Category

2019

Women Face Unique Challenges. Good Decisions are Essential.

By | 2019, Executive Message, Money Matters, Newsletter | No Comments

This year marked the 4th anniversary of our Just for Women conference and the launch of Smedley Financial’s Just for Women community. Hooray!

We want to thank the women who have participated in our community. Together, we have created a meaningful experience that engages, empowers, and educates women of all ages and from all social and economic backgrounds.

Women face many unique challenges when it comes to financial security: longer life expectancies; the likelihood that they will be in the driver’s seat, financially speaking; reduced pension payouts and retirement account balances due to periods away from the workforce to raise children or care for an aging parent. This reality makes it even more important that they set precedence regarding finances. Women should become more educated, build financial confidence, and most importantly–make good financial decisions.

Good decision-making will have a more significant impact on financial success than skill and talent combined, regardless of your gender. Dalbar, an independent research firm, has confirmed this. Their 25 years of research has found that investors’ performance has suffered significantly due to poor decision-making. Decisions which have been emotionally based or made in the “heat of the moment” tend to end with poor results.

This issue recaps some of the highlights of our Just for Women conference. If you were not able to attend, please make it a priority to join us next year — mark your calendar for May 8, 2020. Hopefully, our women’s community will help ignite a financial passion in everyone who participates.

If you would like to receive our Just for Women – Money Matters email, send us a request at [email protected] Provide your name and email, and we’ll make sure you receive the next issue.

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Heritage Planning

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What Successful Families Do Differently

We all have loved ones who we want to succeed after we have passed on. How do we prepare them to use our hard-earned savings in a healthy way?

Heritage planning encompasses passing on your “wealth” to your heirs without controlling or enabling them. The process begins by redefining “wealth.”

Your wealth is human, intellectual, and financial capital. It is who you are and what you value. You can improve the life of your loved ones by passing these principles to them along with financial assets.

Many people are curious about how to start heritage planning with their families. These are six steps to focus on:

  1. Redefine wealth as financial capital, human capital, and intellectual capital.
  2. Use a 7th generation mentality.
  3. Pass on your values through stories.
    (Above is the word cloud of values from our participants.)
  4. Teach your children to give.
  5. Teach your children how to manage financial risks.
  6. Focus on the qualitative and not on the quantitative.

Please call us if you would like to schedule an appointment to discuss how we can help you get started with heritage planning in your family.

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This Is What We Recommend In an Old Bull Market

By | 2019, Newsletter, Viewpoint | No Comments

Economies fluctuate. They always have. They probably always will. These cycles are imperfect and a little chaotic. That’s what makes them so difficult to predict.

Most people would say we are currently in a bull market and we have been in it since March of 2009. That makes it over 10 years old and the longest bull market ever.

Bull markets don’t die of old age. However, some of the current data is positive, and some is negative. That means a recession in the next twelve months is unlikely, but we should expect a rough road ahead.

What should we be doing ten years into an economic expansion? We should get our finances in order. That means more than just our investment portfolios. We should take a good look at all of our savings and spending as well.

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2019 Outlook: Patience Will Pay Off

By | 2019, Newsletter | No Comments

“The stock market is a device for transferring money from the impatient to the patient.”

This statement by Warren Buffett is educational and relevant today. When markets move downward, investors become uncomfortable. But during recessionary times, investors may panic. Companies pull back, people lose jobs, and stock declines can become sharp.

The U.S. is now late in that cycle, meaning we are coming closer to the end of a growth period. But if we look at the big picture, how damaging are recessions? How often do they occur? And how should investors handle them?

Since 1950, the average expansion lasted 67 months (5.6 years) and had an average GDP growth of 24 percent. The current expansionary period is one of the longest in history, currently 10 years in length. But it has also had one of the slowest average growth rates and is still far from the largest in total growth. Capital Group believes this has prevented the major imbalances that cause recessions from materializing. However, they do admit that the risk of recession will continue to grow until its inevitable arrival.

The average recession has lasted only 11 months and had a GDP decline of 1.8 percent. The contrast, as you can see in the graph provided, is immense. Yet the fear that those relatively small declines bring is often greater than their positive counterpart. The truth is, opportunities are developing in declining markets, and the strongest rallies are generally found right after a recession.

The general rule is this: Stay invested. Those who deviate from their financial plans are those who Warren Buffett calls “impatient investors.” If you stick with your plan, the odds of success will greatly be in your favor and the money transferring from the impatient will be to you, the patient investor.

Presented by Max McQuiston (American Funds) at the Just for Women conference. Recap by Jordan R. Hadfield.

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Is Your Brain Risking Your Financial Success?

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The world is full of information, yet our brains are only capable of processing a certain amount. If we had to analyze every aspect of every situation or decision, we would never get anything done. In order to cope, our brains have created shortcuts to help us make sense of things. These cognitive shortcuts – known as heuristics – are rules of thumb or educated guesses. In many cases, being approximately right is good enough. However, there are times when these shortcuts are not good. Recognizing when they are creeping into our decision-making will help us determine if they are helpful or hurtful in our current situation. This is critical when it comes to your money.

Overconfidence

While confidence is good, overconfidence exaggerates our abilities and can cause us to underestimate the risk of being wrong. For example, you may pick a stock that is growing. If the stock price continues to go up, you conclude that you have a good strategy or a natural talent. However, when the stock plummets, you distance yourself from the truth, believing it was just bad luck. An overconfident person may even repeat the same mistake over and over again.

Framing

When we have already made up our minds, we place our existing perspective on all new information that comes our way. For example, expecting a drop in the stock market, you put a negative spin on any good news. People who frame eventually get a big surprise when they find out the cost of being wrong.

Anchoring

Every one of us has experiences that form our opinions. When we anchor ourselves to these opinions, we ignore anything that doesn’t fit our views. If you lost money investing in a recession, you might conclude that the stock market is too risky. Even when presented with a better perspective of its potential growth, you may still feel like there is too much risk.

Herding

Have you ever found yourself doing something you would not do on your own? Going along with what a larger group is doing, whether those actions are rational or not, even in the face of unfavorable outcomes is known as herding. You hear that investors are selling, so you sell, or you hear they are buying, so you buy more without considering how it impacts your financial plan.

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Instant Pot Cooking

By | 2019, Newsletter | No Comments

We had the excellent opportunity to hear from Alex Daynes at our Just for Women conference. Alex is a self-taught food blogger and a monthly contributor on Fox 13 and Studio 5. She has always loved to cook, and it shows.

She is an expert in Instant Pot cooking and taught us the basics of how to use the Instant Pot. She then taught us three easy recipes that we can make on our own; Chicken Coconut Curry, Spicy Green Beans, and Mango Sticky Rice.

If you would like the recipes, give us a call, or you can check out her blog at:
myownmealplan.blogspot.com/

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Rock Steady Boxing

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We had the opportunity to hear and participate in a presentation given by Sherrie Bickley, a coach for Rock Steady Boxing. Rock Steady Boxing is a fitness class designed specifically for people with Parkinson’s disease.

The program focuses on specific skills and motions that are difficult to do or that begin to deteriorate when someone has Parkinson’s. They practice vocalization and learn how to get up off the floor if they fall. They learn the benefits of living a healthy and active life, along with the benefits boxing can have for people diagnosed with Parkinson’s disease.

The results Sherrie has seen have been incredible. We even got to meet one of the boxers in a Rock Steady Boxing class and hear how it has improved his life!

Sherrie showed us what she called “the world’s shortest boxing class.” We learned a few boxing punches, and she took us through the basic outline of what she does in a Rock Steady Boxing class. We had a great time learning about boxing!

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Your Values Matter

By | 2019, Money Matters | No Comments

When it comes to money, your values matter, why? If what you value most and your goals are not in alignment, you will experience a state of financial and emotional conflict. Your ideals and your actions will not match up, making it difficult to reach your goals.

Here’s an example of a value and a goal that would be in alignment. If family is important to you, then you value time spent together and want to take care of them. Your goal would be to protect your family financially if something should happen to you. Your actions might be to provide money to cover debts, pay for children’s college, replace your income, and provide end of life care. You would make saving for emergencies and retirement a priority, so you are prepared to live a dignified retirement, you would have legal documents and beneficiary designation in good order to protect your loved ones.

There is no right or wrong answer when it comes to personal values. They can be anything from Family, to Independence, to Education. There is no prerequisite to what you value; it is the culmination of your life experiences, education, and beliefs. The trick is which values are most important.

What are your top 5 values? You may be able to name two or three right off. Then you may go into a stupor, wondering “What else do I value”? Sometimes it is not easy to identify our top 5; it takes time and thought. If you find yourself stumped let me know; I can help.

Your decisions and actions have the most significant impact when it comes to reaching your goals. They have more to do with your financial success than the market or the investments you choose.

That’s why your values matter!

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How Emotion Drives Your Money

By | 2019, Money Moxie, Newsletter | No Comments

Emotional Response

Financial advertisements make inflammatory statements such as “You cannot afford losses like those of the last recession” or “Making the wrong Social Security decision can cost you thousands.” These advertisers want to make us feel that we need to make changes without considering the reality of our situation.

Everything we hear or see causes an emotional reaction; good or bad. Information we hear or see hits the amygdala, the center of emotion in our brain within 12 milliseconds.

Logical Response

It takes 40 milliseconds for the same information to hit the logical part of our brain, the cortex.

By that time our emotions have hijacked our brain, and we cannot think straight. There literally is no time for rational thinking. Our minds were made up before we even realized what was happening.

Finding a Solution

Next time you find your logic being hijacked by emotion, take a step back. Think to yourself: “What if the situation I am fearing does not happen?” “What if the opposite happens and things are better than I think?”

Your financial plan is the tool we use to prepare you for market volatility and prevent emotional decisions from sidetracking you from your important financial goals. If you do not have a plan or have not recently reviewed your plan, I invite you to meet with one of our financial advisors.

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Bull Market Turns 10!

By | 2019, Money Moxie, Newsletter | No Comments

How a Lesson from 2009 Could Help You in 2019

Ten years ago, the stock market and the economy were in disarray. These were dark financial days for most investors and most Americans.

By March 1, 2009, the Dow Jones index had fallen over 50 percent from its high (from over 14,000 to nearly 6,500). One advisor asked me what would happen if it dropped another 50 percent. His faith in a turnaround was being tested. It turned out that the Dow did continue to slide lower, but for just one more week and the loss was not another 50 percent, but only 3 percent.

A client called to close her account. She was fortunate because she had invested conservatively and had actually made money since the crisis began. She didn’t care. She was petrified–wanted zero risk. She sold out. That was March 2, 2009. Exactly 7 days later, the market hit bottom.

The client and advisor missed out. The S&P 500 has increased 305 percent since its low in 2009, and that doesn’t even include dividends. As we have stated many times,

“If you want to see the sunshine, you have to weather the storm.”
–Frank Lane

December 2018 provided the same lesson with less drama. This time, investors really seemed to be acting irrationally. The market fell around 19 percent in a very short amount of time. Sentiment surveys at CNN Money and the American Association of Individual Investors were recording record lows.

However, our indicators at SFS were not flashing a crimson red. In December 2018, those that focus on employment and consumers (70 percent of the economy) looked strong. Low energy prices also seemed good.

What about the sentiment indicators? Using the emotions of investors as a signal is not very reliable. These emotions can change quickly, so they cannot signal what is likely to happen in the coming year or years. They are also a better indicator of what not to do, which means we had another reason to be optimistic.

In short, we absolutely believed the market would reverse course and move higher. For all our investors that weathered the storm, the sun did shine again and brightly.

Where do we go from here? I said last December that things were not as bad as they seemed. Now I am telling investors that things are not as good as they may look.

With evidence of slow growth, the Federal Reserve will stop tapping the breaks on the economy. Plus, there is plenty of cash that left the stock market in the fourth quarter that has not returned to the markets, yet. Both are reasons to not give up hope for a positive 2019.

The S&P 500 is often used to represent the U.S. stock market. One cannot invest directly in an index. Past performance does not guarantee future results.

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