves risk including possible loss of principal.


[i] entrepreneur.com/article/336037
[ii] The Wall Street Journal, November 13, 2020
[iii] The Wall Street Journal, November 13, 2020
[iv] The Wall Street Journal, November 13, 2020
[v] https://www.irs.gov/newsroom/irsgov-has-many-resources-for-tax-preparers 
[vi] https://intermountainhealthcare.org/blogs/topics/heart/2013/01/getting-vitamin-d-during-the-dead-of-winter/ 
[vii] https://treadingmyownpath.com/2017/07/27/plastic-free-shampoo-conditioner/  

Introduction
Weekly Educational Update
Week on Wall Street
Weekly Tax Tip
Healthy Lifestyle Advice
Green Living Idea
Quote of the Week
Conclusion