06Feb
Market Volatility
Economy

At times like this, we are especially grateful for professional partnerships such as the one we offer clients through The Optimized Portfolio System (TOPS®).

In terms of recent market volatility, Click Here for the insights from Michael McClary, MBA – Chief Investment Officer and the TOPS® Portfolio Management Team at ValMark Securities, Inc.

I hope that this is helpful information to each of you.

As always, we are here to talk if you’d like.

Barbara A. Culver
CFP®, ChFC®, CLU, AEP®
Resonate, Inc.
(513) 605-2500

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30Jan
Do You Know the Real Impact of the New Tax Reform?
Economy

While many of us are enjoying significant gains in investment portfolios, partly due to tax reform law, there is more to the story. Sadly, is seems, that once again a decision was made to create a positive short-term impact with little to no regard for the long-term impact,

The Congressional Budget Office estimates the income tax cuts will boost the current federal deficit by $1.5 trillion over the next ten years. The current national debt already tops $20 trillion. It is 74% of the nation’s gross domestic product (GDP)!

The 2018 federal budget includes interest payments on the debt of $332 billion! Now add into the mix that the new federal reserve chair, Jerome Rhoads, has already stated there will probably be three interest rate increases in 2018 and the $332 billion escalated even higher.

Think about this legislation in terms of the financial future for our children/grandchildren/loved ones under the age of 50. Couple this with the uncertainty of Social Security, the ever-increasing cost in health care and higher education; it seems we are creating a future financial tsunami.

I believe that the combination of the worldwide stock performance along with new legislation which increases debt provides an opportunity for many of us to consider doing something for those we love most in the world.

Would those of us who were fortunate to be invested in equities in 2017 think about creating some financial security for others? Would we be willing to share a small piece of our abundance to create a brighter and more secure future for others?

If this is something you would like to know more about, please contact me. Let’s share a conversation in which we create new meaning and purpose for some of your money as we celebrate new-found abundance.

(The source for this information is the editorial opinion in the January 8-12, 2018 issue of Investment News.)

 

Barbara A. Culver
CFP®, ChFC®, CLU, AEP®
Resonate, Inc.
(513) 605-2500

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12Jan
The Psychology of Change
Issues of Aging

Credit for many of the ideas shared in this blog goes to Whitney Johnson. Johnson was interviewed for the January 2018 Insurance NewsNet Magazine. Her thoughts appear in an article called “The Success Curve of Disruption.”

Johnson states that one of the reasons it’s so hard for people to deal with disruption/change is because it seems very unpredictable at a very basic level. Johnson sites work done by Everett Rogers in 1962. Rogers created “the S-curve” to gauge how quickly an innovation would be adopted. Johnson believes that S-curve is valid today and has pointed out seven steps that anyone can take to deal successfully with change in our lives.

Here’s a brief comment on each of the seven steps:

  1. Take the right risks: This is an essential and fundamental step to mastering change.
  2. Play to your distinctive strengths: focus most of your time and energy on what you naturally do well that other people around you do not do well.
  3. Embrace constraints: people are successful not despite, but because of, their constraints. The law of physics says that we need friction. We must have friction to climb a mountain, to drive a car, and to climb the “S-Curve of Change”.
  4. Battle entitlement: rather than getting too comfortable with our current situation, a key question to ask ourselves is, “what could I be doing differently?” By doing, we choose to create necessary and desirable change in our lives.
  5. Step back to grow: Johnson suggests that “a way to get ourselves to step back to grow is to recognize that there really is no such thing as standing still. If we’re not moving forward, we’re actually moving backward.”
  6. Give failure its due: we must get rid of the shame that we sometimes feel when things don’t work out, because when we allow a mistake to become a referendum on us, our identity-the core of who we are-that’s when we lose. It’s the feeling of shame that limits change. Johnson suggests that “it’s shame that limits moving forward; it’s actually not failure.”
  7. Be discovery driven: this is the willingness to take a step forward, gather feedback, and adapt.

Now, for the good news… Johnson says that we do not need to master each one of these seven steps to be successful. Rather, she says discover which of the seven attributes/attitudes you do naturally and well. Then, “lean into using them when it comes to change.”

If you would enjoy knowing more about this topic, please consider Whitney Johnson’s book, Disrupt Yourself.

Barbara A. Culver
CFP®, ChFC®, CLU, AEP®
Resonate, Inc.
(513) 605-2500

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04Jan
How Long Can the Tech Rally Last?
Economy

Of course, no one can definitively answer this question.  Recently, the Wall Street Journal shared a very encouraging article on this topic.

Much of the tech. rally and the overall success of the economy is linked to the global technology sector. Names that continue to dominate the headlines are Apple Inc., International Business Machines Corporation, Microsoft Corporation, and Tencent Holdings Limited – the Chinese internet company.

Paul Markham, a global equities portfolio manager at Newton investment management, states: “The narrow nature of this rally has to be seen as something of a concern, but these are cash-generative companies who are being seen as the bedrock of the new economy.

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26Dec
Inflation Risk & Impact on Retirement Assets – Part 2 of 2
Economy

This is the second part of a two-part blog on inflation. May I encourage you to read Part One if you have not yet done so?

What is the Primary Risk of Inflation?

The primary risk in inflation is that you lose purchasing power over time.  Therefore, this is a topic we choose to emphasize and thoroughly explain to clients and their families.

Here are some examples I hope you will find interesting:

Year   What $1 buys                                          Money Supply*

1907     1 pair patent leather shoes                       $7 Billion

1913      1 Woman’s house dress                            $13 Billion

1930     16 Cans of Campbell’s Soup                    $46 Billion

1940     20 Bottles of Coca Cola                            $55 Billion

1960     2 Movie Tickets                                       $211 Billion

1987     1 Bottle Heinz Ketchup                             $1,560 Billion

2000    1 Wendy’s Hamburger                              $4,917 Billion

2010     1 Song on iTunes                                 $13,291 Billion

 

* the total amount of money in circulation or in existence in the U.S.

(Source: Jeff Desjardins Visual Capitalist 4-9-2017)

Retirement assets need to increase in value beyond inflation levels.  Those retirement assets need to last 18.8 years for a 65-year old male and 21.2 years for a 65-year old female.  (Source:superlike.com)

Of course, these are average life spans…. What does this mean for the person or couple who live into their 90’s?

Planning for longevity and the increased cost of health care is critical.  The assumptions made for inflation and portfolio return have a huge impact on planning outcomes.  If you do not yet have a retirement plan in place, please make it a priority.  The peace of mind and sense of security a plan provides is priceless.

Barbara A. Culver
CFP®, ChFC®, CLU, AEP®
Resonate, Inc.
(513) 605-2500

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15Dec
Inflation Ahead: Beware! – Part 1 of 2
Economy

One of the observations I have from creating projections for funding future goals such as college or retirement is that it is often very hard for clients to understand the impact of inflation. So, I decided to write a two-part blog about inflation. Part One covers the causes of/and multiple definitions for inflation. Part Two discusses the risk and impact of inflation, because we are living longer.

What causes inflation?

There are several possible answers.  The recent damage caused by Hurricanes Harvey and Irma and California wild fires results in higher prices because there is a temporary shortage of goods.  Therefore, prices are bid up as people compete to obtain what they need.  Fortunately, these situations are temporary.  Inflation is also caused when businesses purposefully restrict supply thereby artificially raising prices.  This happened in the 1970’s when OPEC agreed to limit oil production in an effort to increase oil prices.

The primary cause of inflation is an increase in the money supply.  You have probably heard the phrase, “Too much money chasing too few goods and services increases prices.”

What is the difference between inflation and the Consumer Price Index (CPI)?

The CPI is an index… or “a number used to measure change”.  It measures the change in prices paid by consumers for goods and services.  It reflects the spending patterns of urban wage earners, consumers and clerical workers.  Interestingly, the CPI does not include the spending habits of people living in rural (non-metropolitan) areas, people in the Armed Forces, and anyone incarcerated or a patient in a mental institution. (Source:InflationData.com)

Price Inflation (what we simply call inflation) is the “percentage increase in the price of the basket of goods and services over a specific period of time”.

The key to this definition is knowing what is in the “basket” that is being measured.

Interestingly, it is “all items less food and energy”.  This means the basket includes goods and services such as transportation, medical care, vehicles, clothing, and housing.

Barbara A. Culver
CFP®, ChFC®, CLU, AEP®
Resonate, Inc.
(513) 605-2500

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06Dec
Why Is There So Much Excitement About International Stocks?
Economy

BlackRock’s Chief Equity Strategist Kate Moore notes the following:

While BlackRock prefers stocks over bonds, they are neutral on U.S. stocks and overweighting internationals – specifically Europe, Japan, and emerging markets.

The preference in the U.S. is for technology and financial stocks – especially those companies that are committed to growing their dividend.

In Europe, BlackRock expects the euro to continue to strengthen slightly before stabilizing.

BlackRock is also overweight in emerging markets – namely China, India, and Mexico.

We would be happy to discuss any of these topics in more detail with any of you who are interested in learning more.

Barbara A. Culver
CFP®, ChFC®, CLU, AEP®
Resonate, Inc.
(513) 605-2500

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28Nov
How Is Automation Impacting Job Creation?
Economy

The November 16, 2017 issue of the Wall Street Journal contains an article which addresses this topic.  I found it to be of interest and hope you do, too.

Well-known entrepreneur Elon Musk predicts that the advance of artificial intelligence and automation will dramatically reduce the number of available jobs.

The Wall Street Journal shares a new report from IT-services and consulting firm Cognizant Technology Solutions which offers a much more positive prediction.

The study sites that there will be at least 21 new job categories created within the next 10 years.  Titles such as “genetic diversity officer,” “virtual store sherpa” and “personal memory curator” represent three of these new job categories.

Other opportunities called “walker-talkers,” represent workers to answer calls to assist and provide companionship for a growing elderly population.  Another new position is called “data detectives”.  This represents work to dig into their employer’s data stockpiles and generate new business recommendations.

In summary, the report projects that 19 million positions in the United States will be automated out of existence in the next 15 years.  However, the same report also predicts that about 21 million new roles will be created.

(Source: “A Future without Jobs?  Think Again” by Kelsey Gee.)

Welcome to the growing world of artificial intelligence and automation!

Barbara A. Culver
CFP®, ChFC®, CLU, AEP®
Resonate, Inc.
(513) 605-2500

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20Nov
What Do Auto Loans Have to Do with Me?
Economy
According to Manning and Napier’s September 28 Market Commentary the answer is “a lot”.

First the facts:

U.S. auto debt swelled to a record high $1.2 trillion at the end of the second quarter.  This is the 25th consecutive quarter of auto loan growth, with the total outstanding balance now up 70% from a post-crisis low of $700 million in 2010. The surge in auto loans is a growing burden that we are monitoring both in terms of the challenges it may pose to the consumer, as well as to our outlook for the U.S. economy more broadly.

Since the beginning of the decade, the growth in auto loans has been strong enough to outpace the growth in overall household debt.

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13Nov
Thoughts on Preparing for a Stock Market Correction
Economy

No, I am not suggesting I have a crystal ball which allows me to predict the next stock market correction.  However, we all know that a correction will come.

(As a reminder, a correction is defined as a decline of 10% of current market value.)

What we know is that, as the stock market begins to drop in value, it can be very tempting to “go to cash”.  A recent study by Betterment who analyzed 58,000 IRA account holders from 2008 to 2012 found that those who went into cash had an average return of about 1 percent per year less than investors who stayed the course.

Here are our recommendations to prepare for a coming correction:

  1. Determine how much of a contingency fund you want to have on hand.  In this way, when “you have a need to cover unexpected expenses”, you already have the cash in place.  This helps prevent you from having to sell an asset while it is down in value.
  2. In addition to a contingency fund, for those of you who receive monthly income from your investment portfolio, it’s important to decide how many months or years of your income you want to have readily available.  For example, you might decide to keep one year’s worth of income needs in cash at all times.
  3. Be sure your “revolving replacement fund” is also adequately funded.  This is a fund that is used for predictable expenses such as the need to replace appliances and automobiles from time to.  Again, it is important to determine how much money you want to have in this revolving replacement fund.Having adequate cash set aside or each of these possibilities helps allow you to stay invested during the correction.
  4. Now let’s talk about the money that is invested in the U.S. and/or international stock markets.  First, we want to be sure that you are taking the amount of risk that is appropriate based on your age, health, time horizon and risk tolerance.  It is very important that you understand the potential “drawdown” on your portfolio.  The potential drawdown shows you how much your account could lose on paper during a correction.  Again, you need to be sure that you are comfortable with the amount of drawdown exposure in your portfolio.  This helps allow you to stay invested if/when the portfolio declines in value on paper.

As always, we would welcome the opportunity to answer any questions or discuss any concerns about your portfolio before the next correction.

Barbara A. Culver
CFP®, ChFC®, CLU, AEP®
Resonate, Inc.
(513) 605-2500

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