A MESSAGE FROM SCOTT TO ALL CLIENTS
These are challenging times as the world prepares for, and responds to, the coronavirus outbreak.
The 11 year and 2-day “U.S equity bull-market” came to an end last Thursday as the stock market continued to experience volatility amid investor uncertainty. This officially marked the end of the longest continued rise in U.S stock market in history, and what I believe will be the longest continued rally for stocks/equities that any of us will see again in our lifetime. We all knew it would end, we just didn’t know what would cause it or how quickly things would turn.
In my 17 years in the business I’ve seen many markets and been there to weather many storms hand in hand with you our clients. Market swings both positive and negative, many times come without any signs or warning…rarely are these large movements predictable. Panic and emotions are not your friend during markets like these, and those investors who cash out during volatile markets find it impossible to know when to get back in.
For those of you who are retired/nearing retirement, you will note that in our review conversations over the past handful of years I been preparing you for an eventual and inevitable U.S equity market correction. Your investment portfolio is well prepared. The coronavirus itself was not predictable, but what was predictable is that the U.S equity market have been for many years long overdue for a correction. In our investment approach, we have not been greedy, rather we have been cautious, and it will pay us dividends as the markets correct. Each of you have money that is protected from equity market downturns that is available to you. For those who are 59 ½ or older and who are using their portfolio for monthly income, during markets like this we go to our “safe money” for income during down equity markets. This means utilizing short-term buckets of cash and mid-term buckets of bonds for cash and income needs. By doing this it will allow your long-term equity bucket to properly heal and recover.
For all our “accumulators” who have a good bit of runway between now and retirement, you are more aggressively invested as your retirement dollars are not needed or accessible for several years. The current market environment, although unsettling, is not a cause for making changes and all of this will even out over the long run between now and your retirement date. Also keep in mind that we knew this would happen….markets go up and they go down, as investors we know we will not always make money and there will always be times where we lose money. However, the past 11 years of unprecedented equity market gains have been a tremendous asset to your long-term retirement plans. The downturn in U.S equities creates a tremendous opportunity to “buy low” and utilize any excess cash to make some great long-term investments.
The benefits of “bucketing money” and not having all investments in the same asset (like the stock market) is both beneficial and comforting in markets like this one for all clients regardless of age. Short-term, Mid-term, and Long-term buckets is something that I have illustrated to you all over the course of our relationship, and is a concept that illustrates how we all should have low risk money for short term needs, moderate risk money for the mid-term goals, and aggressive money for long-term goals.
Over the past 10 years I have brought on board countless new clients who have recounted their stories of “going to cash” during the financial crisis of 2007-2008 before working with us. All of these stories share a common thread; as the markets sprang back up in 2009 and 2010, things still didn’t look good here in Ohio economically so these investors “stayed in cash” for the next several years not knowing whether or not it was “safe to come back out”. They locked in their losses and ended up much worse off than if they would have stayed the course, and never exited the market. Some of these investors are just now getting back to where they were in 2007, 13 years later. Investors that deviate from their long-term plans typically regret it later. An investment plan established during calmer times should not be abandoned amid a market downturn.
The last point I want to stress is the importance of Financial Planning. All the above thoughts specifically pertain to our “investment management philosophy” as well as investment management concepts. Financial Planning of course is a completely different topic altogether and where our firm is different than most advisors in the state who only offer “investment management”.
For those clients who engage us in a financial planning capacity, which is roughly 75% of you reading this, we have much more detailed analysis of you and your specific situation in order to provide the most accurate advice as possible.
We as your advisory team know the exact rate of return your money needs to generate for you to not outlive your assets, and we know the minimum risk you are able to with your investments in order to reach financial and retirement goals.
We know your annual spending, total net-worth, how social security and pensions interplay with your investment needs.
We understand and continuously bring into consideration your estate planning goals as well as tax planning strategies that will benefit you.
You have a complete team of specialist from a mortgage broker, estate and general attorneys, CPA’s, and insurance specialist at your fingertips to answer your questions anytime whenever you want to speak to them. They are your team at your service.
Put bluntly, we believe that financial planning or “Total Wealth Management” as we have rebranded it in 2020, is the absolute best way to understand not only your investment needs, but to have comfort in your complete financial picture. Although Total Wealth Management comes with an annual retainer, I believe that it is the absolute best investment that you can make into your personal finances each year.
We are in this together. You have a full team of in-house and outside specialists, along with the team of money managers at your investment company. You truly have an “Affinity Group” of people all focusing on you. As your advisory team, Rick and I are here to answer your questions and talk through whatever is on your mind. We are holding meetings with clients as we speak both in person and through “screen sharing” and teleconferences. Our office hours will remain the same and our client meeting activities will continue as normal, based upon client preference we will simply adjust the format in which we meet.
I look forward to navigating these waters with you, and again, if you have any questions whatsoever please do not hesitate to reach out to us
Tax time considerations
As tax season winds down for 2019, just a few reminders on tax moves you may be eligible for…
Provided your income allows, maxing out Roth and/or IRA contributions. You can contribute $6,000 under age 50 and an extra $1,000 if you’re over age 50 for a maximum of $7,000.
Provided you are part of a high deductible health plan, maxing out HSA contributions. Single individuals may contribute $3500 and families up to $7000. These limits go up to $4500 for singles and $8000 for families if the HSA holder is over age 55.
While many will take the standard deduction, be sure to let your tax preparer know of your eligible itemized deductions (i.e. mortgage interest, charitable gifts, medical expenses, property taxes, etc.) so they can make a determination as to how you should file and save you the most money.
Contact our office directly if you have any questions or if we can be of assistance in any way.
With record-low market prices, our advisory team suggests evaluating your mortgages with the changing times.
NETWORK SPECIALIST HIGHLIGHT
Tom has over 20 years of experience in the mortgage loan industry. He is known for his personal service in guiding his customers step by step through the home buying and refinancing process. His company offers a variety of loan products such as VA, USDA, FHA, and Conventional loans.