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SFS

2018 Just For Women – Let it Grow!

By | 2018, Money Moxie | No Comments

Mark your calendars and plan to attend the
3rd annual “Just for Women” event.

Friday, May 11th

The Gathering Place
at Gardner Village

9:00 a.m. to 12:30 p.m.

Start with a delicious breakfast, brush up on
your financial knowledge, and get fun ideas for spring.
We hope to see you there.

RSVP required. Call 801-355-8888.
Watch your mailbox and inbox for more details.

*Financially Aware Family * U.S. Economic Impact * Financial Confidence*

*Fresh Herb Cooking * Container Gardening*

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Financially Savvy Women

By | 2018, Money Moxie | No Comments

Just Getting Started

You are starting your financial life with a blank canvas. . . you are the artist. You can create a lifetime of financial freedom if you start with a few simple habits and follow them purposefully.

3 Tips to get you headed in the right direction:

1. Get a handle on your spending and keep debt at a minimum. Save for the things you want rather than borrowing. It may take longer but the reward will be that much sweeter.

2. Determine your top three financial goals—build emergency savings, get out of debt, buy a car, save for a down payment for a home, etc.—and create a plan of action.

3. Let compound interest work for you. Contribute to a 401(k), IRA, or Roth IRA and be sure to capture the full company match.

Settling Into Life

Mid-life offers the opportunity to regroup. Your family has a routine, your career is well underway, and you are looking to the future. This is an ideal time to create or refine your financial plan.

You may have up to 20 years before your retirement dream becomes a reality. Focusing on these items will help you reach your goals:

Increase your retirement contribution. If you are falling short, you still have time to make an impact.

Get rid of mortgage debt before you retire. Debt in retirement can reduce your standard of living and prevent you from living the way you had hoped.

Update your financial plan. Make adjustments if needed.

On Your Own

Suddenly single. . . now what? You may find yourself unexpectedly on your own. While the prospects of being on your own may seem overwhelming, we are here to help guide you through this transition.

4 items to focus on first. Taking control of your financial situation will give you confidence and peace of mind:

1. Sources of income. They may include your salary, insurance proceeds, assets from a settlement.

2. Outgoing expenditures. What expenses will you have monthly and annually.

3. Update documents. Insurance and retirement plan beneficiaries.

4. Review portfolio and plan. This includes investment holdings and options. Make sure they still meet your needs.

Reaping Life’s Rewards

You are living the life you’ve dreamed of and enjoying your standard of living. Count on living a long life. Now is the time to get your house in order—so to speak. What’s your financial legacy? Money . . . or financial values.

Top goals. These are the things that should be top on your list:

Review your income plan. Make sure your money lasts as long as you do.

Update your estate planning documents. Do they meet your goals? Determine the best way to pass assets to the next generation.

Have a family meeting. If you want your family to be involved, they need to know what to expect.

Designate a trusted contact who can help you financially.

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Will Good be Good Enough?

By | 2018, Money Moxie | No Comments

Confirmation Bias: The tendency to only accept the facts that support what we already believe.

By virtually every measurement, the U.S. economy is growing–and so it is in just about every other country in the world! That means that even though stock prices are near all-time highs, they are also supported by real economic growth.

The question is, “How long can the stock market continue to grow before cracks begin to form?” The answer: Small cracks are already appearing and most people don’t see them, yet.

How could corporations disappoint in such a good economy? No way . . . unless expectations are too high and investors realize this 3, 6, or 12 months from now.

That’s exactly what this graph is showing: an inability to exceed high expectations. And the market in 2018 is more likely to be affected by expectations than by economics. After all, the growth that everyone expects is already priced into the market. The bar has been set high for 2018!

The Federal Reserve has a new chairman, Jerome Powell, and he seems determined to get interest rates back to more normal levels. This makes borrowing money more expensive and could, at some point, have a negative impact on stocks.

Consumers could turn the tide in a negative way! Consumers represent 69 percent of economic growth. They have been driving growth upward for two years by spending more than they can afford. How long can this continue?

The savings rate, once at 10 percent, is now approaching an all-time low of 2 percent! The risk is not that Americans have overspent, but that they cannot continue to overspend in the next two years like they have in the last two years! How will American consumers continue to lift the American economy when they run out of money?

What will be the next crack in the economy? It will probably not be in housing this time. Mortgage debt seems low compared to 10 years ago and there is a shortage of homes around the country.

Any further cracks may be in credit card defaults. That’s one area we will be watching.

For now, economic growth looks solid. We will keep an eye on things because we know that investments become over-priced while the data is still positive. What we know is that 2018 is already more interesting than 2017!

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One-Trick Financial Advisors

By | 2018, Money Moxie | No Comments

It pains me to say this of a profession that I love, but too many financial advisors are just one-trick salesmen who want to make a quick buck.

How do you spot a one-trick financial advisor? Their answer to EVERY question is either life insurance or an annuity. However, they won’t tell you that is what they are offering.

You’ll hear phrases like, “If you invest with us you can take your money out TAX-FREE in retirement.” Or “Do you want double-digit returns with NO DOWNSIDE RISK?” These “advisors” are throwing out flashy fishing lures to hook you. Here is what those phrases really mean.

The way you can take out your money “TAX-FREE in retirement” is by using an insurance policy that is either whole life or indexed universal life. You build up cash value in the policy over years and you can take a LOAN that is potentially tax-free.

However, the “advisors” usually don’t mention upfront that this is a life insurance policy. They just want to get you hooked before they share all of the details. They also rarely mention that if you take out too much, then you surrender the policy and may be subject to a large tax bill, blowing up the possibility of tax-free income.

To “avoid DOWNSIDE RISK” you use an indexed annuity–also from an insurance company. You lose some upside potential to avoid some downside risk. Of course, the insurance company takes a healthy cut and the “advisor” gets a nice paycheck too.

However, the sales person usually glosses over the fact that your money will be locked up for 7-10 years and that there are hefty penalties to get out early.

Now, it may sound like I am against insurance and annuities, which is not true. I sell them when they fit a client’s needs. I am against how one-trick financial advisors use them as “the only thing you need.” They tout their products as the hottest-thing-since-sliced-bread, but there is no one-size-fits-all product.

In reality, there are many good opportunities to use life insurance and/or annuities as ONE PART of your plan. However, doing so should be tied back to meeting your goals.

Life insurance is essential to protect your family if you pass away too soon or great if you want to leave a larger inheritance. Indexed annuities are good as a CD replacement for money that you don’t need for 7-10 years. It should typically be 20% or less of your portfolio.

I’ve seen too many good people get stuck in products that they don’t understand and many times don’t even need.

To get what you really need, use a holistic planner with a CFP® designation, like the advisors at SFS. We understand the nuances of investment products and use your goals to determine which to use.

So, if you have any questions about something you heard on the radio or from a friend, call us. We are happy to talk about all investment products–how they work and if they fit your financial goals.

 

Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, and CERTIFIED FINANCIAL PLANNER™, in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.

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Stocks Stand Alone

By | 2018, Money Moxie | No Comments

If you could go back in time 100 years and pick an asset in which to invest, which would you choose? Knowing of events like the Wall Street Crash of 1929 and the Great Depression, 7% inflation in the 1970’s, and the stock market crash of 2008, would you still choose to put your money in stocks? If so, you would be making a wise decision.

I recently came across an article posted in the March 2018 issue of The Wall Street Journal regarding the average annual returns of 10 popular investments over the last century. (I included a graph showing these investments and their average historical returns above inflation.)

At first glance, I noticed the negative returns of diamonds. Although diamonds are quite popular, especially on the finger of a loved one, they have been a poor investment if appreciation is the goal.

Bonds, which happen to be fifth on the list behind collectable stamps and high-end violins, show an average annual return of 2%.

Gold, a popular investment among some investors, has historically fallen short when compared to fine art and fine wine; the latter of which post returns over 500% more than that of gold.

Stocks have had the highest returns, and by a large margin. Despite the crashes, recessions, and economic contractions, stocks have had the best return in the last 117 years.

As we face volatility in the markets in 2018, we know that a diversified portfolio of stocks and bonds has weathered the storms of years past.

Despite the risks of recession and downturn in the future, I plan to keep my diamonds on my wife’s finger and my long-term investments in stocks.

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Be Smarter with Your Money

By | 2018, Money Moxie | No Comments

Women outlive men by an average of 5 years. That means women can’t treat their finances exactly as men treat theirs. Women need to think about money for the long term, that way they can retire worry-free. Here are some things women should be doing now to prepare for the future.

1. Invest early – Why? Because you will need more. After retirement, women will have around three decades to enjoy their lives. Take advantage of your paychecks now. Enroll in a 401(k) or open a Roth IRA. The longer you are invested, the more compound interest you stand to accrue–which means you are making more money. It is never too late to start investing no matter what your age– even $100 can make a huge difference (maybe giving up your Diet Coke habit). It is satisfying to watch your money multiply.

2. Keep your eye on the goal – Because you have more time, that means there are more possibilities for things to go wrong, anything from divorce to job loss or death. It is a great idea to have multiple “what if” scenarios in your plan and have regular financial checkups. Discuss your long-term goals with your Smedley Financial advisor, who can help you stay on track.

3. Get involved in your finances – even if your spouse is the one “who does it.” You should know what is coming in and going out each month. It is important to “know” about your money. For example, your account numbers, passwords, etc.

4. Always be looking out for yourself – Women will spend on average 12 years out of the workforce, raising children or caring for elderly family. Even if you are not getting paid for this work, it is important to invest into an IRA and contribute as much as you can. This will help improve the financial future for you and your family. You can’t help others if you can’t help yourself.

 

Source: https://www.mfs.com/subs/redbook/pdf/redbook_fly_9_17.pdf

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What Drives Happiness?

By | 2018, Executive Message | No Comments

Dear Friends and Financial Partners!

It’s true that 2017 was and will remain one of the most memorable years for the stock market. We all have much for which to be grateful and not just in the monetary sense.

About two years ago I came across a TED Talk: “What makes a good life? Lessons from the longest study on happiness by Robert Waldinger.”1 Waldinger is a Clinical Professor of Psychiatry at Harvard Medical School. He is the fourth director of one of the longest-running studies of adult life ever done. It is the ongoing 75-year-old Harvard Study of Adult Development.

The study answers the important questions about what keeps us happy and healthy. Here’s a hint: It’s not about fame or money or our stations in life. It’s about family. It’s about relationships. It’s about the people in our lives.

Another validation about relationships comes from the late Randy Pausch. “People are more important than things,” Pausch said in his book The Last Lecture.2 When Pausch, a computer science professor at Carnegie Mellon, was asked to give such a lecture, he didn’t have to imagine it was his last lecture, since he had recently been diagnosed with terminal cancer.

Again, “People are more important than things.” The keys to a good life involve the family and friends in our lives. It’s the people we know and our relationships with them that truly drive happiness.

We cherish you, our clients, and our special relationship with each of you. We never want to take you for granted. Thank you for being the greatest people on the planet.

Bullish Best Wishes,

Roger M. Smedley, CFP®
CEO

1. Robert Waldinger, “What Makes a Good Life?,” TED Talk, November 2015.
2. Randy Pausch, “Last Lecture: Achieving Your Childhood Dreams,” Carnegie Mellon University, December 20, 2007.

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2017: Record Breaking Year

By | 2018, Money Moxie, Newsletter | No Comments

Entering 2017, I was more optimistic about the potential growth in stocks. In fact, my expectations were higher than 13 of 15 major investment companies. This optimism became a basis for staying invested throughout the year whether the market went up or down. The results were very positive.

I also assumed that at some point in 2017 we would wake up to some major down days. This never happened. The market just continued to climb all year long.

The S&P 500 (with dividends) rose every month last year for the first time ever! A positive return in January 2018 would bring the streak to 15 months in a row. Second place goes to a streak of 10 months stretching from December 1994 to September 1995.

These are powerful trends, considering the probability of any month being positive is around 60 percent. Strong momentum like this typically continues even after the streak is broken.

A second record was set that began in the final days of December. The Dow Jones Industrial Average had its quickest 1,000 point gain ever!

For three consecutive years I have accurately predicted the major actions of the Federal Reserve. I wrote: “This year, I am going to try something new: accepting the Federal Reserve’s forecast that it will raise rates 3 times in 2017.” That is exactly what happened.

I believe that keeping an eye on the Fed this year will be even more important than it was in 2017. You can see my analysis for 2018 here.

 

*Research by SFS. Investing involves risk, including potential loss of principal. Dow and S&P 500 indexes are widely considered to represent the overall stock market. One cannot invest directly in an index. Diversification does not guarantee positive results. Past performance does not guarantee future results. The opinions and forecasts expressed are those of the author and may not actually come to pass. This information is subject to change at any time, based upon changing conditions. This is not a recommendation to purchase any type of investment.

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Will You Benefit From the Recent Tax Cut?

By | 2018, Money Moxie, Newsletter | No Comments

Changes to the marginal tax-brackets will benefit those who are close to the threshold for the 10 percent thru 32 percent brackets. If your income is $400,000, you will hit the 35 percent marginal bracket with less income than in 2017. One notable change is the top bracket–now 37 percent–affecting those with income of $600,000 or more.

2018 Marginal Tax Rates

Contribution Limits

Retirement contribution limits for some plans have been increased while others remain the same.

Standard Deductions

By increasing the standard deduction, the government will effectively reduce the number of filers who itemize. The new married limit is $24,000 and the single limit is $12,000. Both are double last year’s limits.

Itemized Deductions

The new law contains limitations that change the value of itemizing deductions for many filers.

Alternative Minimum Tax

The number of filers affected by the Alternative Minimum Tax is expected to drop by 96%. And many filers may not have to pay AMT again. This is due to two big changes (below).

Higher exemption levels–the amount of income automatically exempt from AMT calculation has increased to $109,400 for married and $84,500 for single.

Higher exemption phase-out levels–the income level above which you gradually lose your income exemption. The phase-out levels increased to $1,000,000 for married and $500,000 for single.

*Smedley Financial and its employees do not provide tax advice; therefore it is important to coordinate with your tax advisor regarding your specific situation.

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2018: FOMO In the Stock Market

By | 2018, Money Moxie | No Comments

Protecting profit is profitable. Protecting fear is not. I keep this phrase on a sticky note below my computer to remind me that investment decisions based upon fear lead to mistakes. I have seen it during the major market meltdowns of 2000-2002 and 2008-2009. I have seen it in smaller drops, like January 2016.

There seems to be little fear of a market drop in 2018. I believe investors may now be protecting from another kind of fear and the consequences may again be surprising.

The Fear Of Missing Out (FOMO)—popular among youth today—describes investors worldwide. Stock markets have been so good people are asking, “Am I aggressive enough?”

Excitement and expectations have been rising and there has been a lot of money to be made. In just the first 10 trading days of 2018, the S&P 500 returned almost 5 percent! Worldwide averages were even higher! That is after returning over 30 percent over the last two years for U.S. large company averages. It is as though investors have accepted the massively positive moves as the new normal.

The market does not have to follow the economy perfectly. The market’s performance is also determined by how reality measures up to expectations. So, the most likely thing to go wrong this year may be a failure to meet lofty expectations.

Consider the awesome year-to-date returns. If the “5 percent in 10 trading days” were to continue for the rest of the year, then we would have a return in the S&P 500 of 217 percent! It’s not going to happen.

The best way to prevent a mistake is by not getting caught up in the FOMO. Don’t get too aggressive right when things could slow down.

While I believe a few surprises may cost those throwing caution to the wind, the market is unlikely to experience a major hiccup while the economy is still growing. That leaves us with plenty of reasons to stay invested in 2018.

*Research by SFS. Investing involves risk, including potential loss of principal. Dow and S&P 500 indexes are widely considered to represent the overall stock market. One cannot invest directly in an index. Diversification does not guarantee positive results. Past performance does not guarantee future results. The opinions and forecasts expressed are those of the author and may not actually come to pass. This information is subject to change at any time, based upon changing conditions. This is not a recommendation to purchase any type of investment.

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