Don’t Fear the End of the Current Bull Market

Investors of a certain age recall all too well the end of the last bull market. From late 2007 to early 2009, the S&P 500 Index fell 56% and lost a staggering $11 trillion in market value. That painful memory has many of today’s investors wondering how long the current bull market will last and how they can protect their portfolios from its eventual, inevitable demise. The simple answer, surprising as it may sound, is “don’t worry about it.” Rest assured, I have not lost my mind.

Study after study shows that most investors buy-high and sell-low. This is because they’re convinced they can correctly identify the beginnings and endings of bull and bear markets when, in fact, they can’t… no one can. As a result, the millions of Americans who sold in 2008 when stocks were low missed out on the extraordinary gains that began in early 2009 and persist today.

072318 Market Bottom.PNG

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How Much Will I Need to Retire?

Almost everyone has wondered, or will wonder, about this question as they progress through their careers and, especially, as they approach retirement.  After working most of their lives, this is understandably a million (or multi-million) dollar question that weighs on people’s minds as they prepare to spend more of their time finally doing exactly what they want.

Retirement Savings

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USDA Loans Helping Millennials Crack the Housing Market

Millennials have surpassed Baby Boomers as the nation’s largest living generation, according to the U.S. Census Bureau. This generation is forming most of the new households and buying a majority of the new and existing homes. One-half of all U.S. homebuyers are younger than age 36, according to recent housing trends.

However, while many Millennials are buying homes, many others are not. That’s because, financing hurdles are keeping a significant number Millennials out of the market. The most common roadblocks include student loan payments and high rental costs that sap the ability to accumulate a down payment on a mortgage. This results in a “rent trap” that is difficult for many to escape.

There is, however, a little-known mortgage alternative available through the United State Department of Agriculture (USDA) that can be a boon for many Millennials, as well as, other first-time homebuyers.

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Small but Mighty: How Individual Investors Can Compete With Large Institutions

Institutional Investors.  These are the big wigs as far as investors go.  They invest money for themselves, for other institutions (e.g. endowments, pension funds, etc.), and typically have billions of dollars at their disposal.  This enables them to buy a majority stake in any S&P 500 company, and if they feel like having a chat with the CEO, or commanding a seat on the Board, both are just a quick phone call away.

How are individual investors supposed compete with these guys?  Continue reading “Small but Mighty: How Individual Investors Can Compete With Large Institutions”

Why High Earners Still Live Paycheck-to-Paycheck

If you live in the United States and have yearly family income of $150,000 or more, a recent study by Nielsen Global Consumer Insights reveals that there is a 25% chance that you have little or no savings because you consume every last dollar you earn.  This is called living hand-to-mouth or, to put it bluntly, you’re basically broke.  Isn’t that hard to believe?

The average family income in the U.S. is just under $47,000 as of 2014.  It would be reasonable to think those fortunate souls making over $150,000 would not be struggling each month to make ends meet.  Not so, according to Nielsen.  Far from it, in fact.  The same study revealed 33% of households making between $50,000-$100,000 and 50% of households making less than $50,000 are in the same hand-to-mouth situation.

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4% Rule: Made to Be Broken?

A common concern among investors is running out of money in retirement. Combating this concern, the “4% rule” is widely presented as a simple way to help your money last. Created in 1994 by financial planner William Bengen, the 4% rule says if you withdraw 4% of your nest egg each year, adjusted annually for inflation, there is a 90% chance your money will last at least 30 years. Yet despite its notoriety, the 4% rule is not without issue.

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Long-Term Investor, Short-Term Attention Span

Society has an activity addiction. We constantly need to be entertained. So much so that the average human attention span is only 8.25 seconds – down from 12 seconds a decade ago and almost an entire second less than a goldfish’s, according to Statistic Brain. Undoubtedly, millennials bring this average down a bit. 77% of people aged 18-25 said if nothing is occupying their attention, they will grab their phone, compared to only 10% of those over age 65. Begrudgingly, I can attest to this. I’m currently working to complete my MBA degree through Ohio University, which is rewarding but includes a lot of paper writing. Although I’m thriving, I’ll admit if I had a nickel for every time I checked my phone, answered a text message or opened an off-topic internet tab instead of focusing on a paper, I wouldn’t need to earn my MBA…I’d just buy one.

*stops writing this post to research the going price for MBA degree*

Obviously I can’t actually buy a graduate degree and as easy as it is to joke about the fact that many of us can’t pay attention anymore, this notion made think (impressively, for more than 8 seconds) about how investors are affected by short attention spans. This mindset makes investors hypersensitive to trading frequency (“Why didn’t my investment adviser buy anything today!?”) and short-term price movements (“She bought that for me last week, why is it already down -1%!?”). This mentality can cause investors to “act just to act,” or worse, act solely on short-term volatility.

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Do You Robo? There’s An App for That

Could this be the golden age of the mobile app?  Maybe.  Only time will tell.  What is clear is that mobile application software (“app”) is transforming everything from how we reserve a table at our favorite restaurant to how we track our activity, sleep, health and much, much more.  Financial services like banking, personal finance (e.g., budgeting, bill-paying), and investment management, are participating in big ways in the mobile revolution.

To that end, automated investment platforms called robo-advisors are proliferating rapidly.  Nearly all major brokerage firms, mutual fund companies, and even some banks have an up-and-running robo-advisor solution for their customers.  They have intuitively appealing names like “Intelligent Portfolios” etc., and they use a simple algorithm to automatically re-balance portfolios back to a fixed asset allocation determined by each user.  In a nutshell, robo-advisors are an automatic, set-it and forget-it, mobile investment technology aimed at the mass market. Continue reading “Do You Robo? There’s An App for That”