2020 Presidential Election and Your Money

ST. CROIX INSIGHTS

2020 Presidential Election and Your Money

BY BRETT ANDERSON/ST.CROIX ADVISORS, LLC

2020 presidential election
As we all know, our next Presidential Election occurs on November 3, 2020. I don’t know about you, but I’m ready for November 4, 2020!
It seems that with the power of the internet, we are all in a cycle of constant news, content, and connectivity. But even in today’s world, it’s still possible to find yourself without cell phone coverage, cable TV, or even the internet. I found myself in a place just like that for five days over the summer, and it was heavenly.

As I write this, we have about 49 days until the next President of the United States is elected. Those of you reading this are Democrat, Republican, Independent, Conservative, Liberal, and my list could go on. Yet one major commonality we all have is our money:

We’re all concerned with things like planning for our retirements, managing our investments and 401k plans, and funding our kids’ college.
We have two choices this next election. How will this outcome impact us, our money, and our investments? As of this writing, here’s what I’ve been able to decipher, along with my overall thoughts for the end of 2020 and the beginning of 2021. Keep in mind that I have no idea who is going to win (but I sure wish I did—it would make my job a lot easier!).
The markets have demonstrated it can perform well under both Democratic and Republican administrations.

No matter who wins the next Presidential Election, here are some of the common threads I see in the future we face:

  • Telemedicine was already growing and has now hit overdrive due to the coronavirus.
  • We strive for faster internet, and 5G will impact all of us.
  • Green/clean energy (e.g., electric cars) will continue to become more common, right down to autonomous driving.
  • Let’s not forget about the increase in automation.
  • Are you receiving more packages at home than ever these days? I don’t see that   changing.

If Vice President Biden wins, these are some potential market sectors to own:

  • Hydroelectric.
  • Solar and Wind.
  • Infrastructure companies that focus on roads, bridges, and airports (assuming people start flying again).

If President Trump wins, these are some potential market sectors to own:

  • Heavy equipment companies.
  • Heavily sales-driven internet companies.
  • Social media companies (Twitter loves him!).
  • Overall US-based manufacturing companies.

Under Vice President Biden’s tax plan (versus President Trump’s):

  • Capital gains tax would move to 39.6% on the wealthy.
  • Step-up in cost basis would be eliminated.
  • 1031 exchanges would be eliminated.
  • Corporate tax rate would increase to 28% (from 21%).

I’ve seen slightly different figures, but the Federal Reserve has printed over $3,500,000,000,000 in a matter of months. I don’t know what comes after a trillion—do you? I haven’t talked to anyone who hasn’t asked how this is going to get paid back.
Today, over 1,000 people a day are moving to Florida from the Northeast alone. I suspect income tax-free states will continue to see an increase in their populations thanks to newcomers from high-tax states.


This year, we’ve seen big stock market swings, though lately that’s settled down. You may be concerned about this presidential election. If you become worried about your investments or the markets or just need a sounding board, give me a shout.
Finally, here’s a reminder you’ve heard me stress: having some amount of cash on hand continues to be a solid strategy.

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? 

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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. “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? 

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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? 

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

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The Lessons Never End – Life Lesson 50 of 50

ST. CROIX INSIGHTS

The Lessons Never End

BY BRETT ANDERSON/ST.CROIX ADVISORS, LLC

the lessons never end

Photo by Nils Nedel

Well, it’s finally happened: after starting earlier this year, offering my thoughts on the world around me—everything from chocolate to Walmart to cancer to leaving a job—I finally reached 50 Life Lessons. What a milestone! The lessons never end.

The lessons never end–maybe my two kids will read these lessons one day and better understand their dad. Better understand that life isn’t always easy. Better understand that their old man has walked in their shoes many times, and sometimes he really does know better.

But the thing is, even I don’t have all the answers. (I know. It came as a shock to me too.)

And that seems to be the pattern: Just as we master a new lesson in life, we’re presented with a brand-new one to figure out and work through. Just when we’re sure we have this whole “living” thing figured out, life conspires to remind us how wrong we are and how much we have yet to learn.

It seems there’s a new lesson to be learned every day—and that’s the key to this final lesson. There’s always more to learn. We just have to be open to the lessons. The lessons never end.

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 + 5 =

Make a Dream Board: Life Lesson 49 of 50

ST. CROIX INSIGHTS

I’m Done Asking for Permission

BY BRETT ANDERSON/ST.CROIX ADVISORS, LLC

make a dream board

Photo by Rana Sawalha

When you make a dream board, you’re setting powerful internal forces in motion that will move you toward your goals, even when you’re not consciously aware of it. Visualization is one of the most powerful tools we humans have for achieving our dreams. 

It may seem silly that by collecting words and images on a piece of paper, we can channel some magic power that influences our lives—but studies have shown that through visualization, we can actually train our brains to work for us in surprising ways.

Make your subconscious work for you

There’s a reason cultures and traditions around the world use visualization to effect powerful change. By constantly envisioning ourselves achieving the things we really want in life, we’re forming habitual thought patterns that keep us moving toward that goal.

Make a dream board- it isn’t just a symbolic action; it’s a way to keep your mind focused on achieving your goals so your subconscious can keep working for you.

Focus your energy through constant reminders

It’s not enough just to jot your dreams on a piece of paper and file it away somewhere; dream boards work best when you keep them in plain sight. Post yours in your office, your bedroom, even your bathroom—anywhere you’re sure to see it every single day.

I personally use a dream board to help focus my personal and professional financial decisions. It hangs right next to my desk as a daily reminder of the ideas, goals, dreams, plans, and visions I have for myself and my future. By keeping it within sight every single day, it’s easy for me to get motivated to do something about my dreams.

Help others help you

Some dreams just can’t be accomplished alone. There is power in sharing your dream board with others. As soon as you start to tell people about your goals and desires, they’ll be able to help hold you accountable for making them happen.

 

Article: I Don’t Want To Share

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

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