tag:blogger.com,1999:blog-45769175746316460002024-02-21T01:00:30.902-05:00Kevin Kroskey's Money & MindPersonal finance articles aimed to educate and sometimes entertain written by highly experienced Certified Financial Planner with deep expertise in integrating retirement, investment, and tax planning into a well-integrated retirement strategy. (This site is for educational purposes only. See disclaimer.)Kevin Kroskey, CFP, MBAhttp://www.blogger.com/profile/14216987399845080721noreply@blogger.comBlogger111125tag:blogger.com,1999:blog-4576917574631646000.post-46951694398526900962018-02-09T08:37:00.000-05:002018-02-09T08:37:04.800-05:00Future posts at www.TrueWealthDesign.comAny future posts at <a href="http://www.truewealthdesign.com/">www.TrueWealthDesign.com</a>.<br />
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Thank you,<br />
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Kevin Kroskey, CFP, MBAKevin Kroskey, CFP, MBAhttp://www.blogger.com/profile/14216987399845080721noreply@blogger.comtag:blogger.com,1999:blog-4576917574631646000.post-29333863815617879262017-12-01T11:10:00.000-05:002017-12-05T12:47:53.064-05:00Common Estate Planning Mistakes<div style="text-align: justify;">
<span style="font-family: "times" , serif; font-size: 14pt;">The most
common way to transfer assets to your heirs is also the messiest: to have a
will that is so out of date that it doesn’t relate to your property or estate,
to have your records scattered all over the place, to have social media,
banking and email accounts whose passwords only you can find—and basically to
leave a big mess for others to clean up.</span></div>
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<span style="font-family: "times" , serif; font-size: 14pt;">Is there
a better way?</span></div>
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<span style="font-family: "times" , serif; font-size: 14pt;">Recently,
a group of estate planning experts were asked for their advice on a better
process to handle the transfer of assets at your death, and to articulate
common mistakes.<span style="mso-spacerun: yes;"> </span>The list of mistakes
included the following:</span></div>
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<b style="mso-bidi-font-weight: normal;"><span style="font-family: "times" , serif; font-size: 14pt;">Not regularly reviewing documents.</span></b><span style="font-family: "times" , serif; font-size: 14pt;"><span style="mso-spacerun: yes;"> </span>What
might have been a solid plan 15 or 20 years ago may not relate to your estate
today. <span style="mso-spacerun: yes;"> </span>The experts recommended a full
review every three to five years, to ensure that trustees, executors,
guardians, beneficiaries and healthcare agents are all up-to-date.<span style="mso-spacerun: yes;"> </span>You might also consider creating a master
document which lists all your social media and online accounts and passwords,
so that your heirs can access them and close them down.</span></div>
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<b style="mso-bidi-font-weight: normal;"><span style="font-family: "times" , serif; font-size: 14pt;">Using a will instead of a revocable trust</span></b><span style="font-family: "times" , serif; font-size: 14pt;">.<span style="mso-spacerun: yes;"> </span>This
relates mostly to people who want to protect their privacy.<span style="mso-spacerun: yes;"> </span>When assets pass to heirs via a will, the
transfer creates a record that anybody can access and read.<span style="mso-spacerun: yes;"> </span>A revocable trust can be titled in your name,
and you can control the assets as you would with outright ownership, but the
assets simply pass to your designated successor upon death.</span></div>
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<b style="mso-bidi-font-weight: normal;"><span style="font-family: "times" , serif; font-size: 14pt;">Failing to fund the revocable trust.</span></b><span style="font-family: "times" , serif; font-size: 14pt;"><span style="mso-spacerun: yes;"> </span>You’ve
set up the trust, but now you and your team of professionals have to transfer
title to your properties out of your name and into the trust, with you as the
trustee.<span style="mso-spacerun: yes;"> </span>If you forget to do this, then
the entire purpose of the trust is wasted.</span></div>
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<b style="mso-bidi-font-weight: normal;"><span style="font-family: "times" , serif; font-size: 14pt;">Having assets titled in a way that conflicts
with the will or trust</span></b><span style="font-family: "times" , serif; font-size: 14pt;">.<span style="mso-spacerun: yes;"> </span>You should always pay close attention to the
beneficiary designations, because they—not your will—determine who will receive
your IRA assets.<span style="mso-spacerun: yes;"> </span>Meanwhile, assets (like
a home) owned in joint tenancy with rights of survivorship will pass directly
to the surviving joint tenant, no matter what the will or trust happens to say.</span></div>
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<b style="mso-bidi-font-weight: normal;"><span style="font-family: "times" , serif; font-size: 14pt;">Not using the annual gift exemption.</span></b><span style="font-family: "times" , serif; font-size: 14pt;"><span style="mso-spacerun: yes;"> </span>People
can gift $14,000 a year tax-free to heirs without affecting the value of their
$5.49 million lifetime gift exemption.<span style="mso-spacerun: yes;">
</span>That means a husband and wife with four children could theoretically
gift the kids $112,000 a year tax-free.<span style="mso-spacerun: yes;">
</span>That can reduce the size of a large estate potentially below the gift
exemption threshold, and in states where there is an estate tax, it can help
there as well.</span></div>
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<b style="mso-bidi-font-weight: normal;"><span style="font-family: "times" , serif; font-size: 14pt;">Not taking action because of the possibility of
estate tax repeal</span></b><span style="font-family: "times" , serif; font-size: 14pt;">.<span style="mso-spacerun: yes;"> </span>Yes, the Republican leadership in Congress includes,
on its wish list, the total repeal of those estate taxes.<span style="mso-spacerun: yes;"> </span>But what if there’s no action, or a
compromise scuttles the estate tax provisions at the last minute?<span style="mso-spacerun: yes;"> </span>Federal wealth transfer taxes have been
enacted and repealed three times in U.S. history, so there’s no reason to
imagine that even if there is a repeal, the repeal will last forever.<span style="mso-spacerun: yes;"> </span>Meanwhile, dynastic trusts and other estate
planning tactics provide tangible benefits even without the tax savings,
including protecting assets from lawsuits and claims.</span></div>
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<b style="mso-bidi-font-weight: normal;"><span style="font-family: "times" , serif; font-size: 14pt;">Leaving too much, too soon, to younger heirs.</span></b><span style="font-family: "times" , serif; font-size: 14pt;"><span style="mso-spacerun: yes;"> </span>Nothing
can harm emerging adult values quite like realizing, as they start their
productive careers, that they actually never need to work a day in their
lives.<span style="mso-spacerun: yes;"> </span>The alternative?<span style="mso-spacerun: yes;"> </span>Create a trust controlled by a trusted family
member or a corporate trust company until the beneficiaries reach a more mature
stage of their lives, perhaps 30-35 years old. Also, some prefer to keep the assets in trust forever for asset protection purposes and the beneficiary becoming trustee and beneficiary of the trust at a mature age.</span></div>
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<strong><em>To Your Prosperity,</em></strong></div>
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<b><i></i></b> </div>
<div style="text-align: justify;">
<b><i>Kevin Kroskey, CFP®, MBA </i></b><br />
<strong><em></em></strong><br />
<em>Adapted with permission from BobVeres.com</em></div>
Kevin Kroskey, CFP, MBAhttp://www.blogger.com/profile/14216987399845080721noreply@blogger.comtag:blogger.com,1999:blog-4576917574631646000.post-62756114172639748042017-11-02T11:43:00.000-04:002017-11-04T06:34:10.708-04:00Major Changes in Northeast Ohio Health Insurance Marketplace & Open Enrollment<div style="text-align: justify;">
The Affordable Care Act -- aka Obamacare -- has become an important program for many retirees who need health insurance to bridge the gap from when employer coverage exhausts until eligible for Medicare at age 65. For those utilizing these plans and especially those that use Medical Mutual of Ohio for their insurance, it's time to review your options during the open enrollment season.<br />
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<a href="http://www.crainscleveland.com/article/20170615/news/170619852/cleveland-clinic-dives-health-insurance-market" target="_blank">As reported </a>earlier this year, in partnership with New York City-based <a href="https://www.hioscar.com/">Oscar Health</a>, <a href="https://my.clevelandclinic.org/">Cleveland Clinic</a> announced it is making its first entrance into the health insurance market with a product bearing its name. The co-branded health insurance plan will be available in Cuyahoga, Summit, Lorain, Medina and Lake with coverage beginning Jan. 1, 2018.<br />
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The Clinic also will not be participating in Medical Mutual of Ohio's (MMO) -- a large insurer of northeast Ohioans and headquartered in Cleveland -- individual ACA products in 2018, as <a href="http://www.crainscleveland.com/article/20171017/news/138911/exchange-offerings-some-counties-might-not-include-cleveland-clinic" target="_blank">Crain's Cleveland Business</a> first reported. MMO switched to a Health Maintenance Organization (HMO) from a Point of Service (POS) network for its 2018 offering, and the Clinic opted not to participate.<br />
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Medical Mutual has added University Hospitals and Summa as part of their new HMO network to make up for the Clinic's departure.<br />
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Also important to note for snowbirds: the First Health network predominant through the southeastern part of the U.S. and 'in network' for MMO is no longer available on exchange plans as of 2018. Thus many snowbirds need to explore new options to ensure they have in-network coverage in both Ohio and Florida.<br />
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The government has dramatically reduced the open enrollment period this year; in most states it starts November 1 and ends December 15. This is very important because you cannot enroll outside of open enrollment unless you have a “qualifying event,” such as: </div>
<ul>
<li style="text-align: justify;">Marriage, </li>
<li style="text-align: justify;">Becoming a U.S. citizen, </li>
<li style="text-align: justify;">Birth or adoption, </li>
<li style="text-align: justify;">Involuntary loss of other health coverage </li>
<li style="text-align: justify;">Permanent move to an area where new health plans are available. This only applies in most cases if you already had coverage prior to your move. </li>
</ul>
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Can’t you just continue with the coverage you have today? If you’re happy with your current policy, that’s one option, but prices are going up by an estimated average of 15% as many insurers are unsure whether they can count on government reimbursements. It doesn’t hurt to look and see if your current insurer is raising rates higher than the competition. </div>
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By now, you know that comparison shopping is not as difficult as it once was. A benefit of the ACA is the standardization. You can choose a bare bones bronze plan, a silver plan with lower deductibles and broader coverage, or a gold plan with more of both, and the various plans in each category, to qualify to be on an exchange, have to offer similar coverage features. However, understanding the nuances of the network is not as clear in my opinion.</div>
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If you have a significant health issue come up recently, then shopping takes on a new urgency. You might consider switching from a bronze to a silver plan, or silver to gold. Or you might realize that you’re not utilizing the medical system as much as you expected, and drop down to a baser metal.</div>
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Roughly 85% of the 11 million people who buy through one of the exchanges qualify for tax credits that significant reduce out-of-pocket costs for deductibles and co-pays, and can also reduce premiums. While you may think this doesn't apply to you, we have several clients with substantial wealth that have obtained upwards of $6K+ in tax credits with proper tax and retirement distribution planning.<br />
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You can get help enrolling and comparing plans by phone or with a local in-person guide, called a navigator. ACA <a href="https://www.healthcare.gov/contact-us/">marketplace call centers</a> are available 24 hours a day, every day except holidays. At HealthCare.gov, you can search by city and state or ZIP code to see a list of <a href="https://localhelp.healthcare.gov/#intro">local organizations</a> that can help you.<br />
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We'd recommend a competent local agent that specializes in individual policies for those under age 65 or a specialist for Medicare if over 65. If you need a referral, just let me know.</div>
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<div style="background-color: white; color: #292929; font-family: Lora, serif; text-align: justify;">
<b><i>To Your Prosperity,</i></b></div>
<div style="background-color: white; color: #292929; font-family: Lora, serif; text-align: justify;">
<b><i></i></b> </div>
<div style="background-color: white; color: #292929; font-family: Lora, serif; text-align: justify;">
<b><i>Kevin Kroskey, CFP®, MBA</i></b><br />
<strong><em><a href="http://www.truewealthdesign.com/">www.TrueWealthDesign.com</a> </em></strong></div>
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</div>
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<span style="font-size: x-small;">Sources: </span></div>
<a href="https://www.healthinsurance.org/faqs/what-are-the-acas-enrollment-periods-and-when-can-i-enroll-outside-of-the-open-enrollment-period/"><span style="font-size: x-small;">https://www.healthinsurance.org/faqs/what-are-the-acas-enrollment-periods-and-when-can-i-enroll-outside-of-the-open-enrollment-period/</span></a><br />
<span style="font-size: x-small;">
</span><a href="https://www.consumerreports.org/health-insurance/buy-aca-health-insurance-in-2018-what-you-need-to-know/"><span style="font-size: x-small;">https://www.consumerreports.org/health-insurance/buy-aca-health-insurance-in-2018-what-you-need-to-know/</span></a><br />
<a href="http://www.crainscleveland.com/article/20170615/news/170619852/cleveland-clinic-dives-health-insurance-market"><span style="font-size: x-small;">http://www.crainscleveland.com/article/20170615/news/170619852/cleveland-clinic-dives-health-insurance-market</span></a><br />
<a href="http://www.crainscleveland.com/article/20170615/news/170619852/cleveland-clinic-dives-health-insurance-market"><span style="font-size: x-small;">http://www.crainscleveland.com/article/20170615/news/170619852/cleveland-clinic-dives-health-insurance-market</span></a><br />
<span style="font-size: xx-small;">
</span>Kevin Kroskey, CFP, MBAhttp://www.blogger.com/profile/14216987399845080721noreply@blogger.comtag:blogger.com,1999:blog-4576917574631646000.post-51874752966936857722017-10-06T09:54:00.001-04:002017-10-06T14:16:18.306-04:00Common Traits of Millionaires<div style="text-align: justify;">
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While being a 'millionaire' isn't what it once was in today's world, it's a nice round number people still fixate on.<br />
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The <a href="https://www.amazon.com/Millionaire-Next-Door-Surprising-Americas/dp/1589795474" target="_blank">Millionaire Next Door</a> was originally published in 1998 and was a robust study of common traits -- many of them surprising -- of millionaires. Many of its findings are still relevant today. Below are a few of my favorites.</div>
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<b>Good Grades = Success, Right?</b></div>
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What most people don’t know is that GPA is a very poor predictor of success. The Author's wrote, "I find no substantial statistical correlation between the economic-productivity factors (net worth and income) and SATs, class rank in college, and grade performance in college." And further, "Overall, there is an inverse relationship between taking financial risk and various measures of analytical intelligence such as SAT scores."</div>
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When asked what their teachers did compliment them on, what was the most common response? "Most dependable."</div>
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When asked what they did learn in college, 94% replied “a strong work ethic.”</div>
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Not I'm not going to set the GPA expectations bar low for my young daughter, but I will do my best to consciously encourage her to work hard, be dependable, do what she says, finish what she starts, and take calculated risks. </div>
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<b>Risk, Reward & Entrepreneurship:</b></div>
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"Twenty percent of the affluent households in America are headed by retirees. Of the remaining 80 percent, more than two-thirds are headed by self-employed owners of businesses. In America, fewer than one in five households, or about 18 percent, is headed by a self-employed business owner or professional. But these self-employed people are four times more likely to be millionaires than those who work for others."</div>
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Yet ... "No matter how you measure new firms, and no matter which developed country you look at, it appears that only half of new firms started remain in business for five years, and less than one-third last ten years."</div>
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Risk can yield return especially when hard work is applied. Failure is okay. Learning and growing from it is key.</div>
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<b>The Vehicles They Drive:</b></div>
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"Approximately 70,000 Mercedes were sold in this country last year. This translates into about one-half of 1 percent of the more than fourteen million motor vehicles sold. At the same time, there were nearly 3.5 million millionaire households. What does this tell us? It suggests that the members of most wealthy households don’t drive luxury imports. The fact is that two out of three purchasers or leasers of foreign luxury motor vehicles in this country are not millionaires."</div>
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Similarly, they tend not to spend money on other luxury items or expensive clothing. Rather, they tend to be thrifty.</div>
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Does that mean you shouldn't buy a nice German automobile? Of course not. Just realize that you are deciding to have it at an opportunity cost of something else -- like accumulating wealth greater and becoming financially independent at an earlier age.</div>
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You decide what's important to you. Just be thoughtful in your decision making.</div>
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<b><i><br /></i></b></div>
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<b><i>To Your Prosperity,</i></b></div>
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<b><i><br /></i></b></div>
<div style="text-align: justify;">
<b><i>Kevin Kroskey, CFP®, MBA </i></b></div>
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</div>
Kevin Kroskey, CFP, MBAhttp://www.blogger.com/profile/14216987399845080721noreply@blogger.comtag:blogger.com,1999:blog-4576917574631646000.post-66897187974081720392017-09-01T10:59:00.000-04:002017-09-01T10:59:57.445-04:00 Hot Stocks (Not) To Pick<div class="MsoNormal">
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This NY Times article <a href="http://link.dimensional.com/c/4/?T=NjI4NTUxODc%3AMDItYjE3MjQwLWM0YjEzMWZjMGJjMjQ2YTJiYjkzMmNjODI0ODNkZDEx%3Aa2tyb3NrZXlAdHJ1ZXdlYWx0aGRlc2lnbi5jb20%3AY29udGFjdC01YjM4NmZkYjljN2FlNjExODBkZGM0MzQ2YmFjNjk3NC1lODFiMjg3NDk1NzU0ZmEzYmE0NzA3NmVhMTA0Zjc4MQ%3AZmFsc2U%3AMA%3A%3AaHR0cHM6Ly93d3cubnl0aW1lcy5jb20vMjAxNy8wNS8xMi95b3VyLW1vbmV5L2hvdC1zdG9ja3MtY2FuLW1ha2UteW91LXJpY2gtYnV0LXRoZXktcHJvYmFibHktd29udC5odG1sP19yPTAmX2NsZGVlPWEydHliM05yWlhsQWRISjFaWGRsWVd4MGFHUmxjMmxuYmk1amIyMCUzZCZyZWNpcGllbnRpZD1jb250YWN0LTViMzg2ZmRiOWM3YWU2MTE4MGRkYzQzNDZiYWM2OTc0LWU4MWIyODc0OTU3NTRmYTNiYTQ3MDc2ZWExMDRmNzgxJmVzaWQ9NDk3MjVlNTItZjk4Yi1lNzExLTgwZmQtYzQzNDZiYWMwOTM0&K=0qKFLhQZ4e1C5aI_MN96rg">Hot Stocks Can Make You Rich. But They Probably Won’t</a> provides a succinct take on the odds of picking the next big winner. Before you jump headlong into stock picking, you should consider the odds. Over the long run, while the total stock market has prospered, most individual stocks have not.</div>
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“A new study by Hendrik Bessembinder, a finance professor at Arizona State University, demonstrates persuasively that while investing in the overall stock market makes sense, the obstacles facing individual stock pickers are formidable.</div>
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Professor Bessembinder found that a mere 4 percent of the stocks in the entire market — headed by Exxon Mobil and followed by Apple, General Electric, Microsoft and IBM — accounted for all of the net market returns from 1926 through 2015. By contrast, the most common single result for an individual stock over that period was a return of nearly negative 100 percent — almost a total loss.”</div>
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Yet more evidence that stock picking can be very harmful to your health. Diversify, diversify, diversify.</div>
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<a href="https://www.nytimes.com/2017/05/12/your-money/hot-stocks-can-make-you-rich-but-they-probably-wont.html"></a><a href="https://www.nytimes.com/2017/05/12/your-money/hot-stocks-can-make-you-rich-but-they-probably-wont.html">Click here to read the full NY Times articl</a><a href="https://www.nytimes.com/2017/05/12/your-money/hot-stocks-can-make-you-rich-but-they-probably-wont.html" target="_blank">e.</a></div>
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<i><span style="background-color: white; color: #292929; font-family: "lora" , serif;"><b><br /></b></span></i></div>
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<i><span style="background-color: white; color: #292929; font-family: "lora" , serif;"><b>To Your Prosperity,</b></span></i></div>
<div style="text-align: justify;">
<i><b style="background-color: white; color: #292929; font-family: Lora, serif;">Kevin Kroskey, CFP®, MBA</b></i></div>
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<span style="font-size: xx-small;"><br /></span></div>
<div style="text-align: justify;">
<span style="font-size: xx-small;">A version of this article appears in print on May 14, 2017, on Page BU6 of the </span><span itemprop="printEdition" style="font-size: xx-small;">New York edition</span><span style="font-size: xx-small;"> with the headline: Hot Stocks Can Make You Rich. Don’t Count on It. </span></div>
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Kevin Kroskey, CFP, MBAhttp://www.blogger.com/profile/14216987399845080721noreply@blogger.comtag:blogger.com,1999:blog-4576917574631646000.post-1953029803956088292017-08-03T14:49:00.002-04:002017-08-03T14:50:15.673-04:0065-80 Year Olds … A New and Exciting Demography<!--[if gte mso 9]><xml>
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<div style="text-align: justify;">
Should today’s 70-year-old American be considered “old?” How do you define that term these days? Statistically, your average 70-year-old has just a 2% chance of dying within a year. The estimated upper limits of average life expectancy is now 97, and a rapidly growing number of 70-year-olds will live past age 100. <br />
<br />
Perhaps more importantly, today’s 70-year-olds are in much better shape than their grandparents were at the same age. In most developed countries, healthy life expectancy from age 50 is growing faster than life expectancy itself, suggesting that the period of diminished vigor and ill health towards the end of life is being compressed. <br />
<br />
A recent series of articles in the Economist magazine suggest that we need a new term for people age 65 to 80, who are generally healthy and hearty, capable of knowledge-based work on an equal footing with 25-year-olds, and who are increasingly being shunted out of the workforce as if they were invalids or, well, “old.” Indeed, the article suggests that if this cohort does NOT start returning to or staying in the workplace, the impact could be catastrophic on society as a whole. <br />
<br />
Globally, a combination of falling birth rates and increasing lifespans threaten to increase the “old-age dependency ratio” (the ratio of retired people to active workers) from 13% in 2015 to 38% by the end of the century. That, in turn, could lead to huge fiscal strains on our pension and Social Security systems, because fewer workers would be paying for retirement benefits for more retirees. <br />
<br />
What to do? The article notes that, in the past, whenever a new life stage was identified, deep societal and economic changes followed in the wake. A new focus on childhood in the 19th century paved the way for child-protection laws, mandatory schooling and a host of new businesses, from toymaking to children’s books. When teenagers were first singled out as a distinct demographic in America in the 1940s, they turned out to be a great source of economic value, thanks to their willingness to work part-time and spend their income freely on new goods and services. <br />
<br />
The next most logical shift in our thinking could be separating out people age 65-80 from the traditional “old” and “retiree” category—and calling them something different. (The article doesn’t offer a suggested name.) They might continue at their desks, or downshift into the kinds of part-time work that emphasize knowledge and relationships. Many who experienced mandatory retirement retired to the so-called gig economy. Though gigging is usually seen as something that young people do, in many ways it suits older people better. They are often content to work part-time, are not looking for career progression and are better able to deal with the precariousness of such jobs. The article notes that a quarter of drivers for Uber are over 50. <br />
<br />
More broadly, a quarter of all Americans who say they work in the “sharing economy” are over 55. Businesses that offer on-demand lawyers, accountants, teachers and personal assistants are finding plenty of recruits among older people. <br />
<br />
Still others are preparing for life beyond traditional retirement by becoming entrepreneurs. In America people between 55 and 65 are now 65% more likely to start up companies than those between 20 and 34. In Britain 40% of new founders are over 50, and almost 60% of the over-70s who are still working are self-employed. <br />
<br />
One large economic contribution made by older people that does not show up in the numbers is unpaid work. In Italy and Portugal around one grandmother in five provides daily care for a grandchild, estimates Karen Glaser from King’s College London. That frees parents to go out to work, saving huge sums on child care. <br />
<br />
All of these changes represent societal adjustments to a reality that isn’t well-publicized: that the traditional retirement age increasingly makes no sense in terms of health, longevity and the ability to contribute. The sooner we find a label for healthy people age 65 to 80, the faster we can start recognizing their potential to contribute. <br />
<br />
<i><b>To Your Prosperity,</b></i><br />
<br />
<b><i>Kevin Kroskey, CFP®, MBA</i></b><br />
<br />
<span style="font-size: xx-small;">This article adapted with permission from BobVeres.com </span></div>
<div style="text-align: justify;">
<span style="font-size: xx-small;">Source: </span></div>
<div style="text-align: justify;">
<span style="font-size: xx-small;"><a href="http://bobveres.com/" target="_blank">BobVeres.com </a><br /><a href="https://www.economist.com/news/special-report/21724745-ageing-populations-could-be-boon-rather-curse-happen-lot?fsrc=scn/tw/te/bl/ed/gettingtogripswithlongevity">https://www.economist.com/news/special-report/21724745-ageing-populations-could-be-boon-rather-curse-happen-lot?fsrc=scn/tw/te/bl/ed/gettingtogripswithlongevity</a><span style="font-family: "times" , serif;"></span></span></div>
<span style="font-size: xx-small;">
</span><br />
<div class="Body" style="text-align: justify;">
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<![endif]--><span style="font-size: xx-small;"></span>Kevin Kroskey, CFP, MBAhttp://www.blogger.com/profile/14216987399845080721noreply@blogger.comtag:blogger.com,1999:blog-4576917574631646000.post-85360256403483643352017-07-10T15:53:00.001-04:002017-07-10T15:54:12.429-04:00Where Have All the U.S. Stocks Gone?<div style="text-align: justify;">
A recent Wall Street Journal article, citing a study by the Center for Research in Security Prices, tells us something remarkable about the times we are investing in: the number of stocks on the U.S. market has quietly diminished by more than half over the last 20 years. In November 1997, investors could choose from 7,355 U.S. stocks. Today, there are fewer than 3,600. </div>
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Most of the decline has come from vanishing companies ranging from small to microcap — the sort of names you probably haven’t heard of. Small stocks have diminished from more than 2,500 in 1997 to fewer than 1,200 today. Microcap companies that are even smaller numbered nearly 4,000 in 1997, compared to 1,900 today. Some went out of business, while others were gobbled up by larger companies or private equity firms. Meanwhile, instead of new companies going public to replace those that have retired from the market, venture capital firms are allowing younger ventures to stay private for longer. </div>
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The article talks about several possible consequences. Since the surviving companies tend to be larger and better known, it becomes harder for professional asset managers to get an information edge or find small undiscovered gems that are undervalued. The declining roster of stocks may also mean that a long era of higher returns from small cap stocks compared to larger firms could be coming to an end or somewhat diminished. But the truth is that nobody knows what the investment consequences will be from the quiet shrinkage of investment options, or for that matter, if this trend will reverse itself. </div>
<br />
<i><b>To Your Prosperity, </b></i><br />
<br />
<i><b>Kevin Kroskey, CFP®, MBA </b></i><br />
<br />
<span style="font-size: xx-small;">Adapted with permission from BobVeres.com</span><br />
<span style="font-size: xx-small;">Source: <a href="https://www.wsj.com/articles/stock-picking-is-dying-because-there-are-no-more-stocks-to-pick-1498240513">https://www.wsj.com/articles/stock-picking-is-dying-because-there-are-no-more-stocks-to-pick-1498240513</a></span><span style="color: black; font-family: "times" , serif; font-size: 10.0pt;"></span>
Kevin Kroskey, CFP, MBAhttp://www.blogger.com/profile/14216987399845080721noreply@blogger.comtag:blogger.com,1999:blog-4576917574631646000.post-3214772555799240642017-06-05T14:14:00.000-04:002017-06-05T14:14:03.387-04:00Where Federal Tax Money Comes From and Goes To<div style="text-align: justify;">
The Committee for a Responsible Federal Budget recently published their annual study. There are some simple and telling charts that help people better understand the source of the US's tax revenue and where that revenue is spent. </div>
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On spending, for every $100 you pay in taxes: </div>
<ul>
<li><div style="text-align: justify;">
$23.61 goes to Social Security payments and administration </div>
</li>
<li><div style="text-align: justify;">
$15.26 goes to Medicare, the government health insurance program</div>
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$9.55 to Medicaid, the health insurance program for the poor</div>
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$19.82 goes to armed forces, including veterans benefits</div>
</li>
<li><div style="text-align: justify;">
$6.25 interest on national debt</div>
</li>
</ul>
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In total, 50% went to Social Security and health programs. Include armed forces and interest payments, and we’re up to about 75%. </div>
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The 2016 federal budget fell $15.24 (out of every $100) short of revenues brought in, having improved from $35.70 in 2011. If a balanced budget were deemed the appropriate thing to do, where would you cut?</div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiFsOROjpjCbrVWjJ4hqZwB_Wjwseu9s45OJ_V7LMWouRXnjBtiWEcO1HyEPe9fWSrEiW6Vci9pDDWEbD4_81oxQAu2ExcF7jmXGCouxGEI84C2PMwB1fFLZuEr8QwBZm5ca8xJCJ9V-kQ/s1600/capture+2.png"><img border="0" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiFsOROjpjCbrVWjJ4hqZwB_Wjwseu9s45OJ_V7LMWouRXnjBtiWEcO1HyEPe9fWSrEiW6Vci9pDDWEbD4_81oxQAu2ExcF7jmXGCouxGEI84C2PMwB1fFLZuEr8QwBZm5ca8xJCJ9V-kQ/s640/capture+2.png" width="484" /></a> </div>
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On the source of tax revenue, you can see individual income taxes are the largest source but payroll taxes are likely more than most Americans would think. </div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgqHCv2D_xvj2d5QHscXu4L1oN-CCCGut7HcK7_QRihE1kYVxsSuEEKYcHlwcoBhlII3xfcNzSgVooX8nCRpEx7DF3yK1o7r7XQi5BtiSLG0ullozXUzCquC1rSkWV34EFjMwUut2ZBMX0/s1600/capture+3.png"><img border="0" height="476" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgqHCv2D_xvj2d5QHscXu4L1oN-CCCGut7HcK7_QRihE1kYVxsSuEEKYcHlwcoBhlII3xfcNzSgVooX8nCRpEx7DF3yK1o7r7XQi5BtiSLG0ullozXUzCquC1rSkWV34EFjMwUut2ZBMX0/s640/capture+3.png" width="640" /></a> </div>
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<strong><em></em></strong> </div>
<div style="text-align: justify;">
<strong><em>To Your Prosperity, </em></strong></div>
<div style="text-align: justify;">
<strong><em>Kevin Kroskey, CFP®, MBA</em></strong></div>
<div style="text-align: justify;">
</div>
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<span style="font-size: xx-small;">Source:</span></div>
<div style="text-align: justify;">
<a href="http://www.crfb.org/blogs/tax-day-2017-charts-explain-our-tax-system"><span style="font-size: xx-small;">http://www.crfb.org/blogs/tax-day-2017-charts-explain-our-tax-system</span></a></div>
<div style="text-align: justify;">
<a href="https://www.wsj.com/articles/how-100-of-your-taxes-are-spent-8-cents-on-national-parks-and-15-on-medicare-1492175921"><span style="font-size: xx-small;">https://www.wsj.com/articles/how-100-of-your-taxes-are-spent-8-cents-on-national-parks-and-15-on-medicare-1492175921</span></a> </div>
Kevin Kroskey, CFP, MBAhttp://www.blogger.com/profile/14216987399845080721noreply@blogger.comtag:blogger.com,1999:blog-4576917574631646000.post-62225532486487022802017-05-04T07:30:00.004-04:002017-05-04T07:40:38.717-04:00Investment Returns: What Can We Expect Over the Coming Years?<span style="font-family: "arial" , "helvetica" , sans-serif;">Having proper expectations is incredibly important in investing. Expectations will impact your investment allocation and may influence your ability to stay disciplined in adhering to your investment plan.</span><br />
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<span style="font-family: "arial" , "helvetica" , sans-serif;">The video below reviews a 5-year expected return forecast as of January 2017 made by the world's largest asset manager Blackrock. It was done in conjunction with the 2017 Q1 market review by Kevin Kroskey, CFP, Senior Wealth Advisor at True Wealth Design, and is edited for brevity.</span><br />
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Kevin Kroskey, CFP, MBAhttp://www.blogger.com/profile/14216987399845080721noreply@blogger.comtag:blogger.com,1999:blog-4576917574631646000.post-57389180922473285912017-04-06T12:42:00.000-04:002017-04-07T15:34:44.561-04:00Brexit Begins<div style="text-align: justify;">
You may recall that last summer the investment markets were panicked by the U.K. voting to exit the European Union. There were dire predictions about the impact on the U.K. economy, which never materialized, in part because the U.K. had not yet formally opted out of its Eurozone agreements. </div>
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At the end of March 2017, the U.K. did pull the trigger, making the departure official. So that means those dire predictions will finally come true. Right?</div>
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Under the bylaws, the divorce will be negotiated over the next two years, meaning that any change in economic circumstances will be gradual and perhaps accommodated as they happen. How gradual? Over the next several weeks, the EU’s remaining 27 members will discuss their priorities in before the negotiations and then hold a summit on April 29. Only then will the European Commission have a mandate to negotiate with representatives from London. </div>
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<b>Items Negotiated in Brexit </b> </div>
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What will the negotiations cover? Britain’s obligations to the EU for its participation thus far, which could total up to roughly $65 billion. Perhaps most important in the day-to-day lives of people: what will be the rights of 3 million EU citizens living in the U.K. and the rights of more than 1 million Britons living and working in the Eurozone? </div>
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After that, it is believed that the British government will seek to negotiate a broad free-trade agreement which will attempt to replicate the provisions of its former membership in the European Union, as a way to protect its commercial ties with the Continent. On the EU side, a simple majority of countries will decide what proposals are accepted and which are sent back to the negotiating table—with one notable exception: any free trade agreement between the two sides much win unanimous approval. <b> </b></div>
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<b>What You Should Do As An Investor </b> </div>
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The bottom line is that nothing dramatic is likely to happen for years. Throughout the two years of negotiations, the U.K. will remain a full EU member without EU decision-making authority. Some are predicting that the discussions will last for several additional years, with extensions on the status quo until issues can be ironed out. </div>
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Both sides in this negotiation have a stake in not having anything dramatic happening, and they will probably succeed in making Brexit a boring exercise in bureaucratic handover.<br />
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Stay disciplined. Focus on what you can control (Hint: It’s not Brexit). Ignore the rest. <br />
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<b>To Your Prosperity, </b><br />
<b>Kevin Kroskey, CFP®, MBA </b><span style="font-size: xx-small;"> </span><br />
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<span style="font-size: xx-small;">Sources: </span><br />
<span style="font-size: xx-small;">This article adapted with permission from BobVeres.com. <br /><a href="https://www.stratfor.com/geopolitical-diary/brexit-has-begun-now-what?utm_source=Twitter&utm_medium=social&utm_campaign=article">https://www.stratfor.com/geopolitical-diary/brexit-has-begun-now-what?utm_source=Twitter&utm_medium=social&utm_campaign=article</a> <br /><a href="https://www.theatlantic.com/news/archive/2017/03/brexit-faq/521175/?utm_source=atltw" target="_blank"> https://www.theatlantic.com/news/archive/2017/03/brexit-faq/521175/?utm_source=atltw</a></span><!--[if gte mso 9]><xml>
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<![endif]-->Kevin Kroskey, CFP, MBAhttp://www.blogger.com/profile/14216987399845080721noreply@blogger.comtag:blogger.com,1999:blog-4576917574631646000.post-41876509357294873752017-03-02T12:03:00.000-05:002017-03-02T12:03:13.107-05:00Biases Affecting Your Brain and Financial Decision Making, As Told By Real Vs. Imagined Crime<div style="text-align: justify;">
Crime in America is totally out of control these days, right? Every day you read about some new shooting, robbery, kidnapping etc., and the impression you get is that we live in an age where the streets are not safe and neither is your home.</div>
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Some of this phenomenon is not crime-related at all. Rather, it is in part stemming from a cognitive bias our brains experience called the recency or <a href="https://en.wikipedia.org/wiki/Availability_heuristic">availability bias</a>. From Wikipedia, “The tendency to overestimate the likelihood of events with greater "availability" in memory, which can be influenced by how recent the memories are or how unusual or emotionally charged they may be.” </div>
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This bias shows may perpetrate your brain after being exposed to various emotionally charged stories and experiences. With money, for example, in the <a href="http://www.esquire.com/news-politics/a5549/nate-silver-on-economy-0309/">Great Recession in 2008, the recency bias</a> may have caused you to think that the stock market is only going to continue to go down and not recover, given the recency, availability of information and media stories, and emotional reaction the severe stock market decline caused for many at that time. </div>
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As for crime, when the Pew Research Center looked at the FBI figures for the quarter century from 1993 through 2015, they came to a somewhat different conclusion than what may be in our brain. Crime in America is actually falling at an impressive rate, when measured by violent crime per 100,000 residents, violent victimizations per 1,000 people, property crime per 100,000 residents or property victimizations per 1,000 households. (See chart) The news about crime, despite relentless headlines and campaign slogans, is almost uniformly good—and has been for some time.</div>
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The FBI data covers 18,000 different U.S. jurisdictions, while the victimization figures come from the Bureau of Justice Statistics. The former reflects reported crimes only, while the latter is a series of polls of individuals who are asked whether they were victims of a crime in the past six months, whether they reported it or not. The decline in violent crime ranged from 50% (FBI statistics) to 77% (BJS data), while the drop in property crime ranged from 48% to 69% respectively.</div>
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It appears that this story is not getting out to a mainstream audience. Twenty-one Gallup surveys conducted since 1989 show that most Americans believed there was more crime in the U.S. compared with the year before, despite the general trend downward. In late 2016, a Pew Research Center survey found that 57% of registered voters believed crime had gotten worse since 2008, even though the actual statistics showed that violent and property crime rates had declined by double-digit percentages during that span.</div>
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Where are you more likely to be a victim in our safer world? The reports show that there were more than 600 violent crimes per 100,000 residents in the states of Alaska, Nevada, New Mexico, and Tennessee. The least violent states, with fewer than 200 violent crimes per 100,000 residents, were Maine, New Hampshire, Vermont, and Virginia. Chicago has drawn widespread attention for its murder rate, but the actual rate in 2015—18 murders and non-negligent manslaughters per 100,000 residents—was far lower than the rate in two cities that are not making the news: St. Louis (59) and Baltimore (55). <br />
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To Your Prosperity,<br />
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<strong><em>Kevin Kroskey, CFP®, MBA</em></strong><br />
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<span style="font-size: xx-small;">This article adapted with permission from BobVeres.com.</span><br />
<span style="font-size: xx-small;">Source: </span><a href="http://www.pewresearch.org/fact-tank/2017/02/21/5-facts-about-crime-in-the-u-s/"><span style="font-size: xx-small;">http://www.pewresearch.org/fact-tank/2017/02/21/5-facts-about-crime-in-the-u-s/</span></a></div>
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Kevin Kroskey, CFP, MBAhttp://www.blogger.com/profile/14216987399845080721noreply@blogger.comtag:blogger.com,1999:blog-4576917574631646000.post-8520584401874856732016-12-15T08:51:00.000-05:002017-01-05T05:24:39.855-05:00Fed Interest Rate Increases: The Tempest in the Teapot<div style="text-align: justify;">
Anybody who was surprised that the Federal Reserve Board decided to raise its benchmark interest rate in December 2016 probably wasn’t paying attention. The U.S. economy is humming along, the stock market doing well, the unemployment rate has fallen to a low level -- now considered to be 'full employment.' We are more recently seeing evidence of increasing wages as well. <br />
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The rate rise is extremely conservative: up 0.25%, to a targeted range from 0.50% to 0.75%—which, as you can see from the accompanying chart, is just a blip compared to where the Fed had its rates ten years ago when it was north of 5%. Keep in mind the prime rate -- more commonly used in consumer finance -- is the federal funds rate plus 3%. So prime was north of 8% in 2007.<br />
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The bigger news was the announced intention to raise rates three times next year, moving to a more “normal” 3% by the end of 2019. This is faster than prior market expectations, heading into the meeting, although still somewhat conservative. Whether any of that will happen is unknown. After all, in December 2015, the Fed was indicating two and possibly three rate adjustments in 2016 before backing off until now.<br />
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The rise in rates is good news for those who believe that the Fed has intruded on normal market forces, suppressed interest rates much longer than could be considered prudent, and even better news for people who are bullish about the U.S. economy. The Fed's announcement acknowledged the sustainable growth in economic activity and low unemployment as positive signs for the future. However, bond investors might be less pleased, as higher bond rates mean that existing bonds lose value. The recent and quick rise in bond rates at least hints that the long bull market in fixed-rate securities—that is, declining yields on bonds—may be over.<br />
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For stocks, the impact is more nuanced. Historically stocks tend to do well and not be impaired by modest interest rate and inflation increases where fast increases tend to hurt. Plus bonds and other interest-bearing securities compete with stocks for your capital investment. As interest rates rise, the see-saw between whether you prefer stability of bonds or higher expected growth of stocks tips a bit, and some stock investors move some of their investments into bonds, reducing demand for stocks and potentially lowering future returns. None of that can be predicted in advance, and the fact that the Fed has finally admitted that the economy is capable of surviving higher rates should be good news for people who are investing in the companies that make up the economy. <br />
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The bottom line here is that, for all the headlines you might read, there is no reason to change your investment plan as a result of a 0.25% change in a rate that the Fed charges banks when they borrow funds overnight. There is always too much uncertainty about the future to make accurate predictions, and today, with the incoming administration, the tax proposals, the fiscal stimulation, and the real and proposed shifts in interest rates, the uncertainty level may be higher than usual.<br />
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For those that have trouble sleeping, you may also read the growing body of academic literature that provides compelling evidence that the Fed has little to no effect on real interest rates in the economy. Rather, markets supersede the Fed and determine these. No doubt <a href="http://kevinkroskeymoneyblog.blogspot.com/2015/12/the-rise-of-short-term-rates.html" target="_blank">we saw the same recently</a>.<br />
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<strong><em>To Your Prosperity,<br /><br />Kevin Kroskey, CFP®, MBA</em></strong><br />
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<span style="font-size: xx-small;">This article adapted with permission from BobVerese.com.</span><br />
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<span style="font-size: xx-small;">Sources:</span><a href="http://www.businessinsider.com/fed-fomc-statement-interest-rates-december-2016-2016-12"><span style="font-size: xx-small;">http://www.businessinsider.com/fed-fomc-statement-interest-rates-december-2016-2016-12</span></a><br />
<a href="http://www.marketwatch.com/story/fed-to-hike-interest-rates-next-week-while-ignoring-the-elephant-in-the-room-2016-12-09"><span style="font-size: xx-small;">http://www.marketwatch.com/story/fed-to-hike-interest-rates-next-week-while-ignoring-the-elephant-in-the-room-2016-12-09</span></a></div>
<a href="http://www.reuters.com/article/us-usa-fed-idUSKBN1430G4"><span style="font-size: xx-small;">http://www.reuters.com/article/us-usa-fed-idUSKBN1430G4</span></a><br />
<a href="http://www.usatoday.com/story/money/personalfinance/2016/12/15/fed-rate-hike-7-questions-and-answers/95470676/?hootPostID=32175354f7440337d62a767b3db92c68"><span style="font-size: xx-small;">http://www.usatoday.com/story/money/personalfinance/2016/12/15/fed-rate-hike-7-questions-and-answers/95470676/?hootPostID=32175354f7440337d62a767b3db92c68</span></a>Kevin Kroskey, CFP, MBAhttp://www.blogger.com/profile/14216987399845080721noreply@blogger.comtag:blogger.com,1999:blog-4576917574631646000.post-34696204216942666532016-12-05T15:54:00.000-05:002016-12-05T15:54:26.971-05:00Balancing Traits<div style="text-align: justify;">
Are you ready to achieve work-life balance? The American Sociological Review has published a study showing that most of us struggle—which is a fancy word for “fail”—in this important endeavor. But there’s hope. The study also found that the minority of people who HAVE managed to achieve some form of the work/life holy grail are doing certain things well.<br />
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Like what? First, they take the time to make deliberate choices about what they want in their lives. Rather than collapse after work in front of the TV or stay at their desk through their vacation time, they create a road map of the kind of life they want to live, and how they will spend their time, and commit to this path. <br />
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Second: they regularly communicate with important people in their lives about what’s working for them, and what isn’t. This prevents them from drifting off the work-life rails as a result of outside influences and pressures.<br />
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Third: they make sure they set aside time for family, friends and their important interests. Instead of waiting to see if there’s any free time is left over after work, they make a point of booking time off to spend outside of work, and they are willing to guard this time and resist intrusions on it.<br />
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Fourth: they develop a strong sense of who they are, and their values, and what’s important to them. This helps them determine what success means to them, what makes them happy and what they want to get more of in their lives.<br />
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Fifth, they are able to tune out distractions, which may mean their electronic devices or just the TV. This allows them to participate in meditation, enjoy music, engage in physical activity or other things that rejuvenate and regenerate them.<br />
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Sixth: They are willing to make sacrifices to get what they want. They may work extra hard during the week so they can be sure to get the weekend off—or earn an extra day off to add to the planned weekend activity.<br />
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Finally: they develop a strong support network that they can depend on to get them through difficult times. They have a variety of interests, which brings them in contact with like-minded people who will enrich their lives and be there when they’re needed.<br />
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<strong><em>To Your Prosperity,<br /><br />Kevin Kroskey, CFP®, MBA</em></strong><br />
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<span style="font-size: xx-small;"></span><div style="text-align: justify;">
<span style="font-size: xx-small;">This article adapted with permission from BobVerese.com.</span></div>
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<span style="font-size: xx-small;">Source:</span><a href="https://www.fastcompany.com/3047825/how-to-be-a-success-at-everything/7-habits-of-people-who-have-achieved-work-life-balance"><span style="font-size: xx-small;">https://www.fastcompany.com/3047825/how-to-be-a-success-at-everything/7-habits-of-people-who-have-achieved-work-life-balance</span></a><br />
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Kevin Kroskey, CFP, MBAhttp://www.blogger.com/profile/14216987399845080721noreply@blogger.comtag:blogger.com,1999:blog-4576917574631646000.post-54403783938592192762016-11-02T08:52:00.002-04:002016-11-02T08:56:13.906-04:00Don't be like Gerald<span style="color: #333333; font-family: Arial;"></span><br />
<span style="background-color: white; color: #333333; display: inline; float: none; font-family: "roboto" , "arial" , sans-serif; font-size: 13px; font-style: normal; font-weight: normal; letter-spacing: normal; text-indent: 0px; text-transform: none; white-space: normal; word-spacing: 0px;">A Texas County Commissioner Gerald Daugherty is a "proven fighter for better roads, lower taxes, and responsible county spending." His wife also doesn't want him driving her crazy in retirement and is using this message to help him get re-elected. As a sign I once saw in a restaurant said, "Retirement: Half the Money and Twice The Husband." </span><br />
<span style="background-color: white; color: #333333; display: inline; float: none; font-family: "roboto" , "arial" , sans-serif; font-size: 13px; font-style: normal; font-weight: normal; letter-spacing: normal; text-indent: 0px; text-transform: none; white-space: normal; word-spacing: 0px;"></span><br />
<span style="background-color: white; color: #333333; display: inline; float: none; font-family: "roboto" , "arial" , sans-serif; font-size: 13px; font-style: normal; font-weight: normal; letter-spacing: normal; text-indent: 0px; text-transform: none; white-space: normal; word-spacing: 0px;">Have a plan for retirement -- for financial and <a href="http://www.truewealthdesign.com/news/retirement-is-not-a-financial-event-9644" target="_blank">non-financial aspects</a> -- to ensure you are fulfilled with yourself as well as your relationships. And, have a laugh at Gerald's video.</span><br />
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<iframe allowfullscreen="" frameborder="0" height="315" src="https://www.youtube.com/embed/wzjRwNUQDRU" width="560"></iframe>Kevin Kroskey, CFP, MBAhttp://www.blogger.com/profile/14216987399845080721noreply@blogger.comtag:blogger.com,1999:blog-4576917574631646000.post-53304892491434649342016-09-06T10:51:00.001-04:002016-09-06T10:51:19.813-04:00Communicable Stress (Even From The Evening News)<div style="text-align: justify;">
By all accounts, stress—and its accompanying emotional mix of frustration, anxiety and fear—are bad for your health. When you experience stress in your body, you release increased amounts of glucose from our liver into your blood, and your body produces cortisone, which is actually toxic to your system. Your heart rate goes up, sending more enriched blood to your muscles. Your immune system kicks into high gear, and you stay in this high-alert state, which is only designed to help you, combat real threats, depleting you physically.<br /><br />Now, researchers have discovered that stress is contagious—that is, you can catch it from those around you, and even from the evening news. <br /><br />Researchers at the Max Planck Institute for Cognitive and Brain Sciences conducted an experiment where they gave individuals a series of very challenging arithmetic questions and interviewed them—in both cases, in order to induce direct stress. They had another group of subjects watch the test and interviews through a one-way mirror. They found that 95% of those subjected to direct stress experienced the physical symptoms, but so, too, did 26% of the observers. Later, they discovered that 24% of their subjects experienced stress simply watching television programs depicting the suffering of other people. (Think: Evening news.) <br /><br />How do you combat this contagious health risk? Heidi Hanna, a psychologist and author of Stressaholic: 5 Steps to Transform Your Relationship With Stress, recommends, well, ten actual steps.<br /><br />First, create a place where you can think without being disturbed. This is difficult in open-plan offices, of course, and it explains why so many great ideas are hatched in the relative isolation of the shower.<br /><br />Second, when you interact with people, give them your full attention. If you set aside your smartphone and focus on that co-worker or spouse, it short-circuits the stress-producing message that the other person is not important. Moreover, it may reduce the stress of trying to do too many things at once.<br /><br />Third, get to know when you are feeling stressed, and ask yourself if you are picking it up from someone else. If so, you can either help that person or limit your time together.<br /><br />Fourth: Practice meditation, and give your brain a few minutes to get out of work mode.<br /><br />Fifth: Make sure you get up from your desk to walk around and stretch every hour or two, and twice a day climb some stairs or otherwise get your heart rate up. If you sit too long, less oxygen gets to your brain, which can trigger a stress response all by itself.</div>
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Sixth: Do not go too long without eating. If your blood sugar goes down, it sends a message to the brain that there is a shortage of food, which can trigger an automatic stress response.<br /><br />Seventh: Do not schedule every minute of your time. Allow time between meetings to prepare for your next encounter and to check and resolve email messages.<br /><br />Eighth: Practice gratitude. That means avoiding the tendency to focus on the negative by redirecting your focus to things that are going right in your life.<br /><br />Ninth: Redefine stressors as challenges. If you see that looming deadline as a challenge, but you know you have the resources to meet it, it generates adrenaline. If you worry about the deadline, you produce cortisone, the inflammatory stress hormone.<br /><br />Tenth: Set a good example for others by practicing good stress “hygiene” and refusing to infect others. The better you take care of yourself, the more others will be able to avoid stress.<br /><br /><em><strong></strong></em></div>
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<em><strong>To Your Prosperity,<br /><br />Kevin Kroskey, CFP®, MBA</strong></em></div>
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<span style="font-size: xx-small;"></span><div style="text-align: justify;">
<span style="font-size: xx-small;">This article adapted with permission from BobVerese.com.<br /><br />Sources:</span><a href="http://www.forbes.com/sites/nickmorgan/2016/08/11/other-people-are-leaking-their-stress-to-you-and-that-may-make-you-sick/2/#6cb43c4429e5"><span style="font-size: xx-small;">http://www.forbes.com/sites/nickmorgan/2016/08/11/other-people-are-leaking-their-stress-to-you-and-that-may-make-you-sick/2/#6cb43c4429e5</span></a><br /> </div>
Kevin Kroskey, CFP, MBAhttp://www.blogger.com/profile/14216987399845080721noreply@blogger.comtag:blogger.com,1999:blog-4576917574631646000.post-82249490755710101712016-08-01T13:45:00.000-04:002016-08-02T16:04:05.951-04:00Paying for College and Getting Your Money's Worth<div style="text-align: justify;">
<span style="font-family: "arial" , "helvetica" , sans-serif;">According to the Student Loan Marketing Association (more commonly known as Sallie Mae Bank), the average tuition, room and board at a private college comes to $43,921. Public tuition for in-state students at state colleges amounted to $19,548 (about half of which is room and board), with out-of-state students paying an average of $34,031. </span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">How are parents and students finding the cash to afford this expense?</span></div>
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<li><span style="font-family: "arial" , "helvetica" , sans-serif;">Sallie Mae breaks it down as follows: 34% from scholarships and grants that don’t have to be paid back, coming from the college itself or the state or federal government, often based on need and academic performance.</span></li>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;">Parents typically pay 29% of the total bill (an average of $7,000) out of savings or income, and other family members (think: grandparents) are paying another 5%.</span></li>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;">The students themselves are paying for 12% of the cost, on average.</span></li>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;">The rest, roughly 20% of the total, is made up of loans. </span></li>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">The federal government’s loan program offers up to $5,500 a year for freshmen, $6,500 during the sophomore year, and $7,500 for the junior and senior years. If that doesn’t cover the remaining cost, then students and parents will borrow from private lenders. The average breakdown is students borrowing 13% of their total tuition costs and parents borrowing the other 7%.</span><br />
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<span style="-webkit-text-stroke-width: 0px; float: none; font-variant-caps: normal; font-variant-ligatures: normal; orphans: 2; widows: 2; word-spacing: 0px;">Does it matter whether the university is considered an elite? Research has shown showing that the majority of
American-born CEO’s of the top 100 of the Fortune 500 companies did not attend elite
universities. There also was no pattern in where they went to school. The <a href="http://viewfromthetopbook.com/"><span style="color: windowtext; text-decoration: none; text-underline: none;">Platinum Study</span></a><span style="-webkit-text-stroke-width: 0px; float: none; font-variant-caps: normal; font-variant-ligatures: normal; orphans: 2; widows: 2; word-spacing: 0px;"> by Michael Lindsay studied 550 American
leaders including 250 top CEO’s, and he found that over two-thirds graduated
from non-elite schools. This finding is generally consistent regardless of profession. Many studies have documented that where you go to college has
little predictive value for future earnings or levels of well-being.</span></span></span><br />
<span style="-webkit-text-stroke-width: 0px; float: none; font-variant-caps: normal; font-variant-ligatures: normal; orphans: 2; widows: 2; word-spacing: 0px;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="-webkit-text-stroke-width: 0px; float: none; font-variant-caps: normal; font-variant-ligatures: normal; orphans: 2; widows: 2; word-spacing: 0px;"></span><o:p></o:p></span></span><br />
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Is the cost of college worth it? The Federal Reserve Bank of New York recently published a report on the labor market for college graduates. The conclusion, in graphical format, is that younger workers have experienced much higher unemployment rates than their college graduate peers—the figures currently are 9.5% unemployment for all young workers, vs. just 4.2% for recent college graduates. Overall, the unemployment rate for people who have graduated with a 4-year degree is 2.6%, and even during the height of the Great Recession, it never went over 5%.</span><br />
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<span style="font-family: "arial" , "helvetica" , sans-serif;">And income is higher as well. The average worker with a bachelor’s degree earns $43,000, vs. $25,000 for people with a high school diploma only. The highest average incomes are reported for people with pharmacy degrees ($110,000 mid-career average), computer engineering ($100,000), electrical engineering ($95,000), chemical engineering ($94,000), mechanical engineering ($91,000) and aerospace engineering ($90,000). </span><br />
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<span style="font-family: "arial" , "helvetica" , sans-serif;">Lowest average mid-career incomes: social services ($40,000), early childhood education ($40,000), elementary education ($42,000), special education ($43,000) and general education ($44,000).</span><br />
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<span style="font-family: "arial" , "helvetica" , sans-serif;">Among the lowest unemployment rates: miscellaneous education (1.0%), agriculture (1.8%), construction services (1.8%) and nursing (2.0%).</span><br />
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<span style="font-family: "arial" , "helvetica" , sans-serif;">Yes, there are some themes here, and of course people in every career can fall above or below these averages. Nor does everybody who graduates with a particular degree end up in a career that tracks that degree. The point is that despite the cost, a college degree does seem to provide significantly better odds of getting a job, and getting paid more for the job you do get.</span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><strong><em>To Your Prosperity,<br /><br />Kevin Kroskey, CFP®, MBA</em></strong><span style="font-size: xx-small;"></span></span><br />
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<span style="font-family: "arial" , "helvetica" , sans-serif; font-size: xx-small;">This article adapted with permission from BobVeres.com</span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif; font-size: xx-small;">Sources: </span><a href="http://money.cnn.com/2016/06/29/pf/college/how-to-pay-for-college/index.html?iid=SF_LN"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: xx-small;">http://money.cnn.com/2016/06/29/pf/college/how-to-pay-for-college/index.html?iid=SF_LN</span></a><br />
<a href="https://www.newyorkfed.org/research/college-labor-market/college-labor-market_unemployment.html"><span style="font-family: "arial" , "helvetica" , sans-serif; font-size: xx-small;">https://www.newyorkfed.org/research/college-labor-market/college-labor-market_unemployment.html</span></a><br />
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Kevin Kroskey, CFP, MBAhttp://www.blogger.com/profile/14216987399845080721noreply@blogger.comtag:blogger.com,1999:blog-4576917574631646000.post-74812223483110105162016-07-05T13:28:00.002-04:002016-07-07T11:53:25.170-04:00Ways Money Can Most Effectively Buy Happiness<div style="text-align: justify;">
We all know that money cannot buy you happiness, right? As it turns out, this is not exactly true.<br />
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A recent study by University of Michigan economists Betsey Stevenson and Justin Wolfers, examining data from more than 150 countries using World Bank data, has shed new light on the interaction between happiness and the size of your bank account. Their first conclusion: the more money you have, the happier you tend to be, regardless of where you are on the income spectrum. They also concluded that multi-millionaires do not think of themselves as “rich.”<br />
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However, there do seem to be income levels where a person’s happiness can be increased faster than others are. Princeton University economist Angus Deaton has found that peoples’ day-to-day happiness level rises until they reach about $75,000 in income—a point where a person can comfortably afford the basic necessities of life without worrying where his or her next meal is going to come from. After that, this type of happiness levels off.<br />
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In fact, a report in Psychological Science magazine found that the wealthier people were, the less likely they were to savor positive experiences in their lives. Another study found that lottery winners tended to be less impressed by life’s simple pleasures than people who experienced no windfall. Once you have had a chance to drink the finest French wines, fly in a private jet and watch the Super Bowl from a box seat, then a sunny day after a week of rain does not produce quite the same jolt of happiness it used to.<br />
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It is another kind of happiness, which focuses on something the researchers call “life assessment,” that continues to rise at all levels of wealth. The more money people have, the more they feel like they have a better life, possibly (Deaton hypothesizes) because they feel like they are outcompeting their peers. <br />
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Is there any way to more efficiently buy happiness with money? A study by the Chicago Booth School of Business found that people experienced more happiness if they spent money on others compared to when the money was spent on themselves. Treating someone else—or, more broadly, charitable activities—are among the most powerful financial enhancements to personal happiness.<br />
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Other research has shown that you get more happiness for your buck if you buy experiences rather than things. An epic trip to Paris, or a weekend at a bed and breakfast near the coast, can be more enduringly pleasure inducing than buying a new watch or necklace. The watch or necklace quickly becomes a routine part of your environment, contributing nothing to happiness. However, your travel experience can be shared with others and reminisced about.<br />
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Finally, you can buy time with money—decreasing your daily commute by moving closer to work, hiring somebody to help around the house, someone to mow the lawn or mulch the beds, hiring an assistant to clear your desk—all giving you more leisure time to pursue your interests. With the free time, take music lessons or learn to dance—and you will be happier than somebody with millions more than you have.<br />
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<strong><em>To Your Prosperity,<br /><br />Kevin Kroskey, CFP®, MBA</em></strong><br />
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<span style="font-size: xx-small;">This article adapted with permission from BobVeres.com</span></div>
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<span style="font-family: "times" , "serif"; font-size: xx-small;">Sources:</span></div>
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<span style="font-family: "times" , "serif"; font-size: xx-small;"><a href="http://fortune.com/2013/05/01/proof-that-money-does-in-fact-buy-happiness/">http://fortune.com/2013/05/01/proof-that-money-does-in-fact-buy-happiness/</a></span></div>
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<span style="font-family: "times" , "serif"; font-size: xx-small;"><a href="http://www.scientificamerican.com/article/can-money-buy-happiness/">http://www.scientificamerican.com/article/can-money-buy-happiness/</a></span></div>
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<span style="font-family: "times" , "serif"; font-size: xx-small;"><a href="http://www.nydailynews.com/life-style/health/money-buy-happiness-article-1.1458890">http://www.nydailynews.com/life-style/health/money-buy-happiness-article-1.1458890</a></span></div>
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<span style="font-family: "times" , "serif"; font-size: 14pt;"><o:p></o:p></span> </div>
Kevin Kroskey, CFP, MBAhttp://www.blogger.com/profile/14216987399845080721noreply@blogger.comtag:blogger.com,1999:blog-4576917574631646000.post-53784183180039614702016-06-02T09:35:00.000-04:002016-06-10T07:12:37.169-04:00Having TSA PreCheck & Global Entry Means Shoes and Coats Stay On<div style="text-align: justify;">
With all the news about long lines at the airport, now more than ever is the time to consider getting yourself "PreChecked". The one most commonly used by travelers is TSA PreCheck. It costs $85 for 5 years. This option is perfect for travelers who are flying within the United States. You'll skip the long lines, keep your shoes on and not even half to pull out your laptop. <br />
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The other, broader option is called Global Entry. It costs $100 and it's a great option if you plan to travel internationally. Global Entry allows users to expedite the customs procedures in addition to speeding up the typical airport screening process.<br />
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I personally recommend Global Entry. I originally signed up for TSA PreCheck but ran into an issue. Some of the discount airline carriers I use do not use TSA PreCheck. There is no Known Traveler ID printed on the boarding pass. Thus I was not able to skip the security lines at the airport when flying with these carriers. <br />
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Global Entry, however, gives you a separate ID card and is not airline-dependent. Thus even if flying discount carriers, you can skip lines going through security. Plus, for anyone who has traveled internationally knows lines in customs can be quite long, making Global Entry even more valuable.<br />
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Do you need it? Well, that's up to you. But wouldn't it be great to make the hassle of airport security a little easier, for as little as $17 a year.</div>
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<a href="https://www.bostonglobe.com/lifestyle/travel/2016/01/23/why-tsa-precheck-and-global-entry-are-worth/kd6ZCv7r8cefkIQd2gMZrO/story.html" style="color: #1155cc;" target="_blank">https://www.bostonglobe.com/<wbr></wbr>lifestyle/travel/2016/01/23/<wbr></wbr>why-tsa-precheck-and-global-<wbr></wbr>entry-are-worth/<wbr></wbr>kd6ZCv7r8cefkIQd2gMZrO/story.<wbr></wbr>html</a><br />
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<strong><em>To Your Prosperity,<br /><br /> Kevin Kroskey</em></strong></div>
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Kevin Kroskey, CFP, MBAhttp://www.blogger.com/profile/14216987399845080721noreply@blogger.comtag:blogger.com,1999:blog-4576917574631646000.post-80546651934789570742016-05-02T12:27:00.002-04:002016-05-02T12:44:17.435-04:00Predicting The Future of Future Expectations<div style="text-align: justify;">
“I'm fascinated with the problem of why really smart people have such a hard time predicting the future. It is mostly because the future is more random than we think. But it's also because future performance (like earnings and economic growth) doesn't tell you half of what you need to know to predict future outcomes.” </div>
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The above was taken from a recent and insightful article entitled <a href="http://www.fool.com/investing/general/2016/04/13/performance-vs-outcomes.aspx">Performance Vs Outcomes</a> (Morgan Housel, The Motley Fool). The author described and provides examples in the world of investing that successfully picking what will do well requires not only predicting what may happen in the future, but also out predicting what everyone else’s expectation of what the future will be as well. <br />
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In other words, to be successful with investing, it’s not only necessary to predict what may happen in the future, but also to evaluate whether the rest of the market is already pricing in that same expectation, or not. For instance, we’ve long known that soda consumption is on the decline (for 12 years now), but Coca-Cola stock is at an all-time high, even as optimism about the growth potential of Walmart has proven true with net income tripling since 2000… but its stock is down 1.5% since then. Similarly, Apple fans for years have been “right” about the company as its earned almost a quarter of a trillion dollars in profit since 2012… but its stock has barely budged, even as Amazon’s profits have rounded down to zero since 2012 but its stock has tripled as the markets just see more and more opportunity for the company going forward (even if it’s not profiting yet). <br />
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What this reveals is that the further complication for investment outcomes is that in the future, stocks are then priced based on what future expectations are at that time – the future-future expectations! – which means it’s not only necessary to evaluate the future (which may be feasible for some who analyze the trends), and expectations about the future, but what expectations about the future-future will be in the future. This has proven to be almost impossible (as noted in the examples above of Apple vs Amazon and Coca-Cola vs Walmart), and similarly who could possibly know what the mood of 7 billion investors will be in April of 2021, even though that may overwhelmingly determine where market levels will be by then. <br />
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Ultimately, then, the reality is that when we try to go from just predicting trends of the future, to making investment decisions on that basis, we increasingly must recognize that we’re not just trying to predict the future, but are trying to predict future-future emotions and expectations, which is the real determinant of the outcome. <br />
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On the other hand, perhaps this helps us realize that trying to predict the future or future of future expectations is largely a waste of time.<br />
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<strong><em> To Your Prosperity,<br /> <br /> Kevin Kroskey</em></strong><br />
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Kevin Kroskey, CFP, MBAhttp://www.blogger.com/profile/14216987399845080721noreply@blogger.comtag:blogger.com,1999:blog-4576917574631646000.post-89540400165820042582016-04-06T14:33:00.000-04:002016-04-06T14:33:13.598-04:00Mutual Funds and Say on Pay for CEOs<div style="text-align: justify;">
Shareholders of publicly traded companies have an important job of providing a system of checks and balances on the company's corporate governance, including executive pay plans. Agents of the company (executives) have an inherent conflict of interest in maximizing their own wealth versus maximizing the wealth of the principals (shareholders). You can look back to 2008 and come up with a slew of examples illustrating this <a href="http://www.investopedia.com/terms/a/agencyproblem.asp">principal-agent problem</a>, which in part provided the impetus for the 2010 "Say on Pay" rules in the Dodd Frank Act.<br /> <br /> Bloomberg recently had an intriguing article showing how the largest shareholders of publicly traded companies -- mutual funds -- generally fall in line with corporate boards for executive pay decisions but some notable outliers exist, having a more discriminating view of these pay plans and advocating for shareholder interests. <br /><br />The "most agreeable" of the mutual fund giants voted with directors on executive pay plans 97 percent of the time last year, according to a report by shareholder advocacy group As You Sow. These fund giants included Vanguard Group, BlackRock Inc., and TIAA CREF.<br /><br />Dimensional Fund Advisors backed only 54 percent of pay proposals and the California Public Employees’ Retirement System opposed 47 percent of pay plans, As You Sow said. <br /><br />"We take corporate governance very seriously," said Joseph Chi, co-head of portfolio management at Dimensional, which had $388 billion in assets as of Dec 31. "We continue to press on this issue because it is important to shareholders." <br /><br />Dimensional’s corporate governance committee comprises the firm’s most senior officers and directors, including co-founder David Booth and director Eugene Fama, Chi said. It never approves of plans that allow single-trigger payouts to executives -- golden parachutes without termination -- in the event of a merger or acquisition.<br /> <br />I commend Dimensional Fund Advisors for advocating for shareholder interests and hope more fund companies do the same to maintain a better system of checks and balances.</div>
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<a href="http://www.bloomberg.com/news/articles/2016-02-17/vanguard-blackrock-seen-seldom-challenging-companies-on-ceo-pay" target="_blank">Click here to read the full article. </a></div>
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Kevin Kroskey, CFP®, MBA</div>
Kevin Kroskey, CFP, MBAhttp://www.blogger.com/profile/14216987399845080721noreply@blogger.comtag:blogger.com,1999:blog-4576917574631646000.post-80590722545579727612016-03-01T14:46:00.001-05:002016-03-01T14:46:23.511-05:00The Good Side of Bad Markets<div style="text-align: justify;">
After the recent downturn in the U.S. and global stock markets, you can be pardoned if you wished that the markets were a bit tamer. Wouldn’t it be nice to get, say, a steady 4% return every year rather than all these ups and downs?<br /><br />Be careful what you wish for. There are at least three reasons why you should hope the markets continue scaring investors half out of their wits.<br /><br />1) The very fact that stock downturns scare people is one reason why stocks deliver a higher return than bonds. Economists call it the “risk premium;” which can be roughly translated as: people are not willing to pay as much for an investment that will periodically frighten them to death as they would pay for an investment that delivers a less exciting investment ride. Over their history, stocks have been a fairly consistent bargain relative to less volatile alternatives, which is another way of saying that they’ve delivered higher long-term returns than bonds and cash. <br /><br />2) If you’re accumulating for retirement by putting money in the market every month or quarter, every downturn means that you can buy shares at a bargain price while many other investors are selling out at or near the bottom. Over time, as the market recovers, this can give a little extra kick to your overall return.<br /><br />3) Market downturns give an advantage to those who are willing to practice disciplined rebalancing among different asset classes. Basically, that means that when stocks go down, any new cash goes disproportionately into stocks to bring them back up to their former share of the overall portfolio. This, too, allows you to buy extra shares when the prices are low, and can also boost long-term returns.<br /><br />There’s no question, the downward plunge on the stock market roller coaster is scary. It’s hard to maintain your discipline when the voice in the back of your brain is telling you to bail out on the bouncy trip before somebody gets hurt. <br /><br />But unless this is the first time in history that the market goes down and stays down forever, we will ultimately look back on the decline and see a buying opportunity, rather than a great time to sell and jump to the sidelines. The patient, disciplined, long-term investor should see market volatility as one of your best friends and allies in your journey toward retirement prosperity.</div>
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<strong>Best Regards,<br /><br />Kevin Kroskey, CFP, MBA</strong><br />
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "georgia" , "times new roman" , serif;"><span style="color: #444444; font-size: xx-small;">This article adapted with permission from Bob Veres.</span></span></span></div>
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Kevin Kroskey, CFP, MBAhttp://www.blogger.com/profile/14216987399845080721noreply@blogger.comtag:blogger.com,1999:blog-4576917574631646000.post-43494047797346594492016-02-02T11:10:00.003-05:002016-02-09T08:59:35.671-05:00Putting Market Corrections Into Perspective<div style="text-align: justify;">
After a turbulent 2015, stocks tumbled in the first few weeks of 2016, causing concerns that the bull market U.S. equities have enjoyed since 2009 may be over.<br />
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Plagued by worries about global economic growth, the S&P 500 dropped 7.75% in the first two weeks of 2016.1 While the pullback surprised many investors, corrections in the 5-10% range are not unusual.<br />
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Since 1928, the S&P 500 has experienced corrections of more than 5% about three or four times each year.2 We see declines of 10% or more every 1-1/2 years, and bear market corrections of 20% or more about every three or four years.3 Obviously, these are all averages and the performance of any single year can deviate significantly from historical norms. </div>
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Though market corrections are rarely welcome, they are a natural part of the overall business cycle, and it is important to take them in stride. The most important thing is not to give in to emotion. While it can be tempting to eject when downside volatility is being experienced, impulsive decisions can be a killer to your portfolio. The only way to ensure you can reliability expect to earn a market rate of return over time is to stay invested in the market throughout time.<br />
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Having a sound financial plan in place couple with a diversified portfolio to support the plan is step one. Step two is having the discipline to execute the plan and stay invested over time.</div>
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Kevin Kroskey, CFP®, MBA</div>
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<span style="font-size: xx-small;">All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. Diversification does not guarantee profit nor is it guaranteed to protect assets.</span><br />
<span style="font-size: xx-small;"></span><br />Kevin Kroskey, CFP, MBAhttp://www.blogger.com/profile/14216987399845080721noreply@blogger.comtag:blogger.com,1999:blog-4576917574631646000.post-21186878477600292072015-12-31T13:00:00.000-05:002016-01-05T14:41:48.196-05:00Should We Go Back on the Gold Standard?<div style="text-align: justify;">
If you watched the Republican presidential debates, you might have noticed that a number of candidates yearn for a return to the gold standard—that is, that every dollar issued by the government would be backed by a comparable value in gold bars that were stashed away in a government vault. Sen. Ted Cruz of Texas argued that the dollar should have a fixed value in gold, and Sen. Rand Paul of Kentucky added that printing money without backing in the precious metal destroys the value of our currency. Mike Huckabee, former governor of Arkansas, thinks that if not gold, then the dollar could be pegged to a basket of commodities. All are mostly concerned that printing money will cause runaway inflation.</div>
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But there may be several problems with this return to the fiscal system of the late 1800s and early 1900s. One is that inflation has barely budged even as the Federal Reserve Board was piling one QE stimulus on top of another, and the government was adding records amounts of currency to the money supply. Why? Because the velocity of money has been low—meaning, essentially, that banks have been sitting on growing piles of cash instead of lending it into the economy where it might have an inflationary effect. </div>
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Another problem is that, if pegged to gold, the money supply would be tied to one of the most volatile commodities in the world. In 2006, gold was selling for less than $600 an ounce. Then it peaked at $1,800 an ounce in late 2011. (See accompanying chart.) That means that the amount of currency floating through the global economy could have tripled in those five years. Today the price is in the $1,050 range, meaning an automatic 70% reduction in the amount of currency that would be available to the economy. Does it make sense for the number of dollars to be tied to the variations in a commodity whose value is sometimes called the “fear index?” </div>
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When the University of Chicago asked 40 leading economists whether a gold standard would improve the lives of average Americans, all 40 said no. They pointed out that the heyday of the gold standard actually experienced far greater economic volatility than we do today, and the nation’s unemployment rate, on average, was almost a full percentage point higher than the period since President Nixon abandoned the gold standard once and for all.</div>
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<strong>Best Regards,<br /><br />Kevin Kroskey, CFP, MBA</strong><br />
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "georgia" , "times new roman" , serif;"><span style="color: #444444; font-size: xx-small;">This article adapted with permission from Bob Veres.</span></span></span></div>
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<span style="color: #6c6e70;"><span style="color: #6c6e70; font-size: xx-small;">Sources:</span></span></div>
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<span style="color: #6c6e70;"><span style="color: #6c6e70; font-size: xx-small;"><a href="http://www.nytimes.com/2015/12/02/business/economy/the-good-old-days-of-the-gold-standard-not-really-historians-say.html">http://www.nytimes.com/2015/12/02/business/economy/the-good-old-days-of-the-</a></span><a href="http://www.nytimes.com/2015/12/02/business/economy/the-good-old-days-of-the"></a></span><a href="http://www.nytimes.com/2015/12/02/business/economy/the-good-old-days-of-the"></a><span style="color: #6c6e70;"><a href="http://www.nytimes.com/2015/12/02/business/economy/the-good-old-days-of-the"></a><span style="color: #6c6e70; font-size: xx-small;"><a href="http://www.nytimes.com/2015/12/02/business/economy/the-good-old-days-of-the">gold-standard-not-really-historians-say.html</a></span></span></div>
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<span style="color: #6c6e70;"><span style="color: #6c6e70; font-size: xx-small;"><a href="http://goldprice.org/gold-price-history.html">http://goldprice.org/gold-price-history.html</a></span></span></div>
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<span style="color: #6c6e70;"><span style="color: #6c6e70; font-size: xx-small;">R&utm_medium=social&utm_channel=Business&linkId=19242237</span></span></div>
Kevin Kroskey, CFP, MBAhttp://www.blogger.com/profile/14216987399845080721noreply@blogger.comtag:blogger.com,1999:blog-4576917574631646000.post-2246172834295172772015-12-08T14:30:00.002-05:002015-12-08T14:30:51.446-05:00The Rise of Short-Term Rates<div style="text-align: justify;">
While many market participants wait for the "inevitable" rise in short-term interest rates expected when the Federal Reserve tightens its monetary policy, some investors may have missed the increase in short-term rates already underway as a result of market forces. </div>
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Looking at the zero- to two-year segment of the yield curve—the segment that many believe will be most affected whenever the Fed "normalizes interest rates"—it may be surprising to see how much rates have increased since 2013. </div>
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In fact, the yield on the 2-Year US Treasury note has nearly doubled since the beginning of 2015, rising from 0.45% in January to almost 0.90% today.* The yield on the 1-Year US Treasury note has more than tripled, from 0.15% to more than 0.50% over the same period. The 6-Month US Treasury bill’s yield rose from a low of 0.03% in May to over 0.30% today. Yet, despite the higher rates, we have not experienced the conjectured financial storm in the fixed income market. </div>
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The question of <em>when</em> the Fed will raise its overnight target rate is still open. Similarly, we can ask ourselves a more complex question: Will the market lead the Fed or is the Fed leading the market through setting expectations? </div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiQKdBbYxYpFFPT7u1ka-GNf2gN9IDBgwTaMYbAAD_Z6IU08VxjLYUDAprPHuEHxzbd6jFOo41GNG9aw7SARIvl0bLRnRRJopC2N3Ef9Acuh-KStY2EgfLQef05RV7GKgzyE1qiaA1qaDs/s1600/Capture.PNG" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiQKdBbYxYpFFPT7u1ka-GNf2gN9IDBgwTaMYbAAD_Z6IU08VxjLYUDAprPHuEHxzbd6jFOo41GNG9aw7SARIvl0bLRnRRJopC2N3Ef9Acuh-KStY2EgfLQef05RV7GKgzyE1qiaA1qaDs/s1600/Capture.PNG" /></a><br />
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<strong>Best Regards,<br /><br />Kevin Kroskey, CFP, MBA</strong><br />
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "georgia" , "times new roman" , serif;"><span style="color: #444444; font-size: xx-small;">This article adapted with permission from Dimensional.</span></span></span></div>
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<span style="color: #6c6e70;"><span style="color: #6c6e70; font-size: xx-small;"><span style="color: #444444;">*As of November 18, 2015. Source: Barclays Bank PLC.</span> </span></span></div>
<br />Kevin Kroskey, CFP, MBAhttp://www.blogger.com/profile/14216987399845080721noreply@blogger.comtag:blogger.com,1999:blog-4576917574631646000.post-35764282736382755492015-11-02T11:48:00.001-05:002015-11-02T11:53:21.409-05:00Why Market Timing Doesn't Work<div style="text-align: justify;">
Few words characterize today’s financial markets like uncertainty. When overseas economic issues can rob investors of months of gains and speeches by Federal Reserve officials cause markets to flip-flop unpredictably, investors are left wondering what they should do. In an attempt to make major market movements work for their portfolios rather than against, some investors attempt to time the market.<br />
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Market timing is the strategy of trying to predict future market movements to time buying and selling decisions. When markets are rallying or pulling back, it can be very tempting to try to seek out the top to sell or the bottom to buy. The problem is that investors usually guess wrong, missing out on the best market days or months.<br />
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The last few months has been volatile. The S&P 500 goes down -6.0% in August, another -2.5% in September, but bounces back +8.4%in October. If you hit the eject button at the end of September, you lost out!<br />
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Missing out on the market’s top-performing days can also be costly. This chart illustrates how a hypothetical $10,000 investment in the S&P 500 could have been affected by missing the best days during the 20-year period between January 1, 1995 and December 31, 2014. </div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjG1HUbyw0WD0-r2mA_J4-N-Z9eu6nIj8sEaT51oElU2w7kE2ktEDaWRT4AvE4y5CT24ZqyZNxXUfghCQdtcO44e3kHwEy9vrXWoRjyOBdnrM7-uIhmrNSjh_aqU9o9BUrAwOnnUjcicOw/s1600/missing+the+best+days.PNG" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjG1HUbyw0WD0-r2mA_J4-N-Z9eu6nIj8sEaT51oElU2w7kE2ktEDaWRT4AvE4y5CT24ZqyZNxXUfghCQdtcO44e3kHwEy9vrXWoRjyOBdnrM7-uIhmrNSjh_aqU9o9BUrAwOnnUjcicOw/s1600/missing+the+best+days.PNG" /></a></div>
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<span style="font-size: xx-small;">Source: Standard & Poor's and Wealth Management Systems. Example based on the hypothetical performance of a $10,000 investment between 1/1/1995 and 12/31/2014. Return represented by total return of the S&P 500, an unmanaged index generally considered to be representative of the U.S. stock market. Past performance is not a guarantee of future results. This is a hypothetical example used for illustrative purposes only and excludes important factors like transaction costs and management fees. You cannot invest directly in an index.</span><span style="font-size: xx-small;"><br /></span></div>
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This is a simple example that leaves out some important elements like transaction costs but it serves as a useful illustration of our point. Investors who remained invested for the entire period could have seen their investment grow to $64,752; those who missed just the five top days would have accumulated just $42,972; investors who missed out on the best 30 days would have seen just a 1.46% return during the whole period, much less than they could have gotten on a 20-year Treasury Bond<span style="font-size: xx-small;">.[1]</span><br />
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<strong>Why?</strong> Trying to time the market. The average investor misses out on performance in part because their money tends to come in near the top and come out at the bottom. Investors are notoriously bad at picking the right time to enter or exit investments; by the time most investors feel the time is right to invest, many times the investment is at or near its peak. Corrections are a normal part of market cycles and periods of high growth often occur very close to major pullbacks. Investors who sell during the bad times frequently miss out on the best days of performance. If you’re not in the stock when it moves, you may miss out on the whole play. <br />
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<strong>Bottom line:</strong> It’s virtually impossible to accurately find the top or bottom of the market consistently. Our experience shows that time in the market is more important than timing the market. Developing a personalized investment strategy and making prudent adjustments when conditions warrant is a much better long-term strategy than making emotional investing decisions. Does that mean that investors have to passively wait out every market, hoping that the next big decline doesn’t take out their life savings? Definitely not.<br />
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There’s a big difference between trying to time markets and making strategic shifts to try to avoid major market declines. One of the benefits of active management is that, rather than relying on a single strategy, investors can tap into the experience of multiple money managers who employ different market strategies. Active managers rely on analytical research, economic forecasts, and the human elements of experience and intuition to make critical investment decisions. Now, that’s not to say that even the best managers don’t have bad years. Whatever investment strategy you choose, it’s impossible to perfectly predict future market movements.<br />
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<strong>Conclusions</strong><br />
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Research and long experience have taught us that successful investing requires discipline and the patient execution of a long-term strategy, most especially when it is emotionally difficult; in fact, that is usually the time when opportunities are greatest. We understand that market timing has a tempting simplicity to it – buy low and sell high. However, it’s pretty hard to correctly predict the tops and bottoms of markets and most investors get it wrong. Remember, you don’t have to be the first to the party or the last to leave to have fun – often; just being there when it matters is enough to help you achieve your financial goals.<br />
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If you have any questions about the information we’ve presented or want to know how recent economic events may affect your investments, please let us know; we would be happy to discuss your concerns. </div>
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<strong>Best Regards,<br /><br />Kevin Kroskey, CFP, MBA</strong><br />
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-size: xx-small;"><span style="font-family: "georgia" , "times new roman" , serif;">This article adapted with permission from Platinum Advisor Marketing Strategies, LLC</span><span style="font-family: "georgia" , "times new roman" , serif;">.</span></span></span><br />
<span style="font-family: Georgia; font-size: xx-small;"></span><span style="font-size: xx-small;"><br />[1] </span><a href="http://fc.standardandpoors.com/sites/client/generic/axa/axa4/Article.vm?topic=5991&siteContent=8096"><span style="font-size: xx-small;">http://fc.standardandpoors.com/sites/client/generic/axa/axa4/Article.vm?topic=5991&siteContent=8096</span></a><span style="font-size: xx-small;">, </span><a href="http://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yieldYear&year=1995"><span style="font-size: xx-small;">http://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yieldYear&year=1995</span></a> </div>
Kevin Kroskey, CFP, MBAhttp://www.blogger.com/profile/14216987399845080721noreply@blogger.com