Financial Advisor News

Piedmont, CA

Financial Advisor News

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Piedmont, CA

by: ALISON VAN DYKE

FIRST AND MAIN FINANCIAL

(510) 601-1935

Oakland, CA | East Bay; Healthy Portfolio Allocation During Retirement

Hi, I’m Erik Wolfers, founder and managing member of First & Main Financial. We’ve been helping our clients successfully get through retirement since 2001. Today I want to talk just a little bit about asset allocation and expectations.

Asset allocation is how your portfolio is invested—you could be 100% in the stock market, or you could have some amount of bonds or cash. If you consider real estate another asset, you might have some of that. There are things like alternative Investments that are designed to move in different directions than the stock market, or not be connected to movements of the stock market. Your asset allocation also could be one stock—you might just own all Apple stock or 10 different stocks. But there is an expected return that comes from your asset allocation—that’s the primary determinant of how much you should expect to make.

Since the beginning of the stock market, creeping up on a hundred years now, large US stocks have made something close to between 9% and 10%, depending on when you look and when you measure. There are other baskets of stocks that have a history of making more. The stock market doesn’t always go up—if it went up everyday just by a little bit people would be really happy. But generally there’s volatility because prices for stocks are based in part on expectations about profitability and the economy and stability in the economy.

We often have conversations with clients about what to expect, and we build diversified portfolios for them. Someone that doesn’t need the money for a long time, generally is in a portfolio that is in 100% of the stock market—but it’s also spread around the globe in different concentrated baskets of stocks that are likely to outperform over time relative to the index that they would be measured against.

If you have 40% bonds in your portfolio over a long period of time, you should expect to make less money than if you’re a 100% in the stock market. But if you need cash on a regular basis, then those bonds give you a relatively safe place to get cash, so you can live in retirement without worrying about the long-term health of your portfolio.

Within the stock market, as I mentioned, we have baskets of stocks that are not large cap stocks—the S&P 500 being the most popular index for measuring performance of large-cap stocks—and sometimes a different basket of stocks gets behind large cap stocks. Large cap stocks are the most consistent performers but they’re not the best performers historically. If everything in our client’s portfolios always went in the same direction at the same time then it wouldn’t be diversified.

There’s no perfect answer necessarily about whether you want all of your assets to keep moving in the same direction at the same time. It can certainly be frightening in market downturns.

That’s just a little bit of information on diversification, various baskets of stocks and relative performance. We’ve been doing this for a long time so we’re happy to have conversations about it at any time. If you are looking for some financial guidance; whether for a one time financial plan or continuing advice on your investments, we invite you to meet with a First & Main Financial planner for a free consultation. We would be more than happy to sit down with you, assess your situation and review our services to help navigate your financial future.

Oakland, CA | East Bay; Q3 2020 Market Summary and the Upcoming Election

We presently live in a country where, unless we shun it, we’re constantly bombarded with someone else’s narrative. Wherever you fall on the political spectrum, unless you try to focus more on practicable solutions than fear; TV, social media, print media and our most elite universities are constantly driving home a message and it either makes you feel good, or, afraid of the “other” side.

Newspapers and TV shows are driven by profit. If they can overwhelm and engage their audience with messaging that makes them more committed to ideas that make them feel good, while mistrustful of opposing views (more tribal), they sell more adds and make more money.

This is not new.

Print and on-line newspapers are battling for their lives due to low barriers to entry for alternative news sources. They need to grab and hold your attention to survive.

Social media and the internet have been around for a nanosecond with respect to the history of humankind and thus our brains aren’t evolutionarily wired to deal with the speed and consequence of what might go on in that space. The artificial intelligence algorithms directing content to social media users are relentless in pushing whatever gets one too look and keep looking. If one shops for information with a narrow band of interest, one will mostly get content pushed in that band.

These days, to many, the things they believe according to what they’re shown by the places they shop for information seem totally certain. There are kernels of truth in the different narratives but given the nature of what’s available to us one must, unfortunately, make extra effort to formulate broader perspective and find irrefutable facts.

I delved into this because we’re about to have an election where we’ve reached an incredibly deep divide between the political factions and we regularly get calls, have conversations, or are told by different clients that they want to wait until after the election to consider investing more money, or, maybe they should take some money out of markets given the apparent craziness. Whichever side one is on they likely think things will be really bad if the other side wins.

We received a lot of clients after the last election when economic results didn’t align with expectations. Then as now many people would rather not have a connection to the stress of having to make decisions about how their money will be invested and so it’s our ethical imperative to try to stay connected to base facts and maintain a broad and reasonable perspective.

This is an ongoing endeavor requiring constant focus and we’re always searching for new information to help us better serve our clients.

The economy is coming back after being shut down. Unemployment is at an extremely reasonable level (7.9%) given the immediate and severe shock to the system. We came into the pandemic in one of the most stable and positive economic environments ever in the history of our country. Unemployment was the lowest in over 50 years while growth was decent and inflation contained with no signs of excess in markets or in our economy. This is called a goldilocks economy.

Depending on one’s information sources the situation may seem much worse than it is. The situation is not great, and many people are hurting, but The Federal Reserve Bank and our government have made strong efforts to keep the train on the tracks while things get reconfigured to a certain degree.

Markets have done quite well and one simply can’t argue with the consensus determined by trillions of dollars all directed with the incentive to profit, not lose.

We don’t know what the election will bring but unless the person who winds up in office tries for a massive wealth transfer, my guess is most of us will keep waking up every morning with basic human needs, and there will continue to be people and companies to fill those needs. Global economic progress will likely thus continue. Global economic progress has lifted about a billion people out of poverty over the last decades.

As always, we appreciate the trust you put in us to manage your investments. We are always available for a conversation should questions arise.

Sincerely,

Erik S. Wolfers, MBA, CFP®

Oakland, CA | East Bay; Which Factors Contribute to a Healthy Retirement?

Hi, I’m Erik Wolfers. I’m the founder and managing member of First & Main Financial. We’ve been helping clients get through retirement since 2001. Today I want to talk a little bit about a longevity; and this specifically pertains to when people are in retirement or their “golden years”.

I go to a continuing education conference every year, and this year I sat in on a talk with a gentleman from the Longevity Institute at Stanford in which he highlighted four factors that have been shown to contribute to a long and healthy life. I wanted to share them with you.

One is connectedness—it’s not good to be isolated when you get older. You want to have a certain number of people you connect with regularly, that you have deep meaningful relationships with. It doesn’t have to be a lot of people—I can’t remember what the magic number was, but it’s less than 10, possibly even less than 5, depending on a person’s personality.

Sleep is critical for everyone, especially when you get older—you need to get adequate sleep so that your body can restore itself; there’s a big wave these days of using breathing devices to help people make sure they get enough oxygen.

Activity when you get older is known as a good for everyone in health and life. You need to be active and it doesn’t necessarily have to be super vigorous activity—but people need to get up and move and move regularly and go for walks, that kind of a thing.

The last thing is sitting. Sitting has been shown to shorten people’s lives if they do it too much.

So again this was research from Stanford and I’m sure there is other great information out there. The Stanford Longevity Institute is good resource. I wanted to share because if you spend your whole life saving money and generating good investment returns, you want to have a good life once you are able to not work anymore.

If you are looking for some financial guidance; whether for a one time financial plan or continuing advice on your investments, we invite you to meet with a First & Main Financial planner for a free consultation. We would be more than happy to sit down with you, assess your situation and review our services to help navigate your financial future.

Oakland, CA | Piedmont; Financial Planning and the Emotions of an Inheritance

Hi, I’m Erik Wolfers. I’m the founder and managing member of First & Main Financial. We’ve been helping clients get good outcomes with their personal finances since 2001. We operate as fiduciaries, where our only objective is to do what’s best for our clients and help them get the best outcome depending on their circumstances and the preferences.

Today, I want to talk a little bit about inheritance. Periodically we have people come to us who have inherited money and it’s an interesting human dilemma—people sometimes have different emotions, different feelings about getting money from someone who they love, and there always seems to be a kind of natural confusion about the taxability.

If you inherit something that was a taxable asset, something sitting in a living trust possibly or a piece of real estate, you get a step-up in basis. Whatever the cost of the asset was to the person who originally acquired it, when they pass it to you, the cost is now the current cost. It can be sold without any taxable gain or any tax consequences to person inheriting the money. Life insurance is also tax free.

We get a lot of clients who inherit retirement accounts and there’s confusion about what to do with those kinds of accounts. Mostly clients open up what’s called an inherited IRA or beneficiary IRA and the assets go into that account. They can take all the money out if they like, and the withdrawal will be fully taxable as income on their taxes.

The rules have recently changed with IRAs. It used to be you could spread the distributions out over your lifetime if you wanted to take it out slowly as possible. Now it has to be taken out within 10 years. But you don’t have to take any out until the 10th year, thus allowing the money to grow and also avoiding any tax consequence of pulling the money out on an annual basis.

We’ve been through it a lot with our clients. We understand that it can be a confusing time and a stressful time with respect to making decisions, or how to feel about the money for those who have inherited it. But it can be made very simple if you’re getting help from someone who has your best interest at heart. It can be a painless process and hopefully a lot of good can come from it.

If you are looking for some financial guidance; whether for a one time financial plan or continuing advice on your investments, we invite you to meet with a First & Main Financial planner for a free consultation. We would be more than happy to sit down with you, assess your situation and review our services to help navigate your financial future.

Oakland, CA | Piedmont; Managing Tech Volatility with Your Financial Planner

Hi, I’m Eric Wolfers. I’m the founder and managing member of First & Main Financial. We’ve been helping clients realize their financial goals since 2001. We only ever operate in the best interest of our clients and to the highest fiduciary standard. There is a written fiduciary standard, but there are people that operate at a higher level of ethics, so we always encourage people to work with someone that’s like us—if they don’t want to work with us.

Today I want to talk a little bit about current events in the market. I spoke not too long ago about a small dominant set of stocks that are making the most money in the stock market right now. Brand name firms that are generating a tremendous amount of profit. There’s been a lot of interest in those stocks lately and they recently have been driven up a lot and price.

It’s been an interesting pattern because when the market dropped at the most rapid rate ever back in March of this year because of the global pandemic, people wanted the pain to end, they wanted to be out of the market. When it rebounded, people couldn’t believe that it rebounded that fast and then they wanted to be out of the market. I would say as of late we’ve gotten in a little bit of a bubble phase where everybody wants to be in the market, especially in the brand name tech stocks.

It’s unlikely that most firms will hold dominant position forever and generate the profits that they do at the rate they do. We’ve had an interesting cycle this year of greed and fear, or vacillation between greed and fear. I got a call yesterday from someone disappointed because tech stocks were down strong and it was hurting and that’s the risk of trying to jump in at what might be the end of a cycle, where there’s been tremendous demand for a certain set of stocks. This is how you lose money; things have gone too far too fast and you’re in a little bit of a bubble environment, you jump in right at the end and it hurts when you lose money.

We always think of investing in terms of decades, or the relevant time frame for somebody’s life depending on how old they are. If you’re invested in a diversified fashion, you should not lose money. You should be in a position where you have enough liquidity to ride out market volatility so that you never actually sustain losses in the stock market.

Be careful of greed and fear and know how long you’re Investing for and why—and know the things that you’re invested in.

We have clients who are competent investors but they just don’t want to watch it, or have their emotions pulled around by feeling like they’re responsible for the choices inside of their accounts. We’re happy to talk with you and we’re taking on new clients all the time. If you are looking for some financial guidance; whether for a one time financial plan or continuing advice on your investments, we invite you to meet with a First & Main Financial planner for a free consultation. We would be more than happy to sit down with you, assess your situation and review our services to help navigate your financial future.

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BIO: At First & Main Financial, Alison Van Dyke helps clients with their financial lives. She has worked in Corporate Finance for Bank of America and Chase Manhattan Bank. Alison is pursuing the CFP® certification; she received her MBA at Georgetown and her B.A. in Political Science from UCLA.

235 Wildwood Avenue,
Piedmont, CA 94610, USA

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BIO: At First & Main Financial, Alison Van Dyke helps clients with their financial lives. She has worked in Corporate Finance for Bank of America and Chase Manhattan Bank. Alison is pursuing the CFP® certification; she received her MBA at Georgetown and her B.A. in Political Science from UCLA.