Current Financial Topics

Market Declines

When stock markets decline, it can be an unsettling time for many of today's investors. With this in mind, we believe that hiring experienced and consistently superior investment management is the best way to manage your stock portfolio. We believe sticking with these managers, especially when the market is in turmoil, is the right decision.

Don't try to time the market. Many investors don't achieve the same long-term returns as the stock market in general because they don't stay fully invested. Many will opt to sell out when the market is declining and attempt to buy back in when it's going up. Just missing the 10 best days in a 10 year period may mean the difference between a gain or a loss.

Be diversified. Never have more than 10% of your investments in one company's stock. Think about how unsettling a huge market drop might be just at the time when you need regular income to supplement your retirement needs. Have an income reserve built into your investments. The amount of this reserve varies with each individual's situation. For example, if you're working in a secure job and you don't need current income, this reserve can be as small as three to six months of living expenses. However, if you're retiring or are already retired, we usually recommend you have at least three years of living expenses in cash and bonds. This reserve can enable you to avoid selling stocks when they're down in value thereby increasing the chance for long term growth.

In our opinion, one of the worst things you can do is to keep looking over your shoulder at the immediate past. One view that may help is to focus on the future. The average retirement age is 62 and the average life expectancy of a couple is another 34 years. One out of the two has a good shot of living to 92. A 70 year old couple has a joint life expectancy of another 27 years. Your income needs to grow in order to keep pace with inflation.*

Remember market declines create opportunity. If you are fortunate enough to have money to invest, review your allocation and consider adding to areas of your investments that may be out of balance. A large percentage of your future gains will come in the 12 months following a market bottom. Since 1926, stock investments have performed almost 3 times better than inflation and offer the opportunity to enhance your lifestyle and maintain it.

*US Bureau of Labor Statistics.

Past Performance is not indicative of future results. Investing involves risk and investors may incur a profit or loss. Diversification does not ensure a profit or protect against a loss.

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Does everyone need an Estate Plan?

In our opinion, the answer is yes. Your estate plan can be as basic as a will in combination with durable powers of attorney. In some cases a will may not satisfy all of your wishes and additional estate planning may be required.

The basic estate plan should include the following:

Will
Provides guidelines where your assets will go upon your death and who will be guardian for any underage children.

Durable Powers of Attorney for Healthcare and Finance
Durable Powers of Attorney are used in the event of a medical emergency or incapacity. You can’t act on your own accord. You appoint someone in advance to act for you should the need arise.

Living Will
Stipulates what medical needs should be used to keep you alive.

In some cases you may want to go beyond the basic estate plan and have a trust drafted. A trust would be a written set of guidelines similar to a will that states where your assets go, but with specifics. A trust can be a valuable tool if you have underage or special needs children and you are concerned about how they would handle an inheritance. A trust may also help with reducing any inheritance or gift taxes.

Some assets you have like life insurance or retirement plans have beneficiary designations. Verifying that your beneficiary designations are up to date is an important part of any Estate Plan.

We are not attorneys or tax professionals, but we do have relationships with these professionals that can help you with your estate planning needs.

Opinions expressed are those of the Miller & Jardine Financial Team and are not necessarily those of Raymond James. All opinions are as of this date and are subject to change without notice. You should discuss any tax or legal matters with the appropriate professional.

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Teaching kids the value of money and saving

Here are a few ideas we have tried over the years to encourage kids to save and to help them make informed choices with money. These aren’t new ideas, but rather concepts we may have read about and put our own twist on.

Pre-teens and teens

It is important to teach teens about the true cost of goods and services. For example, kids love video games and we know that most of the games cost $40 or more. In reality to spend $40 on a video game, you need to earn $80 because of taxes. This may be a slight exaggeration, but you get the idea. In order to encourage them to save their money and to encourage good work ethic, for every one dollar they save, match them a dollar in savings. So for every one dollar the child saves, two dollars goes into their account. They can then use that money after an agreed upon time and decide how to spend their savings.

Young Kids

To encourage financial learning and help young kids decide what they really want, start them with an allowance. They should get a dollar per week for each year of age (or some version). There should also be a loose understanding of helping out at home (taking plate to sink, taking clothes to wash, etc.) to earn their allowance. The allowance then goes into three jars, 50% spending, 40% saving and 10% charity. Imagine a teacher or charity worker’s face when they see your kid with a bag full of quarters and dimes being dumped into their bucket. The charity or school workers always get a kick out of it so the experience always lasts in the child’s mind. Let the child pick the charity and it really sticks with them that there are those who are less fortunate and causes worth donating to. The spending money sometimes has to be accumulated so they can buy what they really want. The savings gets deposited to an account in their name and at some point down the road, it’s theirs to spend or save.

Opinions expressed are those of the Miller & Jardine Financial Team and are not necessarily those of Raymond James. All opinions are as of this date and are subject to change without notice.

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Our investment philosophy- Miller/Jardine Financial Team of Raymond James

The recent market decline has been very unsettling for everyone and your confidence is very important to us. Because of this, we’d like to remind you of our long term investment philosophy. Stocks have been and will likely continue to be the best place for long term growth of your money. We believe hiring experienced, and consistently superior investment management is the best way to manage your stock portfolio. We believe sticking with these managers especially when the market is in great turmoil, is the right decision.

Inevitably, when the market hits a rough patch, some people will question this philosophy and say “it’s different this time”. But history clearly shows that the US stock market has always recovered from seemingly impossible and “different” situations. Despite history, we realize that today’s extreme stock price volatility can still cause investors to question their long term plan. We know that many investors don’t achieve the same long term returns as the stock market in general does because they don’t stay fully invested. Many will opt to sell out when the market is declining and attempt to buy back in when it’s going up. Occasionally we need to remind our clients of this history and hope they will heed our advice.

We also realize how unsettling a huge market drop can be when clients need regular income to supplement their retirement needs. In this case, we generally recommend clients have an adequate emergency reserve of cash and bonds from which to withdraw the necessary income. The amount of this reserve varies with each individual’s situation. For example, if you’re working in a secure job and you don’t need current income, this reserve can be as small as three to six months of living expenses.

However, if you’re retiring or are already retired we usually recommend you have at least three years of living expenses in cash and bonds. This reserve can enable clients to avoid selling stocks when they’re down in value thereby increasing the chance for long term growth.

This is our investment philosophy and it’s based upon a combination of history and our actual experience. We’ve found this philosophy has been far more reliable than following so called “expert” predictions of the future. We care very much about protecting our clients nest eggs and believe the best way to do so is to avoid making emotional financial decisions. We help our clients manage their accounts via an annual review involving a re-balancing of their asset allocation as opposed to a more frequent shuffling of investments based upon a forecast, or “gut feel” style of investing.

Investing involves risk and investors may incur a profit or a loss. Past performance is not indicative of future results.

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Diversification

One mistake that investors often make is the lack of diversification in their portfolios. The definition of diversify as citied by The Free Dictionary by Farlex is "to distribute (investments) among different companies or securities to limit losses in the event of a fall in a particular market or industry". Although the dictionary defines diversification as such, diversification does not ensure a profit or protect against a loss. Investments are subject to market risk, including possible loss of principal.

Don't fall prey to the mistake many employees do, when they invest primarily in their employers stock. These folks often feel that because their company's businesses are diversified, they too are getting diversification by investing in the company stock. What many investors fail to realize is, that the risk of being invested in the company stock extends beyond their stock investment. Also, at risk is your current and future income, i.e. paycheck and pension, health benefits, etc. If the company were to struggle, it's ultimately your savings and future income at risk.

We feel strongly that one company's stock should not represent more than 10%-20% of your stock investments. As quoted from Jason Zweig's book Your Money & Your Brain "In a recent survey, 55% of employees at roughly 100 different companies insisted that "owning my employers stock does not affect my attitudes and feelings." Yet 4 in 10 felt that their employers stock had "about the same level of risk" as a diversified fund - even though the shares of these companies had, on average, lost nearly twice as much money as the overall market over the previous five years!"

Diversification doesn't prevent losses, but it can help to protect the value of your investments from a price decline in one investment. Also, in a well diversified investment portfolio you will always have an investment that isn't performing as well as the others. Diversification should be an important part of your overall investment strategy.

Past Performance does no guarantee future results. There is no assurance these trends will continue. The market Value of securities fluctuates and you may incur a profit or loss.

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