Stacy’s Savvy Financial Advice

Stay Savvy with our founder Stacy Francis’ latest articles on financial planning, budgeting, debt management, investing, divorce, retirement planning, and more.

Stacy Francis founded Savvy Ladies® in 2003 with the mission to educate women about their finances and empower them to make proactive choices. Inspired by her grandmother who stayed in an abusive relationship due to financial reasons, Stacy has been determined to never let another woman become powerless by financial instability.

Get the resources, knowledge, and tools you need to make smart and informed decisions about your money and your life.

In addition to being the Founder and Board Chair of Savvy Ladies®, Stacy is the President, CEO of Francis Financial, Inc., a boutique wealth management and financial planning firm. A nationally recognized financial expert, she holds a CFP® from the New York University Center for Finance, Law, and Taxation, and is a Certified Divorce Financial Analyst® (CDFA®), a Divorce Financial Strategist™ as well as a Certified Estate & Trust Specialist (CES™).

Stacy has appeared on CNBC, NBC, PBS, CNN, Good Morning America, and many other TV & Financial News outlets. Stacy too is ofter sought out for her advice and can be found quoted in over 100 publications such as Investment News, The New York Times, The Wall Street Journal, USA Today.  She shares her wisdom and expert financial advice here for you to learn and get savvy about your finances.

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Opportunity Cost

by Stacy Francis, CFP®, CDFA

Strolling through Tribeca, New York this weekend, I stumbled upon a gorgeous cashmere sweater at a designer sample sale. It fit me perfectly; the only problem was that it was a still little on the expensive side, and I loved it in black and in grey. Torn, I spent a good half hour going back and forth between the two, before eventually settling on the grey one. This really got me thinking about opportunity cost, and how this is present every moment of our lives, always.

Whether shopping for the perfect house, car, or sweater, when you choose one, unless your budget has no limits, you have to un-choose the others. When you buy yourself a Mini Cooper, you give up having, say, a Lexus or a Honda – even one of those yummy Porsche Boxters. Whenever you open one door, you also choose not to open the others.

In finance, the concept opportunity cost becomes even more urgent. Whenever you choose to bet your money on one fund, you choose not to buy others. What if they take off, and yours doesn’t?

And in everyday decisions, like whether to go on a vacation or renovate the kitchen, there will always be things that you do not choose. Always be clear over what your goals and priorities are, and use these as a guide when faced with tough, high-opportunity-cost decisions.

Buy Low, Sell High – A Hard Concept to Follow

by Stacy Francis, CFP®, CDFA

A friend of mine called the other day to tell me about this “miracle fund” she’d been watching. Despite the markets, it had climbed almost 40% over the past five months. I have to have this fund, she said. Could I get her some?

Well, I told her, the thing is, few funds beat the market averages in the long run. If this fund has climbed 40% in a matter of months, chances are, it is more than a little overpriced.

Most investors know that in theory, investing is all about buying low and selling high. Yet very few can put this into practice. Few people are brave enough to buy a stock or a fund that’s been falling off lately, even when their financial advisors assure them that the fundamentals look good and the outlook prosperous. When, on the other hand, stocks or funds have been raging lately and are halfway to the moon, everyone wants to buy.

It is not hard to see why. You have worked hard for your money, and you depend on it. Your life would be over if you lost it. The problem is, by buying securities that are up and selling them when they are down, you are doing just that. You are practicing the opposite of clever money management.

Sure, both stocks and funds can fall because the companies are plain bad. There may be a real reason people do not wish to own them. On the other hand, weaknesses in the markets can present extraordinary opportunities to buy. The key is to work with an expert who can tell the difference.

The Financing Trap

by Stacy Francis, CFP®, CDFA

Someone told me the other day that whenever an American scores a 5% raise, he or she immediately ups spending with 10%. Crazy, you may say, but the thing is, our society is built around exactly this sort of behavior. It doesn’t actually take money to spend money – in the short term, anyway. Sales people, banks, and other types of institutions are tossing money at us in a manner much similar to the way guests toss confetti at the bride and groom at weddings. Chances are, you’ve heard something along the lines of “0% down”, “no interest until 2010” or “cash back” within the past hour. But while these sorts of deals may sound like dreams coming true, in reality, many a people have had their finances ruined by them.


Because the sales reps aren’t just giving you that bed, car, flat screen TV or whatever it is you’re shopping for, for free. Sooner or later, the time will come for you to pay for it, and then you are stuck with your current bills (rent, groceries, gas, insurance, etc, etc) plus the bills you didn’t pay years ago. And though it is easy to think “no problem, three years from now, I’m going to make a killing anyway”, unless you are Nostradamus and can predict the future, chances are, you may not. Your company may go belly up, a family member may have an accident and end up hospitalized, or you may get divorced. The guy at my local Postal Annex has this problem. In order to keep up with his bills, he works from 9 to 6 there, and then goes straight to his second job at a warehouse, where he stays until midnight.

I’m not saying you should never finance anything, because there will be times when this is your only option. But beware of the risks – and plan ahead for the day when you will have to pay for your merchandise.

Market Risk

by Stacy Francis, CFP®, CDFA

What happened when the Dow took its most recent nosedive? As most of my clients are in it for the long term, my day went on as usual. My friend who is a stockbroker, on the other hand, was slammed with phone calls from nervous investors. With this in mind, I thought I should say something about market risk. How does it affect your investments, and what can you do to minimize your exposure?

Market risk is the possibility that your stocks (or funds) will fall due to overall market weakness. This weakness is commonly brought on by a crumbling economy, raised interest rates, or other types of economical factors. Simply put, market risk is related to the economic climate of a country (or region, or continent, etc) as a whole, rather than a specific company.

Market risk can bring the value of your investment portfolio down – especially in the short term. Looking at it from more of a long-term perspective, on the other hand, economies always follow cyclical patterns of boom-decline-recession-rise-boom. The only thing that varies is the speed with which we move through these cycles. So while in the short term your portfolio may fall off during the phases of decline and recession, if you can wait these out, you can rest assured that sooner or later, the economy (and hence your investments) will come back around.

Apart from not being desperate for cash (or simply impatient), the best way to minimize your market risk exposure is to diversify – to spread your investments across several markets and countries. While the economy is growing increasingly global, different countries are still in different phases of these economical cycles. So if you’re concerned about the US economy, try a fund that focuses on investments in for instance India, or Europe, or Australia.

Why Investments Are Nothing Like Husbands

by Stacy Francis, CFP®, CDFA

With Sex and the City: The Movie hitting cinemas and everyone dying to see Carrie in her wedding dress, I became aware of yet another reason I love financial planning. Ready?

One of the greatest things with investing is that it’s nothing like love: there’s no need to choose just one. Marrying a security and holding on to it no matter what is mulish at best, disastrous at worst. The world changes constantly, and as a consequence, so do market outlooks, as well as future and current situations for industries and specific companies. Playing the field isn’t only accepted but advisable, and the savvy investor can – if she loses the reason she started the love affair — dump stock or a fund in an instant without a trace of regret. And why shouldn’t she? There are no joint assets, or children, or houses to fight over. It’s not personal – it’s just business. Still, few people lose money faster than the “investment sluts”, who change their portfolios daily depending on their mood; dropping stocks they no longer love in down markets and desperately chasing the ones admired by others.

So while most of us spend at least our younger years looking for that one person that makes our lives complete, with securities, feel free to gather yourself a whole harem. As long as you love them all and you have good reasons for bringing them into your life, having several isn’t only socially acceptable – most experts recommend it.

When to Give Up on an Investment

by Stacy Francis, CFP®, CDFA

I had an interesting conversation with a client the other day.

I don’t feel good about this certain fund, she told me, in a market like todays.

So let’s sell it, I advised her. Buy something you feel better about – or if you are really worried, leave the money in cash for now.

Oh no, she said, I can’t sell the fund, because it’s down from where I bought it.

I spent the following hour musing over when we should give up on an investment. Here’s what I think. No matter what your reason was for buying the security in the first place (you were bullish on this industry, you share the company’s values, you adore the business model, you like the fund manager’s expertise and performance, etc), if you lose this reason, you need to lose the investment. Every hour every market day, you choose whether you like your investment, or not. If you like it, you buy, or if you already own the security, you hold. If you don’t like it, you don’t buy it, or if you already own it, you sell. It is as simple as that. Holding equals buying, and selling equals not buying. Whether your investment is up or down from where you bought it is irrelevant, as the past has no meaning when it comes to investments. It is all about what the price is now, and what you – or the people you trust for advice – think it is going to be in the future. So be clear over the reasons for your investments, and use them to determine not only when to get in, but also when to get out.

Investing in Different Countries

by Stacy Francis, CFP®, CDFA

With China recovering from a devastating earth quake, and Burma still receiving aid to fix the damage from the enormous cyclone that hit the country recently, it is easy to pass “overseas” off as a scary place where you could lose your money just as easily as those people lost their homes. But the thing is, spreading your capital across several countries and markets may actually put you in a position of less overall risk. Here’s how.

First of all, it is important to note that between the tornado in the Southeast, Hurricane Katrina and the California Wild Fires last fall, plus a war at our hands and an economy headed for disaster, the US isn’t exactly the yoga retreat of investing, either. Those of you who have kept an eye on the stock markets this spring will know what I am talking about. By diversifying between different countries, you lessen the effect it will have on your portfolio if one of those economies turns sour.

Secondly, with the dollar dwindling lower and lower, if you invest in foreign markets, even if your stocks (or funds) remain flat, you can make money off the exchange rate. Of course, if you think the dollar is about to bounce back, investing overseas may not be the right thing for you, as your foreign investments will lose value if that happens, in dollar terms.

Finally, when countries that have traditionally been poor start to catch up, the growth rate can be tremendous. A good example is the explosive growth we saw in several South East Asia in the late nineties. Of course, as I have pointed out before, the higher the potential return, the higher the risk. But if your faith in the good old greenback is dwindling, it just might be worth it to look into a few interesting alternatives.

Pet Healthcare and Insurance

by Stacy Francis, CFP®, CDFA

Last week, I spent a long afternoon in the animal hospital with my cat. The good news is that Sunshine is doing just fine – the bad news is the bill – almost $700. Most people who – like me – love their pets to death have considered purchasing health insurance for them at one point or other. But despite the wild rates charged by many veterinarians, it may not be the best solution. Here’s why.

  1. Health insurance for pets is expensive. Expect to pay several hundred dollars per year and pet – if not more. If your local vet is reasonable, you may be better off paying his or her bills than dumping your money into a policy.
  2. Pet insurance plans usually have high deductibles. Don’t expect to be reimbursed for any minor checkups or procedures. These are on you – in addition to the insurance plan.
  3. The insurance company will tell you they cover pretty much everything – until you try to collect. Then, suddenly, you will learn that eye problems are not covered for this certain breed of dogs, or that this bird disease is exempt. Be very careful when you chose your insurance company and plan. When taking recommendations from friends, make sure their pets have actually been sick, and that they have successfully collected from the company in question.
  4. You may be better off giving your pet a savings account. Especially if your pet is young and healthy, it may be more beneficial to set a bit of money aside each month for vet expenses. This way, you have no deductibles and no holes in the coverage.

With all this said, of course, in certain situations it makes perfect sense to purchase health insurance for your pet. If, for instance, your horse colics and has to spend four days in the animal hospital, with rates of several thousand dollars per day, you may be glad you did.

Reverse Mortgages

by Stacy Francis, CFP®, CDFA

I had lunch with a friend today, who works with mortgages. She said that while for obvious reasons, not that many people are signing up for conventional house loans at this time, many are inquiring about so-called reverse mortgages. For those of you not familiar with these, I thought I should share.

If you are a senior who own your home and need more income, some people will suggest that you take out a reverse mortgage. A prerequisite is that you have paid off a good portion – if not all – of your home. You can then get a deal where the bank “pays” you a certain sum of money each month, and your mortgage grows accordingly. In a way, these “payments” are the opposites of amortizations, where you own more of your house each month, and the bank owns less.

After you pass on, the bank owns whatever portion of your house that you have mortgaged. For obvious reasons, the bank will not let you lend more than your house is worth. They use complex calculations to make sure that the monthly sum they “pay” you is small enough that your total mortgage will not go beyond the value of the house during your life expectancy.

While reverse mortgages can be the only way out of a desperate situation sometimes, be very wary of fees if you are getting one for yourself (or someone in your family). Many times the fees are so huge compared to the amount of money you can take out; you are better off seeking an alternative money source.

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