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Bitcoin ETFs: A Guide for Investors

Bitcoin ETFs are officially available on US listed exchanges. This is a significant development in crypto trading. These ETFs providing greater access to the volatile yet potentially rewarding world of cryptocurrencies, particularly Bitcoin.

As with any investment, careful consideration is crucial. Cryptocurrency is still is a tricky asset class for many investors when it comes to deciding if, when, and how much to invest.

Let’s break down some key factors to keep in mind when deciding how much crypto exposure may be right for your investment portfolio.

1. Understanding Risk Tolerance

Cryptocurrency trading has been synonymous with high volatility. Prices can swing dramatically in short periods, making risk tolerance a crucial factor. The past few years have seen high volatility in the price of a single Bitcoin.

The 11 approved Bitcoin ETFs began trading on January 11, 2024. As a group, they’ve already experienced price volatility, losing an average of just over 10% from their launch price. If large fluctuations are too risky for your taste, you may want to allocate a smaller portion of your portfolio to crypto assets.

2. Defining Investment Goals

Clarify your investment goals and the role you envision for crypto assets in your portfolio. Like all investments, consider what you are attempting to accomplish. Are you aiming for long-term capital appreciation, diversification, or seeking a potential hedge against inflation?

A clear understanding of your objectives will help in determining the appropriate allocation to cryptocurrencies in your portfolio.

3. Embracing Portfolio Diversification

An important factor to not overlook when making investment decisions is diversification. We also refer to this as asset allocation. Investing across various asset classes can help reduce risk and potentially boost returns.

Exampleofportfolioassetallocation

By adding a small allocation of cryptocurrencies in your portfolio, you’ll gain exposure to a new and fast-growing asset class. Expect to see more investors adopt crypto as part of their asset allocation over the next few years.

4. Seeking Professional Guidance

Unsure about the right amount of crypto exposure for your unique situation? Consider discussing your investment strategy with a financial professional.

This guidance should provide a recommendation tailored to your specific circumstances, risk tolerance, and larger financial planning objectives.

If you are considering working with a financial advisor for the first time, or feel underserved and looking for a new advisor, use this as a “know before you go” resource.

Best Approach: Navigate with Caution

Crypto assets have garnered a lot of attention and excitement over the past few years. More investment platforms have made investing easier for retail investors. While this availability expands access for investors, it’s essential to approach this opportunity with caution.

Cryptocurrency investments inherently carry risks, and the value of your holdings can fluctuate more than if invested in other asset classes. By considering the key factors listed above, you can confidently navigate the evolving landscape of crypto assets.

Disclosures

Life Moves Wealth Management is a registered investment advisor offering advisory services in the States of Arizona and Indiana, and in other jurisdictions where exempted. Registration does not imply a certain level of skill or training. Information contained on this site should not be considered a solicitation to buy, an offer to sell, or a recommendation of any security in any jurisdiction where such offer, solicitation, or recommendation would be unlawful or unauthorized.

The information on this site is not intended as tax, accounting or legal advice, as an offer or solicitation of an offer to buy or sell, or as an endorsement of any company, security, fund, or other securities or non-securities offering. This information should not be relied upon as the sole factor in an investment making decision. Past performance is no indication of future results. Investment in securities involves significant risk and has the potential for partial or complete loss of funds invested. It should not be assumed that any recommendations made will be profitable or equal any performance noted on this site.  

HYPERLINK DISCLOSURE – The information being provided is strictly as a courtesy/convenience. When you link to any of the web sites provided here, you are leaving this website and assume total responsibility and risk for use of the web sites you are visiting. We make no representation as to the completeness or accuracy of information provided at these websites. Life Moves Wealth Management is not liable for any direct or indirect technical or system issues or any consequences arising out of your access to or your use of third-party technology, web sites, information and programs made available through this website. Life Moves Wealth Management does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to Life Moves Wealth Management’s web site or incorporated herein, and takes no responsibility thereof.

Signs of economic uncertainty are showing up in more places throughout the BIG economy, which impacts the LOCAL economy that you and I intersect every day. From home prices to mortgage rates, car prices to auto loan rates, inflation to wages, there’s evidence the economy is slowing down a little… or, at least taking a breather.

As the federal government continues deficit spending without much caution for later consequence, inflation continues to be a primary factor in consumer costs and driver of fed monetary policy.

What do you need to be doing as things become more uncertain? Listen as I share insights on where we are economically, where we may be headed, and what you can do to prepare for the certainty of uncertainty.

Disclosures

Life Moves Wealth Management is a registered investment advisor offering advisory services in the States of Arizona and Indiana, and in other jurisdictions where exempted. Registration does not imply a certain level of skill or training. Information contained on this site should not be considered a solicitation to buy, an offer to sell, or a recommendation of any security in any jurisdiction where such offer, solicitation, or recommendation would be unlawful or unauthorized.

The information on this site is not intended as tax, accounting or legal advice, as an offer or solicitation of an offer to buy or sell, or as an endorsement of any company, security, fund, or other securities or non-securities offering. This information should not be relied upon as the sole factor in an investment making decision. Past performance is no indication of future results. Investment in securities involves significant risk and has the potential for partial or complete loss of funds invested. It should not be assumed that any recommendations made will be profitable or equal any performance noted on this site.  

HYPERLINK DISCLOSURE – The information being provided is strictly as a courtesy/convenience. When you link to any of the web sites provided here, you are leaving this website and assume total responsibility and risk for use of the web sites you are visiting. We make no representation as to the completeness or accuracy of information provided at these websites. Life Moves Wealth Management is not liable for any direct or indirect technical or system issues or any consequences arising out of your access to or your use of third-party technology, web sites, information and programs made available through this website. Life Moves Wealth Management does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to Life Moves Wealth Management’s web site or incorporated herein, and takes no responsibility thereof.

Investment minimums are an old-school way for advisors to filter out prospective clients. Advisory firms and their advisors set investment minimums as a way to target growth of assets under management (AUM) and revenue per client. In fact, advisors at conferences and networking meetings will often measure each other up by asking questions like, “what’s your AUM?”

From a business management perspective, tracking and managing to KPIs makes complete sense.

But, from a perspective of barriers to access, investment minimums lock a lot of really good people out of receiving qualify financial advice.

On the flip side, high net worth individuals have been trained to see investment minimums as an indicator of advisor expertise. Clients who can meet higher minimums are led to believe they will be served at a higher level and have access to a wider range of wealth strategies.

In some cases, especially with ultra-high net worth, this can be true. But, for most people with a net worth of less than $10 million, the allure of the big firm minimums is more fluff than substance.

Where are people getting financial advice?

In the absence of access to direct financial advice, some people are relegated to what they can find. Social media financial “experts” who are usually life insurance salespersons. Mutual fund representatives. Annuity advisors. Index fund bloggers. Day traders. Gold bugs. Neighbors, friends, and families. Syndicated radio show hosts.

The challenge is most these sources offer “advice” that lead to product sales, stock tips, or direction that’s not relevant to where you are in life. Where’s the real financial advice?

In my opinion, the financial services industry has created a large gap in access to advice by sticking to the AUM model, which qualifies who gets access based on the amount they have to invest.

Admittedly, people with a higher net worth have vastly different wealth management needs than others. Some people are not ready to work with a financial advisor, and therefore also have vastly different financial advice needs than others.

How fees for services works

The advice gap is one of the reasons I launched Life Moves Wealth. Because financial literacy is not widely taught and building wealth is a difficult journey, more access to qualify financial advice is needed more than ever.

Many of our clients receive ongoing financial planning and investment advice on a flat fee for services model. This approach appeals greatly to younger professionals and entrepreneurs who are starting on their wealth journey. These folks may benefit most from pushing as much investment as possible to a company sponsored retirement plan, meaning no investments for the typical advisor to manage.

It’s also a beneficial approach for business owners who have much of their wealth tied up in their business(es). These folks may be funding their expenses through the business (a.k.a. living out of the business), intentionally taking low salaries and distributions so there is cash to invest in business growth, pay down debt, and recruit and retain key employees.

Screenshot20240210at10.27.41 AM
Overview of Life Moves Wealth fees for financial advisory services.

Short of an inheritance or rapid business success, it takes many people many years to build up enough money to clear industry-standard investment minimums. There are numerous important financial questions, fears, and celebrations along the path of building wealth. Access to quality financial advice through each stage can save time and increase efficiencies in the areas such as taxes, market cycles, business formation and expansion, to name a few.

Because I directly understand the process of building wealth and business ownership, it makes sense to be a partner along your wealth journey rather than waiting for your train to finally arrive at the station.

Why fee-only, independent advisors have an advantage

Fee-only independent advisors have a large advantage over the big firms, largely because the motivations for how clients are served are vastly different. Independent advisors have a lot more flexibility in how clients are served, how clients are billed for services and what amounts, and the technology and tools that will be used to deliver the best advisory client experience.

By way of being a fee-only independent advisor, certain conflicts of interest related to advisor compensation and incentives have been removed. Hence, the advice you receive for certain investment strategies or financial products do not pay commissions to the advisor or their firm. This is an important distinction between an advisor who is fee-based vs. fee-only.

What’s left is the incentive of providing a pathway to increase your financial success first, not the advisors. While there’s nothing wrong with making money, the fiduciary standard ensures the client’s bets interest is first and foremost.

Want more on this topic? Check out the recent Financial Purpose Podcast on how to choose the right advisor for you.

How to choose the right financial advisor

Disrupting the old model

I recently met a business owner at an event. During the conversation, he mentioned talking to other advisors in the past but none could really help him because most of his wealth is concentrated in his business.

"One advisor tried to sell me insurance on my employees, but wasn't right for me. If only there were an advisor who can help me with financial planning and business exit planning without requiring an investment minimum..."

The old ways of providing wealth management are rapidly going out of style. The capital markets and the economy move faster and differently than they did even 10 years ago. Advisors who offer only investment advice, knowing nothing of their clients' cash flow, tax concerns, estate planning, risk exposure, business valuation drivers, etc., will become less attractive providers.

With everyone having complete access to investing platforms and research, the value advisors provide must shift to guiding clients through broader parts of their financial life. This also means shifting away from charging a percentage of AUM in favor of establishing fees for ongoing advice.

If finding the right financial advisor has been a challenge, we might be a great fit for you.

Disclosures

Life Moves Wealth Management is a registered investment advisor offering advisory services in the States of Arizona and Indiana, and in other jurisdictions where exempted. Registration does not imply a certain level of skill or training. Information contained on this site should not be considered a solicitation to buy, an offer to sell, or a recommendation of any security in any jurisdiction where such offer, solicitation, or recommendation would be unlawful or unauthorized.

The information on this site is not intended as tax, accounting or legal advice, as an offer or solicitation of an offer to buy or sell, or as an endorsement of any company, security, fund, or other securities or non-securities offering. This information should not be relied upon as the sole factor in an investment making decision. Past performance is no indication of future results. Investment in securities involves significant risk and has the potential for partial or complete loss of funds invested. It should not be assumed that any recommendations made will be profitable or equal any performance noted on this site.  

HYPERLINK DISCLOSURE – The information being provided is strictly as a courtesy/convenience. When you link to any of the web sites provided here, you are leaving this website and assume total responsibility and risk for use of the web sites you are visiting. We make no representation as to the completeness or accuracy of information provided at these websites. Life Moves Wealth Management is not liable for any direct or indirect technical or system issues or any consequences arising out of your access to or your use of third-party technology, web sites, information and programs made available through this website. Life Moves Wealth Management does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to Life Moves Wealth Management’s web site or incorporated herein, and takes no responsibility thereof.

Many business owners start their businesses because they see a need they can solve, they’re tired of being paid less than their true value, and they want to work for themselves rather than someone else.

One day you wake up and your business is running. Revenue is coming in, costs are going out, and you’re busier than ever.

Ask yourself: is your operations engine running as efficiently as it could? Are you willing to shed the number of hats you’re wearing in order for the business to reach the next level? Is your P&L healthy?

Operations efficiency is the engine of your business. How well is it running?

This episode of the Financial Purpose Podcast features Kendi Brown, Founder of Coati Consulting. Listen to this discussion on the importance of supercharging Operations efficiencies in your business.

Want to know more about maximizing the Operations engine of your business? Connect with Kendi and Coati Consulting here.

Disclosures

Life Moves Wealth Management is a registered investment advisor offering advisory services in the States of Arizona and Indiana, and in other jurisdictions where exempted. Registration does not imply a certain level of skill or training. Information contained on this site should not be considered a solicitation to buy, an offer to sell, or a recommendation of any security in any jurisdiction where such offer, solicitation, or recommendation would be unlawful or unauthorized.

The information on this site is not intended as tax, accounting or legal advice, as an offer or solicitation of an offer to buy or sell, or as an endorsement of any company, security, fund, or other securities or non-securities offering. This information should not be relied upon as the sole factor in an investment making decision. Past performance is no indication of future results. Investment in securities involves significant risk and has the potential for partial or complete loss of funds invested. It should not be assumed that any recommendations made will be profitable or equal any performance noted on this site.  

HYPERLINK DISCLOSURE – The information being provided is strictly as a courtesy/convenience. When you link to any of the web sites provided here, you are leaving this website and assume total responsibility and risk for use of the web sites you are visiting. We make no representation as to the completeness or accuracy of information provided at these websites. Life Moves Wealth Management is not liable for any direct or indirect technical or system issues or any consequences arising out of your access to or your use of third-party technology, web sites, information and programs made available through this website. Life Moves Wealth Management does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to Life Moves Wealth Management’s web site or incorporated herein, and takes no responsibility thereof.

Do you need to get your business house in order?

In this episode of The Financial Purpose Podcast, I talk with Paloma Goggins, Corporate and M&A Attorney and founder of Nocturnal Legal.

Listen for our discussion what business owners need to know about forming business entities, creating and maintaining good operating agreements, and most importantly – how to prepare for an eventual smooth exit by beginning with the end in mind.

Visit https://nocturnallegal.com/ to learn more about Paloma and Nocturnal Legal.

Learn more about Dale L Shafer II, CFP® and Life Moves Wealth here.

Disclosures

Life Moves Wealth Management is a registered investment advisor offering advisory services in the States of Arizona and Indiana, and in other jurisdictions where exempted. Registration does not imply a certain level of skill or training. Information contained on this site should not be considered a solicitation to buy, an offer to sell, or a recommendation of any security in any jurisdiction where such offer, solicitation, or recommendation would be unlawful or unauthorized.

The information on this site is not intended as tax, accounting or legal advice, as an offer or solicitation of an offer to buy or sell, or as an endorsement of any company, security, fund, or other securities or non-securities offering. This information should not be relied upon as the sole factor in an investment making decision. Past performance is no indication of future results. Investment in securities involves significant risk and has the potential for partial or complete loss of funds invested. It should not be assumed that any recommendations made will be profitable or equal any performance noted on this site.  

HYPERLINK DISCLOSURE – The information being provided is strictly as a courtesy/convenience. When you link to any of the web sites provided here, you are leaving this website and assume total responsibility and risk for use of the web sites you are visiting. We make no representation as to the completeness or accuracy of information provided at these websites. Life Moves Wealth Management is not liable for any direct or indirect technical or system issues or any consequences arising out of your access to or your use of third-party technology, web sites, information and programs made available through this website. Life Moves Wealth Management does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to Life Moves Wealth Management’s web site or incorporated herein, and takes no responsibility thereof.

Have you ever wondered how to choose the right financial advisor?

Whether you’re looking to work with a financial advisor for the first time, or you are looking to change advisors, the looming question in your mind might be:

HOW DO I CHOOSE THE RIGHT FINANCIAL ADVISOR FOR ME?

One thing I will admit is there’s no shortage of financial advisors in the world!

In fact, when it was suggested to me by a friend of mine that I should consider being a financial advisor, my response was “hey man, thanks – but, the last thing the world needs is another financial advisor!”

I’m glad I rescinded that statement, however. I love the work I do now.

What do you want the financial advisor to do for you?

What should you be looking for in an advisor? What questions should you ask, and what questions might they ask you?

In my opinion, you want to choose someone who you can get to know, get along with but also be challenged by, and someone who you can trust and can earn your trust in return.

Another part of that is getting clear on what you expect from a relationship with a financial advisor. A few factors to consider:

What to look for in a financial advisor

Many people get referred to an advisor from a friend, family member, colleague, coach, or therapist. Or, maybe you have that college buddy or family member who is an advisor.

Regardless of how you find them, the next question is: How will I know if this is the right advisor for you?

The factors I just talked about cover the expectations of the job.

This question – how to find the right advisor for you – is very important, and one I think you should spend the most time thinking about. Most advisors I know can do the job and do it well.

Some who carry the job title of “financial advisor” are only focused on selling financial products that may or may not be in your best interest. Those folks need a wake-up call to how they’re really impacting people’s lives, but that’s another blog article for another time.

Actually, let me just say one more thing about these folks: a product salesperson – I won’t name specific firms, but it their lead is life insurance or annuities – they are not delivering financial advice at all, and are therefore not qualified to be the right advisor for you.

Moving on…

When interviewing for the right financial advisor, here are a few things to look for:

Questions the financial advisor should ask you

Now that we’ve covered what expectations to consider and what to pay attention to during the meeting, let me share a couple of questions you want the advisor to ask you, as well as a couple of questions you may want to ask the advisor.

First, the right financial advisor is probably going to ask some variation of good questions, such as:

All of these questions have a monetary implication, but none of them dig into your financial specifics.

That’s precisely why I do not ask anyone to bring any statements to the first meeting. I don’t ask anyone to fill out the 10-page “intake” form that has you list everything out for me.

My approach with this is highly intentional. In my first meetings, I do not ask financially nosy questions! From my perspective, your financial specifics are none of my business until we decide to begin working together.

Some people don’t want to waste time, they want to get right down to brass tacks, and that’s fine. I can adjust. However, I find most people appreciate lowering the pressure for the first meeting.

Questions you should ask the financial advisor

Now, here are few questions you may want to ask the advisor in that first meeting:

Use this as a resource

If you are considering working with a financial advisor for the first time, or feel underserved and looking for a new advisor, use this as a “know before you go” resource.

If you’re reading this and want to talk with me about your situation, or click here to access my calendar and schedule time to explore how.

Disclosures

Life Moves Wealth Management is a registered investment advisor offering advisory services in the States of Arizona and Indiana, and in other jurisdictions where exempted. Registration does not imply a certain level of skill or training. Information contained on this site should not be considered a solicitation to buy, an offer to sell, or a recommendation of any security in any jurisdiction where such offer, solicitation, or recommendation would be unlawful or unauthorized.

The information on this site is not intended as tax, accounting or legal advice, as an offer or solicitation of an offer to buy or sell, or as an endorsement of any company, security, fund, or other securities or non-securities offering. This information should not be relied upon as the sole factor in an investment making decision. Past performance is no indication of future results. Investment in securities involves significant risk and has the potential for partial or complete loss of funds invested. It should not be assumed that any recommendations made will be profitable or equal any performance noted on this site.  

HYPERLINK DISCLOSURE – The information being provided is strictly as a courtesy/convenience. When you link to any of the web sites provided here, you are leaving this website and assume total responsibility and risk for use of the web sites you are visiting. We make no representation as to the completeness or accuracy of information provided at these websites. Life Moves Wealth Management is not liable for any direct or indirect technical or system issues or any consequences arising out of your access to or your use of third-party technology, web sites, information and programs made available through this website. Life Moves Wealth Management does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to Life Moves Wealth Management’s web site or incorporated herein, and takes no responsibility thereof.

Stocks have recently been in a pullback period after what has been a great year so far.

After a year like 2022 where both stock and bond markets had terrible returns and inflation peaked at 9.1% year-over-year, we all entered 2023 extremely cautious.

If we’re being honest, most of us were a bit – or a lot a bit – bearish. But, we started to see positive stock market returns in early January and February, only to be pulled back in March to the tune of about 8%. If you remember, it felt like confirmation that we were headed for another down year.

It felt like confirmation of the looming recession everyone seemed to be predicting.

With what felt like catching lightning in a bottle, stocks lifted off again in April based on forward guidance around A.I. and the semiconductor demand to expand the use of that technology.

Now, nearing the end of August, we have seen a recent pullback of about 5%.

So, why is it happening and where might we go from here? Let’s get some context for where we are and think about where we might be headed.

This post will be relatively long, contains several charts, and will include a TL;DR at the end.

Why do stocks pullback?

First, let’s talk about stock pullbacks. Even though they can seem to come out of nowhere or for no good reason, they happen every single year. In fact, they happen every single year at an average of 14.3% drawdown.

The below chart shows the S&P 500 intra-year pullbacks and recoveries going back to 1980. Notice the red dots that show up every year. Also, notice the grey bars to reflect where the S&P 500 finished in each respective year.

In 30 of the 42 years (not including 2023), the S&P 500 rebounded to finish positive. In 2011 it finished with a flat return at roughly 0%.

If we count 2011 as not having a negative return, the S&P 500 has finished with gains 74% of the time. I like those odds.

Annualintrayeardeclines

chart source: JP Morgan Guide to the Markets, data as of 07/31/23

Sometimes when stocks go through a pullback period we think there’s something wrong. We look for a culprit or signal of something to come; another shoe to drop.

In the case of 2023, there’s not much negative to point to. Well, other than the fact the Fed has continued raising rates, which I’ll get to shortly. For now, here’s a look at effect of Fed rate hikes on the US Treasury Yield Curve since March 2022.

If you’re unsure what this chart represents, let’s just say the top line is not healthy for the bond market. It does, however, show why money market funds and CDs are so attractive this year.

USYieldCurveMarch2022Aug2023

As I type this, the S&P 500 is up 14.73% year to date. But that return is a little deceiving. Just 7 stocks account 27.4% of the S&P 500 index value, yet as of July 31st they collectively delivered an average return of about 64%.

The “Magnificent Seven” stocks: Microsoft (MSFT), Amazon (AMZN), Meta Platforms (META), Alphabet (GOOG), Apple (AAPL), Nvidia (NVDA), and Tesla (TSLA).

These seven stocks have lost their shine, now account for something like half of the market value loss so far in August.

On a month-to-date basis, Microsoft is down 4.13%. Amazon up 1.94%. Meta is down 10.88%. Alphabet is down 2.57%. Apple is down 8.05%. NVDA is down 1.80%. Tesla is down 10.68%.

Because of how much these stocks ran up, we may be able to chock this up to profit taking and the market not having the confidence to justify higher multiples based on the forward earnings guidance.

SP500valuationmeasures

Let’s now look a little broader than stock performance.

The Fed keeps raising rates

Since March 2022, the FOMC has aggressively raised rates by more than 525bps, or 5.25%. By historical context, it’s a head-spinning pace. When you add the fact that they’re also unwinding their balance sheet – effectively removing money from the market – at the same time, it’s one of the tightest – if not THE tightest – periods of tightening on record.

What’s more? The FOMC appears poised to raise rates YET AGAIN in 2023. Why? Inflation remains higher than their 2% target, and the labor market is still tighter than target at a persistent 3.5% or so.

Labordemand

chart source: JP Morgan Guide to the Markets, data as of 07/31/23

Even if the Fed does raise rates again this year, the broad expectation is they will have to cut rates over the next year.

The chart below shows the Fed even forecasts rates to fall by up to 1% by the end of 2024. They also expect to see positive GDP growth, lower inflation, and more slack in the labor market over the same period.

FedandInterestrates

chart source: JP Morgan Guide to the Markets, data as of 07/31/23

Interest rate hikes take a while to filter through the economy, and they are doing their damndest to engineer a “soft landing.” But, historically, they always overshoot their target.

Never mind 2024 is an election year and, aside from all the other social issues and candidate hoopla, the economy will of course be a primary issue.

Speaking of the economy, let’s have a further look under the hood.

How healthy is the economy?

After the pandemic the obscene (my carefully chosen word) amount of stimulus that followed, we kept right on spending and have pretty much returned to trend. As the chart below shows, 68.2% of GDP is consumption.

GDP

And for all that spending, the U.S. consumer still has a significantly healthier balance sheet than the period heading into the Great Financial Crisis. Even going back to 1980, the debt payments as a percentage of disposable personal income is historically low.

However, the chart to the lower left shows a slight increase in 30+ days delinquencies in auto and credit care payments over the past two years.

Look at the student loan line in orange… keep in mind payments for federal loans restart in October. I fully expect to see a rise in delinquencies here, as payments have been removed from cash flow for 3.5 years, and some borrowers will flat refuse to pay in protest to the Biden forgiveness being reversed by the Supreme Court.

Consumerfinances

Speaking of delinquencies, some financial pundits have pointed to a possible correlation with a significant rise in credit card balances since the pandemic, and even pre-pandemic. By the numbers, total credit card balance in this country has topped $1.031 Trillion, which is the highest balance ever.

At the same time, it’s estimated that just over 2% of Americans are delinquent by 30 days or more on their credit card payments.

In context though, there are significantly more consumers with credit cards now than back in 2008 – so OF COURSE the total balance number is higher.

creditcarddebt88

And then there’s the persistently high mortgage rates.

The average rate for a 30 year fixed mortgage in 2021 was 2.96%, then 5.34% in 2022, and now roughly 8.14% in 2023.

The St. Louis Fed (FRED) estimates the current average home sales price across the country at $495,100, which is roughly $100,000 higher than just two years ago, but down approx. $50,000 from just one year ago.

mortgageratehistory810

Yet, with significantly higher borrowing costs than in recent memory, consider the average mortgage rate from 1971 to 2023 is 7.74%. With low down payment programs and seller-funded rate buy downs, homes are still selling. And, home building is still booming and will continue to do so for the foreseeable future.

Here’s the TL;DR.

With unemployment under 4%, housing starts rising another 3.9% month-over-month in July, and real wage growth now outpacing inflation by more than 1%, the probability of a recession is significantly lower than we all expected at the start of 2023.

All things considered, the economy continues to soldier on despite Fed rate hikes of more than 5.25% since March 2022. Higher rates, in theory, are a tool to slow down economic growth and bring down inflation. The trailing effect of slowing economic growth, which means slower GDP growth, which means lower corporate production, which may mean lower stock valuations.

That said, where the market goes from here will largely hinge on whether or not the Fed continues to raise rates. If the Fed pauses, or even eventually cuts, we could possibly see borrowing rates decline based on bond yield movements.

Stock market pullbacks are a natural part of investing, and so far in 2023 we’ve seen as much as 8% drawdown, which is less than the average intra-year decline of 14.3%. Much of the current pullback of roughly 5% or so has been caused by the same 7 stocks that led the market significantly higher through July.

Clients of Life Moves Wealth Management have over and over heard me state the importance of remaining on the field and playing the game – staying invested. Market pullbacks are an opportunity, for those who have the capacity, to invest more.

More importantly, we keep buying regardless of what the market is doing today because the game is won by playing smart over time.

The performance of your investment accounts may not match the return of the S&P 500 in any given year; in fact, if your investment strategy is properly diversified and appropriately matched to your individual risk tolerance, the performance of a broad stock-only index is an irrelevant comparison.

What IS relevant, however, is what your investment strategy is designed to accomplish over time and what you have in place to help weather periods of market volatility… financially and emotionally.

What is your investment strategy built to accomplish? Unsure? We can help.

Disclosures

Life Moves Wealth Management is a registered investment advisor offering advisory services in the States of Arizona and Indiana, and in other jurisdictions where exempted. Registration does not imply a certain level of skill or training. Information contained on this site should not be considered a solicitation to buy, an offer to sell, or a recommendation of any security in any jurisdiction where such offer, solicitation, or recommendation would be unlawful or unauthorized.

The information on this site is not intended as tax, accounting or legal advice, as an offer or solicitation of an offer to buy or sell, or as an endorsement of any company, security, fund, or other securities or non-securities offering. This information should not be relied upon as the sole factor in an investment making decision. Past performance is no indication of future results. Investment in securities involves significant risk and has the potential for partial or complete loss of funds invested. It should not be assumed that any recommendations made will be profitable or equal any performance noted on this site.  

HYPERLINK DISCLOSURE – The information being provided is strictly as a courtesy/convenience. When you link to any of the web sites provided here, you are leaving this website and assume total responsibility and risk for use of the web sites you are visiting. We make no representation as to the completeness or accuracy of information provided at these websites. Life Moves Wealth Management is not liable for any direct or indirect technical or system issues or any consequences arising out of your access to or your use of third-party technology, web sites, information and programs made available through this website. Life Moves Wealth Management does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to Life Moves Wealth Management’s web site or incorporated herein, and takes no responsibility thereof.

Today I want to talk about using Kaizen to become a 1%er.

I’m not talking about those that fall in the higher earning bracket…. Although that may be a goal for some…

And, I’m not talking about that particular motorcycle club either….

But what I am talking about is Kaizen.

Kaizen, in practice, usually delivers small improvements that yields big results over time.

It starts by simply improving by 1% at a time.

I have found this to be an effective way to get to where you want to be financially, physically, relationally, emotionally, professionally… literally anywhere you want to see improvement.

And by the way… all of those areas: financial, physical, relationships, emotional control, your profession… those are all directly correlated. The more financial stress you are under, the less effective you will be in the other areas.

On the flip side, the side-effects of financial success show up everywhere – and that’s the direction we need to be headed.  

And the key is this: you have to wake up every morning and re-commit to taking action towards improvement… just like in your marriage, your career, or your job as a parent. Every day you make a new commitment to stick with it.

1% at a time.

Listen to this episode of the Financial Purpose Podcast here:

Disclosures

Life Moves Wealth Management is a registered investment advisor offering advisory services in the States of Arizona and Indiana, and in other jurisdictions where exempted. Registration does not imply a certain level of skill or training. Information contained on this site should not be considered a solicitation to buy, an offer to sell, or a recommendation of any security in any jurisdiction where such offer, solicitation, or recommendation would be unlawful or unauthorized.

The information on this site is not intended as tax, accounting or legal advice, as an offer or solicitation of an offer to buy or sell, or as an endorsement of any company, security, fund, or other securities or non-securities offering. This information should not be relied upon as the sole factor in an investment making decision. Past performance is no indication of future results. Investment in securities involves significant risk and has the potential for partial or complete loss of funds invested. It should not be assumed that any recommendations made will be profitable or equal any performance noted on this site.  

HYPERLINK DISCLOSURE – The information being provided is strictly as a courtesy/convenience. When you link to any of the web sites provided here, you are leaving this website and assume total responsibility and risk for use of the web sites you are visiting. We make no representation as to the completeness or accuracy of information provided at these websites. Life Moves Wealth Management is not liable for any direct or indirect technical or system issues or any consequences arising out of your access to or your use of third-party technology, web sites, information and programs made available through this website. Life Moves Wealth Management does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to Life Moves Wealth Management’s web site or incorporated herein, and takes no responsibility thereof.

Personal finance is personal. Your money story is yours alone, and sometimes changing your money story is key to taking your next financial step forward.

“This isn’t going to be my story anymore…”

In this episode of the Financial Purpose Podcast, I’m joined by special guest Sarah VanHoose for a conversation around how to change your money story.

Listen to hear how she and her husband got serious about their money values, paying off more than $500,000 of debt in three years!

And, hear how she decided to leave her corporate health care career to fully launch her financial and corporate coaching business, Journey to Influence.

Money shame exists all across the wealth spectrum and Sarah is on a mission to change that mindset and help people get control of their money.

Click here to learn more about Sarah and Journey to Influence.

Download Sarah’s 5-Step Plan to thrive with your personal finances.

Disclosures

Life Moves Wealth Management is a registered investment advisor offering advisory services in the States of Arizona and Indiana, and in other jurisdictions where exempted. Registration does not imply a certain level of skill or training. Information contained on this site should not be considered a solicitation to buy, an offer to sell, or a recommendation of any security in any jurisdiction where such offer, solicitation, or recommendation would be unlawful or unauthorized.

The information on this site is not intended as tax, accounting or legal advice, as an offer or solicitation of an offer to buy or sell, or as an endorsement of any company, security, fund, or other securities or non-securities offering. This information should not be relied upon as the sole factor in an investment making decision. Past performance is no indication of future results. Investment in securities involves significant risk and has the potential for partial or complete loss of funds invested. It should not be assumed that any recommendations made will be profitable or equal any performance noted on this site.  

HYPERLINK DISCLOSURE – The information being provided is strictly as a courtesy/convenience. When you link to any of the web sites provided here, you are leaving this website and assume total responsibility and risk for use of the web sites you are visiting. We make no representation as to the completeness or accuracy of information provided at these websites. Life Moves Wealth Management is not liable for any direct or indirect technical or system issues or any consequences arising out of your access to or your use of third-party technology, web sites, information and programs made available through this website. Life Moves Wealth Management does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to Life Moves Wealth Management’s web site or incorporated herein, and takes no responsibility thereof.

Federal Student Loan payments are scheduled to begin on October 1, 2023. After more than three years of extensions, delays, an executive order, and a pending Supreme Court hearing, you may be wondering what to expect.

A few things to know

First, expect this case to be long from being decided and fully closed. A few things to know:

There’s no doubt in my mind this will continue to be a political and economic issue for the foreseeable future. 

studentloandebtgrowthchart.webp

Recent surveys suggest upwards of a third of borrowers claim they will be unable to make their original payments. Many borrowers have publicly stated they are refusing to restart payments. 

Many are also pressing for government action to reinstate bankruptcy protection on federal loans. Currently, the only two options available to retire federal student loans is to 1) pay the loan in full, or 2) die. ​​​​​​​

Tips for preparing to pay your student loans

While all of that gets sorted out, what remains true is these student loan payments have not held a spot in your cash flow for more than three years. 

I still personally have federal student loans and have begun planning to reintroduce these payments into our monthly cash flow. 

For those who also have student loans outstanding, I want to share a couple of tips to help you get ready for payments to begin in October:

  1. It’s likely you have a different loan servicer. Navient, FedLoan Servicing, and Granite State are no longer handling federal loans. Watch for communication to come from your servicer.
  2. A reasonable expectation is that your payments will continue at the same payment amount, as the terms of your student loans were essentially frozen during the forbearance and no interest has been accruing. 
  3. Start setting aside your monthly student loan payment amount in a savings account. This will give you three months to make adjustments in other areas as needed.
  4. OR –  go ahead and make your student loan payment interest free for the next two months!
  5. Check with your servicer about any special benefits for autopay. Some may offer a slight rate discount or other bonuses. 

Finally, if you or someone you care about are reviewing monthly cash flow and concerned about the impact of student loan payments, it may be helpful to get another set of eyes on the numbers.

Reach out if I can be helpful in this area – click here to schedule time with me.

Disclosures

Life Moves Wealth Management is a registered investment advisor offering advisory services in the States of Arizona and Indiana, and in other jurisdictions where exempted. Registration does not imply a certain level of skill or training. Information contained on this site should not be considered a solicitation to buy, an offer to sell, or a recommendation of any security in any jurisdiction where such offer, solicitation, or recommendation would be unlawful or unauthorized.

The information on this site is not intended as tax, accounting or legal advice, as an offer or solicitation of an offer to buy or sell, or as an endorsement of any company, security, fund, or other securities or non-securities offering. This information should not be relied upon as the sole factor in an investment making decision. Past performance is no indication of future results. Investment in securities involves significant risk and has the potential for partial or complete loss of funds invested. It should not be assumed that any recommendations made will be profitable or equal any performance noted on this site.  

HYPERLINK DISCLOSURE – The information being provided is strictly as a courtesy/convenience. When you link to any of the web sites provided here, you are leaving this website and assume total responsibility and risk for use of the web sites you are visiting. We make no representation as to the completeness or accuracy of information provided at these websites. Life Moves Wealth Management is not liable for any direct or indirect technical or system issues or any consequences arising out of your access to or your use of third-party technology, web sites, information and programs made available through this website. Life Moves Wealth Management does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to Life Moves Wealth Management’s web site or incorporated herein, and takes no responsibility thereof.

The National Association of Personal Financial Advisors
The Society of Advice

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