It's here! Summer that is. What a great time to get out there and spent time with the family.
Did you know that according to an eZonomics online poll summer is the season in which Americans spend the most money. Winter is a close second due to the Thanksgiving and Christmas holidays.
No worries though!
I am here to arm you with a 5-Point Summer Financial Checklist that is guaranteed to help you through this expensive season.
1. Examine your budget
One of the easiest ways to save money during the summer is to revisit your budget, assuming you have one. Now I know that no one, except for weird people like me, like budgets but if you don't control where your money goes, it will control you.
So the first place to start is with your budget. If you don't have one there is no easier place to start than with your client website which allows you to set one up almost effortlessly. If you have one, it's time to dust it off.
Once you have your budget, here are the places to focus:
2. Look at Your retirement plan contributions
Have you been putting money aside each month for retirement? While saving any amount is better than saving nothing at all, now's the time to see if you can up those contributions.
Even a small increase can go a long way toward helping you meet your retirement goals. Imagine you're currently allocating $200 a month to your 401(k) and your present balance is $5,000. Assuming your investments generate an average annual return of 8% (which is feasible with a stock-heavy portfolio), after 30 years, you'll have an ending balance of $322,000, which is not bad at all.
But watch what happens when you increase that monthly contribution to $250. All other things being equal, that extra $50 a month will help you grow your balance to $390,000 -- a $68,000 difference.
3. Check up on your investments
Summer is a great time to have a mid-year review. This bull market is not getting any younger and maybe it's time to adjust your asset allocation to account for the added risk that cycle ends can bring.
Have there been any changes in your goals, family or circumstances? These changes should be reflected in your investment allocation so that you can hopefully meet these new goals or circumstances.
4. Adjust your tax withholding or estimated taxes if necessary
Summer is a great time to review where you are versus where you expected to be. If your income is higher or lower than expected, now might be a great time to adjust your salary or wage withholding or, if applicable, your quarterly estimated tax payment amount.
Wouldn't you agree that extra money could come in handy now vs. filing for a refund next year?
If you are pay too much, and you're essentially loaning the government a portion of your hard-earned money for free. If you are paying to little, you may find it hard to come up with the funds later in the year to pay the taxman what you owe. It is a lot easier to pay small increases over the balance of the year than a larger lump sum come January or April.
5. Consider an insurance review
I know that no one likes insurance, but it does deliver peace of mind. However, many times insurance policy premium increases are automatic and over time they become expensive relative to what a new provider might charge for the same policy.
A classic example is auto insurance. Every few years, you have to shop it!
When you do you will find out that the market is so competitive that you are bound to save money. Money that can help pay for that most expensive time of the year, which is why we are doing this in the first place.
Bundling auto, home and flood can also many times save you money.
So now it's up to you. I hope this brief 5-Point Summer Financial Checklist puts more money in your pocket in what is otherwise the most expensive time of the year!
Let us know your thoughts in the comments below!
There are a lot of misconceptions about insurance. Some people feel naked without it. Some would rather have a root canal than think about it. However, everyone I think would agree that in today's society it is a necessary tool in the financial tool kit.
This month, I would like to present an interview I did with Corey Konsulis, Personal Risk Advisor for USI Insurance Services on the misconceptions many have about insurance.
Corey, tell me a little bit about your background.
I grew up in Buffalo, New York and moved to Florida just as I was finishing up High School. I stayed here through College, met my wife, and started my career in the insurance industry. For the past 4 years, I worked with a small independent firm based out of Tampa. I recently made the transition to the brokerage side of the business and work primarily with highly successful families, individuals and family offices. I provide risk management and insurance programs to ensure that their most valuable assets are protected, peace of mind secured, and potential exposures mitigated.
What do you enjoy most about your work within the insurance industry?
I’m an educator at heart and the most rewarding aspect of what I do is getting to educate clients and professionals about the exposures that are affecting them and their families. I also enjoy solving problems and the complexity that exists within the family office space is rewarding as well. We can get very creative in our programs for family offices and no two are alike. That’s energizing for me!
What would you say are some common misconceptions about insurance programs in general?
I hear this all the time, “I’m not in a flood zone so I don’t need flood insurance.” That is wildly inaccurate. If you live in Florida, you have flood exposure. Although the bank might tell you that you don’t “need” flood insurance, the reality is, all of Florida is a big swamp and with the rise of urban sprawl, the water must go somewhere.
I met with a client last summer, who identified that they didn’t have flood insurance on their primary residence. We placed a policy (very inexpensive), and during Hurricane Irma they experienced severe flood damage. Because we had taken the steps to secure the proper coverage – even though they were told they didn’t need it – they were saved from a $150,000 out of pocket loss.
You know Corey, this is very interesting. I myself just visited with a new client in Louisiana who is still recovering from what they call "a thousand year" flood. They spent twelve months out of their home and have totally rebuilt everything in their home from the roof line down. Fortunately, they had flood insurance. Many others in their own family and their neighborhood were not so lucky and are instead trying to reestablish their lives without any kind of financial help. It is sad to see!
What is another misconception you see frequently?
Another I hear constantly is, “My homeowners policy will cover my valuable jewelry.” Most homeowners policies provide $2,500 in coverage for jewelry, does not cover mysterious disappearance, and is subject to a deductible.
Most households need a separate valuable articles policy to ensure they have worldwide coverage for their important and valuable pieces. We have highly creative ways of structuring these programs to ensure robust and comprehensive protection.
What would you say are some common misconceptions for family offices or the ultra-wealthy?
The list is extensive for these folks. Many assume their excess liability program extends to Board positions they hold for profit or non-profit companies. Unless specifically structured to extend coverage for this exposure, there is no coverage built in to a standard excess liability program.
Many also wrongly assume that their homeowners policy will provide coverage for domestic staff on the property in the event an employee is injured or if a lawsuit is filed against them (homeowner). Separate extensions are required for this sort of exposure and programs like Employee Practices Liability and Workers Compensation are highly recommended. Without these, there is no coverage.
One of the biggest misconceptions has to do with communication. Many assume their Certified Public Accountant, Estate Planning Attorney, Financial Adviser, and Insurance Broker are all communicating with each other. That is very rarely the case. Due to the lack of strategic planning among these professionals, many clients remain exposed and unaware they are at risk.
I’m shocked by this and always push for a consultative approach to risk management that includes all of the professionals associated with the client to ensure that we have left no stone unturned. We’re only as good as the people we surround ourselves with.
Is there any advice you would leave my readers with?
Be proactive rather than reactive when it comes to your risk management and insurance program. Don’t wait for something tragic to happen to find out that your insurance program was not structured properly. Vet your Insurance Broker and work with someone who has experience with clients like yourself and a team of people to be able to provide robust and ongoing support over the years.
Our lives are never static and the same should be said about our insurance and risk management programs. They need to grow and adapt just as we do. Is your current program providing this? Does your current broker have conversations like this with you? Maybe it’s time for a change.
Thanks for your time and thoughts Corey.
The best way to work with Corey is through your advisor, like InTrust Advisors, but if you would like to contact him directly, here is how:
So now it's your turn!
Do you have a story of an insurance misconception that either saved your bacon or cost you money?
We would love to hear it! Please feel free to comment below.
The recent NBA playoff series between the Indiana Pacers and the Cleveland Cavaliers may be been a metaphor for the current stock market played out in a different arena.
The incumbent and reigning Eastern Conference champion Cleveland Cavaliers faced off against the rising, young and inexperienced Pacers in a series few expected to go seven games.
The best of seven series was all tied at three games a piece as it entered a pivotal game seven at Cleveland’s Quicken Loans arena.
Could Cleveland’s star player and certain Hall of Famer, Lebron James, do it again?
Could he hoist the team on his shoulders and find a way to win against a more talented team from top to bottom?
As has been the case for so many seasons, Lebron James saved his best for last!
He scored 45 points on Sunday night on 16-of-25 shooting from the field. This was his third 40-point plus game of the series.
He single handedly carried his team to a game seven win, 105-100 over the upstart Pacers.
James finished the series with a 34.4 points per game average on 55.3% shooting from the field, both well above his season averages.
Asked after the game to describe how he felt, he simply said “I am burnt right now……I’m tired and want to go home.”
So what does this story have to do with the stock markets?
Quite a lot actually!
Lebron James averaged 34.4 points per game during this seven game series. This is a full 6.9 points per game over his season average of 27.5 points per game.
You don’t think that game seven was the only game Lebron James went home tired do you? He carried his team in this series. No one on his team scored more than 20 points in any one game.
Much like Lebron is tired following his game seven win. I believe the markets are tired as out outlined in our recent quarterly client letter.
However much like Lebron James game seven heroics, I believe this market has "One More Run" left in the tank.
Let me tell you why.
First, more Americans expect stocks to fall over the next 12 months than rise, according to the Conference Board’s Consumer Confidence survey for April. This is the first time this has happened since the election.
I know I personally have heard from more nervous clients in the past few weeks than at any time since the Great Recession.
So let me tell you why this is a good thing. It simply because Bull Markets usually do not end with a fearful public, they end with mass euphoria and a public in denial.
I know its contrarian, but it’s true.
You can see in the chart below that consumer sentiment has sure shifted to the negative side.
Second, the long-term trend is still up.
Here is a chart of the S&P 500 index and there is obviously a lot here, but let me try to unpack this for you.
The RSI indicator (top chart pane) is a momentum indicator. Notice how we are still above the blue support line for this indicator at around 68. It has also peeked below the 70 line in the past and recovered (see the 2013-2015 period). So it's possible that this is what is happening this time.
Also the price chart (middle pane) has formed a doji candle. This is typically a reversal candle. In this case, the sign of a possible upward reversal.
You can see it even more clearly on the far right of the chart in the zoom thumbnail. It looks like an old style transistor in a electronic device.
If I throw in the charts of the Nasdaq Composite and the Dow Jones Industrial Average (below), you would see all charts are similar with the Nasdaq being the strongest with its RSI still greater than 70 (another positive sign).
Finally, when we move from monthly charts (very long-term) to daily charts (shorter term),we see that the S&P 500 (and Dow Jones Industrial Average – not pictured) has formed a consolidation pattern (the blue dotted lines).
This pattern called a symmetrical triangle usually is a continuation pattern of the previous market direction.
The trend prior to this consolidation pattern was up as you can see from the moving averages (orange, pink and green) on the left of the chart. It would stand to reason then that the odds favor an upside break above this consolidation pattern based on historical price patterns.
We can also see in the lower pane that the volume moving averages are starting to trend upward, which I also believe is a positive trend.
If we stay above the thick blue/purple trend line at 2625, I believe the markets will eventually break to the upside. Even if the markets move lower than 2625, I believe there is a good chance it will just retest the lower band of the symmetrical triangle and then bounce higher.
So let’s say I am right, what does this say for the markets?
I believe just like Lebron’s James heroic efforts to push his team to a game seven win, this market will do what it needs to break out again, just maybe, for one last move higher.
Corrections are healthy and normal. We were overdue for a correction and I believe that is all this is at present.
Bull markets don’t usually end with a shy public as we see in the confidence numbers, above. They usually end with a euphoric public taking every share available from an all too willing seller, Wall Street.
You know the story from here. The public is left to hold the bag, while Wall Street counts its profits.
It is a sad story! One that has been repeated throughout market history and one that I believe will repeat again before this market peaks.
One last thought! Who is watching your investment assets? Does that person have the tools and training to make sure you are not part of the usual carnage brought upon the unsuspecting public by a sophisticated and experienced Wall Street.
If not, maybe it’s time we talk? Schedule your free second opinion now.