financial plan

Unprecedented Times

By | 2020, Newsletter | No Comments

It is unprecedented times like these that bring people together with a common focus and a shared desire. Protecting the lives of our family, friends, and community has become top of mind, and our daily efforts reflect that devotion.

While times have changed, our commitment has not waivered. Your financial success and well-being are our top priorities. We are diligently working to stay abreast of the changing financial landscape and keep you on track to meet your financial goals.

When creating financial plans, we are continually watching for bumps in the road that could prevent our clients from reaching their goals. Financial markets and the associated volatility are not unexpected. In fact, market volatility, as a risk, is built into every plan we create, whether you are working toward future retirement or enjoying retirement now.

Having had the opportunity to help clients through multiple bear markets, and numerous market corrections, we know that sticking with your plan delivers the best opportunity to achieve financial success.

We will continue to use email and social media to stay connected and keep you informed. We will resume sending postal mailings when COVID-19 restrictions have been lifted.

I invite you to contact one of our wealth managers to discuss your situation, get answers to your questions, and hear what Smedley Financial is doing to help protect your financial future. We are working remotely and are still available.

I want to thank those who have reached out to us, concerned about our well-being. Your thoughtfulness is very much appreciated.

It is our greatest hope that you and your loved ones stay healthy and safe.

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Surviving A Bear Attack

By | 2015, Money Moxie | No Comments

bear claw

We have all heard that when a bear attacks, the best thing to do is to stand still! Sounds simple enough, right? Well, it isn’t that easy. A few years ago I had the privilege of hearing Michael Dunn’s story on surviving a grizzly bear attack in the Grand Teton National Park.

Dunn was on a family vacation in the Tetons on August 14, 1994. He woke up before the rest of the family and quietly slipped out the door for a run. He saw signs of danger, but kept moving forward. He had made it just a couple miles on the dirt trail when he heard some branches snap. Suddenly, a large shape moved towards him, knocking him off his feet. He landed nine feet from the trail, where a 500-pound grizzly sunk its teeth into Dunn’s hip.

There was little chance for Dunn as he struggled. The bear clawed at his back, swiped at his neck, tore open his face, and almost stuck a claw right into Dunn’s eye.

The end seemed near and Dunn decided to play dead, which calmed the bear enough that it was distracted. Dunn’s survival was nothing short of miraculous!

Bear markets
Bear markets are not life threatening but can be financially devastating, especially if we make poor decisions. A bear market is typically defined as a loss of 20 percent or more. Smaller losses are often referred to as corrections because they are less damaging and could even be viewed as healthy market behavior. (After all, if stock values just went straight up then how could they represent value from real ownership of real companies?)

This summer, the S&P 500 officially hit correction territory with a 12 percent drop. These drops can be alarming, but often the best thing to do is to stand still. I have compiled more advice for these difficult times.

Last 50 years

Don’t panic
These corrections are normal and are to be expected. Remember 2008 and 2009? The financial markets melted down in a frightening manner, but then recovered to new highs. The current market is nowhere even remotely close to as bad as that was.

Trying to time the market by getting out at a high point and getting back in at lower prices is almost impossible. Most investors would be better off staying the course. Historically, the U.S. stock market has recovered from every correction and every bear market to eventually reach new highs.

Keep perspective
Stock prices experience dips frequently. In fact, only 53 percent of days are positive. Positive months are only slightly more common at 59 percent.

Even though 10 percent corrections occur on average once every three years, the three-year return has been positive 78 percent of the time and the three year average has been a 24 percent increase.

Fortunately, bear markets are rare—occurring, on average, about once every six years. In fact, based upon history, an investor willing to diversify and weather the storms is four times more likely to make 20 percent than to lose 20 percent.

Total Returns

The real positive difference comes over longer periods as the positive numbers begin to compound. For example, over the last 50 years 74 percent of the calendar years have been positive for the stock market.

Over the same 50 years, the chance of losing 20 percent in a calendar year has been extremely rare—occurring just once every 17 years. (Bear attacks resulting in death have occurred once every 18 years on average in Yellowstone.)

Don’t fixate on your statement or the news. If checking your statement every day is going to make you feel like something needs to be done then try checking less often. It is important to stay in tune with what is happening in the world around us, but again, if the news makes you feel like you have to do something then beware. Good news is harder to find in the media, especially regarding financial headlines.

Look for opportunities
A market correction is a good reminder that risk is real. If you or someone you know has any doubt that their investments match their financial plan or their ability to accept financial risk, then come see an SFS Wealth Consultant.

When the market drops, some people get nervous and want to get out. Others welcome the fall as an opportunity to take advantage of better prices.

Remember diversification
“Don’t put all of your eggs in one basket” is a classic phrase to describe diversification. Overall, history has shown this to be one of the most prudent ways to invest.

We don’t know if the current correction will grow to become a bear market. No one knows. However, we do have over 100 years of combined experience at SFS and we feel confident that the market will come back. Stay the course and your long-term results will not only help you survive, but you may even thrive.


*Research by SFS. Data from public sources. The S&P 500 is often used to represent the U.S. stock market. Calculations are based upon a 50-year history in this index. One cannot invest directly in an index. Investing involves risk, including potential loss of principal. 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 on market and other conditions, and should not be construed as a recommendation of any specific security or investment plan.

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Indexing: Best Thing Since Sliced Bread?

By | 2015, Money Moxie, Newsletter | No Comments

There has been a lot of buzz lately about indexing, and for good reason. Statistics show that many actively managed investments don’t beat their benchmarks.1 So, should we all invest solely in indexes? To answer this question, let’s look under the hood to get a deeper understanding.

Let’s say that the U.S. economy is like an engine made up of 500 parts. Each part is important and together they create motion, either forwards or backwards.

The S&P 500 is most widely regarded as the engine of the of the U.S. economy. This engine is made up of 500 stocks like GE, IBM, Apple, and Chevron. If most of these stocks are heading up, the economy is moving forward. The converse is also true.

For most people it would be too complicated to go out and buy 500 parts and build an engine from scratch. We go to a dealership to buy a whole engine already assembled.


The investment challenge is that buying all 500 stocks in the exact quantity of the index is impractical for most and one cannot buy an index directly. An index investment can assemble one portfolio that resembles the 500 parts of the index.

When you buy an index fund you usually get several important benefits such as clear goals, diversification, and reasonable fees.

The objective and implementation should be clear. One does not have to spend hours researching prospectuses to determine exactly what is being held.

When buying an engine, one gets the parts. This diversification reduces your risk because if one stock drops another may do better. With diversification there is a better chance of making money over long periods of time.

Passive investing requires little tinkering under the hood. This helps keep fees reasonable.

Like any investment there are drawbacks: risk, investor behavior, and inefficient markets.

Index investments behave almost exactly like their indexes. This seems so simple that it shouldn’t need mentioning. However, many people only look at the potential return without contemplating the risk.

A good illustration is the “Great Recession” when the S&P 500 went down by 57 percent from October 2007 to March 2009. People indexing only in the S&P 500 lost over half of their 401(k) and couldn’t retire as planned. This greatly impacted people planning to retire who were taking too much risk.

Research shows that individual stock investors have significantly underperformed the S&P 500.2 This is mostly due to investors buying and selling at the wrong time. Just holding an index investment does little to solve this problem and accomplish your goals.

Indexing works best where markets and information are efficient. However, many investors believe that when searching for worthwhile opportunities in other places where information is scarce, it may be worth it to hire an expert to gather more information.

Indexing has become popular and new indexes are introduced all of the time. Not only can you find indexes tracking “the market” but also segments of the market like tech stocks, international markets, and even commodities like oil.

The success of indexing might also be its downfall. “Investing theories run in cycles. A success becomes a fad and a fad becomes a failure. Smart people bet against fads.”3

One must ever be on the watch to ensure they aren’t just following a fad, but that they are using a strong investment strategy built for the current market environment and their own risk tolerance.

What do you do if your engine isn’t working perfectly or you want some improvements? You can either do it yourself or go to a mechanic. In the investing world, the mechanic is an active manager. That active manager is going to replace the parts he/she thinks are hindering performance with other parts designed to boost performance.

Smedley Financial specializes in designing efficient portfolios for the current market environment. We don’t just build engines, we build cars. We typically use indexing to be the engine of a portfolio but then we use other investments to build the remainder of the car.

If you would like to know if your engine is tuned correctly and your car is ready for the road ahead, please contact us for a free review.


  1. “The Case for Index-Fund Investing,” Vanguard, March 2015. https://personal.vanguard.com/pdf/s296.pdf
  2. Dalbar Study
  3. “Is Vanguard Too Successful?” Forbes, January 21, 2015.
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IRA Rollover versus 401(k)

By | 2015, Money Moxie | No Comments

Money BrainIf you have ever left a 401(k) at a previous job, you are probably wondering what you should do with your money. If you have over a certain amount, many 401(k)s will allow you to leave the money there or you could roll the money over to an IRA. Below is a list of seven questions you should ask yourself to determine where your money should be.

1. Do you want to be the financial advisor on your account?
Do you feel comfortable answering these questions: Am I saving enough? Am I taking the appropriate amount of risk for my age and time horizon? Which investments should I hold? How do I make my money last for all of my retirement? If you already know the answers to those questions and are competent at deciding the asset allocation of your 401(k), then your current 401(k) may be sufficient. If you don’t know the answers to those questions, then you may want to roll out your 401(k) into an IRA at Smedley Financial where we can help answer these important questions.

2. How much do I value regular feedback and personalized advice?
Most 401(k) plans are limited in the advice they can render because of fiduciary liability. If you have ever asked a 401(k) advisor where you should invest your money, you may have received a response like: “Where you feel comfortable.” 401(k)s also can’t handle non-retirement investments, real estate, or life insurance. In addition, 401(k) advisors are typically servicing too many participants to provide personalized advice. Seek out a private wealth manager, like those here at SFS, that can advise you on your whole financial situation and align your investments with your goals and values.

3. Is the investment choice important?
Many 401(k)s offer a limited number of investment choices, typically 10 to 20. They may be lacking the ability to diversify into many other investment options that could boost return or diversify risk. IRAs tend to offer a much broader choice of investment selections. For example, our brokerage account has access to over 3,000 different investments. Review the investment options available and determine if they allow for appropriate diversification and if they have had good investment performance in relation to their benchmarks.

4. Do I understand how to compare fees and expenses?
Thanks to recent laws, 401(k)s are now required to disclose their annual fees, which makes this comparison easier. Compare the fees for the 401(k) and the IRA by looking at the total fee and what services are provided for that fee.

5. Am I between ages 55 and 59½?
For employees that separate service between the ages of 55 and 59½, some 401(k)s allow penalty-free withdrawals. IRAs on the other hand only allow penalty-free withdrawals after the age of 59½. Determine when you may need your 401(k)/IRA money and whether you have other sources that can bridge the gap between retirement at an earlier age and age 59½.

6. Am I concerned about creditor protection?
Both 401(k)s and IRAs generally offer substantial credit protection. 401(k)s are typically excluded entirely from bankruptcy proceedings while IRAs are typically excluded up to a maximum of $1 million. Check with your state to verify any state specific rules.

7. Do I own employer stock in my 401(k) plan?
Before cashing out your company stock in your 401(k), consult with a tax advisor to determine if a tax strategy called Net Unrealized Appreciation could benefit you. Depending on your individual circumstance, the company stock may be taxed at a lower rate. Once company stock is transferred to an IRA, it is treated like the rest of the IRA money and is taxed as ordinary income when it is withdrawn.

Before making these or any important financial decisions, talk to the Wealth Management Consultants at Smedley Financial so they can help you reach your goals.

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The Ultimate Marathon: Retirement

By | 2013, Money Moxie, Newsletter | No Comments

Top notch athletes have something in common. Each possesses a strong commitment to endure to the end. Marathon runners spend countless hours working towards a single goal–completing the 26.2 mile run at marathon pace. When accomplished, many begin preparing for the next marathon.

Richard J. Carling personifies a top notch marathon competitor. He began running at age 39, for health reasons, and at age 75 he’s still going strong.  He runs four marathons every year.

In October, Richard will be running in the St. George Marathon, his 145th marathon. I asked Richard how he got started. He said, “Before I started running, I didn’t think I needed a plan to stay healthy, I thought I was fine.” After his health scare he was told he needed to do something and running was recommended. Now he has a plan and a strategy, which he follows to stay healthy and compete in marathons.

A runner’s journey begins with an assessment. Fitness level, personal needs, and race terrain become the basis on which their training program is built. If these areas are not addressed, the runner will have little chance of reaching the goal. For instance, someone with a physical ailment must take precautions to protect themselves from injury. Someone who will be competing at a high elevation, like the Colorado Rockies, must do more than train at sea level. The key is that each training plan is very personalized to the athlete and the goal.

Planning for retirement begins much the same way. First you must determine what it is you want to accomplish. Is your desire to retire at a certain age, or is it more important to maintain a certain standard of living throughout retirement? Once you’ve made your decisions, there must be a strong commitment to reach those goals.

Self-assessment is important when building your plan. If this step is missed, you may find that you are not able to stick to your long-term plan. Think about this, if you invest in something with considerable volatility when emotionally you can tolerate little risk, you are more likely to abandon your plan. On the other hand, you will be disappointed and fall short of your goal if you were expecting market returns over many years but were invested too conservatively.

If you want to run for a lifetime, as Richard has, he says, “You must stay within your limits. This will help keep you healthy and prevent injuries.” Consistency is important. Richard runs 8 miles each weekday and tries to get 20 miles in on Saturday. He says, “If you over train or push yourself too hard, you will have to make adjustments that can set you back in your training.”

Marathon runners, in general, train by running long distances to increase stamina and endurance. They are not running sprints to get ready for the race, nor will they be sprinting during the race. The distance of each run is carefully planned out so that they peak on the day of the marathon.

This same practice is applied to retirement planning. Your plan must be well thought out. What types of investments will best help you reach your goals? My guess is that there will be some investments that are more conservative to provide for your needs as you begin retirement. From there the investment risk may increase based on when the assets will be converted into income. While this may seem obvious, many miss this point entirely. Their plan becomes fluid and investments are made based on the heat of the moment; the well thought out plan is abandoned. Market timing becomes the basis of the investment plan.

Dalbar Inc. released a study on March 26, 2013, regarding investor behavior. The study reveals how emotional, short-term decisions have stunted the performance of equity investors.  In a nutshell, the study shows that over the past 20 years, investors have under performed the market by an average of 3.96 percent per year. When compounded over 20 years, the difference becomes a chasm separating you from your dreams.

The gap in returns can be attributed to bad investment habits. The most common error is chasing performance by purchasing the hottest investments. In other words, investors are often their own Achilles heel.

Endurance, both physical and mental, is essential to a marathon runner. Without it an athlete would fall victim to the overwhelming urge to quit. During the 26.2 miles, the runner’s courage and determination are tested. When asked how he’s able to run such long distances, Richard says, “Everyone hits a wall at around 20 miles. At that point it’s all mental. You don’t worry about the past or the future. You stick with your plan. If you get excited and try to push too hard you’ll crash.” In order to endure, the will must remain stronger than the body.

Along the path to retirement there will be many obstacles. The endurance test will be a matter of commitment and will. If your plan is well thought out, market volatility in the short-term should have little impact on the long-term results of the plan.

If you are committed to following your plan and have the will to succeed, you can protect yourself from financial elements that arise. If you understand that taking a large distribution at the wrong time will jeopardize your plan, you will be less likely to make bad loans to others.

After completing the St. George Marathon, Richard looks forward to running the Honolulu Marathon and then the Boston Marathon where he is 10th overall for running the most consecutive marathons. While he is always focused on the race at hand, when that race is completed, he is looking forward and mapping out a plan for his next race. Go Richard!

Getting to retirement is just one step in the long-term retirement plan. Making sure that your assets allow you to continue your lifestyle throughout your retirement years requires additional sophisticated planning. There will be a whole new set of financial elements, and adjustments may be necessary for this part of the race.

Your plan to access your income must address a different set of personal needs. Those that will require continued commitment in an effort to reach the ultimate goal– financial security in retirement.


*The S&P 500 is an index often used to represent the market. One cannot invest directly in an index. Investing involves risk, including the possible loss of principal. Past performance does not guarantee future results. Data provided by Dalbar Inc.

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