Achieving Financial Security

ST. CROIX INSIGHTS

Achieving Financial Security

BY BRETT ANDERSON/ST.CROIX ADVISORS, LLC

Photo by Eirik Skarstein

I’ve tried saying no, but it does occasionally offer some benefits…
These days, I limit the time I spend on social media. I check to see what’s happening with family, friends, and clients, and I log off quickly. I don’t even have the Facebook app on my phone. One useful group I did find on Facebook was a retirement group where people pose retirement/investment questions to strangers to solicit advice. In many respects, I find this scary (you have no idea who these people are or what their background or qualifications are for giving financial advice), but at the same time, it’s helpful to see what different people are thinking about as they approach or experience their retirement years.

One common theme among those I interact with is that most are seeking financial security. And why would anyone not? But “financial security” looks and means something different to each of us based on our background, our upbringing, and our lifestyle, as well as what we strive for down the road.

Many times, what “security” looks like is not just a mathematical calculation but an emotional one. One recent Facebook post broke down the three levels of financial security one can achieve: financial security, financial independence, and financial freedom.

Financial security is defined as having enough income to cover your basic living expenses. It’s a foundational level that takes decades of hard work and saving to achieve, where you’ve worked for thirty or forty years and can finally put in your two-week notice and not look back. (I often hear people say you need a million dollars saved up before you can retire. The truth is, you don’t.)

Financial independence is what I think most people seek when they use the term “financial security,” but it’s hard to differentiate between financial security and financial independence. Financial independence just means having more passive income to cover your lifestyle, which includes more than the basic necessities of financial security. That might include extra income to travel once or twice a year, eat out a few times a week, and have extra spending money each month.

The third level is financial freedom. Very few people will ever truly achieve this level of freedom. This is when you have multiple passive income streams in place to create the life you’ve always dreamed of, which enables you to do the things you love while also giving back. You still live within a budget, but this level of freedom allows you additional choices on how you live.

Common to all three of these definitions is the phrase “passive income.” Passive income comes in a host of different forms, from Social Security, an income stream from your investment/retirement accounts, a pension (though this is becoming less and less common for younger people), income from a business you own, rental real estate, and so on. For some, passive income is even viewed as part-time work in a low-stress position where they aren’t taking their job home at night.

When I think about financial security, I think about time. Time to take a relaxing vacation—so relaxed you don’t adhere to a rigid timeline. Time to cook those meals that take hours to prepare and eat, take naps you don’t have to set alarms for because you slept so well the night before, and finally start to conquer that mile-long to-do list. That time to invest in ourselves is what I want to help all my clients achieve.

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

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The Dreaded B-Word

ST. CROIX INSIGHTS

The Dreaded B-Word

BY BRETT ANDERSON/ST.CROIX ADVISORS, LLC

Photo by Carlos Muza

Not a day goes by when someone doesn’t say to me, “I wonder where all my money goes?” or “I wish the month were a week or two shorter” or “I make a lot of money, I just don’t understand how I can spend so much of it.” Most of us wish we better understood where we’re really spending all our money. Luckily for me, Mrs. Anderson has followed my financial advice over the years. (Almost too well—I’ve created a financial ninja. Sure, it’s great at times…but other times, she asks what I purchased from Amazon for $19.28) Everyone’s on a budget, whether formal or informal. But knowledge is power, and we can all stand to be more impactful with our resources.
If you’re the type of person who has no interest in budgeting, guess what? Unless you’re consistently spending beyond your means, you are already using a budget. Congratulations! Now, to curb your spending, just focus on achieving these three numbers:

  • 20 percent savings
  • 30 percent lifestyle
  • 50 percent housing

If you conquer your spending and savings rates, you’re more likely to enjoy life down the road. But no matter how well your informal budget may be working, one way or another, you still need to start tracking the numbers.

So what three steps can you take to understand where your money is going and how you can finally plug your financial leakage?

1. Make technology your friend.

Some Saturday or Sunday while you’re watching a movie or a ball game, invest a couple hours in improving your finances. Try using software like Mint, a website like www.youneedabudget.com, or Google for a host of other options to choose from.

Don’t worry about what happened six months ago; this your opportunity to start fresh. Establish where you are spending money each day, week, and month. You can categorize your spending by restaurants, events, home items, and any other useful category, right down to stamps. If you watch your pennies, the dollars will follow.

2. Create a budget.

I know, the word “budget” makes you cringe. (I hate budgeting too, and I’m in the money businesses!) But we all need to establish a baseline for how much we really have to save, spend, or give away each month. To truly achieve financial peace, you need to create a margin between your income and your spending. This is so much easier when you make technology your friend.

By looking at the numbers in detail, you can finally see each day, week, or month where you are over- or underspending. I know what you’ll discover: you actually have more money than you thought you did, and you’ll wish you would have done this exercise years ago.

3. Understand your priorities.

Prioritizing your goals for your money is the only way to truly master it and direct it where you want it to go. Priorities can range from paying off your debt, saving 20 percent of your gross income, tithing, helping others, paying cash for that new car, and so on. I believe that more stuff means more money and more stress; look for opportunities to spend your money in creative, thoughtful ways, not just on the acquisition of more “stuff.”

Spending a few hours reversing the flow of your financial leakage will be empowering. Now, you can direct where you want your money to go and align your actions and values. Become the master of your money instead of letting your money master you.

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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? 

7 + 1 =

Dumb Ways We Spend Money: Lesson 21 of 50

ST. CROIX INSIGHTS

Dumb Ways We Spend Money

BY BRETT ANDERSON/ST.CROIX ADVISORS, LLC

dumb ways we spend money

Have you ever thought about some of the dumb ways we spend money?

At the risk of embarrassing myself, here are a few of mine:

  • Cable TV (even though nothing good is ever on)
  • Cell phone plan (even though I hate always being connected)
  • Bottled water (even though I finally purchased a reverse-osmosis system for my house)
  • The occasional impulse buy when I see something on sale (even though I don’t need it)

The list goes on!

One overlooked (but still dumb) way we spend money is all those monthly recurring payments. They can accumulate quickly, almost without our notice, but the individual charges are small enough where we’re never actually triggered to cancel them.

Microsoft: $10. Dropbox: $10. Netflix: $10. Gym membership: $40.00 (“but I’ll go someday, so I’d better keep paying”). It’s not the mortgage or car payment that gets us; it’s these nickel-and-dime amounts that really start to add up.

Maybe it’s time to tally up all the dumb ways we spend money and consider dropping a few unused or unnecessary subscriptions from our monthly expenses. After all, when it comes to making smart financial decisions for our future, every little bit helps.

Article: Broke vs Poor

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

10 + 3 =

Dream Board Session

ST. CROIX INSIGHTS

Dream Board Session

BY BRETT ANDERSON/ST.CROIX ADVISORS, LLC

Have you heard? We are hosting a dream board session on July 28! Learn more by going to this facebook event page. We decided to hold this event because dream boards have become very important in our own lives. We use this boards, which sit right next to our desks, as daily reminders of the ideas, goals, dreams, plans, and visions we have for ourselves and our futures. By having these within sight every single day, we become much more motivated to do something about those dreams. Another piece of it is that these dreams cannot be accomplished alone. There is power in community and in sharing with others. For these reasons, we have created this session that will allow you to do the same for yourself and even sign up if you’re interested in follow-up.

OR watch the video below

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

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How Much to Spend on a Wedding Gift

ST. CROIX INSIGHTS

How Much to Spend on a Wedding Gift

BY BRETT ANDERSON/ST.CROIX ADVISORS, LLC

It’s something we’ve all thought about when invited to celebrate that special day – how much to spend on a wedding gift. Before tackling this subject, it’s important to note that giving should be based on both the financial position you are in as well as your relationship to the couple. With that, here are some general guidelines to follow.

Realistically, you have three options when it comes to wedding gifts. Either you can buy directly off of the couple’s registry, give cash or check, or give a gift card to the store that the registry exists at or a place you know they enjoy. Although creativity is wonderful, most engaged couples have thought through what it is that they need to get started, so don’t stray too far from that.

Certainly, money can be tricky, especially because there are so many different reasons for going to a wedding. However, a good rule of thumb is to spend at least $50 on a wedding gift. Usually, this lower threshold (under $100) is appropriate for acquaintances, coworkers, neighbors, and distant family members.

Now, I suspect most families don’t track their spending on a daily or monthly basis. Luckily, St. Croix Advisors clients have access to iAdvise- the most advanced financial planning software. Further, it allows us to track their spending and help establish a monthly budget.

The $100-$150 range is where most people land when purchasing a wedding gift. This amount makes sense for friends, cousins, and those you have a close working relationship with. Anything above $150 is suitable for those closest to you or for people who have the financial ability to give generously.

Additionally, it is a good idea to try to tackle some of the bigger items on the registry first that may be a bit too pricey for the new couple. Currently, you may not be able to afford to give a washing machine as a wedding gift, but maybe you have a good friend going to the wedding who would be willing to combine gifts. It’s a lot easier to run out to the store for some hand towels rather than new appliances.

Also, don’t forget about the other costs associated with weddings. Generally, are you the type of person who buys a new outfit for a special occasion? In this case, were you invited to a bridal shower, bachelorette party, or a similar celebration? Following the wedding, are you going to be giving anniversary gifts? Indeed these are all good questions to ask yourself – try not to overshoot or undershoot on the gift.

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

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