Archive for Author Kristi Sullivan

It’s Not Me, It’s You: Why your financial planner is crabby

financial planner

Since the stock market volatility of October, my financial planner friends and I have been pretty crabby.  “Well, of course,” you say, “down stock markets are terrible for investment advisors.”

 

Nope, that’s not the problem at all.  Getting mad at the stock market for going down is like being angry at a toddler whose nap you skipped to run errands and is now having a meltdown at the grocery store.  It’s the grown-up’s reaction that needs to be managed.

 

Who is the grocery store grown-up in the down stock market analogy?  Hopefully it’s the investor.  Handling the temporary fit in a calm manner and going about her business. But some days I have my doubts.

 

The stock market goes down some years/months/days/hours/weeks.  It MUST go down occasionally in order for it to go up.  Down stock markets are healthy, regular, and to be expected for good overall economic health.

 

If there is no risk, there is no reward.

 

If you don’t experience losses sometimes, there is no reason to expect gains.  You’ve heard it all before.  You tell your financial advisor that you are ready to take risk and get growth in your investments.  And yet..

 

You still are tempted to make the same bonehead moves every time the stock market experiences a down day.  You call your advisor and ask to move all your money to cash when the US stock market goes down by 3%.  When, of course, your advisor didn’t have you in all US stocks to begin with because he forced you into a diversified portfolio even though you WANTED to be all in US stocks 3 months ago because that’s what has performed the best the last 2 years.  Geesh!  You see where this is going?

 

It’s not the market, it’s the investor that is the problem.

 

So, please, for the sake of your investment advisor’s sanity, remember just two factoids:

 

In the twenty years preceding 12/31/2015, the S&P 500 averaged 9.85%/year compared to the average investor return of 5.19%/year. *  This is because investors tend to put more money into investments when they are high and pull money out when markets are low.  Buying high and selling low is no way to make money – ask any store owner.

 

You never know when to get back in after you’ve bailed out.  Missing a few great days can lead to sub-par performance over decades.  For example, a hypothetical (because it NEVER happens) investor remained invested in the S&P 500 Index from 1998 to 2017 (5,036 trading days) would have earned a 7.20% annualized return. Miss the 5 best performing days and the annual return shrank to 5.02%. Miss the 20 days best days, the returns were cut down to just 1.15%. If the 40 best-performing days were missed, an investment in the S&P 500 turned negative, with $10,000 dropping to $5,670. **

 

If you’d like a professional to help you craft a diversified portfolio you can live with for the long run, with occasional rebalancing, e-mail me to set up an appointment.

 

Just not right now.  I’m in a bad mood.

 

*Source:  https://www.thebalance.com/why-average-investors-earn-below-average-market-returns-2388519

 

**Sourcehttps://www.ifa.com/12steps/step4/missing_the_best_and_worst_days/

 

Defined Maturity Bond Funds: A New(ish) Investment Option

maturity bond funds, denver financial planner

In times of uncertainty (rising interest rates, tariff wars), investors understandably want predictability, even if it means sacrificing return.

 

Cash (savings accounts, money markets) offer stability, but not much interest.  For people who are working, I suggest you keep 3-6 months of expenses in cash for emergencies and invest the rest for longer term growth.  For retirees, a bigger cash cushion (1-2 years of expenses needed from your portfolio) makes more sense to insulate your need to pay bills from a recession.

 

Bonds offer better interest than cash, less volatility than stocks, but still do rise and fall in value.  Buying individual bonds can relieve some of this uncertainty.  Bonds mature at a pre-determined date and pay a set amount of interest in the meantime.  However, bonds sell in $1,000 increments, so it can take a lot of money to build a diversified bond portfolio.

 

Just as with stocks, most investors get their exposure to the bond market through bond mutual funds.  Unlike individual bonds, bond funds invest in a large pool of bonds.  As bonds in the mutual fund mature to cash, the fund manager buys more bonds.  These products don’t have a set maturity date.  The interest earned is usually better than money markets, and the principal of your bond fund can grow over time.  The principal can also drop, with no set date when it might come back up.

 

Here’s another option

Enter a new-ish investment option:  Defined Maturity Bond Funds.  Sometimes they are also referred to as Target Maturity Bond Funds.  These mutual funds invest in bond that all mature in the same year.  As the bonds in the fund mature to cash, they are not reinvested to buy more bonds.  At the end of the defined year, the whole fund will be in cash, effectively maturing like an individual bond.

 

These products offer an interesting way to take some of the uncertainty out of bond investing without the hassle and high capital need of creating your own bond ladder or bond portfolio.

 

In researching the investment firms offering Defined Maturity Bond products, I’ve seen some things to look out for:

 

 1. Not all of the big brands are offering them. And those who do can have a limited selection.  For example, Fidelity offers municipal defined maturity bond funds, but those aren’t great for IRA investors.    Vanguard, an investor favorite, doesn’t seem to be offering the products at all.

 

 2. Much of the inventory in this space is sold as ETFs (Exchange Traded Funds), not mutual funds. This means that prior to maturity, the shares of your bond ETF trade back and forth between investors like a stock or bond.  The perception of the value of the ETF, not its net asset value (NAV) is what determines an ETFs pricing before maturity.  With a Defined Maturity Bond ETF, after the holdings all mature to cash, the cash is sent to shareholders and the fund is liquidated.

 

If you have questions about how different bond products fit into your portfolio, contact me for an appointment!

 

Wise Words to Live By

wise words

My husband recently forwarded me this great column that makes me feel better every time I read it.  So, why not share these wise words with my faithful readers?  The theme is life lessons the author wished he had learned by his 20s.

 

Click here for the full list, but here are my 5 favorites.

 

Don’t judge. You don’t know all the facts. That lady speeding down the road with her toddler unbuckled in the back seat may be panicked, heading for the hospital for an emergency that you can’t see. That “big kid” having a “tantrum” in the store may be on the autism spectrum, and is having a meltdown, which he/she hates as much as you do. The fat lady in the bikini may have lost 100 lbs so far, and she’s pretty darn proud of what she’s done. Don’t shame people for smoking, drinking, or being fat. We all have our faults and bad habits. As a pretty famous guy is alleged to have said, “let he who is without sin cast the first stone.”

 

Don’t beat yourself up about stuff. Do what you can to fix your mistakes, then move on. Guilt is only good for pushing you toward making things right again. After that, it becomes shame, and shame is a toxic substance which will eat you up inside. Same for worry.

 

“Fitting in” is highly overrated. Be you. Confidence is sexy. Besides, great leaders didn’t get where they are by following the crowd.

 

You’re probably a lot smarter than you give yourself credit for being.

 

It’s just stuff. Sure, stuff gets broken—oftentimes accidentally by people you love—and that’s annoying. But your stuff can be replaced. You can never erase the hurtful words you say to the person you love, because they broke your stuff. Stuff is never, ever as important as those you love.

 

No boring personal finance stuff this week.  Consider it my gift to you, but next week we are back at it with financial tasks to do before year-end.

Christmas Gift Guide: One-Stop Shopping HERE

Christmas gift guide

Looking for something different to put under the tree this year?  How about these beauties?

 

  1. Don’t be bored with your old board games!  Give these adult versions of classic games from Hasbro a try!  Clue (lost in Vegas), Sorry, not Sorry (get embarrassing confessions from fellow players), and Life:  Quarter Life Crises (paying off soul-crushing debt and dealing with a phone dropped in the toilet).  Many other fun options in this link: https://www.scarymommy.com/hasbro-parody-versions-games/

 

  1. She’s got legs (sing ZZ Top now)!  This is more of a pre-Christmas gift, but my favorite holiday accessory is candy-cane striped tights.  So warm AND fun for the office holiday party.  https://www.amazon.com/Leg-Avenue-Womens-Candy-Pantyhose/dp/B0148KL8WG  S.  I do NOT wear these with the 5-inch high stripper shoes and tutu as shown.

 

  1. But seriously folks…Who really needs more stuff? How about the gift that keeps on giving, without cluttering up the house?  That’s right, I’m talking charitable gifting!  You can give a goat, cow, or sheep to a family in need without the need to scoop poop.  heifer.org.  How about being a source of safe funds for women starting or expanding a business in a developing company?  https://www.capitalsisters.org/  Or, closer to home, you can help feed people all year round with a donation to your city’s food bank.  For a list, go here:  https://www.feedingamerica.org/find-your-local-foodbank

 

See, all the fun of the holidays, without fighting the hoards on Black Friday.  You are welcome!

5 Conversation Starters for your Thanksgiving Table

5 Conversation Starters for your Thanksgiving Table

Let’s face it, even the most animated family and friends can have conversation lags during a whole day spent cooking, snacking, drinking, snacking, basting, mashing, snacking, yelling at the football game, moving things around frantically in the oven, and finally, eating!

 

So here are 5 Conversation Starters for your Thanksgiving Table:

 

Thanksgiving Mad Libs, available for $5 on Amazon is always a way bring people together for a laugh.

 

Find a corny Thanksgiving joke for each guest and put it at their place setting.  Go around the table and read them.  Let the groaning begin.

 

Do a Thanksgiving Festivus a-la Seinfeld and tell each person what has annoyed you about them this past year.  I’m totally kidding, DO NOT do that!

 

Have everyone say one thing in the room they are grateful for.  It could be food, another person, the extra napkins, comfy chairs, or whatever.  Kind of like I Spy with a twist.

 

Ask everyone what their favorite movie or book was this year.  What was their least favorite?  It’s your own Rotten Tomatoes!

 

Have a wonderful Thanksgiving Day!

 

 

Rock Your Thanksgiving with This Recipe

thanksgiving recipe

I don’t mean to brag (well, of course I do – anyone starting a sentence like that is about to brag), but I have been making cornbread dressing for my family since my teens and it is really good.  I mean better than yours.  Or your mama’s. Or your Aunt Ethel’s.  And because I feel bad about you eating sub-par dressing on Thanksgiving, I am sharing my recipe with you.

 

First, you make the cornbread.  Bake cornbread 24-48 hours before making the dressing so it has a chance to dry out.  Break it into pieces so it dries out better.

 

Preheat the oven to 425 degrees

 

Mix the following dry ingredients:

  • 2 cups cornmeal
  • 2 cups flour
  • 1 tsp salt
  • 4 tsp baking powder

 

Combine the following 3 wet ingredients

  • 2 cups milk
  • 2 eggs
  • 1 cup water

 

½ cup melted vegetable oil (put this in your 9×13 pan while the oven is pre-heating)

 

Mix the wet and dry ingredients together.  Add the melted vegetable oil and mix.  Pour into your 9×13 pan and back for 25 minutes.  After it has cooled, cut the cornbread into chunks and let it dry for a day or two.

 

Okay, now for the dressing:

 

  • Brown 1 pound of Jimmy Dean Sage sausage in a LARGE (I use a pan that covers two burners) roasting pan over medium heat.
  • Add ½ – 1 whole stick of butter to the browned sausage.
  • Sautee with the sausage:  2 cups chopped white onion and 1 cup chopped celery.
  • After veggies are soft, add 2 cans Campbell’s Cream of Mushroom soup (warning, do NOT get the garlic flavored or low-fat kind.  It will ruin your dressing).
  • Add 4 Cups chicken stock.
  • Mix well and then add cornbread.  Stir until all ingredients are evenly distributed.
  • Last, add ½ cup chopped green onions and ½ cup chopped parsley.  Stir well again.

 

Transfer dressing to pans for baking. I like to use several glass loaf pans, so you can pre-heat in the microwave and finish browning in the oven.  Efficient when oven space is at a premium on Thanksgiving Day.  Before serving, bake at 350 until warmed through and a little brown on top.

 

A couple of tips:

  1. If the dressing seems too dry for your taste, add more chicken stock.
  2. Cornbread dressing freezes well. I typically make a giant batch (double above) in early November.  I freeze in multiple smaller pans and have enough for Thanksgiving and Christmas.

 

Enjoy!

Scary Food Additives – A Guest Blog From Tam John

scary food additives

“Choosing real food is an investment in your health, offering improvement into the way you look and feel.”  (John, 2018) Well heck yes you say!  Of course, you want Real Food!  Letting labels proclaiming to be ‘natural’ and other health claims be your guide isn’t going to save you from laboratory made food your body and mind were never meant to consume.

 

Three of the scariest food additives:

 

Natural Flavoring

A catch all phrase that has more to do with flavoring than nutrition.  This is where MSG and the fluid from the sex glands from beavers (castoreum) are included in the ‘food’ along with other mysterious brain and body tricking additives and chemicals hide.

 

Carrageenan

It sounds natural as it is derived from seaweed.  Although Generally Recognized as Safe/GRAS by the FDA, the National Organics Standards Board has voted to remove it from organic food.  It has a lengthy and controversial reputation for causing damage to the digestive system.

 

Food Dyes/Coloring

These contain cancer causing chemicals also linked to hypersensitivity, hyperactivity, rashes and immune system issues.  Real food is beautiful without added coloring.  In Europe warning labels are required, but not in America.

 

Once you get the hang of it, it is easy to choose healthfully even with a modern busy life.  Tam will show you how to healthfully navigate the holidays and beyond while you live it up and love yourself more.  Work with Tam for a plan you and your being love!  Contact Tam for a complimentary 15-minute conversation to discuss your wellness goals and where you feel stuck.  Find out if her approach is a fit for you.

 

Tam’s title A Fresh Wellness Mindset is available at Tattered Cover Bookstores, Amazon and BarnesandNoble.com.

 

Don’t let your holiday habits haunt you!  Arrive in 2019 feeling fantastic!!!

 

 

 

 

Reference:  John. T. 2018.  A Fresh Wellness Mindset:  Personalize Your Food Life & Find Your Truth about Gluten.  CreateSpace Independent Publishing Platform.  North Charleston, SC.

ALL RIGHTS RESERVED © 2018 EatRight-LiveWell ™ & Tam John

7 Hilarious Quotes about Halloween

halloween, denver financial planner

It can’t all be about financial education on this blog.  Even financial advisers need to laugh between appointments where they nag people to save more.  From Twitter, here are some great quotes about Halloween.

 

By the way, the correct grammar was all added by me.  You are welcome.

 

“The scariest Halloween costume I can think of is ‘regular adult who wants to show you how well they play piano’.” @paulbwelsh

 

“If I pay $40 for a haunted house I better die.” @hodgesboi15

 

“Love seeing the creative Halloween costumes like Cold Nurse, Cold Schoolgirl, Shivering Female Superhero, Uncomfortably Chilly Pirate.” @tarashoe

 

“Halloween is coming up and I still have no idea what I’m going to be for the rest of my life.” @9GAG

 

“My daughters used to wear inappropriately sexy costumes for Halloween but now that they’re 16 they only dress that way all the time.” @DannyZuker

 

Friend: “What should I be for Halloween?”
Me: “My designated driver.” @causewereguys

 

“Congrats to Monster Mash on winning the VMA for “Best Halloween Song” for the 52nd consecutive year.” @brendohare

 

Happy Halloween!

WTF (What the Finance) is a Roth 401(k)?

roth, denver financial planner

More and more employers are making the Roth option available in their 401(k), 403(b), and 457 plans.

 

What does this mean?

 

Well, the default contribution to retirement plans has always been tax-deferred.  Meaning, you are legally hiding income for the current year, enjoying paying no taxes on the dividends and capital gains on the account, but pay income taxes on the withdrawals at retirement.  Basically, kicking the tax can down the road on retirement investments.

 

In the mid-90s the Roth IRA was invented to allow contributions to an IRA where you didn’t tax an up-front tax deduction, but growth in the account could be withdrawn tax-free at retirement.  Great deal!

 

In 2006, Roth contributions to 401(k)s became available.  This allowed the saver to choose to save tax-deferred, tax-free, or a combination of both.  Adoption has been slow, but now about 70% of employers offer the Roth option in their retirement plans.

 

Why consider using a Roth 401(k)?

 

First, the pesky income limitations that keep those earning over $133,000/year ($186,000 for couples) from contributing to a Roth IRA are non-existent in a Roth 401(k).  Any plan participant can elect the Roth option.  Also, while a Roth IRA has a $5,500/year ($6,500 for ages 50+) contribution limit, the Roth 401(k) allows up to $18,500/year ($24,500 for 50+) so you can really build that tax-free retirement asset.

 

It’s hard to think about giving up your nice top-line income reduction from a tax-deferred 401(k) contribution but consider this:  If all of your money is saved tax-deferred, every time you withdraw in retirement a tax bill is triggered.  Roth distributions create no tax bill, and when you are retired, you will love having a pool of money that is available tax-free.

 

And remember, it’s not an all-or-nothing decision.  If you are interested in the idea of the Roth 401(k) but worried how losing the deferred benefit will affect your paycheck, start with just a little at a time to Roth.  You may decide to increase the percentage going forward.

Annual Scary and Sweet Investment Column

investments, Denver financial planner

As I sit here and eat the Take 5 bars that I will not be giving to trick-or-treaters, it seemed appropriate to offer a quick market commentary about what has been scary and sweet so far in the 2018 investment world.

 

Scary:

 

International stocks, which have been hurt by the rising US dollar and trade tensions.  But, don’t bail out yet!  International was a strong performing asset class in late 2016 and 2017 and will have its day yet again.  If anything, lower short term returns could be a reason to buy on sale.

 

Old Bulls.  There is a general holding of the breath as investors, still scarred by the Great Recession, wait for the bottom to fall out of the current expansion.  I don’t know when or how or how severe it will happen, but worrying (and sitting all in cash) won’t help.  Make sure you are diversified and have risk that makes sense for your time horizon.  Then, turn OFF the financial news and eat some candy.

 

Expensive Chocolate.  Speaking of candy, will these trade wars initiated by the US increase the cost of imports from cars to cocoa?  That seems to be the worry as our trading partners prepare to retaliate against our policies.  So far the results have been mixed with some industries benefiting from the tariff talk and others suffering.  Time will tell how our consumer prices, economy, and investments are affected.  In the meantime, I am hoarding chocolate.

 

Sweet:

 

Tasty Opportunities for Job Seekers.  In June of 2018 the number of job openings in America surpassed the number of people looking for work. That should mean good mobility for workers who want to make a career change.  However, the low unemployment numbers reported are probably not taking into account the many underemployed millennials, gig economy workers, and baby boomers holding on for dear life to their jobs.

 

Consuming Consumers.  The US confidence survey in August reported the highest consumer confidence rates in 18 years.  People are on services and planning to buy homes and other big-ticket items.

 

Corporate Earnings are Up.  All that consuming is helping US companies to continue their earnings growth.  Even perpetual brick-and-mortar retailers saw gains last quarter.  So, even though investors seem to hate this bull market, US stocks have been on the rise without the love of the public.

 

Is our economy a treat to be enjoyed or a trick just waiting to happen?  I won’t predict, but just remind you that expansions last longer than recessions.  Keep enough in savings to cover 3-6 months living expenses, and let your investments do their long-term thing.

 

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