Saving for your own retirement could be called a socially responsible, self-sustaining endeavor. By planning for your own future, you put yourself in a position to help others instead of depending on others. But many people find that they want to take their generosity to another level with Socially Responsible Investing (SRI).1 Socially Responsible Investing is a strategy used by investors who are looking to promote ideals and values they feel strongly about. For example, an investor who feels strongly about education reform might invest in Microsoft but avoid Berkshire Hathaway. That’s because the Gates Foundation2 actively supports education reform and Buffett’s Sherwood Foundation3 actively opposes education reform. Whatever your personal ideals, you can find ways to invest that will promote those concepts. According to Forbes, SRI increased more than 76% to $6.57 trillion in managed assets during the period between 2012 and 2014.4 If you’d like to put your money where your heart is, you can participate in Socially Responsible Investing in the following ways: [+] Read More

The market endured a bumpy start to the year, but it also displayed strong resilience over the last few weeks to rally back into positive territory. Investors should use this experience to remember an important lesson: even when market volatility seems pronounced and temptations run high to shift away from stocks, the market can also overcome the short-term headwinds and recover quickly. The first three months of the year offer us a case and point: Figure 1. S&P 500 Year-to-Date (the lapses in the graph are trading holidays) [+] Read More

Retirement sometimes means being busier than ever, and for some that’s because you have re-entered the workforce with a new passion or a new project (the income is nice too). If you’ve returned to work or are thinking about it, it’s important to consider how your additional retirement income could affect other parts of your investment plan. Walk through these five questions with your financial advisor to see how you might be affected. 1) How Will the Income Affect My Social Security Retirement Benefits? If you are already collecting Social Security retirement benefits, and you are below the normal retirement age (between 66 and 67 for those born after 1943), then your benefits will likely be reduced depending on how much income you are making. The law states that for every $2 you earn above the annual limit ($15,720 for 2016), you get $1 less of Social Security benefits. This is known as the “earnings test.” [+] Read More

Passive investing – which is also categorized as index investing or simply ‘investing in Exchange Traded Funds (ETFs)’ – has gained popularity in recent years within the investment community. In 2015 alone, roughly $150 billion moved out of mutual funds while $150 billion moved into ETFs (according the Thomson Reuters). It is probably a coincidence that the money moving in and out was nearly the same, but that’s not the point anyway. What is clear is that ETFs are gaining popularity while enthusiasm for mutual funds is fading, and this is a trend that has been going on for years.1 Performance and fees are probably two key drivers of the sea change. Over the last 20+ years, the percentage of active managers (mutual funds and otherwise) that outperform passive indexes can range anywhere from 10% to 80%, but from year to year the actual number fluctuates widely.2 If an investor has a manager or managers that have a couple of years underperforming their benchmark (usually an index), the investor might grow tired of paying management fees and decide to take a passive approach instead. The theory behind taking a passive approach is fairly simple – it offers the investor less in management fees with index-like returns. But does it? There are two little-discussed flaws with the passive approach that can be influential (and detrimental) to performance. [+] Read More

Starting to save for retirement is an important first step toward achieving your goals. That said, retirement planning can seem overwhelming at times. The timeframe is long, and the future seems unclear. As you create a plan and develop your investment portfolio, however, you’ll see how having a solid plan can make you feel more confident about the future and ensure that you have attractive options available to you. Creating a plan is just the first step, however. After you have a plan in place there are still actions you should take on a regular basis to keep you on the right track, steadily pressing forward to your ultimate goal: a successful retirement. The following tips can help you to keep your retirement on track. [+] Read More

The recent market volatility has shifted focus away from the upcoming presidential election (a little), but there’s still not a day that passes without at least a few hours of campaign coverage. Take the build-up to November as you will, but we think we can all agree that until the actual results are in, it’s more rhetoric and political posturing than anything else. A topic du jour for political posturing is…you guessed it… the economy! Both parties try to persuade voters that their policies are better for the economy and the markets, so we decided to take a closer look at how the economy and stock market have performed under different kinds of leadership. As you review some of the findings below, please keep in mind we do not favor one party over the other—our primary goal is to help our clients reach their long-term goals, and how we view politics personally should not (and does not) play a role in the investment plans we create and manage. Also, the findings below should not set any kind of expectation for future returns depending on who wins. If anything, you should view the findings below as little more than ‘interesting cocktail party facts!’ So…Republicans or Democrats – Who’s Better for the Economy? Two Princeton economists performed some comprehensive research on the matter, in a paper titled “Presidents and the U.S. Economy: An Econometric Exploration.” For all of the interesting discoveries they make in the process, perhaps the biggest takeaway is that political party doesn’t seem to matter all that much The economy and stocks tend to perform better when a Democrat is in power, but Messrs. Blinder and Watson make it clear in their paper that gaining an edge in economic and stock market performance is more arbitrary than policy related: “It appears that the Democratic edge stems mainly from more benign oil shocks, superior [productivity] performance, and perhaps greater defense spending and faster growth abroad.” The analysis looked at a 64-year period starting with President Harry Truman and ending with President Barack Obama, which includes seven complete Democratic terms and nine Republican ones. Some findings: [+] Read More

Whether you’re hoping to move closer to family, downsize your home, or live in a place you’ve always dreamed of, many people choose to relocate during retirement. In fact, relocating can be an effective part of your retirement lifestyle planning, especially if you consider the financial implications of your new chosen home state. As you make decisions about relocating, you can use each state’s tax rules to your advantage to potentially save thousands of dollars. Perhaps, more importantly, you can benefit even more if you can find a state with tax rules that align well with your personal retirement goals. If you’re leaving a large sum of cash to you children, you might consider choosing a state with very low estate taxes. [+] Read More

The benefits of investment diversification have long been known, heralded, and applied to portfolio management. And that’s not likely to change going forward either – it seems highly unlikely that sometime in the future we’ll look back on diversification as some kind of antiquated investment tool that no longer works effectively. That’s because asset prices have been volatile for as long as anyone can remember, and they move in all different directions at different times. While diversification and asset allocation do not ensure a profit or guarantee against loss, the theory of diversification that “everyone talks about” is if you own a portion of each asset class in your portfolio, you can attempt to neutralize the impact of individual price changes—smoothing out returns with lower volatility. [+] Read More

Discussions about retirement planning usually begin with a basic question: What’s the cost of a successful retirement? If everyone had the same expenses, the same family situation, and the same retirement goals and aspirations, there could be a one-size-fits-all answer to this question. But each person’s situation is unique. That said, there are certainly rules of thumb that can be extremely helpful when it comes to retirement planning. Using general guidelines—with a healthy helping of personalization—you can answer the very important question of how much you will need to have a successful retirement. Let’s first take a look at general guidelines, and then we’ll look at the ways each person needs to personalize retirement planning to fit their unique situations. Rules of Thumb Everyone can begin their retirement calculations from a few basic rules of thumb and then personalize from there. The following guidelines can help you get a rough, generalized estimate of what you’ll need for a successful retirement. [+] Read More