Is Inflation the Next Hurdle?

New Year, New Confidence?

January 15, 2021

Even as COVID-19 continues to be a threat for many around the world, I think most of us breathed a collective sigh of relief and looked forward to a new year. It’s understandable to want a fresh start and leave past worries behind. Inevitably 2021 will come with its own set of challenges, but I’m hopeful for more on the positive side. Big or small issues ahead, I encourage you to stay focused on what you can control with your finances.

Some Positive Glimmers

While we all know that changing the year on the calendar doesn’t mean all the challenges from the past go away, but there’s nothing wrong with having a more positive outlook. In fact, there are some reasons to have optimism, such as the continued rollout of COVID-19 vaccines and more effective treatments.

For your money, our investment professionals see some improvements in economic growth and some companies may see profits return, possibly sooner than was first expected. As individual investors, your portfolio has also gotten somewhat of a break from the extreme market turbulence we experienced in early 2020. But as always, that’s no reason to be complacent or to stray from your solid investment plan.

Keep Your Plan in Sight

Speaking of your plan, I encourage you to follow it no matter what may change around us. A new year can be a good time to see if what you have in place is working, or whether you need to adjust. Remember that even in times of higher market performance, it’s important that your risk level is consistent with your goals so you can be prepared for any environment. If you need help with your plan, just call us.

And if I can offer one more thought about the new year: I believe the resiliency shown by many through the trials of last year is reason enough to have confidence in our ability to endure whatever 2021 has in store. As always, thanks for your continued confidence in us.

Unboxing Active Management

January 29, 2021

Over the past several years, tech stocks have gotten a lot of attention, especially the big names we all know and use every day. While it’s nice to benefit from investing in popular companies, there’s always the caution of too much of a good thing. It’s one reason we believe active management is important—to help manage exposure. Active investing isn’t new, but given the new year and this week’s headlines, now may be a good time to revisit what it is and why it may be important for long-term goals.

Active Management User Manual

What Is It?

With active management, a professional buys and sells investments in a portfolio—in our case a mutual fund portfolio. The goal? To create a portfolio that performs better than its benchmark, usually a financial index that tracks similar assets. The S&P 500^® Index is one example.

On the flip side is passive investing, which is buying investments that mirror an index—and getting similar returns. Passive investments seek to follow an index; active managers seek to outperform it. As active managers, we believe there’s a place for both approaches in a balanced portfolio.

Why Use It?

A benefit of active investing is the experience, knowledge and analysis the manager brings to the table. For example, active managers will dig deep into a company’s financial health. They may consider the competitive landscape too. Is there a new innovation that will offer opportunities, or a new competitor that may pose a challenge?

Political or environmental forces can also be a reason to rely on active management. Last year’s health, financial and social uncertainties are good examples of when it may help to have an expert in your corner. Even new government policies can bring changes that a manager can navigate.

Lastly, active managers have more options when unsettling market activities arise; they are not locked in to following an index like passive managers. But that’s not to say they should follow every trend.

Our approach to active management is to keep a disciplined, long-term view no matter what happens. For us, it’s about pursuing enduring opportunities for clients, even in the face of short-term issues like this week’s headline-grabbing, speculative trading. To get our professionals’ latest views on this market event, read more.

Active and Your Portfolio

As our client, active managers oversee your mutual fund. When thinking about your own portfolio or considering new investments, it’s important to examine the approach, the cost and if the investment works with what you already own.

As much as we believe in active management, we also believe in the value of a balanced and diversified portfolio—one that fits you and your goals. To learn more about the potential benefits, read The Surprising Truth About Diversification. If you want to talk over choices or your portfolio, remember we’re here for you. All you have to do is call us.

A message from American Century Investments Wayne Park, Senior Vice President, Personal Financial Solutions

A History of Bubbles (And What to Do)

February 12, 2021

You may be hearing murmurings about a potential market bubble (when asset or stock prices dramatically surpass their historical norms or values). It’s natural to wonder when markets continue to rise while we still face economic and health challenges. Of course, the biggest concern about bubbles is the fallout if they burst. Let’s explore some past events to see what we can learn. 

Plan for the Certainties

February 26, 2021

We talk a lot about planning for uncertainties, but some inevitable things require just as much thought. Two of those are taxes and retirement. Current unknowns, along with new and proposed government policies, may leave you wondering how to proceed. Here are a few thoughts that may help. First and foremost, don’t stop planning and be sure to seek help from a consultant or tax advisor.

Taxes Are Certain: Plan for Now and Later

One inevitable task the pandemic has not stalled is tax time—the deadline is still April 15. It’s important to understand taxes and your investments, but also consider what may be new this year, including these:

• You can now contribute to an IRA past age 70½ thanks to the SECURE Act. This could help with taxes right now—actually for any age—since Traditional IRA contributions are usually deductible and can be made up until the tax deadline.
• The CARES Act allowed people under 59½ who were negatively impacted by the pandemic to make penalty-free withdrawals from retirement accounts. Remember penalty-free is not the same as tax-free; it will be counted as income for 2020.
• 529 withdrawals may have been a little dicey last year if you received a refund for college expenses due to the pandemic. If you weren’t able to redeposit the money into your account within 60 days, you may need to pay taxes and a penalty on the withdrawal.

For the future? There’s a lot of talk about tax policy changes or higher taxes. Regardless if that happens now or some time down the road, planning for taxes is always smart. Find out some potential ways to combat taxes.

Retirement Is (Mostly) Certain: Plan Ahead

Retirement may be certain, even though sometimes the timing is not. Job losses, health concerns and family issues may cause people to retire sooner or later than expected. Either way, there may be new considerations for your plan this year.

The pandemic may have changed some timelines if your savings took a hit. However according to most reports, few people withdrew money from their retirement accounts as allowed by the CARES Act.* Market changes may also warrant a second look at your plan. If retirement is far off, check if you’re still on track. If you’re getting closer, it’s even more important.

Another thing to consider is how much growth potential you may need in retirement. Many people think only about the lower volatility of bonds, but growth has a place too. The continued low-interest-rate environment may be problematic for bonds; if you need that income for retirement, you might need to factor that into your plan. 

The Need for Planning Is Certain

I’ve covered just a few thoughts about planning for taxes and retirement—and there are many more facets to consider for both. And the good news? You don’t have to plan alone. We’re here to answer questions about your financial plan. Please don’t hesitate to call us.

It’s Been a Year

March 12, 2021

I don’t know when things changed for you, but for us it’s been a year since most of our staff packed up to work remotely. Back then, we thought it would be for a few months. Since then, the world has experienced numerous changes that are now becoming the norm. Some may have impacted the way you view your finances and long-term investing plan.

It’s Been a Year of Change

Recently National Public Radio (NPR) asked people to share on social media the moment they realized life as they knew it had changed. Using #TheMoment, there were many responses from seeing long lines and empty shelves at the grocery store, to when people became both full-time employees and full-time child care providers at home. Others said it was when major events—sporting, concerts—began to cancel.¹

Whatever it was for you, 2020 was definitely the year the world changed. Let’s look at some ways it altered finances.

More Savings, Less Leisure

A way COVID-19 positively impacted people’s finances is their decisions to save more. Some of that may have been by default because of fewer opportunities to spend on leisure. But the initial market volatility and recession shock was a good reminder that emergency savings are important no matter what.

According to a recent survey,² better financial habits are resulting from the pandemic: 43% of people said they picked up a new habit and 94% say they plan to continue it this year. Among those are setting a budget, reducing spending, saving and tracking credit scores—all good news for finances.

More Retired, Fewer Wanted To

According to another study, 70% of people who retired in 2020 said they did so earlier than expected. Of those, a majority said it was involuntary, citing health issues or job losses. The same survey said retirees were more anxious about their situation than before.³

We know from previous studies that many people expect to work longer than they actually do, but this year the pandemic contributed to some retirees ending employment when it didn’t feel physically safe to work outside the home. On the positive side, more pre-retirees—those within 10 years of retirement—are more actively planning for their future.

Either way, planning for retirement is always critical. Retirees will also want revisit their plans and budgets to make sure they are on track.

Pandemic or Not—There’s Always Change

No matter if COVID-19 made you take a second look at your finances or it was business as usual, change is always present. It doesn’t take something as large as a pandemic to alter life. Markets and personal situations can change things overnight too.

That’s why it’s always important to periodically review your personal finances and to check if your plan still matches your situation. Don’t hesitate to call us if you need help.

As I reflect on what a year it’s been, I want to sincerely thank you for your continued trust in us. We often said, “We’re in this together.” Looking back, I see it was true.

Find Your Investing “Why”

March 26, 2021

A few weeks ago we asked clients how their investing interests had changed after a tumultuous 2020. About a third said, “no change.” Others said they were now paying more attention to trends, are more focused on a solid future for their families and are more interested in giving to charity. Regardless of how you might answer the same question, your motivation may matter most. When you define clearly “why” you invest, it might help you be more successful.

Investing Is More Than Money

When thinking about why you invest, some people list goals that are about the money:

• To grow it
• To build wealth
• To get returns

These are good explanations of why to invest in general, but the motivation behind them are much more meaningful. “Growing your money” may mean you want to take care of the next generation. “Building wealth” may mean you want to start a new business in the future. "Getting returns" could mean your goal is a comfortable lifestyle after you retire.

Money may be the means to help, but it’s not the ultimate reason. Focusing on the “why” makes investing that much more important—and maybe a little more serious too.

Finances Today and Tomorrow: Time for a Reset?

December 4, 2020

If this were any other year, we’d be talking about rebalancing your portfolio: buying and selling investments to get it back to your original risk level after a bumpy market year. While rebalancing is still important, a larger reset may be needed after all the life changes of 2020. There won’t be a replay of pre-COVID-19 days—things have changed too much. It might be time for a financial reset.

Reset Today’s Finances

In addition to reevaluating future goals, you might also consider what changes may impact your finances in the next few years. And that’s not just for those who may have experienced a major financial setback from the pandemic. If that describes you, let us know how we can help.

What if your finances stayed similar, but every other way you live has changed? That may call for a reset too. Even with the promising news about vaccines and other treatments for more serious COVID-19 symptoms, none of us should assume that life will be exactly the same as before.

In fact, many believe the changes will be more permanent, including how we work and spend money. Both have impacted businesses and our economy long-term. These may be reasons to rethink your personal finances and investment choices. Our investment professionals are already doing that for you too, as they consider companies and investment trends in the current environment and as they look ahead.

Reset Your Perspective

The pandemic may have also given you a new perspective. Before the pandemic, few could fathom quarantines or long-term school and business shutdowns. And who would have thought masks would be the new fashion trend?

Now we know the very real importance of preparing for such things. It also may mean your priorities have changed. What was important to you 12 months ago, may not be the same. A change in mindset can alter how you view your finances today and for your future.

Let Us Help

If you need help talking through your finances or goals, we’re here to help. We can also help with a rebalance to make sure you have the right amount of risk for you. Either way, please don’t hesitate to call us.

Consolidating: Gift or Grind?

December 11, 2020

A lot of financial companies talk about consolidation—having your investments in one place. Why? Streamlining with one firm does have its benefits. So why does it seem complicated and almost opposite of “not putting all your eggs in one basket?” Let’s explore these ideas and some thoughts that might make it more of a gift for your investment goals.

A Gift of Simplicity

The idea of consolidating money isn’t new. Many people consolidate debt or student loans to get a single lower payment. That kind of consolidation can save you money and make it easier to manage your bills. However, the caution is not to take on new debt and wind up owing even more.

For your investment accounts, easier management can be a reason to consolidate too. It can also help you have a clearer view of the amount of risk you have or let you know if you have overlaps you don’t need. Read more about these benefits in our article below.

The Grind of Consolidating

I’ve heard more than one investor say they are wary of consolidating because it seems to contradict not putting all your eggs in one basket. While the egg analogy actually is about diversification—not investing in all the same kinds of assets to avoid a big loss, I understand the sentiment. Others think it sounds complicated, and it can be if you have to do it on your own.

Still others go so far as to have more than one advisor—maybe that’s the “two heads are better than one” thinking but it can also be confusing. What if your advisors don’t agree? It can also cost you more in fees. So what’s the answer if you’re wary of having just one company or one advisor? Maybe look at it more in terms of location.

Consolidate by Location

When you consolidate in one place, it can feel like you’re losing something—maybe variety. What if you look at it in terms of location instead? For example, I have my growth investments here, I have my fixed-income investments there.

Or look at it in terms of goals. I have my long-term investments at this firm and my short-term investments with that one. This idea of a “semi consolidation” could still help you simplify managing your accounts, but also help you not overlap investments for certain goals or run the risk of having too much of one thing.

When to Consolidate

Still I think there are circumstances when you may want to consolidate in one place. If you have 401(k)s from former jobs here and there, it might make sense to have your retirement money together where you have more control, especially if your money is in a default fund and if you can’t add to it.

Another time people like to consolidate is when they get closer to retirement. At this critical time for your investments, you especially want to know the amount of risk you have and you may also want to have that one trusted professional looking out for you.

Let’s Talk About You

Consolidating your investments (or not) is a significant decision, but it’s one you don’t have to make on your own. Our consultants are here to help. Please don’t hesitate to call us. And if you do decide to consolidate here, we ’ll help with that too.

The Gift of Family Money Talks

December 24, 2020

Many look forward to time spent with family over the holidays. Even if virtual or socially distanced this year, it can still be a special time. Sometimes awkward topics surface, including discussions about money. Do you avoid those uncomfortable subjects? They can be difficult for sure, but consider how these talks could be a gift for you and your family.

Great (or at Least Hopeful) Expectations

December 31, 2020

The new year brings hopes that 2021 won’t be a repeat of this year. Many look forward to a new start and anticipate that next year will be better, or at least not worse. I’m glad that we can still have some optimism after this year of struggles. And in spite of ongoing economic challenges, our investment professionals will continue looking for opportunities created in this environment. We’re also making a small change to our email newsletter that I want to let you know about.

What Are Your Expectations for 2021?

A recent survey reports that 44% of Americans say 2020 was bad or terrible, while 37% said it was OK. Will next year be better? The same survey says that 44% of us expect it to be, and 30% say 2021 will be about the same. The rest aren’t sure or expect it to be worse.^*

Compare that to a similar poll a year ago where 58% of people were full of hopes for 2020.^* The results show the pandemic’s effect on our optimism a year later. Still, some may wonder if it could get any worse. I think it depends on how severely the health and financial trials touched you or your loved ones, as well as how deeply you may have been impacted by the social issues that came to the forefront.

Personally, I’m hoping advancements on the medical front and our improved awareness point to a more peaceful new year. And if 2021 doesn’t meet our expectations? We can build on the lessons and adjustments we made this year and keep moving forward. No matter what’s in store, I’m confident we’ll get through next year, too.

Small Changes for 2021

One of our responses to the pandemic and subsequent market volatility was to communicate to you weekly. Things moved fast and we knew it was important to help you stay informed and give our perspective.

For 2021, you’ll still hear from us about topics that are relevant for your finances and your families, just not weekly. In addition, you’ll receive other communications that align with your investments.

Expect Us to Help

Regardless of how often you receive an email newsletter from us, our availability to you will stay the same. You can continue to connect to a real person, so please don’t hesitate to call us.

Let me end this anything-but-normal year by thanking you for your continued trust and confidence. And from all of us here, we wish you and your family hope and happiness in the new year.

Your Investments in “This Normal”

September 4, 2020

While many are accepting life with the pandemic—rather than wondering when we’ll resume normal—one thing we’re not quite used to are stock market movements. Many were shocked by the drops earlier this year and the recent market highs have left some wary. When markets experience dramatic movements, it may be a good time to stick with active investments. Let’s explore why.

The Market Reflects Our Normal

If this were 12 months ago, few of us would blink if markets were hitting records. We had grown accustomed to the markets going up—at least most of the time. Today it’s different. The makeup of the market also tells a different story from what we knew just nine months ago.

Looking at the so-called “COVID-19 winners,” you see some stocks that were excelling before. The FAANG—Facebook, Amazon, Apple, Netflix and Google—stocks were doing well prior to the pandemic. As technology companies, their products also fit nicely into our new way of living.

However, that's not to say that the winners will always continue breaking records—as we saw this week. And other companies might be considered COVID losers because they have not rebounded at all. The market makeup is different from what we knew and it's not likely going back. It's a different economy.

Should You Change How You Invest?

If you’re confident that your investment plan still fits your long-term goals, the answer is no. If not, or you made sudden moves when the markets got rough, it might be time to evaluate. I believe the best place to be is in a diversified portfolio that fits your situation. However, given this different economy and new environment, now may be a good time to evaluate actively managed investments versus index or passive ones.

Active Investments in Volatile Times

Both active and index funds can have a place in your portfolio—it’s usually not an either-or choice. However, for volatile times, there may be some advantages to relying on the expertise and experience of an active portfolio manager.

Active managers can look below the surface of a company’s performance to see if its financials match what’s happening with the stock. They can also take advantage of opportunities or back away from risky prospects more quickly. The ability to pivot may be especially important during times of big market swings or uncertainty. Index funds don’t have the same luxury.

Are You Confident in Your Plan?

As important as the makeup of your portfolio is, it’s also important that you feel prepared for whatever comes next. If you need help evaluating your portfolio, you’re in the right place. A free portfolio review is available upon request. Just call us.

As always, thanks for your continued confidence in us.

Going the Distance

September 11, 2020

There’s not much most of us wouldn’t do for a loved one. Sometimes we care for a parent or someone else who can’t do it alone. The physical and mental strain can be difficult—especially if you don’t live close. But you go the distance no matter what. That same principle applies to investing, too.

Caregiving: Pace Yourself

Dedicating your time and energy—and likely your money—caring for a loved one is not easy. It’s even harder when you don’t live nearby. I’ve experienced it myself, including the urgency of wanting to be there. One piece of advice: Don’t burn yourself out.

Instead, go step by step and enlist the aid of others. The last thing you need is to have your own health or finances suffer. Think of it as providing steady care rather than racing to do everything all at once. That’s actually a good idea for your investments as well.

Find Your Stride

Long-distance runners pace themselves so they can cross the finish line. With investing, setting your stride starts with an investment plan that is your “speed”—one that considers when you need the money and how much risk you can tolerate. What does not work are “sprints” or “detours.”

• The sprint is attempting to reach the finish line with highly aggressive investments—usually to make up for a lack of savings or losses. It can be too risky, especially with uncertain markets.
• The detour is side-stepping a solid plan by jumping out of the market to avoid losses or jumping in to capitalize on gains. Market timing can be detrimental to your goals.

Take Your Time

We believe time in the market is superior to trying to time it. Staying invested lets you take advantage of compounding—making money on your original investment as well as on the earnings. Also, when you’re already invested, you won’t miss a potential market spurt.

How Can We Help?

When caring for a loved one, remember to care for yourself and your own finances—pace yourself. Do the same with your investments. In either situation, we’re here for the financial side. If you need help, please call us.

Thanks for putting your confidence in us to manage your money.

Best Regards.

What’s Your (Investing) Type?

September 18, 2020

People have different relationships with their investments—just like they have different connections with people. Some believe it has to do with your investing personality. It’s an interesting concept and one that may give insight into how you make decisions.

Your Investing Personality

Your relationship with your investments is likely linked to your family’s view of money and your own experiences. Psychologists and behavioral finance professionals say it also involves your personality, which they classify into different types based on research.

Let’s review those developed by Jonathan Myers,^* an industrial psychologist who believes your investing personality doesn’t change much under different circumstances. Based on that premise, events such as COVID-19 would not have much impact on how you handle investing decisions.

Do You See Yourself in Any of These?

• Cautious Investors don’t like risk or losing money. They usually make few portfolio changes and may be wary about financial advice, preferring to do their own research.
• Emotional Investors follow the latest trends and make decisions on instinct. They may hold on to an investment—even if they shouldn’t—because they believe everything eventually works out.
• Technical Investors follow the numbers when making investment decisions. Research and diligence are their mantras.
• Busy Investors are aware of everything that’s happening with the markets and may make decisions based on what they hear. They check prices often and may buy and sell—a lot.
• Casual Investors are busy with work and family, using a “set-it-and-forget-it” style. They rarely check on their finances, preferring to leave it to professionals who they may or may not be in contact with regularly.
• Informed Investors use information from many sources and keep watch over their investments, markets and the economy. They listen to experts and are confident in their decisions—relying on knowledge and experience.

Down the Home Stretch: Rein in Emotions

September 25, 2020

Whew! We made it to the fall and are nearing the final lap of the year. It’s still 2020, so that doesn’t mean we’re “home free.” What could possibly go wrong? From continued COVID-19 cases to economic uncertainty and a charged election period—there’s plenty to stir our emotions. Let me offer possible solutions for feelings about your finances.

Keep Blinders On (When Needed)

When emotions run high, I recommend tuning out distractions. The latest news can prompt undue worry, especially if your investment plan fits your goals. If you’re less confident, it may be time to revisit your plan.

Another way to tune out noise is to practice healthy financial habits. Stay invested and avoid knee-jerk financial decisions. It can have a negative impact on your goals.

Who Wants to Hear a Scary Story? Not Me!

October 9, 2020

There have been plenty of frights for investors this year—the pandemic, market volatility, economic news, political uncertainty and more. We’ve covered them frequently over the past several weeks. Now I want to turn to some practical ways to help manage two things that people can get the jitters about: Taxes and protecting your personal information. Both can be scary topics, but there are ways to alleviate their threats.

Bust Tax-Time Fears

Tax time can be an investor’s—really anyone’s—least favorite time of year, especially when figuring out if you owe taxes. Did you have a gain or a loss? Did your fund pay dividends? Then there’s the sometimes-complex task of figuring your cost basis—used to calculate gains or losses based on the price you originally purchased a security or share. Some may dread the paperwork. Others just get nervous when it comes to anything dealing with taxes.

Why am I talking about taxes in October? There are things you can do—even starting now—to make tax time less frightening next April. A few have a December 31 deadline so I’m bringing them to your attention now. And yes, it also goes with my spooky Halloween theme, but that’s not the main point. Read the article below for nine tax items that you can start thinking about now.

Thwart Identity Tricksters

Identity theft has been a threat for a while. Unfortunately, the pandemic has not slowed down scams, or people’s fears. According to a recent Transunion study, 83% of people are worried about having their identities stolen and stress over it has risen 32% during COVID-19. Even more scary,10% of U.S. adults became victims of the crime during this time.*

Here at American Century Investments, we take seriously your private information and the security of your money. Along with the precautions we take, we also know that protecting your identity requires a partnership between us and you. There are things you can do both online and offline. Read the article below to get our latest tips on protecting your information. 

Beyond Who’s President, There’s SALT

October 16, 2020

As we count down to the November elections, many people focus on who will be president for the next four years. Presidents may help decide the direction of the country, but for your personal finances, you may want to look closer to home. Local races may have more impact because of SALT (state and local taxes).

The President and the Stock Market

Presidential elections can definitely impact the markets—especially leading up to election day. The oftentimes-charged season can result in uncertainty, and that can be unnerving to investors. In fact, in one of our recent surveys, 32% of clients said that the election was their single biggest investment concern, followed by market volatility and the pandemic.

But after an election, the individual and party winners don’t seem to matter much to the markets, if history is a guide. Still, the results may have a role in policy decisions and affect certain industries. Read our take on some of the potential outcomes.

Don’t Pass On the SALT

State and local taxes may actually have more of an influence on you than who lives in the White House. From schools to water service to roads, local governments play a big role in quality of life. And because they are typically smaller elections—with lower turnouts—your voice may count even more.

You’ll also see impacts on your money. Local governments impose property taxes and sales tax on what you purchase and consume. That can affect you and your family’s discretionary income and the amount you can invest for the future.

Be Heard and Stay Calm

Voting is a privilege we should all exercise—for all levels of government. I encourage you to also stay strong in your investment plan, particularly if you’re watching the markets react leading up to Election Day. In the next few weeks, be sure to watch your inbox for more perspective about elections and the markets.

In the meantime, remember that volatility is normal—even in this everything-but-normal year and election process. Our Volatile Markets? Kick Up Your Financial Knowledge article may help give you some perspective.

Also, if you’re wondering about your investment plan, remember we’re here for you. Please don’t hesitate to call us.

Don’t Invest Based on a Single Story

October 23, 2020

Election decisions based on one candidate or policy may not provide the results you expect—rarely are issues settled soon after all the votes are in. Investing decisions on a single event, such as an election or a market reaction, may not give the desired results either. You could succumb to what novelist Chimamanda Adichie calls the “danger of a single story” and miss the bigger picture.^*

When you consider a collection of stories and experiences, it can help you make more informed decisions. It’s how we manage your money. I believe it’s a good approach for you too.

Add to Your Collection

How do you look beyond single stories that market and news headlines tell us nearly every day? Take a page from our investment professionals’ playbook: They make decisions objectively (based on data), systematically (following repeatable processes) and in a disciplined way (true to their objectives). Here are my thoughts on how you can do the same with your investments.

• Stay Objective – Ignore the emotions of today’s turmoil and keep focused on your long-term goals. There will always be uncertainty, but history shows that long-term investing can have rewards.^**
• Make It Systematic – Keep investing even through the trying times. Investing regularly helps you keep your long-term goals a priority.
• Practice Discipline – This has to do with your investment plan. Have a mix of different investments—known as diversification—to help balance your portfolio through market ups and downs. Then, stick with it no matter what stories you may hear, but remember to reevaluate periodically to ensure you're on track.

Let Us Help Unravel the Plot

Sometimes it’s hard to know which stories to pay attention to. That’s where we can help with both how we actively manage your investments and our commitment to help you reach your goals. Our consultants are here to evaluate if your plan fits, so you don’t have to be swayed by a single story. Don’t hesitate to call us if you need help.

Election Drama: It Just Takes Time

October 30, 2020

This year’s election seems more charged than usual—although we may have thought that four years ago as well. Add in dramatic predictions that final results may not be known for a while, and we could be in for more market uncertainty past Election Day. What should you do? Remember that time in the market is a better strategy than attempting to time when to buy and sell to achieve a gain or avoid a loss.

A Repeat of 2000? Sort Of

The thought of an unresolved or contested election feels unnerving. However, not all races have had an immediate clear winner. In the 2000 election, we waited for Florida recounts and “hanging” chads (paper fragments from punched ballots) to have their day in court. The Supreme Court settled the matter on December 12. And while lingering election results can lead to more uncertainty, it shouldn’t change how you invest when you have a solid, long-term plan.

Time In vs. Timing

Why is it important to keep investing during uncertain times? For the same reasons you should continue to invest when markets are going up. No one can predict the best time to buy or sell. Even if some claim occasional success, market timing is not sustainable. Jumping in and out of the markets can lead to missing some of its best days and that can impact your goals.

No Guessing, No Speculating—Investing Is Long Term

The purpose of investing is to accumulate money for your goals. It’s not about timing, guessing or even speculating. An investment plan helps you focus on your future and take advantage of the power of compounding over time.

Compounding means earning money on your original investment plus on those earnings. The longer you stay invested, the more potential it has to grow exponentially. This can be demonstrated by the Rule of 72^* —a long-held rule of thumb that estimates how long it might take to double an investment based on an fixed average rate of return. It is calculated by dividing 72 by the rate of return. 

According to the rule, here’s how long it could take to double an investment:

In addition to showing the potential effects of compounding, the rule illustrates the potential value of investing over time. But note that these are estimates only. You need to hold an investment for a length of time to get an actual average. For a more detailed estimate for an invested amount (such as $5,000) at a fixed return rate, use our future-value calculator.

Time Will Tell

Elections may not get resolved as soon as we want and uncertain markets may continue, but don’t discount the reasons to keep investing. If you need to confirm that your investment plan fits your goals, don’t hesitate to call us.

And Now We Wait

November 5, 2020

As some predicted, we’ve entered into more unknowns for the 2020 election. Is it a surprise? Not really, given the pandemic, record numbers of mail-in ballots and varying deadlines for each state. 

Delayed results feed market uncertainty, but history shows us there’s nothing new about volatility surrounding elections—even contested ones, as we saw in 2000. In this case, it may linger until we know the final outcome. However, the current uncertainty is not a signal to change how you invest or to make snap decisions. 

Stay Focused as You Watch and Wait

Regardless of who ultimately wins or loses, I believe keeping a long-term view is important for these times. Also keep in mind that historically, the markets don’t care who is in the White House, or which party they belong to. 

Policies may be more important in the long run. In my opinion, that’s one more reason to rely on professional money managers to stay on top of how any changes may impact investments. Our experts are already thinking ahead. Read their views on how each candidate’s policies might affect certain industries in Global Markets at a Crossroads.

We’re Here to Help

It’s natural to feel unsettled when there’s no deadline on the uncertainty. But don’t let that deter you from your long-term plan. Our consultants are here to review your plan or confirm that you’re on the right path. Want to talk? Request a call.

We’re in this together, and for your finances—we’re here for you.

Now What?

November 13, 2020

With the current state of the 2020 election, there’s talk about what happens now. Will there be a shift in direction? The upcoming balance of power won’t likely spell sweeping change. But there are policy transitions to watch—some of which may affect your finances.

Could There Be a Silver Lining to Spending Changes?

November 20, 2020

This year we’ve all made life adjustments—how we connect with each other, where we work and maybe even our perspectives. A pandemic can have that kind of effect. However, one thing that hasn’t changed for your personal finances is the need for a budget. As we think about the changes—and head into holiday shopping season—now may be a good time to revisit or start a spending plan. You may find some of the budget updates are good for your finances.

Living and Spending With COVID-19

Months ago we talked about life after the pandemic. Now? Most people have settled in to life “with” COVID-19. Unfortunately, we’re hearing talks of a second wave and reports of higher positivity rates in many states. Work as we knew it also changed, with 40 to 50% of Americans now working from home.¹ Not only has that changed how people do their jobs, but also how and where we spend money. And that can affect our economy and investments too.

Give Thanks, Take Time

November 25, 2020

Despite the health and financial issues we still face this year, I think most of us can find things to be thankful for. And while we may not celebrate as we have in the past, I hope your Thanksgiving or Friendsgiving is meaningful; that you connect with others (even virtually) and take time for yourself. I say we all deserve it.

Give Your Budget a Break Too

Some of you look forward to the kickoff of holiday shopping, but we know that will be different too. As always, we encourage you to set a spending limit that works and stick with it. That’s one way to give your finances a break this season. Read our tips to help make it less stressful.

Self-Fulfilling Choices

Worry can skew perceptions and lead to decisions that give the very results you don’t want. For example, in the first six months of 2020, the stock market experienced one of the worst drops in history, but also one of the highest gains. The average for that period is actually modest, but many did—and still do—only focus on the dramatic drops.

Those in the FOLO camp may have moved into a money market (or out of the markets) and missed the big loss, but also the big gain. Unfortunately, this could have resulted in locking in the losses and missing the rebound.

Succumbing to FOMO can play out as selling at a loss and later buying high—the opposite of what you want to do. This market timing can expose you to missing out on what you want: Some of the market’s best days. That’s why we advocate time in the market as a better strategy.

Opt for Strategic Decisions

The good news is that you can make investing decisions based on proven strategies instead of emotions. There are ways to strike a balance and avoid guessing what to do next, including practicing these:

1. Balance Risk. An alternative to staying on the sidelines is to match your portfolio risk to your goals and timeline. Also, realize that the extremes of “low risk” and “all risk” are not the only answers for your portfolio.
2. Diversify. Adding a mix of several different investments in your portfolio has long been hailed as a practice to manage loss. The idea is that when one investment performs badly, others may offset it by performing well.

Let Us Help

Investing during uncertain times can feel scary, but I encourage you not to lose heart—even if you made a knee-jerk reaction along the way. Instead, focus on a long-term plan that’s built just for you and your goals—including how you feel about risk. Need help with your plan? Don’t hesitate to call us.

As always, thanks for your confidence in us.

Remember the Basics

While the investment and saving side of planning are critical, other details require your attention. Having your accounts in order is also important in an emergency. And doing it now gives one less thing to stress over. Here are four things to do:

1. Solidify your long-term plans. If you’ve put off an estate plan, I encourage you to take that step. Your financial plan isn’t complete until you have that in order. Legal documents include a will or trust, power of attorney and medical directives. You’ll also need to appoint people to carry out your wishes.
2. Name names on your financial accounts. Make sure you have other people on your accounts who can or will take over. That includes beneficiaries on retirement accounts and interested parties on brokerage accounts. Bank accounts, credit cards and other investments will need the same.
3. Stay organized. Keep papers in order, including account information, statements or other documents that you may need to get your hands on quickly. That also includes who you work with—financial advisors, attorneys, doctors, insurance agents, etc. Hard copy or electronic, make sure you can easily access the information, and others can too if needed.
   
4. Share with loved ones. Finally, communicating with your family is a key part of being prepared. They’ll need to know where to find things and what’s in your plan. Together, you should also decide who will do what in an emergency.

It’s Work, but Worth It

Planning takes thought and commitment, but the result will be worth it. I hope you take that time for yourself and your family. And if you need help with your financial plan or updating your accounts, we’re available. For fast service, you can also update your beneficiaries on our website.

We’d love to help you prepare for whatever comes next. Don’t hesitate to reach out.

Family Money Discussions? Practice, Practice.

August 21, 2020

Why is it so hard to talk to our families about money? It can be uncomfortable for parents and children to have conversations about financial issues, even if they are your plans. Maybe it’s like other things we do—it just takes practice.

Money Talk Opportunities and Necessities

There are certain times in a family’s lifecycle when opportunities to discuss money arise and other times when it’s critical. Talks may be easier if you have them more often, starting when children are younger. But, if they’re older—even grown—it’s not too late.

Starting an allowance for a younger child or sending your high school grad to college (even virtually) are great opportunities to talk about money responsibilities. What if your grown child comes back to the nest? It’s also a good time to discuss finances.

Money talks with aging parents may be hardest for adult children and the parents themselves. No one wants to think about the need to help mom or dad with finances or caregiving. Parents may find it difficult to share their plans. However, these may be the most important conversations.

More Talk Can Make It Easier

I encourage you to make money talks a regular habit and to start somewhere. COVID-19 may give you an opening. As the pandemic stretches on, the need for planning continues for finances, retirement plans and unfortunately, health plans. Your family—even children—may feel more confident knowing there’s a plan.

Start Talking. We’ll Help With the Plan.

Remember we’re here to help with questions about your finances. If you find yourself facing a family tragedy, our estate transfer services may be able to help. Don’t hesitate to call us.

As always, thanks for your confidence in us.

Winning by Not Losing—A Good Strategy?

August 28, 2020

Discussions about upcoming sports seasons—or not—remind me of a long-held thought that more games are won by not losing. While that can be debated among sports fans and statisticians, the theory applies to investing as well. Let’s explore why.

“Winning by Not Losing” in Investing

Not losing in sports can mean building a strong defense or avoiding turnovers and errors. These also apply to how you handle your investments, which is especially important during volatile market times.

Playing Defense

In sports, the goal of defense is to prevent the other team from scoring. For investing, the goal is to position your portfolio against losses. While we like our investments to perform well, behavior finance tells us that investors focus more on not losing than they do on winning big gains. 

There is something behind that fear; mathematically, investments are penalized more from losses than they are rewarded from gains. How? For every loss, you need exponentially higher gains just to break even, as shown in the illustration.