News & Insights

Stock Returns – The Uncommon Average

by Jim Freeman, CFP® on 11/10/2017

The US stock market has delivered an average annual return of around 10% since 1926 (as measured by the S&P 500 Index through 2016). But short-term results may vary, and in any given period stock returns can be positive, negative, or flat. When setting expectations, it’s helpful to see the range of outcomes experienced by investors historically. For example, how often have the stock market’s annual returns actually aligned with its long-term average?

Exhibit 1 shows calendar year returns for the S&P 500 Index since 1926. The shaded band marks the historical average of 10%, plus or minus 2 percentage points. The S&P 500 had a return within this range in only six of the past 91 calendar years. In most years the index’s return was outside of the range, often above or below by a wide margin, with no obvious pattern. For investors, this data highlights the importance of looking beyond average returns and being aware of the range of potential outcomes.

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posted in BlogInvestments

Market Review – Q3 2017

by Financial Alternatives on 10/13/2017

  • Emerging markets outperformed developed markets, including the US, during the quarter.
  • In US dollar terms, developed markets outperformed US equity indices but underperformed emerging markets indices during the quarter.
  • The Bloomberg Commodity Index Total Return gained 2.52% during the third quarter.
  • Interest rates increased slightly across the US fixed income market for the quarter, but total returns still remained positive for most investment grade indices.

posted in InvestingNewsletters

Planning Newsletter – Oct 2017

by Financial Alternatives on 10/13/2017

Tax Reform or Not

  • The recent tax proposal would significantly change income taxes, but there are many important provisions that have not been specified.
  • The most noteworthy part of the proposal is a full repeal of the estate tax.
  • Due to the makeup of Congress and the expected costs of the tax proposal, some sort of compromise will be required to push any changes through.

Remembering the Last Crisis

  • The 10 year anniversary of a record S&P 500 high point is upon us, with several other crisis period anniversaries like the Lehman bankruptcy coming in succeeding months.
  • Reflecting on your experience back then and looking at the recoveries of other financial crises can help prepare you for the next one.
  • A key part of a good long-term investing experience is being able to stay with your investment philosophy, even during tough times.

posted in NewslettersPlanning

Embracing Retirement by Making the Right Housing Decisions

by Ellen Li, MSBA, CFP® on 9/22/2017

As a busy financial advisor and  mother, I like to balance myself with the practice of yoga. To me, yoga is more than just the practice of body movement, it’s  also an exercise of mental discipline.  Recently one of my favorite instructors used “embrace change” as our mantra and it really resonated  with me both  professionally and personally.

At Financial Alternatives, we recently helped two clients make new housing choices in their retirement years — one client remodeled their house and redesigned the living space on the first floor to make living there safer and more comfortable. The second client decided to move to an assisted living facility. In both cases, it was a transition, a new change that our clients embraced with courage and wisdom.  Stories such as these show the importance of making the right housing decisions  during your retirement years. These decisions could  have a tremendous effect on you  both financially and emotionally.

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posted in BlogGeneralPersonal Finance

5 Steps to Take After the Equifax Breach

by Chris Jaccard, CFP®, CFA on 9/14/2017


Now that some of the dust has settled on one of the worst cyber security breaches in history, we think everyone should go through the 5 steps listed below.  Why everyone?  Because there is no way to be certain if you have been affected by the Equifax breach or not.  I entered false info to test Equifax’s verification site including a last name of “test” and a SSN of “123456” only to find that it positively identified me as a person impacted by the breach.  [9/16/17 Update: Equifax’s Chief Information Officer and Chief Security Officer are “retiring” and their internal investigation continues.]

Also, please make sure everyone in your family has taken these steps including your spouse, kids in college, domestic partner, and perhaps even minor children.

Step 1: Review Your Credit Report

Use the Annual Credit Report site to review your credit report from at least one of the three listed credit reporting agencies (“CRAs”).  By law, you are allowed one copy every 12 months, so we suggest you request a report from one of the three CRAs every 4 months.  Check for rogue activity or inaccuracies, and contact the CRAs to address the issue.

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posted in BlogGeneralPersonal Finance

Thank Vanguard for Lower Investment Costs. What Makes Them Different?

by Jim Freeman, CFP® on 9/5/2017

Most investors do not know this but The Vanguard Group is radically different from all other investment firms. What makes them different is that they are owned by the funds they manage – a unique arrangement that eliminates conflicting loyalties.

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posted in BlogGeneral

Thoughts on S&P’s decision to exclude non-voting stock from indexes

by Chris Jaccard, CFP®, CFA on 8/3/2017

This week the company that maintains the S&P 500 index announced that they will start excluding companies from their indexes that issue multiple classes of shares.  So newer issues of stock from companies like Snap Inc. (SNAP) – that do not have voting rights – will not be included in many popular indexes.  This follows similar statements from FTSE Russell and MSCI earlier in the year.

These announcements highlight a couple of key reminders for investors.  First, there is a significant human element even with indexes that claim to be strictly rule-based.  Second, although index providers and professionals agree that corporate governance matters, there is no consensus on how to encourage better practices while still maintaining indexes that represent public companies.

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posted in BlogInvestments

Market Review – Q2 2017

by Financial Alternatives on 7/13/2017

  • The broad US equity market posted positive returns for the quarter but underperformed both non-US developed and emerging markets.
  • In US dollar terms, developed markets outperformed the US equity market and had similar performance to emerging markets indices during the quarter.
  • The Bloomberg Commodity Index Total Return declined 3.00% during the second quarter.
  • Non-US real estate investment trusts outperformed US REITs.

posted in InvestingNewsletters

Investing Newsletter – Jul 2017

by Financial Alternatives on 7/13/2017

  • Investors continued to earn positive returns in the first half of the year.
  • Nobody knows when the next bear market will occur, but we know that stock markets have had their ups and downs and they always will.
  • Bear markets, which are corrections of 20% or more, cannot be distinguished beforehand from normal 5%-10% corrections which occur on a regular basis.
  • Trying to sell before a bear market usually causes investors to miss the next market up turn because most market drops turn out to be just normal 5%-10% corrections.
  • Accept that bear markets occur on a regular basis and avoid panic selling your stock positions during the downturn.
  • Maintain ample conservative investments in your overall portfolio.
  • Try to ignore the day to day financial news which is often sensationalized to keep your attention.

posted in InvestingNewsletters

Market Review – Q1 2017

by Financial Alternatives on 7/13/2017

  • Looking at broad market indices, emerging markets outperformed both US and non-US developed markets during the quarter.
  • Real estate investment trusts (REITs) lagged their equity market counterparts.
  • In US dollar terms, emerging markets indices outperformed both the US and developed markets outside the US.

posted in InvestingNewsletters

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Posts are general in nature and do not constitute the rendering of legal, investment, accounting or other professional advice.