Benefits of Rebalancing

Connie Brezik with Buckingham Strategic Partners, 8/27/2020

Diversifying your investment portfolio means putting together a mix of stocks, bonds and other investments with your financial goals, time horizon and risk tolerance in mind. Your mix is called your asset allocation. The idea behind diversification is that, overall, owning different kinds of investments should earn you higher returns with less risk than holding any individual investment.

Establishing the mix, or asset allocation, right for you is one of the most important factors in determining long-term investing success. But then you must do the ongoing maintenance necessary to produce your desired results and control your risk. This occurs through a process called rebalancing, which restores your portfolio to its original asset allocation and risk profile.

Each investment in your portfolio will increase or decrease in value at varying rates, changing your asset allocation. Asset classes, or groupings of similar types of investments, will have months, years or even decades when they outperform or underperform other asset classes. Examples of major asset classes are stocks or equities, bonds or fixed-income investments, and real estate or other tangible assets. Each major asset class can be further categorized into greater detail. For example, equities can be broken into large cap, small cap, U.S. (domestic), international, growth, value and other buckets.

Think about it like preparing a balanced meal to include a protein, vegetables, fruit and grains. Specifically, you could have chicken, asparagus, watermelon and whole wheat rolls. Or you may want BBQ ribs, french fries, roasted peppers, cantaloupe and chocolate cake.

You can rebalance in a couple ways. You can get back to your desired asset allocation when you add or withdraw funds. A way to generate cash is to let dividends pay out instead of automatically reinvesting. Another method is to sell investments in an asset class that has increased in value beyond its set percentage and purchase investments in asset classes that have declined in value.

You do not want to rebalance too frequently, and you certainly want to be aware of whether doing so will generate taxable income. Rebalancing with added cash has its advantages. This can limit the number of trades you need to make (and thus trading costs) and minimize taxable capital gains. You may want to delay rebalancing if it incurs short-term capital gains, as they are taxed as ordinary income. If capital losses can be harvested, you want to take advantage of that situation.

Let’s look at a brief, hypothetical example of how rebalancing works. Ron and Sally set a desired asset allocation of $500,000 of equities and $500,000 of fixed income for their $1 million portfolio. Their target is to stay within 5% of this 50% stock and 50% fixed income mix. Over the past two years, equities have performed well, and this portion of their portfolio has grown to $700,000. Their portfolio’s fixed income value also has risen, to $530,000. They now have a portfolio worth $1.23 million with 57% in equities and 43% in fixed income. This new allocation has too much risk for them, and they decide to sell $85,000 of equities and reinvest that cash into fixed income to restore their original 50/50 allocation.

Another benefit of knowing your portfolio is built to maintain a risk profile that you can tolerate is the calm and peace of mind it will lend you in years like 2020, when volatility has been higher than in the recent past and abandoning stocks may have looked tempting.

Using a diversified portfolio that you monitor and rebalance periodically will help you stick to your investment strategy and manage your risk.

This commentary originally appeared August 2 on TheCasperStarTribune.com

By clicking on any of the links above, you acknowledge that they are solely for your convenience, and do not necessarily imply any affiliations, sponsorships, endorsements or representations whatsoever by us regarding third-party Web sites. We are not responsible for the content, availability or privacy policies of these sites, and shall not be responsible or liable for any information, opinions, advice, products or services available on or through them.

This article is for general information only and is not intended to serve as specific financial, accounting or tax advice. IRN-20-776

© 2020 Buckingham Strategic Partners®

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Are you Prepared for Fire Season?

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Reframing the Social Security Claiming Decision for Married Couples

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Jeffrey Levine, CPA/PFS, CFP®, AIF®, CWS®, with Buckingham Strategic Partners 8/4/2020

For many, correctly answering the question, “When should I begin to take my Social Security benefits?” is a critical step toward making sure their retirement income and savings last at least as long as they do. For others, who perhaps are lucky enough to have accumulated a more substantial nest-egg, the decision may have less of an impact on their ultimate chances of a “successful” retirement (as they may have enough income and/or other assets to overcome a poor choice). But let’s face it … nobody wants to leave Social Security dollars on the table because of a less-than-ideal claiming decision.

Unfortunately, making the right choice for you and your specific life and financial circumstances is often much easier said than done. Consider, for instance, that there are literally thousands of rules governing the Social Security system and nearly a dozen different types of Social Security benefits.

As if that weren’t bad enough, choosing the best time to claim Social Security benefits also means trying to guestimate how long you will live, which just complicates things further. Factors such as health, family history, and even income can all be helpful predictors, but they’re far from perfect. Healthy people sometimes die young, while those with poor health sometimes live beyond even the most optimistic estimates.

For married couples, the decision-making process can be even more challenging, because it’s not just one life to consider, but two. It’s enough to truly make one’s head spin!

With that in mind, let’s consider one way that married couples can reframe their thinking about Social Security benefits and simplify claiming decisions. But first, a quick recap of some basic Social Security rules.

In general, Social Security retirement benefits can be claimed as early as 62. However, claiming at 62 will result in a significantly reduced benefit (25% to 30%, depending upon the year in which you were born) compared to waiting until Full Retirement Age (66 to 67, depending upon the year in which you were born). Waiting until your Full Retirement Age will earn you a so-called unreduced retirement benefit, which kind of makes it sound as though it’s the biggest benefit you can receive, but that’s not the case.

Rather, by delaying benefits beyond your Full Retirement Age, you are entitled to receive “Delayed Credits,” which will further increase your benefit by 8% per year (or two-thirds of 1% per month), in addition to any cost-of-living adjustments that might apply. Therefore, by waiting until as late as 70 to begin receiving Social Security retirement benefits, you can effectively increase your “unreduced” benefit by as much as an additional 24% to 32% (depending upon the year in which you were born).

Of course, while delaying the receipt of your Social Security benefits can boost your monthly benefit amount, it also, quite obviously, reduces the number of months that you will receive benefits. Thus, the obvious question arises:

“Should I start receiving smaller Social Security checks sooner so that I get more total checks during my lifetime, or should I wait to take Social Security until some future date to make the checks I do receive bigger?”

In trying to figure out the answer to this question, people, including married couples, often base their decision when to start receiving benefits upon how long they (the individual person) will live. For married couples, though, that is often a mistake, and instead of each spouse looking at their own life expectancy, they should often consider the following planning hack.

Stated simply, instead of focusing on when their own death will occur, the higher-earning spouse should focus on answering the question, “When will the second of our deaths occur?” By contrast, the lower-earning spouse should focus on answering the question, “When will the first of our deaths occur?”

Note: The term “higher-earning spouse” is used to refer to the spouse with the higher Social Security benefit. Accordingly, “lower-earning spouse” is used to refer to the spouse with the lower Social Security benefit.

If the higher-earning spouse believes that either spouse will still be alive into their 80s, they should give more consideration to delaying Social Security benefits, possibly until as late as age 70, even if they don’t think that they will live much beyond that time themselves. Conversely, if the lower-earning spouse believes that either spouse will die within the next decade or so, they might want to give additional consideration to claiming their own benefit sooner, even if they think that they will personally live to 100!

So, why does this work?

When the first spouse of a married couple dies, so too does the lower Social Security check. Meanwhile, the higher of the couple’s Social Security checks will live on with the surviving spouse.

In more technically correct terms, if the spouse with the lower benefit dies first, that spouse’s Social Security check will stop being paid, but the surviving spouse will keep their own monthly retirement benefit (which was the higher monthly check). Alternatively, if the spouse with the higher benefit dies first, the surviving spouse can trade in their own lower retirement benefit or spousal benefit for a higher monthly survivor’s benefit.

Note: In certain circumstances, a pre-Full Retirement Age surviving spouse receiving their own Social Security benefit may decide to delay switching from their own retirement benefit to a survivor’s benefit to prevent reductions in the survivor’s benefit due to the surviving spouse’s age.

Put in the simplest terms, as long as at least one spouse ends up living until their early-to-mid 80s, it often makes sense for the higher-earning spouse to delay receiving Social Security benefits (possibly until as late as age 70). And in truth, it is this spouse’s decision that is generally more important. Claiming “too early,” for instance, could not only hurt the higher-earning spouse during their lifetime but the lower-earning spouse as well if they are the second to die.

Conversely, the lower-earning spouse can also claim benefits “too early,” but that mistake is only relevant until the first death occurs. As such, for couples who are on the fence about when to claim Social Security (because they want the protection of higher checks if they live a long time, but also want to start getting something sooner to enjoy in case they don’t live as long as they expected), the default thought process should often be to have the higher-earning spouse delay benefits and to have the lower-earning spouse claim benefits earlier to get that desired taste of Social Security at a younger age.

This framework, of course, doesn’t work for all couples. And even couples that it helps will still have questions, like just how early the lower-earning spouse should consider claiming and just how long the higher-earning spouse should wait. So, in the end, Social Security claiming decisions remain incredibly personal and complex, which is why we strongly urge clients to consult with their wealth advisory team before taking any action.

The information presented here is not specific to any individual’s personal circumstances and is for general information and educational purposes only. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. By clicking on any of the links above, you acknowledge that they are solely for your convenience, and do not necessarily imply any affiliations, sponsorships, endorsements or representations whatsoever by us regarding third-party websites. We are not responsible for the content, availability or privacy policies of these sites, and shall not be responsible or liable for any information, opinions, advice, products or services available on or through them. IRN-20-859

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Code Name: Monte Carlo

Sheldon McFarland, VP, Portfolio Strategy and Research with Buckingham Strategic Partners, 8/4/2020

What do you get when you assemble a dozen or so of nuclear science’s greatest minds, give them access to the world’s first electronic general-purpose digital computer, and spend $2 billion during the height of World War II? An atomic bomb of course, and a sophisticated simulation technique code-named Monte Carlo. Monte Carlo simulation was developed by scientists working on the Manhattan Project to predict the explosive behavior of the various atomic weapons they were constructing. Since then, researchers have successfully applied it to a vast number of scientific problems. Today, and many evolutions later, we use it to model the validity of your financial life plan.

Monte Carlo tools test the probability that your financial plan will do what it is designed to do by simulating thousands of scenarios. Each scenario is run by modulating inputs, such as returns, cash flows, and inflation, to give a range of possible outcomes. Outcomes can then be graphed to show you and your advisor the likelihood of reaching your investment goals.

Whether your specific goals involve retirement, college savings, or your legacy, Monte Carlo simulation is a robust way to stress test your financial plan. Unlike simple forecasting methods that rely on static return and cashflow assumptions, Monte Carlo simulation offers a way to test the outcome of an investment plan over a range of returns to account for the risk and uncertainty inherent to investing. Knowing your plan has been thoroughly evaluated against unfavorable market conditions and shown resilience not only gives you confidence that the plan is the right one for you, it can provide welcome peace of mind during times of market turbulence.

Accounting for return uncertainty is what makes Monte Carlo simulation such a powerful financial life planning tool. Monte Carlo simulations assume market returns vary from year to year and test your investment portfolio against a wide range of these possibilities. Results are typically shown in terms of your probability of success based on thousands of simulations. For example, if your investment plan is successful 800 out of 1,000 scenarios, your plan would be estimated to have an 80% success rate. Not unsurprisingly, our goal is to design and build an investment plan that has a high probability of success—high enough that you can be confident in the outcome, but not so high that the plan becomes overly restrictive. Together, we look for a number chosen specifically to help you stay on track toward your goals through market and economic cycles, typically in the 75% to 90% range. It’s important to note that confidence ranges vary by age and circumstance. For instance, a lower projected success rate may be acceptable for young professionals, because there are several decades over which factors will change, including how much they can save. Retirees should look for a higher projected success rate, given their shorter timeframe and expected income requirements.

You’re missing something important if you are estimating your financial plan’s success based on an average rate of return. What you’re overlooking is the fact that returns fluctuate over time and this fluctuation can have a significant effect on your investment results. Return fluctuations run you the risk of falling short of your investment goals if the market experiences an unforeseen downturn and your portfolio does not have time to recover. Assuming an average rate of return also misses the effect that the sequence of your portfolio’s returns will have on your financial life plan. A sequence of low returns at the outset of retirement, for example, can have a much more profound impact on your plan’s success than the same sequence of low returns toward the end of your retirement. Stock and bond returns are unpredictable; they will vary widely over your planned investment horizon. The reality is that neither you nor anybody else knows what your portfolio returns will be in the future with any certainty.

However, our sophisticated financial planning software incorporates Monte Carlo simulation to provide a better sense of a financial plan’s possible outcomes. These outcomes reflect many different market assumptions to give you and your advisor a sense of what is most likely. This can provide a more realistic investment plan than one that relies on average annual rates of returns alone.

Don’t get me wrong, Monte Carlo simulation is not a guarantee of success. There is no reliable way to predict what markets will do or know whether they were modeled entirely correctly by the Monte Carlo simulation. That said, Monte Carlo simulation is useful to help clear away some of the murkiness in our forever cloudy crystal ball. Also, Monte Carlo tools are not intended to use once and then forget about. As life happens and inputs to your plan change, update the assumptions in your Monte Carlo simulation and reexamine the output. For example, divorce, disability, loss of income, or other serious personal financial events will change your financial plan’s probability of success, and you would need to adjust your plan to ensure an acceptable range of outcomes.

Monte Carlo simulation techniques have had a lasting impact on the way we stress test investment plans and measure their resiliency. They give us a way to create and test a financial life plan that considers multiple market scenarios, offering us a glimpse into many possible outcomes. They also give us a tool to help decipher the impact that significant life events have on a plan while providing ample warning to adjust and enhance it. Unfortunately, we can’t control market returns. But we can control important investment and financial plan variables, like spending rates, saving rates, and asset allocation, to improve our odds of success. The goal of any investment plan is to succeed, but if you don’t plan properly, you plan to fail.

By clicking on any of the links above, you acknowledge that they are solely for your convenience, and do not necessarily imply any affiliations, sponsorships, endorsements or representations whatsoever by us regarding third-party Web sites. We are not responsible for the content, availability or privacy policies of these sites, and shall not be responsible or liable for any information, opinions, advice, products or services available on or through them.

The opinions expressed by featured authors are their own and may not accurately reflect those of Buckingham Strategic Partners. This article is for general information only and is not intended to serve as specific financial, accounting, or tax advice.

© 2020 Buckingham Strategic Partners

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U.S. Stocks Climb to Start the Month

Rising U.S.-China tensions and potential delays to a new economic relief package weigh on sentiment

By Anna Isaac with The Wall Street Journal

U.S. stocks rose on Monday, as investors weighed halting steps toward a new coronavirus relief package and the country registered its lowest number of new infections in weeks.

The Dow Jones Industrial Average gained 229 points, or 0.9%, after the opening bell, kicking off August with a modest uptick. The index climbed 2.4% in July. Trading volumes are expected to slide in the coming weeks with the onset of the summer vacation season, leading to an increase in volatility.

The S&P 500 rose 0.7%, while the technology-heavy Nasdaq Composite climbed 1.1%.

Fresh data spurred investors’ hopes that new Covid-19 cases could be slowing. The U.S. reported more than 47,000 new coronavirus cases, the smallest daily increase in almost four weeks, after posting a record number of new infections in the month of July.

“A couple of weeks ago, U.S. cases were rising by 40-50% on a weekly basis. They’re now falling. Not as fast as they might appear, because testing has dropped, but they are still lower and so is the rate of hospitalization. Markets like that,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics.

Overseas, the pan-continental Stoxx Europe 600 rose 1.8%, bolstered by survey data showing signs of recovery in euro area factories.

Progress was uncertain on a deal on further fiscal support for the American economy. Democrats and Republicans remained at odds in weekend negotiations on a new economic relief package, including aid to replace the federal $600-a-week boost to unemployment benefits that expired Friday. The White House had hoped to pass a short-term extension of the federal unemployment insurance, but Democrats want to negotiate a comprehensive package of relief, including state and local aid.

“The slowness with which Washington is coming to an agreement on a fiscal policy shows some fatigue. A deal will likely come, but after some big fiscal cliffs have been passed,” said James McCormick, a strategist at NatWest Markets.

Secretary of State Mike Pompeo’s comments over the weekend that the White House may take action against Chinese software companies stoked concerns about deteriorating relations between the world’s two largest economies. Heightened tensions between Beijing and Washington have weighed on investor confidence for weeks, with growing expectations that the U.S. government will take a harder line in relations with Beijing in the run-up to November’s presidential election.

“It seems the closer the election gets, the fiercer tensions are likely to be,” said Oliver Jones, senior markets economist at Capital Economics. “The China hawks in Washington appear to have the upper hand.”

The video-sharing app TikTok, owned by a Chinese company, has become one flashpoint after U.S. officials expressed concerns that TikTok could pass on the data it collects from Americans to China’s authoritarian government. President Trump on Friday signaled that he was considering a ban of the popular app. Microsoft said Sunday that it will move forward with plans to buy its U.S. operations following a call between Microsoft CEO Satya Nadella and Mr. Trump.

Microsoft shares gained 4.1% in morning trading.

Among European equities, HSBC Holdings slid 3.5% in London. The bank’s second-quarter profit fell 96% as the disruption caused by the pandemic complicated its efforts to refocus on Asia while dealing with the rising U.S.-China political tensions. Siemens Healthineers fell 7.4% after the medical technology company said it would acquire Varian Medical Systems for $16.4 billion, or roughly 25% above its current market value.

The U.S. reported more than 47,000 new coronavirus cases Monday, the smallest daily increase in almost four weeks.

In the Asia-Pacific region, China’s major equity benchmark, the Shanghai Composite Index, rose 1.8% by the close of trading after a private gauge of manufacturing activity on the mainland rose in July to its highest level in more than nine years, boosted by accelerated production and recovering demand.

The ICE Dollar Index, which tracks the greenback against a basket of other major currencies, ticked up 0.5% while remaining near its lowest level in over two years. The dollar had made a sharp U-turn this summer following a long rally, and its slide added further support to the booming market rally, lifting U.S. stocks and commodities.

In bonds, the yield on the benchmark 10-year U.S. Treasury ticked up to 0.564%, from 0.536% Friday.

A closely watched metric of economic activity signaled that European factories are staging a recovery. Purchasing Managers Index data for manufacturing in the euro area broke through the key level indicating growth, a score of above 50, for the first time in a year and a half, when the bloc’s manufacturing sector entered recession. It had plummeted during the coronavirus pandemic.

However, economists cautioned that industrial production was still well below pre-pandemic levels at the end of the second quarter. The compiler of the survey, IHS Markit, also said: “severe job-cutting” continued as firms were operating under capacity.

“We had a nervous week last week, but the market loves a good PMI survey. It’s a rally on the back of the better than expected numbers,” said Steen Jakobsen, chief investment officer, and chief economist at Saxo Bank.

—Frances Yoon and Alexander Osipovich contributed to this article.

Write to Anna Isaac at anna.isaac@wsj.com

Corrections & Amplifications
Ian Shepherdson is chief economist at Pantheon Macroeconomics. An earlier version of this article misspelled his name as Ian Sheperdson. (Corrected on Aug. 3)

 

 

Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved.
The Wall Street Journal 08/03/2020 – https://www.wsj.com/articles/global-stock-markets-dow-update-8-03-2020-11596446113?mod=markets_lead_pos2

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Stock Market Quiz

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Minimize Regret Over Maximizing Returns

Doug Buchan with Buckingham Strategic Partners, 6/29/2020

“Maximizing returns” is a phrase that you’ll hear bandied about ad nauseam on both Wall Street and Main Street.

As in, “My goal is to maximize my returns.”

Is it though? Is that really the goal?

Bronnie Ware would beg to differ. More on her in a moment.

Personally, I can’t remember coming across anybody who I would have surmised to be living a full, peaceful, and centered life around the primary goal of maximizing their returns, and it’s pretty easy to see why. There can always be greater returns somewhere, and odds are that if you look hard enough, you can find someone who got them.

An alternative phrase that I have been continually encouraging clients to consider involves the idea of “minimizing regret.”

“How do I minimize regret?” feels like something that you can answer in much greater capacity and with a much more satisfying journey than the question “How do I maximize returns?”

This is true in investing as well as in life.

Back to Bronnie. Ms. Ware is an Australian nurse who spent several years working in palliative care, caring for patients in the last 12 weeks of their lives. On her own path, she decided to record her patients’ dying realizations in a blog, which garnered such praise that she put her observations into a best-selling book called “The Top Five Regrets of the Dying.”

Ware writes of the amazing clarity of vision that people gain at the very end of their lives, and how we might learn from their wisdom. The following is a summary of her patients’ collective top five regrets (quoted material is from her book):

  1. I wish I’d had the courage to live a life true to myself, not the life others expected of me.

“This was the most common regret of all. When people realize that their life is almost over and look back clearly on it, it is easy to see how many dreams have gone unfulfilled. Most people had not honored even a half of their dreams and had to die knowing that it was due to choices they had made, or not made. Health brings a freedom very few realize until they no longer have it.”

  1. I wish I hadn’t worked so hard.

“This came from every male patient that I nursed. They missed their children’s youth and their partner’s companionship. Women also spoke of this regret, but as most were from an older generation, many of the female patients had not been breadwinners. All of the men I nursed deeply regretted spending so much of their lives on the treadmill of a work existence.”

  1. I wish I’d had the courage to express my feelings.

“Many people suppressed their feelings in order to keep peace with others. As a result, they settled for a mediocre existence and never became who they were truly capable of becoming. Many developed illnesses relating to the bitterness and resentment they carried as a result.”

  1. I wish I had stayed in touch with my friends.

“Often they would not truly realize the full benefits of old friends until their dying weeks and it was not always possible to track them down. Many had become so caught up in their own lives that they had let golden friendships slip by over the years. There were many deep regrets about not giving friendships the time and effort that they deserved. Everyone misses their friends when they are dying.”

  1. I wish that I had let myself be happier.

“This is a surprisingly common one. Many did not realize until the end that happiness is a choice. They had stayed stuck in old patterns and habits. The so-called ‘comfort’ of familiarity overflowed into their emotions, as well as their physical lives. Fear of change had them pretending to others, and to their selves, that they were content, when deep within, they longed to laugh properly and have silliness in their life again.”

I’ve observed that one of the fortunate consequences of this rather unfortunate situation we all now find ourselves in is that it has allowed many to reflect a bit more on their lives in two distinct ways: to look back at some of the things they may have taken for granted, but also to look forward and reexamine some of the goals they would like to accomplish.

With any bear market – regardless of the circumstances associated with it – comes a reassessment of people’s tolerance for risk.

As you know, we believe in building a portfolio allocation based on your A) need to take on market risk (ascertained by building out detailed goal-attainment projections), B) willingness to take on market risk (more art than science), and C) ability to take on market risk (the time horizon between your age and the desired timing of your most important goals).

I’d like to quickly address variables A and B.

Let’s say we run a plan and we determine that you have a 90% chance of successfully meeting your goals with a 70% allocation to stocks. Let’s also assume that I can construct an alternate portfolio where you also have a 90% chance of success, but with only a 55% allocation to stocks. You reflect on these two options, and you decide you’d like the 70% allocation to stocks.

This is where I would gently ask you, “Why?”

Now, you may say something like, “You know, I’ve listened to you over the years, and I’ve concluded that I am more afraid of the insidious erosion of purchasing power over time than of the long-term risk of owning equities, and I believe equities give me a much better chance to fight that erosion of purchasing power than fixed-income bonds. Also, I have a stomach of steel, and do not worry at all about how I’ll feel when the inevitable bear market returns and, hopefully for only a short period of time, negatively impacts the value of my portfolio.”

If you said that, I would say, “Eloquently stated. You’re allocated with your eyes wide open, and you’ve weighed multiple uncertainties of life in an appropriate way for you.”

But if you said in so many words that you’d rather the higher allocation to stocks because you want to get better-expected returns, I would encourage you to look through the lens of “regret minimization” as much as you’re looking through the lens of potential “return maximization.”

While the need and ability to take on market risk will change as your goals evolve and as time marches on, it’s the willingness to take on market risk that has been most affected by our current experience. Tolerance for risk is a funny thing, and as I said, it’s often more art than science. We need to be aware that each and every one of us will perceive risk differently when the sun is shining versus when there’s a pandemic outside our window. You see, it’s oh-so-easy to overestimate your tolerance for a risk that you can’t see or can’t imagine.

But the reverse is also true. It’s often difficult to see the projected reward of a risk when that risk is right in front of you but the reward is miles down the road.

It’s OK to admit that your tolerance for stock market volatility might not be what you thought it was. It’s always OK to reassess; no, it’s more than OK – it’s wise. That said, your wealth advisor will encourage you to think through the multitude of risks that may lie ahead, not just the one in front of our faces.

It’s very difficult to be objective and unemotional about your own situation during extremely stressful times. When outcomes are uncertain and the stakes are high is when all of our behavioral glitches seem to peak. And this is a major reason why an objective advisor can be so valuable. Our goal is to help you deeply understand your own personal need, willingness, and ability to take risk. Many of these discussions are rooted in academic science, but not just investment science. We are all human, so behavioral science also plays an important part. What good is a solid academic plan if you are emotionally uneasy for much of the journey?

We work our hardest to help you build a financial plan designed with your fullest life in mind, whatever that particular phrase may mean to you. These conversations are often successful; other times they’re a work in progress. But I, for one, will keep at it, as nothing fulfills my life more than helping others fulfill theirs.

It’s never too late to minimize regret. It can start today. Often, minimizing regret requires no money at all, simply a change in mindset and action.

By clicking on any of the links above, you acknowledge that they are solely for your convenience, and do not necessarily imply any affiliation, sponsorship, endorsement, or representation whatsoever regarding third-party websites. We are not responsible for the content, availability, or privacy policies of these sites and shall not be responsible or liable for any information, opinion, advice, products, or services available on or through them.

© 2020 Buckingham Strategic Partners®

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Cultivating an Abundance Mindset, Even in Difficult Times

Becca Craig, ABA, CFP® with Buckingham Strategic Partners, 6/29/2020

Cultivating an “abundance mindset” might be far down your list of what needs attention today. In times such as these, you might even believe that the thing most in abundance right now is a mounting variety of very real financial stressors. That’s a fair point to make, and you most certainly would not be alone. In fact, events over the past few months likely have only served to highlight the relationship between money and stress, between financial wellbeing and emotional wellbeing.

To find relief from external stressors, many are now turning inward. A June 2020 survey found that as the COVID-19 pandemic continues, the vast majority (80%) of U.S. adults plan to be more mindful of their self-care habits, yet most struggle with tangible ways to do so. Financial self-care, like self-care more generally, can mean different things to different people.

Even so, the self-care practice of cultivating an abundance mindset can be particularly helpful in creating powerful, positive momentum toward a sense of better financial wellbeing, especially when coupled with a sound, comprehensive, long-term financial plan.

Reflecting on the way we act around and think about money is almost always a worthwhile financial exercise. And luckily, our perspective or mindset counts as one of those things in life that we have the power to control or change (although there are certainly others we can’t).

So how, then, do you go about nurturing a mindset characterized by abundance, expansiveness and the optimism of opportunity rather than scarcity, reactive negativity, and the unattainability of enough? One that allows us to see possibility rather than limits

First, get grounded.

Accept what is. Relationships can be tricky, especially relationships with money. Perhaps your experience (at least up until now) has been shaped primarily by the “money script” of your childhood or by other societal influences. Radically accepting your relationship with money as it stands is an integral part of marshalling the ability to shift it.

Inventory your values. An undercurrent of anxiety can surface when we spend our hard-earned dollars on items that aren’t aligned with what we inherently value. Try taking stock of what really matters, and more importantly, why it matters. Do you invest in experiences that spark joy or a continuing sense of fulfillment? Is your streaming service subscription vital because it supports your value of overall physical, emotional and spiritual health, or is it just something to do? Understanding and establishing how your values engage your money is the foundation of creating an abundance mindset. However, the structure that follows finds reinforcement in the belief that money needs a definite direction and place to land to meet your goals. Get clear on what’s important to you, and resolve will follow.

Next, mind your self-talk.

Replace negatively charged words with objective language. We can break negative thought cycles by changing the language we use with ourselves. Consider that you may have a reflexive emotional response to your finances. Changing the language that you use around money can help diffuse the power held by certain words, giving your mind a reprieve from the fight or flight response that might occur when initially digging into your finances.

Reframe the dreaded B-word (“budgeting,” that is). Try this on for size: You “get” to pay your bills instead of “have” to pay your bills. Fashioning an objective framework for saving and spending can help remove the stigma that budgeting is just about limits and constraints. By making choices for your dollars in alignment with your predetermined hierarchy of needs and wants, your actions become an empowering expression of freedom, not obligation.

Call your emergency savings fund an “opportunity fund.” Refocusing on our intention potentially can lead to improvements in mood, mindset and energy. Instead of saving for an emergency or a rainy day, approach it from the more positive mindset of saving for an opportunity, which can affirm sound savings habits.

Balance your attention between what you have and have not. Assets are what you own, liabilities are what you owe – it’s a balance. When we focus solely on what we don’t physically have, it’s difficult to see the intangible good and meaningful relationships we do possess. Whether it’s your family, supportive friends, a loyal four-legged companion, meaningful work and causes, or even simply access to indoor plumbing, coupling a gratitude list with thorough wealth planning can be a powerful way to help find balance.

Finally, take action.

Give, give, and give some more. Call it the Golden Rule, karma, or something else entirely, what goes around comes around. Acting to start the cycle is required to witness abundance working in your life. There are countless ways to give financially, but it’s not necessary to cultivate an abundance mindset. You can offer your time, talent, experience, energy or creativity in the workplace or out in the community. When we are of service to others, we free up headspace previously given to anxiety; when we give freely without expectation, we put the idea of abundance into our actual daily practice.

Ask for help. Radical, permanent change in mindset and action is difficult to implement in a vacuum. Give yourself permission to ask for help by enlisting the support of family and friends who share or also want to cultivate an abundance mindset. Seeking the resources of a compassionate wealth advisor or financial counselor may also be valuable in keeping yourself accountable to your chosen outlook.

Shifting your mindset is not an overnight task, so be kind to yourself. But changing how you interpret the world is a first step to changing the reality you experience. Ultimately, embracing an abundance mindset may be the more rewarding path.

By clicking on any of the links above, you acknowledge that they are solely for your convenience, and do not necessarily imply any affiliation, sponsorship, endorsement or representation whatsoever regarding third-party websites. We are not responsible for the content, availability or privacy policies of these sites and shall not be responsible or liable for any information, opinion, advice, products or services available on or through them.

© 2020 Buckingham Strategic Wealth®

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Have a Conversation, for You and Your Family

Connie Brezik with Buckingham Strategic Partners, 6/29/2020

During this pandemic, you may have family or friends whose health has been directly affected by COVID-19. And the longer you live, the more people you know will face significant health concerns. Making sure you and your family are prepared for these situations – now and in the future – is an act of kindness.

If you have ever been responsible for helping someone deal with medical issues, perhaps in the hospital, you know this is not easy. You need to be able to work in tandem with your friend or family member – now patient – and their physicians for the best outcome. With the current virus situation, there are many restrictions on who is allowed into a hospital. I have two personal friends whose spouses recently died in the hospital without any family being able to visit.

Health issues can emerge suddenly and without notice. Consider, for instance, the onset of dementia. A person who had great intentions of getting their “ducks in a row” may now have his or her capacity to do so diminished.

No one likes to think about their own mortality, but it is practical to do so. Find a family advocate that will be there when you need them. If you are unable to help yourself, you want that person to understand your wishes. Document your wishes in writing and give copies to your advocate and your doctors.

Advance directives generally consist of a medical power of attorney and a living will, often combined into one document. These documents let your family and physicians know what medical treatment you want (or do not want) if you are unable to express your own preferences.

A medical power of attorney names a person to make medical decisions for you. You can limit the power this person has in the document. A living will allows you to approve or decline certain types of medical care, generally if you have a terminal illness or injury. You can determine which “life-sustaining” measures should be taken on your behalf, including do-not-resuscitate instructions.

Having these conversations and forming written plans is a gift to your family and friends. Another gift to family and friends is telling your story. Family history is often lost if it is not documented. Today’s technology makes this easier than ever, and you can create an audio or video recording that is uniquely you.

You have a legacy to leave that is not related to your assets or net worth. This can be your philosophy on life, or what mattered to you the most. Maybe you want to talk baseball with your grandson and leave him your favorite mitt. Perhaps you want to encourage your niece to pursue her dream of becoming an astronaut. Letting people know what causes you to cherish can help them carry on your charitable intent.

Other considerations to discuss and document are organ donation and funeral instructions. Some people even write their own obituary. Of course, you can leave this all up to the friends and family who survive you, but they will be much happier knowing your end-of-life services are what you really wanted.

Your age does not matter when it comes to getting your plans in order. If you are younger, you may revise your plans several times over the years. But you simply never know when you may get a terminal diagnosis or have a sudden accident while driving to that UW football game.

Having these conversations for yourself and your family is worth the time and effort, and they will be a gift to all involved.

This commentary originally appeared June 7 on TheCasperStarTribune.com

By clicking on any of the links above, you acknowledge that they are solely for your convenience, and do not necessarily imply any affiliation, sponsorship, endorsement or representation whatsoever regarding third-party websites. We are not responsible for the content, availability or privacy policies of these sites and shall not be responsible or liable for any information, opinion, advice, products or services available on or through them.

© 2020 Buckingham Strategic Partners®

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The Quarantine Summer Guide

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