Expect the Unexpected

At some point, everyone’s made a decision with the best intentions, only to have things go differently than they planned. Because nobody can predict how the markets will behave, investments can sometimes fall into this category.

We believe individuals should create a financial strategy that’s designed to help them work toward their financial objectives, but at the same time speak to their values, and reflect their risk tolerance and   timeline for retirement.

With that being said, we live in a world economy where an economic or political blip on the other side of the globe can impact our financial situation.¹ This can make it difficult for money managers, business leaders and politicians to agree on decisions that will lead to the most positive impact for the greatest number of people.

Inevitably, it seems, someone is left out or disadvantaged. In some other instances, the whole effort is undermined, and the only takeaway are the lessons learned from the shortcomings. For example, the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act comprised more than 2,300 pages of comprehensive reform proposals to help safeguard America’s financial system.²

However, now six years down the road, much of the law is still not implemented. As of July 2015, only 63 percent of rules had been finalized, while about 20 percent had missed deadlines, the majority of which concern derivatives and mortgage reforms.³

One lesson here is that sometimes trying to do too much results in too little. We might do well to create overarching goals but carve out shorter-term and more easily achievable solutions.

¹ Christopher S. Rugaber. The Globe and Mail. Aug. 14, 2016. “U.S. economy grew at tepid 1.1% pace in spring.” http://www.theglobeandmail.com/report-on-business/international-business/us-business/us-growth-revised-down-for-second-quarter-consumer-spending-raised/article31570816/ . Accessed Aug. 25, 2016.

² David Arthur Skeel. Wharton Public Policy. December 2015. “Five Years after Dodd-Frank: Unintended Consequences and Room for Improvement.” https://publicpolicy.wharton.upenn.edu/issue-brief/v3n10.php#section2. Accessed Aug. 25, 2016.

³ Ibid.

Content prepared by Kara Stefan Communications. 

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

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

Investment Advisory Services offered through Global Financial Private Capital, LLC, an SEC Registered Investment Advisor.

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Are You Suffering From Financial Stress?

Despite the strengthening economy and positive outlook, some people are still experiencing high levels of financial stress. Many are worried about meeting monthly expenses, with 30 percent reporting in a recent survey of over 1,000 people that concern over their financial situation keeps them up at night.¹

A 2014 report by the American Psychological Association showed money has been the most common source of stress for Americans since 2007, followed by work, the economy, family responsibilities and health concerns.²

Financial stress is pervasive in that it can impact so many areas of your life, from sleep habits to interactions with friends and family to reduced productivity at work. Research has found a correlation between economic insecurity and increased complaints of physical pain, leading to additional health care spending and further financial woes.³

It’s one thing to be stressed out because you can’t find a job, but there are plenty of working Americans who are stressed out because of their occupation. According to CareerCast, some of the more stressful positions include public relations agent, event coordinator, broadcaster, newspaper reporter and taxi driver.⁴

Millennials, who represent about 25 percent of the U.S. population, report feeling the most financially related stress.⁵ Small wonder, considering so many are either unemployed after college or work part-time, low-paying jobs that sometimes don’t require higher education.

Fortunately, now that jobs are on the rise, employers are having to compete for quality workers. For recent college graduates, one of the most appealing benefits is a program that helps them pay down student loans.⁶

Regardless of generation, sometimes just working with a financial professional to develop a financial strategy can help ease your financial stress as you work toward financial independence.

Content prepared by Kara Stefan Communications.

¹ Dave Shaw. MarketPlace. March 14, 2016. “The economy’s improving, but Americans’ economic anxiety persists.” http://www.marketplace.org/2016/03/11/economy/anxiety-index/economys-improving-americans-economic-anxiety-persists. Accessed Aug. 19, 2016.

² Suzanne Woolley. Bloomberg. Feb. 4, 2015. “This Is the Most Stressed-Out Person in America.” http://www.bloomberg.com/news/articles/2015-02-04/this-is-the-most-stressed-out-person-in-america. Accessed Aug. 26, 2016.

³ Association for Psychological Science. Feb. 22, 2016. “Experiencing Financial Stress May Lead to Physical Pain.” http://www.psychologicalscience.org/index.php/news/releases/experiencing-financial-stress-may-lead-to-physical-pain.html. Accessed Aug. 22, 2016.

⁴ CareerCast.com. 2016. “The Most Stressful Jobs of 2016.” http://www.careercast.com/jobs-rated/most-stressful-jobs-2016. Accessed Aug. 19, 2016.

⁵ Kent E. Allison. The Huffington Post. April 27, 2016. “Financial Stress Surging Among Millennials.” http://www.huffingtonpost.com/kent-e-allison/financial-stress-surging-among-millennials_b_9787658.html. Accessed Aug. 19, 2016.

⁶ Jenny Che. The Huffington Post. Sept. 22, 2015. “This Firm Will Help Employees Pay Off Their Student Loans.” http://www.huffingtonpost.com/entry/pwc-student-loans_us_56019508e4b08820d91a58a6. Accessed Aug. 22, 2016.

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

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

Investment Advisory Services offered through Global Financial Private Capital, LLC, an SEC Registered Investment Advisor.

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The Importance of Investment Mix

As individuals progress from young adults to the age of retirement, their investment mix traditionally changes to meet their needs. This is typically a reflection of a person’s goals, tolerance for risk and investment timeline. Generally, as the time nears to tap into investments for retirement income, the mix of assets becomes more conservative.

However, some may see the situation a little differently these days, as the recession taught various generations different lessons. Older generations that lost money -- or at least lost ground in their savings contributions -- may now be more likely to hold a larger share of equities than in the past in an effort to accumulate enough savings before retirement.

However, many members of the younger generations, who struggled to find jobs while watching their parents lose them, may have come away with a different perspective: save and spend conservatively. Recent research into the financial behaviors of young millionaires found this to be true even though they had amassed a fortune at such a young age. The study found that some millionaires under 40 are even more conservative than baby boomers in that they favor holding more cash, are less likely to invest in stocks and more prone to putting money in alternative investments (e.g., gold, hedge funds).¹

We are all influenced by a variety of factors, including how our parents saved and spent money, the economic and stock market upturns and declines we’ve lived through and our own career paths and financial success. That’s why we believe you can’t always choose investments based solely on your age or your goals. We can help you develop a financial strategy that takes into account all your personal experiences. What investments you select and how they work together can be just as important as your timeline and capacity for risk. Please remember that all investing involves risk, including the potential loss of principal.

Speaking of risk, while cash often seems like a safe bet, it’s important to remember the potential impacts of inflation may cause cash to lose value in the long run. A sustained period of low interest rates on fixed income financial products can create the same issue, which is why many pre-retirees and even retirees are holding more stocks in their portfolios today than in previous generations.² For some, losing money may be an even bigger concern than running out of it.

In 2016, we’ve seen a good bit of market volatility. In this type of environment, we believe that a diversified portfolio tends to work well. During the first half of the year, diversified, global portfolios delivered both higher returns and less volatility than all-equity portfolios.³

Diversified portfolios can deliver more stable returns over time, as well as the ability to match your risk tolerance with an investment mix. Instead of actively managing a portfolio and pondering whether to buy or sell based on market performance, you may want to consult your financial professional about a well-diversified mix. Such diversification may help to mitigate risk and takes advantage of periods of outperformance without the stress, fees and taxes that may be associated with trying to time the market. In the end, attempts at market timing tend to generate smaller returns than what the overall market does over a long period of time.⁴

Your account mix may be important, too. A new study that compared saving strategies for retirement accounts over the next 30 years found that most individuals, both young and old, would be best served by a mix of assets in both traditional (401(k)/IRA) and Roth accounts.⁵

¹ Jonnelle Marte. The Washington Post. July 5, 2016. “How millionaires under 40 manage their money.” https://www.washingtonpost.com/news/get-there/wp/2016/07/05/how-millionaires-under-40-manage-their-money/. Accessed Aug. 12, 2016.

² Christine Benz. Morningstar. Jan. 21, 2016. “6 Retirement Asset-Allocation Pitfalls to Avoid.” http://news.morningstar.com/articlenet/article.aspx?id=737073. Accessed Aug. 12, 2016.

³ Jeffrey L. Knight. Columbia Threadneedle. July 18, 2016. “Diversification strikes back in 2016.” https://blog.columbiathreadneedleus.com/diversification-strikes-back-in-2016?cid=GPemail. Accessed Aug. 12, 2016.

⁴ Fidelity. Aug. 3, 2016. “The pros’ guide to diversification.” https://www.fidelity.com/viewpoints/guide-to-diversification. Accessed Aug. 12, 2016.

⁵ ThinkAdvisor. July 11, 2016. “Mix Roth, Traditional 401(k)s for Better Outcomes.” http://www.thinkadvisor.com/2016/07/11/mix-roth-traditional-401ks-for-better-outcomes?t=the-retiree%3Fref%3Dchannel-other-topics&slreturn=1471042680&page_all=1. Accessed Aug. 12, 2016.

Content prepared by Kara Stefan Communications.

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

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

Investment Advisory Services offered through Global Financial Private Capital, LLC, an SEC Registered Investment Advisor.

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Stock Market Performance During Election Years

There’s only so much a U.S. president can do to improve the performance of the stock market, but that doesn’t keep people from connecting the highs and lows with the person sitting in the Oval Office.

Regardless of party, the markets have traditionally improved during election years. Eighteen of the 22 election years since 1928 have yielded positive returns.¹ The average return of the S&P 500 is 12.6 percent when the incumbent is up for re-election. However, in years like 2016, when the president is on the way out, the S&P 500 actually drops an average of 2.8 percent.²

Another variable to consider is who is in control of Congress during a presidential election year. One market analyst crunched the data to reveal that when Republicans controlled Congress, the S&P 500 averaged 19.7 percent. In years with a split or Democrat-controlled legislature, the S&P 500 averaged 7.6 percent and 3.2 percent, respectively.³

Election years pose unique challenges. One political party is always quick to point out the negative effects the other may have on the nation’s financial situation. The winner of the election may not determine how stocks perform, but some market observers have theorized the market can actually predict the outcome of a presidential election.

If the stock market posts gains in the three months before Election Day, the candidate from the political party already in the White House has a very high probability of winning. In contrast, the party trying to retake the Oval Office has a better shot if stocks tumble.⁴

Clearly, politics do play a role in influencing the stock market. However, it is important to not make financial decisions based on election predictions and historical returns of election years, as they are not an indicator of future results. It’s also important to work with a financial professional to develop a financial strategy designed to help you work toward your particular goals. Please give us a call if we can help you with that.

Content prepared by Kara Stefan Communications.

¹ Columbia Threadneedle. Spring 2016. “Politics, Stocks and Your Portfolio.” https://www.investor.columbiathreadneedleus.com/content/columbia/pdf/SPRING-2016_NEWSLETTER.PDF. Accessed Aug. 5, 2016.

² Merrill Lynch. March 10, 2016. “How Presidential Elections Affect the Markets.” https://www.ml.com/articles/how-presidential-elections-affect-the-markets.html. Accessed Aug. 5, 2016.

³ William Watts. Marketwatch. Dec. 29, 2015. “2016 predictions: What presidential election years mean for stocks.” http://www.marketwatch.com/story/2016-predictions-what-presidential-election-years-mean-for-stocks-2015-12-29. Accessed Aug. 5, 2016.

⁴ Adam Shell. USA Today. July 26, 2016. “Stocks could predict who wins White House.” http://www.usatoday.com/story/money/markets/2016/07/25/stocks-predict-who-wins-white-house/87440314/. Accessed Aug. 5, 2016.

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

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

Investment Advisory Services offered through Global Financial Private Capital, LLC, an SEC Registered Investment Advisor.

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