Gratitude during the holiday season

Blog post #424

The Holidays can be different for each one of us. We might spend the holidays with our immediate family members, extended family or just with our spouses if your children are grown and have schedules of their own or live out of town.

You might bake cookies, decorate a tree, have dinner as a family, go to a religious service, buy gifts for loved ones, or help those in need.

Maybe you celebrate Hanukkah or Christmas and the traditions that accompany these holidays. You may not celebrate the holidays at all.

We often focus on buying presents, hosting our families for the holidays, or trying to please our family and friends. We often find ourselves stressed out during the holidays instead of just enjoying the time with our loved ones.

So, whether you take part in any of the above activities or not, let’s take time to be grateful, appreciative and acknowledge all the opportunities we have in our lives.

Let’s take the time to reflect on the moments both special and ordinary and be in the present with others.

Every Monday, we hold a weekly firm meeting. Over the past few months, we have started our firm meetings by having each WWM team member state something they are thankful for. I know not all members are comfortable sharing with everyone. It’s become a nice personal way to start our firm meetings and get to hear what each WWM team member is thankful for that week.

It has helped our firm grow. We may learn something new about a team member and appreciate the value each WWM team member contributes to the firm.

Just as we take the time to say what we are thankful for each week, we hope you set aside time for reflection and discover what you have gratitude for, at this time of year.

From all of us at WWM:

We appreciate EVERY client and the relationships we get to build with each one of you.

We hope you have a good holiday season and we wish you all the best for a healthy and happy 2020!

This week’s blog written by: Michelle Graham

Note: There will not be a blog post Friday, 12/27/2019.

Looking back and forward, Part 2

Blog post #423

As this decade draws to a close in a few weeks, we are providing a series of blog posts of our thoughts and reflections, lessons and guidance.

Last week we discussed how interest rates changed dramatically over the past decade, and in the opposite direction of what most people would have expected to occur in 2010, for the next 10 years.

This week, we will provide some of the traits, philosophies and attitudes that can help you to be more successful, as an investor and for your financial future.

Having a written investment plan. We feel that developing a written document with our clients, that discusses their long term asset allocation plan, as well as the potential of how such an allocation could perform during a significant market decline, is vital to your future success, as it helps you adhere to the plan during down markets.

To be a successful investor, you need to be patient. You need to have the psychological ability, with our assistance if needed, to ride out market declines, to be able to reap the rewards of positive bounce backs. Staying in the market during and after the significant declines of late 2018, and at other times in the past decade, are great examples of this. By staying in the markets in late 2018, this enabled the stock portion of your portfolio to grow during the positive markets of 2019.

Be willing to listen to others and get advice. Due to changes in financial markets, the economy, tax laws and the speed of change in general, we feel that using a financial advisor can help you reach your financial goals. Using an advisor that adheres to a fiduciary standard, as our firm does, so that the advisor’s interest is aligned with your financial interests is important. One aspect of an advisor that adheres to a fiduciary standard is we try to keep your costs minimal, by using very low cost institutional mutual funds. We cannot control many things, but costs are something we and you can control.

Having a consistent investment philosophy that you believe in and can adhere to over the long term, is vital. This philosophy should provide you with a solid chance for financial success. Rather than continuously changing approaches and underlying investment managers, sticking with a consistent, long term philosophy should provide you with confidence and peace of mind. An important aspect of our philosophy is the belief that, for most investors over the long-term, utilizing asset class mutual funds should outperform those who buy and sell individual stocks, as well as active money managers who try to guess which stocks and sectors will do the best in the future.

We believe that for the long term, being broadly and globally diversified is the proper strategy for your stock portfolio. We also believe that having a portfolio tilted towards small and value stocks, as well as including International stocks, should provide you better expected returns and a smoother ride over the long-term.


  • We may have the right long-term strategy, but this does not mean this will result in an optimal outcome every year or even for a number of years. You can have a good strategy, and still incur an outcome that is not as good as another strategy over certain time periods. But that does not mean you should change your strategy in a significant manner, unless you have evidence which supports your change, or that your current strategy is no longer valid.
  • To use a sports analogy, if you are going into the Super Bowl and could pick any quarterback, choosing Tom Brady may be the correct strategy. He may not win that one game, but your plan was valid. Over the longer term, he has proven to be a winner. Likewise, in investing, one could develop a sound strategy and recommend investing in a diversified set of asset classes (mutual funds).  If one of those asset class mutual funds underperforms other asset categories for a period of time, this does not mean the strategy was bad.  Patience is likely to prove that in the long term, continuing to hold a currently underperforming asset class to be rewarding in the future.  We just don’t know exactly when.

We think having a positive attitude helps you to be a more successful investor. You should believe in capitalism and that over the long-term, companies will succeed and grow their earnings.

Having realistic expectations of the financial markets is vital. You should know that stocks go down at least 20% in one of every 5 years, on average, since World War II. We want you to be prepared emotionally and financially for such downturns. At the same time, know that stocks go up far more years than they go down. When you are in retirement mode, you should plan to withdrawal 4-5% of your portfolio, which gives you a better chance of not running out of money during your lifetime and be able to maintain your standard of living.

We know that the financial markets and the world are continually changing, and we will change and adopt new strategies, investments and concepts, if they are valid, sound and we expect them to be beneficial to our clients. We are independent. We do not get compensated by mutual funds or other investment providers. We gather information from many sources, but we make our own decisions and recommendations.

We have used the same general investment philosophy since our inception in 2003. We still strongly believe in these major concepts and beliefs. Within that framework, however, we have not been static. We have made changes and modifications over time and will continue to do so, as we feel they should be made, as long as we expect them to be in our client’s best interest.

We cannot predict the future. We do not know what the next decade will bring. We do know that we have a set of philosophies and beliefs, as well as a team of professionals and industry relationships, that you can be confident in.

Talk to us.

Looking back and forward, Part 1

Blog post #422

It seems amazing, but in a little over 3 weeks, this decade ends and a new decade begins.

This is a good time to review, reflect and learn from what has occurred in the past, as well as share some insights about the future.

This is the first of a series of blog posts we plan to write reflecting on various aspects of the past decade and the future.

Ten years ago, the US and the rest of the world were just beginning to come out of “The Great Recession,” which was caused by the US housing bubble and led to the global financial crisis of 2008-09.

One of the major lingering impacts of the Great Recession has been that interest rates and inflation have been at historically low levels over the past decade.

You may think interest rates are low today, but let’s really put this into perspective.

Currently, the 10 year US Treasury Note is now yielding around 1.8%, and has fluctuated between 1.56% – under 2% during the last 3 months.

What do you think the yield was of the 10 year US Treasury Note ten years ago, during January 2010?

Think about this for a minute. The U.S. economy is doing pretty well today. While other parts of the world may not be doing as well, the world economy is certainly not going through anything like the global financial crisis that occurred in 2008-09.

So what do you think the 10 year US Treasury Note was yielding in January, 2010?

Incredibly, the yield 10 years ago much higher than it is today, almost twice as high. The 10 year yield was 3.665% in early January 2010, versus around 1.8% this week. ***

Similarly, mortgage rates were also higher in 2010 than they are now. Mortgage rates were above 5.25% in early 2010, and are now around 3.70%, for a 30 year fixed mortgage. *

While US and global economies have improved significantly over the past 10 years, inflation has been very low and interest rates have dropped. In many other counties, interest rates are actually negative.

What do we think are the causes and thoughts about the future?

Inflation and interest rates are closely correlated. If inflation was higher, or started to increase above 2%, then interest rates would be higher, or at least central banks around the world would raise interest rates to prevent inflation from increasing significantly.

This has not been an issue, as inflation has been so subdued over the past 10 years. One clear cause of this has been the impact of technological changes like fracking on the global oil and energy supply. In previous decades, such as 1973-74, the rise in oil prices caused high inflation and high interest rates. As we have written previously, the technological improvements in oil and natural gas production has put what appears to be a cap on oil price increases. Oil prices have traded in a range since 2015, which has been a key factor in low inflation.

We often say….you should focus on things that matter and things you can control, per the great sketch by Carl Richards. In this case, we cannot control the future of interest rates or inflation. For planning purposes, we assume that interest rates will remain around current levels going forward. Though we would not have assumed these current low interest rates ten years ago for now, there is nothing on the horizon to indicate much higher interest rates will be returning any time soon.


Our blog post dated March 17, 2010, Fed Actions: What Does it all Mean, still very much applies today. “As advisors managing fixed income portfolios, we do not make predictions about the direction of interest rates…to attempt to do that is nearly impossible, particularly over a long period of time. We would prefer to build a diversified portfolio of very high quality fixed income securities, of varying maturities, so that we will get the interest rate return of the market, and not risk losing money by betting on the direction interest rate moves.”

We know that is it very difficult to predict or guess the future direction of interest rates.

We are not going to play a loser’s game, or one that would be unnecessarily risky, by trying to place bets on the direction of interest rates with your fixed income allocation.

At the same time, we realize that the fixed income portion of your portfolio is not earning much, compared to certain time periods in the past. The rate of return on fixed income is low, in actual terms, as well as what is called the “real return,” which is the yield less the inflation rate. For example, if your fixed income is yielding 3.5% and inflation is 1.8%**, then the real return is 1.70%.

Unfortunately, due to this economic reality, to grow your assets net of inflation, you must take risk in stocks, as high quality fixed income securities are only earning 1-2% greater than the inflation rate. And this does not include income taxes on the earnings.

Though interest rates are low, we want to caution you to not increase your stock allocation unless you truly have the need, ability, willingness and time horizon to take on the extra risk that comes with owning more stocks. This is where talking with us, and planning, comes into play. In our role as your guide and advisor, we want to help you determine what is the appropriate balance of fixed income and stocks for your individual or family’s specific circumstances and goals.

There is still a vital role that your fixed income allocation plays, which is to provide downside protection when inevitable stock market declines occur. Owning fixed income mitigated losses in periods like the 4th quarter of 2018. While you may not earn much on your fixed income investments, the role of fixed income is still critical, to smooth out the ups and downs of stock markets.

We recommend that you factor in lower rates of return on fixed income, when you consider your financial future.

This means you may need to save more, as your fixed income earnings may be less.

It means you should generally not pay off a low interest rate mortgage early, as that is a significant “asset.” If your mortgage is higher than 4.5%, you should consider refinancing.

There are many implications to lower interest rates. Some are good and some are bad. We can help you to deal with this.

Please talk with us. We want to help you plan for your future.


*, December 4, 2019

**, December 4, 2019

***, December 5, 2019

Give Thanks

As we celebrate Thanksgiving Day next week, we hope you appreciate the good fortune that so many of us have, simply by being born and able to live in the US.

Warren Buffett has often cited what he calls “winning the ovarian lottery,” which he feels Americans win the day they are born in the US. In lengthier speeches on the same topic, he cites the many aspects of your life which are determined at birth: the political and economic system you are born into, your health, gender, skin color and your level of intelligence.

While our country is certainly not perfect, we are thankful for its many virtues and the opportunities it has provided to so many of us.

We are truly thankful and optimistic, and hope you are as well.


We are thankful for our clients, who have placed their trust in our firm. We do not take your loyalty for granted.

We are very thankful for the referrals that our clients and friends have made to people they care about, so we can assist them and better their lives.

We are thankful for clients who have requested our advice on matters in addition to  investing and financial planning, such as helping them with life transitions, estate planning, real estate transactions and other decisions or issues that are important to them.

We are thankful that our clients understand the importance of focusing on their long-term goals, and not on short-term market swings.

We are thankful for our business partners and relationships, which help us to be successful and operate our business efficiently.

We wish all of you a very Happy Thanksgiving, and hope you are able to share it with those who are most important to you.

Note: As next week is Thanksgiving, there will not be a weekly blog post email next Friday (the only week off, each of the past few years). The next email will be Friday, December 6th.

Personal Success…..Our Coach of the Year

Blog post #420

Everyone defines success differently.

Success in work, success as a financial advisor, success in life, success as a parent or as a football coach.

Each has a different criterion for accomplishments, goals and success.

My business partner, Keith Rybak, has reached a level of success and accomplishment across many of these areas that are worthy of recognition.

Within our firm, Keith is responsible for the day to day trading, financial rebalancing and working with me on strategy, as well as providing personalized advice and guidance to clients.

Outside of the firm, Keith, along with his wife Ann, are raising their “team” of 5 children, four boys and their daughter, Olivia, who range from almost 9 to 17. Each is different and unique.

On top of all of that, Keith has been coaching youth football for the past 10 years for the Walled Lake Braves football organization, of which Keith also serves as the organization’s President.

While teaching the players values, discipline and sportsmanship, his teams have had a record of 27-2 over the past three seasons. They have won 2 league “Super Bowls,” including the most recent season, in which they finished an undefeated 9-0 on their way to a Championship season. In our view, he is Coach of the Year!

The Braves after they won the “Super Bowl” this season, 22-0, at Wayne State University’s stadium, capping off a 9-0 season. Coach Rybak is in the back row, upper left

Keith feels his football coaching success, similar to progress WWM has made with our clients, is based on preparation and focusing on the long term. Keith has worked with the same set of coaches during much of the past 10 years. WWM has had very little staff turnover, as we have had only one person leave our firm since 2009, who wanted to change careers.

Preparation has been a vital aspect of their football game plan. Keith feels that no other coaching staff was more prepared than his staff. He sees a similarity between coaching, which requires practice and a game plan, and the individual investment plan that we develop for each of our clients, which we call an Investment Policy Statement (IPS).

His coaching staff develops a philosophy each year. For 2019, that philosophy was to build a fearless culture, so that behind every fearless player is a fearless group of coaches, who love and care about their players so much that they refuse to let them be anything less than their best.

I have seen the time, dedication and care that Keith puts into his coaching, and I’m sure that he and his coaching staff strive to help their players, 7th and 8th graders this year, be their best and develop as strong teammates.

Just as we as financial advisors need to adapt to changing financial markets and life events, Keith’s teams would have to evaluate many factors before and during a game, and be able to react, adapt and calmly make quick and decisive decisions.

They would identify their strengths and weaknesses to formulate a game plan. Before and during each game, they would assess their risk. Based on their players and the opponent, should they run or pass more? In his league, passing was more risky than running. How strong was their defense? Did they need to score 4 touchdowns or only 2?

How much risk did they need to take? This is the same question we often discuss with you, our clients, as we evaluate and provide you with financial and investment guidance. How much exposure to stocks do you really need? Do you have the patience to hold small value stocks, during periods when they may underperform other asset classes, for the expected longer term reward?

Keith and his coaches worked with their players from mid-summer through late October. They teach them plays. Emphasize conditioning. Develop teamwork.  They started every practice by chanting “Win Today.”  This was a simple and powerful message, that is applicable to all aspects of life. Their team motto stresses that no other team will out work them, no team will out smart them, they will have better practices, better teammates and “most importantly, no team will have more fun than us.”

An example of the fun that Keith brought to his team, and the league, was helping to organize a special day playing at Michigan Stadium earlier this fall. Various age groups of the organization played all day, while their families and friends got to share in the excitement and photo opportunities. As you can see below, Keith and his son, Austin, had a triumphant day at Michigan Stadium, winning 37-0.

The coaches developed game plans, and based on their record, they clearly executed it very well. At the same time, just as in investing, Keith knew that every play in a game does not work out like they designed it or practiced it. Sometimes things don’t work out as planned.

Keith knew they had the right strategy, but that the outcome would often be different. It still made the strategy correct. Similarly, we are confident that having a globally diversified stock portfolio is the proper long term strategy for most of our clients. Even though International stocks have underperformed US stocks for a period of years, we still feel that having a globally diversified portfolio is the proper long term strategy. Sometimes you can have the right strategy, it just doesn’t work out every play, or every year.

We are quite proud of the effort and results that Keith has had as a football coach for these young athletes. We are confident that they will be better in life, as well as in future athletics, as a result of Keith being their coach.

We are also confident that Keith’s same dedication to planning, strategy, patience and effort will benefit you as a client of our firm.

And just so you don’t have to worry, Keith is not planning to leave his day job as a financial advisor for a football coaching career.

If you want to talk to a winner, on the field and off, give Keith a call.

Importance of Staying in the Game

Blog post #419

Markets go up. Markets go down.

It can sometimes be difficult to stay invested, especially during down periods.

As the chart below clearly shows, staying invested and not trying to time the stock market is one of the most valuable pieces of financial advice that we can provide to you.

The data below is based on the S&P 500, which is an index of very large US based companies. The companies in this index are always changing, as companies get bought, merge, shrink and grow.

From 1970 through August 31, 2019, $1,000 invested in the S&P 500 grew to $138,908.

However, note the significant change in that outcome if you miss some of the top performing days.

If you were out of the market on the top 5 performing days of the S&P, your return would have declined by almost $49,000, from $138,900 to $90,170.

If you missed the best 25 days, the outcome dropped from $138,900 to less than $33,000, an incredible loss of over $106,000, from only 25 days over almost 50 years!

There are no proven ways to time the market. So market history and academic data says the best course of action is to adhere to your long term financial plan, which we develop with you, and stick with your stock allocation through up and down financial markets.

Sticking with your financial plan, and investing in stocks, will provide you with the best opportunity to reap the rewards that stocks can offer over the long term.

While we provide this data on large US based companies as an illustrative example to guide you not to try to jump in and out of the market, it is important to emphasize that we strongly recommend a globally diversified stock portfolio, with many asset classes, both in the US and Internationally, not just using the S&P 500.

While the S&P 500 has outperformed many other stock asset classes recently, this has not always been the case. There have been other long periods, such as most of the period 2001-2010, when other asset classes, such as US small value and most international and emerging markets far outperformed the US Large asset class, as represented by the S&P 500.

Do not try to time stock markets. That is not a winning game.

Over the long term, do not invest only in the S&P 500. That is not a winning game.

Over the long term, to have the best chance to reach your financial goals, you should be globally diversified across many asset classes, tailored to your individual and family’s need, ability and willingness to take risk, as well as your age and time perspective.

We look forward to talking with you to develop, or review, your portfolio.


“What Happens When You Fail at Market Timing”, Dimensional Fund Advisors,10/29/2019

Three Cuts and They’re Out-For Now

Blog post #418

The US Federal Reserve cut short term interest rates on Wednesday, for the third time since July, 2019. They signaled that this is likely to be the last reduction for now, unless the economy slows sharply.

“The current stance of (interest rate) policy is likely to remain appropriate” as long as the economy expands moderately and the labor market remains strong, said Fed Chairman Jerome Powell in a press conference after the Fed’s two day meeting.*

This rate cut reduces the federal funds range by .25%, to a range between 1.50%-1.75%. This impacts short term interest rates, but long term interest rates have also declined in 2019.

Analysts interpreted the Fed’s statement and press conference answers to indicate that the bar has been raised for the next increase or decrease, meaning it is likely that short term rates will remain at these levels for a number of quarters into the future.

Major change since last year

These actions are in sharp contrast to the Fed’s actions in 2018, when they raised short term interest rates 4 times, and had expectations for further increases well into 2019 and 2020.

A year ago, the Fed funds range was 2-2.25% and were expected to be in range of 2.75%-3.25% by the end of 2019, as our blog post dated November 8, 2018 discussed.

Due to weakening global growth, continued trade-policy uncertainty and muted inflation, the Fed felt it was necessary to cut rates during 2019. Current short term interest rates are 1%-1.5% less than the Federal Reserve expected at this time last year. This shows how difficult it is to predict the direction of interest rates and financial markets.

Longer term interest rates have also dropped significantly over the past year. The 10 year US Treasury Note yield was 3.214% at the end of October, 2018 (last year). Today, that rate is 1.70%, a drop of more than 1.5%. This has had the impact of reducing mortgage rates and other borrowing costs during the past year.

How is the economy doing?

We remain positive about the economy and growth in the US. Throughout 2019, many analysts and financial commentators have expressed recession concerns in the US and globally. There is still no sign of that occurring now.

Economic data continues to show that companies and US consumers are doing well. US GDP, an indication of economic growth, grew at an annual rate of 1.9% in the last quarter. This was stronger than economists expected, but less than than the growth in the prior quarter of 2.0%. Business spending did decline, but consumer spending remains strong, as does housing and unemployment remains at 50 year lows.**

Corporate earnings continue to beat analysts expectations. While overall earnings for the S&P 500 are on track to decline for the 3rd straight quarter, about 75% of the 342 companies that have reported earnings as of the morning of October 30th have beaten Wall Street expectations. The energy sector accounts for most of the reason for the decline in corporate profits, and along with utilities, have the most earnings misses.***

Based on this information, if the energy sector was excluded, it appears that corporate profits continue to grow. The growth in corporate earnings, and their future expectations, is what causes stock prices to increase in the long run. Earnings are expected to grow 5.7% and 7.1%, respectively, in the first and second quarters of 2020.***

The Fed has acted to prevent or minimize the risk of a recession. The US consumer is feeling good, secure about their job prospects and continues to spend. Corporate earnings remain solid. These are some of the reasons why we continue to remain positive for the long term.

We hope you find this analysis to be timely, helpful and provides you with clarity and information that is understandable.

We want you to focus on your long term financial goals, not on short term moves in interest rates or stocks. However, this type of information can be helpful in keeping you on track and sticking with the financial plan that we have developed for you.


* “Fed Cuts Rates, Signals a Pause,” Wall Street Journal, October 31, 2019, page 1

** “Consumer Spending Bolsters Growth,” Wall Street Journal, October 31, 2019, page 2

*** “Better-Than-Expected Earnings Ease Growth Fears -for Now,”, October 31, 2019

Investing in ourselves….for you

Blog post #417



Full of ideas.

These are some of the feelings I have after concluding a weekend learning group session I had with advisors from across the country and from our back office firm’s Annual National Conference, which Michelle Graham and Bradford Newsome also attended.

I am also feeling a bit overwhelmed, for a good reason.

We all brought back lots of ideas….ranging from technology tools we will be using in the near future, thoughts on portfolio management, how to build closer relationships with you, our clients, and conversations you could be having with your family members about money and wealth.

Gaining exposure to a wide range of speakers and a diverse set of issues was the reason we had three attendees at this conference.  We strongly believe it is important to invest in ourselves and our firm, as continuous learners, to strive to improve and continuously get better.

Over the weekend, a presenter encouraged us to review various processes and systems in our office and how we interact with our clients. How can we make things easier for you? How can we reduce friction, so you can implement and move things forward? How can paperwork and interactions with our firm be made easier? How can we be more hands on in helping you with certain tasks, such as linking your 401(k) with our firm or helping you to deal with updating your estate planning documents?

People do not want to deal with certain tasks that are unpleasant, multi-step, take a long time to complete or have a lot of uncertainty. We can help with these. We want to help you tackle things like insurance needs, 401(k) investment choices, long term care assessments and any other financially related item in your life. We encourage you to reach out to us. With our assistance, we want to make issues and projects like these easier for you to deal with.

  • These are ways we can save you time and effort, help you deal with something you know you should be doing and add value, all as part of our comprehensive relationship.

Another speaker gave a very impactful and moving talk about how family members handle the topic of money within their family relationships. He recommended that we should all be more vulnerable, to be more open with our relatives, whether that is with our parents, siblings or children.

To practice this type of vulnerability, he made a suggestion that really hit home with many attendees. He encouraged us to ask our children how we are doing as parents (not necessarily about money, but as parents in general)….and listen to the feedback we get. This could really be an interesting and eye opening discussion. If you try this one out, let me know how this goes! As my kids sometimes read these posts, I wonder how this will go for me!

This speaker primarily works with affluent families. He defined this as “when you have more than you need…and you have to think about what to do with it….you are wealthy.” This is obviously a fortunate position to be in, but as he explained, many families struggle with the issues of wealth. We can help you work through and resolve some of these issues.

We heard from numerous speakers on investment topics, including current research and thoughts about the financial markets. While value company stocks have underperformed growth stocks for many years, many speakers provided evidence and confidence that the value premium still exists and is valid throughout the world. Bradford and I spent a lengthy time, one on one, with one of the top Investment Policy Committee members to discuss these matters in depth. Continuing to review, and further analysis from these discussions, is one of our top near-term priorities. The access to high level financial and research professionals, and their research, is a major reason we attend these conferences.

The last speaker of the conference was one of the best speakers I have ever heard, Tommy Spaulding. The emphasis of his talk was on the importance of relationships and how we all need to deepen our relationships. He encouraged us to go from talking about NWS (news, weather and sports), to much deeper relationships with our clients and others in our lives. His message was important, and something we will be making a priority.

This ties in closely with another speaker, who encouraged us to focus more of our conversations with you, our clients, to be more about your life, and not just money. He feels an important aspect of the client/advisor relationship should be about your ability to live out your life dreams.

  • What are your dreams?
  • How can we help you to accomplish more of them?
  • Is there more risk in the next really big market decline, such as in 2008-09, or is there more risk that you will not live out your life dreams and goals?

These are great questions for future conversations.

You can see we returned home with many to-do’s, concepts to further explore and ideas to implement.

We want your input and your suggestions. We may ask you about these during future calls and meetings.

  • What do you value from us?
  • What can we do better?
  • How can we improve?
  • Do you value this weekly blog that we write, which is significant time commitment?
  • Please share your thoughts with us at We want to hear from you!

We are committed to providing you with excellent service, solid long term investment guidance and the planning necessary so that you can reach your financial and life goals.

We feel that we can provide the same valuable benefits to your friends and family members. We are committed to providing these services to you, as well as growing our firm with referrals of friends and family, from people like you.

Let’s Talk. There is a lot to talk about!

2020 Social Security Benefit and Payroll Tax Increases

Blog post #416

Social Security is still vital for nearly all Americans. Annual payments can be $15,000-$36,000 per year, which is the equivalent of withdrawing 4% per year from an account value of $400,000-$900,000.

Social Security recipients will be receiving a 1.6% increase in 2020 benefits. This benefit increase will likely be partially offset by slightly higher Medicare health premiums in 2020.

The increase in gross benefits would be the smallest annual COLA change since 2017. Recent changes have been: 2019 – 2.8%, 2018 – 2.0%, 2017 – 0.3% and 2016 – no increase.

A 1.6% COLA increase in 2020 would raise the average monthly Social Security retirement benefit by about $32, to $1,503. The 1.6% COLA increase would also increase the maximum retirement benefit, currently $2,861 per month, by about $150 per month, to $3,011 for someone at full retirement age in 2020.

In 2020, the maximum wage base subject to Social Security and Medicare taxes will increase $4,800, from $132,900 to $137,700, a 3.6% increase. This will cost employees and employers each $367.20. Additionally, all earnings, even those above the $137,700 Social Security maximum, are subject to a 1.45% Medicare tax. Plus, individuals with earned income above $200,000 and married filers with earned income above $250,000 pay an additional .9% in Medicare taxes.

The earnings limit for those who claim Social Security benefits before their full retirement age will increase from $17,040 to $18,240 in 2020. If this applies to you, you lose $1 benefit for every $2 earned in wages or earned income over $18,240.

We hope this information is helpful to you.  Regardless of your other assets, Social Security benefits are an important aspect of your financial future.  Please contact us if you have questions about Social Security or related planning matters.

“Social Security COLA for 2020 will be 1.6 percent”, InvestmentNews.comby Mary Beth Franklin, October 10, 2019

The Value of Fixed Income

Blog post #415

What is the importance of fixed income to your overall portfolio?

How do we add value to your fixed income allocation?

Are you paying proper attention to the interest you are receiving on your cash, particularly at your bank?

The part of your portfolio that is invested in fixed income is primarily to provide you with stability and safety, as well as income. We determine your fixed income allocation based on your age, your need and ability to take risk, as well as your time horizon, for various goals. High quality fixed income investments, such as investment grade individual corporate and government bonds, CDs, municipal bonds and bond mutual funds do not experience the same type of short-term volatility that comes with investing in stocks.

The less willing you are to have volatile swings in your portfolio, the greater we would recommend your allocation to fixed income. The fixed income investments provide you with stability, like the foundation to a house. 

When we structure the fixed income portfolio for you, our objective is for these investments to provide a market rate of interest for a high-quality security, with the primary objective being the return of your principal. For example, if a typical investment grade, high quality 5 year corporate bond is paying 3.5%, we would not purchase a 5 year bond that is paying 6.5%, as the financial markets are saying that the second issuer is much riskier, as it is paying a large premium to attract investors.

Risk and reward are correlated. If you don’t get paid back on the bond at maturity, the benefit of the higher interest yield would not be worth it in the long run. In fixed income, we do not want to take on that additional risk. That is why we do not buy junk or high yield bonds and recommend that you don’t either. If you have accounts elsewhere, are you sure that you do not have any junk bonds in your portfolio?

When clients have adequate funds for us to structure a diversified portfolio of individual fixed income securities, we do that. We evaluate their tax rate, to see if municipal bonds would make sense for their taxable accounts. We would evaluate the financial markets, comparing the various interest rates and risk factors, such as corporate bonds v government bonds and CDs. To purchase an investment grade corporate bond, the issuer must be paying a greater interest rate, as the government bonds and CDs have minimal default risk.

When we structure individual securities for a fixed income portfolio, we have many guidelines and principles, all with the goal of striving to reduce your risk. We only invest in high quality, investment grade instruments. We strongly believe in diversification. We strive to diversify across issuers, and limit how much of any bonds would be held by any single issuer. There are certain sectors, industries and states that we avoid, as we perceive them to be too risky. When we purchase municipal bonds, we diversify across many states, to spread your risk geographically. We purchase these securities with the objective of holding them to maturity. We are not trying to make bets on the direction of interest rate rates, as that is very difficult to predict.

If we are able to purchase individual securities in this manner, we can eliminate a tier of fees you may incur, which is the expense ratio of bond mutual funds. There are also other benefits we provide, as you are not exposed to gains that may be incurred when others sell the bond fund, as well as permanent losses that can be incurred in bond mutual funds, when interest rates rise.

Through our back-office firm, we closely monitor the credit ratings of all the fixed income securities that are held on behalf of our clients. If securities are downgraded, due to a deterioration of the financial quality of the issuer, we would consider selling the bond prior to maturity, to reduce or minimize a loss of principal.

For accounts that do not have adequate assets to develop a diversified individual fixed income portfolio, we would use a bond mutual fund, as having adequate diversification is of primary importance.

The fixed income portfolios we have discussed above is usually part of your long term savings. For your short term cash or savings, you should still carefully monitor what interest rate you are receiving at your bank or other accounts. Many banks are still paying close to nothing on many checking, savings or money market accounts. Unlike Fidelity Investments, our primary custodian, many brokerage firms are not paying money market rates on cash or sweep accounts. 

We can provide you with money market accounts or alternatives to cash, as well as fixed income investments that offer liquidity, generally within a few days, on conservative fixed income investments. We strive to be as efficient as possible with your assets, including your cash. Together, let’s determine what the right amount of cash and fixed income is best for you.