Lifetime Financial is a boutique financial planning service for non-profit professionals that want expert financial answers about retirement, college planning, investing, and insurance. Lifetime Financial helps you build the financial support to lead your best life.
Lifetime Financial LLC
7000 Carroll Ave Ste 201A
Takoma Park MD 20912
202-350-1515
Sign up to receive our newsletter featuring the latest post. We write on practical, thoughtful, well-sourced topics that apply to our clients written by David and other humans--not AI.
You have successfully joined the Lifetime Financial maillist. See you soon!
All in Common Questions
Last week we officially hit bear market territory for the S&P500, the widely used barometer of US stock market prices. As of the writing of this article, the market is down ~22% on the year. We all want to know how bad this will be. Is there anything we can learn from previous bear markets that might help?
I don’t know much about the real economic costs of cybercrime. (Pretty, but out of date infographic.) The majority of the costs are borne directly by government and businesses, but redistributed broadly in the form of higher prices and taxes. The costs are not all economic. Digital safety is critical in so many privacy concerns, civil rights issues and important debates about surveillance and freedom.
In the last few years almost 200 specialized 'thematic' ETFs and mutual funds have been created. The asset growth of thematic funds quadrupled. Thematic funds offer unique, tactical bets on investment opportunities grouped by a subject or motif. Typically, it’s about technology and our changing future. Thematic funds tend to be a bull market phenomenon, possibly a result of investor overconfidence and enthusiasm. (There’s a good line that bull markets make everyone look smart.) It’s an intuitive strategy: “Let’s invest in a handful of really smart innovative companies that people are excited about, the growth potential is incredible.”
I'm getting a lot of 'what do you think about the market right now?' questions from clients, friends, and neighbors. CNN’s ‘fear index’ says we are all in extreme fear. I don’t know about that, but maybe it's time to reflect.
College has a big impact on a family’s long term finances. It’s a large expense that comes relatively quickly in the family financial lifecycle, so there isn’t a lot of time to see salary improvements and allow for beautiful, beautiful compound interest to do its magic. Most of us know college prices have gone up a lot faster than the Consumer Price Index, our general benchmark for inflation. But how much faster? What should you and I assume today about the cost of four-year college in 18 years?
What is umbrella insurance? It’s liability insurance. It pays for your legal expenses and losses if sued for a variety of incidents related to injuries to other people, some lawsuits, and damage to other people’s property. It doesn’t protect you from professional or work issues and it doesn’t protect your property or costs in an accident. Why do you need it? It’s strictly to help pay the costs of someone else’s misfortune, for which you are somehow financially responsible.
The question I get the most is ‘Should I invest my emergency fund in the stock market?’ Bank interest rates are at all-time lows and are not rising with interest rate hikes any time soon. Banks have enough consumer deposits and don’t need to compete. With inflation surging and the S&P 500 returning a blistering 14.36 % for the last 10 years, it’s painful to see your .5% bank account lose money in real terms.
You are no doubt familiar with the group of mostly anonymous investors who last year coordinated the leveraged buying of GameStop, AMC, and other stock options, pushing up the price to the point that some hedge funds lost a lot of money. It was a good David and Goliath story and a new development in consumer investing. When I placed my first and only stock trade for GameStop in January of 2021, it was not with the idea that I believed in the stock. I simply wanted to see what it was like to buy into a frenzy. (I’ll cut to the chase; it was terrifying.)
Trish, my late wife, and I traveled a lot with my girls after she was diagnosed with breast cancer in 2003. We didn’t always have enough money for travel. I got creative and started optimizing credit card points and harvesting miles, which comes naturally to a planner and finance nerd like me. The experience dividends have been priceless.
The other week, a client called me from Mexico on her new vanlife journey around North America. She has modest assets and is trying to define herself less by her job, which she is doing part-time remotely. I’m proudly responsible for the financial plan supporting her life goal. I mentioned to her that the US stock markets were down over 11%. “Oh yeah, look at that,” she said, reviewing her online statements, with interest but not worry. If, like her, you were living your best life last month and not paying attention to the stock market, kudos. It’s not good for investor health or wealth to pay close attention to stock market returns.
Last week I wrote about who is exposed to inflation risk and identified low-income workers and retirees as the most endangered. To minimize exposure to inflation risk retirees can use both planning techniques or investment strategies. One planning technique we don’t like is to simply spend less, although sometimes that’s the best choice. Technically, one could die younger. We really do not like that. But the math undeniably works. But, here are some planning techniques I do like.
Inflation worry is everywhere. 88% of Americans are concerned about inflation (Oct 2021). Google searches for inflation are more than double the ten years prior. If you are buying meat, a car, or a hotel room you have seen prices increase by over 25% on average. Gasoline is up 50%. Should you be worried?
Donor Advised funds are ‘a waiting room’ for charitable donations. The donor gets a current tax deduction, pays fees to a custodian (for instance, .60% for first $500,000 by Schwab), and then later suggests when and to whom the money should go.
You might think the frothy stock market is a risk for current retirees, and you aren’t wrong. What about historically low bond rates? That’s much less of an issue than people think. Long term care insurance, yeah but at least there is Medicaid as a (terrible) last resort. So what is it?
Have you heard of the SARSA? The ‘Super Awesome Retirement Savings Account?’ No, you haven’t because it doesn’t exist. Instead, it’s stupidly called a ‘Healthcare Savings Account’. Do you have one? Are you maxing it out ($3,600 single, $7,200 family) and not spending it? You should.
Six documents you and your loved ones need to help navigate life as you age. Do you have them all? If you said ‘no,’ you are not alone. The number of Americans with a will continues to decrease and is now well below half, 31% according to one survey, and presumably some of those are outdated. The reasons so few Americans have wills are obvious: it feels complex and expensive (it isn't) and it causes an existential crisis (doesn't have to.)
