Staying the course…change is just part of it.

ST. CROIX INSIGHTS

Staying the course…change is just part of it.

BY BRETT ANDERSON/ST.CROIX ADVISORS, LLC

2020 was off to such a great start! Wrapping up the holiday season with friends and family, winter vacation travel in full force, snowbirds enjoying life outside of this cold tundra, the economy roaring—how could it get any better? As we know now, everything went south fast (and not in a good way).
We’ve seen winners and losers during this coronavirus, although I’m not sure that’s the right terminology; maybe it’s slightly inconvenienced vs. dramatically impacted. If you had told me on January 1, 2020, that by August 1, 2020, face masks would be common, international air travel would have come to a halt (and I read last week that it is not expected to return for another three years), RV dealers would hit record sales (up 90%), and businesses would no longer want cash as payment for goods and services, I would have bet my net worth that you were wrong. You could have cleaned me out!  

These changes haven’t been easy for any of us. (OK, maybe the introverts have been enjoying this “social distancing,” but for the extraverts among us, I suspect this hasn’t been easy.) Technology companies have become clear winners, as their services play an even greater role in our ability to see our grandkids, work, and even socialize with friends and family. How many of you are tired of Zoom meetings by now?

I’ve been in business for nineteen years, and I can tell you that owning your own business isn’t as glamorous as you might think. You are the first to turn the light on in the morning and the last to get paid. So many businesses and employees have been impacted in this new reality of decreased sales, revenue, and customers. Businesses can’t survive long without revenue or customers, and workers have been laid off; I suspect we haven’t yet seen how many small businesses will end up closing their doors. It’s not an easy time or journey. Fourth quarter 2020 will be very telling as far as where our economy is heading. It’s enough to make you pause and reflect on where you’ve been and where you want to go.  

Use them if you got them… Each December, I purchase gift cards to our favorite restaurants because of the Christmas specials they offer. I usually buy enough so we can live off them throughout the year. I like saving money when I can, but this one might backfire on me. Early on, we decided to continue to support our favorite restaurants but hold off on using our gift cards until this July: businesses needed revenue, and using our gift cards right away truly wouldn’t have helped them. But today, so many places have experienced financial hardship, and I’ve talked to so many individuals who haven’t been in a restaurant since March and don’t expect to return any time soon. You may want to use up your gift cards ASAP.
 
The stock market has experienced record highs and lows and huge daily swings. Yet to even my surprise, the markets have come close to recovering more rapidly than I would have expected. Throughout this year, I’ve been traveling by air, car, and boat. Hotels are sold out wherever I’ve stayed, restaurants are full (due to fewer tables), and air travel has been almost enjoyable, as airports have been ghost towns and flights have been less than half full. I suspect air travel has changed for years to come, and higher prices will be the new norm. I’m OK paying a little more not to be packed in like sardines on my next flight.  

I never thought we’d see interest rates so low in our lifetimes again, but here we are. If your interest rate is over 3%, now’s the time to do something about it. For those who enjoy the open road, I suspect in two years, you’ll be able to pick up an RV at a great price. Amazon now has RV parks where employees can live for free in their own rigs! I’m a big fan of credit card reward points (I pay them off each month), and cash is no longer the preferred payment method. It’s time to get the rewards you deserve (if you can keep that balance down!).  

Delivery will continue to play a major role in our lives. From groceries to dog food, your UPS delivery professional is really getting to know you and your purchasing habits, along with Amazon and Google. I still enjoy walking down the aisles at my local Costco in search of pricing ending in .97 to find the best deals. Though I must confess, I’m on a first-name basis with the UPS guy now.

All day long, I observe what’s happening around me and how the coming changes could impact my clients, friends, and family. Working our life plan isn’t always easy. As I close this letter out while finishing breakfast at the local diner, I thought you’d enjoy this observation of someone working their plan: I’m watching this guy finish breakfast, and as he’s leaving the restaurant—at 9 a.m.—he’s carrying a dish of ice cream and a spoon out with him (and no, it wasn’t me)! Being that it’s 85 degrees outside already, he’s going to have to eat it fast. He’s working his plan: breakfast followed by desert. That’s staying the course!

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Ask yourself- can my portfolio support my lifestyle in my retirement? 

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Independence Day: July 4, 1776, through July 4, 2020

ST. CROIX INSIGHTS

Independence Day: July 4, 1776, through July 4, 2020

BY BRETT ANDERSON/ST.CROIX ADVISORS, LLC

“We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.”  ~ The preamble to the Declaration of Independence

Life, liberty, and the pursuit of happiness—isn’t that what we all seek? These three common goals unite all of us as Americans. It doesn’t matter your background, education, or occupation; we all strive for this. Aren’t those three items at the core of financial freedom?

Life: creating the life/lifestyle we desire.
Liberty: living in a free society.
Pursuit of Happiness: finding meaning and purpose.

Financial freedom doesn’t come without hard work, sacrifice, and the faith that we can actually achieve it. Some of you may have achieved financial freedom; others may still be working on building their financial wealth to achieve that level of independence. Whenever I encounter someone who has achieved financial freedom, they give me hope for others I advise on how they can also achieve it.

For me, financial freedom means that I can choose between needing to work and deciding to work. That’s a level of financial security that people generally experience later in life, after years of hard work and careful money management.

328,000,000 people live in this great country. We are a nation of people with three common goals—life, liberty, and the pursuit of happiness—but we all have different thoughts and perspectives on what those three core goals mean for our own lives and how we can achieve them. That’s just one reason why America is so special.

We will all be celebrating July 4, 2020, with fewer fireworks, picnics, ball games, parades, BBQs, concerts, and big family reunions that normally bring us together on this special day. But one thing hasn’t changed: this is a time for each of us to pause and remember what’s truly important for our lives and our country.

Happy Fourth of July! Here’s to many more Independence Days ahead.  

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Ask yourself- can my portfolio support my lifestyle in my retirement? 

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Broke Millionaires—It Happens

ST. CROIX INSIGHTS

Broke Millionaires—It Happens

BY BRETT ANDERSON/ST.CROIX ADVISORS, LLC

I suspect you think I’ve gone off the rails this time. How can someone who makes a million dollars a year be broke? Maybe you’re thinking, “If I had a million dollars, I’d never be broke.” Well, I’m here to tell you this is a more common theme than you might think.
In my professional experience, it’s not the mortgage payments that cause the financial leakage in our checkbooks. It’s the day-to-day spending. It’s the $10, $25, or $100 here and there throughout the month that causes the problem. This type of financial leakage seems so small and innocent, no big deal . . . yet this compounding leakage adds up to real money.

Many people believe that if they just made $5,000, $10,000, or $100,000 more a year, all would be well with their finances. The truth is, no matter what they make, most individuals live life right up to their full income if not beyond by using credit. And credit is so darn easy to obtain. Today, I’m even seeing zero percent auto loans for 80 months. That’s a long time to keep making payments (and no car company is offering a zero percent interest-free loan, by the way).

But—and this is a key life lesson—debt limits our future lifestyle.
We live in a society that says if you buy this, you’ll be happy. If you buy this, it will impress others. Money is not always mathematical; it’s emotional, and that complicates things for some of us. I have two kids, one who will end up with more money than his parents and one whose paychecks are inevitably spent two weeks prior to payday. (Till this day, I have no idea how the heck I raised two kids with such opposite spending habits!)
It’s not about what you make; it’s about what you keep. If you are ready to keep more, you’ll like our down-to-earth strategies to control your money. Let’s schedule a time to discuss how we help our clients reach their financial goals.

Also, sign up for our eNewsletter blog that includes timely financial matters, news, and planning strategies that you can implement today.

Ask yourself- can my portfolio support my lifestyle in my retirement? 

9 + 13 =

Federal Stimulus Check 2020

ST. CROIX INSIGHTS

2020 Federal Stimulus Cash

BY BRETT ANDERSON/ST.CROIX ADVISORS, LLC

federal stimulus check

The federal stimulus check raises many questions. With markets whipping between rallies and retreats, it’s natural to ask:
First off, Is it time to buy?
Is it time to sell?
Are we near the bottom?
Or worse, Is the bear market finally over?

Despite the recent market surge, which propelled the Dow 21% higher in just 3 days (technically ending its bear market correction), it’s likely too soon to get overly optimistic.*

What gives? How can markets be rallying when the crisis hasn’t even peaked yet?

When markets have fallen so much and “priced in” so much bad news, it’s common to see short-term surges on good news like the relief bill. However, these “head-fake” rallies can be unsustainable when there’s so much uncertainty.
Bottom line: No one is good enough to call the exact bottom of a market. What’s important is looking through the bear market to the other side and picking up opportunities along the way. 
Whether the bear market is over or not, we’ve been here before and know what to do.

How worried should I be about a recession? 

Cautious, but not panicked. When a $21 trillion economy comes to a screeching halt, there’s going to be an economic contraction. Multiple timely indicators show that we are already experiencing a sharp downturn.**
However, the $2 trillion fiscal rescue act and the Federal Reserve’s new asset-buying program are a double-barreled bazooka aimed at the effects of a serious recession.
Furthermore, we’re monitoring the data rolling in and will know more about how the economy is reacting to the unprecedented aid in the coming weeks and months.

What’s inside the $2 trillion CARES Act? What’s in it for me?

The Coronavirus Aid, Relief, and Economic Security (CARES) Act is designed to provide relief for individuals and businesses who have been hurt by the outbreak. I won’t try to include all 800+ pages in this post, but here are a few key provisions that you should know about:

Federal Stimulus Check: A One-time cash payment. Taxpayers are eligible for a one-time direct deposit of up to $1,200 per adult ($2,400 per couple) plus $500 per child under age 16. Amounts are reduced for those who make more than $75,000 ($150,000 if married). If you have filed your 2019 taxes already, the IRS will use that income to calculate your payment; if not, they’ll use your 2018 tax filing.

Better unemployment benefits. The Act will extend and expand unemployment insurance through Dec. 31. Eligible workers (now including self-employed, independent contractors, and gig economy workers) will receive an extra $600/week for four months, on top of what they receive from state unemployment benefits.

Early withdrawal penalty waiver. The Act waives the standard 10% early withdrawal penalty for eligible coronavirus-related distributions from retirement accounts (retroactive to Jan. 1). You’ll still pay income taxes on withdrawals, but you can spread them over a three-year period or use that time to roll the distribution back over.

2020 RMDs suspended. You won’t have to take a Required Minimum Distribution from your IRA or 401(k) this year, leaving you in control of how much you withdraw. If you already took
your RMD for 2020, you have several choices: keep it and pay taxes on it, return it to your IRA as an indirect rollover, or convert the amount into a Roth IRA (Roth conversions are permanent).
 

Financial advice is a public service in these times, and I’m here to help. If you have questions about how the slew of recent changes could affect you, please call the office at (651) 337-1919 and we’ll find a time to talk.

Also, sign up for our eNewsletter blog that includes timely financial matters, news, and planning strategies that you can implement today.

Ask yourself- can my portfolio support my lifestyle in my retirement? 

9 + 2 =

Coronavirus & Your Money

ST. CROIX INSIGHTS

Coronavirus & Your Money

BY BRETT ANDERSON/ST.CROIX ADVISORS, LLC

First off, there have been weeks of headlines about the coronavirus outbreak. In addition, markets have been caught in a volatile pattern of surges and retreats. Here’s what you should know:

Why are markets so volatile?

Obviously, disease outbreaks are hard to predict and come with a great deal of uncertainty that can make investors nervous. In addition, this is particularly true after a period of record market gains.

Furthermore, as the epidemic spreads beyond China, investors worry that it could cause serious disruptions to trade. Then, it would impact the interconnected global economy.

How long will the volatility last?

Well, it’s hard to say. Though the human cost of an outbreak like Coronavirus is tragic, it’s unclear how widespread the economic fallout will actually be. For instance, we can’t predict what markets will do. However, this isn’t the first time we’ve grappled with market reactions to an epidemic.

Here are some examples from previous outbreaks:

Chart source: CNBC, Yahoo Finance

Unfortunately, the past can’t always predict the future.  Although we were not prepared for a virus of this caliber, we can refer to historic data. First, markets reacted to epidemics with panic selling. But they recovered after the initial outbreak. This coronavirus should be no different.

However, epidemics don’t happen in isolation. Above all, underlying economic and market fundamentals will influence how investors react long-term.

Then, pullbacks and periods of volatility happen regularly, for many reasons.

Whether the cause is an epidemic, geopolitical crisis, natural disaster, or financial issue, markets often react negatively to bad news and then recover.

Sometimes, the push-and-pull can go on for weeks and months. This can be stressful, even when it’s a normal part of the market cycle.

Lastly, the best thing you can do is stick to your strategies and avoid emotional decision-making.

Why?

Emotional reactions don’t lead to smart investing decisions. In other words, the biggest mistake investors can make right now is to overreact instead of sticking to their strategies.

P.S. Reading too many headlines? Having trouble keeping calm?

Just give me a call at (651) 337-1919 and I’ll be happy to help.


Chart Source:

S&P 500 performance during outbreak:

S&P 500 performance six months after outbreak: Yahoo Finance. 6-month performance between open of first trading day of the month after end of outbreak to adjusted close of final trading day of the sixth month.

SARS: April 1, 2003 – Sept 30, 2003
MERS: Dec 3, 2012 – May 31, 2013
Ebola: March 3, 2014 – Aug 29, 2014
Zika: March 1, 2016 – Aug 31, 2016

Risk Disclosure: Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Past performance does not guarantee future results.

This material is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. The content is developed from sources believed to be providing accurate information. No warranty, expressed or implied, is made regarding accuracy, adequacy, completeness, legality, reliability or usefulness of any information. Consult your financial professional before making any investment decision. For illustrative use only.

Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. The Standard & Poor’s 500 (S&P 500®) is an unmanaged group of securities considered to be representative of the stock market in general. Indexes are not available for direct investment. The performance of the index excludes any taxes, fees and expenses.

Federal Stimulus Check Article

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