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Food for thought

Debunking Market Myths

By | Food for thought

The world keeps changing, politics and social movements emerge, the stock markets fluctuate and a lot of our preconceived notions continue to be challenged. However, some things don’t seem to change, including myths about the markets and investing. Let’s take a look at some of the ones that still exist.

It’s true that it’s usually considered wise to diversify investments. However, it’s generally a myth that stocks rise when bonds fall, and vice versa. The reality is that, overall, both stocks and bonds increase in value over the long haul, and there are periods when they both rise and fall at the same time.1

Should this type of knowledge change the way we build a portfolio? Not at all. When you work with an experienced financial advisor, you’ll find that he or she is more concerned with the direction you are moving in, not the stock market. An asset allocation strategy and a portfolio of financial products should be designed to support an investor’s individual goals, not chase market returns. If you’re looking for advice on how to construct a portfolio to reflect your goals, risk tolerance and investment timeline, please give us a call. That’s what we do.

Another commonly accepted phenomenon is the way we define a bull or bear market — we base it on a percentage of rise or fall in performance. However, at least one market analyst believes that valuation of markets isn’t the critical factor for a bull or bear market, but rather the direction in which earnings ratios are moving.

Another common myth relates to politics. While politicians often take credit for rising stock markets, their actual impact is more often seen on individual stocks, such as when a president targets an industry for reform or support.3 Ultimately, it’s important for investors to stay focused on their own financial goals, not on how markets will react to election outcomes — because those responses are usually short-lived.4

There’s also the market cliché, “Sell in May and go away.” While markets do tend to slow down during the summer season (since 1950, the market has posted a mean return of 1.4 percent from May through October, compared to 7 percent for November to April), pursuing this strategy is a form of market timing.5 Another way to look at low-price periods is as an opportunity to buy low and wait for the possible rising tide.

And finally, the myth that men are better investors than women is just that — a myth. In fact, a new study from Fidelity reveals that women not only save more than men, but their investments earn (slightly) more on an annual basis.6

 

Content prepared by Kara Stefan Communications.

 

1 Ben Carlson. Bloomberg. Sept. 28, 2017. “Some Market Myths Hurt Investors.” https://www.bloomberg.com/view/articles/2017-09-28/some-market-myths-hurt-investors. Accessed Dec 29, 2017.

2 Barry Ritholtz. Bloomberg. Aug. 14, 2017. “How to Spot a Bull or Bear Market.” https://www.bloomberg.com/view/articles/2017-08-14/how-to-spot-a-bull-or-bear-market. Accessed Dec. 29, 2017.

3 Ryan McQueeney. Nasdaq. July 21, 2016. “Here’s How Presidents and Elections Affect the Stock Market.” http://www.nasdaq.com/article/heres-how-presidents-and-elections-affect-the-stock-market-cm652950. Accessed Dec 29, 2017.

4 Ben Carlson. Bloomberg. Sept. 7, 2017. “Markets Don’t Care Who the President Is.” https://www.bloomberg.com/view/articles/2017-09-07/markets-don-t-care-who-the-president-is. Accessed Dec 29, 2017.

5 Michael Brush. MarketWatch. May 12, 2017. “Opinion: Believing these 5 stock market myths will cost you money.” https://www.marketwatch.com/story/believing-these-5-stock-market-myths-will-cost-you-money-2017-05-12?siteid=rss&rss=1. Accessed Dec 29, 2017.

6 Chris Taylor. Reuters. June 7, 2017. “Why women are better investors: study.” https://www.reuters.com/article/us-money-investing-women/why-women-are-better-investors-study-idUSKBN18Y2D7. Accessed Dec 29, 2017.

 

We are an independent firm helping individuals create retirement strategies using a variety of insurance and investment products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic financial planning strategies and should not be construed as financial advice. All investments are subject to risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. 

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.

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Green Innovation and Investors

By | Food for thought

President Trump may have announced his intention to drop the U.S. from the Paris Agreement last June,1 but that didn’t stop commerce from pressing on with “green” innovation. Drawing from lessons learned from the emerging renewable energy industry, many global corporations have found there is money to be made by saving the world from pollutants.

More than 2.5 million Americans work in the “clean tech” sector, with employment in the solar industry alone boasting a 123 percent increase over the last six years. Even in sectors that are experiencing high research and development costs, profits are possible because the market for renewables grows stronger each year.

For investors, fossil fuels versus green innovation doesn’t have to be an either/or decision. Investment portfolios can hold stakes in tried-and-true blue-chip companies, many of which are expanding to include renewable divisions, as well as pure green startups.3

However, as with any investment, it’s important to consider investor goals, timelines and tolerance for risk with market opportunities. We work with clients every day to establish an asset allocation strategy that reflects both their circumstances and their interests. If you’re interested in a comprehensive review of this nature, we’d be happy to schedule a time to discuss this with you further.

We all know that the basis of solar power is exposure to the sun. While in the past, solar companies have focused on harnessing this exposure with roof panels, new innovation is exploring energy-harvesting windows and solar glass blocks in place of traditional brick siding. Both advances offer both light and heat sources for buildings and residences.4

As far as the new tax bill goes, there’s good news on the green front. The legislation retains existing tax credits for renewable energy and includes a $7,500 federal tax credit for the purchase of new electric vehicles.5

While clean energy may still cost more on some fronts than traditional energy sources, the cost comparisons are inconclusive. For one thing, they do not represent the cost of addressing pollution and health concerns generated by fossil fuels. If the price of coal, for example, included these ancillary expenses, cleaner renewable energy would appear much more affordable.6

And that doesn’t even include benefits to the environment.

 

Content prepared by Kara Stefan Communications.

1 Michael D. Shear. The New York Times. June 1, 2017. “Trump Will Withdraw U.S. From Paris Climate Agreement.” https://www.nytimes.com/2017/06/01/climate/trump-paris-climate-agreement.html. Accessed Jan. 18, 2018.

2 Brian La Shier. Environment and Energy Study Institute. Feb. 1, 2017. “Going Green in 2017: The Business Case for Renewable Energy.” http://www.eesi.org/articles/view/going-green-in-2017-the-case-for-renewable-energy. Accessed Jan. 18, 2018.

3 Jeremy Berke. BusinessInsider.com. Dec. 17, 2017. “The world’s largest oil and gas companies are getting greener after fighting with shareholders for months.” http://www.businessinsider.com/exxon-shell-bp-announce-renewable-energy-and-climate-initiatives-2017-12. Accessed Jan. 18, 2018.

4 Ben Coxworth. New Atlas. Aug. 16, 2017. “New glass blocks may be a clear choice for solar power.” https://newatlas.com/solar-squared-glass-blocks/50925/. Accessed Jan. 18, 2018.

5 Cathy Proctor. Denver Business Journal. Dec. 21, 2017. “Wind, solar, oil and gas — What the federal tax overhaul does for them.” https://www.bizjournals.com/denver/news/2017/12/21/wind-solar-oil-and-gas-what-the-federal-tax.html. Accessed Jan. 18, 2018.

6 John J. Berger. The Huffington Post. Dec. 21, 207. “Fostering Clean Energy Innovation — Financial Advisor Explains How To ‘Put A Stake in Fossil Fuel Industry’s Heart’.” https://www.huffingtonpost.com/entry/fostering-clean-energy-innovationfinancial-advisor_us_5a3c374fe4b0df0de8b063dc. Accessed Jan. 18, 2018.

 

We are an independent firm helping individuals create retirement strategies using a variety of insurance and investment products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic financial planning strategies and should not be construed as financial advice. All investments are subject to risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. 

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.

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Preventing Elderly Financial Abuse

By | Food for thought

A recent study by the Center for Retirement Research at Boston College concluded that many retirees who do not suffer from any cognitive impairment can still manage their money through their 70s and 80s.1 The study reports that financial capacity relies on accumulated knowledge and that knowledge stays mostly intact as we age.

However, the study points out that it generally is not a good idea to start managing financial decisions in your late 70s and 80s if you haven’t had experience doing this before — such as after the death of a spouse who handled the finances.2 We work closely with our clients to help them develop financial strategies designed to last a lifetime, with the goal of reducing the need to make dramatic financial changes later in life. However, we are here to address any questions or concerns of our clients no matter what stage of their financial planning. Please give us a call; we’re here to help.

Having a plan for late-stage financial management is important due to the increase in elderly financial fraud. With more than 45 million seniors in America, this is a large and tempting market for scammers. One study estimated that about 5 million older Americans are financially exploited each year. In New York state alone, allegations of elderly financial abuse spiked by more than 35 percent between 2010 and 2014.3

In response to this growing problem, several government regulatory agencies have stepped up efforts to help prevent and address elder financial abuse, including the following:

  • The SEC requires brokers to make “reasonable efforts” to identify a “trusted contact” for investment accounts and allows them to prevent the disbursement of funds from the account and notify the trusted contact if the broker suspects abuse.4
  • The Financial Industry Regulatory Authority, or FINRA, set up a senior help line at 844-57-HELPS (844-574-3577)5
  • In 2016, four state legislatures approved a rule requiring advisors to notify adult protective services and state regulators if they detect abuse; 10 more states are expected to adopt similar rules this year, and three other states already had such rules in place.6

According to the National Committee for the Prevention of Elder Abuse, some of the most common ways the elderly are taken advantage of financially are: forging their signature; getting them to sign a deed, will or power of attorney through deception, coercion or undue influence; using their property or possessions without permission; and telemarketing scams. Some of the most likely perpetrators of elder financial abuse are: family members; predatory people who seek out vulnerable seniors; and unscrupulous business professionals.7 If you believe you are a victim of fraud, contact your local law enforcement, state agency on aging and/or a community senior services group.

 

Content prepared by Kara Stefan Communications.

1 Anek Belbase and Geoffrey T. Sanzenbacher. Center for Retirement Research at Boston College. January 2017. “Cognitive Aging and the Capacity to Manage Money.” http://crr.bc.edu/briefs/cognitive-aging-and-the-capacity-to-manage-money/. Accessed June 22, 2017.

2 Ibid.

3 Christine Idzelis. Investment News. April 23, 2017. “Advisers on front lines in battle against financial abuse of the elderly.”  http://www.investmentnews.com/article/20170403/FEATURE/170339977. Accessed June 22, 2017.

4 Mark Schoeff Jr. Investment News. April 3, 2017. “Advisers taking steps to protect elderly.” http://www.investmentnews.com/article/20170403/FREE/170339979?utm_campaign=socialflow&utm_source=twitter&utm_medium=social. Accessed June 22, 2017.

5 FINRA. “FINRA Securities Helpline for Seniors.” http://www.finra.org/investors/highlights/finra-securities-helpline-seniors. Accessed June 22, 2017.

6 Mark Schoeff Jr. Investment News. April 3, 2017. “Advisers taking steps to protect elderly.” http://www.investmentnews.com/article/20170403/FREE/170339979?utm_campaign=socialflow&utm_source=twitter&utm_medium=social. Accessed June 22, 2017.

7 National Committee for the Prevention of Elder Abuse. “Financial Abuse.” http://www.preventelderabuse.org/elderabuse/fin_abuse.html. Accessed June 22, 2017.

We are an independent firm helping individuals create retirement strategies using a variety of insurance and investment products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic financial planning strategies and should not be construed as financial advice. All investments are subject to risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. 

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.

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Will Power be Restored to the Coal Industry?

By | Food for thought

In March, President Donald Trump signed executive orders to rescind several regulations that were in place to limit pollution from mining and burning coal.1 The administration’s goal is to revive the coal mining industry, but the downside is coal emissions release more greenhouse gases than natural gas.2

These recent actions serve as a reminder that nearly every sector, no matter how reliable it has been in the past, goes through cycles of uncertainty. The utilities sector, for example, has long been recognized as a steady provider of dividend payments and thus is a popular instrument for retirement income.3

Like any industry, it has its ups and downs, which can affect an investor’s returns and income stream. That’s why we believe it’s generally a good idea to remain diversified, even within a historically reliable sector, to help mitigate risk. As financial professionals, we’re here to help you analyze your personal financial situation and create strategies utilizing a variety of investment and insurance products that can help you work toward your financial goals. Please remember that investing involves risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

In 2016, natural gas (34 percent) surpassed coal (30 percent) as the country’s No. 1 source of energy for the first time in U.S. history. Nuclear power accounted for a 20 percent share of electricity generation. Renewable power sources, such as wind and solar power, are the fastest-growing power sources today, but they still represent only 8 percent.4

As for the future of coal, the CEO of the country’s third-largest coal mining company believes the industry will see most of its future gains not from policy changes, but from demand by China and South Korea. Last fall, these countries agreed to stop importing coal from North Korea, which was a boon for the U.S. industry.

The CEO for the U.S.’s largest public utility says his company closed many of its coal plants because it could produce energy at a lower cost with fewer facilities — not because of regulations. He also reiterated the company’s commitment to reducing carbon emissions by 60 percent by 2020. Having been raised near coal plants in Philadelphia, with coal cinders floating frequently through the air, he said he appreciates the great strides that have been made in clean air.6

While clean energy sources have a way to go before they become the more affordable choice, many experts believe that eventually will happen. When it does, it’s unlikely consumers or corporations would choose a more expensive option to fuel their electricity.

 

 

 

Content prepared by Kara Stefan Communications

1 CNBC. March 28, 2017. “Coal can be more profitable and efficient going forward, expert says.” http://www.cnbc.com/2017/03/28/coal-can-be-more-profitable-and-efficient-going-forward-expert-says.html. Accessed April 25, 2017.

2 Ryan Handy. Houston Chronicle. Jan. 16, 2017. “Natural gas surpasses coal as fuel for power production.” http://www.houstonchronicle.com/business/article/Natural-gas-surpasses-coal-as-fuel-for-power-10861176.php. Accessed April 25, 2017.

3 Kira Brecht. U.S. News & World Report. Feb. 5, 2016. “Generate Income and Play Defense With Utility Stocks.” http://money.usnews.com/investing/articles/2016-02-05/generate-income-and-play-defense-with-utility-stocks. Accessed April 25, 2017.

4 Ryan Handy. Houston Chronicle. Jan. 16, 2017. “Natural gas surpasses coal as fuel for power production.” http://www.houstonchronicle.com/business/article/Natural-gas-surpasses-coal-as-fuel-for-power-10861176.php. Accessed April 25, 2017.

5 Michael Bastasch. Daily Caller. 2017. “Mining CEO Expects A Record Year For Coal Exports.” http://dailycaller.com/2017/04/14/mining-ceo-expects-a-record-year-for-coal-exports/. Accessed April 25, 2017.

6 Jonathan Matisse. Knoxville News Sentinel. April 19, 2017. “TVA CEO: Coal plants not reopening under Trump.” http://www.knoxnews.com/story/money/business/2017/04/19/tva-ceo-coal-plants-not-reopening-under-trump/100641238/. Accessed April 25, 2017.

We are an independent firm helping individuals create retirement strategies using a variety of insurance and investment products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic financial planning strategies and should not be construed as financial advice. All investments are subject to risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. 

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.

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Can Longevity Truly Be Predicted?

By | Food for thought

Every morning, Emma Morano ate a raw egg and biscuits. When she died at age 117 in April of this year, she was the oldest person in the world. She lived in Verbania, a picturesque town situated on Lake Maggiore in northern Italy.1

Violet Brown, who was born in 1900 and lives in Jamaica, now holds the mantle as the world’s most senior senior.2 Like Morano, she resides in one of those beautiful locales that most of us only dream about. Could picturesque surroundings be a factor in longevity?

Surely happiness, time spent with good friends and family and a high quality of life can be factors. But no one really knows how long they’re going to live, which makes it particularly difficult to plan accurately for retirement income.

According to the Society of Actuaries, men who reach age 65 can expect to live to an average age of 86 and women to 88 — but those are just averages.2 In reality, some won’t make it to their predictive age and others will live longer. Which will you be?

As financial advisors, we understand the dilemma of planning for the unknown because it’s what we do every day. If we can help you develop a retirement plan, please contact us for a financial review. We can help you stay focused on your long-term goals and work with you to design a specific plan using a variety of insurance and investment products that help you work toward your desired financial future.

One tool to estimate your lifespan is the Actuaries Longevity Illustrator. Based on a few simple questions regarding health and demographic characteristics, it offers a series of percentages predicting your chances of living to various ages.3

If that’s too broad in nature, you might enjoy completing a more detailed questionnaire at the Biological-Age calculator. Based on how healthy a lifestyle you lead, this calculator knocks years off your current age for an estimate of how well your body is holding up.4

The Living to 100 Life Expectancy Calculator (livingto100.com), which was developed by Dr. Thomas Perls, of the New England Centenarian Study, asks 40 questions about health and family history to help estimate how long you may live based on researched medical and scientific data.5

If you’re concerned about getting older, here’s a bit of good news: People tend to get happier as they age. In a poll earlier this year, people age 70 and older said their quality of life has improved as they’ve aged.6 This could reflect the sentiment many people feel who either never enjoyed working or are simply happy to stop.

Either way, it’s probably more uplifting to stop thinking about the limitations of getting older, and reflect more on the advantages we can enjoy that were denied us at younger ages.

 

 

 

Content prepared by Kara Stefan Communications

1 Sean Rossman. USA Today. April 15, 2017. “World’s oldest person, last known to be born in 1800s dies.” https://www.usatoday.com/story/news/nation-now/2017/04/15/worlds-oldest-person-last-known-born-1800s-dies/100501238/. Accessed April 18, 2017.
2 Mark Miller. The New York Times. Feb. 18, 2017. “How to Make Your Money Last as Long as You Do.” https://www.nytimes.com/2017/02/18/your-money/retiring-longevity-planning-social-security.html?_r=0. Accessed April 18, 2017.
3 Society of Actuaries. 2017. “Actuaries Longevity Illustrator.” http://www.longevityillustrator.org/. Accessed April 18, 2017.
4 Biological Age. 2017. “Find Your Biological Age.” http://www.biological-age.com/#. Accessed April 18, 2017.
5 Dr. Thomas Perls. 2017. “Living to 100 Life Expectancy Calculator.” . Accessed April 18, 2017.
6 Matt Sedensky. The Detroit News. March 22, 2017. “Poll: As people move toward old age, optimism sets in.” http://www.detroitnews.com/story/life/wellness/2017/03/22/poll-old-age-optimism/99485000/. Accessed April 18, 2017.

This material is intended to provide general information to help you understand basic financial planning strategies and should not be construed as financial advice. All investments are subject to risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.

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Tax Reform: What’s On The Docket

By | Food for thought

From: AE Wealth Management

With a Republican president and the GOP controlling both houses of Congress, all the chess pieces are in place for meaningful tax reform. President Donald Trump and House Speaker Paul Ryan have each introduced proposals featuring reduced rates for individual and corporate taxes. While corporate tax reform enjoys broad bipartisan support, both sides of the aisle have grave concerns about how to pay for lower household income taxes.

Click here to read more…

Gratitude 365

By | Food for thought | No Comments

Healthier, More hopeful, Improved Sleep Quality, Increased Self Esteem, Increased Helpfulness and Empathy, Increased Resilience…

I imagine most of us could use a bigger dose of at least a few of these things. Guess what it comes from…GRATITUDE—scientifically proven benefits from the active practice of gratitude*.

This is the time of year we talk about gratitude quite a bit. We sit around our tables with family and friends; we express what we are thankful for, eat more than we intend to, laugh harder than we normally do, and embrace longer than we usually would…

What about the rest of the year? Most people are appreciative automatically when life is good. However, I believe we need to practice gratitude because life is not always good and especially when life is not good.

Ways to practice: a gratitude journal, think of someone you are grateful for each day, incorporate acts of kindness into your life, notice something beautiful or interesting each day, thank people sincerely, compliment a stranger, smile at someone (the real kind that makes your eyes crinkle), stay away from gossip, live in the present…

At my house there’s a jar sitting in the kitchen.  In our office it sits on the front desk. When we think of something we are grateful for, we write it down and put it in the jar. It absolutely changes my perspective on the day, it forces me to list what I’m grateful for and decide what to put in the jar. Above all, I’m always grateful it is a long list :).

 

Meaghan Shaffer

Director of Marketing and Operations

 

* www.newsweek.com/5-scientifically-proven-benefits-gratitude-398582