Kalorama's services include fee-only investment advisory and financial planning. A financial plan provides a road map to achieving greater financial security and independence. Financial planning is the process of developing strategies to achieve your life goals through proper management of financial resources. The focal point of any financial strategy is the investment plan — how your assets will be invested to achieve your financial goals. Kalorama specializes in the development and implementation of investment and retirement plans, and the prudent management of assets, the essential building blocks necessary for you to achieve your financial goals. Kalorama can also assist you with other aspects of your financial plan, including cash flow management and net worth analysis, insurance review, tax analysis (we do not prepare tax returns), and estate plan review.
During an initial complimentary meeting, we will identify which of the following services will help you achieve your goals and objectives:
- Investment planning
- Investment advisory services
- Retirement planning
- Cash flow analysis
- Net worth calculation
- Income tax planning
- Education funding
- Insurance planning
- Estate plan review
- assess risk tolerance
- current portfolio review and analysis
- asset allocation recommendations
Investment advisory services
- investment policy development
- portfolio construction
- portfolio monitoring and management
- performance reporting
Investment planning begins with an assessment of your risk tolerance to determine whether your current portfolio is invested in an appropriate manner. Based upon your risk tolerance, an asset allocation is recommended that is consistent with your goals and objectives. Investment planning also determines an annual amount of funds available for investing and the amount of investment income to include in cash flow. Investment advisory is the process of investing your assets to achieve a return that is consistent with your goals and objectives. See our investment advisory process for the steps in the investment planning and advisory process and investment philosophy for Kalorama's investment philosophy.
- future income and capital needs analysis
- calculation of the periodic amount to be saved to fund income during retirement
- plan options (IRA, SEP, Profit Sharing)
- distribution strategies
Retirement planning begins with an estimate of how much income is needed when you either reduce time working or cease to work. The future income estimate is used to calculate future capital needs and the periodic amount to be saved to provide income during retirement. These calculations are used as the basis for retirement investment planning.
Retirement investment planning includes strategies for accumulation, conservation, and distribution of your assets. The accumulation phase is concerned with designing an investment plan that will achieve your goals. Conservation is the process of investing the assets to minimize risk of loss. Finally, distribution determines the best method and timing for withdrawing the assets to provide income during retirement.
The three basic sources for retirement income are company retirement plans, personal savings, and social security. Retirement planning also includes an assessment of retirement plan options. These options depend upon whether you are an employee or an owner of a company. Employee options are limited by what is offered by the employer. Company owners can choose between various types of qualified and non-qualified plans. Qualified plans include defined contribution and defined benefit plans. Non-qualified plans include deferred compensation, salary continuation, and bonus plans. Kalorama helps you choose which plan is most suitable based upon your situation.
There are many variables in the retirement planning process including, but not limited to, contributions, withdrawals, rates of return, inflation rate, retirement date, and life expectancy. A concern most investors have is whether they will run out of money. Kalorama uses sophisticated software programs to analyze various retirement scenarios. We may also use Monte Carlo simulations to assess and quantify the probability that your retirement plan will succeed, or the risk of failure (i.e., the probability of not having enough money to fund your retirement). Monte Carlo simulations are projections that include hundreds or thousands of hypothetical retirement scenarios based upon statistical sampling of historical rates of return and risk.
Cash flow analysis
- assistance with the development of a budget to determine the amount of excess cash available for investment
- establishment and maintenance of an emergency or reserve fund
- update for significant changes in situation
Net worth calculation
- amount by which assets exceed liabilities
- develop projections consistent with goals
- periodic reviews to determine whether wealth accumulations goals are on target
Cash flow analysis is typically the starting point in the planning process because it is the basis for funding the goals in other planning areas. If your situation dictates, the analysis may include assistance with the development of a budget. The two principal objectives of cash flow analysis are: 1. Management of income and expenses, including the establishment and maintenance of an emergency or reserve fund, and 2. Systematic creation and maintenance of excess cash for investment. Your cash flow statement should be updated as needed, typically when there has been a significant change in your personal or economic situation. The statement of net worth should be reviewed or updated annually to determine whether wealth accumulation goals are on target.
Income tax planning
- minimization strategies
- tax-efficient investment strategies
Kalorama's income tax planning involves the identification of strategies to reduce, time, or shift current or future tax liabilities. Basic strategies include accelerating expenses and deferring income. While tax preparation focuses on minimization of payments for what has happened, tax planning entails coordinating with your income tax advisor to review legitimate opportunities to reduce future federal and state taxes. In connection with investment management, income tax planning involves investment selection, the placement of the investment in the appropriate account to obtain the best tax consequences, and the timing for disposal.
- calculation of the periodic amount to be saved to fund future education costs
- alternatives and strategies
Education planning includes a calculation of future capital needs and the periodic amount to be saved.
- identifying the risks that could jeopardize financial goals
- needs analysis
- home, umbrella liability
- disability, life, long-term care
- plan design
- product evaluation
Insurance planning includes identifying the risks that could keep you from attaining your financial goals and determining whether you should retain the risk (self insure) or shift the risk to another party. If the risk is to be transferred to another party, planning focuses on estimating how much insurance you need to protect against the risks and determining what type of policy and related provisions are suitable. Kalorama will provide you assistance in coordinating with an insurance professional to acquire policies recommended in the plan.
Estate plan review
- financial and medical powers of attorney
- distribution strategies
Estate planning involves the development of a strategy for the distribution of assets (the "estate") either during life or at death, including to who and how the assets should be distributed. Estate planning documents must be executed to ensure that your asset distribution goals are achieved. Because attorneys are required to draft estate planning documents, you will be referred to an estate planning attorney. Kalorama's role is to provide you with information about the various estate planning tools and techniques that are available, and to ensure that you have executed estate planning documents that will achieve the goals and objectives contained in your estate plan.
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