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17 minutes | Aug 13, 2021
The Process in Your Financial Plan
In this episode we discuss what goes into making a financial plan. Lon goes into detail about setting financial goals, proper investment allocation, how to plan properly, and much more! If you enjoy this episode be sure to check out previous episodes and other financial content at Pineswealth.com!
22 minutes | Jul 1, 2021
Your Behavior Matters
In this episode we discuss how your behavior in the markets can affect your financial outcomes. Lon discusses how to properly react to the media and crises in the markets, how to form the proper mindset for investing, and many more topics. Enjoy this episode and check out previous podcasts to gain valuable insights to become a smarter investor and taking emotions out of your investment decisions.
15 minutes | Feb 24, 2021
Finally, my suspicions are confirmed...
In this episode of Emotional Wealth, we focus on a recent white paper that was done by the National Bureau of Economic Research entitled “Why is all Covid-19 News Bad News?”, which explores the media biases during the Pandemic. We also discuss the impact of headlines which have been overwhelming negative and the dangers of letting those headlines drive your investment policy.
12 minutes | Feb 15, 2021
Fallacy of Safety
I think we can all agree that 2020, so far, has been one big dumpster fire. Never have I ever looked more forward to an end-of-the-year New Year’s celebration as I have this year. And its only August! Every Dec 31st, New Year’s Eve revelers eagerly chuck out the old and welcome, with open arms, the hope of a better year and a fresh new start. Wow, am I really looking forward to that and I suspect that I am not alone in that sentiment! The dumpster fire that is 2020, has brought about many conversations with clients about becoming “safer” within their investment strategy to avoid another meltdown like we saw between Feb 19th – Mar 23rd of this year, where the S&P 500 Index dropped 34% in a matter of 33 short days. It was by all definition a full-fledged panic! And like all panics, the aftermath, and the emotional damage done to your investment psyche can trigger thoughts of “seeking out safety” to ensure that the pain caused by the quicksand of panic is never felt again. I want to preface the rest of my diatribe by simply stating that I do not wish to discount those that are rethinking their level of “safety” within their investments strategies. Rather, I would suggest that it may be better for an investor to understand how their investments will behave in bad times as well as in good times! I humbly suggest that reacting to current events rather than being proactive in understanding the potential impact on your investments BEFORE they happen, may be a recipe for disaster within your financial plan. Safety can be an important part of a well thought out asset allocation plan guided by the financial goals in your overall financial plan. However, invariably a byproduct of panic is to re-evaluate how much risk you are taking, and how much “safety” you should have in our own investment strategies. You can’t avoid the conversation around “safety” because it surrounds the investor during times of panic: it’s in the headlines, the media, and even with casual conversations with neighbors, family or friends. “Safety” has traditionally meant investing in bonds, where the investment mantra has always been that bonds can be a best friend to the investor seeking “safety”. But unfortunately, the math of “safety” from bonds simply doesn’t work. As many of you know, my background in engineering has given me a great respect for math and the precise results from its calculations that can’t be changed by either rhetoric or narrative. It’s simple: Math doesn’t lie, narrative does. As I write this the 10-year U.S. Treasury note yields about 0.63% (source:MarketWatch), which in itself is not that attractive especially if you’re looking for a higher yield. What is another option you ask? Well, you might look at the 30-yr U.S. Treasury Bond, which currently is yielding around 1.4% (source:MarketWatch). Now, given the panic-stricken levels in the equity indexes between February and March those yields look certainly better than the alternative, don’t they? Panic has a way of distorting reality for investors. There’s more to the story here, that more often than not, simply goes overlooked. Let’s start off by looking at purchasing power. After all, what good is a rate of return, if you can’t keep pace with the cost of e
14 minutes | Feb 1, 2021
Great Unknown In Retirement
We talk about one of the biggest unknowns in retirement – It’s psychological impact. Finding your personal “why” in retirement may help you transition to a happy and healthy retirement. I share some practical ideas that may help you find your “why” in retirement.
15 minutes | Jan 20, 2021
A Year Of Lessons
I think that we all can agree that 2020 had its share of challenges. No matter the person, nor the circumstance, we may not have all been in the same boat, but we certainly were in the same storm. The gambit of the reasons for our struggles last year were far and wide. Maybe you struggled with health, maybe your job, maybe you suffered stress from the presidential race, maybe you struggled with keeping your sanity, all the while missing family and friends. Yet, I can’t help but think of what a perfect year of lessons it was for the goal-focused, long-term, planning-driven investor. If ever a year encapsulated the “why” on why investors should be focused on the bigger picture, look no further than 2020. On December 31st, 2019, the Standard & Poor’s 500-Stock Index closed at 3,230.78. This past New Year’s Eve, it closed at 3,756.07; the percentage increase of the Index year over year, was 16.3%; and the total return with reinvested dividends was 18.4%, according to Barron’s. Imagine us having a conversation at the end of 2019, and I prognosticated that in 2020 a pandemic would grip us with fear and buckle the American economy, bringing it to its knees by enforcing lockdowns. There would be social unrest in America’s biggest cities, and just to put icing on the cake of misery, we had a hotly contested, highly partisan presidential election, that tore at the very fabric of friends and family alike. I’m guessing your first reaction as an investor would have been to sit this year out. Yet, here we are, and we start the New Year, at or near record highs on the S&P 500 Index. There is a lesson here for you, the long-term investor, that he/she probably already knew, but had long forgotten: At their most dramatic turning points, the economy can’t be forecast, and the markets cannot be timed. Instead, having a long-term plan and sticking to it – “acting” as opposed to “reacting”, which is your and my investment policy in a nutshell – once again demonstrated its enduring value. The second most important lesson can be derived from the trajectory of the rebound in the S&P 500 Index from the depths of a panic driven selloff, which saw the S&P 500 Index drop a horrifying 34% in 33 days. I don’t recall one single conversation from any media outlet, market pundit, or arm chair stock market guru, encouraging investors to put money into the markets at the end of March. Once again, and as I have written about many times over the years, it is and was again in 2020, a mistake to do a TKO 10-count on the American economy. The American economy, and its leading companies, continued to demonstrate their fundamental resilience through the balance of the year. The stock markets responded from the depths of panic to make multiple new highs. From the start of the panic, the great American companies, did what they always do – rolled up their sleeves and went to work by developing, and getting approved in record time at least two viable vaccines. Distribution of the vaccine has begun, giving hope to the millions who are most vulnerable to the virus, and finally relieving them from their burden of fear. And as if those two lessons weren’t important enough, the third lesson was nevertheless, just as important as the first two Presidential elections do not define us, nor should they be part of any investment policy. The reason that the mainstream media will shove “This is the most important election of our lifetimes"The goal-driven, long-term, planning driven investor thrives on uncertainty, because it’s that uncertainty that drives their superior long-term performance, which is absolutely needed in order to achieve their goals set forth in their financial plan.
18 minutes | Nov 20, 2020
I Choose Hope...
Many people have no idea who Tom Clancy was, nor what he did. He was neither a politician, a philosopher, or a hero. He was very simply a voice of hope, when none existed. Who exactly was Tom Clancy you ask? Well, Mr. Clancy was an American radio personality best remembered for his distinctive 1971 remix of the 1965 popular song “What the World needs Now is Love”. His rendition came at a time when the despair felt by Americans seemed overwhelming. The War in Vietnam was not going well, and social unrest was seemingly a daily occurrence in every major city. At that moment in time, Mr. Clancy chose to focus on hope not hate, he chose to focus on tolerance rather than intolerance. He chose the right message at the right time, and made one of the most iconic recordings in the 1970’s that is certainly applicable for today.I’m sure we all can agree that in the annals of history, 2020 is likely to go down as one long, drawn out, miserable dumpster fire of a year. Not only did we battle (and are still battling) with an epidemic, mix in massive amounts of social unrest, economic instability, and is if this dumpster fire needed any more fuel, add in a toxic and contentious Presidential election, where partisan politics is not only dividing friends, but sometimes whole families. Mix that all together, and you get 2020 – a.k.a. “The imperfect year of the perfect dumpster fire”.With unyielding pressure from all forms of social media, from the headlines, and even from family or friends, it seems as though we are buried under an avalanche of fear and negativity. Tolerance has succumbed to intolerance. Hope has been replaced by hopelessness. Well, today, I choose to follow Mr. Clancy’s’ message of Love and Hope rather than hopelessness and intolerance. I choose the light over the dark, and to rejoice in today and the promise of tomorrow rather than to live in the past. How did we ever lose sight of how much better our lives have gotten? Why did we forget to appreciate how far we’ve come as humans? Why have we forgotten that over the last 2 centuries (a small blip in the timeline of human history) that human civilization has seen massive reductions in extreme poverty, huge advances in literacy, more political and economic freedoms, where we are living longer than at any other time in history, and that our global infrastructure for educating mankind, has NEVER been greater? Two hundred years ago, only a privileged few were not living in extreme poverty. For all the ills of capitalism and industrialization, increased productivity made it possible to steadily lift more and more people out of extreme poverty. As recent as 1950 75% of the world were still living in extreme poverty. But today, those living in extreme poverty are now less than 10%. Where’s that headline? Only two hundred years ago where only a few of the elite were able to read, has today become 8 out of every 10 people on earth are literate. Once again, no mention of that anywhere.The progress made in human health is simply astonishing over the last two centuries. In 1800, more than 40% of the world’s newborns died before the age of five. Modern medicines, in addition to our increased knowledge of germ and diseases, have increased the average life expectancy from 32.5 years to 78.9 years. Global life expectancy has more than doubled in 200 short years. Never before in our history has that happened. In spite of the rather combative partisan political environment we are currently mired in, just 200 years ago a majority of the worlds’ humans lived under dictatorships and autocracies. Today, 4 out of 5 still living in autocracies live in China Today, democracy and political freedom are the norms.
21 minutes | Oct 6, 2020
Part II: What's Important To Know About Social Security?
Part II of this Emotional Wealth podcast titled, "What's Important To Know About Social Security," will walk you through the options and strategies available to you on a Individual, Spouse, and Survivor Benefit level along with concrete examples to help you navigate through this complex issue so you feel confident when it's ready to file for your Social Security Benefits.Here is What You'll Learn: 3 Stages & Strategy OptionsDeciding when is a good time to collect Social SecurityStrategy 1: Benefit Options for CouplesDiscuss and evaluate available options to determine when to file for benefits.Options: 3 Stages for filingStage 1: Filing EarlyStage 2: Full Retirement Age (FRA)Stage 3: Delayed CreditsStrategy 2: Survivor Benefit OptionsWhy do Survivor benefits work best if one spouse is expected to outlive the other.Some general rules to keep in mind
15 minutes | Oct 5, 2020
Careful . . . Your Confirmation Bias Is Showing
In this episode, we explore the psychology of being a long-term investor by digging deeper into confirmation bias. Confirmation bias as become so prevalent in today’s highly charged political climate, that the long-term, patient goal driven investor may ignore its dangers. We also discuss the potential outcomes for investors’ portfolios depending on who wins in November.
17 minutes | Sep 28, 2020
Part I: What's Important To Know About Social Security?
Emotional Wealth Podcast - #1 Social Security, by Lon W. Broske, CFS®, CFP® .This podcast "What's Important To Know About Social Security," will walk you through the basics and give you some insight and strategies on how and when might be a good time to consider filing for your Social Security Benefits.Here is What You'll Learn How can you coordinate spousal benefits & Survivor Benefits? (Three Opportunities to maximize benefits) How many people are receiving Social Security? Who receives Social Security? Longevity: What does this mean for your future as we live longer and longer? Important Terms & Definitions: Primary Insurance Amount (PIA) Full Retirement Age (FRA) Windfall Elimination Period (WEP)
11 minutes | Jun 23, 2020
"Investors who are Proactive vs. Reactive"
In this addition of Emotional Wealth we discuss; The difference between Proactive vs. Reactive. Having an emotional, knee-jerk response to short-term events Taking an educated and intelligent non-emotional approach in analyzing the impact to their financial plan from short-term events. Understanding the differences between the two, and the potential impact on your financial goals. Using Proactive to help control your emotions during an emotionally driven time.
26 minutes | Jun 19, 2020
"Should I Make a Roth IRA Conversion?"
What are the mechanics behind a Roth Conversion? Mechanically, this strategy involves converting savings from a pretax retirement account, such as 401(K) or a Traditional IRAs, to a tax-free Roth IRA. What are the primary items to consider? Current and Future Tax Brackets Expected Income Sources Types and Amounts in Different Investment Accounts Time left until withdrawals needed Comfort Level with Investment Risk Is a Roth Conversion right for you? While this strategy can help you save tax, it involves analyzing multiple pieces as well as your timelines in your financial picture.
9 minutes | Jun 4, 2020
Three Types of Bear Markets - 2020
Three Types of Bear MarketsHere's what you will learn: Structural Bear Market: Learn how Structural Bear markets are triggered and how they are defined. How do structural imbalances and financial bubbles play a part in this type of bear market.Cyclical Bear Market: Learn the functions of Cyclical Bear Market and how rising rates, impending recession, and falling profits play a part with this type of bear market.Event Driven Bear Markets:Learn what triggers event driven bear markets and why do they NOT lead to a domestic recession. Why is this type of bear market vulnerable to trade and geopolitical events.COVID-19:Learn why the current economic conditions fit nicely into an Event Driven Bear Market. However persistent macro uncertainty can introduce structural risk.Equity Performances with these 3 types of Bear Markets: Learn what the average length and average draw-down of each Bear Market type. How does the equity performance look after entering Bear Market territory.
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