Category: Smart Money Tips

What’s the Passion Driving Your Financial Goals?

whys

“If you aim at nothing, you will hit it every time.” – Zig Ziglar

That’s true for most aspects of life, including our finances. Most of us realize that. It’s why we set New Year’s resolutions—and why more than half of all Americans set some type of financial goal as a resolution each year.1

As great as setting goals is, it won’t accomplish much for you if you can’t achieve them. And, maybe not so surprisingly, the vast majority of people (92% according to the research) don’t achieve their goals.2

Why?

Why do we (and I’m including myself here) struggle so much to meet the goals we set for ourselves? Is it because we don’t want to? Because we lack commitment? Not so much.

One big reason behind our failures is that most of us lack a clear connection between our present reality and the future we’d like to achieve. That vagueness can cut the emotional ties to a financial goal, draining the passion and commitment that actually lie within us.3 When we don’t connect to our goals at a deep level, it’s easy to get off track and lose our momentum.

So, how can we stay on track to achieve our financial goals?

By reconnecting with the vivid emotions behind them and digging deeper to uncover our inner passions and motivations behind our goals.3 A simple way to dig deeper into the underlying reason for your financial goals is by peeling back the layers and asking yourself “why?” three times.

UNLOCK THE PASSION INSIDE YOUR FINANCIAL GOALS BY ASKING THESE 3 WHYS

1st “WHY”: Peel back the first layer

Start by asking yourself why you have set a specific financial goal:“Why do I want to (obtain this financial goal)?”Financial goals to earn more, save more, or build wealth are usually linked to a deeper desire, like the desire to have more time, more freedom, or an early retirement. Answer this first question to help reveal the general motivation behind your financial goal.

STILL NOT THERE YET? KEEP ASKING “WHY.” PEOPLE ARE LIKE ONIONS. SOMETIMES, YOU HAVE TO PEEL BACK MORE LAYERS TO UNCOVER THE CLEAR VISION BEHIND YOUR GOALS.

When you’re able to dig deep and connect your financial goals to your innermost desires, you’ll stay excited about them for the long run.

FINANCIAL LESSON:UNCOVERING YOUR PASSION CAN BE THE BEST MOTIVATION FOR ACHIEVING YOUR FINANCIAL GOALS

For most people, financial goals take time to achieve. From spending less to saving more, these goals take consistent effort and action. They can require you to change your habits, make sacrifices, and stay the course for years.

And that’s hard.

But it can be a lot easier if you’re able to stay connected to the “why” and the passion behind your goals.

Maybe you want more free time so you can enjoy special experiences with your family because you’ve missed important occasions before. Maybe you’re focused on creating a lasting foundation for your children because your family struggled while you were growing up. Perhaps you dream of owning a vacation home where your family can gather because you have fond memories of family gatherings in the past.

Why?

Because, if you’re truly passionate about your financial goals, you’ll stay excited about them for the long run. And that can mean you’ll be far more likely to work harder toward achieving your goals and you’ll be far less likely to give up on them.4

Of course, the financial goals you set today can change over time. With age and changing life circumstances, new financial goals can replace the ones you set 5, 10, or even 20 years ago. No matter when or why those goals may change, staying connected to the “why” behind them can go a long way to helping you achieve them.

If you’re thinking about the “why” behind your financial goals and want to talk about them, give my office a call at 800-840-5946.

I’d love to hear more about your goals, why you chose them, and where you are at in your journey toward achieving them. I have a lot of experience helping my clients with their financial goals, and I look forward to the opportunity to help you, too.

Richard Archer, CFA, CFP®, MBAArcher Investment Management

Need a Financial Planner?

SOURCES & DISCLOSURES

1 https://www.bankrate.com/personal-finance/smart-money/how-to-avoid-common-financial-mistakes/

2 https://www.inc.com/marcel-schwantes/science-says-92-percent-of-people-dont-achieve-goals-heres-how-the-other-8-perce.html

3 https://www.cnbc.com/2019/11/29/use-financial-psychology-to-crush-those-saving-goals.html

4 https://www.marketwatch.com/story/passion-budgeting-lets-you-keep-what-matters-most-yet-still-fix-your-finances-2019-01-25

Risk Disclosures: 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. Past performance does not guarantee future results. This material is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. The content is developed from sources believed to be providing accurate information; no warranty, expressed or implied, is made regarding accuracy, adequacy, completeness, legality, reliability or usefulness of any information. Consult your financial professional before making any investment decision. For illustrative use only. 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. Past performance does not guarantee future results. The S&P 500 is an unmanaged composite index considered to be representative of the U.S. stock market in general. All index returns exclude reinvested dividends and interest. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. For illustrative purposes only.

This material is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. The content is developed from sources believed to be providing accurate information; no warranty, expressed or implied, is made regarding accuracy, adequacy, completeness, legality, reliability, or usefulness of any information. Consult your financial professional before making any investment decision. For illustrative use only.

Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. These are the views of Finance Insights and not necessarily those of the named representative or firm, and should not be construed as investment advice.

The Costs of Kids

kids

IT’S NO SECRET THAT KIDS COST MONEY.

But how much do they really set you back?

For the average American parent, raising a child comes with a price tag of at least $12,980 every year. By the age of 17, that’s well over $230,000—and that’s before college costs come into play. High-earning families spent even more—over $370,000 according to the research. 1

Of course, child-rearing costs vary from family to family, and it’s far more expensive to raise kids in some high-cost-of-living states, like Oregon and New York.2

Plus, kids don’t magically stop costing you money once they turn 18. College, rent, insurance, and helping out adult children can all add up.

No matter how old your kids are, spending money is an unavoidable part of raising them.

What does that money go toward?

Here’s a breakdown of the biggest costs of raising kids.

WHY KIDS COST SO MUCH MONEY

(Source: USDA, 2015)

CHILDCARE

$2,000-$22,600 PER YEAR3

Whether it’s school programs, babysitters, or full-time care, parents can spend a shocking amount of money on childcare. However, the benefits of career stability to parents and the socialization and stimulation children can receive in high-quality care, can make the expense a worthwhile choice for many.

HEALTH CARE

$1,150-$3,170 PER YEAR

Parents have to shell out for out-of-pocket doctor and dentist visits as well as health insurance premiums, prescriptions, and other medical expenses. While adults may spend more on their own health care expenses (especially as they age), health care costs for the under-18 crowd had the highest rate of inflation, meaning parents may end up spending even more in the years to come.4

HOUSING

$3,600-$5,500 PER YEAR

Housing is the single biggest cost of raising children. Whether it’s buying a bigger house, or finding a good school district, about $1 in every $3 spent on kids goes toward keeping a roof over their heads.

FOOD

$2,300-$3,500 PER YEAR

Picky eaters or not, food costs add up. It’s also not uncommon for parents to shell out more for organic or all-natural foods. Good news, though: splurging on healthy food may actually save money later when it comes to health care costs.5

COLLEGE

$10,400-$36,800+ PER YEAR

Though the individual cost of college varies, tuition costs double about every decade.6 Since college graduates can end up earning about 56% more than non-college graduates, these higher education costs can be well worth it.7

“The experience of raising children can create lifelong memories you can never put a price tag on.”

FINANCIAL LESSON:THE JOY OF KIDS & FAMILY MAKES THE COSTS WORTH IT

Whether you’re raising a young child, sending your kid off to college, or watching your kids raise the next generation, kids cost a lot in America. There’s no getting around that.

And money is just one way you’re spending on your kids. In fact, research shows that parents aren’t just spending more money on children these days—they’re also spending more time and energy on their kids than ever before.8

Why?

Because parents and grandparents want to give the kids in their family the best possible life.

Often, that means doing more than just housing, feeding, and educating kids. It can mean taking them to ball games and concerts, paying for special lessons, throwing memorable birthday parties, taking vacations, and more. These activities and experiences you enjoy with your children can create lifelong memories you can never put a price tag on.

Of course, all of that does come with some up-front costs. But I think most parents would agree that the costs are worth it.

If you’re thinking about how to balance the costs of kids with your personal needs and future, call my office. I’ve helped lots of parents and grandparents figure out ways to give their kids a great start while still saving for the future, and I’d be honored to help you, too.

Richard Archer, CFA, CFP®, MBAArcher Investment Management

Need a Financial Planner?

SOURCES & DISCLOSURES

1 https://www.usda.gov/media/blog/2017/01/13/cost-raising-child
https://fns-prod.azureedge.net/sites/default/files/crc2015_March2017.pdf

2 https://www.epi.org/child-care-costs-in-the-united-states/

3 https://www.epi.org/publication/what-does-good-child-care-reform-look-like/

4 https://time.com/4962475/nutrition-snap-health-care/

5 https://www.healthcostinstitute.org/images/easyblog_articles/276/HCCI-2017-Health-Care-Cost-and-Utilization-Report-02.12.19.pdf

6 https://research.collegeboard.org/pdf/trends-college-pricing-2019-full-report.pdf
https://www.finaid.org/savings/tuition-inflation.phtml

7 https://www.usatoday.com/story/money/2017/01/12/pay-gap-between-college-grads-and-everyone-else-record/96493348/

8 https://www.theatlantic.com/business/archive/2014/05/do-kids-make-parents-happy-after-all/361894/

Risk Disclosures: 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. Past performance does not guarantee future results. This material is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. The content is developed from sources believed to be providing accurate information; no warranty, expressed or implied, is made regarding accuracy, adequacy, completeness, legality, reliability or usefulness of any information. Consult your financial professional before making any investment decision. For illustrative use only. 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. Past performance does not guarantee future results. The S&P 500 is an unmanaged composite index considered to be representative of the U.S. stock market in general. All index returns exclude reinvested dividends and interest. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. For illustrative purposes only.

This material is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. The content is developed from sources believed to be providing accurate information; no warranty, expressed or implied, is made regarding accuracy, adequacy, completeness, legality, reliability, or usefulness of any information. Consult your financial professional before making any investment decision. For illustrative use only.

Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. These are the views of Finance Insights and not necessarily those of the named representative or firm, and should not be construed as investment advice.

Paradigm shifts (and how to keep up)

college plans

Life has changed; how do we adapt without losing sight of what we want to achieve?

As you’ve heard me say before, no one knows how the future will play out, but we should still look ahead and think through the consequences of what’s happening. (More about this kind of second-order thinking ahead.)

I believe that our society and our economy are experiencing a massive paradigm shift.

We will never go back to the world we had before COVID-19, and the lens that we used to evaluate ideas, markets, economies, and personal choices over the last decade may not be sufficient for the next decade.

Here are just a few things that I see changing as a result of what’s going on now:

Social Support: 36.5 million Americans have become unemployed in two months, and the effects are rippling through families, communities, and the economy.1 The government has responded with trillions of stimulus dollars to individuals and businesses. More relief is likely to come. What does this mean for our society? Who should get a helping hand in tough times? Will we permanently expand the social safety net?

Work: Thrown into the largest work-from-home experiment in history, more workers and employers will transition to remote work post-pandemic. This shift in work has major implications. Which places will be a draw if workers can live anywhere and employers can have their pick of a nationwide (or global) workforce? Will those who must physically show up demand different compensation?

Education: Students, parents, schools, and universities are being forced to re-evaluate the definition of education (and its price tag) now that the on-campus experience has gone online. What’s missing if you attend from home? How much should education cost? What alternatives to a traditional four-year degree will arise?

Shopping & Entertainment: Brick-and-mortar retailers may never recover from the body blow dealt by pandemic lock-downs. Online shopping, grocery delivery, and digital services may finally overtake offline channels. What will the retail landscape look like when it’s easier (and maybe safer) to eat, shop, and watch at home?

No one has all the answers about the new world and things are not always what they seem.

Though it appears that the stock market has moved past the pandemic, we shouldn’t celebrate just yet.

Why?

Much has changed in the world and we’re still playing out first-order effects. More consequences are coming.

“What are the second- and third-order consequences of this?” is a question big thinkers like Ray Dalio (Manager of the largest hedge fund in the world) ask about complex scenarios.

Here’s what they mean:

First-order thinking is fast and simple: B is the logical outcome of event A.

But then what? What happens as a consequence of B?

And what happens as a result of that? And what is the follow-on effect of that?

Second-order thinking is about interactions and complex systems. It’s slow and hard (but mastering it can put us steps ahead of the crowd).

Understanding the new world that’s growing out of the pandemic requires thinking through these higher-order consequences and developing a new lens to navigate the uncertain waters ahead.

How can we adapt? How can we still pursue our goals in a totally different world?

We think it through with humility and an open mind.

We hone our second-order thinking skills by asking: what could happen? And then what? How likely is it that I’m right? What could happen if I’m wrong? How do I position myself?

We’ll do it together.

COVID-19 is going to be with us for the rest of 2020 and possibly into 2021. So we’re adapting.

At Archer Investment Management, it means we will continue to hold virtual client meetings for the foreseeable future.  We are happy to reopen our office once we know more.

It also means big changes in our personal lives. Many of our children will be attending school online through the end of the school year and maybe even this fall.

Our anticipated summer vacation to Disney Magic Kingdom is canceled, but we’re hoping to spend time on Lake Austin instead.

We’re taking it day by day and thinking through those higher-order effects.

How about you? What changes are you making to your plans this summer and fall?

Need a Financial Planner?

P.S. A number of clients and friends have reached out to talk through options around a potential lay-off, buy-out offer, or early retirement. If this is on your mind, please let me know. We can work through it together.

P.P.S If you’ve got a kid in college this fall, I have a question for you: is virtual university still a compelling offer? Are you and your student considering a gap year or some alternative? Please let me know. I’m interested in learning from your experience.

1https://www.washingtonpost.com/business/2020/05/14/unemployment-jobless-claims-coronavirus/

Chart source: https://www.artsci.com/studentpoll-covid-19-edition-2

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. Past performance does not guarantee future results.

This material is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. The content is developed from sources believed to be providing accurate information; no warranty, expressed or implied, is made regarding accuracy, adequacy, completeness, legality, reliability or usefulness of any information. Consult your financial professional before making any investment decision. For illustrative use only.

Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

Risk Disclosures: 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. Past performance does not guarantee future results. This material is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. The content is developed from sources believed to be providing accurate information; no warranty, expressed or implied, is made regarding accuracy, adequacy, completeness, legality, reliability or usefulness of any information. Consult your financial professional before making any investment decision. For illustrative use only. 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. Past performance does not guarantee future results. The S&P 500 is an unmanaged composite index considered to be representative of the U.S. stock market in general. All index returns exclude reinvested dividends and interest. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. For illustrative purposes only.

What the “new” normal could look like…

MS chart

It’s been weeks since we shuttered the office and started working from home and, like many, I’m feeling the strain of upended life.

How about you? Are you ready to venture out again? Are you dying to go to the beach like me?

In this article, I thought I’d give you a rundown of some of the latest economic projections, as well as a sneak peek of what post-lockdown life could look like for us soon.

(Ready for a break from COVID-19? No worries. Scroll down to the P.S. for some wonderful distractions.)

On to the economy.

You may have seen a headline showing that U.S. economic growth dropped -4.8% in the first quarter after posting 2.1% growth in Q4 2019. That’s not a surprise.1

Unfortunately, worse news is ahead since widespread layoffs and shutdowns didn’t hit until late March. Here’s a projection of what the next few quarters could look like for the economy.2

You can see in this chart that the coronavirus hit the economy like a tsunami. Q2 could be the worst quarter since the Great Depression.3

The arithmetic of recovering from a 30%+ drop in economic growth means that it could take many months (maybe even years) to return to pre-pandemic GDP levels, especially if we face multiple waves of infection.

Let’s mentally prepare for that.

April 2020 is likely to be one of the worst months for the economy in history; contradictorily, it was also a blockbuster month for stocks.4

Why are stocks so disconnected from the economic data?

Fundamentally, a stock’s price is an attempt to put a value on the underlying company’s earnings now and in the future. Complicating the calculation are factors like fear, greed, uncertainty, and movements in the overall market.

While economic data looks back at what has already happened (or is happening now), the stock market looks forward at the trajectory of the business environment. Framed that way, the rally isn’t so unusual since investors are expecting things to get better, not worse.

Will the rally continue? Hard to say. Volatility is very likely to be the name of the game for months.

Economists are predicting a rebound in Q3 2020. Are they right?

You know by now that we can’t perfectly predict what the recovery will look like; all economic estimates are based on educated guesses about spending, business investment, trade, and other factors. The biggest unknown is “personal consumption” by folks like you and me. Our spending drives 70% of economic growth.

The pace of the recovery depends on how quickly businesses reopen and consumers go out to shop, eat, travel, and spend money. If people don’t feel safe going out or don’t feel confident enough to open their wallets, growth could take longer to come back.

What could life look like as Texas reopens? While America is just now taking the first tentative steps toward reopening, many countries around the world are farther along, offering us a glimpse of what daily life might look like in a world where the coronavirus still remains a threat.5

Hong Kong: Restaurants are open but tables must be spaced farther apart.

South Korea: Pro sports are back but athletes play to empty stadiums. Temperature screening is in place in many buildings.

Taiwan: Schools are in session but assemblies are canceled and students wear face masks in class.

Australia: Beaches are open but sunbathing, picnicking, and large gatherings are verboten.

How long will coronavirus precautions overshadow our daily life? Realistically, some restrictions are likely to drag on until a vaccine or breakthrough treatment becomes widely available.

What do you think? What will our “new normal” look like?

Need a Financial Planner?

P.S. I promised you some distractions from the coronavirus, and here they are:

Watch jellyfish float at the Monterey Bay Aquarium (includes relaxing music!).

Dream of a Caribbean vacation with the beach cam at the Soggy Dollar Bar on Jost Van Dyke.

SCUBA dive vicariously in a kelp forest off Anacapa Island.

Watch the live cam at Tembe Elephant Park.

Take an hour-long walking tour around Paris.

Enjoy!

1https://www.bea.gov/news/2020/gross-domestic-product-1st-quarter-2020-advance-estimate

2https://www.cbo.gov/publication/56335

3https://www.marketwatch.com/story/echoes-of-the-great-depression-us-economy-could-post-biggest-contraction-ever-2020-03-19

4https://www.marketwatch.com/story/after-a-blockbuster-april-for-the-dow-and-sp-500-is-sell-in-may-in-the-coronavirus-era-a-smart-strategy-2020-04-30

5https://www.nytimes.com/2020/05/02/world/asia/coronavirus-china-hong-kong-south-korea-australia.html

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. Past performance does not guarantee future results.

This material is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. The content is developed from sources believed to be providing accurate information; no warranty, expressed or implied, is made regarding accuracy, adequacy, completeness, legality, reliability or usefulness of any information. Consult your financial professional before making any investment decision. For illustrative use only.

Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

Risk Disclosures: 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. Past performance does not guarantee future results. This material is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. The content is developed from sources believed to be providing accurate information; no warranty, expressed or implied, is made regarding accuracy, adequacy, completeness, legality, reliability or usefulness of any information. Consult your financial professional before making any investment decision. For illustrative use only. 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. Past performance does not guarantee future results. The S&P 500 is an unmanaged composite index considered to be representative of the U.S. stock market in general. All index returns exclude reinvested dividends and interest. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. For illustrative purposes only.

What lessons will you take from this?

new experiences

So much is unknown.

Do we reopen or wait?

Are we past the peak? Or just over the first summit of a mountain range?

Are we safe yet?

After weeks of restrictions, it’s easy to feel that we’re swirling in a maelstrom of uncertainty, helpless to make decisions when so much remains unknown and out of our control.

I think that’s normal. We’ve traded a trip on the highway for an off-roading adventure. And we don’t know where it’s going to take us this year.

So let’s lean into the uncertainty. Let’s embrace it and use it to explore and appreciate what really matters.

Our health. Our family, friends, and loved ones. Our home. Our community. Our compassion and creativity. Our resilience as human beings.

As for me, I have some moments of frustration, but I’m staying grounded by learning to cook.  

I’m learning a lot about myself. I’ve learned that I might be pretty good at creating sauces. I’ve learned that I’m very bad at making pizza crusts, but I’m humbly trying to get better. Did you know there are more than thirty different ways to bake them and one method even uses a waffle maker?

I’m working on gratitude and enjoying simple things like playing catch with Annie and finally watching the two new Star Trek series.

I’m grateful to have a wonderful home and meaningful work.

I’m grateful to have you.

On the professional side, I’m focused on what I can control on my clients’ behalf and staying abreast of what might come next. My mantra right now is: “one day at a time.”

How are you? I’d love to hear how you are coping. What lessons are you learning about yourself? What have you had the courage to try for the first time? Hit “reply” and let me know.

This pandemic is scary. But it’s also a once-in-a-lifetime chance to hit the “reset” button and connect with the creativity, joy, and good old human ingenuity that can flourish within the limitations of pandemic life.

Eventually, we’ll recover from the coronavirus. It’s not clear yet what that will look like, and we’ll likely see more hard days before we get there. Businesses will reopen, people will go back to work, the recession will pass, and the country will rebuild.

We will heal. But some marks will remain as reminders of our experience.

The Great Depression taught people to clip coupons and “make do or go without.” 9/11 upended our travel rituals and awareness of terrorism.

Some lessons from the pandemic will stay with us long after the immediate crisis fades. Some will be unconscious; maybe we’ll become a society of dutiful hand washers and social distancers.

Others will be lessons we consciously take with us about our values and ability to adapt to circumstances far beyond our control.

I’m hopeful and excited to see what we learn. Let’s make it good.

How has the crisis changed your perspective? What new values and priorities will you bring out of your experiences?

Need a Financial Planner?

P.S. Do you know someone who is having a hard time and could use some financial advice? I’m holding a few spots open for folks who could use a professional’s help. If you can think of someone, please call 800-840-5946 to let me know.

Risk Disclosures: 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. Past performance does not guarantee future results. This material is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. The content is developed from sources believed to be providing accurate information; no warranty, expressed or implied, is made regarding accuracy, adequacy, completeness, legality, reliability or usefulness of any information. Consult your financial professional before making any investment decision. For illustrative use only. 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. Past performance does not guarantee future results. The S&P 500 is an unmanaged composite index considered to be representative of the U.S. stock market in general. All index returns exclude reinvested dividends and interest. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. For illustrative purposes only.

V, W, L, or Swoosh? (no, it’s not a meme)

recovery scenarios

Everyone you and I have ever met has been affected by the Coronavirus.

My childhood friends in Indiana, the folks I met in London last summer, and even Brad Pitt.

It’s likely that every human on the planet has been affected by COVID-19.

I’m not sure that this kind of event has ever happened before in human history.

Though it’s sad that it took a disease to bring us together, it reminds me of how deeply connected we all are and how much our daily existence depends not just on our community, but on people we’ll never meet in far-flung corners of the world.

That very interconnectedness is what’s making this pandemic so dangerous to us and the economy.

Economists believe we entered a recession in March, and the latest data continues to show the economic damage:1

  • Retail sales dropped 8.7%, the biggest drop since the government started tracking the data in 1992.2
  • Spending on travel, restaurants, and shopping overall is way down (though grocery sales and delivery are up).3
  • The number of new unemployment claims skyrocketed to 22 million, erasing the job gains since June 2009.4

Despite the ugly economic data, stocks just wrapped their best performance in decades.5 What gives?

“Irrational exuberance,” to quote Alan Greenspan. Stocks are famous for rallying in the face of bad numbers, and it’s clear that investors are expecting government stimulus to lead to a quick recovery as states emerge from lockdown and business picks up.

Are bullish investors right? Will the economy recover quickly?

It’s impossible to say right now. How long the downturn lasts and how soon the economy recovers depend on answers to some critical questions:

  1. When will widespread testing, tracing, and treatment allow lockdowns to ease? Reopening America too soon and igniting a fresh wave of the pandemic will prolong the pain.
  2. Will employers maintain relationships with their laid-off staff? You can’t just flip a switch and reopen a closed business without skilled workers. The longer the shutdowns continue, the harder it will be for companies to staff up.
  3. How soon will consumer spending return? “Deferred” demand that’s pent up and just waiting for restrictions to ease could cause spending to surge; “destroyed” demand that’s not coming back could cause spending to remain depressed for longer. Here’s a simple example: deferred demand would be rescheduling a canceled vacation. Destroyed demand would be deciding to skip it entirely.

V, W, L, or Swoosh?

The “shape” of the eventual recovery is being hotly debated because it gives us insight into what would need to happen (and how long it could take).6

“V-Shaped” Recovery: A short, sharp decline and then a quick rebound is the best-case scenario. In this case, lockdowns lift soon and spending surges, driven by pent-up demand and government stimulus.

“W-Shaped” Recovery: A “double-dip recession” is a worst-case scenario that could happen if the easing of restrictions leads to another wave of infections and lockdowns, or the economic damage causes a second downturn.

“L-Shaped” Recovery: An L represents a sudden plunge and fitful recovery if lockdowns continue through the year and growth is slow to return.

“Swoosh-Shaped” Recovery: A tick or swoosh is a sharp downturn followed by a gradual recovery as lockdowns are eased cautiously across the country. 

We can’t predict what the road ahead will hold, but I think it’ll look less like a return to “normal” and more like a way to live with the way COVID-19 has overturned ordinary life.

What do you think? Will your life be back to normal this summer?

Need a Financial Planner?

1https://www.cnbc.com/2020/04/15/us-retail-sales-march-2020.html

2https://www.msn.com/en-us/money/markets/coronavirus-delivers-record-blow-to-u-s-retail-sales-in-march/ar-BB12FaEi

3https://www.nytimes.com/interactive/2020/04/11/business/economy/coronavirus-us-economy-spending.html

4https://finance.yahoo.com/news/coronavirus-covid-weekly-initial-jobless-claims-april-11-192401571.html

5https://www.wsj.com/articles/the-stock-market-is-ignoring-the-economy-11587160802

6https://www.weforum.org/agenda/2020/04/alphabet-soup-how-will-post-virus-economic-recovery-shape-up/

Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

Risk Disclosures: 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. Past performance does not guarantee future results. This material is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. The content is developed from sources believed to be providing accurate information; no warranty, expressed or implied, is made regarding accuracy, adequacy, completeness, legality, reliability or usefulness of any information. Consult your financial professional before making any investment decision. For illustrative use only. 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. Past performance does not guarantee future results. The S&P 500 is an unmanaged composite index considered to be representative of the U.S. stock market in general. All index returns exclude reinvested dividends and interest. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. For illustrative purposes only.

This is why I’m an optimist

silver lining

“The toilet paper had armed guards.”

“We celebrated my birthday with a dinner party over Zoom.”

“My officemate jumped on my desk and drooled on my keyboard during a meeting.”

One day, we’ll look back on these strange days and tell stories about the COVID-19 pandemic of 2020.

But right now, we’re getting through it. One day at a time.

How are you doing? What stories can you share with me about your life right now? Hit “reply” and tell me. I’d love to hear about them.

In difficult times, it’s easy to think we are alone. Especially when our loved ones and support system are far away or reduced to virtual connections.

We are all learning how to adjust to a new world and stay grounded when headlines are blaring and our very health and well-being are under threat.

I’m working on being grateful for my blessings in this life.

I’m grateful for the people I get to shelter-in-place with.

I’m grateful to get to spend a lot more time with my daughter, even if it’s doing her homework with her.

I’m grateful for the opportunity to learn to cook.  It’s something I’ve always wanted to do, but have never made time for.

I’m grateful that my parents are safe and well.

I’m grateful for work that allows me to help people in my community get through times like these.

I’m grateful for you.

What are you grateful for?

Like WWII and 9/11, we’re living through days that will define future generations and change the very fabric of our society.

I don’t envy the policymakers making grim trade-offs between life, death, and the economy. How long do we socially distance? What about the 10 million+ who have lost jobs?1 Or the businesses that have been forced to close?

I hope with all my heart that each one of them has a financial plan and someone they can go to for advice. But my head knows better. I know that most Americans can’t survive a $1,000 emergency and only 17% have a financial adviser to help them.2

What trade-offs are we willing to make to protect those at greatest risk from the disease? We can’t put a dollar figure on human life. But we can put a dollar figure on the human cost of jobs lost and businesses closed.

The next few weeks are going to be tough for all of us. And I want you to know that I’m here for you.

Layoffs and furloughs are happening and I’m helping affected clients create a game plan to get through the next few months. If this happens to you or someone you love, please let me know immediately so I can help you determine if you’re eligible for special assistance.

My team and I are also working on action plans for multiple economic scenarios. I’ll reach out to you if I think updates to your current strategies should be made.

How do we make good decisions with so much uncertainty and mixed information?

We make a choice:

We can choose to crumble under the weight of fear and uncertainty…

We can choose to simply hunker down and endure…

We can choose to grow, flourish, and come out stronger on the other side. We can be grateful for our blessings and focus on what’s within our control: our mindset, our behavior, and the actions we take.

I am fundamentally optimistic about humankind’s ability to weather this crisis and use it to grow.

I’m optimistic about how our society will adapt and change due to this crisis. Some of the greatest changes and innovations in history grew out of frightening, pessimistic times.

I’m optimistic about the heroes fighting the disease on the front lines.

I’m optimistic about the people helping friends, neighbors, and strangers stay safe and comfortable.

I’m optimistic that those with jobs will continue working to keep this country going while we wait and heal.

I’m optimistic about the innovators staying up late in labs, workshops, factories, and offices around the world to create vaccines, treatments, and tools to beat the virus.

I’m optimistic about the new inventions and technologies that will grow out of necessity.

I don’t know what challenges the world will throw at us in the coming days and weeks. I do know that I am grateful to be surrounded by smart, motivated people who push me to do better.

How can you show up for the people around you? How can you be your best self in these times?

Need a Financial Planner?

1https://www.marketwatch.com/story/the-us-officially-lost-701000-jobs-in-march-but-in-reality-millions-vanished-2020-04-03

2https://www.bankrate.com/banking/savings/financial-security-january-2019/
https://www.cnbc.com/2019/04/01/when-it-comes-to-their-financial-future-most-americans-are-winging-it.html

Risk Disclosures: 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. Past performance does not guarantee future results. This material is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. The content is developed from sources believed to be providing accurate information; no warranty, expressed or implied, is made regarding accuracy, adequacy, completeness, legality, reliability or usefulness of any information. Consult your financial professional before making any investment decision. For illustrative use only. 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. Past performance does not guarantee future results. The S&P 500 is an unmanaged composite index considered to be representative of the U.S. stock market in general. All index returns exclude reinvested dividends and interest. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. For illustrative purposes only.

New tax saving opportunity for you?

tax saving

With tax season approaching, I wanted to reach out with a few new tax saving opportunities that opened up due to the latest tax rules (the 2017 TCJA and 2019 SECURE Act) passed by the federal government.

This is a TIME-SENSITIVE opportunity, and to take advantage of your potential savings to the fullest you’ll need to act on this fast (before you file your taxes), so pay close attention.

These new tax rules can radically change your tax picture from now until 2025 when the 2017 rules are set to expire (unless a new administration changes them sooner).

For some people, these new tax rules could permanently lower the taxes they’ll pay for LIFE.

Remember, this is truly a LIMITED-TIME opportunity for two reasons:

#1 – The laws are set to expire in 2025, so you’ll want to take advantage to the fullest until then because you’ll probably pay more in taxes in the following years if the tax brackets return to pre-TCJA levels.

#2 – Some of the tax saving strategies in the free tax savings guide (below) need to be completed before you file your tax return, so it’s very important that you take action right now.

If you’re interested in saving more on your taxes under the latest tax rules, see this free guide to help you save every penny you can (including 6 “hidden” opportunities).

Please feel free to forward this email to a friend, business relation, or family member who may benefit from this tax saving guide.

Remember, this opportunity is time-sensitive; I highly recommend you read this now so you can take advantage to the fullest. If you have any questions, please “reply” to this email or call my office at 800-840-5946.

FREE Tax Savings Guide: The 6 “Hidden” Tax Saving Opportunities

Need a Financial Planner?

Risk Disclosures: 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. Past performance does not guarantee future results. This material is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. The content is developed from sources believed to be providing accurate information; no warranty, expressed or implied, is made regarding accuracy, adequacy, completeness, legality, reliability or usefulness of any information. Consult your financial professional before making any investment decision. For illustrative use only. 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. Past performance does not guarantee future results. The S&P 500 is an unmanaged composite index considered to be representative of the U.S. stock market in general. All index returns exclude reinvested dividends and interest. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. For illustrative purposes only.

How to give & get more from philanthropy

philanthropy

We’re giving more to charity than ever before.1 One reason is that giving feels good. It gives us a warm glow that can inspire us to keep giving.2

That’s probably why charitable contributions have increased by 5% over the past few years1and experts expect this trend to continue.3

That’s promising, but it could be even better.

That’s because about 2 out of 3 people say they want to give more, but they aren’t. Why?

Because they don’t have a giving strategy—and they don’t know what the impact of their giving will be.4

In this month’s Visual Insights Newsletter, we explore the concept of strategic giving and its essential role in maximizing the impact of philanthropy. Click here to see it!

With the right charitable giving strategies, you can feel more fulfilled and make a greater impact on the world.5

Go ahead and click here to discover more about strategic philanthropy.

Need a Financial Planner?

P.S. Donors cite philanthropy as the number one way to make an impact on the world.6 Make sure your charitable gifts are making the greatest impact by checking out this month’s Visual Insights Newsletter.

1https://www.charitynavigator.org/index.cfm?bay=content.view&cpid=42

2https://www.pitt.edu/~vester/whydopeoplegive.pdf

3https://philanthropy.iupui.edu/news-events/news-item/new-study-predicts-charitable-giving-will-increase-in-each-of-next-two-years-.html?id=287

4https://www.fidelitycharitable.org/about-us/news/study-finds-64-percent-of-donors-want-to-give-more.html

5https://www.hbs.edu/faculty/Publication%20Files/10-012_0350a55d-585b-419d-89e7-91833a612fb5.pdf

6https://philanthropy.iupui.edu/news-events/news-item/2018-u.s.-trust-study-finds-high-net-worth-donors%E2%80%99-average-giving-amounts-increased-since-2015.html?id=277

Risk Disclosures: 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. Past performance does not guarantee future results. This material is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. The content is developed from sources believed to be providing accurate information; no warranty, expressed or implied, is made regarding accuracy, adequacy, completeness, legality, reliability or usefulness of any information. Consult your financial professional before making any investment decision. For illustrative use only. 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. Past performance does not guarantee future results. The S&P 500 is an unmanaged composite index considered to be representative of the U.S. stock market in general. All index returns exclude reinvested dividends and interest. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. For illustrative purposes only.

What does your rich life look like?

rich life

The Beatles famously sang, “Money can’t buy me love.”

But, money should be able to buy happiness, right?

If people can buy the things they want, need, and enjoy, it’s seems like money should make them happy. But it doesn’t always.

Why?

Harvard researchers say it’s because people don’t spend it right. They don’t know what makes them happy, so they waste their money on things they think will make them happy but often don’t. They simply don’t know how to use their money to sustain happiness and experience a richer, more meaningful life.1

So, how can you live a rich life? Do you know what your rich life looks like? In this month’s Visual Insights Newsletter, we explore these questions and share some strategies for living a richer life. Click here to check it out!

While money is an opportunity for happiness, it’s no guarantee. And Harvard researchers say that, if money isn’t making us happy, it’s our fault.1

But there are things we can do about it. We can use our wealth with purpose to create the rich lives we want to live.

Go ahead and click here to find out more about how to live a rich life.

Risk Disclosures: 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. Past performance does not guarantee future results. This material is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. The content is developed from sources believed to be providing accurate information; no warranty, expressed or implied, is made regarding accuracy, adequacy, completeness, legality, reliability or usefulness of any information. Consult your financial professional before making any investment decision. For illustrative use only. 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. Past performance does not guarantee future results. The S&P 500 is an unmanaged composite index considered to be representative of the U.S. stock market in general. All index returns exclude reinvested dividends and interest. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. For illustrative purposes only.