Celebrating Twenty Years—Thank You!

ST. CROIX INSIGHTS

Celebrating Twenty Years—Thank You!

BY BRETT ANDERSON/ST.CROIX ADVISORS, LLC

Very few people have ever asked how I got started in the financial services industry. It’s not a story I generally volunteer unless someone asks, but now that I’ve survived this industry for twenty years, I thought I’d share it for those of you who haven’t heard it before.
Twenty years in business is no small feat. The financial services industry isn’t a forgiving one: 95 percent of those who start in it don’t last three years, and 98 percent leave within five. The odds are truly against you. With odds like that, you have to be a little off-centered to get into the field in the first place…or you just don’t know any better. I started out with no idea what the heck I was getting myself into, with no clients and no income. I left a good corporate job with paid vacation time and a nice paycheck every two weeks. But I wasn’t happy working in corporate America, and I had no plans of going back.

(I used to want to be a stockbroker, actually, but I’m glad I’m not today. I prefer to plan and create investment and financial strategies for people, rather than simply purchase a few stocks and hope they do well. This way, I get to participate in the joys and tears of each of our clients. How can you beat that? But back to the story…)

There was a video at church called “What’s Your Story?” It showed three or four people who couldn’t meet their tithing obligations they had made to the building fund. The church board had made financial decisions based on those commitments, and now they were coming up short. In the video, the loss of a job or other change in their financial situation caused these people not to fulfill their financial commitments.

Something just went through me that day: I knew that I could help these people manage their money so they would never have to miss their important obligations. I could help them change their lives. That realization started me on a twenty-year journey that continues today.

If you are reading this, I want to thank you. Thank you for continuing to place your trust in me. It’s not something I take lightly or for granted.

At the risk of leaving someone out, I would like to point out a few people who have impacted me and contributed to my continued success over the past twenty years.

Terry Townsend – He took this city slicker and turned me into a gun-totin’ outdoorsman who freezes easily in this cold tundra. He’s included me on so many adventures.
Ross Vass – I’m not making this up: he almost killed me trying to turn me into the great outdoorsman I’ve become. (Surprisingly, he’s still on Mrs. Anderson’s approved list of people I can hang out with. I think she wants to collect the insurance monies.)
Jeff Redmon – I learned so much from him about being a business owner myself and adding value to other business owners.
Ben Flottemesch – He’s extremely knowledgeable, and I enjoying learning from him.
Christopher Burns – My legal resource guru, even when I have dumb questions.
Tim Bohannon – I would never have read so many books in my life if it weren’t for him. Every book he brought up, I read it. I learned a lot from him in my first ten years in business, even though I disappointed him daily with my fashion trends. (My poor fashion trends continue today.)

These are the people behind the scenes. You don’t always see them, but they contribute to your success and mine, every month and every day.

Brad Lewis – He’s been my right-hand man for the last seventeen years. (Even though he rolls his eyes at me a lot, and it kills him when he has to admit I was right.)
David Montgomery – When you want to geek out on investment analysis, he’s your guy.
Drew Dewitt & Lee Heidgerken – When it comes to insurance planning, no one knows it better.
Rebecca, Sarah, and Ejaz – I’m always a work in progress, and they do the best they can to make me look good.

And most importantly, Mrs. Anderson. It wasn’t always easy for the first few years, since she was supporting our family financially. (Hey, nothing wrong with being a kept man! I must say I enjoyed it.) She’s always helped me to follow my dreams.

Despite the bumps in the road, I have the best career anyone could ask for. I get to impact others on a daily basis. I get to help people reach their goals, some days even stretch their goals. I get to educate people about their money and help them make better, more informed decisions in their personal, professional, and financial lives.

Thank you—all of you—for the first twenty years. God willing, I have another twenty in front of me.

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

9 + 11 =

4 Kinds of Investors

ST. CROIX INSIGHTS

4 Kinds of Investors

BY BRETT ANDERSON/ST.CROIX ADVISORS, LLC

Photo by Alec Favale on Unsplash

For many, including myself, it’s easy to get fixed on one number: the value of our accounts. We never want or expect that number to drop below the number we have in mind. If my account value says $1,000,000 (or $100,000 or $10,000), but the following month my investment statement says $800,000 (or $80,000 or $8,000), I’m not happy about it, and I suspect neither are you when it comes to your own statements! But the fact is, markets fluctuate over time—and so do our investment account values.
When I look back over the past twenty years (boy, I sound just like my parents), I see three major market downturns: In 2001, the stock market went down 48%. In 2008, it went down a whopping 59%. And as recently as 2020, it went down a mere (!) 35%. And here we are in 2021, with the stock market continuing to reach all-time highs. While I may not always be happy about it, markets go up and markets go down; that’s what markets do.

As I’ve gotten older, so have our clients, and our time frames and expectations continue to change over time. That’s just the natural progression of life. Wouldn’t it be ideal if you and I could get significant returns during every stage of our lives, year after year, without any downside/market risk? Just think: all the fun and none of the drawbacks when it comes to investing. Who wouldn’t love that?

Sigh. It’s a nice dream, but expecting markets not to experience cycles given our financial markets is simply unrealistic. Well, we may not live in a world without risk, but we can each decide what level of risk we consider acceptable for our accounts.

As an investment/wealth advisor, I needed a reliable way to determine the level of risk an investor is comfortable with for their investments. It seemed to me that investors fell naturally into one of three levels of risk tolerance. I came to think of these categories as Ferrari, Minivan, and School Bus.

Many of you have heard me use this analogy. (I have three Hot Wheels on my desk as my visual reminder.) Every time I mention these visual images, my right-hand man Mr. Lewis rolls his eyes. Yet I chuckle quietly to myself every time I hear him quoting me using my own analogy. It must be good if Mr. Lewis is using it! These categories are understandable and relatable no matter your financial background. Each immediately conjures a certain image, and each implies a level of risk that has nothing to do with how much money one has. Let’s take a look.

#1: The Ferrari

The first type of investor is the Ferrari. Just like all the other types, these investors seek big returns, and they are willing to accept the downside risk associated with those significant returns. That’s the biggest difference with this type of investor: they won’t lose sleep over the kinds of losses we experienced over the last twenty years.

In fact, very few individuals fall into this category. We may admire Ferraris from afar, but when it comes right down to it, not many of us can look that kind of risk in the face and keep our cool. If this isn’t the approach for you, you may fit into the next investment category.

#2: The Minivan

The second type of investor is the Minivan investor. They know they’ll arrive at their destination, but they don’t seek the level of risk that comes with driving a Ferrari to get there. Plus, the cost of owning a minivan is a lot lower—and if you crash a minivan, chances are good that you’ll survive.

This type of investor is the most common. It’s the “happy medium” intersection of risk and reward that most of us are comfortable with: steady growth and acceptable risk. (If you are wondering, most of the time, I’m in the minivan.) But if even this moderate risk feels like too much, you might identify with the third type of investor.

#3: The School Bus

The third type is the School Bus level of investor. We generally don’t hear about a school bus crashing. (When I was a kid, they didn’t even have seatbelts.) With a school bus, you know you’ll arrive at your destination eventually, and the thought of driving a Ferrari or Minivan just isn’t appealing.

This type of investor is the second most common: they are more concerned with holding on to what they have and most comfortable when they can minimize most of their risk, even if it means taking a little bit longer to get where they want to be.

Bonus #4: The Park Bench

I’ve learned in my old age that we have a fourth type of investor: the Park Bench. Some investors, in moments of extreme economic uncertainty, simply want their money to rest and be at ease. They know that it’s not best to let 100% of their resources sit idle for the long term, but there are times when they feel too uneasy about what’s happening in the markets to want to participate in them.

If you’re losing sleep at night over uncertainties and you’d rather sit and wait on the sidelines, at least for now, you may be a Park Bench investor.

What’s Your Investment Style?

As investors, you and I have invested our dollars in each of these four categories at some point. Yet the most significant factor in determining which type of investor you are is your percentage of allocation in stocks, bonds, and cash.

As you go through life, you may find yourself in one category today and a different one ten years from now. You may find yourself returning to the one you left ten years prior because an investment opportunity arose. That’s natural. That’s investing. That’s life.

Wherever the markets are in their cycle, whatever fluctuations our investment statements reflect, it’s important not to lose sight of our long-term investment strategies and our objectives for growing and protecting our resources.

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? 

6 + 2 =

Staying the Course and Handling Change

ST. CROIX INSIGHTS

Staying the course…change is just part of it.

BY BRETT ANDERSON/ST.CROIX ADVISORS, LLC

Change is inevitable, but this year was different. 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? 

6 + 4 =

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. “Broke millionaires, really?” 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 (and broke millionaires).

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!) Talk about broke millionaires.

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? 

14 + 1 =

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? 

6 + 6 =

Which Side of the Check? Life Lesson 37 of 50

ST. CROIX INSIGHTS

Which Side of the Check do you Want to Sign?

BY BRETT ANDERSON/ST.CROIX ADVISORS, LLC

which side of the check

Photo by Brooke Lark

I recently visited a successful doctor who owns her own dental practice. She’s married and has kids, and she has a host of employees who help keep her office running smoothly. As we were discussing her fees and insurance reimbursements (she was giving me a choice between replacing a filling or getting a crown), I asked her a simple question: “Which side of the check do you want to sign?”

She laughed and said, “I wish someone would have had that conversation with me years ago.”

Most people never give this a second thought, since most of us are employees: we are used to signing the back side of our checks, and we enjoy having the money appear in our account every other week with regularity. But if you own a business, you have to sign the front of the check and take on a heightened level of financial responsibility.

To be a business owner, you already have to be little off. Sure, it’s great to be your own boss, but owning a business isn’t easy:

  • It’s hard work.
  • You don’t always get paid.
  • The time commitment is massive.
  • It’s a big financial risk.

Not everyone is cut out to be a business owner.

There’s just no guarantee that you’ll be able to generate the necessary revenue to pay back the debt you’ve taken out, and that doesn’t sit well with everyone.

Personally, I’d rather just sign the back of the check and have the cash—but that’s just me. Not everyone is cut out to be a business owner like my doctor friend. Which type of person are you?

Before making the decision to own your own business, take a good, hard look at your own strengths, weaknesses, and comfort level when it comes to debt and risk. Then ask yourself: Which side of the check do I really want to sign?

Feel Good Article: Looking for Unconditional Love? Get a Dog

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

5 + 13 =