Being Smart with $$ - Local Banks' May Be Good for Distant College Students

Nice tip for Metrowest Boston families that will soon be sending a child to college out of the area. My friend at Needham Bank told me of their no-fee ATM accounts that allow students to use any bank ATM around the world and get reimbursed for the fees that bank may charge.  If your current bank doesn’t have multiple branches near the new school you could get hit with many ATM fees.  And the most convenient part of the Needham Bank account is that the parent can fund the account locally anytime more cash is needed (such as for that emergency kegger in the dorm. 21 and older please to tip that cup! And NO driving!)  Not in Metrowest Boston? Check your own small, local banks for a similar deal.

Larry Pike, CFA
www.clientpriority.com
Blog: clientpriority.blogspot.com

Being Smart with $$ - Wall Street Victims

Which is worse? To be invested in stocks and lose money as the market falls, or to not be invested in stocks and watch the market rise?  Neither are fun. Sitting out the market means your cash stash buys less every year because of inflation. And if you’re in the market and it falls, you just have less money. But unlike gambling in a casino, your money is likely to increase in stocks over the long term because most big companies earn profits every year that adds to their value and stock prices should eventually reflect all that new value created. So while you may be a Wall Street victim for being in the market on a bad day, in the long term you are more likely to be a victim for NOT being in the market.
Larry Pike, CFA
www.clientpriority.com
Blog: clientpriority.blogspot.com

Being Smart with $$ - Part of You Wants to Sell & Part of You Wants to Buy

The Stock Market!  Admit it.  Part of you wants to sell all your stocks because you think the markets might crash more and you’ll be a genius if you buy back at the lower levels.  And part of you wants to buy more stocks because this could be a dip that is a classic buying opportunity.  But the truth is, we have no idea which of the two scenarios is ahead of us in the short term.  Market timing has victimized so many before you and that includes many professional traders.  Keep your eye on the prize and invest for your long-term needs rather than guessing and gambling on the short term. 

- Larry Pike, CFA, Client Priority Financial Advisors LLC

- www.clientpriority.com 

Being Smart with $$ -- Buy? SELL? Maybe Turn Off the Business Channel

BUY! No…SELL! No wait, BUY!  That’s the message you may get if you watch the business channels long enough.  Well-respected analyst Jim Paulsen was recently on CNBC saying the market is significantly overvalued and may fall 15%.  Yet, Ed Yardeni, who is equally highly regarded, believes the market will be 9% higher by year end.  These statements were in two different articles side-by-side on CNBC.com.  Who will be right? Time will tell.  But a proper investment plan doesn’t bet on where the market is going in the next months.  I know too many investors who believed the doom and gloom story and missed the last couple of years of huge investment returns.  Maybe Paulsen will be right about a correction and they’ll get another chance to buy low.  But they’re missing the point.  It’s not about where the market will be a year from now; it’s about where it will be in 10 years or 20 years or whenever it is that you are retiring.  Waiting for a crash that puts stocks below 2016 levels may keep you on the sidelines for the rest of your life.  If you believe the market will be higher in 2028 then worry less about 2018 and turn off those business channels!  Instead, consult an hourly, fee-based advisor who can help you reach your goals.

- Larry Pike, CFA, Client Priority Financial Advisors LLC

- www.clientpriority.com 

Being Smart With $$ - Did Your Advisor Make You Enough Money?

“My financial advisor made me money so I don’t mind the fees I paid.”  But did she make you as much as she should have?  If not, that $5,000 fee you paid on a $500k retirement account doesn’t seem like a good investment.  A simple balanced portfolio of low-cost Vanguard funds returned over 17% in 2017.  So if you made 15% for example last year then you paid a $5,000 fee to lose $10,000 relative to what you should have made.  Don’t be fooled by advisors who tell you that you had a great year and made 10%. Of course the right portfolio is different for each person and someone requiring a lower-risk portfolio would have earned less but the return above is what many 50-something couples should have earned in 2017.  (This hypothetical starting portfolio is 50% US stocks/20% international stocks/25% bonds/5% REITs.)  The Vanguard Target Retirement 2035 Fund did even better with a 19% return.  The bottom line: If you’re paying high fees, make sure you are getting your money’s worth.  And ask me how sensible advice from an hourly, fee-based advisor may provide you with a different option.

- Larry Pike, CFA, Client Priority Financial Advisors LLC

- www.clientpriority.com 

Being Smart with $$ -- Thank Yourself for the Gift from Your Financial Advisor

Everybody loves getting gifts!  That’s why your financial advisor may send you expensive cigars or wine for the holidays.  If so, I hope you send him/her a note of thanks.  Or wait, maybe you should send the note to yourself.  Your fees are paying for the gift.  Is your advisor charging 1% of assets every year?  If yes, on a $300,000 retirement account these charges may be adding up to as much as $50,000 in fees plus lost investment earnings on those fees over only 10 years!  On a million-dollar account it’s likely over $150,000!  No wonder they are sending you expensive gifts.  They should be sending you a new 60-inch TV or even a car!  And then the question is, are you getting $50,000 of service on a simple $300,000 starting portfolio?  Perhaps an hourly, fee-based advisor can give you equal or superior help but without the huge, recurring annual fees. Let’s discuss the difference.

- Larry Pike, CFA, Client Priority Financial Advisors LLC

- www.clientpriority.com 

Being Smart with $$ - How We Fall for Market Bubbles

How do smart people fall victim to market bubbles? It usually happens like this:

1. First we watch others make crazy money every day from investments in an asset class. Like Bitcoin. Fundamentals don’t seem to matter and we realize there is likely a complete disconnect between where it is trading and what it may truly be worth. But that doesn’t matter when it goes higher every day. It’s frustrating to watch others make such easy money while we sit on the sidelines actually working for a living. So we decide to jump in, but only until the bubble starts to burst. Because we think we can see it coming. 
2. We hear of people that sell when it pops higher and buy it every time it drops 10% or 20%. And then when it reaches new highs this strategy seems genius. So we start doing the same.  Or maybe we just buy and hold and ride out the brief dips. 
3. This buy-and-hold AND buy-low, sell-high strategies both seem to work. But then one day we buy low, but instead of moving higher it falls another 10%. We have been accustomed to these drops and believe it is just a chance to buy even cheaper before the next move higher. So we hold on or even buy more. 
4. As the asset class keeps falling, we keep holding believing that something that recently traded for $16,000 must surely recover from $10,000 (even though it was well below $10,000 only a month ago and below $2,000 at the beginning of the year.) 
5. As the asset class continues to plummet, it feels too late to bother to get out and we hang on hoping for some miracle recovery. This never comes.
6. Finally, we ask ourselves how we could fall for something that was so obviously a bubble. Didn’t we learn from the tech stock bubble which fell so much that 10 years after the bubble burst it was still down 50% from its peak?  And we walk away poorer. Hey, we can skip this year’s vacation. Next year we will make it back on some new trade that appears to be going unstoppably higher.

- Larry Pike, CFA, Client Priority Financial Advisors LLC

- www.clientpriority.com 

- Blog: www.clientpriority.blogspot.com