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Emerging Markets Emerge (again)!

Fri, 17 Apr 2026 12:49:29 GMT

Emerging Markets Emerge (again)!

For starters, let’s define what we mean by “emerging markets”. Emerging markets are developing economies (e.g., China, India, Brazil) as opposed to developed economies (e.g., Canada, Japan, the UK). Emerging markets are known for having cheap labor and producing products much less expensive than what they would cost if built in the U.S. When you walk into Walmart to buy a manufactured product, odds are it was produced in an emerging market country.

Most mutual fund companies offer funds that specialize in emerging market companies. If you’ve been invested in an emerging markets stock fund the last decade or so, you’ve probably been disappointed. Returns for the 10-year period ending in December, 2024 averaged just under four percent. Meanwhile, over that same 10-year period, the U.S stock market averaged better than 12 percent a year!

That’s enough to make you want to cut and run on emerging companies. But hopefully you didn’t bail out. U.S. stock markets had a good year last year, with a return around 17 percent. But emerging markets did even better, returning a little over 30 percent! That 2025 stellar return doesn’t make up for a decade of underperformance for sure. But it does put a dent in it. And it’s not the first time that’s happened.

Let’s roll back to the first decade of the 21st century. Suppose you invested $1,000 in the S&P 500 index on January 1, 2000. It’s your first time ever investing in stocks. You’ve heard stocks average a 10 percent return annually. You leave it alone for the next 10 years. Finally, on December 31, 2009, you look at your account. At a 10 percent rate, you’re expecting to see a balance of around $2,600. In fact, the balance is barely over $900! What happened? Well, that decade opened with the dotcom bubble, where technology stocks crashed by around 75 percent! The decade ended recovering from the 2008 Great Recession, where stock values in the U.S. had been cut in half. The period 2000-2009 is often referred to as the Lost Decade. And it certainly was a lost decade for U.S large cap stocks.

So, did any areas make money during that decade? Yes, in fact, several sectors did, including bonds at 6 percent, real estate trusts (REITs) at 10 percent, U.S. small cap stocks at 8 percent, and emerging markets at 13 percent! All figures stated in annualized returns. The “lost decade” was not lost at all for a globally diversified portfolio.

You’ve heard the phrase “don‘t put all your eggs in one basket”. Given the randomness of market returns, a corollary to that would be: Put a few eggs in ALL the baskets! And be patient! One more thing: let’s go back to that first time investor in 2000 who lost money for that decade. If he stayed put the next decade, the S&P averaged 13.6 percent per year! Patience rewarded!

All content on this page is for informational purposes only. Opinions expressed herein are solely those of Mustard Seed and our editorial staff. Material presented is believed to be from reliable sources, however, we make no representations as to its accuracy or completeness. All information and ideas should be discussed in detail with your financial advisor prior to implementation period. Content should not be regarded as a complete analysis of the subjects discussed.

Let's Move Some Money!

Tue, 20 May 2025 15:09:08 GMT

Let's move some money!

“Let’s move some money!”

Some years back I was visiting with a friend as we watched our kids during a ballgame. He related to me how his visits would usually go with his financial advisor. He’d go in for his annual review and often would express disappointment at the performance of his account. He thought he would have done better the previous year based on news reports and such. I’ll never forget the reply given by the advisor in response to his disappointment: She’d say “Well, let’s move some money!” This phrase, he said, would tend to lift his spirits, at least a bit. Give him a bit of temporary optimism. Well at least, he would think to himself, she’s going to do something productive for my portfolio!

The tendency to act is often comforting to investors. I’ve heard clients remark “my guy must be doing me some good- he sure trades my account a lot!”. It feels reassuring that they’re looking out for you, doesn’t it?

Well, back to that statement “let’s move some money”. An obvious question to ask would be “are you going to put me into a better set of investments than I am in now?” If the answer is “No”, then why move money around at all? And if the answer is “yes”, then why don’t you have me in that portfolio already?

Moving money around, or trading, often does benefit at least one party to the transaction; the advisor or broker. Suppose the broker spent the previous weekend at a golf tournament sponsored by the XYZ Investment Company, all expenses paid. Now my friend walks into the broker Monday morning and expresses concern over his investments. The “let’s move some money” notion kicks into high gear. And guess where it’s likely moving to? The XYZ fund is top of mind for the broker.

There are certainly valid reasons for trading in a portfolio. For folks in retirement living off their investments, trades must be made to keep the cash coming. For savers making systematic deposits, trades must be made to invest the cash coming in. As different sectors of the market ebb and flow, trades may need to be made to keep the portfolio in balance. But moving money around to implement a different investment strategy is more likely to be harmful than helpful.

You would probably accept the “buy low and sell high” axiom of investment advice. It sounds simple enough. But execution is another matter. When stocks fall, we get fearful and are inclined to sell out. When a stock (or a market) has done well recently, we get euphoric and are tempted to buy in. Both actions are in direct contrast to the “buy low sell high” strategy. If you’ve made this mistake in the past, don’t feel bad. The pros do the same thing. They get it wrong more often than they get it right!

Your takeaway here: there are valid reasons to trade in a portfolio. But don’t fall for that “let’s move some money“ trick to make you feel better in the short run. Have an investment plan that you are comfortable with and stick with it!

All content on this page is for informational purposes only. Opinions expressed herein are solely those of Mustard Seed and our editorial staff. Material presented is believed to be from reliable sources, however, we make no representations as to its accuracy or completeness. All information and ideas should be discussed in detail with your financial advisor prior to implementation period. Content should not be regarded as a complete analysis of the subjects discussed.

Stay In Your Seat

Thu, 15 May 2025 14:17:22 GMT

Stay in your seat

May 15, 2025

You’ve heard some rumblings that we’re in danger of falling into a recession. Comments on this issue are coming from legitimate financial professionals. These comments stem for the most part due to the current trade war the U.S. initiated against most of the rest of the world. And first quarter numbers just released show the economy shrinking, not growing.

There’s reason to believe we’re headed for an economic slowdown. The tariff on Chinese goods (with some exceptions) as I write this is 145 percent. China, in retaliation, has imposed a 125 percent tariff on U.S. goods. This has significantly reduced trade between the two countries. The number of containers arriving on the west coast is down by some estimates, as much as 40 percent! Retail executives from Wal Mart, Target and Home Depot recently warned Trump to expect significant price increases and empty shelves shortly.

So, given all that, what to do with my investments? You might be tempted to run for cover. In other words, just sell off my stock investments and convert over to cash until all this blows over. Sounds easy enough, right? Wrong! DON’T DO IT!. Let me explain.

It’s true that stocks may suffer a decline in a recession. But we’ve already seen a significant decline in the markets. The Dow went over 45,000 in December. It’s currently at around 41,000, a decline of roughly 10 percent. The Nasdaq decline is even worse, off roughly 15 percent from its recent high. If you bail out now, you’re selling at significant discounts.

But it could go even lower, you argue. Yep, it could. But if you cash out, you then have the issue of when to get back in. Recently, Trump put a 90-day pause on implementing tariffs. The market soared, with the Dow up over 2,000 points that day. If you were sitting on the sidelines in cash, you didn’t participate in that gain. To follow through on that, the next day the markets were down, giving back much of the previous day’s gain. But research shows that missing only a few of the big market days can have a significant impact on long run returns.

A couple of things to remember during this volatile period: first, market gains, as well as drops, often occur rapidly. You’ve got to be out on the playing field to score, not sitting on the bench. Second, after market corrections occur, markets historically go on to higher levels 100 percent of the time. Those are excellent odds. Finally, make sure your allocation to stocks is consistent with your ability to tolerate market risk. If you can’t sleep over worrying about your stocks, maybe you should shift some funds over to bonds. But don’t completely abandon the stock market; it’s your best hedge against inflation over time. And the experts are telling us to expect higher prices!

Tale of Two Economies

Tue, 22 Apr 2025 14:11:08 GMT

A Tale of Two Economies

July 2024

“It was the best of times, it was the worst of times...”. You might recognize that as the opening line in Charles Dicken’s classic A Tale of Two Cities. That phrase might well apply to the U.S. economy. Despite relatively strong economic numbers, polling in the U.S. consistently shows consumers are dissatisfied with the American economy. Only one in five Americans feels that the economy is doing well. There are likely several contributing factors to this. First, some media outlets consistently paint a dismal economic picture. If we heard it on the news, it must be true, right? Second, a major factor in dissatisfaction is the inflation shock we experienced the last couple of years. From the Great Recession year of 2008 through 2020 (the onset of Covid), U.S. inflation averaged just 1.7 percent per year. In 2021, prices shot up by 7.0 percent, more than triple the previous 13-year average. That inflation continued in 2022 at 6.5%.

Inflation certainly has slowed, currently running just over three percent. Consumers may misinterpret this as prices should start falling. For example, assume a $5 jar of peanut butter pre-pandemic now costs $8. A lower inflation rate doesn’t mean peanut butter is going back to $5. It’s likely stuck at $8! The relatively long period of mild inflation, combined with a shorter period of rapid price increases, has led to consumer frustration. Real wages (wage increases over and above the inflation rate) have actually increased the last few years. But they haven’t increased for everyone, and many families feel left behind. Hence, the high level of consumer dissatisfaction regularly being measured in polls.

The facts on three key measures of the American economy are as follows:

GDP: GDP grew at a rate of 2.5% for 2023 and continued growing in first quarter of 2024 at a rate of 1.4%.
Inflation rate: as mentioned, currently at around three percent. The Federal Reserve’s targeted rate is in the two percent range.
Unemployment rate: currently at 4.0 percent, near an all-time historical low. Jobs are readily available in many areas.

If we had to pick perfect economic numbers, we’d suggest GDP back to 2.5, inflation at 2.0, and we’re fine with unemployment at 4.0. The actual numbers aren’t that far off! In his book The Psychology of Money, financial writer Morgan Housel sums it up: Nothing is ever as bad or as good as it seems!

Please feel free to contact us for any questions you may have concerning the enclosed reports or other financial matters. We appreciate the opportunity to serve you!

Tariffs: friend or foe?

Tue, 22 Apr 2025 14:11:07 GMT

Tariffs: friend or foe?

April 2025

Given the business headlines for the first quarter, you may be hesitant to review the enclosed reports on your portfolio. Certain segments of the U.S. stock market experienced significant declines for sure. But those declines were offset to some extent by gains in other markets. Chief among them were gains in foreign stock markets. This includes foreign developed markets as well as emerging markets. Most fixed income segments had positive returns as well.

As we write this letter, markets are digesting the news of the tariffs announced by the Trump administration on April 2. The announcement regarding new tariffs on U.S. imports has understandably stirred some waves in the markets, with a notable sell-off reflecting initial
uncertainty.

This move, aimed at giving American manufacturing a shot in the arm and bringing jobs back home, is a big step. It’s not surprising for volatility to follow as the world adjusts. Despite the uncertainty, markets have a way of riding out storms like these, whether it’s a new policy, a global event, or something else entirely. We’ve seen this before, and markets tend to settle down and adjust with time. Rest assured, we’re here to guide you through this stretch with care and confidence.

January Newsletter

Tue, 22 Apr 2025 14:11:03 GMT

Happy New year!

January 2025

The year 2024 saw healthy returns overall in the market, despite finishing the year with a whimper. For example, international equity markets, both developed and emerging, saw declines of eight percent plus in Q4. The U.S. bond market declined more than three percent in the same period. Several other sectors saw less severe declines. The notable exception was U.S. growth stocks which continued strong
performance into Q4.

Going into Q4, we faced the uncertainties of a close election as well as future actions by the Federal Reserve. As expected, the Fed followed through on three rate cuts in 2024. However, coinciding with the third cut on December 18, Fed chairman Jerome Powell indicated the pace of future rate cuts was likely to slow from earlier expectations. This was somewhat unnerving to investors banking on aggressive rate cutting in 2025. Ironically, a reason for slowing rate cuts, as outlined by Powell, is the overall health of the U.S. economy. Inflation has moderated, employment is strong, and the economy is growing. (A notable exception here is the housing market, where 30-year mortgages remain around seven percent.) It’s a case of good news (a healthy economy) being bad news (a slower pace of rate reductions).

New year, new faces
We’re happy to announce the addition of two new team members. Ayden Sharp is a December graduate in finance from Southern Arkansas University. Ayden, originally from Leander, Texas, and his wife Christan, reside in Magnolia and he will work out of the Magnolia office.

Kirk Reardon is our new advisor in the Texarkana office, located at 5329 Summerhill Road. Kirk and his wife Shannon, reside in Wake Village, TX, and are the proud parents of two sons, Holden and Cooper.

We’re excited to welcome both to our Mustard Seed team.

Also, some not so new faces!
We recently celebrated the 20-year anniversaries of two of our senior financial advisors. Angie Glass is a Chartered Retirement Plan Specialist in the Magnolia office. Bruce Butterfield is a Certified Financial Planner in the El Dorado office. Angie and Bruce began their careers at Mustard Seed in 2004 as part- time employees. Both have distinguished themselves with a strong base of long-term clients and in- depth knowledge of a broad range of financial issues. Congratulations Angie and Bruce!

A note about texting
Mustard Seed is required to archive all written communication with clients. This requires us to use a special program for texting. Many of our clients are already using this alternative texting and we will attempt to convert the rest in the first quarter of 2025. We’ve enclosed a flyer with more information on this.

Fact Checked

Tue, 22 Apr 2025 13:59:10 GMT

The Following Has Been Fact Checked!

October 2024

The long-awaited and much debated interest rate cut finally happened. The Federal Reserve had announced earlier this year the aggressive rate increases of 2022 and 2023 had done their job in slowing inflation. (The latest inflation numbers came in at 2.5 percent, close to the Fed target of two percent.) The Fed had further indicated rate cuts were now on the horizon. Perhaps the only surprise in the September announcement was the size of the rate cut at 50 basis points, or one-half of a percent.

We’re already seeing the results of this rate cuƫng environment. A 30-year home mortgage is now around six percent, down from 7.8 percent a year ago. Good news for home buyers. But one person’s gain is another person’s loss. Savers who recently collected a 5.5 percent interest rate on short-term Treasury bills now see that rate down to four percent. On balance, however, a declining rate environment should be positive for the economy overall.

No doubt the election is on the minds of many. How could it not be given the barrage of coverage! We briefly addressed this in our April newsletter. But a quick reminder: Over the last 100 years, we’ve had 27 presidential administrations, 14 Democrat and 13 Republican. Stock
market returns have been positive in 23 of 27 periods. Of the four losing periods, two were Democrat and two Republican. Your takeaway: the market has historically fared well regardless of what party is in the White House! Don’t adjust your long-term financial game plan because of an impending election.

Texting with Mustard Seed
It is crucial for us to stay connected with our clients. If you receive a text from (870) 626-0038, it means that a Mustard Seed associate is reaching out to you. In order to initiate a chat with them, please respond with a YES. Please be aware that all written communications must be archived according to our compliance regulations. Therefore, our associates are not allowed to send business-related information through their personal cell phones. To text your advisor, please use (870) 626-0038.

Please contact us for any questions concerning the enclosed reports or other financial matters. We appreciate the opportunity to serve you!

Your Mustard Seed Team

Flossing to 100!

Mon, 13 Jan 2025 18:46:20 GMT

Flossing to 100!

Dr. David Ashby | Dec 30, 2022

From the desk of Dr. David Ashby:

No doubt it’s crossed your mind before just how long you are going to live.

As with many areas of our lives, the federal government is glad to offer some help here! It publishes live expectancy tables and update them regularly. For example, a child born in the U.S. in 2019 has an average life expectancy of 79 years. For 100 kids born in 2019, 50 are expected to die prior to age 79 and 50 will live to 79 and beyond.

A couple of points to note about this statistic: First, these averages include all deaths, including infant mortality. If a female makes it to age 65 in the U.S., she then has a life expectancy of around age 90. A male age 65 can expect to live on average to age 85. Just for kicks, I used to ask students in my retirement planning class why they thought women outlived men. The responses were interesting to say the least. Closest I ever came to having a fight break out in the classroom!

The second point on these statistics is that life expectancies in the U.S. have now declined two years in a row. A child born in the U.S. in 2020 has a life expectancy of 77 years and one born in 2021 is down to 76 years. It’s the first two-year drop in life expectancies in over 100 years. As scientific advances and medical care have progressed over the years, life expectancies have traditionally increased. As an example, Social Security was passed in 1935 and would begin paying you a pension at age 65. Average life expectancy that year was 63. Hawaii has the highest life expectancy at 80.7. Mississippi is the lowest at 71.9. Arkansas is close to the bottom at 72. In general, southern states don’t fare as well as other parts of the country. Maybe it’s the fried food!

As you might expect, the decline in life expectancy is primarily due to COVID. But that’s not the sole driver. Suicides were up sharply over the past few years, which is no doubt somewhat related to COVID and the associated isolations. There’s also been a sharp increase in deaths from overdoses. And the increased incidence of obesity in our society is a factor as well.

A while back I was working on some Social Security projections for a client and ran across the website Living to 100. The website asks you numerous questions on your personal situation and then projects your life expectancy. Mine came out at 88 years. Coincidentally or not, my dad passed at age 88.

A curious question on the survey: Do you floss? I mentioned to my dentist I thought this was an odd question. He said not at all. Of course, I would expect a dentist to be pro-flossing. He then went on to explain that the mouth is a prime area for infections to enter the bloodstream. Sounds logical.

Your takeaway here: Even though we’ve seen a couple of back-to-back declines in life expectancy, you can still expect to live another 20-plus years after you retire. Perhaps longer if you are an avid flosser! That’s a long time with no paycheck. But consumption continues. You’re still going to need money for food, clothing, housing, dental floss, etc. So plan accordingly by saving and investing on a regular basis. It’ll sure make that retirement stage of life a lot more comfortable!

Originally published by Magnolia Reporter.

Agribusiness Blog

Mon, 13 Jan 2025 18:41:43 GMT

Agribusiness Blog

Angie Glass | Feb 10, 2023

We wanted to take the time to share a quick excerpt from the Agribusiness Blog and point you to their full article for some very insightful reading that pertains to a number of areas in which we serve. We hope you enjoy the read!

Excerpt:

A few weeks ago, Paul and I spoke at Top Producer regarding estate planning and the various types of trusts that can fit into these plans. Finally, in the second session as the last item in the Q & A period, someone finally asked the question…What is the dollar amount at which I need to have a trust? The answer is “it depends”. Whether you need a trust is about dollars, but it’s also about several other things including control, asset protection, and family relationships. There are also individuals that will “sell” you a trust (and sometimes an expensive and complicated one) regardless of need, so be careful and thoughtful in your planning.

It’s Not Polite to Talk about Money!

Mon, 13 Jan 2025 18:41:42 GMT

It’s Not Polite to Talk about Money!

Dr. David Ashby | Mar 13, 2023

There’s a chance you grew up in a home where finances were not discussed. My folks didn’t talk about money, but I think it’s because we didn’t have any. Dad made an average living as a feed salesman and Mom was a stay-at-home mom raising six children. The only discussions I recall about finances were which bills to pay this month and which to put off until the next month.

But for families that did have money back then, the subject was often off the table. If you talked about finances with the kids, it could be construed as being boastful and arrogant. So the family’s financial situation was generally off-limits. That may have loosened up a bit over the years, But I still run into folks who don’t share financial information with their children, even though their children are in their 50s and 60s!

Ed Slott is a financial advisor in New York and arguably the nation’s foremost expert on Individual Retirement Accounts, or IRAs. But he advises clients on issues beyond the IRA realm, and he strongly encourages family conversations about finances. Ed suggests doing this during the holidays when families are gathered together. While that makes sense logistically, it might put a damper on things to be discussing money over Christmas dinner.

There’s a lot to be gained by having a frank discussion with other family members about your financial situation. I’m amazed at how many folks I run into that have no will or trust in place to direct disposition of their assets at their passing. You want to direct who gets what rather than have state law do it for you. But you must have documents in place to do that. Having a discussion with family members about your assets and final wishes can highlight areas like this that need to be dealt with. Hopefully, such a discussion motivates you to see an attorney. Besides a will or a trust or both, an attorney may also suggest you put in place powers of attorney. This designates someone to act on your behalf in the event you are incapacitated.

If you put together a will or a trust, this forces you to think about the distribution of assets at your passing. You may have it in your mind who gets the pink dishes. You have even told your daughter that you want her to have them. But do the other siblings know that? Better to have it in writing to avoid a conflict. It’s also possible that nobody wants those ugly pink dishes anyway. It’s been my observation over the

years that kids aren’t necessarily as attached to items as you are. And I know you think your children are different. There may be an item or two that they want to keep. But I see estate sales where they are selling everything down to the home canned tomatoes.

If your child stands to inherit a significant chunk of money and you‘re worried they may blow it on the way home from your funeral, there’s an app for that. It’s called a trust, a legal mechanism that allows you to control, to some extent, your assets from the grave.

Discussions about family finances also help avoid the chance of assets being lost. A paid-up life insurance policy purchased 30 years ago could easily be overlooked. Better to let the kids know what you have and where to find relevant documents than to risk assets not being discovered.

Suppose you are leaving specific assets to one child or more than an equal share to one child over another. Or you’ve made provision for a charitable distribution. Why not sit down with the kids and explain the rationale rather than having them wonder, “why’d Momma do that?”

So the next time you have the kids together, you might want to have that talk about what happens to your stuff after you’re gone. It could prevent some hard feelings, surprises, and the risk of losing family assets! And it's perfectly polite to talk about it!

Originally published via Magnolia Reporter.

Inconceivable! How Silicon Valley Bank Failed and How the Fed Was Complicit

Mon, 13 Jan 2025 18:41:41 GMT

Inconceivable! How Silicon Valley Bank Failed and How the Fed Was Complicit

Jonathan Baird | Mar 28, 2023

Many of you have heard of the failures of three banks: Silvergate Bank, Silicon Valley Bank and Signature Bank. Besides all of them starting with the letters “Si” are there any common denominators in these failures? At least in the case of Silicon Valley Bank, there are some very obvious mistakes that were made that led to their demise.

Back in 2020 and 2021 when the Federal Reserve had lowered rates to zero percent and Jerome Powell said that they, and I quote, “… weren’t thinking about thinking about raising rates,” Silicon Valley Bank (SVB) believed them. At the same time, in the height of COVID lockdowns and stimulus, SVB experienced an onslaught of deposits from tech companies that were attracting an overwhelming amount of investment. In the face of historically high inflation, the Fed began to raise rates precipitously, and the plot thickened.

When you are a bank you do two primary things: you borrow money and then reinvest it in other things. The main two things that banks invest in are loans and bonds. Loans and bonds have all different terms, one year, five year, ten year, twenty or even thirty year maturities (and everything in between). They also have different interest rates depending on the risks associated with the endeavor. “Risk free” bonds, also known as Treasuries, are seen as the gold standard in terms of credit quality. There is virtually a zero percent chance that Treasury bonds and bills will not be paid back because the issuing entity (the Treasury of the United States) has the ability to raise unlimited debt- debt ceiling limits notwithstanding. Loans, on the other hand, are the most risky things that banks invest in from a credit standpoint. Loans are generally to individuals and businesses who don’t have access to a money printer and therefore have a much higher risk of defaulting on their loans.

Based on what I’ve just outlined, you would think that SVB probably had a bunch of loans that went bad, right? Wrong. The mistake that SVB made was to invest their tsunami of deposits into ten-year agency guaranteed Mortgage Backed Securities and Treasuries. Unlike the 2008 Great Recession, which was based on the underlying credit quality of the investments that banks made, the current crisis is based on the length of the maturity (or duration) coupled with a very low rate. They had the problems of a mismatch in maturity of investments with deposits that could be withdrawn at will. Additionally, many of the depositors in SVB were technology companies that in many cases had multi-millions of dollars on deposit. For instance, Roku had around $480 million in their checking account. The Federal Deposit Insurance Corporation (FDIC) only insures the first $250,000 in deposits so there were many entities that had excess deposits that could be lost in the event of a bank failure.

SVB had almost half of their asset balances invested in bonds with a greater than ten-year maturity at around a 1.6% rate. Most of this was invested at the very top of the bond market, meaning that the interest rates were very low. If things weren’t bad enough, Jerome Powell went back on his word that rates would remain low for a very long time and began the most aggressive interest rate increase since the 80s. When rates rise that quickly, banks are forced to compete for deposits by paying higher interest on their deposits. In the case of SVB, they weren’t able to pay because they had so much of their balance sheet invested at a 1.6% rate. Now the stage was the set, the pieces were all in place to have a 1920s-style bank run, and that is exactly what happened.

Large depositors are the first to get antsy because they could lose anything over $250,000 and since Roku had almost 2000 times more than that in the bank, they wanted their money back. “No problem” you might think, “they have high quality bonds that they can sell to create the required liquidity to give them their money back.” The problem is that those ten year bonds paying 1.6% are now worth 80% of what they paid for them. They had around $95 billion of these bonds and they were worth about $77 billion now meaning they had lost about 20% of their value. So SVB took Roku’s $480 million, invested it in bonds that are now only worth about $390 million. Ouch! If SVB were to sell those bonds they would recognize a $90 million loss. There are a lot of complicated reasons for how this can happen, and it boggles the mind, but there they were.

The large depositors started frantically withdrawing their money forcing SVB to sell their pristine credit quality bonds at a 20% loss. This created an $18 billion loss on their books. But don’t worry they had $16 billion in capital! Jokes aside, $2 billion is a lot of money to everyone except Congress. The regulators were involved at this point and there was nothing left to do but to declare SVB dead and check its pockets for loose change. Long term bonds at very low interest, plus flighty large depositors, plus a historic increase in interest rates all colluded to destroy Silicon Valley Bank.

There are many questions left unanswered about this situation. Will the contagion spread? Does the fact that banks collectively have about $650 billion of these losses mean that there are more failures to come? Will the FDIC bail out other depositors who have more than $250,000 in their accounts at banks? Is the Federal Reserve an ultimate good or bad for the economy? Unfortunately, we do not have the answers yet. However, for most people who keep their bank deposits under the $250,000 limit, this situation is not a significant problem. For those who are fortunate enough to have more significant deposits, it might be a good idea to spread your deposits around and make sure you are under the limit. Please let us know if we can help you with managing the risk of your portfolio and aligning it with your retirement goals.

Creating an Investment Philosophy

Mon, 13 Jan 2025 18:21:02 GMT

Creating an Investment Philosophy

Angie Glass | Mar 30, 2023

You may have heard investors say that a clear investment philosophy is essential to pursuing long-term financial success. And while investment strategy is important, it’s nothing more than a manifestation of an investment philosophy. Strategies can evolve as life changes, but philosophies are the core beliefs, principles, and practices that guide your decision-making. In times of market uncertainty, a philosophy may enable you to control your emotions, shut out the noise, and bring your focus back to your long-term goals.

Too often, we see people want to focus on the short-term outcomes of their decisions when it has little impact on their long-term strategy. For example, a sudden drop in the market in reaction to an adverse event can be concerning, but in time it may be nothing more than a minor blip. An investment philosophy can remind you of that. It can also remind you that short-term results are random and fleeting, meaning you have no control over them.

Instead, an investment philosophy can keep you focused on the process. If mistakes are made, you’ll have a system for uncovering and learning from them. No panic or second-guessing, just a clear assessment of where you are and where you want to be, and whether your current strategy has the potential to get you there. If the strategy doesn’t work, you adjust.

Keep It Simple

An investment philosophy doesn’t need to be elaborate. You can keep it short and simple while still expressing your core belief. Take Warren Buffett’s investment philosophy for example, which is just one sentence:

“Buy wonderful businesses at a fair price with the intention of holding them forever .”

While some people may not grasp the meaning of Buffett’s investment philosophy, all that matters is that he does.

It requires understanding the markets and familiarity with investment principles and practices to create a philosophy, but it also requires a deep understanding of your own values, beliefs about money, and comfort level with risk over a long period of time.

A financial professional can help you discover the elements of an investment philosophy that fit your profile while offering education and support to help you pursue your goals. Be wary of financial professionals that don’t bother to ask what your values are, or worse, are unable to describe their own investment philosophy succinctly and with conviction. If you’d like to see if our firm’s values align with yours or if you need help defining your financial goals, give us a call.

This content is developed from sources believed to be providing accurate information. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel. Neither the information presented nor any opinion expressed constitutes a representation by us of a specific investment or the purchase or sale of any securities. Asset allocation and diversification do not ensure a profit or protect against loss in declining markets. This material was developed and produced by Advisor Websites to provide information on a topic that may be of interest. Copyright 2024 Advisor Websites.

Investment Strategy: Where You Are Now vs. Where You're Headed

Mon, 13 Jan 2025 18:21:00 GMT

Investment Strategy: Where You Are Now vs. Where You're Headed

Angie Glass | Apr 20, 2023

From CEOs to athletes, most people striving for a certain level of performance are constantly assessing where they are and where they want to be. Regularly checking in helps them decide if they’re effectively using all their resources. Sure, it may seem OK to overshoot a goal, but if resources are used in the wrong way – too inefficient, too costly, not the right kind of risk – it may undermine the long-term prospects of achieving it. And you want to avoid undershooting a goal because it may cause more problems.

A gap analysis can give you a snapshot of your current situation and help you decide the adjustments you’d like to make to get back on track.

Determine Where You’re Headed

For a long-term strategy to have the most potential for success, it should be based on an assessment of your needs, priorities, preferences, and risk tolerance. Financial goals, like planning for lifetime income in retirement, should account for your actual needs, economic factors, and life’s uncertainties. When you put these factors together, you should end up with a target to aim for.

Are You Where You Want to Be?

When you first create your investment strategy, it should be adjusted to your needs. But over time, things will change. For example, a change in the market may shift your allocation of assets out of balance, potentially causing a mismatch of risk and return orientation. A change in priorities may mean you’re assuming too much or too little risk, throwing you off target. While this can be addressed through regular portfolio rebalancing, a gap analysis is another way to see if your portfolio is still leading you toward your goals.

Portfolio gap analysis helps you determine if the resources you’re using to pursue your investment goals are being used effectively across your strategy. When performing your analysis, you may want to consider:

Are your assets allocated in a way that supports your investment objectives and risk tolerance?
Is your portfolio diversified across a number of distinct equity asset classes, global markets, and a broad amount of securities?
Does your portfolio emphasize enough value and small capitalization equities to potentially increase long-term potential?
Does your fixed income allocation have enough high-quality, short-term bonds to potentially dampen overall portfolio volatility?
Is your portfolio structured to minimize management and transaction costs?
Does your portfolio’s risk profile still reflect your current risk capacity and tolerance?

No matter if you’re working with a financial professional or attempting to manage your portfolio on your own, a thorough analysis should be a part of your long-term investment strategy. Through regular review, you’ll be better informed about where you are in relation to where you want to go. Give us a call if you’d like to review your portfolio, and let’s see if you’re heading in the right direction.

When Vacations Go Wrong: 5 Costly Travel Mistakes & How to Avoid Them

Mon, 13 Jan 2025 18:20:59 GMT

When Vacations Go Wrong: 5 Costly Travel Mistakes & How to Avoid Them

Angie Glass | Jun 16, 2023

How do you get ready for a trip?

What travel habits do you rely on to get around, stay safe, and still have fun?

Whether you’re going across town, across the country, or to the other side of the world, what you do before you take off — and what you know while you travel — can help you avoid some risky, wallet-draining mistakes.

It can take some of the stress out of traveling. That can mean getting more enjoyment out of every trip, even if things don’t go as planned.

To help you get the most out of any vacation, here are some common, costly mistakes travelers tend to make and simple tips for avoiding them.

5 Traveler Mistakes to Avoid on Any Trip

You can’t control everything when you travel. But you can control what you know, how you get ready to get away, and what you do while you’re vacationing.

And if you know these common travel mistakes, you’ll be much better prepared to get away and make it a truly great experience.

Travel Mistake #1: Bypassing travel insurance.

Traveling is risky, and anything from the weather to flight cancellations, lost bags, and illness can interfere with a smooth trip. Without travel insurance, you could be left covering the costs of any mishaps or losses out of pocket. That could mean shelling out hundreds to thousands of dollars (or more) if you suffer a medical emergency on vacation, for instance.

Keep in mind that travel insurance is available for single trips and 365-day coverage for more frequent travelers — and that travel insurance tends to be affordable and relatively low cost when compared with other coverages.

Tip: Get travel insurance when you’re booking your vacation plans. Be sure to ask about any exclusions so you’re fully aware of what your coverage does (and doesn’t) include and so you can get add-on coverage if needed.

Travel Mistake #2: Not anticipating flight delays.

Unfortunately, about 1 in 4 flights operated by the major airlines these days is delayed for some reason.1

That could cause you A LOT of headaches and hassle on your next trip if:

You have a connecting flight, and you didn’t schedule enough time between flights.
You didn’t get travel insurance, and your tickets are nonrefundable.
You need to arrive at some destination at a specific time, like for an event that day or the next.

If you’re caught up in flight delays and/or cancellations, you could find yourself stranded in a connecting city, footing the bill to stay next to the airport until you can fly out. Worse yet, you could miss out on some of the fun you had planned for the beginning of your journey!

Tip: If you’re flying, try to add a “buffer” day for your flight travels, ideally one day extra for flying out and another day for flying back, just in case something unexpected happens and your flight is canceled (or extremely delayed). Also, avoid scheduling connecting flights within an hour or so of previous flights. Try to give yourself enough time to make connections, especially if you have to travel across larger airports and/or if your first flight is delayed for any reason.

Travel Mistake #3: Failing to pack smart.

Smart packing doesn’t mean packing everything. It means:

Only bring what you really need: What items will be at your destination (like robes or hairdryers)? Will there be laundering services available (so you can wash clothing)? Are there any baggage weight limits you need to consider? Thinking about these issues ahead of time can help you cut out the extras and pack them wisely.
Accounting for the key factors: What’s the weather like where you’re going? What are you going to do while you’re away? How long are you going to stay? Will you need to bring electrical outlet adapters (if you’re traveling to Europe)? The answers to these questions can help you pack smarter too.

If you overpack, you could be charged extra fees for overweight bags if you’re flying. You could also end up being more miserable on the trip if:

You have to lug around all your heavy baggage by yourself.
You lose items because you can’t keep track of everything (because there’s just too much stuff!).
Your bags or personal items are stolen because a thief offered to “carry” a bag for you.
You end up getting hurt because your baggage is too heavy.

Tip: Don’t pack at the last minute. Try to pack at least a day or two in advance. Think about what you have to carry around and what help may or may not have with your baggage while you travel.

Travel Mistake #4: Taking zero precautions against theft.

Tourists can be easy marks for pickpockets, scammers, and other fraudsters. So, if you look out of place and you’re not on guard, you could be their next target. You could also be vulnerable to travel theft if:

You don’t know where you’re going.
You don’t carry your money carefully or securely.
You’re wearing tons of jewelry, designer duds, or super flashy gear.

Tip: Keep a low profile when you’re traveling. Avoid carrying around a lot of cash at any given time. And stay alert to your surroundings, especially in known tourist areas which can be hotspots for thieves.

Travel Mistake #5: Paying for rental car insurance.

If you’re renting a vehicle at any point on your trip, you could be covered through your own auto insurance provider already — and even if you aren’t, buying rental car insurance through the rental car company is usually the most expensive option available.

Tip: Check your auto insurance coverage before your trip to see if it covers you in rental cars. If it doesn’t, shop around for rental coverage before you travel. Avoid getting this coverage through rental car companies whenever possible.

Better Plans & More Knowledge Can Help You Avoid Mistakes in Travel & Finance

With travel mistakes and their consequences, the more you know, the better. After all, you can’t manage risks you’re not aware of, and you can’t make the best choices if you can’t see the entire picture. Plus, the risks and uncertainties that can pop up with travel can change — and visiting one place may not present the same risks as vacationing in another.

That’s where your knowledge can help, regardless of whether you’re planning travel or focusing on your financial life. So can a trusted partner who can share insight and advice. So, if you’re facing uncertainty, risks, or questions about any aspect of finance, remember you don’t have to figure it out by yourself. You can turn to a financial professional for answers, support, and guidance.

Sources:

1. https://www.travelandleisure.com/most-delayed-airlines-2021-2022-6814429

Don’t Let These Costly Retirement Mistakes Drain Your Nest Egg

Mon, 13 Jan 2025 18:02:55 GMT

Don’t Let These Costly Retirement Mistakes Drain Your Nest Egg

Jen Milam | Nov 16, 2023

Retirement can feel like a finish line after decades of working — but you may not be able to cross that finish line or really enjoy the retirement you had imagined if you get tripped up along the way.

In fact, the retirement of your dreams could disappear before your eyes with just a few missteps and oversights.

Unfortunately, that happens more than most of us realize. Just under half of the folks who are going to stop working within the next 30 or so years are expected to run out of money in retirement.1

That paints a grim picture, but it’s not all doom and gloom.

If you know what mistakes tend to drain retirement savings, you can take caution, make more informed decisions, and stay on track to fund your dream retirement.

Top 10 Retirement Savings Mistakes

Any of us can get tripped up by these common retirement mistakes if we’re not careful and if we don’t really understand the impacts of our actions (or inaction).

Here’s what you need to know to protect your nest egg and minimize the risks of running out of money when you retire.

1. Waiting to save for retirement.

It’s never too early to save for retirement. Putting off retirement savings until later in life can mean losing out on the ability to take full advantage of compound interest, meaning the ability to make interest on the interest you’ve earned.

The earlier folks start saving for retirement, the better. That’s true even if you can’t contribute a lot in those early years of your career. Every little bit helps, especially if you can start building retirement savings early.

Adopting an all-or-nothing mindset toward retirement, or delaying your savings until your 40s or 50s, can significantly hinder your financial growth. As a result, you may find yourself with fewer resources when it's time to retire.

2. Not having a detailed retirement plan.

Details refer to specific numbers that outline your financial needs in retirement. These should account for factors such as your retirement location, planned activities after you stop working, and your anticipated lifestyle.

With this type of detailed plan, you should also get a clearer understanding of specifics, like:

How much longer do you need to work before retiring
Whether you want or need to work part-time in retirement
Your retirement living expenses

Without a plan in place, it’s much more difficult to:

Consistently invest enough in retirement savings.
Forget about key parts of your financial life in retirement.
Get the math wrong and fail to save enough money to live comfortably in retirement.

3. Failing to consider future needs.

What will your future medical care look like and cost? At what point would you need live-in care or long-term care (LTC) facilities?

You may not know the answers or numbers off the top of your head, and that’s OK. There are several online tools available to help you estimate medical costs and LTC expenses. A professional can help too.

In general, however, it’s important to know that:

Most folks who are 65 will need some type of LTC as they age.2
LTC costs can be expensive, and they aren’t necessarily covered by Medicare.2
Medical and LTC bills do cause some folks to run out of money in retirement.2
Budgeting for medical bills and LTC costs in retirement is merely one side of the financial “coin” here. The other is to consider powers of attorney — who would you want to make financial (and healthcare) decisions on your behalf if you couldn’t later?

Considering these issues early on can give you more power and flexibility to plan for your later-in-life needs. That can provide priceless peace of mind both before and during retirement.

4. Miscalculating Social Security.

How much can you expect from Social Security, and when can you start drawing that? Will those funds be enough to support your life in retirement, or will you need other income streams?

If you’re eligible for Social Security benefits, run the numbers before you rely on them. Many folks can’t live on Social Security benefits alone — and others won’t be able to rely on these benefits at all.

So, take a closer look at what you could actually draw from Social Security and how that would fit into your retirement income. Making assumptions here can be a huge financial mistake that could send retirees back into the workforce.

5. Failing to consider taxes and inflation.

What tax bracket will you be in when you retire? Many folks assume they’re going to be in a lower tax bracket at retirement, only to find out later that:

They’re wrong.
They’re in a higher tax bracket than expected in retirement.
They didn’t budget enough for taxes as retirees.

Similarly, inflation can bring a lot of unwelcome surprises and put unexpected strains on your retirement income, leaving you with less purchasing power than you’d anticipated, if you haven’t factored it into your plans.

So, don’t overlook taxes and inflation when you’re considering what you need to retire and how that amount could be thinned out later.

6. Investing less and less as you get closer and closer to retirement.

If retirement is around the corner, don’t automatically reduce your contributions. Run the numbers again to make sure everything’s on track. Don’t cut your retirement contributions based on assumptions alone.

7. Bringing too much debt into retirement.

Ideally, you’d retire with as little debt as possible. Taking excessive debt with you into retirement can burden you with a lot of financial obligations when you’re no longer working (and you’re on a fixed income). That could drain most or all of your retirement income, leaving little for the fun stuff. Instead, try to pay off as much debt as you can before you retire. That’ll free up more of your income for living expenses and whatever you want to do with your time.

8. Failing to maximize retirement contributions.

Employer matches and similar contributions are like free money. If you don’t take advantage of them, you’re effectively leaving them on the table. So, don’t do that; instead, leverage these “matching” offers you get from employers, financial institutions, or others. Invest what it takes to get the match and avoid leaving free money on the table whenever possible.

9. Borrowing from retirement savings.

Cashing out part of your retirement savings can come with hefty costs and steep penalties. While there may be a few very good reasons to take on these costs, like in the event of an emergency, it’s generally not a great idea to withdraw retirement funds early if you have other resources.

10. Failing to check in.

Life changes, and that can affect our retirement plans and objectives. If we truly want to keep our retirement goals within reach, it’s prudent to re-evaluate them from time to time. That’s usually easier to do with a financial professional.

How to Live (More) Comfortably in Retirement

Retirement can be deeply rewarding — and maybe even a little bit better — when we look out for the landmines and we know how to avoid them. Whether you’re just getting started with retirement planning or it’s time to revisit the numbers, the truth is that it’s complicated and we don’t have to do it alone.

With a little knowledge, some perspective, and the right guidance, we can stay on track with our retirement savings and give ourselves better footing to truly enjoy retired life.

Sources:

1. https://www.ebri.org/content/retirement-savings-shortfalls-evidence-from-ebri-s-2019-retirement-security-projection-model

2. https://www.moneytalksnews.com/slideshows/what-happens-if-i-really-do-run-out-of-money-in-retirement/