Third Quarter Market Review

Commentary From Our Investment Team

As Interest Rates Climb, are Bonds Still a Good Investment?

“The best protection against inflation is your own personal earning power. . . If you do something valuable and good for society, it doesn’t matter what the U.S. dollar does.” – Warren Buffett

The Federal Reserve has two main goals: to keep unemployment low and keep inflation low. They have basically one tool for achieving this: setting interest rates. Lately, unemployment has been low, but inflation has been running at its highest level in more than 40 years. Consequently, to bring it down by putting a damper on the economy, the Fed has continued its policy of increasing interest rates.

This course of action was seen as inevitable by those who believed the current round of inflation was not as “temporary and transitory” as many had hoped. As a result of this tightening of the money supply the stock market responded with a series of corrections which has resulted in another quarter of losses for all the major indexes.

Whether this latest round of rate hikes will finally slow inflation is yet to be seen. It certainly has participated in bringing down the prices of stocks. For this reason, those who believe the market will eventually return to its long-term trend of growth have been purchasing equities at a discount.

However, stocks are not the only widely traded instrument available to investors. Bonds are also a key component of a diverse portfolio. While they too have suffered under rising rates, they have a built-in mechanism which dampens their volatility.

The Bond Teeter-Totter

Bonds are instruments of debt instead of equity (like stocks) and have two components, which is why people often find them confusing. A bond is basically an IOU between a borrower (the government or corporation issuer) and a lender (the purchaser). As with a loan, the bond issuer agrees to repay the principal on a predetermined schedule and make interest payments along the way.

A bond can be bought and sold like a stock; therefore it has a market price. So, the two components of a bond are its value (market price) and its income return (interest payments).

Many factors can affect a bond’s price, including its duration (sensitivity to small interest rate changes) and the reliability of the issuer. For example, bonds with a higher risk of default are called junk bonds and have a higher return as a result.

Another significant factor in the price of a bond is a change in interest rates. When a high-quality bond is issued, its return will be in line with current interest rates. For example, let’s say a bond was issued when rates were at 2%. When the Fed raises interest rates to 2.25%, that 2% return becomes less attractive. After all, you can buy new bonds with higher returns. In turn that original bond’s price drops until its return reflects the new higher rate.

Here’s how that would work with a 10-year bond worth $100 that pays 2%. Interest rates rise to 2.25%. That bond will drop to $80 in value, because at that lower price $100 worth will now pay 2.25%.

This teeter-totter effect tends to balance out the loss in market value. Of course, like stocks, you only realize a loss when you sell a bond.

Bonds have this built-in mitigating factor and a predetermined term and return, because of this they tend to be less volatile than stocks. Of course, that lower risk produces lower returns on average. However, when stocks are taking a beating, investors find the relative safety of bonds more attractive, and their prices go up. On the other hand, when stocks are soaring, investors find lower- performing bonds less attractive, and they fall in value.

In general, stocks and bonds tend to move in opposite directions, which makes owning both an attractive tactic in an overall strategy of holding a diverse portfolio. Since the movements of the market are unpredictable, the most prudent strategy is to own instruments that allow you to benefit from unexpected gains, while limiting your exposure to unexpected losses.

The big events that affect the global market are so unpredictable—events like the pandemic, the Great Resignation, and the war in Ukraine. So, it makes sense to follow a plan that’s designed for the long-term.

Who knows what surprises will be in store for investors this next quarter?

But we can be sure that investors who worry less about what they can’t control, and focus more on the things they can, will be much better off in the long run.

Quarterly Market Summary

Index returns

Past performance is not a guarantee of future results. Indices are not available for direct investment. Index performance does not reflect the expenses associated with the management of an actual portfolio. Market segment (index representation) as follows: US Stock Market (Russell 3000 Index), International Developed Stocks (MSCI World ex USA Index [net dividends]), Emerging Markets (MSCI Emerging Markets Index [net dividends]), Global Real Estate (S&P Global REIT Index [net dividends]), US Bond Market (Bloomberg US Aggregate Bond Index), and Global Bond Market ex US (Bloomberg Global Aggregate ex-USD Bond Index [hedged to USD]). S&P data © 2022 S&P Dow Jones Indices LLC, a division of S&P Global. All rights reserved. Frank Russell Company is the source and owner of the trademarks, service marks, and copyrights related to the Russell
Indexes. MSCI data © MSCI 2022, all rights reserved. Bloomberg data provided by Bloomberg.

Long-Term Market Summary

Index returns as of September 30, 2022

Past performance is not a guarantee of future results. Indices are not available for direct investment. Index performance does not reflect the expenses associated with the management of an actual portfolio. Market segment (index representation) as follows: US Stock Market (Russell 3000 Index), International Developed Stocks (MSCI World ex USA Index [net dividends]), Emerging Markets (MSCI Emerging Markets Index [net dividends]), Global Real Estate (S&P Global REIT Index [net dividends]), US Bond Market (Bloomberg US Aggregate Bond Index), and Global Bond Market ex US (Bloomberg Global Aggregate ex-USD Bond Index [hedged to USD]). S&P data © 2022 S&P Dow Jones Indices LLC, a division of S&P Global. All rights reserved. Frank Russell Company is the source and owner of the trademarks, service marks, and copyrights related to the Russell
Indexes. MSCI data © MSCI 2022, all rights reserved. Bloomberg data provided by Bloomberg.

World Stock Market Performance

MSCI All Country World Index with selected headlines from Q3 2022

These headlines are not offered to explain market returns. Instead, they serve as a reminder that investors should view daily events from a long-term perspective and avoid making investment decisions based solely on the news.

Graph Source: MSCI ACWI Index (net dividends). MSCI data © MSCI 2022, all rights reserved.
It is not possible to invest directly in an index. Performance does not reflect the expenses associated with management of an actual portfolio. Past performance is not a guarantee of future results.

World Stock Market Performance

MSCI All Country World Index with selected headlines from past 12 months

These headlines are not offered to explain market returns. Instead, they serve as a reminder that investors should view daily events from a long-term perspective and avoid making investment decisions based solely on the news.

Graph Source: MSCI ACWI Index (net dividends). MSCI data © MSCI 2022, all rights reserved.
It is not possible to invest directly in an index. Performance does not reflect the expenses associated with management of an actual portfolio. Past performance is not a guarantee of future results.

US Stocks

Third quarter 2022 index returns

International Developed Stocks

Third quarter 2022 index returns

Emerging Markets Stocks

Third quarter 2022 index returns

Country Returns

Third quarter 2022 index returns

Real Estate Investment Trusts (REITs)

Third quarter 2022 index returns


Third quarter 2022 index returns

Fixed Income

Third quarter 2022 index returns

Global Fixed Income

Third quarter 2022 yield curves

What Drives Investment Returns? Start with Ingenuity.

Third quarter 2022

A recent news item reported that Frederick Smith intended to step down as Chairman and Chief Executive Officer of FedEx Corp., the largest air freight firm in the world.

As a Yale undergraduate in 1965, Smith wrote a term paper for his economics course outlining an overnight air delivery service for urgently needed items such as medicines or computer parts. His professor was not much impressed with the paper, but after a stint in the Air Force, Smith sought to put his classroom idea into practice. He founded Federal Express (now FedEx) in 1971, and one evening in April 1973, 14 Dassault Falcon jets took off from Memphis airport with 186 packages destined for 25 cities.

In retrospect, it was not an auspicious time to launch a new venture requiring expensive aircraft consuming large quantities of jet fuel. Oil prices rose sharply later that year following the Arab states’ oil embargo, and the US economy fell into a deep recession. Most airlines struggled during the 1970s, and Federal Express was no exception.

But Smith’s idea found favor with customers, and 49 years after its initial deliveries, the firm is a global colossus with over 650 aircraft, including 42 Boeing 777s—each of which can fly more cargo than 100 Falcons.
Although it took over two years to turn its first profit, FedEx became the first start-up in American history to generate over $1 billion in revenue in less than 10 years without relying on mergers or acquisitions. The journey has proved rewarding for investors as well—100 shares purchased at the initial offering price of $24 in 1978 has mushroomed to 3,200 shares worth over $718,000 as of May 31, 2022.1

Fred Smith’s idea is just one example of ingenuity that humans have exhibited for centuries. Sticks and stones led to hammers and spears, the wheel and axle, the steam engine, and eventually semiconductors and jet aircraft. The invention of writing made it possible to store and hand down information from one generation to the next, enabling ingenuity to compound into an ever-increasing body of knowledge.

Although we often associate innovation with clever new technology, some remarkable developments have required little more than astute powers of observation. The curse of smallpox, for example, has afflicted humans with death or disfigurement for thousands of years. English doctor Edward Jenner noticed that milkmaids who had previously experienced cowpox did not catch smallpox, and in 1796, he took material from a milkmaid’s cowpox sore and inoculated James Phipps, the nine-year-old son of his gardener. Later exposed to the virus, Phipps never developed smallpox, and Jenner published a treatise on vaccination in 1801. Smallpox vaccines gradually eliminated the disease in countries around the world, and the last known case was reported in Somalia in 1977.

  1. Stock split information sourced from FedEx investor relations website. Stock price information provided by Bloomberg. This is not taking into account cash dividends or any reinvestment.

What Drives Investment Returns?
Start with Ingenuity.

(continued from page 16)

One innovation often paves the way for others:
• Charles Lindbergh took off from Long Island for his historic
transatlantic flight to Paris on May 20, 1927. That same day, J.
Willard Marriott opened a nine-stool lunch counter serving cold A&W
root beer in Washington, D.C. Ten years later he began to supply box
lunches to airlines flying from nearby Hoover airport and 20 years
later opened the world’s first motor hotel in Arlington, Virginia. Today,
Marriott is the world’s leading travel firm, with over 8,000 hotel
properties in 139 countries.
• The now-ubiquitous microwave oven can trace its roots to a happy
accident. While working on radar equipment in 1945 for
Massachusetts-based Raytheon, electronics engineer Percy Spencer
noticed that the chocolate bar in his pocket had suddenly melted. His
curiosity led to the introduction of commercial-grade water-cooled
microwave ovens in 1947 costing thousands and ultimately to
countertop units available today for $99.
• Frustrated by lengthy delays associated with loading and unloading
cargo ships, trucking firm owner Malcolm McLean launched a
shipping service in 1956 using standardized steel containers of his
own design. Met with great skepticism when first introduced, his idea
for theftproof stackable cargo boxes eventually transformed the
global shipping industry—and world trade—by slashing dockside
loading costs over 90%.
• On June 26, 1974, cashier Sharon Buchanan inaugurated the era of
barcode inventory tracking when she scanned a pack of Juicy Fruit
gum bearing a Universal Product Code at Marsh Supermarket in
Troy, Ohio. Barcode scanners eliminated the drudgery and inevitable
mistakes associated with manual entry by checkout clerks and
provided store managers with powerful tools to track sales trends. As
retailers such as Home Depot, Ross Stores, and Walmart expanded
throughout the country in recent decades, barcode technology played
a key role in matching inventory with local preferences at each
• In March 2022, a 20-year-old woman born with a small and
misshapen right ear received a 3D-printed ear implant made from her
own cells and shaped to precisely match her other ear. Although
experimental, the procedure represented a significant advance in
tissue engineering and could eventually lead to artificial organs such
as lungs or kidneys.
The benefits of innovation are widely dispersed throughout the
economy, often in unpredictable ways. Apple Inc. became one of the
world’s most valuable companies based on its clever marriage of the
computer and the telephone; both iPhone users and Apple shareholders
reaped substantial rewards.
On the other hand, suppose your fairy godmother had told you in 1935,
at the dawn of commercial air travel, that this tiny sector of the economy would eventually become a gigantic industry with millions of
passengers flying every year—including some flying from breakfast in
New York to Los Angeles for dinner. What would your prediction be for
industry pioneers such as TWA or Pan American? Most likely, bountiful
prosperity and rewarding stock market performance. The millions of
passengers materialized. The profits did not. Both firms went bankrupt.
So innovation itself does not ensure prosperity in every case.
That’s why it makes sense to diversify. Investors are often tempted to
focus their attention on firms that appear poised to benefit from
innovation. But it’s difficult to predict which ideas will prove successful,
and even if we could, it’s unclear which firms will benefit and to what
extent. Software giant Microsoft has been a big winner for investors,
with the share value soaring more than 100-fold over the 30-year period
ending May 31, 2022. Discount retailer Ross Stores proved even more
rewarding, as the stock price multiplied over 189 times during the same
period. One firm developed powerful computer technology and the other
applied it.
Civilization is a history of innovation—curious minds seeking to improve
upon existing ways of meeting mankind’s wants and needs. Public
securities markets are just one example of such creativity, and they
have a history of rewarding investors for the capital they supply to fund
such innovation. But a significant fraction of the wealth created in public
equity markets typically comes from only a small number of firms;
therefore, we believe owning a broad universe of stocks is the most
effective way to participate in the rewards of ingenuity and innovation,
wherever and whenever it takes place.

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Happy Holidays 2021-2022!

Merry Christmas and
Happy New Year!
We are wishing you the best health, happiness and prosperity going into 2022. In this issue is a great article for planning next year, and a good idea for a gift to give parents or grandparents; Kasey’s Will for leaving a legacy of stories and life lessons.

Our office schedule for the end of the year:

Closed Friday Dec. 24th to Friday December 31st for ChristmasReopening Monday January 3rd, 2022
We will be checking our mail and messages

To your Prosperity,
Kasey Claytor, Aaron Wade and Dawn Lopez

Here comes 2022: Will history repeat itself?
Whether we’re ready for it or not, 2022 will be here in a few days. Another year will have passed. You’ll look at your schedule, your finances, maybe even at the bathroom scale and wonder if this time next year you’ll be any closer to achieving the changes in your life you’d really like to make.Setting aside his politics for a moment, Karl Marx once wrote an interesting observation, “History repeats itself, first as tragedy, second as farce.”1 He was of course speaking of national events affecting millions of people. But the principle holds true in our personal lives as well. Our actions may cause us an unexpected setback. But then the next time we’re faced with a similar circumstance, we can’t seem to resist taking the same action again—even though we are fully aware of its detrimental outcome.Sales of expensive exercise equipment, scheduling planners, and weight loss apps soar in the first few weeks of January each year. People switch from indulging themselves to buying devices and memberships they hope will change how their conduct their lives.Unfortunately, these hoped-for transformations rarely take hold. Research has shown that willpower alone is not enduring enough to cause significant life change.2 It eventually gives out and the person goes back to their habit.The good news is that change is possible and the New Year is an excellent time to work for self improvement.Business coach Ashira Prossack has helped her clients find success by inserting a step before they make new resolutions, and that’s to spend time reflecting back on the year that is ending. The hustle of the holidays don’t make this easy.”With the end of the year fast approaching,” she writes, “it’s easy to feel overwhelmed. The holidays are often the busiest time of year, and there’s the added pressure of trying to finish up everything (at work) before December 31st.”3Prossack says you have to purposely set aside time to think back. But, she adds, at the end of the year you’re primed and ready to be in reflection mode.The next step, she advises, is to write out your goals for your personal life and career. Don’t worry yet about how you’ll accomplish them. Just get them down on paper. And be as detailed as possible.Finally, she says, write up your “game plan.” Identify the things you will need to do to accomplish your goals. And then list the specific steps you will need to take. The important thing is to write it all out. This will force you to think clearly about what it will take for you to accomplish your goal. If you break them down into small, easily doable tasks, you’ll be much better prepared to hit the ground running next year.And as far as financial goals, we would love to talk with you about what you’d like to accomplish over the next 12 months and how we can help you get there.Have a happy New Year and we will see you in 2022.

Sources:1. ​​ views expressed herein are exclusively those of Efficient Advisors, LLC (‘EA’), and are not meant as investment advice and are subject to change. All charts and graphs are presented for informational and analytical purposes only. No chart or graph is intended to be used as a guide to investing. EA portfolios may contain specific securities that have been mentioned herein. EA makes no claim as to the suitability of these securities. Past performance is not a guarantee of future performance. Information contained herein is derived from sources we believe to be reliable, however, we do not represent that this information is complete or accurate and it should not be relied upon as such. All opinions expressed herein are subject to change without notice. This information is prepared for general information only. It does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may receive this report. You should seek financial advice regarding the appropriateness of investing in any security or investment strategy discussed or recommended in this report and should understand that statements regarding future prospects may not be realized. You should note that security values may fluctuate and that each security’s price or value may rise or fall. Accordingly, investors may receive back less than originally invested. Investing in any security involves certain systematic risks including, but not limited to, market risk, interest-rate risk, inflation risk, and event risk. These risks are in addition to any unsystematic risks associated with particular investment styles or strategies.

A great Christmas gift for parents and grandparents!
A workbook to state the legacy of one’s beliefs, ethics, values and history to pass down.
As a financial planner and advisor, I’ve assisted people with their estate planning for well over 30 years; how to prepare our possessions and financial assets to pass easily to our loved ones and charities, but what about our intangibles? Our knowledge? What is in our hearts?
Within this workbook are questions to trigger or inspire you on various topics such as impactful life lessons, humorous family stories, good advice from your parents, and things you wish you had been taught!
This is your love letter to those who live on after you and even those who aren’t born yet.
On sale now on Amazon. Just click on the image below.Kasey Claytor

August Newsletter

These are heavy times we are going through! We hope all is well with you and your family. The markets are trudging forward regardless of the news, and that is in part because the markets are forward looking and betting things will improve. 
    We have been busy these last few months handling all of our client’s needs as well as several new clients coming in. It is heartening to have new clients who understand our prudent strategy of investing.
Some news~    Kasey has been working on a pet project that you just might be interested in! She’s writing a workbook that is a guide to making your own spiritual or ethical will. It’s a fascinating topic.
As a financial planner and advisor, Kasey has assisted people with their estate planning for well over 30 years. Explaining how our possessions and financial assets can pass easily to our loved ones and charities, but what about our intangibles? Our knowledge? What is in our hearts? When she learned of this, she found it so intriguing she decided not only would she put down her own most cherished beliefs and insights, but would also make this available to everyone by creating a workbook; a gentle guide to go through the process of creating one’s own spiritual legacy.
The act of writing it benefits the author—you—too. The writing of an ethical will can bind you more to your heritage, understanding more of your own cultural history, and define your ethical and spiritual values. Thus, you create an intangible, but very meaningful, legacy. Through the project you may begin to understand how your life made a difference, and can continue to do so through your efforts in the Ethical or Spiritual Will workbook, (name it what you want).
We will keep you posted on when it will be available, hopefully by October. If you are interested in being in our Beta test group for the first draft of this workbook, let us know. You can hit reply to this email.

What to do Now?

Life throws us small and large challenges. That is true whatever your background is, wherever you live, or who you are born to. One of the main tests in life is how you react to it.           

 All this recent news has me wishing I could just sell my children’s book and live in that world. But that wouldn’t be fair to all of our dear and valued clients who expect to hear from us during bad times as well as good times. As you should.           

So, the stock market is appearing to fall into the basement. Where is the bottom? When will it stop? Will we lose our assets? And when will this virus recede? What will happen before it does?            

No one knows the answers to these questions. The biggest clue to the future we have is found by looking at what went before.We have been here many times! Since I began my career in this financial industry in 1983, I’ve seen this type of situation many times: epidemics, pandemics, bear markets, and market corrections. And this is true: they are temporary. The markets recover. The viruses go away.            

What is different is the modes of communication. The wide spread use of social media, the insidious use of news media continuously ramping up the use of alarming terminology when reporting information. In the 60s breaking news was used for an assassination or a huge global event. Now breaking news is every five minutes. The stress is high. The benefit is to the advertisers who know you’ll feel the need to continue to watch to prepare for some horrific future.            

The short-term moves in the stock markets, (those less than 1 year, or even 3 years) are based more on emotions: fear, greed and hope, or guesses, than reality. Traders are constantly guessing what is around the corner. Most often they are just shooting in the dark.            

We have always cautioned to ignore these short-term expressions in the markets. When we look year over year, we see a calmer vista, a long expansion of growth. I’m including a chart that illustrates how the stock markets fall within every year, sometimes a small amount, sometimes pretty deeply, but over the years the declines are filled in, made up, risen out of.            

I will tell you a little story. We stockbrokers all sat at our desks one Monday in October in 1987 completely stunned, paralyzed, because the markets were in what appeared to be a free fall like we’d never, ever seen. It was the largest percentage one day drop in history (-22.6%). That week we were dazed and afraid. But I did know the worst thing I thought I could do was to sell into this horrible market. Brokers, money managers, financial advisors, whatever you label those in this industry, do have emotions too.           

 One of my coworkers panicked. He sold and went to cash that week in his own 401k. We had about the same amount in our 401ks, we had been hired the same year 4 years earlier. The markets rose again, of course, and sometime during the recovery, he went back into the market. But he had lost so much, and being out of the market when it was going back up he never was able to make up for the losses he took selling at that time.           

What a lesson for me as a young, green broker. I never forgot it. And I don’t want you to either.So hunker down, stay healthy and take care. 

 I do hope you can read the attached graph. It shows each years close in orange and the lowest points during the year with a purple diamond. Big drops are common, but always big news in the media.  To Your Prosperity and Wellbeing,

Kasey Claytor
Aaron Wade
Investment Advisor Representatives
Osprey Money Management LLC   

Planning Retirement isn’t just a Financial Plan, The Five Accomplishments You Need

Having walked my clients through planning, approaching, and living in retirement financially for the last almost 40 years, I couldn’t help but pick up on other aspects facing us besides the money part, such as grappling with when to retirewhat to do in retirement, and how to plan a full and thriving last third of life? As I heard someone say; what are you going to do between now and dead?

     As we near our ‘golden years’, we observe our elders living in a great variety of ways, from scrapping by on social security, to cruising or flying around the world, and travelling between multiple homes.  There is an undeniable correlation between financial health and satisfaction in the later years, but this doesn’t mean you need to be stinking rich.

     A successful retirement appears to have several moving parts: financial, health and wellbeing,  relationships, passions and purpose; and let’s face it, nearing death also brings in one’s beliefs and how they experience their own spiritual life. So how do we prepare ourselves for this last and significant period of our lives?

     First, not planning for it or setting goals, not contemplating how you will live in retirement, can cause unnecessary suffering later on. With no plan, with no savings, with no interests outside of work, some retirees may end up spinning in their own exhaust, no where to go and nothing to do. This can be disastrous on the human spirit. Depression and other mental health problems can take hold, leading to unhappiness and even physical ailments. But let’s not dwell on this, because the fact that you are reading this means you are proactive, interested, and willing to learn. Yay you!

     This topic could easily be a 400-page book, but I’m just going to give you the briefest of outlines here.

1) Financially

  • Never too early or too late to begin saving. Have your paycheck debited for your employer plan, or, have your checking account systematically debited to go into an IRA, as much as you can afford, and then a little more.
  • Invest in a broad, diversified portfolio with stocks and bonds, low fees and good, comprehensive management.
  • Beware if you have the tendency, like some parents of adult children, to financially help them to such an extent you harm your own comfortable retirement. I remember a client who borrowed against his home, and withdrew from his IRAs, to help a daughter who said she couldn’t find a job. He did this until he and his wife had to give up their plans on traveling with their friends in retirement. He died leaving nothing for his wife, and only after his death did his daughter go to work to support herself.
  • We used to say in the financial business in the 1980s, you needed at least as much in savings as your closest decade in a hundred thousand dollars. For instance, at 40 years old you should have saved $400,000, at 60, $600,000, and so on. Typical standards now in financial planning state it really takes much closer to one million to have financial freedom these days to enable no financial worries, and the ability to take care of all your needs. Yet, I have seen people retire with half that and get along just fine.
  • Educate yourself on how money works; how the markets work. Order our 30 page $5.00 booklet on the 7 Big Mistakes Investors Make & The 7 Habits of Successful Investors to get you started. You will find it listed on this linked page.

2) Health and Wellbeing

  • Of course, take good care of yourself. Eat a good, healthy diet with lots of fresh vegetables, fruits, nuts and lean proteins.
  • Get outside every day. Walk, bike, swim, play, explore, move. Take up yoga or Tai chi, dancing or some other social exercise. These good habits will be easy to follow into retirement. With good balance falls become much less likely among many other benefits.
  • Find a mindfulness practice you like such as meditation, contemplation, breathing techniques, prayer and self-reflection etc. Conditioning the mind for wellbeing is also essential.
  • If you do have anxiety, depression, or other emotional problems bothering you, find a good therapist. Most of these issues are resolved with the proper help. Our society still attaches an unfortunate stigma to getting assistance in this area, but it is so essential, shows emotional maturity, self-care, and can be a rewarding experience.
  • Develop a positive attitude toward aging and retirement. Day dream about all the activities and experiences you’ll be able to enjoy, and the friends and family to spend time with. If you don’t have a close circle of friends, join a club or a class. Get involved in something you enjoy, sports, a book club, knitting, hiking etc. and read, I can’t stress how much reading can enhance anyone’s life in so many ways. There are so many great books in the self-help genre, but even a great book of fiction is a positive experience.
  • Cultivate peace with your own passing. Our cultures in the West have a poor record of coming to terms with death. It’s not usually spoken about except in dramatic and negative ways; we pretend it isn’t inevitable, we try to extend the lives of our loved ones in often grotesque and extreme ways, making their last days, weeks or months, lying in a sterile facility hooked up to machines and on heavy medications. My recommendation is to have a good plan. Most states have a type of Dying with Dignity form to fill out describing what you want done and how in a terminal situation. Email us if you would like us to mail you one.  Other than this, building a solid belief of your own, whether religious or faith in life and nature, can re-frame the end of life as something not to fear. There are many great books on this.

3) Relationships

  • Fostering good relationships takes time, effort and the ability to forgive—maybe yourself or others. We all say or do things we don’t mean at times, are hurt by others words or actions, and without processing through these productively, we can be emotionally drained, hurt or worse. Forgive yourself and others. I know it’s hard. I will never forget a ninety-six-year-old, long-time client on his deathbed telling me he had been too hard on his wife and children. He was verbally abusive. He carried this all of his life. If he had been self-reflective, brave enough to look within, and been able to forgive himself, he wouldn’t have been so full of pain at the end.
  • Approaching this last stage of life, we can take the opportunity to develop a positive relationship with ourselves and others that will nurture us.

4) Passions and Purpose

  • What do you envision doing during retirement? So many people have jobs they don’t really enjoy, and so they dream of retiring as soon as possible, looking forward to having endless free days, like permanent weekends. But they’ve spent little time thinking about what they will do in retirement. I’ve seen some retire in their 50s and become bored, aimless and searching. Some go back to work. Some actually lose interest if life. On the other hand, I’ve seen people in their 70s who have no intention of retiring anytime soon because they love what they are doing.
  • Studies show the more control you have over what you do at work, who you work with and so on, the more satisfied you are. I believe that is why entrepreneurs often scoff at the idea of retiring, they are already living the life of their dreams.
  • To discover what your perfect retirement might look like, create a vision board of activities and places you’re interested in exploring. Think about what you enjoyed as a child.
  • Ask, how you may serve your community?

5) Deciding When to Retire

So, I am guessing you are beginning to see its not just at what age you can fiscally retire, it is so much more than that.

One, you want to retire when you are healthy and able to enjoy your passions

Two, you’ve figured out how you are going to fulfill your needs for community, purpose, interests and activities.

Three, make sure you aren’t just continuing to work because you have no idea what else to do with your life. Maybe you aren’t totally satisfied with work, but haven’t invested the time to explore what else might interest you.

Four, what about semi-retiring? This is getting very popular for those who have this option. And if you don’t, perhaps you could retire and pick up a part-time job doing something you’ve always wanted to do, like teach art or be in a counseling position.

Five, talk with your financial advisor about the income you will need during retirement. Take in to account how much your desired lifestyle will cost, your social security, and the amount of investments it will take to produce the income.

     All of these subjects require some introspection; knowing yourself well will help you plan your later years to your benefit. Settling in to the idea of being an elder in the community, offering your hard-wrought wisdom, having loving relationships, enjoying the fruits of your labor, knowing how to still play, and exploring the world with a sense of wonder, can make your retirement the best time of your life.  

Common Mistakes

Investing in stocks and bonds and having adequate insurance coverage is essential to any comprehensive wealth accumulation plan. The stock market has historically grown at a faster rate than inflation. So why do so many people have such poor results in their portfolios?

Stock markets are cyclical. When one category of securities falls (such as large US company stocks) investors get nervous and make an emotional decision to move to another category that may be moving up at the time, (such as government bonds, for example). We instinctively want to move away from what seems painful. The mistake is that your investments often don’t respond the way you hope from this type of behavior.

In actuality, if you keep moving your investment from one type of security to another, it will erode the potential return because it will likely be in a market that will experience a down turn when the original US company stocks experience its next big move up! Truth is, no one really knows which sector will bring the best results and jumping around rarely produces positive results. Patience does.

It seems logical to pick mutual funds and other managed investments by how well they have performed in the past. It feels comfortable and looking at the data gives us the sense that we can predict how it will perform in the future.

Truth is, predicting future performance based on past performance has created loads of unhappy investors. Studies show the vast majority of funds DO NOT out-perform the market. Picking 100 or 150 stocks out of a stock market that has thousands of choices results in a very small chance of outperforming the broader market returns.

If you have 10 different mutual funds you may think you have good diversification. After all, you hold so many different funds, right?

Maybe not. These funds could have the same individual stocks in them, which means duplication – plus, there could be gaps in the portfolio – and the next good return is in a category you don’t even own! The next cyclical downturn in stocks could weigh heavily on your portfolio if you aren’t balanced among several markets.

Over-Funded Retirement Accounts

Life happens pretty fast. Most of us are busy working away, adding to our retirement accounts in a company plan or an IRA. Before we know it, we’re nearing retirement. And there is something I’ve noticed about this.

It isn’t hard to build up our retirement if it’s taken out of our paychecks or checking accounts automatically. We don’t ever really miss it. But we may not find it so easy to do this with our after-tax money. Setting aside money for emergencies, other long-term savings, ready cash for vacations and big ticket items is important also. We’ve grown accustom to instant gratification, impulsively buying things we don’t need, and we whittle away the money we could be saving in a savings or investment account apart from long-term retirement ones.

In approaching retirement, many people find they have a nice amount in their IRAs or retirement plans, yet not much elsewhere. Once in retirement, or unluckily, laid off, they find they need to not only depend on an income from the retirement accounts, but it also is the place they need to go for big expenses such as repairing big items, needing a new a/c unit, or other big costs. And if they turn 70 ½, now they have to take a significant amount out for their RMD, (Required Mandatory Distribution), because the IRS wants to tax that account you’ve had great tax advantages on for so long.

One scenario: George has $1,000,000 in his IRA. He turned 70 ½ this year and must withdraw $50,000 and pay taxes on that. He may not need it, but he has to take the distribution anyway. He could have directed some of those savings to non-retirement accounts.

Another scenario: Harry, 55, has saved $300,000 in his IRA but has only about $7,000 in savings. He needs a new roof that will cost him $15,000. He needs to take it out of his IRA, paying income tax and a 10% penalty because he is not yet 59 ½.

The advice here is, in addition to saving for retirement, it is important to set aside other monies that is readily available without penalties or tax consequences. There are several ways to set this up automatically, much like your retirement plan at work.

Ask your employer if they have an after-tax savings plan you can contribute to that is reasonably accessible to you.

Set up a savings, money market, or mutual fund and direct your bank to send to this account a set amount at regular periods. Could be around your paycheck deposits.

When you sit down to pay your bills make a point to pay yourself first. Transfer money from your bank account to your savings online.

For extra windfalls such as a bonus, monetary gifts, inheritance, etc. save a portion.

There are more ideas, see if you can think of some. Just be aware so all your assets aren’t in a retirement account. Retirement accounts are for retirement income down the road.

Get with a financial planner and figure out a plan that will give you the income you’ll need in retirement and savings for needs while you’re working.

Salesmen, Emotions and Mistakes

Lately it’s been more challenging out there, especially for older folks alone. Sometimes they get talked into buying products they can’t afford.

Just recently one of our clients was so pressured by an intimidating salesman, she signed up for a water purification system she couldn’t afford. He even told her he would get fired if she didn’t buy it. It did turn out ok for her though, in the end. They can’t touch her retirement account or her home, so she is lucky.

Another client had a salesman in her home to learn about stairway chair-lifts and he was so overbearing he insisted on her giving him her brokerage statement! He told her how she was invested incorrectly and picked up the phone and called me! When she realized he had called me she got on the phone and told me what was going on. I told her not to sign anything and call me later. Fortunately, she is fine, didn’t buy it, and he is now fired.

These two instances were very close calls. One would have had to pay $8,000 and the other $13,000. I am not saying the products were bad or not worth the price, but these clients weren’t in a position to pay for them.

But both women felt intimidated, stressed, even frightened by these aggressive men. I know our clients can make good, solid decisions. But, if you are alone and think you may feel at all vulnerable if someone is trying to hard-sell you something, have a plan ahead of time. Tell a close friend or family member about the appointment. Better yet, have a trusted person with you.

Sit by your phone ready to call if you feel intimidated, and tell your contact ahead of time a prearranged word or phrase to come over, such as “Can I afford this?”

If you do feel like you got pressured into buying something you shouldn’t have, under Florida law you have 3 days to cancel the purchase. For those of you in other states, check your state’s laws.

Call your financial advisor or planner before the appointment to discuss what a reasonable, affordable purchase for you would be, especially if you’re not sure. Then, if the product is over that amount, be firm with your decision that you will not buy it.

If you have already made a mistake and want to find out if anything can be done now, we can see if any of our resources can help, but if not, don’t berate yourself, just know you’ve learned from the experience.

If you have a friend or relative who may be vulnerable in this way, sit down with him or her and come up with a plan if a desired in-home purchase appointment is coming up. Not all companies have unethical salespeople. I know there are many great people out there. Just please be careful.

Sometimes we don’t realize how much an aggressive salesman or woman can coerce us into making an emotional, disastrous decision. Preparing for an appointment with a salesperson includes checking ourselves for our own steadfastness in protecting ourselves, even if that means reaching out for help.

How can you tell if you have the right financial advisor?

Here is a check list of questions to ask yourself:

1) Does he/she prognosticate and predict?
We’ve been taught to expect our experts to tell us what is coming, yet in reality no one knows. We must be prepared for all possible and unseen events to the extent we can be.

2) When the market makes a big move up or down, does your advisor suggest changes to your portfolio?
If so:
A) Why was it incorrectly positioned in the first place?
B) Were there commission charges on the changes?
Your portfolio should be allocated to weather any storm for your time horizon and your comfort level. After that it is just routine maintenance to keep the allocation aligned with your original plan. The only time this might change is when you have big changes such as marriage or retirement.

3) Do you receive education on how the markets really work from your advisor?
Is there an opportunity for clients to learn methods of investing including philosophies so you can discern what yours is?

4) Does your advisor talk ‘above’ you? When you listen to your advisor is he/she understandable?
If you don’t understand, does he/she re-frame the answer in a way that you do? It is important you know what you are doing and why with your investments.

5) Do you have a high feeling of trust? Do you feel good after talking with him or her?
This will be your experience when your advisor is also a good ‘coach’. Your emotions will invariably work against your success if they go unchecked. You may be tempted to buy and sell at inopportune times. The stock markets will always have drops of 20% or more, and our decisions during those times can easily damage our long term plans. It is important that you can voice your fears and concerns to your advisor so that not only are you heard, but hopefully you will learn the truth about the markets and not the latest media buzz.

6) Have you been encouraged by your advisor to have reasonable expectations?
Such as:
A) The markets will cycle through bull and bear markets. During the last 31
years we had 24 positive returns. Even during the positive years the average intra-year decline was 14%
B) The stock markets will invariably decline over 20% at some time.
Are you prepared to stick with your plan no matter what is going on in the world and the markets? This is a sign of a seasoned, well-educated investor.

7) Lastly does your advisor understand, when it comes right down to it, your success has more to do with your internal commitment, internal guidance and financial maturity than any other variable?
If you have no resolve to leave your money invested through the tough times, can’t resist spending more than you earn, or you haven’t devised a good way to save, no advisor can be of much help.