Category: Smart Money Tips

If You’re Hoping To Retire Within The Next 5 Years…

retirement

The coronavirus-driven recession and uncertainty will make retiring in Austin within the next 5 years challenging. The record volatility, recent legislation, and economic disruption mean that the decisions you make next will define your retirement. Create confidence in your plan for a work-free life by downloading this free checklist. Worried about what’s going on and want advice now? I save a few appointments each week — grab one by calling 800-840-5946.

The Amazing Power of Gratitude

gratitude

How To Be Happy When Life Doesn’t Go As Planned

IN FINANCE AND IN LIFE, EXPECTATIONS OFTEN ECLIPSE REALITY.

They become anchors for how we evaluate opportunities (like companies and stocks) and our own sense of happiness.1

They also make us fixate on what could or should have been, not what’s right in front of us.1

When reality doesn’t line up with our expectations, unhappiness, resentment, and anxiety usually follow.2

These negative feelings can intensify when we sense uncertainty.3 We get anxious about our hopes, goals, and dreams for the future when we feel like everything’s unpredictable.4

Yet, it’s not impossible to be happy when life throws us a curveball and the future seems uncertain.

How can we find joy when things feel chaotic?

Gratitude.

When we’re grateful, we can let go of our expectations. That can lead to greater happiness and life satisfaction, no matter how uncertain the present is—or the future may be.5

HOW TO BE MORE GRATEFUL & HAPPIER: 6 QUESTIONS

1. WHAT IS A MAGICAL MEMORY YOU HAVE FROM THE LAST FEW MONTHS?

We instinctively focus more on the negative than the positive. When times are tough, we expect the worst. To see things in a more positive light, we have to consciously set aside the negativity.6

Recalling happy memories is a quick way to do that. Even remembering a simple act of kindness can make you feel happier.7 

2. HOW HAS YOUR PERSPECTIVE CHANGED OVER THE LAST FEW MONTHS?

Consider the interactions, experiences, or people who have changed the way you think about something recently. Think about what you’ve learned.

Change and uncertainty can test our strength and character. How we stand up to the challenge may not just change our perspectives. It can also keep us grounded and spark personal growth.8

3. WHAT DO YOU TAKE FOR GRANTED?

It’s natural to take things for granted as we get used to them, even if they matter a lot to us. If we don’t take time to appreciate them while we have them, though, we may never get the chance.

Writer Robert Brault may have said it best with this: “Enjoy the little things in life because one day you’ll look back and realize they were the big things.” 

4. WHAT DO YOU WANT TO REMEMBER FROM THIS PERIOD OF YOUR LIFE?

“We do not remember days; we remember moments.” These words from Cesare Pavese ring true if you’re in your 20s, your 90s, or anywhere in between.

Whether you’re starting your career, raising kids, or enjoying retirement, recognize the good moments that are shaping this phase of your life. If you do, you’ll enjoy them far more as they’re happening.

5. WHAT EXPERIENCES HAVE YOU HAD THAT YOU’RE GRATEFUL FOR?

Some experiences create memories that last a lifetime. Family dinners, vacations, celebrations, major life milestones, and once-in-a-lifetime moments can shape us forever and for the better.9

They can also have positive impacts on the way we learn, see the world, and respond to unknown situations in the future.10 

6. WHAT DO YOU FEEL LUCKY TO HAVE THAT SOME OTHERS DO NOT?

This doesn’t have to be extravagant. It can be simple, like some treasured part of your day or week.

It can also be unique and intangible, like a relationship you have with a friend, sibling, child, or spouse. In fact, these close relationships are the key to fulfillment and long-term happiness. Appreciating how special they are can help you make them stronger while bringing you more satisfaction.11

SOURCES & DISCLOSURES

1 – https://www.psychologytoday.com/us/blog/cui-bono/201802/the-psychology-expectations

2 – https://hbswk.hbs.edu/item/the-subconscious-mind-of-the-consumer-and-how-to-reach-it

3 – https://dash.harvard.edu/handle/1/3153298

4 – https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4276319/

5 – https://www.health.harvard.edu/healthbeat/giving-thanks-can-make-you-happier

6 – https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3652533/

7 – https://greatergood.berkeley.edu/article/item/how_memories_of_kindness_can_make_you_happy

8 – https://www.psychologytoday.com/us/blog/the-power-prime/201201/personal-growth-four-obstacles-positive-life-change

9 – https://www.princeton.edu/news/2005/03/10/studies-relate-life-experiences-brain-structure

10 – https://www.ucdavis.edu/news/how-experience-changes-basics-memory-formation/

11 – https://www.health.harvard.edu/healthbeat/giving-thanks-can-make-you-happier

12 – https://www.psychologytoday.com/us/blog/future-trends/201808/why-do-we-think-so-much-the-future

13 – https://greatergood.berkeley.edu/article/item/why_gratitude_is_good

14 – https://ggsc.berkeley.edu/images/uploads/GGSC-JTF_White_Paper-Gratitude-FINAL.pdf

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.

Risk Disclosure: 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. 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.

Mental Secrets To Make Better Financial Decisions

glass globe

In a perfect world, logic would always guide our financial decisions. Emotions wouldn’t come into play.

But we don’t live in a perfect world. Far from it.

That means our emotions impact our financial choices more than we realize.1

Shockingly as much as 95% of our purchase choices are made subconsciously, driven by our emotions—as little as 5% are based in logic (and that’s when we’re in a good headspace and feeling comfortable and secure).2

When we’re faced with uncertainty, fear and instinct can take over and push logic right out of the window.3

Your brain will make you want to react quickly to protect yourself and avoid the pain you anticipate from potential losses.4

Ironically, these instincts often make things worse. Emotional reactions can lead to poor choices and the losses you were trying to avoid in the first place.5

The best way to avoid letting your hardwired biases take over? Use these strategies. They can help you fare better in any crisis. They may even make you a savvier investor.

Click Here for full article and to sign up for our Visual Insights Newsletter!

What Should I Do With My Old 401(k) or Employer Plan?

401k

Lots of people are losing their jobs and getting furloughed in Austin, and the CARES Act gives workers extra flexibility in tapping their retirement accounts. But there are a lot of factors to balance before deciding what to do with a 401(k) or other workplace retirement plan. This FREE guide helps investors take control of an uncertain situation and shows what the options are with an old employer plan. Overwhelmed and need personal advice now? Call 800-840-5946 to get your questions answered in a complimentary 1-on-1 phone appointment.

This FREE Guide reveals the 5 options to revive your old zombie plans!

Is the sky really falling?

sky falling

I’m sure you saw the headlines:

“Record Economic Plunge”1

“Second-Quarter GDP Plunged by Worst-Ever 32.9%”2

“U.S. Economy Contracted at Record Rate Last Quarter”3

It sure sounds like the sky is falling.

Is it really? Let’s take a step back and put the news in perspective.

The coronavirus shutdown thumped the economy, businesses, and workers badly over the last two quarters, and it’s uncertain how quickly we’ll recover.

We knew that Q2 GDP numbers (Gross Domestic Product) were going to be horrible. In fact, in May, the Federal Reserve thought they were going to be even worse.4

So, ~33% down is actually better than expected.

But, despite the headline, we didn’t actually “lose” 33% of economic production last quarter. The Commerce Department reports data on an “annualized” basis to make it easier to compare; so, if you looked at it quarter-over-quarter, the economy lost 9.5% since Q1.5

That’s still an eye-watering blow to the economy, but it’s not an apocalypse.

The largest contributing factor to the economic losses was a steep drop in personal spending, particularly on services, which makes complete sense in a shutdown.6

Three points before we move on:

  1. This is an advance estimate for Q2, and we will see revisions as more data is finalized.
  2. Though this is the sharpest drop in the shortest time in history, it was caused by the shutdown, and we’re already climbing out of it.
  3. 63.8% of economists think Q3 is when we’ll see the recovery really pick up steam, and the current forecast is for 15.2% annualized growth this quarter.7

So, what’s up with markets?

I think markets are being driven by a few big trends.

In a previous note, I mentioned what a Nobel-laureate economist calls “FOMO mania” by investors who fear missing out on the bounce. I think that’s still in effect as investors continue to pile into stocks, especially in the tech sector.8

I also think the market is being supported by massive government spending and Federal Reserve intervention.

And thirdly, I think a lot of traders are betting heavily on the recovery. If states have to shut down again, the collective delusion may collapse and trigger a correction. We’re watching for that.

How long will the rally last? That’s anyone’s guess. I’ve seen many cheerful forecasts predicting new all-time-highs. I’ve also seen plenty dolefully predicting the next crash.

With so much unknown, they’re all guesses. Even in less-murky circumstances, the market gurus are only accurate about 47% of the time.9

So, since we can’t predict what’s going to happen in Q3 and Q4, we’re staying agile and focusing on the fundamentals of good planning.

I know, it’s a really boring answer. But that’s how we give ourselves the best opportunity for success in chaotic times.

Let’s talk about you.

How are you doing?

What kind of decisions are you making right now?

Can I help?

P.S. Apple recently announced a four-for-one stock split.10 Here’s what that means: Stock splits are “cosmetic,” meaning they don’t change anything fundamental about the company. Splits just make the stock more accessible to investors by lowering the price (like getting four quarters for a dollar). If you currently own Apple stock, you’ll receive three more shares for every share you own in late August. Have questions about it? Click on the link above and let me know.

1https://www.chicagotribune.com/business/ct-biz-us-economic-plunge-20200730-t25tj4pzdvcmrirdufstpla2nm-story.html

2https://www.cnbc.com/2020/07/30/us-gdp-q2-2020-first-reading.html

3https://www.wsj.com/articles/us-economy-gdp-report-second-quarter-coronavirus-11596061406

4https://www.newyorkfed.org/research/policy/nowcast

5https://www.washingtonpost.com/business/2020/07/30/did-third-economy-really-vanish-just-three-months/

6https://www.cnbc.com/2020/07/30/us-gdp-q2-2020-first-reading.html

7https://www.wsj.com/graphics/econsurvey/

8https://www.cnbc.com/2020/07/28/paul-krugman-sees-mania-by-stocks-investors-driven-by-fomo.html

9https://www.cxoadvisory.com/gurus/#aggregate

10https://www.cnbc.com/2020/07/30/apple-just-announced-a-stock-split-heres-what-that-means-for-investors.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’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

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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.