2017 1st Quarter Stock Market Recap

Yes, the stock market has been doing well, but just how well and what categories did the best?   As it turns out, a big theme for the first quarter was the big returns from diversifying internationally.  Matson Money’s International Fund was up 8.02% in just 3 months.

Below is commentary from Matson Money about the 1st Quarter in the market.

The 1st quarter of 2017 built upon a strong 4th quarter and continued to provide positive returns across broad markets. Many members of the media and so-called “experts” warned of a financial downturn resulting from Donald Trump being inaugurated as President, but it seems as if these predictions were unfounded, with stocks up worldwide since President Trump took the reins. U.S. stocks performed well in the first quarter, with large stocks leading the way up 6.07% as represented by the S&P 500. However, despite the warnings of some pundits that President Trump’s protectionist policies would sink international stocks, both developed and emerging market stocks saw an even greater lift than those domestically, with the MSCI EAFE Index index up 7.39% and the MSCI Emerging Markets Index up 11.49%.

 d
This overperformance by international equities as compared to domestic equities marked a contrast to what we have seen over the last few years, and can be a great lesson for investors. Leading up to 2017, the five-year period ending in 2016 saw the S&P 500 gain 98% while the EAFE was up only 40%. Naturally, many investors fell into the trap of thinking that this was the “new normal” and that it was prudent to invest in all U.S. stocks and ignore those abroad. The only thing that is “normal” about this performance disparity is that when one invests in different asset classes with the goal of diversification, they get just that – asset classes with dissimilar price movements, which is the earmark of diversification. This time period is one of many that can highlight why this kind of diversification is a good thing and is so important for investors. Without a crystal ball to tell an investor which of the asset classes will perform better over any short-term period, it can be extremely detrimental to be over-weighted in any one and take asset class specific downside risk or miss out on a boom in another. Consider the following example of varying five-year periods of U.S. equity (S&P) performance as compared with international (EAFE):
1971-1975 – EAFE outperformed the S&P by 48%
1979-1983 – S&P outperformed the EAFE by 60%
1984-1988 – EAFE outperformed the S&P by 257%
1989-1993 – S&P outperformed the EAFE by 85%
1995-1999 – S&P outperformed the EAFE by 166%
2002-2006 – EAFE outperformed the S&P by 70%
2012-2016 – S&P outperformed the EAFE by 58%

 d
When looking at this most recent period through the lens of history, it no longer appears to be an extraordinary shift in market paradigms; rather it can be viewed as just another of the many examples of U.S. and international stocks performing differently. What IS truly  extraordinary is that during this entire period (1971-2016), both asset classes had an average annualized return of 10% per year – these returns just occurred unpredictably at different times. It can be challenging to not get caught up in a current trend, but taking a more prudent, historical outlook can prove to be rewarding. For investors who chose to forsake diversification and chase what had recently been hot, they may have missed out on potentially sizable returns.

 d
In the end, choosing a wise financial strategy – and sticking to it – can have tremendous impact on an investor’s long term financial health. Chasing performance through buying and selling is a risky game. Historically speaking, it will only reduce an investor’s real return. Relying on unbiased, non-emotional advice from a trusted investor coach to make good decisions can help an investor bridge that gap between what the average investor makes and the return of the market.

By Jimmy Hancock

References

  1. Matson Money. “Account Statement.” Letter to James Hancock. 20 Apr. 2017. MS. N.p.
  2. Globe with International Flags. Digital image. Freeimageslive.co.uk. N.p., n.d. Web. 25 Apr. 2017.

 



How I Beat Vanguard Index Funds

You have probably heard of an Index fund, but you might not have heard of an Institutional fund.  Index funds seem to be getting more and more popular as a means for investing with minimal fees, but institutional funds have been outperforming index funds, and I will show you how.

Index Funds

These type of mutual funds are not actively traded, and the only purpose of the fund is to keep the stocks in their fund that are listed in specific index.  For example, the S&P 500 is an index made up of the 500 largest publicly traded companies in America.  Thus a S&P 500 Index fund would hold those 500 stocks, and that is all.  When the list of 500 companies changes, they sell the companies that exited the list, and buy the companies that jumped into the list.

Institutional Funds

Institutional funds are similar to index funds, but go 1 step further.  These type of mutual funds dont worry about what is listed in indexes, but have specific criteria for evaluating each stock.  They put each of the publicly traded stocks throughout the entire world into different categories based on size, country, and other factors.  They then take those categories and weight them based on nobel prize winning studies like the 3 factor model and modern portfolio theory.   They then can be specifically weighted in a investors portfolio based on each investors risk preference, which is decided by the investor and the advisor together.

The Proof is in the Pudding

Lets compare index funds to the institutional funds offered through us, aka Matson Money.  We will look at real average annual returns over the last 16 years from 2000 through 2015 for a few different sectors of the market.   Note, all of the numbers shown are after subtracting of all mutual fund management fees.

Large Cap Value Funds:  

Vanguard Index Fund- 5.14%

Institutional Fund Used by Matson Money- 7.65%

International Large Value Funds:

Vanguard Index Fund – 3.08%

Institutional Fund Used by Matson Money- 5.03%

International Small Cap Funds:

Vanguard Index Fund – 6.61%

Institutional Fund Used by Matson Money- 8.38%

Micro Cap Funds:

Vanguard Index Fund – Not Offered

Institutional Fund Used by Matson Money 9.02%

International Small Cap Value Funds:

Vanguard Index Fund- Not Offered

Institutional Fund Used by Matson Money- 9.91%          1. 

Seeing the data above, I would like to point out another other obvious advantage of institutional funds.  Institutional funds allow for everyday investors to get into sectors that you cannot get into with Index funds, like micro cap (very small companies), International Small Value, and Emerging markets Small and Value (Countries that are less established).  Returns in those categories have been huge going back 16 years as well, as you can see above.

Click here to Download our free Investor Awareness Guide

To get slightly more technical, I have included a few more important weaknesses of index funds as written by Dan Solin in a recent article.

1. Flexibility When to Buy and Sell Stocks

An index fund buys and sells stocks when they enter and leave the index. An institutional fund has the ability to reduce turnover and increase tax efficiency by establishing a range that permits it to hold a stock even if it drops out of the index.   2. 

2. Flexibility in Stock Selection

An institutional fund can establish a screen to exclude categories of stocks with historically poor returns, like initial public offering stocks. An index fund manager does not have this flexibility.  2. 

3. Use of Block Trading Techniques

There are sophisticated trading techniques a small cap, institutional fund manager can use that are not options for index fund managers. Because the market for these stocks is relatively small, and dumping a large block can affect the stock price, an institutional fund may be able to buy these stocks at a favorable price from a seller who has an urgent need to liquidate holdings. 2. 

If you want to beat Vanguard Index Funds, call us at 208-522-4961, email jimmy@proinvestmentcoach.com, or find out when we are doing our free investing class in your area by clicking on this link Upcoming Events

By Jimmy Hancock

Jimmy Hancock is an Investment Advisor Representative for Preferred Retirement Options, an RIA in Idaho.



References

1. Matson Money.  Investor Jeopardy Powerpoint. Mason, OH: Matson Money, 28 Mar. 2017. PPT.

2. Solin, Dan. “Solving the Mystery of Passive Asset Class Investing.” The Huffington Post. TheHuffingtonPost.com, 21 Jan. 2014. Web. 23 Jan. 2014. <http://www.huffingtonpost.com/dan-solin/solving-the-mystery-of-passive-asset_b_4627737.html>.

3. Vanguard Investments Logo. Digital image. En.wikipedia.org. N.p., n.d. Web. 28 Mar. 2017.

How to Beat Taxes by Investing

It is tax time once again and no matter how much you hate taxes you should know about the tax advantages of IRA’s.  Contributions to IRA’s can help you in many different ways at tax time.  They can lower your taxable income dollar for dollar to reduce your tax burden, or even increase your refund.  I will compare Traditional IRA’s with Roth IRA’s to show you the benefits of each.  Everyone that is able should be putting money away into an IRA.  The contribution limit per year is $5500, or $6500 if you are over age 50.

Traditional IRA Summary- A Traditional IRA allows you to take the tax advantage in the year that you make contributions to the account.  This type of IRA is used by people who are looking for tax deductions.

Pro’s

  • – You get to write off your contributions you make each tax year from your Income.
  • – If you are not covered by a retirement plan at work, the income limit does not exist.  Meaning you can write off contributions no matter how much you make.
  • You don’t have to itemize deductions in order to get the deduction, it affects your AGI, (Adjusted Gross Income) not your net income.

Con’s

  • – When you take the money out in retirement, you pay the full taxes on not only the money you put in, but the growth as well. (Assuming there is growth)
  • – You are required to take the money out and pay taxes beginning at age 70 1/2, this is called a Required Minimum Distribution.
  • – If you have a retirement plan at your work, you cannot write off contributions if your Adjusted Gross Income is more than $118,000 for Married Filing Jointly. ($71,000 for Single Filers)

Roth IRA Summary- A Roth IRA allows you no advantage in the year of the contribution, but the money you take out in retirement or after death is completely tax free.   It is used by people with lower current tax rates and by those wanting tax free money in retirement or as an inheritance for their children/spouse.

Pro’s

  • – You get all of your money that you contributed plus all the growth of the account completely tax free after the age of 59 1/2.
  • – If you die, the money goes tax free to your beneficiaries.
  • – You have the option  of withdrawing money, up to the total of all your contributions made, tax and penalty free at any age or for any reason.  

Con’s

  • – Your contributions do not lower your Adjusted Gross Income in the year contributed.
  • – If you make more than $194,000 as married filing jointly($132,000 for single) you cannot contribute to a Roth IRA.

Things to Consider

  • – You can open as many Roth IRA’s and Traditional IRA’s as you want, but that may not be in your best interest.
  • – If your income is below $37,000 (Married Filing Jointly) then you probably qualify for the Retirement Savings Credit, which gives you up to 50% of your total contributions in the form of a tax credit on top of any other tax benefit you would already receive.  See last weeks blog for more info on this.  
  • – If you are married, you can contribute with the tax advantage up to $11,000 total, $5500 in both spouses accounts. 
  • – If you believe your current tax bracket is significantly higher than it will be when you take the money out, then you should probably consider a traditional IRA.

The most important part of the decision should be your goals and priorities.  A Roth IRA will give you more long term assurance of tax free wealth, while a traditional IRA will help you to dodge big tax bills in the short term.   If you need to open up an IRA or Roth IRA this tax season, get in contact with us and we can help you out with no upfront cost.  

By Jimmy Hancock

Reference

IRS. “Retirement Topics – IRA Contribution Limits.” Retirement Topics – IRA Contribution Limits. IRS, 18 Feb. 2014. Web. 03 Aug. 2014. <http://www.irs.gov/Retirement-Plans/Plan-Participant%2C-Employee/Retirement-Topics-IRA-Contribution-Limits>.

Boxing Gloves. Digital image. Misswoodenglish.wikispaces.com. N.p., n.d. Web. 14 Mar. 2017.



If You Make Less Than $61,500 Read This Before You File

It’s becoming increasingly difficult for low to middle-income families to save; however, the IRS allows a Saver’s Credit that could mean a $2,000 tax credit per family. Of course, it depends on the tax filer’s status as well as their adjusted gross income, or AGI.  The tax benefit is to increase the incentive for lower income families to put money away for retirement.  Every family that qualifies should be taking advantage of this bonus tax credit.

To be eligible for the Saver’s Credit…

  1. You must be 18 years or older
  2. You must not have been a full time student (you can be a part-time student)
  3. You must not be claimed as a dependent on another person’s tax return.
  4. Your Adjusted Gross Income must be below $61,500 (married filing jointly), or $30,750 (individual).

How it works…

In 2016, if your tax status is married filing jointly and your AGI is not more than $37,000, and you meet the other requirements, then you qualify for an additional 50% tax credit.  This number increases annually for inflation.   If you are above that income level it goes to a 20% tax credit until you are phased out above the $61,500 threshold.

Let’s say that you earned $37,000 for all of 2016, and your spouse was unemployed for the entire year. If you made a $2,000 contribution to your Qualified Plan (ie IRA, Roth IRA, 401K, 403B) for 2016, then you can receive that 50% tax credit which in this case is $1000 against any taxes owing or to add to your refund.  On top of that you can contribute $2000 to your spouses Qualified Plan and get an addition $1000.   That is $2000 cash money in your pocket for contributing $4000 into a retirement account.  $2000 is the maximum tax credit any family can receive.

This tax credit is in addition to the tax benefit you get within the IRA such as being able to deduct from your income all contributions to a Traditional IRA.

Don’t miss out on this too little known tax credit that can save you big money on your taxes this year.

Also, if you don’t have any investment account currently, and you know you qualify for this credit, why would you forego getting 50 cents cash back for every dollar invested.  And at the same time you are putting money into a growing retirement account. A win win for sure.  You can open up an IRA and contribute to it for tax year 2016 up until April 15th of this year.

By Jimmy Hancock

References

  1. IRS. “Retirement Savings Contributions Credit (Saver’s Credit).” Retirement Savings Contributions Credit (Saver’s Credit). IRS, 23 Oct. 2015. Web. 21 Feb. 2017. <https://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/Retirement-Savings-Contributions-Savers-Credit>.
  2. Tax Credit for Disabled Veterans. Digital image. Progressive-charlestown.com. N.p., n.d. Web. 21 Feb. 2017.

How to Become a Millionaire on a $30k Salary

Becoming a Millionaire used to seem like this totally unrealistic goal that would never happen unless I won the lottery or inherited a bunch of money from some distant relative.   As it turns out becoming a millionaire is not all that unrealistic of a goal.  It is achievable on almost any salary if you do it the right way.  There are over 8 million Millionaire households in America.  That’s more than 1 in every 20 households.  1. 

Is it Possible?

This is my 3 step guide to reach the status of millionaire: 1. Saving/investing at least 10% of your income, 2. investing prudently while taking proper risks, and 3. starting young.

1. Saving 10% of Your Income

I will show you an example of how a person making $30,000 a year can be a millionaire by the time they retire.   A 25 year old, let’s say his name is Bayden, just graduated from college and got a job making $30k year.  He decides to put 10% of that into a Roth IRA, which is $250 a month.   As it turns out he stayed at that same job for his entire life and never got a raise, but continued to invest the 10%.   When he retires at age 67, with growth rate of 8%, he will have $1,058,593 in his Roth IRA.  And the best part of that is the money is all tax free!  Obviously with a higher salary and/or frequent raises you could end up with much more than a million if you follow the 10% rule.

2. Investing Prudently While Taking Proper Risk

Time, and growth rate are the two most important factors in that equation.  An 8% growth rate is not anything too crazy, but you have to be invested long term, and have a vast majority of your money in stocks.  You cannot panic and take your money out if there is a crash.  You must trust in the market, and understand that stocks are the greatest wealth creation tool in the world. 

3. Start Young

millionaire

Total contributions     $12,000                $36,000

* assumes an 8% growth rate    2. 

This visual further proves how important time and compounding is to your retirement account.  Starting young is a principle that everyone knows, they just don’t follow it.  The power of compounding interest is amazing, and the younger you start the more powerful it is.  Even if you can’t reach the 10% goal, if you have an income source, you should be contributing to a retirement account.  For those of you who don’t have 40 years till retirement, you will need to save more than 10% to reach a million. 

Do you  really need $1 Million Dollars?

Going back to the example of Bayden, when he retires at age 67, he will literally need every cent (and more) that he saved and earned while investing.   Just to live on the equivalent of today’s $30,000 a year ($103k assuming 3% inflation) for 20 years in retirement, he would need $1.1 million.   And that is assuming a 6% growth rate on the money for those 20 years.   If you don’t have a pension at work, and you want to live on more than $30k a year in retirement, then you better get to saving!

If you can apply discipline in your finances and in your investments, you can become a millionaire by the time you retire.    That is my plan.

By Jimmy Hancock

References

1. Boston Consulting Group. “Millionaire.” Wikipedia. Wikimedia Foundation, 17 June 2015. Web. 9 Feb 2017. <https://en.wikipedia.org/wiki/Millionaire>.

Matson Money. Who Wants to be a Millionaire Powerpoint. Mason, OH: Matson Money, 16 Jul. 2015. PPT.



Are Investment Fees Tax Deductible?

Everyone is looking for tax deductions this time of year, so I am going to help you out with a possible tax deduction that often get overlooked.  When I get asked if investment fees are tax deductible, I say, “it depends”.   If your investment fee along with other miscellaneous deductions, such as tax prep fees or unreimbursed employee expenses,  total to be above 2% of your Adjusted gross income, then you qualify for the deduction.   If your investment balance is much higher than your current income, then you will likely be able to use this deduction.

The following is more info from an article from David Marotta.

“If your expenses are close, you gain from lumping most of your expenses every other year. For example, if your AGI is $100,000 and your miscellaneous expenses average $2,500 a year, in most years you will only get a $500 deduction. But if you can pay the same bills in January and December of one year, you might be able to have $5,000 in deductions one year and zero the next. That means you could have a $3,000 deduction every other year. In next year’s 28% tax bracket, this would save you $560 more in taxes.

Even if you can’t deduct investment management fees directly, you can still pay a portion of the fee with pretax dollars. Investment management fees can be deducted directly from the accounts for which they were charged.

Many fee-only advisors charge a percentage of assets under management. But they can also prorate those fees back to the accounts they are managing. For traditional IRA accounts, the fee is not considered a withdrawal and therefore is not a taxable account. The fee is considered an investment expense. Thus this fee is being paid with pretax dollars. And the cost is discounted to clients by their marginal tax rate.

I’ve seen advisors take their entire management fee from IRA accounts. I don’t think that is warranted by the letter or the spirit of the tax code. Any fee taken from an IRA account should be justified as a fee for the management of a pretax account. You can’t simply start paying your bills from an IRA as a nontaxable withdrawal.

Similarly, any management fees paid directly from an IRA account should not be listed as a miscellaneous expense on Schedule A trying to qualify for an additional tax deduction. Only expenses paid from a taxable account should be listed as a miscellaneous expense.

There is no advantage in trying to pay the entire fee from a taxable account in an attempt to boost your deductions. If you pay $2,500 in management fees, it is better to pay $1,000 from an IRA with pretax dollars than to pay for it separately to get a $500 tax deduction. Any amount paid from an IRA is equivalent to getting that same amount as a tax deduction.

Although getting money out of a traditional IRA tax fee is an advantage, taking management fees out of a Roth IRA is not. There are limits on getting money into a Roth account where it will never be taxed again. We recommend paying the portion of management fees prorated to a Roth account out of your taxable account. This allows as much money as possible to stay in your Roth.

One of the advantages of working with a fee-only financial planner is that fees can be taken from the accounts under management or paid separately, depending on which is more advantageous. If fees are stuck on commission-based products, you can’t choose to pay the fees for a Roth account separately from a taxable account in order to allow the Roth to grow unimpeded.

This is another advantage to having fees based on assets under management rather than a separate fee or an hourly charge. Management fees are easily justified taken directly from accounts including IRA accounts where you can pay with pretax dollars.

Many advisors charge a percentage of assets under management and then offer comprehensive wealth management advice without an hourly charge. This is ideal. If these charges were separated, less of the fee could be paid with pretax dollars.

No one likes to pay fees. Hidden fees in many ways are easier psychologically. We recommend that when you need unbiased financial advice, seeking a fee-only financial planner makes sense. And it helps knowing there are tax-efficient ways to pay management fees.”

 By Jimmy Hancock

Reference

Marotta, David. “Are Investment Management Fees Tax Deductible?” Forbes. Forbes Magazine, 25 June 2012. Web. 12 Nov. 2014. <http://www.forbes.com/sites/davidmarotta/2012/06/25/are-investment-management-fees-tax-deductible/2/>.

Income Tax Refund. Digital image. Cutiebootycakes.blogspot.com. N.p., n.d. Web. 30 Jan. 2017.

2016 Stock Market Recap

Many people look at 2016 from different angles, but the stock market was an obvious positive to finish the year.  In 2016 the Matson Money US Equity Fund (Diversified US Stocks) was up over 21%, and the Matson Money International Equity Fund (Diversified Intl. Stocks) was up over 8%.  The following is an insight article from the Matson Money client statements about what we can learn from what happened with the election and the stock market.

“The 4th quarter of 2016 was a memorable one in the United States for many reasons. We  experienced the most partisan and unique election season in recent memory, culminating in an election result that few expected. The news of a potential Donald Trump presidency  brought forth many pundits clamoring to give their opinion on how it may affect the stock  market and the economy as a whole.

 
Prior to the election, on Fortune.com, Katie Reilly reported that Citigroup predicted that a Trump win would have a negative effect on the stock market, believing the S&P 500 index would fall 3% to 5% if Trump was elected. Evelyn Cheng reported on CNBC the day before the election that JP Morgan, Barclays, Citi, and BMO all expected a Trump victory would have a negative impact on the stock market, with Barclays being as bold as saying the S&P 500 could potentially fall 11 to 13 percent.

 
Some went even further with their market predictions. Simon Johnson of MarketWatch wrote:
“The election of Donald Trump…would likely cause the stock market to crash and plunge the world into recession.”

 
In an interview with Neil Cavuto, noted billionaire Mark Cuban stated:
“In the event Donald wins, I have no doubt in my mind the market tanks,” Cuban said. “If the polls look like there’s a decent chance that Donald could win, I’ll put a huge hedge on that’s over 100% of my equity positions… that protects me just in case he wins.”

In addition to many analysts predicting a drop, the stock market itself seemed to be indicating the same thing. When FBI director James Comey  announced on October 28th, that he had reopened an investigation into Hillary Clinton’s email server, the betting markets reacted favorably to Trump winning, but the stock market reacted negatively, with the S&P 500 sharply reversing gains and dropping almost 1% intraday. Even more starkly, on election night itself, as results started pouring in showing key states falling to Trump, DOW futures fell as much as 750 points.

Given this information, many investors may have had the inclination to feel uneasy about the performance of the equity markets following the election. Those that reacted to this emotion may have sold stocks and moved their money to cash or bonds. Unfortunately for those that made this decision, the prevailing market predictions of downward volatility proved to be unfounded; in fact just the opposite occurred. From November 1st through the end of the year, equity markets had a substantial growth period, with the S&P rising 5.75%. However, while this is most certainly a fine return over 2 months, investors who diversified their portfolio beyond just U.S. large stocks may have seen even greater returns. Small cap stocks as represented by the Russell 2000 rose 14.27%. But not to be outdone, the Russell 2000 Value, an index of small value stocks, increased 17.95%.

Hopefully investors will remember this period of time not just because of the election result, but as a great lesson that trying to predict the short term move of the stock market – even when it may seem so evidently clear that it will move a certain way – can be folly and cost you  dearly.

 
In the end, choosing a wise financial strategy – and sticking to it – can have tremendous impact on an investor’s long term financial health. Chasing performance through buying and selling is a risky game. Historically speaking, it will only reduce an investor’s real return. Relying on unbiased, non-emotional advice from a trusted investor coach to make good decisions can help an investor bridge that gap between what the average investor makes and the return of the market.”

By Jimmy Hancock

References

  1. Matson Money. “Account Statement.” Letter to James Hancock. 16 Jan. 2017. MS. N.p.
  2. The Financial Markets Have Accepted a Trump Presidency. Digital image. Au.anygator.com. N.p., n.d. Web. 16 Jan. 2017.

“Billionaires Bet Big on Market Crash”

I go online to check Yahoo Finance everyday to see how the stock market and other markets are doing.  I try to stick to the numbers and real information, and avoid the headlines and articles most of the time.  But, a few weeks ago this was the headline that couldn’t be missed.

Billionaires Bet Big on Market Crash (The Reason Why Is Shocking)

I was in the mood to be “shocked” so I clicked on the link and it took me to the article.   This is where it gets comical.

This is the first paragraph…

“Investment titans are making massive billion-dollar bets that the stock market is approaching an imminent crash…Multibillionaire Carl Icahn, for example, recently increased his short positions by 600% … betting as much as $4,321,000,000 that the stock market will plummet sharply and suddenly!  Mysteriously, just about every major financial whale is taking specific steps against the market … all at the same time.” 2.

The amount of money Carl Icahn is betting just so happens to be numbers counting down to 0, which i thought was a funny (on purpose) coincidence.  But obviously what is happening is they are trying to get me to think that stock market genius’s all see this great crash ahead, so it must be happening.

It Gets Better…

“The glaring question is … what’s coming that has them so sure? The best answer we found is linked back to a little-known, controversial calendar.  Devised by a group of Wall Street analysts in 1905 and kept closely by insiders, this little-known calendar has accurately predicted every boom and bust for the last 111 years, and what it says for the rest of 2016 is alarming.  “It simply labels each year with a corresponding letter. For example, 2008 was a ‘K’ year, meaning ‘low stock prices.’ Hence, I was forewarned of the crash.”  In the video, one can see that 2016 ends as a “D” year … once again meaning “low stock prices.”2.

Wow, this kind of reminds me of the Mayan calendar that predicted the end of the world in 2012.  I am pretty sure the stock market is more complex than a single letter label can define for any given year.  How in the world, would some guys in 1905 know anything about the stock market in 2016.  So the weird thing is, I am pretty sure this article was written at the beginning of 2016, but by the time I saw it 2016 was almost over.  Now it is 2017 and we know for sure that nothing alarming happened in the stock market in 2016.  In fact, just the opposite, lot’s of positive returns.    It was at this point of the article that i started thinking, why would anyone write this article and put so much fear into investors.  Then I read this.

With this kind of information at hand, it’s easy to see why those in the know are making big bets that a stock market crash is imminent. But what’s even more exciting for investors is what 2017 and 2018 hold. Yastine believes that if one has the help of his updated and advanced version of the calendar, they could add an extra $1.2 million to their retirement.  Click here to see the calendar in JL’s new video exposé. 2. 

Wow, that is a great sales pitch.   They are in the business of making money off of peoples fear and greed.  The more fear they can put into the investors, the more money and fame they will get.

I advise you to stay away from the fortune tellers of Wall Street.  Nobody has a crystal ball.  Don’t fall for the headlines that are only there to sell you on emotion of fear.  Fear is a powerful emotion that can take over an investors mind.  Don’t let it.

By Jimmy Hancock

References

1. Mayan Calendar. Digital image. Creatingdigitalhistory.wikidot.com. N.p., n.d. Web. 4 Jan. 2017.

2. Smith, Jocelynn. “Billionaires Bet Big on Market Crash (The Reason Why Is Shocking).” The Sovereign Investor. The Sovereign Society, 8 Dec. 2016. Web. 8 Dec. 2016.

Books Make the Best Christmas Presents

main street moneyChristmas time is here again! This is the time I get frantic about finishing up buying gifts for everyone on my list.   To those who are interested, books make great gifts.  We can offer you the book “Main Street Money” by Mark Matson for free this holiday season.   This book is perfect for your spouse, parent, or child looking for not just good, but great financial advice.  This book is a simple and personal text with some invaluable information on investing, retirement planning and the like.

If you have not read the book Main Street Money yet, here is a brief into explaining why Mark Matson wrote this book and how it can help you to receive investing peace of mind.  The following is a direct quote from the introduction to the book, “Main Street Money”.1.

“Chances are you’re one of the 95 percent of Americans who are destined to retire broke. It’s not really your fault. Goodness knows it’s confusing out there for the average American trying to secure their financial future. Contradictory advice and information, misleading promises, portfolio-gutting investment strategies – and that’s just from my fellow Wall Street investment professionals. Maybe that’s why the finance industry’s leading lights can be counted on to say one thing one year and the opposite the next. Market timing? It will never work. Oh wait, yes it can. Asset allocation? A big winner – until a real bear market comes around. Buy and hold? The best thing since sliced bread. That is, until the market tanks and the buy and hold model is tossed onto the scrap heap by so-called market experts.

It’s almost like financial professionals want to confuse the investing public. Where is the continuity? Where is the unvarnished truth about investing strategies? Why won’t anyone step up to the podium and admit that nobody can predict the future? After all, people scoff at astrologers and tarot card readers. But some guy in a suit and hang a “stockbroker is in” sign on his door and people can’t wait to see what he has to say during a bull market or during the latest market crash. There is no shortage of talking heads who pretend they have the forecast about the future that will magically allow you to own all of the best stocks and get into and out of the market at the perfect time.

These prognosticators prey on the psychology of Main Street investors. Often causing them to take risks they don’t understand and lose more money than they could possibly imagine. I call these posers Bullies because they take advantage of investors to line their own pockets with your hard-earned money. The money you will need for your retirement and most important life dreams. But it doesn’t have to be that way. I can teach you how to outwit, outsmart, and out invest the biggest Wall Street Bullies and icons. And help you create true peace of mind in your investing experience. And the good news is that it is not that hard. Once you are armed with the basic knowledge you need, you can adopt an investment philosophy and strategy beats the vast majority of all the blow-hards on Wall Street. You will soon see that your problems are their profits – the trick to getting their hands out of your pockets once and for all. Make no mistake, Wall Street does not want you to read this book and they don’t want you to take the actions outlined in this book.”  

If you would like a copy of this book, get in touch with us and we can get one for you at no charge to you.  We give out copies at our monthly coaching classes.  It is our job to educate investors about the wall street bullies.

References

Matson, Mark. “Changing the Status Quo.” Introduction. Mason, OH: Mcgriff Video Productions, 2013. IX-X. Print.





You Can’t Afford to DIY Investing

do-it-yourselfWith the proliferation of the Internet and continued expansion of online investment tools, the role of an Investment Advisor is now of crucial importance. Personal investors have access to more information than they ever have before, but wading through the data to find that path to success and discipline still requires the eye of a trained investment coach. Given the daunting amount of different investment advice, options, funds, accounts,  stocks, bonds, annuities, and timelines available to investors planning for your future is intimidating to say the least. When you take the inherent danger that follows bad investments into consideration , it quickly becomes clear your retirement isn’t worth that risk, and should instead be left to a professional. The following five points are some of the more common DIY investor mistakes that a qualified investment advisor can help you avoid, while better planning for your future.

1) Buying “cool” stocks, or giving too much attention to brand loyalty
This is one of the most common mistakes of beginning investors. Although you might feel a certain pull to invest in a company whose products you already support, it’s important to remember that you’re not buying their product; you’re buying their future performance as a company. In the long run the advantage of having a globally diversified portfolio is much bigger than the cool feeling you get when you buy your favorite companies stock.  Remember, your investments’ future earnings are more important to your well being than owning a fraction of a “cool” brand.  On top of this, usually the “cool” stocks that people buy are extremely massive companies, which have a lower expected growth rate than small cap companies.

2) Investing too conservatively
With the previous point in mind, it’s important to not be overly conservative when it comes to planning your future. Ever since the crash of 2008 new investors have been very skittish when taking on risk, many opting out of the stock market entirely. That being said, it’s important to remember the old adage that “without risk, there is no reward.” A financial professional can better assess the highs and lows inherent with ownership of  stocks. A more evenly balanced portfolio (that means one with stocks), while carrying an additional degree of risk, offers much greater rewards to the investor, and under a watchful eye it will continue to grow for years to come.

3) Hoping to beat the market “bad gambling”
This tip, more than almost any other, is extremely important to new investors. We’ve all seen a movie or heard a story with someone offering “a deal too good to be true,” and when it comes to investing that old cliché is worth its weight in gold. While we can all think of an example when a company’s stock value went through the roof seemingly overnight, it’s important to remember for every success story there are many more of failure and bankruptcy. Putting everything on a single stock or position is just as risky as taking your life savings to Vegas and hoping for the best at a roulette table. Any investment you care about should be made as part of a balanced portfolio and a long-term plan.

4) Thinking they are saving money by not having an advisor
This is a very common thought by most do it yourself investors.  They think with the advisor out of the picture they take out the middleman and thus lower their investment costs. The problem with this thinking, is that it is completely wrong in most cases.   Online, the extremely high fees for trading must be paid.  Depending on the website, they usually run $7 to $10 per trade.  If you are diversified like you should be, that would be hundreds if not thousands of dollars just to buy into all the stocks you should be holding.   The advantage to working with us is that there is no fee per trade.  You are no longer treated as an individual investor and thus you have a flat discounted fee no matter how many trades are made in your account.

5) Ignoring your investment horizon
To be frank, you need an investment coach to accurately accomplish your goals. Many new investors forget that investments are made for a purpose, and if you don’t have access to your money when you need it that investment has failed you. Different accounts have different tax implications that must be matched with your time horizon and age.  If you are putting away money for retirement that is not for 20 years, then you should not invest your money conservatively.  Your risk tolerance should be directly correlated with your time horizon for your investments.  You can be more conservative with investments that you will need in a short time frame.

By Jimmy Hancock

References

Do It Yourself Lobotomy. Digital image. Smithlhhsb122.wikispaces.com. N.p., n.d. Web. 21 Nov. 2016.