Financial Planning

Living In Retirement Together Isn’t Easy

August 29, 2024 by Hans Blake, CFA, CPA

Reading Time: 2 minutes

In this episode of Intelligent Money Minute, we explore an often overlooked aspect of retirement planning: preparing emotionally, psychologically, and relationally for this significant life change. While financial readiness is crucial, it’s equally important to ensure that couples are prepared for the non-financial aspects of retirement, such as how they will spend their time and maintain their relationships.

The Importance of Non-Financial Preparation for Retirement

Retirement isn’t just about having enough money to live comfortably; it’s also about understanding how you’ll spend your time and how it will affect your relationships. We often help our clients prepare for the emotional and psychological shifts that accompany this new phase of life. Being mentally and emotionally prepared is just as vital as being financially secure.

During the podcast, we discussed an exercise we use to help couples visualize their future together. Recently, I worked with a couple where the wife had already retired, and the husband was about to retire. To help them align their expectations, I gave them a simple exercise: a weekly schedule divided into 28 time blocks, representing four segments—morning, noon, afternoon, and evening—across the seven days of the week.

The Benefits of This Simple Planning Tool

The couple was asked to fill in each time block with activities they envisioned for themselves during retirement. When they returned, they shared their plans with each other. The wife had filled her schedule with activities such as bridge games, church meetings, and social events. The husband, however, was surprised to find himself only included in two of her planned activities. This revelation led to an important discussion about how they would spend their time together and balance individual and shared activities.

This exercise is a powerful tool for sparking meaningful conversations about expectations and shared goals in retirement. It helps couples understand each other’s desires and plan for a fulfilling life together, beyond just the financial aspects.

If you’re preparing for retirement, consider trying this exercise with your partner. To make it easier, we’ve created a downloadable 28-block template that you can use to plan your activities and discuss your expectations. This practical tool is designed to help you think through how you want to spend your time and ensure that both partners’ needs are met.

More From Kathleen Rehl

Some of our most popular blogs are the financial scam series we posted on our website. We talk about how to emotionally heal after being financially scammed, how to help others who have been financially scammed, and 11 ways to protect yourself from being financially scammed. You can find all of those on our blog page.

Please be sure to subscribe to our podcasts as we will be interviewing Kathleen on an upcoming podcast where she explains how to simply write a legacy letter to your family and friends. You will not want to miss it. You can purchase Kathleen’s book here.

Kathleen Rehl Bio

Kathleen M. Rehl, Ph.D., CFP®, CeFT® wrote the multi-award-winning book, Moving Forward on Your Own: A Financial Guidebook for Widows. Experiencing widowhood herself, Dr. Rehl empowers widows financially™ and inspires their advisors. Her work has been featured in the New York Times, Wall Street Journal, AARP Bulletin, CNBC, USA Today, U.S. News & World Report, Journal of Financial Service Professionals, Journal of Financial Planning, and other publications. Rehl owned a financial planning firm for 17 years before retiring to her “encore” career. She walks an hour daily, practices yoga, enjoys art and music festivals, writes poetry and makes art, loves her grandsons . . . and continues to evolve on her journey.

Why Intelligent Investors Don’t Panic

August 16, 2024 by Hans Blake, CFA, CPA

Reading Time: 4 minutes

Staying the Course During Market Corrections

C.S. Lewis once wrote, “When the whole world is running towards a cliff, he who is running in the opposite direction appears to have lost his mind.” This sentiment is particularly relevant in today’s financial climate, where headlines are dominated by fears of a market correction following a weak jobs report and a subsequent Nasdaq downturn. As recession concerns grow, it’s crucial to recognize that what seems like chaos in the short term is often just part of the market’s natural cycle.

Our Philosophy: Driven by Goals, Not Headlines

This recent market correction aligns with our earlier analysis, where we observed a speculative rush into the tech sector, fueled by fear of missing out on the artificial intelligence boom. Now, the market is reverting to the mean—a typical and necessary process in maintaining long-term stability.

At Intelligent Investing, we emphasize an investment philosophy that is designed to withstand market cycles with patience and discipline. Our clients’ financial goals, rather than fleeting news headlines, guide our decision-making process. We regularly review our clients’ specific risk profiles and make necessary adjustments to their portfolios, ensuring they remain aligned with their long-term objectives.

While we stay informed about market developments, we avoid overreacting to the alarmist headlines often seen on Wall Street. History has repeatedly shown that markets recover from downturns—whether it was the selloff in 2018, the COVID-19 crash, or the correction in 2022. Each time, the market rebounded to new highs.

Fear and Greed: A Dangerous Duo

Currently, the CNN Fear and Greed Index hovers around 19, indicating extreme fear in the market. We’ve seen it dip even lower in the past when short-term investors, driven by emotion, made impulsive decisions. As Warren Buffett wisely advised, “Be fearful when others are greedy and greedy when others are fearful.” This principle is central to our investment strategy.

It’s essential to understand that our clients’ portfolios are not limited to a single asset class like the S&P 500. Instead, they are diversified across multiple asset classes, including international investments, which helps spread risk. These asset classes are not 100% correlated, meaning when one zigs, another may zag. This diversification can mitigate risk, though it doesn’t eliminate it completely.

Utilizing Our Risk Software

Our proprietary risk software is a critical tool that helps us calculate a 95% historical range for portfolio performance. For example, a portfolio with a risk number of 45 might typically experience fluctuations between -8% and +12% over six months. These movements are within the normal range for such a portfolio.

However, markets can sometimes swing into 5% probability events, where downturns exceed the 95% historical range. While we can’t predict these periods with certainty, we’ve seen similar scenarios during the 2008/2009 financial crisis and the initial COVID-19 shock in 2020.

At Intelligent Investing, we regularly review our clients’ portfolios to determine if rebalancing is necessary. This doesn’t involve market timing, which is notoriously ineffective. Instead, we rebalance when we identify opportunities to realign portfolios with the risk parameters established during calmer times, all while considering the tax implications.

A diversified portfolio that includes both equities and fixed income tends to self-rebalance over time. When panic leads investors to sell equities in favor of safer assets, the value of fixed income typically increases as yields fall. Conversely, when the panic subsides, equities often recover and even reach new highs.

Preparing for Market Volatility

We’ve spent considerable time preparing our clients and their portfolios for periods of market volatility. By stress-testing portfolios, we provide clients with a glimpse of what their investments might look like during turbulent times. The key question now is whether to react in fear or to stick to the sound decisions that have been made.

Over the long term, equities serve as a hedge against inflation. A company’s earnings and revenues typically rise with inflation, contributing to higher stock prices. Since 1970, the MSCI USA has averaged an annualized return of 7.6%, outpacing the annualized inflation rate of around 4%. This is a testament to the power of long-term investing.

Understanding Market Corrections

A market correction is a decline in the value of a stock market index or asset, typically ranging from 10–20% from a recent peak. Such corrections are a normal part of market behavior, occurring nearly every year. Historically, equity markets experience a 15% decline on average each year, with deeper declines happening roughly once every five years.

It’s essential to understand that no one, no matter how informed, can predict the depth of this or any other correction. For long-term, goal-focused investors, these short-term fluctuations should be of little concern.

For those still in the accumulation phase, market declines present an opportunity to purchase shares at discounted prices. What the media portrays as a “correction” is often a “sale” for those accumulating assets. Conversely, for those drawing on their investments in retirement, it’s crucial to remember that portfolios are designed to serve financial plans, which are rooted in personal goals—not in reaction to current events.

As we navigate this correction, it’s important to remember the four scariest words in investing: “This time is different.” An intelligent investor knows that staying the course and focusing on long-term goals is the key to success during turbulent times.

If you or someone you know is feeling anxious about the current market, we would be happy to provide peace of mind and help reduce financial stress. Feel free to reach out to us at Intelligent Investing for a complimentary conversation about how we can assist in managing your financial future. Simply visit investedwithyou.com and click on the “Get Started” button.

Disclosure: The information provided in this article is for educational and informational purposes only. The returns mentioned, such as the historical performance of the MSCI USA and other market indices, are based on past data and do not guarantee or predict future performance. Investing involves risks, including the potential loss of principal. Diversification does not guarantee a profit or protect against loss in a declining market. All investments should be made based on your own goals, risk tolerance, and time horizon. Please consult with a financial advisor, such as Intelligent Investing to determine the strategy that best suits your individual situation.

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What Are Powers of Attorney?

August 15, 2024 by Hans Blake, CFA, CPA

Podcast: Play in new window | Download

Reading Time: 3 minutes

On our latest episode of Intelligent Money Minute, we had the pleasure of interviewing Chace Campbell, an experienced attorney with over 20 years of legal expertise. During the conversation, Chace broke down the often-confusing concepts surrounding powers of attorney, providing clarity on the differences between durable, limited, and general powers of attorney. For those navigating estate planning or concerned about future incapacities, understanding these distinctions is crucial.

What Are Powers of Attorney?

To begin, Chace explained that the term “power of attorney” essentially refers to the legal authority given to one person (the agent) to act on behalf of another (the principal). This authority can vary significantly in scope, depending on the type of power of attorney in place.

General Power of Attorney: This is the broadest form, allowing the agent to act on behalf of the principal in a wide range of matters. Chace highlighted that this could include managing financial affairs, making healthcare decisions, or handling legal matters, especially if the principal becomes incapacitated and unable to manage these tasks themselves.
Limited Power of Attorney: In contrast, a limited power of attorney restricts the agent’s authority to specific tasks or decisions. For example, Chace mentioned scenarios where someone might need to authorize another person to withdraw a specific amount from their bank account or sign documents for the sale of a property while they are out of town. The limitations are clearly defined within the document, ensuring the agent’s authority only extends as far as necessary.
Durable Power of Attorney: The concept of durability adds another layer to powers of attorney. As Chace explained, durability ensures that the agent’s authority remains in effect even if the principal becomes legally incapacitated. This is particularly important in cases where the principal might fall into a coma or suffer from a condition that prevents them from making informed decisions. Without this durability clause, the power of attorney would typically become void if the principal loses mental capacity.

Legal Incapacity and Its Implications

Delving deeper, Chace clarified what legal incapacity entails and how it relates to the durability of a power of attorney. Legal incapacity can arise in several situations, such as when a principal is in a coma, suffers from severe cognitive impairment, or is otherwise unable to understand and manage their affairs.

Chace emphasized that the durability clause is vital in these scenarios because it ensures that the agent can continue to act on behalf of the principal, providing continuity and protection for their interests. This clause is essential for anyone concerned about the possibility of becoming incapacitated and wanting to ensure that their affairs are managed according to their wishes.

Key Takeaways

As our conversation with Chace Campbell highlighted, understanding the distinctions between general, limited, and durable powers of attorney is crucial for effective estate planning and legal preparedness. Each type serves a specific purpose, and selecting the right one depends on the individual’s circumstances and the level of authority they wish to grant.

For those looking to secure their future and ensure that their legal and financial matters are handled appropriately, consulting with an experienced attorney like Chace is a wise step. By doing so, you can create a tailored plan that addresses your unique needs and provides peace of mind, knowing that your affairs are in capable hands.

Stay tuned for more interviews with Chace, where we’ll dive deeper into his expertise and the valuable lessons he has to share with our intelligent investing audience, so be sure to subscribe to our Intelligent Money Minute podcasts.

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Chace Campbell Bio

Chace is a seasoned legal professional with over 20 years of experience in estate planning, business law, and probate. He began his career in 1997 at Culp, Elliot, and Carpenter, P.L.L.C., focusing on tax and corporate law before discovering his passion for family law, probate, and small businesses in 2002.

Chace is renowned for his exceptional communication skills and careful listening. He is dedicated to helping clients navigate complex legal landscapes, providing comprehensive understanding and effective resolutions through litigation, mediation, negotiation, or forward planning. He emphasizes both resolving and preventing legal issues, offering accurate information, honest advice, and concrete action steps.

Outside of work, Chace enjoys time with his wife Michelle and their three children, preparing for outdoor adventures at REI, and indulging in his passion for coffee.

Credits: This blog was written in part by ChatGPT, an AI language model developed by OpenAI. The content of this blog reflects the knowledge and opinions of ChatGPT, may or may not reflect the knowledge and opinions of Intelligent Investing, and is protected by copyright laws. Please do not reproduce or distribute without giving proper credit to ChatGPT and OpenAI.

Starting Early- A Guide to Saving for College

August 8, 2024 by Hans Blake, CFA, CPA

Reading Time: 5 minutes

Focusing on the SC Future Scholar 529

As summer is almost over and kids will be heading back to school very shortly, many parents are thinking about their children’s future education. My oldest son is just a few years away from college, and the financial decisions we make now will have a lasting impact. From the early days of our marriage to the birth of our son, we have diligently saved for his higher education, with generous contributions from grandparents along the way. In this article, I want to share insights on how to begin saving for college through the South Carolina Future Scholar program, offer tips for when your child heads off to college, and emphasize the importance of prioritizing your retirement planning.

If you’re not from South Carolina, don’t worry—many states across the country offer similar 529 college savings programs. These plans generally function in the same way, providing tax advantages and flexible investment options to help you save for your child’s education. However, specifics can vary from state to state, so it’s important to check your own state’s 529 plan website for detailed information and benefits unique to your region. Reaching out to your state’s program can provide the exact details and advantages available to you.

One more thing to remember before we dig in: You can borrow for college but not for retirement.The Illusion of Wealth

Understanding the South Carolina Future Scholar Program

What is the South Carolina Future Scholar Program?

The South Carolina Future Scholar 529 College Savings Plan is a tax-advantaged savings plan designed to encourage saving for future education costs. Contributions grow tax-free, and withdrawals for qualified education expenses are also tax-free. This makes it a powerful tool for college savings.

Benefits of the Future Scholar Program

The Future Scholar Program offers numerous benefits:

Tax Advantages: Contributions are deductible from South Carolina state income tax, and earnings grow tax-deferred.
Flexibility: Funds can be used at any eligible educational institution, including out-of-state and some international schools.
Control: The account owner maintains control over the funds, deciding when and how they are used.

How to Enroll in the Future Scholar Program

Enrolling in the Future Scholar Program is straightforward:

Visit the official website and complete the online enrollment form.
Choose your investment options: The program offers a range of age-based and static investment portfolios to suit different risk tolerances and timelines.
Set up automatic contributions: Regular, automated contributions can help grow your savings over time.

Tips for Saving and Leveraging Your 529 Plan

Start Early and Benefit from Compounding Interest

Albert Einstein famously called compounding interest the eighth wonder of the world. The earlier you start saving, the more time your money has to grow. Starting early allows you to benefit from the exponential growth of compounding interest and dividends.

For example, assume you saved $100 per month with an 8% annual growth rate from the time your child was born for 18 years. In this example, the end result when they are heading to college would result in approximately $45,000. This example highlights how increasing your monthly contributions can exponentially increase your savings due to the power of compounding interest over time. Starting early and contributing consistently can significantly boost your college savings.

Make Regular Contributions

Consistency is key. Even small, regular contributions can accumulate significantly over time. Setting up automatic transfers from your bank account to your 529 plan can ensure you stay on track with your savings goals.

Take Advantage of Gift Contributions

Encourage family members, such as grandparents, to contribute to your child’s 529 plan. These gifts can provide a substantial boost to your college savings and are a meaningful way for relatives to invest in your child’s future.

Review and Adjust Your Investments

Unless you choose to invest based on the age-based models, periodically review your investment choices to ensure they align with your goals and risk tolerance. As your child approaches college age, you may want to shift towards more conservative investments to protect your savings from market volatility.

Prioritizing Retirement Over College Savings

Why Retirement Planning Should Come First

While saving for your child’s education is important, it’s crucial to prioritize your retirement planning and savings. You can borrow for college, but not for retirement. Ensuring a secure financial future for yourself is essential, as it reduces the likelihood of becoming a financial burden on your children later in life.

Balancing Retirement and College Savings

To balance both goals, consider the following strategies:

Maximize Retirement Contributions: Ensure you are contributing enough to your retirement accounts to take full advantage of employer matches and tax benefits.
Allocate Discretionary Funds: After meeting your retirement savings goals, allocate additional funds to your child’s 529 plan.
Utilize Catch-Up Contributions: If you are over 50, take advantage of catch-up contributions to boost your retirement savings.

Preparing for College: Tips for Parents

Create a Family Education Policy

Establish a clear family education policy to outline expectations, responsibilities, and financial plans for college. This can include:

Setting Savings Goals: Determine how much you aim to save for each child’s education and create a plan to achieve those goals.
Discussing Financial Responsibilities: Clarify what expenses parents will cover and what students are expected to contribute, such as part-time work or scholarships.
Reviewing Financial Aid Options: Explore available scholarships, grants, and loans to supplement your savings.

At Intelligent Investing, we’re committed to comprehensive financial planning that extends beyond investment management. That’s why we’ve included a complimentary Intelligent Investing Family Education Policy to assist families in planning for their children’s educational futures. This policy serves as a structured guide, outlining strategies to optimize savings through vehicles like the South Carolina Future Scholar Program and emphasizing the importance of balancing college savings with retirement planning. It’s designed to provide peace of mind, ensuring that families have a clear roadmap to navigate the complexities of educational expenses while prioritizing long-term financial security.

Plan for College Expenses Beyond Tuition

College costs extend beyond tuition. Prepare for additional expenses, such as:

Room and Board: Housing and meal plans can be significant expenses.
Books and Supplies: Budget for textbooks, software, and other necessary materials.
Personal Expenses: Consider daily living expenses, transportation, and extracurricular activities.

Utilize Your 529 Plan Effectively

When it’s time for your child to start college, strategically withdraw funds from your 529 plan:

Cover Qualified Expenses: Ensure withdrawals are used for qualified education expenses to avoid taxes and penalties.
Optimize Tax Benefits: Coordinate withdrawals with other tax benefits, such as the American Opportunity Tax Credit, to maximize savings.

Planning for your child’s college education requires careful consideration and early action. By leveraging the South Carolina Future Scholar program and prioritizing your financial goals, you can ensure a secure future for both your retirement and your child’s education. Start early, make regular contributions, and stay informed about your investment options. With thoughtful planning and dedication, you can navigate the financial challenges of college savings and provide your child with the best possible start in their academic journey.

At Intelligent Investing, we love organizing our clients’ “financial junk drawers” so we can minimize their financial stress and maximize their lives. If you are heading towards retirement and want to get a plan in place, feel free to reach out to us for a complimentary call or coffee.

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Chace Campbell’s Journey to Becoming a Legal Expert

August 1, 2024 by Hans Blake, CFA, CPA

Podcast: Play in new window | Download

Reading Time: 3 minutes

On this episode of Intelligent Money Minute, we interviewed Chace Campbell, a distinguished attorney based in Greenville, with over 20 years of legal experience. Chace’s story is one of diverse experiences and deep-rooted passion for the law, family, and business.

Early Influences and Entrepreneurial Roots

Chace’s journey began in his childhood, growing up as the only child of a serial entrepreneur. His father’s ventures provided Chace with an early education in business, sparking his interest and shaping his understanding of what it means to be a business owner. He recalls fondly the times his father would take him along to business meetings, allowing him to observe and learn the intricacies of various industries.

These experiences were more than just father-son bonding moments; they were foundational lessons that would later inform Chace’s legal practice. “The education I got from those experiences has stayed with me throughout my life,” Chace reflects. This early exposure to business operations equipped him with a unique perspective that he brings to his legal practice, especially when dealing with business owners and entrepreneurs.

The Path to Law

Despite his entrepreneurial upbringing, Chace always aspired to be a lawyer. Initially influenced by iconic TV lawyers like Perry Mason and Matlock, Chace pursued his dream, earning his JD with honors from the University of South Carolina School of Law in 1997. His early career at Culp, Elliot, and Carpenter, P.L.L.C. saw him specializing in tax and corporate law, but it wasn’t long before he found his true calling.

In 2002, Chace transitioned to focus on family law, probate, and small businesses. This shift was driven by his passion for the interpersonal dynamics within these areas, where he felt he could make the most significant impact. His ability to listen attentively and communicate effectively has made him a trusted advisor for his clients, helping them navigate complex legal landscapes.

Building His Own Practice

After several years of working with established firms, a pivotal moment in Chace’s career came when he was appointed to represent three children whose mother had been incarcerated. This experience was a turning point, inspiring him to start his own practice. In 2002, he founded Chace Law, initially focusing on guardianship cases before expanding to encompass business and estate planning.

Chace’s practice is characterized by a holistic approach, recognizing the interconnectedness of business, probate, and estate planning law. “Those are not really three different areas to us; those are really interconnected,” he explains. This integrated perspective allows Chace to offer comprehensive legal solutions tailored to the unique needs of his clients.

A Day in the Life

Today, Chace’s clients range from entrepreneurs and business owners to individuals dealing with estate planning and probate issues. His practice areas may seem distinct, but they often intersect, reflecting the complexity of modern legal challenges. Chace’s goal is to provide decisive legal action balanced with compassionate understanding, ensuring his clients receive the best possible outcomes.

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Chace Campbell Bio

Outside of work, Chace enjoys time with his wife Michelle and their three children, preparing for outdoor adventures at REI, and indulging in his passion for coffee.

Why Do We Try to Keep Up with The Joneses?

July 24, 2024 by Hans Blake, CFA, CPA

Reading Time: 4 minutes

The phrase “Keeping up with the Joneses” originated in early 20th century America from Arthur (Pop) Momand’s comic strip titled “Keeping Up With The Joneses,” which first appeared in the New York Globe in 1913. The strip quickly gained popularity, and by September 1915, it was adapted into a cartoon film shown in US cinemas. The ‘Joneses’ in the comic were not based on specific individuals but served as a generic representation of neighbors, with ‘Jones’ being a common surname.

In today’s fast-paced world, appearances can be deceiving. The notion of “keeping up with the Joneses” has become increasingly prevalent, fueled by social media and a culture of instant gratification. But as Dave Ramsey wisely points out, “Very few people who look like they have money actually do.” This phenomenon often leads individuals and families into precarious financial situations. At Intelligent Investing, we believe in organizing financial “junk drawers” to ensure our clients can make informed decisions without the pressure of maintaining appearances.

The Illusion of Wealth

The rise of social media platforms has created a continuous stream of visible consumption. It’s now easier than ever to see the luxurious cars, sprawling homes, and exotic vacations that friends, family, and influencers indulge in. This constant exposure has led to a significant number of Americans experiencing what psychologists call “money dysmorphia” — a feeling of insecurity regarding their financial well-being, even if they aren’t as financially unstable as they perceive.

Similarly, in today’s 24/7 news cycle, it’s easy to feel overwhelmed by the sheer volume of information we are exposed to daily. News outlets often emphasize sensational stories to attract viewers and boost ratings. This can lead to a skewed perception of reality, where the world seems more dangerous or chaotic than it actually is. At Intelligent Investing, we understand that this constant exposure to negative news can affect not only your mental health but also your financial decisions.

According to a survey by Qualtrics for Intuit Credit Karma, 29% of American adults report feeling this financial insecurity. The psychological disconnect between perception and reality is even more pronounced among younger generations. A LendingTree survey found that 62% of Gen Z Americans feel financial pressure to keep up with their peers, leading 51% to admit to overspending to impress others. Amongst this group, 56% are now in debt due to their attempts to maintain these appearances.

Lifestyle Inflation and Debt

Borrowing money to splurge on luxury items just to impress others can trigger unsustainable lifestyle inflation. Once a budget is stretched to accommodate a new car, a bigger home, or a lavish vacation, sustaining those expenditures becomes increasingly difficult. This is likely why many high-income Americans are struggling financially. A recent Lending Club survey revealed that roughly half of six-figure earners live paycheck to paycheck.

At Intelligent Investing, we emphasize the importance of understanding the true cost of debt and the impact it can have on long-term financial health. Our proprietary financial software, Intelligrations®, helps clients see the bigger picture and make decisions that align with their values and goals, rather than societal pressures.

True Indicators of Wealth

On his website, Ramsey outlines his definition of financial success: “True wealth is about three things: making an impact through giving, leaving a legacy, and having options for how you live your life.”

At Intelligent Investing, we resonate with this definition. We believe that financial success involves compassion, legacy, integrity, excellence, nimbleness, and truth — core values that guide our approach to wealth management. Being able to donate to charitable causes is a genuine indicator of economic security. In 2022, regular Americans made 64% of all charitable donations in the U.S., reflecting a strong culture of giving.

Leaving a legacy is another significant sign of wealth. A USA Today Blueprint report found that 68% of Gen Z and millennial Americans expect to receive an inheritance, with the average size being $320,000. This transfer of wealth is a testament to the financial planning and foresight of previous generations.

The freedom to choose one’s lifestyle is perhaps the most subjective measure of wealth. The ability to decide where to live, how to spend one’s time, and the flexibility to pursue one’s passions are invaluable aspects of financial success. At Intelligent Investing, we strive to help our clients achieve this level of freedom through personalized financial strategies.

Practical Steps to Financial Health

Assess Your Financial Situation: Consider using tools like Intelligrations® to get a comprehensive view of your finances.
Set Realistic Goals: Align your financial goals with your values and long-term aspirations.
Create a Budget: Track your income and expenses to ensure you live within your means.
Build an Emergency Fund: Save enough to cover 3-6 months of living expenses.
Invest Wisely: Diversify your investments and seek professional advice to ensure your portfolio aligns with your risk tolerance and goals.
Avoid Unnecessary Debt: Borrow only what you can afford to repay and focus on paying off high-interest debt first, if you have any.

Avoiding the Trap of Appearances

A classic example of someone who pursued the appearance of wealth only to face financial ruin can be found in the biblical story of the Prodigal Son. In this parable, a young man demands his inheritance from his father and promptly leaves home to indulge in a life of extravagance and excess. He spends his wealth on lavish living, attempting to portray an image of affluence and success. However, his reckless spending quickly depletes his fortune, leading to his downfall. Stricken by poverty and regret, he finds himself destitute and humbled, forced to work as a swineherd. Ultimately, he returns to his father’s house, repentant and seeking forgiveness. The story illustrates the perils of prioritizing the appearance of wealth over financial prudence, demonstrating how the pursuit of superficial status can lead to ruin and the eventual realization of what truly matters.

The pursuit of appearing wealthy can lead to financial ruin. Instead, true wealth is about financial security, the ability to give back, leaving a legacy, and enjoying the freedom to live life on your terms. At Intelligent Investing, we help our clients achieve these goals through strategic planning and a focus on what truly matters. Remember, all that glitters is not gold, and real wealth lies in the peace of mind that comes with sound financial management.

Consider joining our clients and making Intelligent Investing your financial accountability partner. Together, we can navigate the uncertainties of election seasons and beyond, ensuring that your investments remain aligned with your long-term objectives.

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Navigating Election Volatility in Your Portfolio

July 2, 2024 by Hans Blake, CFA, CPA

Reading Time: 4 minutes

Election years often stir up market volatility, especially when candidates present starkly different viewpoints. While historical data can provide some insights, the future remains unpredictable. Election processes have evolved, with mail-in voting and concerns about voting fraud becoming more prominent issues. In fact, there is a thing called Election Stress Disorder, and perhaps you’ve experienced it.

Election Stress Disorder (ESD) refers to the heightened anxiety and stress individuals experience during election seasons. This phenomenon can be triggered by constant exposure to political news, social media debates, and the uncertainty surrounding election outcomes. Symptoms may include irritability, difficulty sleeping, and feelings of helplessness. Managing ESD involves limiting news consumption, and maintaining perspective on the election’s impact on daily life.

It’s crucial to remember that elections, despite generating headlines, should not deter you from adhering to your financial plan. While it’s natural to have concerns about the election’s impact, history suggests it will likely be a nonissue for your portfolio.

Elections Matter (But Not So Much to Your Investments)

Contrary to what the news might suggest, a wealth of empirical research indicates a different narrative. Vanguard conducted a comprehensive study on stock market performance during presidential election years. One key finding was that market returns do not vary drastically between election and non-election years. Examining data from 1860 to 2010, the average return difference is a mere 0.8%. In addition, Dimensional Fund Advisors has an interactive blog on “How Much Impact Does the President Have On Stocks.”

Markets Tend to Ignore Election Years

Another common concern is market volatility leading up to an election. Headlines and public sentiment might suggest increased market instability as elections approach. However, data shows otherwise. Analysis of the S&P 500’s volatility 100 days before and after elections reveals that volatility remained consistent at 13.8% in both periods. This demonstrates that markets generally tend to ignore the noise surrounding elections.

Staying the Course with Intelligent Investing

At Intelligent Investing, our mission is to minimize financial stress and maximize your life. We act as a buffer between sensational headlines and your portfolio. It’s natural to feel uneasy during election seasons, but it’s crucial to stay grounded and focus on your long-term financial plan.

Successful investing involves focusing on what you can control and keeping emotions secondary to your financial strategy. By maintaining perspective, discipline, and a long-term outlook, you can continue progressing toward your financial goals, despite the short-term uncertainties elections may bring.

The stock market often acts as a leading indicator, beginning to rise before an economic recovery is fully evident. This is one reason why markets can show upward movement even amid negative headlines. Pundits, economists, and other financial advisors will inevitably speculate on election outcomes and other significant events, but our investment philosophy is not based on short-term predictions. We believe in long-term investing, diversification across asset classes, and adherence to risk management principles.

As Leo Tolstoy wisely said, “The two most powerful warriors are patience and time.” Regardless of the election outcome, we appreciate our clients’ trust in us as their financial accountability partner. Our mission is to guide our clients away from emotional extremes, coaching them on adhering to their financial plan, and helping them stay aligned with their long-term goals and risk tolerance.

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Disclosures:
Returns Graphic: Vanguard calculations, based on data from Global Financial Data as of December 31, 2019. Data represents the 60% GFD US-100 Index and 40% GFD US Bond Index, as calculated by historical data provider Global Financial Data. The GFD US-100 Index includes the top 25 companies from 1825 to 1850, the top 50 companies from 1850 to 1900, and the top 100 companies by capitalization from 1900 to the present. In January of each year, the largest companies in the United States are ranked by capitalization, and the largest companies are chosen to be part of the index for that year. The next year, a new list is created and it is chain-linked to the previous year’s index. The index is capitalization-weighted, and both price and return indices are calculated. The GFD US Bond Index uses the U.S. government bond closest to a 10-year maturity without exceeding 10 years from 1786 until 1941 and the Federal Reserve’s 10-year constant maturity yield beginning in 1941. Each month, changes in the price of the underlying bond are calculated to determine any capital gain or loss. The index assumes a laddered portfolio that pays interest on a monthly basis.
Volatility Graphic: Vanguard calculations of S&P 500 Index daily return volatility from January 1, 1964, through December 31, 2019, based on data from Thomson Reuters. Note: Past performance is no guarantee of future returns. The performance of an index is not an exact representation of any particular investment, as you cannot invest directly in an index.
Notes:
Past performance is no guarantee of future returns. The performance of an index is not an exact representation of any particular investment, as you cannot invest directly in an index. All investing is subject to risk, including possible loss of principal. Be aware that fluctuations in the financial markets and other factors may cause declines in the value of your account. There is no guarantee that any particular asset allocation or mix of funds will meet your investment objectives or provide you with a given level of income. Diversification does not ensure a profit or protect against a loss. Investments in bonds are subject to interest rate, credit, and inflation risk.

Not Wired to Retire: Encore Careers in Retirement

May 29, 2024 by Hans Blake, CFA, CPA

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At Intelligent Investing Advisors, we are dedicated to helping our clients navigate the complexities of retirement with confidence and clarity. We prioritize providing personalized guidance to ensure that our clients feel empowered throughout their retirement journey. In a recent interview, we spoke with Kathleen Rehl, a leading authority on encore careers in retirement. Together, we explored the concept of not being wired to retire and highlighted the significance of emotional and psychological readiness for retirement.

Not Wired to Retire: Seeking Purpose Beyond Traditional Retirement

Kathleen Rehl’s philosophy challenges traditional retirement norms. Retirement, to her, isn’t about endless leisure; it’s about finding purpose and fulfillment daily. As she aptly puts it, retirement isn’t just about golf or fine dining; it’s about embracing activities that bring joy and meaning. For many, retirement isn’t the end; it’s a new beginning. Kathleen emphasizes embracing encore careers, where passions can thrive. From speaking engagements to articles, her journey showcases the potential of encore careers in retirement fulfillment.

The Three Pillars of Retirement Readiness

Kathleen emphasizes that retirement readiness goes beyond finances. Emotionally, psychologically, and relationally, individuals must prepare for retirement’s challenges. Managing financial stress and navigating relationship shifts are crucial for a smooth transition.

At Intelligent Investing Advisors, we understand retirement planning is multifaceted. By addressing emotional, psychological, and relational aspects, we empower clients to transition smoothly. Our approach ensures clients are prepared financially and emotionally for retirement.

Retirement signifies not the end of one’s journey but an opportunity to redefine fulfillment and pursue novel avenues of growth and contribution.