Emergency Fund Part 2

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Why is it important to have an emergency fund?

In our last video, we discussed how you can start or improve your savings habits to build an emergency fund.  Today we will talk about why it’s important.  An Emergency fund can protect  your most important assets, like your home or your car.  It can help reduce stress when you are facing difficult times.  Having a few months of expenses saved also protects your future.  And, an emergency fund will save you money.

Did You Miss Part 1?

In Part 1 we offered tips to help you start or improve your savings habits.  Click the button below to watch.

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Improve the Return on Your Emergency Fund

Would you like to improve the return on your cash type savings accounts.  These three online banks offer an easy link to your local bank account and can improve the interest you receive on those funds.   All of them are FDIC insured.

Synchrony Bank

Ally Bank

Capital One

Note:  We have expereince with both CapitalOne and Synchrony bank.  We do not receive any compensation for providing links.

What’s on your mind?

We’d love to hear from you and we would also love to provide content relevant to you and your situation.  If you have a question or a topic you would like covered in a future video, let us know.  We would love to address it in a future video.  Also we are always open to suggestions about how we can improve the content we create.  Your comments are always welcome.

Emergency Fund – Part 1: How to Get Started

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Did you hear about the Government Shutdown?  Some 800,000 government workers didn’t get paid for a little over a month.  Have you stopped to consider how you would pay your bills if you didn’t get paid for a month?  What about 3 months?  Do you have an emergency fund?  (You probably should).

The first part of this video series offers a few tips on how you can start or improve your emergency fund.

Bonus Tips

Emergency Fund Bonus Tip 1 – Consider reducing your 401(k) contributions temporarily

To bolster your short-term savings, you may want to consider reducing your contributions to your 401(k) temporarily.  This can free up cash flow to add to your emergency fund.  Once  you reach a comfortable level, resume the deferrals.  One note of caution:  Pay attention to the company match, it’s free money.  Don’t reduce your contributions to a level where  you won’t maximize the employer matching funds.

Emergency Fund Bonus Tip 2 – Use Your Tax Refund.

Do you normally get a large tax refund?  Consider using part or all of it to boost your short term cash reserves.  Whether you expect it or not, it can be an easy way to help you get to that goal.

Emergency Fund Bonus Tip 3 – Take Advantage of Direct Deposit

Is your paycheck deposited directly into your bank?  Consider splitting the deposit to two accounts, one your normal check account, and the other your cash reserve fund.  Sometimes it is easier to save it, if it never reaches your spending account.

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Online Savings Accounts

Some of the online banks make it easy for you to save and reward you for doing so.  Most of them have no minimum balances, and all three of them pay you interest.  They have an easy to use online interface.  And you can transfer money back and forth to your local checking account.  We have experience using both Capital One and Synchrony Bank (and neither of them pay us anything to talk about them.)  Three of the more popular ones are linked below.

Capital One

Synchrony Bank

Ally Bank

Have a Question?

If you have a question we can answer on a future video, please fill out the form below.

Follow us on Social Media…

Yes we are up on all of these new things like Facebook, Twitter, and YouTube.  Follow us, like us, subscribe….It is another way to stay in touch.

What Happens Next?

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Last year was the first negative year (calendar year at least) in the US Stock market since 2008.  Are we in for a rebound or are we in for continued struggles? Most people are wondering what happens next.  We’ll look at some historical data to see if it offers any guidance about what we should expect in 2019.

 

Watch this and other videos on our YouTube Channel.

If you would like an audio only format, you can listen below.  Also visit our podcast page here.

Since 1950, the stock market has decreased 14 times.  On average, one out of every four years results in a negative result.

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What Happens Next?

As you can see from the image above, the S&P 500 has generated back-to-back negative years just 3 times since 1950.  The first happened in 1973 and 1974.  And more recently, it happened in 2001, 2002, and 2003.  If you go back to the mid 1920’s, it happened in 1929-1932 and then from 1939-1941.  In other words, negative returns in consecutive years are not common.

What happens next: 1 year later—

In the year following the last 14 calendar year declines since 1950:

The market went up 11 times.  The average gain was 17%

What happens next: 3 years later—

Three years after the last 14 declines, the market was positive 13 times, with an average annual return of 13.6%

What happens next: 5 years later—

Five years after the last 14 declines, the market was positive 13 times, with an average annual return of 11.3%

We Would Love To Hear From You

Do you have a question you would like to have answered on a future episode?  Enter the information in the form to the right.  We will try to address it in an upcoming video.

Ask A Question

Did You Miss This Post?

A couple of weeks ago, we updated our favorite performance chart, the asset allocation quilt.  Click on the button below to see more.

Updating the Asset Allocation Quilt for 2018

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Some years stocks go up.  And every now and then stocks go down.  And  one of the best ways we have found to help visualize how various types of investments behave is by using the asset allocation quilt.  Each major asset class is assigned a color, and each year, the performance is ranked best to worst.  More importantly, the compounded long-term returns are also shown ranked best to worst.

In today’s video we’ll recap the investment world, and share our observations of our favorite performance chart, the Asset Allocation Quilt.

To watch this on our YouTube Channel click here.  (You can also see our past videos and some other planning related content).

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Download a Copy of This Year’s Quilt

To download a copy of the chart, please click the button below.

What do you see?

Here are some of our observations:

One of our biggest take-away’s is how the more volatile asset classes generate more long-term return than their much calmer counterparts.  The only asset class to not lose money in the past 16 years? Short-Term Bonds.  The lowest long-term performance? Also Short-term Bonds.When you review your accounts and see declining account values, we lose sight of the longer-term facts.

Most client portfolios own most of these asset classes.  We are believers in both Small-Cap and Mid-Cap stocks and use them as part of the stock holdings in most accounts.  And years like 2018, those smaller companies will drag down overall returns.

2018 was one of those rare years, when nothing worked well.  Only two of the eleven asset classes posted a very slight increase.  Years like this frustrate us.

Gold is always an interesting topic.  People ask us about using gold as a defensive.  It does tend to “zig” when stocks “zag.”  But, many people fail to understand it has also been extremely volatile over time.

The biggest surprise: Real Estate.  Over longer periods of time real estate has been a strong performer.  It does have some volatility.

We’d be interested to hear your observations.

 

We Would Love To Hear From You

Do you have a question you would like to have answered on a future episode?  Enter the information in the form.  We will try to address it in an upcoming video.

Ask A Question

Checking Our Crystal Ball

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It is the time of year when we financial advisors look into our crystal ball and try to see what is going to happen next year.  If the big Investment Banks and brokerage firms can do it, why can’t we?

Click on the video to watch.

As luck would have it, predicting the future is really hard.  Huge firms with smart people and tremendous resources don’t fair much better than consulting a horoscope or the farmers almanac.

(Click images to enlarge)

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So many things happen during the year which cannot be seen, even if you were able to use a crystal ball.  Nobody knew—in advance—2017 would be as calm and as good as it was.  Likewise, nobody foresaw the extreme down-up-down craziness experienced this year.

But it hasn’t stopped any of these large firms from taking a guess at what might happen in 2019 either.

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Would You Like Your Own Crystal Ball?

Here is the link to the one we purchased.  Fair warning, it shows finger prints really badly.  And if you are hoping you will be able to see the future?  Well I hope it works better for you than it did for us.

We Would Love To Hear From You

Do you have a question you would like to have answered on a future episode?  Enter the information in the form to the right.  We will try to address it in an upcoming video.

Ask A Question

Visit Our Retirement Learning Center

Are you thinking about retirement?  please stop by our retirement learning center for helpful information about Social Security and other general retirement planning topics.

Follow us on Social Media…

Yes we are up on all of these new things like Facebook, Twitter, and YouTube.  Follow us, like us, subscribe….It is another way to stay in touch.

Scoreboard Watching: December 2018

Scoreboard

The Dow Jones Industrial Average acts as a scoreboard for investors.  It provides an easy way for investors to tell whether the market has had a good or bad day.  But from time to time, investors need to recalibrate what those big moves mean.  After all, a 100 point move today doesn’t mean what it used to.

The Dow Jones Industrial Average is an unmanaged index.  An investment cannot be made directly an index.  Returns are not guaranteed. Past performance is not indicative of future results.

Recalibrating the 25  Worst Days For the Dow

If we were to state the 25 worst days for the Dow Jones Industrial Average, this is how they would look.  The 25th worst day, would equate to a drop of about 1,700 points.  The worst day ever, would be a drop of over 5,600 points.

Scoreboard

Yes you saw what you thought you saw….

There is a picture in the video of the scoreboard from the end of the Ohio State victory over their rival on November 24.  We were there to witness such a momentous occasion.  But just in case, here is the photo again.

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Visit our YouTube Channel.

All of the videos we have created can be found on our Youtube channel.  Click on the button for more.

Visit The Retirement Learning Center

If you—or someone you know—is planning to retire soon, visit our retirement learning center.  It has plenty of video content to help you make informed decisions about your retirement.

Subscribe to our mailing list

5 Good Minutes: 2019 Updates

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2019 Updates: Cost of Living Adjustments, Increased Contribution Limits and More

There are several important changes which can impact your retirement.  Today’s episode of 5 Good Minutes will focus on the 2019 updates to:

  • Social Security Benefits
  • Medicare Part B Premiums
  • IRA Contribution Limits
  • Retirement Plan Contribution Limtis
  • Health Savings Account Contribution Limits

Get A Copy of Your Social Security Benefits Esitmate

If you haven’t received a copy of your Social Security Benefits Estimate and Earnings record, you can obtain a copy by clicking on the button below.  It will tell you your projected benefit at Normal Retirement Age, your benefit at age 62 and at age 70.  The report also shows your earnings record over time.

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Visit the Retirement Learning Center

Take a moment to visit our retirement learning center.  There is plenty of content about Social Security, Investing in retirement, and planning for retirement.

3rd Quarter Investment Market Update

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The third quarter was a mixed bag for the investment markets.  In this video we provide an update of how the investment markets did in the third quarter.

Below is a “mini” version of our popular asset allocation quilt which details the results for various asset classes for the first three quarters, and year to date.

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Please be sure to visit our YouTube Channel for our other videos.

5 Good Minutes: Potshots

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Potshots: Marijauna Stocks – the next version of dot coms?

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In the late 1990’s the dot com stocks made headlines due to their rapid gains.  More recently it was the crypto-currency led by Bitcoin.  Now marijuana stocks are taking center stage as the next hot investment topic.  In today’s episode of five good minutes we’ll take our potshots at the latest headline stealing topic.

Legalized marijuana has created a new and untapped industry.  Pot sales are legal in some form in 30 states. And in October, Canadians will be able to buy cannabis for recreational use.  Right now it is the new shiny thing in the investment world, but in many ways, these companies are much like the dot com stocks of the early 1990’s.

In the next five minutes, we’ll talk about the latest fad.

For more about investing in retirement, including videos about risk, please visit our retirement learning center.

August Investment Market Update

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In this month’s update, we recap how the stock and bond markets performed.  We also discuss the end of the latest stock market correction.

Click on the video to watch.

 

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It’s been a good year, so far…

The US Stock market has had a good year so far.  And, most broad segments of the stock market have participated in the increases.

Fist the large company stocks as measured by the S&P 500…

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Mid cap stocks have also done well, but their gains have been more modest.

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Small Cap stocks have been the big winners thus far.

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A Different Story for Bonds

Interest rates rose early in the year.  And when interest rates increase, bond prices decrease.  The broader bond market had a good month, but it wasn’t enough to erase the declines from earlier in the year.

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Data Source: Standard an Poors.  The S&P 500, S&P MidCap 400, S&P Smallcap 600, and the S&P Aggregate bond indexes are unmanaged indexes used to represent the performance of certain segments of the investment markets. An investment cannot be made directly in an index.  Past performance does not predict future results, and the rates of return shown are not guaranteed.  Investing involves risks, including the potential loss of principal.  Please consider all risks before making an investment.  Your actual investment results could be better or worse than what is shown.

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