To be kind, think In Kind
Today we are talking about charitable giving strategies. Donations in Kind are a powerful way to efficiently give to charitable causes. These direct gifts are a great way to help charitable organizations, while reducing your tax bill. These types of donations are not right for everyone, and we encourage you to speak with a tax professional about your specific situation. However, most charitable organizations, non-profits, and churches can accept these types of donations. So regardless of the cause that you support, it is possible that In-Kind giving can increase your donation’s impact.
One of the most important questions to answer before setting financial goals
What is the most important question to ask before setting financial goals?
In Lewis Carol’s famous novel Alice in Wonderland, Alice asks the Cheshire Cat what fork in the road to take. The Cheshire Cat replies, “That depends a good deal on where you want to get to.” Alice explains she doesn’t really care where she goes, as long as she goes somewhere. The Cheshire Cat responds “Then it doesn’t matter which way you go.”
That is true for lost protagonists, and it is true for investors, knowing where you want to be is the first step in getting there.
We want to be your partners in reaching financial goals. We love helping to develop the plans and teaching you about the options available. However, only YOU can decide what you want out of life.
So, what do you value most?
Because that is the most important question to ask before you set any financial goal.
4 Common Missteps in Estate Planning
Because we have helped a lot of individuals through both the planning and the sorting process, we have learned that inattention and procrastination can hurt family wealth. Although some estate planning is better than none, sometimes people address wealth transfer issues inadequately when they go it alone. Here are some classic missteps:
First: Waiting too long. A wealthy individual may postpone estate planning until too late in life, which may present obstacles due to diminished faculties or declining health.
Second: Poor communication. Failing to discuss details of an estate plan with a spouse, an executor, a charity, or heirs may lead to assumptions and differences in expectations—potentially setting the stage for more difficult conversations after you pass away.
Third: Choosing the wrong executor. Some people lack the interest or temperament to carry out an estate plan. Others face a steep learning curve. Sometimes, an executor is chosen regardless of his or her health—and passes away before the grantor does.
Fourth: Failing to update beneficiary choices. Beneficiary designations on retirement savings accounts and life insurance policies can potentially override bequests made in your will. Outdated designations may result in ex-spouses or estranged children receiving life insurance proceeds or retirement plan assets.
How up-to-date is your estate planning? Call or email us today so that we can review your estate plan and use our experience to your advantage.
This information is not intended to be a substitute for individualized legal advice. Please consult your legal advisor regarding your specific situation. Kimball Creek Partners and LPL Financial do not provide legal advice or services.
How do political flashpoints impact stock market performance?
In terms of political turmoil, the 60’s and 70’s can be considered analogous to today. For example, in 1968 the USA was involved in the Vietnam war, Martin Luther King was assassinated, and there was a great deal of protests and even violent demonstrates as frustrations boiled over. And yes, 1968 even featured a flu pandemic.
As we celebrate another chapter of American democracy, we thought to examine past moves in the markets following contentious and jarring events in the United States. This video includes a chart that shows the percentage change in the S&P 500 index from 30 trading-days before a major event to 250 trading-days after.
Events can move stock market prices, but how the markets react is unpredictable and not necessarily tied to an event.
We’ve looked at the data and no pattern holds 100% of the time. What we believe, is that over time markets will move higher, as has historically been the case. The most important thing an investor can consider is how long they can stay invested, and what kind of volatility they are comfortable experiencing.
What do new investors need to know about trading stocks?
“Every investment is an education. The only question is whether you will pay tuition or get a scholarship. ”
One of the biggest problems faced by a novice, is not recognizing the breadth and depth of knowledge required to truly be an expert. This was eloquently explained in a now famous study by Justin Dunning and David Kruger. Understanding the “Dunning-Kreuger effect” can help us be more self aware when investing.
Furthermore, like an experienced mountain guide can help you conquer peaks, a financial advisor can be a considerable resource. And if you decide to go venture solo, do things in moderation to start. Be prudent, calculated, and treat the experience like an education.
Is the rising federal debt going to hurt the stock market?
U.S. federal debt has risen for decades. However, not all debt is created equal. Falling interests rates may be mitigating some concerns around ballooning national debt.
“U.S. Government debt has increased nearly 800% since 1990. However, interest payments on this debt have increased only 145%. It may be that markets are not deterred by mounting U.S. debt because this debt is borrowed at lower interest rates, and thus the payments on the debt will be less onerous to tax payers” -Dean Bennion
Is the stock market like gambling?
“In gambling, the house only makes money if the participant loses. Therefore, the house has a strong incentive to stack the odds against the gambler. However, when an investor buys stock in a company, the company wins alongside the investor when the stock increases in price. In essence, the company and investor are on the same team because their goals are often aligned.”
Watch the video above for more complete details on why we feel gambling and investing are fundamentally different.
Is the stock market at a high?
LPL recently published a chart that shows how this bull market, which began in March last year, compares to the bull market starts of 1982 and 2009 (watch the video above for the chart). This graph illustrates that past bull markets, have exhibited an early period of fast gains, followed by a period where the markets move sideways, or take a breather if you will. Our current bull market has followed this period of fast gains quite closely, and it would not surprise us if our current market took a breather for a few months.
However, we think it would be presumptuous to assume that because growth slows for a period, it indicates the end of a bull market. History tells us, that we might have multiple years of growth before the next market downturn.
2021 Opens With Optimism
Dear Valued Investor,
“In the short-term, the market is a popularity contest. In the long-term, the market is a weighing machine.” Warren Buffett
2021 is under way, as our nation and the rest of the world look to begin to put the global pandemic behind us. The path forward for the US economy, as well as that of the global economy, will continue to depend heavily on the success of combatting the virus.
While many of the risks presented by the outbreak of COVID-19 persist, it appears we may be in the later innings of the pandemic. Following increased restrictions to quell the holiday surge, new daily COVID-19 cases and hospitalizations have peaked, and are down significantly the past few weeks (source: COVID Tracking Project). Reopening is taking place as well, highlighted by New York City’s plans to bring back indoor dining by Valentine’s Day. Meanwhile, the distribution of currently approved vaccines is well underway—and accelerating. The United States has added over 1 million shots per day over the past week (source: CDC) and 1.5 million per day is quite possible soon. Adding to this optimistic trend, new vaccine candidates from Johnson & Johnson and Novavax have also shown efficacy in combatting the effects of the virus and new mutations. If these two candidates are authorized for use as most experts expect, the boost in supply will be a welcome development in the US and abroad.
Despite the positive trends in COVID-19 data, volatility began to return to the stock market in the final days of January, as retail traders set their eyes on GameStop (GME) stock and other heavily shorted securities, captivating the nation’s imagination. As Warren Buffett explained above, while many of these securities may be popular now, the real winners will likely be investors with longer-term horizons. While these developments could be another sign of excessive optimism in certain segments of the equity markets, we do not believe they represent a sign of a broader market bubble or indicate a major correction is forthcoming.
After the powerful snapback of economic growth seen in the third quarter, the economy continued to grow at a solid 4% in the fourth quarter despite the holiday surge in COVID-19 cases. This improving economic backdrop has provided tailwinds to corporate profits, which should help stocks grow into their elevated valuations. S&P 500 Index earnings for the fourth quarter are impressively tracking 9 percentage points ahead of consensus expectations, while more than 80% of companies have beaten earnings estimates (source: FactSet). Meanwhile, housing remains extremely strong nationally and manufacturing data continues to show an economy that is firmly on the mend.
The improving economic backdrop, along with US government and Federal Reserve policies designed to boost the economy, suggest the environment for risk assets may remain favorable in 2021. Don’t get complacent though; after the S&P 500 Index rallied more than 70% since the March 2020 lows, some volatility would be perfectly warranted. Remember, they say that the stock market is the only place where things go on sale, yet people run out of the store screaming. Have a plan in place to be ready to take advantage when the sales come, and don’t run out screaming.
Stay healthy and please contact me with any questions.
Important Information
This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.
References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.
Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities.
All index data from FactSet.
This Research material was prepared by LPL Financial, LLC. All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.
Securities offered through LPL Financial, member FINRA/SIPC. Investment advice and financial planning offered through Financial Advocates Investment Management DBA Kimball Creek Partners, a Registered Investment Advisor. Financial Advocates Investment Management, Kimball Creek Partners and LPL Financial are separate entities.
Please remember to contact Financial Advocates Investment Management and Kimball Creek Partners in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you want to impose or modify any reasonable restrictions to our investment advisory services, or if you wish to direct that Financial Advocates Investment Management, and Kimball Creek Partners effect any specific transactions for your account. Please be advised that there can be no assurance that any email request will be reviewed and/or acted upon on the day it is received – please be guided accordingly. Trading instructions sent by email will NOT be honored. A copy of our current written disclosure statement discussing our advisory services and fees continues to remain available for your review upon request.
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Do high stock valuations mean a market crash is coming?
Dean has been a financial advisor for more than 30 years. He has guided people through multiple market cycles and shares his thoughts on the current market environment. Watch the video for more complete details!
“…market pundits often cite the high valuations prior to the Tech Wreck in early 2000 as supporting evidence that our markets are riding a bubble that is going to burst. Let me be clear, they are almost assuredly correct that at some point in the future, the market will undergo a significant draw down. Healthy markets correct from time to time, but it is incredibly difficult to predict when that will happen.” -Dean Bennion
