Archive for Author Kristi Sullivan

What do Rising Interest Rates Mean to You?

rising interest rates, denver financial planner

There is so much talk about the Fed raising interest rates.  Expectations are that the Federal Reserve will raise the cost of borrowing between banks 2 times in 2019.  Other than incoherent tweets originating from our nation’s capital, what are you supposed to make of this news?  Let me break it down in simple language that even the tweeter-in-chief can understand.

 

Rising Interest Rates = Very good for savers.

If you are a person who wants/needs a substantial amount of money in a safe place, rising interest rates are great.  Some money markets are paying over 2% interest!  Also, if you plan to buy an income annuity, start a pension payout, or buy new bonds, you will benefit from higher interest rates.

 

Rising Interest Rates = Very bad for spenders.

If you are carrying credit card debt, expect your minimum payments to go up.  If you are looking to buy a house with a new mortgage, your payments could be higher.  And, if you are wanting a business loan, those costs will go up.

 

Rising Interest Rates = Who Knows?

For the stock market.  There is no way to know how the stock market will be affected long-term by rising interest rates.  Some say the Fed raising rates is a sign the economy is healthy and can absorb higher borrowing costs.  That should make the stock market happy.  Others say more expensive borrowing costs will slow capital expenditures and be a drag on the market.

 

Only time will tell, but interest rates are a small part of what drives overall stock market returns.  As with all hysterical headlines, I encourage you to focus on what you can control – your saving and spending – and not worry about the rest.

The Magic Art of Tidying Up your Finances

marie kondo

I’ll put it out there in the universe – I’d like to be a Brand-with-a-capital-B someday.  Books, TV shows, t-shirts, memes, all featuring some witty quip of mine and making me money while I sleep.  Like Suze Orman, only less irritating.  That’s not even how you spell Suzie.

 

Marie Kondo has it down.  She has made millions by telling us what slobs we are, yet her sweet personality, soothing voice, and adorable wardrobe have us falling all over ourselves to hear her message.  So, until I can become my own Brand-with-a-capital-B, I’ll just gently borrow Marie’s ideas.

 

I give you the Magic Art of Tidying up Your Finances.

 

Like Marie, we will sort by category, not by room.  We’ll start easy and then get to the harder, sentimental stuff last.

 

Category 1:  Consolidate your accounts.

Just as having 6 white shirts doesn’t spark joy in your closet, having 4 old 401(k) plans and IRAs at 3 different custodians does not help your finances to be more diversified.  It’s only messy.  Pick your favorite broker (I’m partial to the discount variety like Fidelity, Schwab, TD Ameritrade, E-Trade, and Vanguard) and move all like accounts to one.

 

Category 2:  Papers.

This is straight from Marie!  So much of people’s clutter is in the form of paper that is unnecessary to keep.  Sure, you may need proof of residence for your kids’ school choice forms.  Keep one- or two-months’ worth of utility or cable bills.  Beyond that, everything you need for proof of payment or purchase can be gotten online. Get thee to the shredder with those old investment statements and bills!

 

Category 3:  Investments.

Here is where the emotional stuff comes in.  Once you’ve consolidated your accounts, you can more easily see where you have too many types of one asset class.  Hint, one large cap US stock fund is fine.  You don’t need ten.  They all invest in the same stuff.  Also, selling an investment that didn’t work out as you planned does not make you a quitter.  Just an unemotional investor, as we all should be.

 

As for the sentiment, remember, just because your great-grandfather bought those shares of GE, doesn’t mean it’s good for your portfolio to have 15% invested there.   What served you (or previous generations) before, may not serve you still.  Don’t be afraid to sell old investments!  It’s the only way to have a streamlined portfolio.

 

Of course, you’ll want to thank the old accounts, papers, file cabinets, and investments that have served you before getting rid of them.  I hope reading this blog has sparked some joy in your day.

 

Annual Valentine’s Day Message

valentines day

Ah, Valentine’s Day. Love it or hate it, it does come with some great candy. Here is a quick recap of Valentine’s Day related investments (as of January 28th) to get you thinking about how to incorporate holidays into your investment management plans.

 

Nestle (NSRGY), is down 1.26% for the past 12 months, but doing much better than the industry average of -12.26%.

 

Hershey (HSY) is down 6.32%. Worse than Nestle, but still better than the food category loss of 12.26% in the same period.

 

1-800 Flowers.com (FLWS) is up 14.59% in the year ending 1/28/19, beating its peers in the internet and direct marketing category by over 10%.

 

Most of the greeting card companies (Hallmark and American Greetings) have been taken private, so nothing to report there.

 

I leave you with my favorite Tweet regarding Valentine’s Day:

“White chocolate: The Valentine’s Day gift that says, ‘I don’t really love you.’ “

 

Thanks, @Reverend_Scott.

The Only Thing You Have to Fear is Fear Itself

fear, denver financial advisor

Do you have fears that keep you from moving forward with your life goals?   I do!  I have a fear of asking businesses for donations and sponsorships for fundraisers.  This stresses me out since I find myself serving on many non-profit boards where that is the principal activity.

 

What to do to get over my fear?  I don’t know yet, but in the meantime, let me tell you how to get over your fears of investing.

 

Fear that I might lose money

Yes, some days/weeks/months/years, you WILL lose money in your investments.  This is the very underpinning of taking risks and being rewarded for it.  If there is no risk (investing in CDs), there is no reward (2% interest on your 2 year CD).

 

Bust through the fear

Remember how long you have to be an investor.  It’s the rest of your life!  If you are 60 years old, it’s possible you will live to 95.  That’s a 35-year investment time horizon for most of your money.  That’s 3 to 5 more recessions.  Are you going to freak out during every single one?  What a waste of energy.  Just embrace down years as a natural part of life and concentrate on things you do have control over.  Like your flossing habits or vegetable intake.

 

Fear that I will ask dumb questions

Guess what?  No one is born with some innate knowledge of how to invest money.  It takes time, study, practice.  Financial advisors LOVE answering questions because it makes us think we are smarter than we are.

 

Bust through the fear

Would you leave your doctor’s office after a scary diagnosis without asking questions?  No!  Because it’s important that you understand what your options are.  Who cares what the doctor thinks, it’s your understanding that is paramount.  Think of your financial/accounting/legal advisor the same way.  They owe it to you to make the information they give clear and actionable.

 

Fear that I am trusting the wrong person

Let’s face it, trusting someone with your money is scary.  How do you know they aren’t a Bernie Madoff disguised as a nice guy?  Actually, Bernie Madoff WAS disguised as a nice guy.

 

Bust through the fear

First, you can do some research.  FINRA’s broker check tool allows you to look up your potential advisor and see if there have been a bunch of lawsuits or judgements or disciplinary problems in that person’s past.  Second, you do have a gut instinct, don’t you?  Trust it!  If something feels uncomfortable, or you don’t feel listened to, or you feel pushed into an investment product that you don’t want, just walk away.  There are plenty more advisers out there who could be a better fit.

 

I hope this blog helps you move past fear and into action on creating your best financial plan.  And if you know some ways to get past my fear of soliciting donations, please pass along those tips!

 

Inexpensive Ways to Beat the Winter Blues

winter blues, denver financial advisor

Long winter days got you down?  You are not alone?  Fifteen to twenty five percent of people are thought to be affected by Seasonal Affective Disorder.  Even if you don’t have all of the symptoms of SAD, you might be experiencing the winter blues.

 

Since I want you to save for retirement/college/emergency funds, my recommendation for fending off the cold-weather blues can’t be pricey vacations to the Cayman Islands.  Instead, try these ideas.

 

Light Therapy Boxes (about $40 on Amazon) used in the morning for 30 minutes can help manage your sleep cycles and production of melatonin.

 

Try Aromatherapy by using essential oils to help regulate mood, initiate sleep, and regulate appetite.

 

Get Out!  Yes, it’s cold, but here in Colorado, it’s almost always sunny.  That cute coat you bought in September is for more than wearing to the bar.  Couple the sunshine with exercise, and your SAD could be on the way to glad.

 

Schedule it!  Maintaining a regular schedule for sleep and meals can help with the bad sleep and weight gain that often happen in winter.

 

Obviously, I’m not a doctor.  I just want my clients to be cheerful when we meet about their finances!

 

Source:  https://www.everydayhealth.com/depression/treatment/ways-to-ease-seasonal-depression/#01

5 Funny Quotes About Skiing

skiing, denver financial planner

Not sure if I’ve mentioned it in this blog, but I love to ski.  As a naturally uncoordinated, slow person (no, I did NOT play basketball/volleyball/competitive swimming despite being almost 6 feet tall), skiing is the only sport I’ve ever even remotely looked good doing.  For fellow skiers, have a laugh while thinking about your next powder day!

 

“Cross country skiing is great.  If you live in a small country.”  Steven Wright

 

“Skiing combines outdoor fun with knocking trees down with your face.”  Dave Barry

 

“You’d think skiing wouldn’t be strenuous – all you have toe do, after all, is s tart at the top and let gravity pull you to the dessert bar in the lodge.  But at those elevations, you’ll find about as much oxygen as you’ll find kindness from your children.  It’s like spending six hours holding your breath.”  W. Bruce Cameron

 

“I didn’t start skiing until I was 50.  My wife Lois taught me to ski.  I’m proficiently conservative.”  Buzz Aldrin

 

“Skiing: The art of catching cold and going broke while rapidly heading nowhere at great personal risk.”  Author Unknown

 

Pray for snow, people!

 

Moving on From Relationships

As I slide ever more deeply into middle age, I can look back on many relationships that I thought would last forever, and for some reason did not.  Moving on made me feel guilty, strange, or sad.

 

To my hairdresser, Bill: I thought you were the only person who could ever cut my insanely curly hair.  For 10 years, I would drive over an hour to have you expertly shear my sheep-like mop.  But, every time you got to talking about your adult children, my hair would get shorter and shorter until I was nearly bald.  So, I had to embark on the most painful journey most women ever face:  finding a new hairdresser.  It took about 15 years, but the search was worth it.  Marissa, don’t ever leave me or retire!

 

We have friends with whom it is harder to keep up a conversation.  Co-workers with whom, as it turned out, the only thing we had in common was that boss we all hated.  Therapists who were good for one issue, but not as helpful for others.

 

Then, there are our professional advisers:  Accountants, attorneys, financial advisers.  We all like to think clients will never leave us, but maybe there is a time that the relationships must change.  Here are the life events that might cause you to re-think your professional advisory relationships:

 

Divorce

Rarely does someone want to stay with the same financial advisers as their ex-spouse (although some do!).  That’s okay!  Part of the metamorphosis into a single person may involve finding that fit that is just for you, not just someone your ex loved and you tolerated.

 

Retirement

Some financial advisers are great at helping you build a nest egg, but not as skilled at helping you spend it.

 

Starting a business

Here is where you want an accountant with real expertise.  Not someone who just files taxes, but someone who can advise on business structure (LLC or S Corp?), reasonable business write-offs, and retirement savings options.

 

Death of a spouse

Here, you will need guidance from a variety of people.  At a minimum, your estate plan will need to be re-done.  Is your old attorney even still in business? Is it time for a fresh look at your investment strategy?  Your life is in upheaval, but don’t let the long term planning languish for too long.

 

Don’t stay in a professional relationship because of a sense of guilt or misplaced loyalty.  Although advisors love our clients, we understand when they need to move on for one reason or another.  After all, that’s how we get new clients!

3 Small Things to Improve Your Finances in 2019

Improve Your Finances in 2019

Happy New Year!  Many of us look to improve our health with the turning of the calendar.  That health can be physical (1 in 8 new gym memberships are initiated in January!), mental, or financial.

Increase your 401(k) contribution

Did you know that in 2019, the maximum amount you can contribute to a 401(k) goes up to $19,000?  Seem unrealistic?  Try increasing your contribution by 2% over your current amount.  Keep doing that every year and watch the savings pile up!

Don’t have a 401(k) or other workplace plan?  You can open a Roth IRA and contribute up to $6,000 per year (or $7,000 if you are aged 50 or older).  If you are a small business owner, check out this helpful guide from Fidelity on the various types of accounts you can use to lower your taxes now, and have a nice nest egg at retirement.  https://www.fidelity.com/retirement-ira/small-business/compare-plans

Start a vacation fund. 

Is the pleasure of vacation ruined by the idea of paying back months of high interest credit card debt?  Give yourself the gift of an interest-free vacation by – yep, you got it – saving ahead!  That all-inclusive vacation in Mexico costs $2,000?  Save $200/month by automatically having the money deducted from your checking account to a Vacation Savings Account (this is not a real thing, just a name in your mind to make it fun).  In October, you will be ready for your margaritas and siestas.

Consolidate at least 2 accounts into one. 

An area that leaves people feeling stressed about their finances is often plain old organization.  Got 3 old retirement plans out there?  Call up the 800 numbers on your statements and tell them you want to move those accounts.  You can open a Rollover IRA in your own name or move the accounts to your current workplace retirement plan.  Either way, you’ll have fewer statements and a more cohesive investment strategy.  And, like getting rid of old clothes that don’t serve you, you will feel great about having less financial clutter.

Need help prioritizing financial health goals?  Contact Kristi for a 15-minute phone consultation to see if there is a fit for working together.

3 Financial Tips for 2019

financial tips

Give yourself the gift of financial sanity going into the new year with these 3 easy financial tips:

 

Stop watching any sort of financial TV. 

MSNBC, Bloomberg, CNBC – they are all designed to sow fear and uncertainty in you so that they may sell more advertising.  Their very programming advocates short term outlooks, when most investors are looking 30 years out.  Financial magazines that help you plan for the long-term (Money, AARP, Kiplinger’s) are a better way to use your financial education time.

 

Make sure you are investing at least 15% of your own money into your retirement account. 

This will have two advantages:  Building a nest egg for future security AND getting you used to living off a smaller income.

 

Talk to your kids about money.

From saving a bit of allowance each week to smartly navigating the college tuition jungle, to saying, “we can’t afford that now,” helping your children understand money at a young age it will keep them from being a drain on your resources as you enter your golden years.

 

Happy New Year!

 

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/

 

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