Being smart with $$ - Crappy earnings = Roth conversion opportunity

Were your earnings crappy this year? Your silver lining may be to convert some Traditional IRA assets to a Roth IRA at a lower tax rate than if you earned more money.  But year end is days away so get that done if it suits your needs.  Let me know if you want to know more.
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com

Being smart with $$ - Even half of recent stock returns would be great

The stock market may be down slightly for the year. But the 3-year average annual return for the S&P 500 index of large stocks is a positive 12%. Long term investors will have good and bad years but we should be quite happy with 12% average returns. I'd be happy with half that in the years ahead. Even at just 6%, your money would double in about a dozen years.
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com

Being smart with $$ -- Too late for "file and suspend" but don't miss the next thing

Have you heard of the "file and suspend" strategy for squeezing thousands of extra dollars out of Social Security?  No? Well you can ignore it now because Congress put an end to it last month (though a few people over 66 can still benefit.)  But if you haven't heard of it, you should seriously consider having a financial advisor so you don't lose thousands on the next thing like it.
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com

Being smart with $$ - Don't click that link!

I got an email from my bank saying I need to click a link and fix a problem. Or did I? Classic trick by evil computer criminals trying to steal your data. They create lookalike sites designed to fool you. NEVER click the link. Always go directly to the bank's website by typing in the domain yourself. If there's really a problem, they will tell you when you log in.
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com

Being smart with $ - Even Warren Buffett can't always beat the market

Warren Buffett is a genius no doubt. Many assume you will always do better than the stock market if you invest with him. However, if you invested $10,000 five years ago, you would have $2,800 less today with Buffett than if you just put your money in an unmanaged S&P 500 index fund.  No stock manager has a crystal ball, and after taking out fees, even Warren Buffett can have a hard time beating the market average.
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com

Being smart with $$ - Rules for investing

Investing rules (per K. Kristof in Kiplingers Nov '15): 1) Diversify your investments (not all eggs in one basket); 2) Rebalance (yesterday's outperformer is often tomorrow's underperformer); 3) Dollar-Cost Average (keep investing regularly); 4) Keeps Costs Down (investments with high fees will underperform more often than not).   She forgot to mention: Save first and only spend what's left (you can't control how well the markets do but you can control how much you add to your accounts.)
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com

Being smart with money - Markets don't do what you think

The stock market is easy to predict, right? Bad news makes it go down and good news makes it go up, right? So terror attacks should lead to stocks falling as airlines and hotels will surely make less money. So if you traded on this idea, you have been fooled by the notion above. The overall market has been up all week.  Stick to buy and hold. Stock market winners are those who buy early and often and stay the course.
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com

Being smart with $$ - Lucky or good?

Are successful money managers actually talented or are they just lucky? Far less than half succeed in beating a simple index of stocks which is worse than flipping a coin. Kiplingers columnist and hedge fund manager Andrew Feinberg announced he's giving up and going mostly with index funds to be sure of getting average returns. (Nov '15)  You can increase your chances of outperforming money managers by doing the same. This is a case where average is very good.
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com

Being smart with $$ - Even Warren Buffet can't time the market

Do you buy and sell stocks when they seem cheap or rich?  Warren Buffet says he has 0 ability to time the markets.  But he says he knows "stocks are going to be higher, and perhaps a lot higher, 10 years from now, 20 years from now."  (Kiplingers Nov '15) So he invests how you're supposed to:  buy and hold for the long term and don't let short-term volatility spook you.
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com

Being smart with $$ - Stocks recovered but what's next?

Remember when we were all panicking about the stock market? Well October was great and large-cap stocks are UP for the year! Where are stocks going next? No one knows (especially in the short term) but I'm betting my retirement money they'll be higher in 10 years and if history is a guide, the odds are with me. 

Larry Pike, CFA

www.clientpriority.com

Being smart with $$ - Become a MULTI-millionaire

Become a MULTI-millionaire.  Get to the first million by saving 10% of your $75k salary over 30 years (says Money Mag Oct '15). And then just 10 more years of doing the same makes you a MULTI-millionaire!  $2 million is "multi," right? (Assumes 3% raises and 6% stock market returns.) Don't have 40 years to save? Don't use that as an excuse.  The time to start saving for retirement is always right now.
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com

Being smart with $$ - Don't invest like the Greeks

Do you hate international stocks and prefer to invest in U. S. companies only? What if you were Greek? Would you buy U.S. stocks or Greek stocks? Apparently Greeks like their own country too and 82% of their stock money is in Greek companies. Yet their stock market makes up less than 1% of the world's stocks (says Kiplingers in an Oct '15 article). I wouldn't recommend putting all your money in the Greek stock market but there is a diversification benefit of having some exposure to stocks outside the U.S.
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com

Being smart with $$ - Pretend you're not as rich

$100,000. If you and your spouse earn that much combined you're in the top 22% of earners (total household income according to CNNMoney). $150k puts you in the top 10%. Hey, maybe that group could pretend they're only in the top 30% and save the rest for retirement.

Larry Pike, CFA

www.clientpriority.com

Being smart with $$ - Don't be a typical single, start saving early

Save early and often. That's how you get to a financially sound retirement.  But Mintel Group says that only half of singles have a retirement savings plan, compared to 84% of married couples (as reported in 401kspecialistmag.com.)  Here's the killer: Saving $1000 per year in the first 10 years after graduation is likely the same as saving $1000 per year in the following 35 years.  No matter where you are now, the later you start the harder it gets. So get started!
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com

Being smart with $$ -- Wall Street projections: too little too late

Are Wall Street predictions worthless? Today Goldman Sachs lowered its estimate of where the stock market will end the year by about 5%. But this prediction is made AFTER the market has fallen 8% year to date. It may have been more impressive if they changed their predictions BEFORE the market fell. But if you still have faith, they believe the market is going up 6% from here before year-end.
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com

Being smart with $$ - Stocks are up, not down!

Losing money is no fun! Wouldn't it be nicer if stocks were up, say, 14% instead of down? Well, actually, they are. That's the 3-year average return on the S&P 500 stock index. And since the stock market is for long-term investors doesn't that seem like a more important measure than "year to date"?
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com

Being smart with $$ -- Lose less money

Lose less money. It's hard to watch our stock portfolios fall in a turbulent market. But the one thing you can do to improve performance without taking on more risk is to reduce fees. They add up to so much more than you would think. (Originally posted to social media 9/4/15.)

Larry Pike, CFA

www.clientpriority.com

Being smart with $$ -- Financial black holes may be costing you thousands

Thousands of dollars. That's what I helped my last client save in unnecessary fees and earn in additional investment income without changing their exposure to the markets or taking on any more market risk. And this is an annual benefit they will earn each year. Have you considered if there are similar black holes in your financial life?
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com

Being smart with $$ -- Are there bad times to buy stocks

Does it seem crazy to buy stocks when the market is crashing? And does it seem crazy to buy stocks when markets are healthy but prices are so high? If you bought stocks at the highs in 2000 before the crash, you would be up about 29% today. If you bought stocks at the lows of the 2001 crash, you would be up about 130% today. And that doesn't even include dividends received. So if you have a long-term horizon, when is it a bad time to buy stocks?
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com

Being smart with $$ -- Buy before a crash and get rich

Buy stocks right before a crash and you can still get rich. Ben Carlson, investment manager and writer, studied what happened if you bought stocks right before the crashes in 1973, 1987, 2000 and 2007. If you put a quarter of your portfolio in the market right before each of these crashes and never sold, your portfolio would be six times higher today. (As seen on CNBC).
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com

Being smart with $$ - Don't panic if you are invested properly

Stocks are down huge! But remember why we invest in stocks in the first place and if your portfolio is appropriate for your long-term needs then don't panic.  Ask me for my full investor letter that addresses today's market.
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com

Being smart with $$ -- Remember why we invest in stocks

Tough week for stocks. But since we can't go back in time and sell last week, we must not be too hasty about bailing on our portfolios and remember why we are invested in stocks in the first place. 

Larry Pike, CFA

www.clientpriority.com

Being smart with $$ - Warren Buffet says indexing is best

Where does Warren Buffet want his money invested?  Index funds.  For his heirs, he wants their inherited money to go 90% into an S&P 500 stock index fund and 10% in money markets.  He says he expects this portfolio to do better than results by most other investors including pension funds, institutions and individuals.  Are you going to argue with Warren Buffet?
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com

Being smart with $$ -- Millionaires like index funds

Want more help being a millionaire? Actual millionaires are more likely to be index fund investors than non-millionaires says Spectrum Group in Money Mag (Aug '15).  Millionaires seem to know that index funds as a group outperform actively-managed funds as a group. Plus, index funds are more tax efficient which is another way to improve investment performance over the long-term.
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com

Being smart with $$ -- Frugality can make you a millionaire

Who wants to be a millionaire? Step one on how to get there: Live below your means. Most millionaires say frugality and saving early and often is what got them to 7-figure portfolios, according to surveys by PNC and Spectrum Group mentioned in Money Mag (Aug '15). It's never too late to start building more wealth.
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com

Being smart with $$ -- Variable annuities in your IRA? Pass!

Variable annuities. When a salesperson suggests you buy a variable annuity in your retirement account, he/she probably cares more about commissions than about you. Annuities are considered an option for people who want tax deferral but have already maxed out their other retirement accounts. But why would you need a tax-deferred product in an account that is already tax deferred? The salesperson will argue that other bells and whistles make it worthwhile. Don't listen to them. The enormously high fees in these products make the salesperson rich and keep you poor.
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com

Being smart with $$ - Where to invest

Where to invest? Some say stocks are high (though others disagree). Some say bond yields are too low (though others disagree). Some say cash under your mattress is safest though you'll lose money for sure that way as inflation erodes your value. So what to do? Create a portfolio that's right for your long-term needs and don't worry so much about short-term volatility.
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com

Being smart with $$ -- Hall of Fame and Retirement Saving

Congratulations Pedro Martinez. To get into the Hall of Fame takes years of hard work and diligence.  Same as saving for retirement .
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com

Being smart with $$ -- Different kinds of financial advisors

Networking events are great.  Where else can you find out about a Bus that has Spin Bikes on it and you can take a Spin Class during your commute to work? (www.bikebus.com)  These events also show that most financial advisors operate under models that generate high fees from their clients.  Client Priority Financial Advisors LLC's model of providing advice and guidance on an hourly fee basis is much harder to find.  CPFA LLC does not earn commissions so it won't recommend products on that basis, it does not need to sell internal company products and it does not charge you year after year even if you are not seeking any help..
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com
- Blog: www.clientpriority.blogspot.com

Being smart with $$ - Gold, What Is It Good For?

GOLD, HUH, WHAT IS IT GOOD FOR? It's down over 2% today.  It's below where it was 5 years ago vs. stocks that are up about 100% in that same time frame.  Some advisors say Gold is a good hedge against  inflation and others like it as a safe haven in scary times (and it sure has shined in some times like those).  But why does it have value beyond the pretty jewelry it makes?  It doesn't earn anything like stocks do (when companies generate profits) or like bonds do (when borrowers pay you back your money plus interest).  It has no intrinsic value other than the value we attribute to it.  Gold will have value as long as people say it does.  I just don't want to own too much when they decide they no longer want to pay $1000 for a small chunk of metal.
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com

Being smart with $$ - Zero dollars doesn't last long

Zero.  That's how much 26% of people surveyed said they have saved for emergencies.  (Money Magazine July 2015.)  If you lose your job, you could plow through zero dollars faster than images of Pluto get transmitted back home.  Scary.  How will you pay for next month's premium cable package?
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com

Being smart with $$ -- Be a 401(k) millionaire

Oh to be a 401(k) millionaire.  In the July 2015 Money Magazine letters column, one fellow writes that he did it over 31 years not by being smart, but just by investing in good markets and bad.  Stocks go up and stocks go down.  And it's painful when they fall but if you keep investing after the decline, you are buying more shares per dollar invested.  And that consistency may make YOU a 401(k) millionaire.
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com

Being smart with $$ -- What kind of advisor do you want?

Financial advisors come is all shapes and sizes. And approaches too.  Some only want to sell you insurance because they work for insurance companies.  Some want to gather your assets because they collect 1% of that amount from you every year (which can be a surprisingly large amount of money over the years.)  Some get commissions or incentives to sell their own company's products.  And some work for an hourly fee and have no incentives to sell anything that isn't in your best interest.  They just give advice and provide solutions without being influenced by outside incentives.  Client Priority Financial Advisors LLC is that last kind that really believes the Client IS the Priority.
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com

Being smart with $$ -- You're slower than the headlines

Does a scary headline make you want to sell your stocks? Well, you're too late.  Before you can hit the "Execute Trade" button, the price has already adjusted to the news.  So do you still want to sell?  After the "no" vote in Greece this weekend, many wanted to punt stocks.   If you went to sell Apple stock the instant the market opened today, you sold at price that was $1.50 below the prior close.  But what comes next is always the real mystery.  After half a day of trading, it regained half of what it lost at the open.  Remember that very few people have any unique insights that might give them an edge and market timing rarely works.
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com

Being smart with $$ -- Stocks are always where investors think they should be at that moment

Greece fire! Investors voted with their brokerage accounts Monday that the Dow was worth 350 points less due to Greece's financial woes.  Does that mean stocks will keep falling?  If they thought prices should be even lower, the index would have closed lower.  Stocks at any point in time reflect what investors collectively think they are worth at that moment.  Be careful believing that yesterday's prices will predict tomorrow's action.  Sometimes they seem to.  Sometimes they don't. Since Monday's close, stocks are up.
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com

Being smart with $$ - A chance to make money but more likely lose it

An "actively-managed fund at least has a shot at (beating an index fund)" is a statement heard in Kiplinger's (07/2015) as an argument for paying for active management.   Yet the same article admits that the S&P 500 index funds beat actively-managed large cap funds by a half percent per year for 10 years! On a $10,000 investment, that difference would have cost you $1000.  Yes, active funds can outperform but they can also underperform and are more likely to do so.  I will stick with the sure thing.
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com 

Being smart with $$ - Warranty over? There's other solutions

Two of my Vizio TVs dead each after less than 2 years of owning them and the warranty is only for 1 year. But wait! Don't neglect extended warranties.  Your credit card probably doubles the warranty. Bought it at Costco? They double the warranty too. Dead gadget? Call the manufacturer.  They often help even if past the warranty date. Sometimes with below-market replacement options.
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com

Being smart with $$ - Boring indexing may make you richer

Still think index funds are boring? In the last five years Vanguard's index 500 fund has beaten actively managed large-cap funds by an average of 1.73% each year. Think that doesn't matter? Over 20 years of steady annual investing that difference could cost you 20% of your money which might be tens of thousands of dollars. (Source: Morningstar in the Economist online 2/13/15)
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com

Being smart with $$ - Accidental indexing

Are you indexing and didn't know it? You might own an actively-managed large cap fund that owns 200 stocks and charges a 1% management fee. You might own 2 such funds each with 200 stocks. You may even own 3 or 4, each with 200 stocks. At that point you are pretty close to matching the Vanguard 500 Index Fund that charges a 0.05% fee. Except YOU are still paying a 1% fee which makes it a pretty good bet you are doing worse than if you just bought the Index 500 fund.

Larry Pike, CFA

www.clientpriority.com 

Being smart with $$ - Small amounts matter with fees and performance

Yesterday I reported that just 1% in fees over 40 years could cost you 1/3 of your portfolio (see prior post for details.) But what if you pay 1% in fees AND the investments that your advisor's boss tells him/her to recommend also underperform by 1%? Now your account is less than HALF of what it would be without the fees and the underperformance.  The little stuff does count!
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com

Being smart with $$ -- Fees matter a lot

Don't think fees matter? An extra 1% in fees over 40 years can cost you 1/3 of your wealth! This loss is the cumulative effect of the fees plus lost earnings on those fees with 6% annual investment returns (per bankrate in Money Mag May '15). And there's so many different ways to get hit by fees. Ask me more.
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com

Being smart with $$ -- "Annuity" may not be a dirty word

Dirty words. You know a few but is "annuity" one of them? Many believe that annuities are designed to make your financial advisor rich instead of you. There is an argument to be made that that's true.  However, not all annuities deserve the bad rep.  Immediate fixed annuities are a simple product where you exchange cash today for a guaranteed monthly paycheck for the rest of your life. That's good peace of mind and there isn't a salesperson getting rich off selling it either.
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com

Being smart with $$ -- True cost of financial advice

$40,000 is what your financial advisor cost you?!?!?! And that's on EACH $100k you have invested with them?!?!
Thats the true cost over 20 years of an advisor that charges a 1% annual fee according to Kiplinger Retirement Report (March 2015). It assumes 4% annual returns on your portfolio with 28k being fees paid and 12k being lost earnings on those high fees. If your portfolio earns more than 4%, your cost could be dramatically higher. Ask me about the difference offered by fee-based planners.
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com

Being smart with. $$ -- Beware claims of profitable trading trends

"YOU CAN BE A DAY TRADER," shout commercials on CNBC. They implore you to use trading platforms that take advantage of historical trends. But Harvey Campbell, finance professor at Duke, (in Kiplingers March 2015) says if you look hard enough for patterns you'll find them. But he said it's like saying stocks that start with "H" did best last year so buy "H" stocks. When you test for enough factors, by chance there has to be some that appear to matter, even if they don't.
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com

Being smart with $$ - Hedge funds better for the manager than the investor

Hedge funds. Only the rich are lucky enough to buy them, right? And the hedge-fund managers get paid very well for offering such great returns. The managers usually get a 2% management fee which by itself is quite a bit. But they also get 20% of the returns they provide. Wow. That's a nice payday when hedge funds returned only 3% in 2014 compared to over 11% for stocks (says CNBC). In 2013 stocks did 26% vs. 9% for hedge funds! Sounds like the hedge fund managers have a much better deal than the investors.
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com

Q1 2015 Quarter End Letter

Dear Clients and Friends:

The first quarter of 2015 has come to a close and as always there is plenty to worry about in the financial markets. Political instability around the world and economic concerns both here at home and overseas make investing a difficult endeavor. However, as you go back in time, it is hard to find a period when there have not been concerns in the markets. And when there are few concerns, the markets are typically at very high levels which should worry those who realize that the next hiccup can lead to a big drop. I remind you, as always, that investing should be pursued as a long-term proposition and short-term concerns should not dictate your portfolio. The majority of professional investors can not time the market or beat the market averages and therefore we should be careful not to believe that we can do so either. Long-term investment returns should get us to our long-term goals and that will be our reward.

The Dow Jones Industrial Average of large stocks closed the first quarter almost exactly where it started. A 0% return is not what we hope for. However, if you maintained a simple diversified portfolio of large and small U.S. stocks, international stocks, bonds and REITs, you would have realized a return for the last three months of approximately 2.5% (appropriate portfolio allocations and specific results would differ for each investor). We can never predict in advance which sector of the markets will be the outperformer but if we maintain a proper diversified portfolio then we can benefit by the sectors that will do the best. And diversified portfolios reduce your volatility and risk along the way.

It is worthwhile to review your portfolio semi-annually or at least annually to discuss changes in your life that may require modifications to your investment mix or to otherwise rebalance back to your target allocations.

Thank you for reading my posts.

- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com


--------------------------------------------

Being smart with $$ - Easy to be fooled when buying a car

Car buyers: We are all so easily fooled by things car salespeople say. Key points to remember: 1. How much your old car is worth has nothing to do with what you should pay for a new car; 2. Indicating a monthly payment you can afford will rarely get you the best deal; 3. The sticker price is meaningless. --> Shop at multiple dealers...they will be aggressive on price when they know someone else might be doing the same. 

Larry Pike, CFA

www.clientpriority.com 

Being smart with $$ -- Never a good time to buy stocks?

There is never a good time to buy stocks. Or so it often seems. They are either falling and who wants to buy something that is going down? Or they have just gone up and who wants to buy AFTER you missed the increase? But if you believe stocks can continue to provide historical average annual returns above 8%, then worrying about short-term moves can keep you from investing and cost you. 8% annual returns would double your money in 9 years and quadruple it in 18.
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com

Being smart with $$ - Don't extend when you refinance!

More on refis? Extending the payoff date kills your long-term financial plans. People tend to spend the money in their pockets. If you refi back to another 30 year mortgage you have more money in your pocket but now you will be making that mortgage payment forever.  Win-Lose.  Instead of refinancing a 15 year old mortgage into a new 30 year mortgage, refi into a new 15 year loan.  The rate will be even lower, your payments will fall and a bigger portion of your payments will now be going towards principal which builds your wealth. Win-Win.
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com

Being smart with $$ -- Refis can make you poorer

The problem with refis... When you refi a 300k mortgage 10 years into it, going from 4% to 3%, you may lower your monthly payments from $1430 to $990. BUT---> only $200 of that is saved interest. $240 is from paying less principal because you extended your maturity by 10 years. When you go spend that $440 you saved, your net worth is now LOWER than if you didn't refi.
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com

Being smart with $$ -- Don't reduce your mortgage payment

The Fed hinted today they might raise short-term rates at some point. That doesn't necessarily mean mortgage rates will rise anytime soon but if you refi to grab today's low rates, DON'T start paying less per month just because you can. Pay the same amount as before and you'll get your mortgage paid off sooner and save thousands on interest.
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com

Being smart with $$ -- Acquire assets, not liabilities

Rich people acquire assets and poor people acquire liabilities says Robert Kiyosaki in his book "Rich Dad, Poor Dad." It's probably true most of the time.  Acquiring an asset (buying an investment) means your wealth grows with investment returns.  Acquiring a liability (such as getting a loan to buy a luxury car) means you keep making payments of principal plus interest on the loan.  Assets snowball into more and more wealth.  Liabilities snowball into a bigger and bigger drain on your paycheck.  Acquire wisely.
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com

Being smart with $$ -- Shop for that best rate!

Are you looking at refinancing and thinking the rate you were offered seems "good enough?"  It may seem like too much trouble to shop around, but laziness can be costly.   If you can find a rate that's just 1/8 point better, that will save you about $375 this year on a $300k mortgage.  And $375 next year.  And $375 the year after.  And so on.  And if the lender knows you're not shopping around, they might not feel inclined to step up with their best rate.
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com

Being smart with $$ -- Brew coffee and save $80k

In the news: The inventor of the Keurig K-Cup regrets inventing it due to the environmental impact. But what about the financial impact?  Brew two cups of coffee per day instead of using K-Cups, save the difference from graduation to retirement, and you will likely have $80,000 more in your retirement account. $80k and better coffee! Again, the little things do count.
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com

Being smart with $$ -- Choosing how to spend money

As overheard in LL Bean (a mother to her daughter when looking at a price tag): "Well, you can either buy quality or you can buy food." She makes a great point. We have limited resources that need to be allocated appropriately.  You have to pay for housing, buy basic groceries and fund your retirement account. Then figure out how to spend the rest without going over.
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com

Being smart with $$ - Living on limited income

Isn't it hard to live on the income we earn these days? Now how about if we were forced to put 10% of our income into our retirement account leaving us with even less money for today's needs? And what if there was no such thing as debt or social welfare programs? Would we find a way?
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com

Being smart with $$ - Don't let marketers fool you

Marketers are fooling us into thinking we can afford anything.  Instead of telling us that something costs $300, they say it's only $10 per month for 33 months. With interest that's still $330 no matter when you pay it. Add a Nav system to your car? That's only $26 more per month on your 5-year loan.  But it's still $1500+. Is it no wonder that 3 in 10 millennials don't have a savings account (says USA Today/Bank of America)? And of those that do, 40% have less than $5000 saved.  Don't be the next marketing victim. That $36 per month matters!  It can go into savings and turn into $100,000 or more for retirement.
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com

Being smart with $$ -- Cheap or expensive?

Cheap or rich? WTI Crude Oil was around $100 in the middle of 2014. Today it's down almost 50% from that level.  It sounds cheap now, right? Well, a couple weeks ago it was around $45.  Now it's UP 17% from that low.  It sounds expensive, right?  So is it cheap or rich? The global community of investors says that it's priced exactly right at this moment.  If not, buyers or sellers would move the price.  When you say it's cheap or rich, you're saying you know better than the rest of the world.  That's a bold claim to make.
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com

Being smart with $$ -- Moving money too late

Isn't it frustrating when your money is invested in X when Y is the big performer? Isn't it tempting to move all your money to Y when you see that happen? Many people do. The problem is, moving money after you missed the rise can be like closing the barn door after the horses already got out. Last year international stocks underperformed U.S. stocks by a big margin. This year? International is already 3% better than U.S,  Stick to your diversified portfolio and stop timing the market. It rarely works.
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com

Being smart with $$ - More 401(k) millionaires

More millionaires inside 401(k)s says Fidelity via Yahoo Finance.  72,000 workers did it as of the end of 2014 says Fidelity.  How did they do it? The old fashioned way: They saved as much as they could and as often as they could.  Fidelity says they saved 10-15% of their paycheck, got the company match and took advantage of catch-up contributions allowed after they turned 50.  If any old Joe can do it, you can too.
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com 

Being smart with $$ - You probably own Apple

Apple astounds again with its earnings announcement.  The stock is up over $8 as I type.  Are you kicking yourself for not buying it? Well, if you own an S&P 500 index fund in your IRA, you DO own Apple.  For every $100k of the S&P 500 index in your IRA or 401(k), you own about 30 shares of Apple.  That's because Apple is about 3.5% of the index.  Congratulations on being so smart and buying Apple!
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com

Being smart with $$ - Data mining works looking backward but not so much forward

In late December I highlighted how CNBC said the stock market historically rises by over 1% in the last 5 days of the year compared to less than 0.2% for other 5-day periods.  An opportunity???  I also pointed out that it is likely data mining as statistically speaking, SOME 5-day periods HAVE TO outperform.   So how did the market do in those last 5 days of 2014?  It fell by 1%.  As always, be careful what you believe out there.  And call me if you need SENSIBLE advice.

- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com 

Being smart with $$ - More $ may not = more happiness

Studies show that people get happier with their lives as they have more money but only up to a point. After their basic needs are met, people get happier by a smaller and smaller amount as they have more money. And at a point, adding even more money no longer makes them happier. So instead of shooting for interstellar growth with your portfolio, just shoot for one nearby star. You are more likely to hit that attainable target and less likely to fall all the way back to Earth.
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com

Being smart with $$ -- Passive beats active

Last year Passively Managed Mutual Funds (aka Index Funds) returned 1.2% more than Actively Managed Funds according to Money Magazine (through 11/2014). Makes sense.  That's about the amount of the fees Actively Managed Funds take out to pay the managers.  Individual investors did even worse, trailing Index Funds by 2%.  Individuals have a knack for panicking and selling low or jumping into a winner after a stock has already risen all it's going to.  The most boring choice wins again.

- Larry Pike, CFA
- www.clientpriority.com

Being smart with $$ - Take investment advice with a grain of salt

Do you like salt? Well, at least one grain should be taken along with most investment advice you receive. I read 2 finance magazines today.  Money Magazine has an article "Why China is Over." Kiplinger's Personal Finance has an article "Time to Buy Chinese Stocks."  Both written by smart people.  They took the same information and came to opposite conclusions.  So remember, next time you read about an investment tip, ask for the single-grain salt dispenser before acting.

- Larry Pike, CFA
- www.clientpriority.com

Larry Pike, CFA quoted in an article

Larry Pike, CFA of Client Priority Financial Advisors LLC is quoted in a budgeting article in the online student publication "Student Health 101". Don't know where your money goes? Try budgeting.
Click or copy this link to read:  http://readsh101.com/0115/demo.html
Click the arrow on the right to get to page 19.
Larry Pike, CFA
www.clientpriority.com

Being smart with $$ -- 2014 Recap

Dear Clients and friends:

I would like to wish you a happy new year and a prosperous 2015.

The year that we now leave behind us was a positive one in the financial markets. After a huge increase in stock prices in 2013, many feared that 2014 could be a year where we would give back some of those returns. And if you were someone who likes to time the market, you may have sold some or all of your stocks at the beginning of last year.  As it turns out, the overall U.S. stock market returned 10.5% in 2014. Large stocks did better than small stocks and high dividend payers outperformed those that don't pay out much of their income. International stocks, were negative for the year by 7.7%. REIT funds returned over 25% and bonds returned a respectable 2.9%. A model portfolio for a family with school-aged kids returned approximately 7.5% overall.  Results for other portfolios with different risk profiles would vary. 

As briefly mentioned above, timing the market in an attempt to take advantage of a sector that you believe will outperform, can be dangerous. The most experienced stock market investors have a very questionable record in timing the market. Those who reduced their stock positions at the beginning of last year missed the strong performance in stocks. No one can predict how each sector of the financial markets will perform in 2015 and last year's winners may be next year's losers or they may again lead the pack.   Therefore we must continue to maintain the portfolio that is right for our personal circumstances. Maintaining a diversified portfolio prevents the kind of catastrophe that would occur if your portfolio was made up entirely of one market sector and that sector substantially underperformed.

It is useful to periodically rebalance your portfolio such that you make adjustments to maintain your target weights for each sector. Rebalancing is generally recommended every 6 to 12 months except in the case of large market moves where you might want to address this more frequently.  A change in your personal circumstances would be another reason to address your financial plan sooner.

If you are someone who is still saving for a goal, you may note that contribution limits have increased in many savings vehicles for 2015. New limits are shown below:

401(k)                                                $18,000401(k) catch-up                                $6,000IRA and Roth IRA                              $5,500 (unchanged)IRA and Roth IRA catch-up             $1,000 (unchanged)Income limit to contribute to a Roth IRA (married filing jointly)                    $193,000(single)                                              $131,000

I am available by phone or email anytime if you have questions or require assistance so don't hesitate to contact me.  And remember that references are the greatest thank you I can receive if you believe I have helped you.

Warm regards, 

Larry Pike, CFA
Client Priority Financial Advisors LLC www.clientpriority.com

Being smart with $$ - Happy new year

January 1, 2015

Wishing your portfolio a happy new year. It had a pretty good 2014. A simple portfolio of 60% US stocks, 10% international stocks, 5% REITs and 25% bonds returned 7.5% last year. Hopefully you did that well. If anyone wants to guarantee me that return indefinitely, I will gladly accept it. 

- Larry Pike, CFA
- www.clientpriority.com