The U.S. and China Battle for the Top Spot

As we await results from the U.S. and China trade negotiations, it's important to remember the contributions each have to today's  world economy.  The U.S. is still far bigger, but the China is growing more quickly.  This piece gives more information, but I'd like to point out something towards the end of it.  

Because Apple is such a widely held stock, your allocation to that stock or funds that perhaps hold a lot of the company could have had a larger weight, or influence, on your portfolio performance.  This is why diversification is not only important, but knowing what you own and why you own it (something Peter Lynch of Fidelity used to say).  Essentially, if you aren't getting the results you want, you may need to look at what you own.

If You Were Furloughed, Do You Have Cash?

The current government shutdown is no secret, nor is the difficulties those furloughed are going through financially.  This should be a lesson to the rest of us, though.  Ask yourself this:  What would happen to me if I lost my job and didn't have an income for a period of time?  This, of course, is where an emergency fund comes in and is extremely important.  This piece provides some good, basic advice on an emergency fund, but I'd like to add my own twist.

For one, the basic and classic amounts of 3-6 months or up to a year of living expenses is a good starting place.  But I also think individual comfort and mindset should have a place in determining that amount as well.  For instance, if you have an uneven income, you may feel more comfortable having a larger emergency fund.  The opposite could be true if you have a relatively safe job with a history of not being laid off or slow periods.

Second, I've read online advice that says to put your emergency fund into a low cost index fund so that it grows and keeps up with inflation over time.  I can't stress how terrible I think this idea is.  For one, no one knows what the market will do at any particular time, we just know that it goes through booms and busts and tends to rise over long periods of time.  Why would you want your emergency fund in a vehicle that could drop drastically in value right when you possibly need it?  It's a terrible idea.  Two, although cash currently pays next to nothing, in a pinch, cash is king.  Invested, you need to sell, wait for settlement of the sale, then wait for the funds to hit your bank bank account after transfer.  If the cash is already in a savings account, a simply transfer normally suffices.  It's really as simple as that.

I think a better solution is to adjust your emergency fund over time as your situation changes.  And guess what?  A great time to do this is when your evaluating your plan and making any necessary changes.  It's funny how things can fit together, right?

Advice from Bogle

Investors lost possibly their biggest advocate last week with the death of John Bogle.  I encourage everyone to read the books he's written or what interviews he's given.  He certainly had a knack for making complex issues easier to understand and was right on the money when it came to common sense.  Here's a short piece with some of his advice.  It's simple, which is usually the best kind.

2018 Recap

Looking back at 2018, a lot happened.  The markets set record highs then had the worst performance since the Great Recession.  Oil rallied then tanked.  International markets had a tough time.  Much more occurred, but I'll let this flyer do the talking on that.

Things happen every year, good and bad.  With your investments, it pays to stay diversified and keep your goals in mind.

I'm here to help.  Contact me today.

Beware Scams at Tax Time

Since tax season is upon us, I thought I'd share this flyer with great tips to protect yourself from scams and identity theft.  Although the IRS will normally send a letter to first establish a communication, this isn't always the case.  If some claims to be from the IRS, always ask for I.D.

I believe it's always best to be proactive when protecting yourself and your identity, and that starts with knowing what to look out for.  It's much easier and less costly than finding out after the fact.

New Year's Financial Checklist

My last post talked about making your money your New Year's Resolution.  In helping you do so, here's a checklist with more ideas to keep an eye on your money.  For example, whether you plan to borrow money or not it's a good idea to keep an eye on your credit score.  You never know, there could be an incorrect record tarnishing your score that can make borrowing more costly and complicated.

Happy New Year!

My Thoughts on Market Volatility

Are you worried about market volatility?  Are you worried about the possibility of a recession?  If so, you aren't alone.  We've seen extraordinarily good markets over the past several years, so it can be unsettling to see wild markets return.  But, it is the nature of the capital markets and the business cycle.  So what can you do to calm your fears?

First, I'd suggest to create a plan if you don't already have one.  This includes not only what your future goals and expectations are, but also planning your investments accordingly.  If you already have a plan, great.  Revisit that plan and ensure nothing should change.  

Second, as a general rule, if you don't need money for a specific purpose over the next 1-3 years, then I wouldn't worry too much about the market.  This depends of course on your future needs and how you are invested (you could be taking far too much risk).  However, if do need money for something in the next 1-3 years, and all your money is tied up in the market, you should probably consider freeing up some cash as to not risk losing it.  No one knows what the market will do over any period of time, so why risk the cash if you know you will need it for some expense in the near-term?

Third, seek help if you're just not sure.  There is a lot of information and considerations to make when developing a plan and how to properly invest your money to reach your goals.  This includes keeping enough cash for known near-term expenses and an emergency fund for things you don't know will hit until they do.  

I'm here to help you figure it out.  It just takes a phone call or email.  Why wait?

Retirement Mistakes to Fix Before the Holidays

What do you need to do to plan for retirement?  Do you know how much you'll need, or what age you'd like to retire?  Do you have your beneficiaries set up correctly?  These questions and many more are great to ask ourselves while we wrap things up for the year.  It can seem inconvenient due to the holidays, but it's incredibly important to do so as well.  Even if you think you have these things taken care of, a review only helps.  You may go into a review thinking everything is ok, then discover something that does need updated or changed.  

See this guide for more details.  Don't wait until it's too late.  I'm here to help.

Could A Recession Be Just Around the Corner

We've heard a lot of talk about a possible recession around the corner.  Could we really be close to one?  It's tough to tell, but this expansion has lasted for quite a while, and the news that has had the market jittery could be the start of what tips us in that direction.  In my opinion, economists can forecast all they want, but we really won't know if we are in recession until we get two consecutive quarters of GDP contraction, which only tells us what has occurred in the past.

This link explains more about the events triggering the shaky market.  Because no one knows for sure, it pays to be diversified.  Contact me today for a free review of your portfolio.