Last week we saw the Dow formally enter correction territory, meaning the market dropped by more than 10%. This is what markets do: they go up, until the herd feels like its time to take some profit off the table and sell, and then they go down. And then back up again.
This correction is not like others we’ve seen – it was/is driven by a specific fear, namely the Coronavirus’ effect on world economies.
COVID-19, as it is formally known, has now shown up in Florida. As I write this, there have been 2 U.S. deaths. These have occurred in vulnerable, sickly people. From the CDC website, the symptoms are mild to severe respiratory illness, with fever, cough, and shortness of breath. Many patients get pneumonia in both lungs. The statistics coming out of China are unreliable. It seems that most people who get the virus recover from it....
I’m here to tell you once and for all.
Yes, I know . . . this is a little off the beaten path for me.
I usually write about financial topics, given that I’m a professional financial planner. But occasionally some NIGO aspect of the world (that’s Not in Good Order, in my professional parlance) comes to my notice with such frequency that I just can’t take it anymore. Sort of like the crescendo in Lucy in the Sky with Diamonds. It builds and builds, and you know that a climax is coming.
Well, today it peaked, and I’m compelled with great generosity of spirit (and indeed, humility) to set the English-speaking world right.
Ready? Here it is: data is the plural of the singular datum. There is your pronunciation: dāta with a long a. Not dăta with a short a. Never ever EVER.
Now that that’s settled, let’s turn our attention to the verb...
By Glenn J. Downing, CFP®
I’m sure you’ve heard the term before: asset bubble. Sounds ominous, because a bubble is generally something that’s going to pop. On the other hand, I think of bubbles with champagne. So there are two images, both conjuring up a party that has to end at some time.
What does the term refer to in terms of market valuations? It means simply that at some point assets will be trading at a price that’s too high, and that the price will come down – maybe gradually, or maybe by a pop. Why is there so much in the financial literature today about asset bubbles? Because there appears to be a big asset bubble in the making.
Before I go on, let me define two terms:
By Glenn J. Downing, MBA, CFP®
As many of you know, I am a CFP instructor with Zahn Associates and have been for many years. Currently, I am reviewing the material for General Principals of Financial Planning, which I’ll be teaching soon. Part of that course is college funding.
In the context of the material, this section teaches the time value of money calculations. For example, if the client has a newborn who absolutely will be attending Harvard at age 18, how much new annual saving is necessary assuming 5% inflation and 8% earnings? Siri tells me that the full freight now is $78,200.
Ready for the answer? Sitting down? $18,743.42/year. Something most new parents can do, right?
I personally feel that if I have brought a child into the world, I have a responsibility to that child to give him or her the best start possible, and that includes a solid education. Yet college funding numbers look stratospheric. In this example, one year of college may very well cost more than one...
I came to financial planning as a profession in my 40’s, having made a mid-life transition from retail management. I worked in both department stores and specialty retail and generally enjoyed the work. I always enjoyed Christmas in the stores – the music, the new fragrances, the decorations, and generally upbeat anticipatory atmosphere.
Christmas time was grueling, however. The amount of merchandise that comes into a store through its loading dock, and then out the doors in the customers’ shopping bags, is enormous. It is very physical work, in that all that merchandise needs to be unpacked, displayed, and stocked around the store. The associates who wait on you generally have competing priorities imposed upon them: great customer service, while getting the new merchandise out of the bins and on the racks.
No matter where I worked, at 6 PM on December 24th, there were always customers who needed to make last-minute...
In what should I be invested?
We make no recommendations before completing our due diligence. Only after we have a clear picture of your risk tolerance, income needs, tax situation, time horizon, and cash flow position do we make any investment recommendation.
There’s no such thing as a perfect investment. Each investment product on the market was designed to accomplish a specific purpose and has its own risk and reward characteristics. Whether it is a managed account with mutual funds, ETFs, individual securities, bonds, annuities and insurance products, our job is to match you with the appropriate vehicle.
Will you do socially responsible investing for me?
Yes of course. There are several mutual fund companies that screen their underlying investments for various social and/or religious criteria. by various
How much do I need to retire?
We can do a projection for you. For example, say you want to retire 10 years from now; you want to have an income of $100,000 in today’s...
What kinds of insurance do you offer?
We broker life insurance, disability income insurance, and long-term care insurance. In obtaining Insurance coverage for our clients, We shop the market for the most suitable product at the best price.
Can I get auto or homeowners through you?
No – that requires another license which we do not hold. As part of a complete financial planning engagement, we will evaluate the client’s risk exposure in these areas, and recommend coverage changes as appropriate. We are glad to refer you to insurance agents who can assist you with these policies. BTW we neither pay nor accept referral fees from other professionals, nor do we accept any liability for their actions.
What role does life insurance play in a financial plan?
A crucial part. A life insurance death benefit can complete the overall plan in the event of an untimely death.
Tell me about life insurance for tax-free income.
The strategy is to purchase a policy in such a way that...
Why do financial planning?
Short answer: because no one can hit a moving target. The financial plan informs all financial decisions: how to invest, what to save and where, and what insurance should I purchase or drop.
What should I expect when I come in to see you?
First of all, a warm welcome and a cup of coffee. We’ll meet in one of the conference rooms at our Miami office. We’ll give you a bit of personal introduction and will be interested to learn how you came to us.
From there, we listen. We want a general snapshot of your financial position, and we’ll really want to understand your specific concerns and goals for our engagement.
This is a time of seeing if we’re a good fit. You want to know if you feel comfortable with us. We want to know if you have reasonable expectations (i.e. you don’t want a 15% return per year with no risk). If all seems a go, we’ll enter into a financial consulting arrangement.
How many visits will this take?
I recently finished watching the entire Upstairs Downstairs series on Britbox. Easily sixty episodes in all. My viewing interests are usually limited to either WWII or British crime stories, so this was a bit of a departure for me, and one I thoroughly enjoyed. As the name suggests, it is sort of a Downton Abbey Lite. The time spanned goes from before WWI to the New York Stock exchange crash. It is the story of all the residents of 165 Eaton Place in London – the home of a member of Parliament who married a titled lady (the upstairs folks) and their household staff (the downstairs folk).
Richard Bellamy, MP, had two children – a married daughter in New York, and a son at home – James Bellamy. James was up at Cambridge, though no mention of a degree. He worked at a job he hated, and then joined his regiment as an officer during the Great War. This is a fellow whose newspaper and shoelaces were ironed for him. Life was a series of dinner parties, weekends at...
1. Create a budget.
If this sounds too obvious, I’ll say it again for reinforcement – are you maintaining a budget? Seriously. Miami is one of the flashiest cities in the world. If you don’t have a budget I’ll put it another way — Estas loco? It has been proven that our propensity to spend money in Miami is directly proportional to our physical proximity to Brickell/Downtown Miami and South Beach. A budget is by far the best way to keep track of your money. If you have a budget, you’re already way ahead.
2. Want to build up your credit score fast?
Pay your bills on time. In other words, “Do what you say you’re going to do, Miami.” Your payment history comprises 35% of your credit score. By contrast, your length of credit history accounts for only 15% of your overall score.
3. Time is your biggest asset.
Spend extra time with the people you care for most in life. This is easier said than done in Miami traffic. You’ll need to...