Reasons to Stay Invested and Reasons to Adjust

Reasons to Stay Invested and Reasons to Adjust

by | Aug 2, 2020 | Budgeting, Planning, Retirement

We are quickly wrapping up summer 2020. And wow…we won’t forget it! What is normally a time of recharging and checking out from the norm has been a time for many of checking in to the daily number of COVID-19 cases and deaths. The toll this can take on us is brutal. I don’t think we were designed as humans to digest constant news and data from around the globe. Of course, the bulk of this news is negative and life-taking, not giving.

But there is some good news that hasn’t been reported as much as COVID-19 – the stock market. Would you believe that on July 21st this year the S&P 500 index closed at the same value where it started the year (3,257)? Also, on July 22nd it even exceeded the starting value (3,276)? So what are investors to do? We have some suggestions.

Stock Market vs. The Economy

You might be asking: “How can the stock market be back up given the horrible news of COVID-19 and discouraging (to say the least) economic reports such as unemployment numbers?” Answer: The stock market and economy are not the same. Yes, there is some correlation between the two. However, as often said in our client email communications and previous blog posts, the stock market is a leading economic indicator. The stock market is forward-looking and prices in what it believes lies ahead.

No question the actions of Congress and the Fed has provided stability to the markets. Now, it comes at a cost to the government and eventually taxpayers. But in the short-term, the stock market is pricing in stability.

Reasons to Stay Invested

You might feel the temptation to bail-out now given you are back (or almost back) to your January 1st starting values. However, what is your motivation? Most likely it’s fear which is seldom a good reason to make adjustments. So why stay invested?

  • Remember why you invested in the first place. Investing was never a short-term plan (at least not for Rivertree clients). It’s not a sprint; it’s a marathon. Don’t lose focus of this long-term goal.
  • Recognize the Opportunity. For those still in the accumulation phase of retirement planning (i.e. still contributing regularly to retirement accounts), have you celebrated the investment purchases that occurred in February through May? You bought more shares of companies whose values were beaten-down. With this short-term recovery, you now own more shares than you would have previously! This valuable investment strategy is called dollar-cost averaging. And it works well with time.
  • Recognize the Alternatives. Should you choose to abandon your long-term investment plan, what are your investment alternatives? Cash? If you’re like me, you have received multiple emails from savings account companies stating that your interest rate was being lowered. You’re doing really good to get 1% now for online FDIC insured savings accounts. Is a 1% rate of return going to accomplish your long-term goals? Most likely not unless you have significant wealth and can afford for inflation to erode the purchasing power of your dollars. Savings accounts are great for emergency funds and short-term savings needs. They are lousy for long-term investing.

Reasons to Adjust

No question there are times to make adjustments to your investment allocations. These adjustments could better suit your long-term goals and needs. When is a time to adjust?

  • Your goals have changed. Perhaps your retirement age moved from 62 to 70 or vice versa. This eight-year difference could affect the amount of stock and fixed-income holdings you have. If your retirement is delayed until age 70, you could afford to have a larger allocation towards stocks. If your retirement age is expedited to age 62, consider allocating more to fixed-income investments.
  • Your risk tolerance has changed. It’s common that a once aggressive investor shifts to a more moderate investment risk tolerance, especially as one approaches retirement age and considers that little will be added to investment accounts. And, you wonder if you’ll live long enough to see your investments recover in the event of a downturn. Maybe the year 2020 has exposed this change in risk tolerance and it’s time to make adjustments.
  • Your financial circumstances have changed. Maybe you’ve had a change in income or lost a loved one. These life events would certainly be cause to revisit your investment allocations. 

Closing

In summary, there are wise reasons to revisit your investment strategies and goals. There are also unwise reasons to make adjustments. Presidential elections come and go. The pandemic will eventually pass. Volatility in the stock market will rear its head during times of uncertainty. But don’t let these fears be the driver of your investment decisions. Research continues to show that investment decisions based on fear do not produce long-term results.

Our job is to walk alongside our clients during these times of uncertainty and help them make wise long-term decisions. Should you feel the need to have a conversation, please don’t hesitate to contact us.

*For financial planning clients of Rivertree Financial Planning: Please contact us as soon as possible if you have had any changes in circumstances, objectives, goals or risk tolerance.

Self-Awareness and Money

Self-Awareness and Money

by | Nov 1, 2019 | Budgeting, Faith, Other, Planning, Retirement

I hope your fall season is going well and that you’re enjoying the cooler weather. Our newsletter topic this month might seem peculiar. What does money have to do with self-awareness, and self-awareness have to do with money? Quite a bit I’d say.

A Case Made

“Without knowledge of self there is no knowledge of God…without knowledge of God there is no knowledge of self.” Who said this? John Calvin, the great reformer! Now, we can take this quote out of context and too far by saying that introspection or self-awareness is more important than a knowledge of God. Calvin makes the case that these go together. We must see ourselves for who we truly are before a holy, righteous God. After true introspection should come humility.

But what I would also argue is that Calvin saw a place for knowledge of self. We often hear of self-forgetfulness – ignore our needs and only focus on others. But as I reflect on the life of Jesus, I can’t help but notice how many times he left the crowd to be alone. He recognized the times he needed to be alone with the Father, even though there were sick people to heal and lessons to be taught. Jesus had greater self knowledge and awareness than any other man who has walked this earth. He knew his calling, his mission, and his identity. And these impacted every decision he made.

And Money?

We all relate to money in different ways. Some of us never (or seldom) worry about it. Others think about it more often. And others are consumed by it. Where do you fall?

I would argue that first knowing how you personally relate to money is critical to making progress financially. If we know we’re prone to blow cash the minute it comes out of the ATM, then maybe that method is not best. Or perhaps it’s the opposite for you: cash gives you needed boundaries of when it’s gone, the spending stops. If it’s plastic, then spending continues.

We’re often asked by clients: Which budgeting system is best? We respond: “The one that you’ll actually do.” If a yellow pad and pencil keep you on track, then that’s best. If an excel spreadsheet, great. If an app, so be it! Ultimately, which system best helps you accomplish your goals?

What about investment account balances? TV financial pundits? Research online? Are these helpful for you, or do they create more stress? Perhaps you check your blood pressure next time you partake. Or maybe you already know the answer…you just don’t want to change. That’s okay for now. At least you know. But maybe change will come when “the pain of staying the same becomes greater than the pain of changing.” -Dr. Henry Cloud

Having self-awareness about your tendencies with money is critical.

A Helpful Tool

The Rivertree Team recently started the book The Road Back to You: An Enneagram Journey to Self-Discovery by Ian Cron and Suzanne Stabile. Whew! We have already had some good laughs as we’ve discussed our types and tendencies (and some occasional grunts as we read about the not so good parts of ourselves). The goal is that we know one another and ourselves better to create an even healthier work environment.

And at the spiritual level, considering what Brother Dave said to Ian, the author of this book: “Just remember, it’s only one tool to help you deepen your love for God and others….There are plenty of others. What’s important is the more you and Anne grow in self-knowledge, the more you’ll become aware of your need for God’s grace. Not to mention, you’ll have more compassion for yourselves and other people.”

What used to frustrate us about ourselves and one another can hopefully be replaced with compassion…and some friendly chuckles. 

Now What

Have you taken this journey before? If so, has it been helpful? If you haven’t taken this journey, I’d encourage you to do so. I am confident you’ll find it worthwhile.

*For financial planning clients of Rivertree Financial Planning: Please contact us as soon as possible if you have had any changes in circumstances, objectives, goals or risk tolerance.

Financial Planning – Outside the Lines

Financial Planning – Outside the Lines

by | Aug 1, 2019 | Budgeting, Debt, Faith, Planning, Retirement

Are you tired of taking sides? Tired of having to choose one over another? Simply tired of making so many decisions every day? Well, I’m not surprised given that some studies estimate the average person makes 35,000 decisions a day. I feel exhausted just thinking about this!

So, what’s a person to do? Well, a starting place is simply to acknowledge the exhaustion that comes from having to choose so many times on a daily basis (enter “decision fatigue”). And if you are symptomatic of the condition “paralysis of analysis,” it’s just that much harder.

What about financial planning? Think you have some choices to make? Well, I think we’d agree that you do. So, what does financial planning “outside the lines” look like? We have some thoughts.

Firstly, Giving Credit Where It’s Due

I read Scott Sauls’ book Jesus Outside the Lines about 2 years ago. The timing of this book was perfect for me. Scott’s writings resonated with me, particularly as it related to politics, money, and hope (or realism). He approached these quite sensitive topics with humility and grace. I greatly appreciated this. So, thank you, Scott, for your book and helping me with the title of this post.

Investments

Let’s name a few choices you have: stocks, bonds, mutual funds, ETFs, annuities, passive, active, momentum, contrarian, etc. Shall I go on? I’ll spare you.

So, what’s an investor to do? And which of these options are best? Ultimately, you have to make a choice. Or, you choose to hire someone to help you.

Insurance

Buy term and invest the rest? Buy term and spend the rest? Or buy permanent, whole life insurance? Perhaps variable universal life? Follow the duck to Aflac or rely on your traditional health insurance? Work with an 800# rep or have a local agent? Which is best? (Answer coming…)

Estate Planning

Save money and do a cookie-cutter last will and testament? Or pay a local attorney to help? Retitle all assets possible into a revocable living trust, or go through the probate process? Name specific beneficiaries on all accounts, or let your will do the work?

So many decisions here. What’s a person to do?

Financial Planning (Outside the Lines)

It’s this: Developing a financial plan specific to you and your needs, goals and desires. It’s not a robo-advisor or robo-plan. It’s not a one-stop shop online or a local company advertising that they have all the right answers and solutions. It’s not an insurance company promising (almost) to save you 15% on premiums.

I remember early in my career thinking I had the perfect plan and most all of the answers to clients’ concerns and questions. My heart’s motive was to help. However, I learned with time and experience that I needed to step out of my personal story and enter into their stories.

The client may communicate their desire to have life insurance that is guaranteed to always be there. They may communicate their desire to have retirement income that they can never outlive, regardless of market conditions. The client may share their desire to work with a more traditional “brick and mortar” bank rather than an online bank paying a higher interest.

Where do we fit in?

It starts with you, not us. Our personal plan might (or will) look different than yours. We are happy to share what we are personally doing in our financial plan. But again, we expect our plans to look a little different.

Our job and passion is to walk alongside you in your life story. We are morally and legally obligated to put your interests above our own. That’s how it should be.

We are deeply thankful for those who have asked us to come alongside them. It would be a privilege to have a conversation with you about how that might look in your life journey. And be assured that your financial plan will be designed outside the lines.

*For financial planning clients of Rivertree Financial Planning: Please contact us as soon as possible if you have had any changes in circumstances, objectives, goals or risk tolerance.

When Things Don’t Go as Planned

When Things Don’t Go as Planned

by | Jun 3, 2019 | Budgeting, Other, Planning, Retirement

Ever had a plan not go as expected? Yeah, me too. In fact, my family and I are living this reality right now.

After twelve years of being in the same house, we decided for several reasons that it was time to make a move. So, last fall we starting taking steps to get our house ready to sell. After decluttering, painting, and finally fixing those pesky issues we’ve been ignoring for months (okay, maybe years), we listed our house for sale. And yes, we then began to love our house more than ever! That’s how it goes, right?

We still decided to move forward with selling our house. Our house sold quicker than expected. So now what? Well, things haven’t gone as planned.

The Plan

We had a plan: Sell our house then quickly (and conveniently) move into the next house we’ll love for another twelve years at least. Many of us have a plan, right? The infamous boxer Mike Tyson had something to say about this: “Everyone has a plan ‘till they get punched in the mouth.” Pretty straightforward, you think?

I am a planner by personality…and trade. Heck, “planning” is in our business name. It’s what we do! Does that mean we develop the perfect plans without a hitch? Obviously, no. We often say the only 100% guarantee is that the financial plan will not go 100% as planned. Expect the unexpected: Family illness or premature death, job loss, market under-performance, etc. These are all things we plan for but don’t know exactly how these things will look for each client.

So, does that mean don’t plan at all? I’d say not.

The Response

How do you handle a plan gone awry? I will be honest (otherwise, my wife will call me out). Generally I don’t handle it well. I complain or stonewall. I may even sulk. Just when I get irritated reading and hearing about the Israelites wandering after being freed from slavery, I realize – I. am. them.

So, what might be a better response? Perhaps focusing on the things we can control: Voicing our frustration and anger in a healthy way; being thankful that we are not in control; trusting that there is a better plan ahead…much better than my own.

The Peace

“For I know the plans I have for you, declares the Lord, plans for welfare[b] and not for evil, to give you a future and a hope. 12 Then you will call upon me and come and pray to me, and I will hear you. 13 You will seek me and find me, when you seek me with all your heart. 14 I will be found by you, declares the Lord, and I will restore your fortunes and gather you from all the nations and all the places where I have driven you, declares the Lord, and I will bring you back to the place from which I sent you into exile.”

There is a plan for each and every one of us. We just don’t know (and won’t know) what it fully is on this side of eternity.

What can we do? Find peace in the fact that we are not in control. Rest easy that there is a plan for good, not harm, for those that trust in Him, our heavenly Father.

So, how am I now handling this time of uncertainty with housing? Honestly, I’m finding peace. We’re calling it a “family adventure!” The kids are onboard. Who doesn’t want adventure! (Well, me, sometimes…but ready or not, this one has begun).

If you’re looking for a financial professional to partner with on your next adventure, we’re on-board. Give us a call.

Finding a Financial Mentor

Finding a Financial Mentor

by | May 1, 2019 | Budgeting, Debt, Other, Planning, Retirement

I was challenged this morning by a pastor and friend who spoke to a group of fathers. The question initially posed was this: “What do I most need today in regards to decisions?” Answer: “Someone ahead of me, and someone behind me.” In other words, we were challenged to have a mentor and mentee in our lives. We briefly journeyed through the life of Luke in the Bible. Luke traveled with Paul. Paul was ahead of Luke. Luke also had Theophilus in his life who he mentored.

When we need counsel, we so often go to our peers who are most likely facing the same struggles (and making the same mistakes). Don’t get me wrong – I do think it’s helpful to share our struggles and burdens with peers; but are our peers best for counsel? Or could it be wiser to receive counsel from someone ahead of us in life and who has already faced the struggles? My pastor friend would argue the latter. How would this look for financial decisions?

Why can taking this step be hard for us? I’d say that simply asking for help doesn’t come naturally to us. We might be ashamed of our circumstances or situation. We might think that no one else gets it. We might think there’s just no better way than what we’ve come up with ourselves. As a person who struggles with trying to think myself through situations, I have come to learn that sharing and processing what I’m going through with others is extremely helpful; and that sharing with someone who is ahead of me is even better.

Think about financial decisions that you have made during your lifetime – the good, the bad, the ugly. How about buying your first house? First car? First timeshare (uh oh…). What did you learn? Now rewind: If you would have received counsel from someone at least ten years ahead of you, do you think the bad/ugly decisions could have been avoided? Probably so.

What about your peers? Most likely they are signing up for the same college credit card only to get a free t-shirt. Then yes, that “free” t-shirt ends up costing you hundreds to thousands of dollars in interest for the tv or vacation you really couldn’t afford. What if you had sought counsel from someone at least 10 years ahead of you who showed financial responsibility? Do you think that they would have advised you differently than your peers? Most likely so.

What about us – financial planners? We are experts in this field, but does that mean we don’t need to seek financial counsel from someone ahead of us? I have been challenged to seek out a financial mentor. Just as you, we’ve found that it’s 100% impossible to check all emotions at the door when it comes to our own financial decisions. We need sound guidance – the same guidance we give to our clients.

As we seek out a mentor, we’re also challenged to seek out someone behind us that we can help. How do we find these people? Pray that the Lord would bring these people into your life. Open your eyes to those already around you. They may not be far away.

In closing, I’ll share wise counsel that the speaker received from someone ahead of him during a critical time in his life: “Make decisions today that you will least regret in ten years.” That’s good. What’s this all about? Priorities.

So now what? Make that call. Send that text or email. Take the risk. I just did.

*For financial planning clients of Rivertree Financial Planning: Please contact us as soon as possible if you have had any changes in circumstances, objectives, goals or risk tolerance.

Living a “Just In Case” Retirement

Living a “Just In Case” Retirement

by | Apr 1, 2019 | Budgeting, Faith, Planning, Retirement

Very recently a couple of us from the office attended a retirement income planning seminar. The seminar was titled, “Don’t Live a Just in Case Retirement.” Tom Hegna, an internationally renowned expert on retirement planning, was the presenter.

The seminar concepts were helpful and timely. Many points were reminders, but a couple of points struck a chord with me and are worth discussing.

Retirement Success

One key point was this: “The success of your retirement is really not about assets.” Well, that’s controversial. Isn’t retirement about having a certain number? (i.e. How much do you have in your retirement nest egg?) Assets can be lost, stolen, divorced, etc.

His argument was that the success of your retirement really depends upon how much guaranteed, lifetime retirement income you have. His argument is not just based on emotion, but research.

I have to agree. Our most joyful, content clients are the ones that know each month a set, guaranteed direct deposit is coming that doesn’t depend upon market performance. It’s backed by a pension guaranty, Federal government or an insurance company. This deposit is what used to be called the “mailbox check.”

But what’s the problem? There are fewer and fewer companies offering the pensions of one to two generations ago. It’s too costly and risky for employers. Therefore, we see defined contribution plans more today, such as 401ks, 403bs, and deferred compensation.

The risk has been transferred from the employers to the employees. The employees are in charge and responsible for saving enough for retirement. Problem is, how much is enough? Is it a certain number? We’ve dispelled that myth before. There’s no magic number that works for every person. Each person and financial plan are unique.

What’s the good news? We firmly believe a joyful, content retirement is possible, but it must come with a plan.

Avoiding Risks

The second and last point that struck home with me was this: “How will you avoid risks detrimental to your plan?” Great question. Ignoring current and future risks is not wise, they need to be addressed. What are some of those risks?

  • Not maximizing your social security benefit
  • Inflation
  • Long-term care expenses
  • Sequence of returns risk (How the market performs in the early years of your retirement is a critical factor to be addressed.)
  • Longevity risk (outliving your assets)

The purpose of this writing is not to invoke panic and hysteria. Really, it’s not. I do, however, hope the items discussed moves you to taking action. “Any plan is better than no plan!”, said Tom.

And let’s not forget to address this topic from a spiritual standpoint. Are the items above important? Yes. Are they ultimate? Absolutely not. For those who’ve trusted in our loving, heavenly Father, we know that our ultimate care is in His hands. So much so that he cares for us in this way:

“Look at the birds of the air: they neither sow nor reap nor gather into barns, and yet your heavenly Father feeds them. Are you not of more value than they? 27 And which of you by being anxious can add a single hour to his span of life?[a] 28 And why are you anxious about clothing? Consider the lilies of the field, how they grow: they neither toil nor spin,29 yet I tell you, even Solomon in all his glory was not arrayed like one of these. 30 But if God so clothes the grass of the field, which today is alive and tomorrow is thrown into the oven, will he not much more clothe you, O you of little faith? 31 Therefore do not be anxious, saying, ‘What shall we eat?’ or ‘What shall we drink?’ or ‘What shall we wear?’ 32 For the Gentiles seek after all these things, and your heavenly Father knows that you need them all. 33 But seek first the kingdom of God and his righteousness, and all these things will be added to you.

34 “Therefore do not be anxious about tomorrow, for tomorrow will be anxious for itself. Sufficient for the day is its own trouble.” – Matthew 6:26-34 (ESV)

Living in the “already but not yet” is not easy. The ultimate battle has already been won, but we also know that on this side of eternity, the struggle and fight is real. Brokenness, hurt, loss and pain do exist. So how are we to respond? We trust, we follow, we love, we ask for help and forgiveness and, we don’t give up.

Ask us for help. We’d love to walk alongside you through this journey of life. It’s not just about money for us. It’s a much bigger conversation.

*For financial planning clients of Rivertree Financial Planning: Please contact us as soon as possible if you have had any changes in circumstances, objectives, goals or risk tolerance.