No one knows what the future holds. And all of us, at some point, will make a decision and later regret it.
Tuesday, 18 September 2018
Living with Investor Regret
This holds true in life and in investments. A bear market surrounded by pessimism and fear can affect even the most stalwart investor. There’s a lot of emotion and expectation tied to a long-term investment. Investments are dreams, hopes, and your retirement plan. And because of that, investors tend to sell winning investments too soon and hold losing investments too long. This behavior, one that leaves investors filled with regret, is common enough to have its own label: The Disposition Effect.[i]
It’s happening! Your child is going to college. This is both an exciting and financially taxing time to be a parent.
Monday, 13 August 2018
The tuition payments are secure, the car is packed up with XL twin sheets and lamps and all the things a young coed will need. And while it may feel that everything is in order, take a moment to ask yourself if your now legal-adult has given you a medical power of attorney, durable power of attorney, and their HIPAA release. These are documents you may not think of but in today’s environment with privacy rules, if your child were to have a problem it might be difficult for you to quickly assist.
Trade has been a hot topic lately. The question of tariffs and trade wars has been dominating headlines since spring and doesn’t appear to be letting up anytime soon.
Wednesday, 25 July 2018
It is important to remember, however, that trade tariffs are older than our republic and the pendulum has swung high and low throughout our nation’s history driven by a variety of policies for a variety of different reasons at any given time.
A Brief History of Tariffs
The great experiment that has been the United States’ economic evolution has included a great deal of experimentation with tariff policies. During the Great Depression, 50% tariffs were enacted in order to exact money from other countries during a time when the country needed more revenue and taxing the people would only further burden those who were struggling to survive already. Nowadays, in our global economy largely dependent on low tariffs to encourage the unencumbered flow of trade, the US import tariffs average just 3.5%. This low-tariff strategy has served the United States well because it was in our best economic interest to reduce reliance on manufacturing everyday goods and, instead, focus on innovations that are more significant in scale like medical research, new defense technology, and Artificial Intelligence.
When it comes to investing with success the greatest risk may be in taking no risk at all. Don’t trade the actual security of your retirement for the false sense of security that comes with investing solely in “low-risk” options.
Wednesday, 18 July 2018
Taking on the right degree of risk is something that many investors struggle with when crafting a retirement strategy. Many risk-averse investors believe that stocks (or equities) are too risky a proposition when it comes to building and protecting their retirement. The reality, however, is that not investing some of your portfolio in equities can also pose a serious risk to your long-term financial plans. With a portfolio composed of bonds, T-bills, and other “low-risk” investments you may find yourself underfunded for retirement if the growth of your portfolio does not outpace inflation.
Self-proclaimed risk-averse investors often take on a surprising amount of risk when they invest without the guidance of a financial advisor. They rely on forecasts, chase past returns, gamble on individual stocks, run up unnecessary costs and tax liabilities, and fail to rebalance their portfolios for shifting levels of risk over time. As fiduciaries, it is our duty to advise our clients on the best possible strategy to achieve their financial goals, and this includes helping you make sure that the risks you are taking are the right ones for you.
As financial advisors, we have seen what happens when people have not planned for the challenges that come with someone that has significant medical issues.
Wednesday, 11 July 2018
Alzheimer’s disease, Parkinson’s, Dementia, or other chronic illnesses have led them or their loved one to substantially diminished capacity-- physically, mentally or both. They come to us trying to put together a plan. When we meet with these families, it is a constant reminder of why we recommend beginning an advisory relationship before the planning becomes overwhelming. The financial planning process helps people prepare for many unknowns. That way, if and when something diverts you from your original plan, it is not as difficult to adjust.
Preserving a legacy and providing a financial safety net to your family and loved ones after you pass is a personal, nuanced and uncomfortable aspect of financial and life planning.
Saturday, 09 June 2018
Advanced planning for a substantial family wealth transfer is paramount to the success of the transfer as well as the preservation of a positive family dynamic. Transferring your wealth to benefit future generations requires communication, listening, and understanding. Here are some tips for having family money conversations early and often.
Goals and Objectives
There are often several participants involved in family wealth transfer. Having a strong understanding of each participant’s objectives for their lives and the money they may stand to inherit can help you get a better handle on how and when you might choose to distribute the wealth. Having a candid goals and objectives conversation with everyone who you plan to leave money to can help make the transfer manageable, fair and void of discord. There are things that you might not have considered that can come to light in these conversations. The clarity can be empowering and give you a new perspective on the choices you are making when it comes to your bequest.
As human beings, we can often react to events or experiences in an instinctual rather than logical or practical way. It is in our very nature and can, in many cases, not be avoided.
Friday, 08 June 2018
When you see someone else who appears successful what do you imagine he or she does, has, finds fulfilling? Do you equate success with happiness?
We don’t often ask ourselves these types of questions. But taking a moment to consider your definition of success could help you find personal fulfillment alongside financial well-being. We can only measure our success (as well as others’ success) by how we define it. This definition is likely unique to each of us. This uniqueness is one of the key components to understanding how you might go about achieving your goals when it comes to planning for your future, financially, physically, emotionally and psychologically.
In this article, we identify five key factors that can help you define and build your own success plan.
What do you picture when you think about success? Do you feel like a successful person?
Friday, 11 May 2018
When you see someone else who appears successful what do you imagine he or she does, has, finds fulfilling? Do you equate success with happiness?
We don’t often ask ourselves these types of questions. But taking a moment to consider your definition of success could help you find personal fulfillment alongside financial well-being. We can only measure our success (as well as others’ success) by how we define it. This definition is likely unique to each of us. This uniqueness is one of the key components to understanding how you might go about achieving your goals when it comes to planning for your future, financially, physically, emotionally and psychologically.
In this article, we identify five key factors that can help you define and build your own success plan.
Recently, a strong and relatively calm bull market has given way to an increase in volatility and decline in value which has resulted in renewed anxiety for investors.
Tuesday, 10 April 2018
While it may be difficult to remain calm during such periods, it is important to remember that volatility is a normal part of investing. Further, for long-term investors, reacting emotionally to volatile markets may be more detrimental to portfolio performance than the drawdown itself.
Market pullbacks are far more common than most investors realize. According to Capital Research and Management (see attached chart), intra-year declines of 5% or more happen about 3 times per year, declines of 10% or more happen about once per year, declines of 15% or more happen about once every 2 years, and declines of 20% or more happen about once every 3 ½ years. Further, intra-year declines have averaged 13.4% since 1948, yet calendar year returns have been positive in 51 of those 70 years. In 2018 the biggest intra-year decline so far is from the high reached on January 26 to the low reached on March 23, a decline of 11.6%. That decline is the first of its kind since 2016. As we have been saying in our review meetings, we had gotten conditioned to abnormally low volatility with strong returns and the equity market was overdue for a correction. Even so, this 11.6% intra-year decline is still less than the historical average intra-year decline of 13.4%. Surprisingly to most investors given how this market feels, as of the market close on April 6, 2018, the S&P 500 is down only 2.9% for the calendar year 2018 (Wall Street Journal, April 6, 2018).
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