With the continued increase in health insurance cost, many employers and self-employed individuals are using high-deductible health insurance plans combined with a Health Savings Account (HSA). HSAs can be a great way to manage healthcare costs, gain a tax deduction, and save future dollars. Review the details on how you can leverage your IRA to fund your HSA account.

If you have questions about managing retirement costs or building financial plans, please contact me. I would be happy to offer you insights on how I can accentuate your journey.


Rest in peace Jack. Thank you for having such a profound impact on the world of investing.

 


As the stock market’s volatile movements have created cautious investors, we share a few points about market performance and the problem with trying to predict future behavior.

  • Stock market volatility will likely continue, especially in the current political and economic climate.
  • Long term returns are accentuated by staying committed to a pre-determined asset allocation amid short term volatility.
  • Building a portfolio that reflects your need for risk (expected higher returns) is key to a successful financial plan.

The risk and return profile improves with time.

Note: Volatility is measured as the standard deviation of time-period returns for the return period specified, (i.e., the one-month volatility is the standard deviation of one-month returns).

Sources: Vanguard calculations based on data from Bloomberg, as of January 4, 1988–December 31, 2017.

 

Timing the market is challenging and an unpredictable strategy. The best and worst trading days can happen close together.

Note: All investing is subject to risk. Past performance is no guarantee of future results. The performance of an index is not an exact representation of any particular investment, as you cannot invest directly in an index.

 


The most important component of embracing simplicity in building financial wealth might be that it allows you to focus on the type of wealth that matters most of all – the spiritual wealth of sharing your talents and wisdom with others. While the financial industry is intent on filling your portfolio with the “perfect” investments, maybe you are better off turning away from that empty energy, and instead reflecting on how you can invest your treasures in making a difference in your world. In my latest column, I suggest a few ways you can invest your talents with others.


It’s the time of year we talk about pie. Whether it’s pumpkin, sweet potato, or cherry pie that you might be sharing this holiday season, there’s one slice you could be missing. An entire chapter is devoted to the most important slice of the investment pie in The Coffeehouse Investor book – compounding. It is a piece of the pie that you can’t afford to ignore. We address this topic annually because many investors are still missing this piece!

When you reinvest your stock dividends instead of spending them, you can earn dividends on the original dividends and those dividends earn more dividends and as it continues, you get what we call “compounding.” Investors who spend time selling stocks and mutual funds that go up in price are missing out on the largest piece of the money pie because they don’t give their investments a chance to sit there and do what they are supposed to do – compound!

In celebration of pie, we share our pumpkin pie recipe included in the book. You can now show your loved ones the impact that dividend reinvestment has on your own pumpkin pie.

From our Coffeehouse family to your family, Happy Thanksgiving!

 

 


If you can believe it, the time to start thinking about the 2019-2020 school year is now. The 2019 Free Application for Federal Student Aid (FAFSA) was released at the beginning of the month. Don’t waste time filling out the form, some student aid programs have limited funds available. The early bird gets the worm!

Hopefully, if paying for higher education is or was one of your financial goals, you started a 529 education plan along the way. There are a variety of programs out there to help you finance the cost but Vanguard discusses the importance of leveraging index funds in your college savings plan. With their low costs, diversification, and greater performance predictability, index funds are one of the most reliable ways to save for the future costs of education.

In our last newsletter, we highlighted Dimensional Fund Advisors’ The ABCs of Education Investing, a strong argument on why you should invest in assets that are expected to outpace inflation.

Hopefully, none of this information is new to you and you find yourself ahead of the savings game. If not, we should talk – give me a call, I’d be happy to give you a second opinion on your financial plan.

 

 


Why do investors perceive heightened volatility as such a bad thing, and why are they prone to liquidating stocks during steep market sell-offs? From January through mid-March of this year, retail investors pulled out a net $40 billion dollars from global equity funds. Read what I think you should do to try and achieve a 6 percent or even 5 percent portfolio return over the next 30 years.


I published The Coffeehouse Investor book in 1998 after spending 13 years working for a major Wall Street firm. It became obvious to me that an investment story very different from Wall Street’s traditional story needed to be told.

Ten years ago, I revised and expanded the book and included this in the preface, “Now, ten years later, after reflecting on the profound impact The Coffeehouse Investor has had on people’s lives during a period of immense global turmoil and market volatility, it is time to reestablish these lifelong principles as fundamental to building wealth, ignoring Wall Street, and getting on with your life.”

Twenty years later, the portfolio is still helping investors build wealth, ignore Wall Street, and get on with their lives. Proud to be part of Forbes portfolio list resonating with folks across the country.


A quick read-through of any financial journal serves as a reminder of the unfolding of business at breakneck speed around the world.

Artificial intelligence, Blockchain technology, Cloud computing, Remote delivery services; for many investors, it is a daunting challenge to keep up with this dynamism, and then to integrate it within portfolios throughout a lifetime of investing. And so, they turn to experts – Wall Street authorities whose job it is to guide investors into the top-performing stocks, industries, and trends.

But do “experts” really exist, and if so, how should we rely on them for portfolio advice?

This question is especially timely considering the current portfolio performance of legendary bond “expert” Bill Gross.

For many years, Mr. Gross was Wall Street’s acknowledged bond “expert” heading up Pimco’s Total Return Bond Fund, the world’s largest fixed-income fund.

Following a contentious split with Pimco, Mr. Gross switched firms to manage Janus’ Unconstrained Bond Fund (JUCIX). Recently, Mr. Gross positioned this fund to take advantage of the almost certain rate increase in German bonds, especially in comparison to the already higher rates paid by Italian fixed income investments.

Unfortunately, with chaos unfolding throughout the Italian political system, investors began fleeing Italian bonds in favor of the more secure German funds. The result? Janus Unconstrained bond fund plummeted over 3% in one day and is now dead last in year-to-date performance for its Morningstar category.

Mr. Gross’ bad luck reminds us of another “expert” whose stellar market calls experienced a similar fate.

Infamous Bill Miller

For much of the previous decade, Wall Street’s favorite stock-picking guru was Bill Miller. His Legg Mason Value Trust’s (LGVAX) beat the S&P 500 index for 15 consecutive years from 1991 through 2005. But his streak ended abruptly in 2006, and over the next five and a half years, the fund he managed lost 36% while the S&P 500 gained 13%.

Investors holding positions in LGVAX were faced with the question, “Do I stay the course with what I own, or do I switch into another fund with hopes for a better outcome down the road?”

The problem with searching out “experts” and then attaching a portfolio’s performance to their insights, is that one starts to rely on tenuous external forces to reach lifetime goals, instead of turning within and focusing on financial planning decisions that actually matter in the larger context of reaching one’s goals.


If you missed our latest newsletter, here are a few highlights …

Are You Adequately Insured? – Is it time to review your own insurance policies? Soundmark Advisor, James Nevers discusses the gaps and misconceptions of homeowners and umbrella insurance policies in his blog.

Connections Matter – It’s always a good time to reassess lifestyle habits. We all know we should eat more vegetables and move more, but the connections and relationships we share with others may be our most beneficial health move yet. Review this midlife tune-up list for inspiration.

The Problem with Excuses – The 2018 SPIVA Scorecard results continue to show the failures in active management. Larry Swedroe discusses the flaws in underperformance excuses and the real reason active funds can’t beat the benchmark.