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ELECTIONS & THE MARKETS

Written by Minich MacGregor Wealth Management on . Posted in Uncategorized.

It’s that time again!  Every four years, Americans take a few minutes out of their day to choose the next President of the United States.  Under normal circumstances, voting is a simple, uncomplicated act—but the months preceding it are anything but.  After all, before we vote, we first have to endure the dreaded “campaign season.”  From endless televised debates to the plethora of signs on our neighbors’ lawns, “politics” becomes the order of the day.

If you’re like us, you probably don’t enjoy all the campaigning.  But you also know how important the political process is.  Being an informed, engaged citizen is crucial to maintaining the stability of our Republic.  That means asking some pretty tough questions, like: “Which candidate best represents my opinions and values?”  “What will each candidate do to ensure both our safety and our personal liberties?”  Getting the answers can be both frustrating and time-consuming.

Fortunately, there’s one question you don’t have to ask. 

“How will the election affect the markets?”

This is a question we get every four years.  This year, we thought we’d make life a little easier for you by answering it now.  That means you have one less question to worry about! 

So, how do elections affect the markets?  The answer is:

Not much.

Since 1957, the S&P 500 has gained an average of roughly 9.8% every presidential election year.1  Of course, there can be some massive exceptions.  For example, in 1928, the S&P rose over 37%.  In 2008, it fell over 38%.2 

But there’s a danger in using averages to try and predict what will happen.  Take the “Presidential Election Cycle Theory” for instance.  Once upon a time, many people believed that U.S. stock markets are always the weakest in the year following a presidential election.  This was the case for Franklin Roosevelt.  It also held true for Truman and Eisenhower. 

But in George H.W. Bush’s first year, the S&P 500 rose 27%.  In Bill Clinton’s first year, it rose 7%.  Barack Obama’s first year saw a 23% rise.  Donald Trump’s first year was 19%. 

It’s clear that the “Presidential Election Cycle Theory” just doesn’t hold water.  And that’s true for actual election years as well.  An average merely shows you what has happened, not what’s going to happen.  (Side note: this is why you often see the financial industry emphasize that “Past performance does not guarantee future results.”  Because it’s true.) 

“But what if the Democrats/Republicans win?  Won’t that have an effect?”

That’s the next question we get every four years.  Our answer:

Not really.

Don’t believe us?  Let’s take a little quiz.  Below are the last eight presidents of the United States, with their political party next to their name.  (We’re skipping Ford as he took office in the middle of Nixon’s second term.)  Look at each name and guess whether you think the S&P 500 went up or down during the first year of each president’s term.  Write your guess in the space provided, if you like.   

PresidentPartyMarkets Up or Down?
Richard Nixon (1st term)Republican 
Richard Nixon (2nd term)Republican 
Jimmy CarterDemocrat 
Ronald Reagan (1st term)Republican 
Ronald Reagan (2nd term)Republican 
George H.W. BushRepublican 
Bill Clinton (1st term)Democrat       
Bill Clinton (2nd term)Democrat 
George W. Bush (1st term)Republican 
George W. Bush (2nd term)Republican 
Barack Obama (1st term)Democrat 
Barack Obama (2nd term)Democrat 
Donald TrumpRepublican 

Now, maybe you’ll score 100% on this quiz.  But we’re willing to bet at least a few of the answers will surprise you.  Speaking of which, here they are.2 

PresidentPartyMarkets Up or Down?
Richard Nixon (1st term)Republican-11.36%
Richard Nixon (2nd term)Republican-17.37%
Jimmy CarterDemocrat-11.5%
Ronald Reagan (1st term)Republican-9.73%
Ronald Reagan (2nd term)Republican+26.33%
George H.W. BushRepublican+27.25%
Bill Clinton (1st term)Democrat+7.06%  
Bill Clinton (2nd term)Democrat+31.01%
George W. Bush (1st term)Republican-13.04%
George W. Bush (2nd term)Republican+3.0%
Barack Obama (1st term)Democrat+23.45%
Barack Obama (2nd term)Democrat+29.6%
Donald TrumpRepublican+19.42%

If a hypothetical investor had followed the “Presidentical Election Cycle Theory”, he or she would have missed out on some of the biggest gains in market history.  The same is true if that hypothetical investor had made decisions based on politics.  Convinced Democrats are terrible for the country?  Fine, but have fun missing out on Clinton’s second term.  Can’t stand Republicans?  Okay, but too bad you didn’t catch the train between Reagan and the first Bush.   

As worked up as we often get about our political beliefs, neither party tends to have that much impact on the markets compared to the other.  Historically, the S&P 500 has gone up 10.8% under Democratic presidents, and 5.6% under Republican presidents.3  That’s not a large difference and can be attributed to a whole range of factors besides politics.  Either way, the markets go up over time.  That’s because the markets are driven by far more than just one person or event.

Obviously, it matters a great deal who our president is … but not when it comes to the markets.  And that’s a good thing!  Here’s why:

  1. The Founding Fathers created a system of government where no branch (executive, legislative, or judicial) was supposed to dominate the other.  The fact that neither political party, nor election years in general, have that much influence on the markets shows that our system of checks and balances extends to investing, too. 
  2. Again, the markets are driven by far more than just one person or event.  They’re controlled by the ebb and tide of trade, by the law of supply and demand, by innovation and invention, by international conflict and consumer confidence.  The markets are like life.  The course our lives take isn’t determined by one gigantic decision, but by the millions of small decisions we make every day. 

We don’t know about you, but we find that comforting.

So, what’s the takeaway from all this?  The takeaway is that when it comes to investing, we control our own destinies, not politicians.  The way to reaching your financial goals is by having a sound investment strategy, making informed decisions, and taking emotion out of investing.  Not by worrying about the election.

So this year, as you watch the debates, chat amongst your friends, and decide who you want the next president to be, you can do so with the knowledge that whatever happens, the markets will go their own way … and so will you. 

On behalf of everyone here at Minich MacGregor Wealth Management, we wish you a happy (and headache free) election! 

1 “What could the S&P 500 tell us about Trump’s reelection?” Forbes, October 21, 2020.  https://www.forbes.com/sites/greatspeculations/2019/10/21/what-could-the-sp-500-tell-us-about-trumps-re-election/#3b5151ef4664

2 “S&P 500 Historical Annual Returns,” Macrotrends, https://www.macrotrends.net/2526/sp-500-historical-annual-returns

3 “Democratic presidents are better for the stock market and economy than Republicans, one study shows,” Business Insider, August 24, 2020.  https://markets.businessinsider.com/news/stocks/stock-market-election-democratic-republican-presidents-better-performance-economy-gdp-2020-8-1029528932#

Financially Savvy Investor

Written by Minich MacGregor Wealth Management on . Posted in Uncategorized.

These days, most people can’t afford to reach their financial goals – like retirement – on their employment income alone.  The cost of living is simply too high.  That’s why investing is so important: Because it allows you the opportunity to put your money to work for you.  Through investing, you can potentially grow your money and seize opportunities for additional income. 

But it’s not enough to simply throw your money at the stock market.  You must invest wisely if you’re to reach your financial goals.  You must be a financially savvy investor. 

To help, we’ve created a special infographic called Four Steps to Becoming a Savvy Investor.  Please take a minute to look it over.  These steps are all very simple to understand, but they’re critically important.  If you have any questions about them, or if you need any help applying them, please contact us for further information. 

We hope you find this infographic helpful.  Again, please contact us if there is anything we can do to help you invest for your future. 

Summer Market Update

Written by Minich MacGregor Wealth Management on . Posted in Uncategorized.

Our thoughts on investing amid the current market situation

Every year around this time, parents, grandparents, and guardians prepare for Back to School season.  This year is no different – except how they prepare may be very different indeed.  Due to the pandemic, parents now have some difficult choices to make.  Do they send their children back to school?  Do they choose online learning?  Should they homeschool for a year?  It’s a difficult question with no easy answer because there are so many factors to consider.  How many cases are in the area?  What options does the school actually provide?  What is the child’s health like?  What about the health of other family members?  How do parents balance their child’s education, social needs, and health with their other responsibilities? 

Since the headline at the top of this letter says, “Summer Market Update,” you’re probably wondering why we’re talking about going back to school.  The reason is simple.  As you know, COVID-19 has completely upended our daily lives.  It has disrupted almost everything we used to think was “normal.”  And the problem is, there’s no playbook for how to adapt!  No cheat sheet that contains all the answers.  That’s certainly true for parents. 

It’s also true for investors. 

We’ve been thinking about this a lot as we’ve studied the markets over the past few months.  There’s simply no cheat sheet – or even a roadmap – for how to invest in a period like this.  Think about it.  Even during “normal” times, it’s hard enough for institutions to know what to do.  But asking an investor who’s simply trying to save for retirement to navigate the markets during a recession and a health crisis?  Talk about dealing with uncertainty – the one thing investors hate most! 

Just as parents have multiple options to consider, so do investors.  Be aggressive?  Be conservative?  Stay the course?  Get out of the markets altogether?  And again, there are so many factors and variables to consider – or at least, that’s what media pundits would have you believe.  So many, in fact, that trying to parse what matters and what doesn’t can feel like the world’s worst word search.   

For instance, check out this jumble:

Those words are earnings, interest rates, COVID, second wave, vaccines, stimulus, China, oil, and elections if you don’t want to bother searching – and who could blame you?  If you believe the talking heads in the media, each of those words could signal either a glorious market recovery or a gloomy market pullback.  As a result, interpreting the markets can feel like looking at a blurry photograph and trying to guess what it shows.  That just leads to less clarity and more confusion.  Is the economy recovering, or is it still in decline?  Are the markets on solid ground, or the edge of a cliff? 

The proof of all this can be found in how the markets have behaved over the past two months.  March’s bear market led to a sharp recovery, but since the beginning of June, the markets have been largely flat.  For example, on June 8th, the S&P 500 closed at 3,232.  On July 30, it closed at 3,246.1  There have been plenty of little bumps and shallow dips since then, but overall?  Flat.  And that’s with many investors staying out of the stock market altogether, with “nearly $5 trillion parked in money markets” as CNBC reported back in June.2 

In school, we learned that for every action, there is an equal and opposite reaction.  That’s Newton’s Third Law of Motion, and when he wrote it, he was talking about physics.  But lately, it can also describe the physics of the markets.  For example, here’s a short list of what’s been driving the markets lately:

EventMarket Action/Reaction
Good news about vaccine development!↑
But a rising number of COVID cases…↓
Unemployment claims fall!↑
But unemployment is still high…↓
Consumer spending is up!↑
But the stimulus that drove it is all used up↓
Federal Reserve keeps interest rates near zero!↑
Congress can’t agree on more stimulus↓

You get the idea.  For every bit of good news, there’s news that’s equally troubling.  For every action, there is a reaction. 

In short, there is still a lot of uncertainty out there about what type of economic recovery we’re actually experiencing, and where the markets will go next.  When you talk to investors and analysts, there’s a sense that most of them are just waiting for a sign.  For a development.  For something that’s infallible, incontrovertible, unmistakable.  Something that helps them feel certain about what to do.  Essentially, investors are tired of trying to read tea leaves and want road signs. 

But even during normal times – there’s that word “normal” again – the road to growth is rarely straight.  There is, and will continue to be, major uncertainty in the months ahead.  We don’t know what the coronavirus will do.  We don’t know when a vaccine will be available.  We don’t know whether the economy is recovering or stalling.  We don’t know who the next U.S. president will be.  We can have educated expectations, but we don’t know. 

So, what do we do?

We have good news: We don’t need to know all those things. 

You see, those who invest based on COVID vaccine rumors, economic forecasts, or even company earnings projections, are investing based on storylines.  But here Minich MacGregor Wealth Management, we try to be more like Sir Isaac Newton by observing laws – specifically, the law of supply and demand.  Amid a sea of economic uncertainty, supply and demand is the only reliable dry land.    

Again, nobody knows exactly when a vaccine will be ready, or what the coronavirus will do, or when Congress will pass more stimulus.  What we do know is that when supply outpaces demand, and sellers dominate the market, it’s time to play defense.  When the opposite is true, we play offense.  That helps us avoid the worst market downturns, which are the number one detriment to saving for retirement.  Investors who simply “buy and hold”, however, will have to weather every dip and bump, only to end up right back where they started.  Just like the markets have these past two months. 

When it comes to investing during this climate, we also must remember that, just as there’s no cheat sheet, there’s also no one right answer.  Just as parents must make the best decision for their situation, the same is true for us.  When it comes to our investment strategy, making sense of the word search above is simply not as important as asking ourselves: How much risk can we afford to take on?  What kind of return do your personal goals require?  How close are you to retirement?  Do we prioritize growing your money, or preserving it?  We’ll continue to let your answers dictate the decisions we do make, not how many COVID cases there are or when a vaccine will come.  That way, even when the market is flat, we’ll keep moving forward – secure in the knowledge that we’re doing what’s best for you. 

In the meantime, the markets will continue to act and react.  There will be good weeks and bad days.  That’s why, when it comes to interpreting the markets, we don’t have to worry about predicting the future, or solving metaphorical word searches to figure out what matters.  We just need to continue following the rules we’ve put in place: Getting in the markets when they trend above a certain point and getting out when they trend below a certain point. 

We hope you found this to be informative.  As always, please let us know if you have any questions or concerns.  We always love to speak with you.  Have a great rest of your summer!     

1 “S&P 500 historical prices,” The Wall Street Journal, https://www.wsj.com/market-data/quotes/index/SPX/historical-prices

2 “There’s nearly $5 trillion parked in money markets as many investors are still afraid of stocks,” CNBC, https://www.cnbc.com/2020/06/22/theres-nearly-5-trillion-parked-in-money-markets-as-many-investors-are-still-afraid-of-stocks.html

Happy Father’s Day

Written by Minich MacGregor Wealth Management on . Posted in Uncategorized.

Every Father’s Day, we celebrate our dads.  We recognize all the things they do for us.  We recognize the example they set through their work ethic, their character, their strength, their patience, and of course, their love.  In short, we celebrate the best qualities that fathers have to offer.  But every year, I get more and more concerned that we’re leaving something out.  That we’re forgetting to appreciate one of the most treasured aspects of fatherhood.  

We’re referring, of course, to Dad Jokes.  

Dad Jokes, as you know, fall under the “so bad it’s good” category of humor.  But they are a time-honored tradition observed by fathers everywhere.  So, in honor of Father’s Day, here are eleven of the silliest, corniest, cheesiest, most eye-rolling, groan-inducing Dad Jokes of all time.  You’re welcome.  

***

“What time did the man go to the dentist?”

“Sigh.  I don’t know, dad.  What time?”

“Tooth hurt-y.”  

“Why are skeletons so calm?”

“I give up.  Why?”  

“Because nothing gets under their skin.”

“What do you call cheese that’s not yours?”

“Please, dad, I’m really not in the mood fo-”

“Nacho cheese.”  

“Hey, have you read that new book about anti-gravity?”

“No, is it good?”

“It’s impossible to put down.”  

“What do you call someone with no body and no nose?”

“Okay, I’ll bite.  What?”

“Nobody knows.”

“What happened when the frog parked his car illegally?”  

“Dad, frogs don’t drive.”

“It got toad.” 

“What’s brown and sticky?”

“Gross, I don’t even want to know –”

“A stick.”  

“Hey, did you hear about that restaurant on the moon?”  

“Dad, mom says that if you tell one more joke…”

“Great food, no atmosphere.”  

“Why did the scarecrow win an award?”

“Mom, he’s doing it agai-”

“Because he was out standing in his field.”  

“Want to hear a joke about paper?”

“Okay, fine.  Tell me.”

“Never mind, it’s tear-able.”  

“When does a joke become a dad joke?”

“I have a bad feeling about this…”

“When it becomes apparent.”  

***

To all dads, the Minich MacGregor Wealth Management team wishes you a happy Father’s Day.  Thanks for all you do – including telling awful jokes!  We hope these jokes made you laugh.  But if they didn’t, don’t blame us.  Blame atoms.

After all, they’re the ones that make up everything!   

Breaking Down the Secure Act

Written by Minich MacGregor Wealth Management on . Posted in Minich MacGregor Missive, News, Uncategorized.

Important Provisions of the SECURE Act

Before we dive in, understand, that the SECURE Act is over 20,000 words long.  (And in fact, the Senate had to tuck it away in a much, much larger appropriations bill to pass it.)  That means there isn’t room to cover every provision of the new law, and many won’t apply to you anyway.  So, what follows is a brief overview of the major changes that could affect your finances.

Are you ready?  Then take a deep breath as we go over…     

Changes to the IRA “stretch” provisions2

For years, one of the most popular estate planning strategies was the use of Stretch IRAs.  When a parent or grandparent dies, they can leave their IRA to their children, grandchildren, or other heirs.  Under the old rules, these beneficiaries could take distributions from their inherited IRA based on their official life expectancy.  This allowed them to “stretch out” the value of the IRA – and the tax advantages that come with it – for a longer period.  For example, if a 50-year old with a life expectancy of 85 inherited her mother’s IRA, she could stretch out her distributions over the next 35 years.  

Now, non-spousal beneficiaries who inherit an IRA in 2020 or beyond can no longer do this.  Instead, inherited IRAs fall under the new “10-Year Rule”.  This means that all the money in the IRA must be withdrawn by the end of the 10th year following the year of inheritance.  At that point, the beneficiary must pay taxes on that money.

Note that the rule does not require the beneficiary to take withdrawals during the 10-year period if he or she doesn’t want to.  That’s important!  Deciding when to take withdrawals should be based on several factors, including the beneficiary’s current financial situation, how close they are to retirement, and when they plan on taking Social Security benefits.  

Something else to note: The new 10-Year Rule does not apply to spouses, disabled and chronically ill beneficiaries, and minors.  For the last group, the exception lasts until the child reaches the “age of majority”, which is 18 to 21 depending on the state.  Once they reach that age, the 10-Year Rule kicks in.  

Make no mistake: This new rule will have a profound impact on beneficiaries, especially those who are younger and could otherwise have waited decades before making withdrawals (and paying taxes on those withdrawals).  For this reason, if you are either planning to bequeath an IRA to your beneficiaries, or are expecting to inherit one yourself, we should have a conversation about your options.  We want to do everything we can to help you and your heirs maximize your retirement savings while minimizing your tax burden.   

Changes to Required Minimum Distributions for IRAs2

Speaking of maximizing your retirement savings…

Another change the bill makes is to lengthen the time people can contribute to their IRAs. Currently, retirees can only contribute to an IRA up to age 70½.  Once they hit this milestone, they are required to begin making withdrawals. (These are called required minimum distributions, or RMDs.) Under the SECURE Act, that age would increase to 72. That means retirees have an additional 18 months to benefit from the tax advantages that come with IRAs. 

Note: This change only applies to those who turn 70½ in 2020 or later.  Even people who turned 70½ in December of 2019 would still have to take an RMD for 2020.

That’s it for this provision.  See?  We told you some of the changes were simple.  

Other IRA Changes2

Here’s another simple change.  Under the old rules, contributions to a traditional IRA were prohibited once a person reached the year they turned 70½.  No longer.  Now, anyone, even those older than 70½, can keep contributing to their IRA so long as they continue to work.  

Here’s an example.  Jane turns 70½ in 2020 but decides she wants to continue working.  So rather than withdraw money from her IRA, she decides to make a tax-deductible contribution to it instead.  While Jane must still take RMDs once she turns 72, she decides to keep making contributions every year until she actually retires, as the math still works in her favor.  

Obviously, this change only benefits those who continue working into their seventies.  And even then, it may not always make sense to keep contributing to your IRA.  But it’s always nice to have options!    

Another change is for new parents.  Under current law, a person must be 59½ years old to make withdrawals from a traditional IRA. If they withdraw money earlier than that, they must pay a penalty of 10% on the amount you took out. There are a few exceptions, such as if they need the money to pay large medical bills, buy a home, or manage a disability. But, generally speaking, the government wants the money inside a retirement account to be saved for retirement. 

Under the SECURE Act, new parents can now withdraw funds penalty-free to help cover birth and adoption expenses.  This is especially helpful for younger parents who have high deductible insurance plans. There is a $5,000 cap on withdrawals, though, and they need to be made within one year of the birth or adoption.

Changes to 401(k)s2

The SECURE Act brings many changes to 401(k)s, but most are for businesses to worry about.  There is one change you should know about, though, and it involves annuities.  

A type of insurance product, many annuities offer a monthly stream of income, sometimes for life.  This can make them attractive for retirees.  Historically, few 401(k)s contained annuities.  The SECURE Act makes it easier for employers to offer this as an option.    

The reason we mention this is because you should talk to us before putting your money in an annuity.  Choosing the right annuity can be difficult, as there are many types and features, and some annuities come with high costs.  So, while an annuity may be right for some people, that doesn’t necessarily mean it’s right for you.  

If you have questions about this, let’s chat!

Changes 529 Plans2

For many Americans, paying off student loans is a difficult financial burden.

To help pay for their loved ones’ higher education, some parents and grandparents use 529 plans.  Any funds invested in a 529 plan can be used to help pay for college expenses, like room and board or tuition.  The best part is that the funds are exempt from federal taxes, and often state taxes, too, so long as they’re used solely for education expenses.  

Under the SECURE Act, parents with 529 plans can make a tax-free withdrawal of up to $10,000 to help pay off their child’s student loans.  This $10,000 limit is per person, not per plan, which means another $10,000 can be withdrawn to help pay the student debt for each of a 529 plan beneficiary’s siblings.

If you have invested in a 529 plan for a child or grandchild with lots of student debt to pay off, let’s talk to see if it makes sense to take advantage of this.    

Conclusion

As you can see, the SECURE Act is loaded with changes and provisions for those saving for retirement.  So, again, if you have any questions or concerns, please don’t hesitate to contact us!  

In the meantime, remember that we’re here to help you work toward your financial goals.  Please let us know if there’s ever anything we can do – in 2020 and beyond.

Happy New Year!  

Sources

1 Anne Tergesen, “Congress Passes Sweeping Overhaul of Retirement System,” The Wall Street Journal, December 19, 2019.  https://www.wsj.com/articles/senate-spending-bill-includes-significant-changes-to-u-s-retirement-system-11576780736

2 Text of “SETTING EVERY COMMUNITY UP FOR RETIREMENT ENHANCEMENT” (page 1532), Senate Appropriations Committee, December 16, 2019.  https://www.appropriations.senate.gov/imo/media/doc/H1865PLT_44.PDF

The Greatest Generation

Written by Minich MacGregor Wealth Management on . Posted in Uncategorized.

In 1945, there were sixteen million of them.
Today, there are less than 500,000 left.

They endured the hardships of the Depression.  They watched firsthand as radio, talking pictures, and television changed how we live.  They witnessed the dawn of the Space Age.  

And, of course, they fought to free the world from the evil grip of fascism.   

We’re sure you’ve already guessed who we’re referring to: 

The American veterans of World War II.

According to the Department of Veterans Affairs, there were only 496,777 veterans left in 2018 – and approximately 348 die every day.1  That means every day, a little bit of courage, valor, determination, and sacrifice leaves the world forever.  Every day, the sights, sounds, and smells of Pearl Harbor, Midway, Iwo Jima, Sicily, Omaha Beach, Bastogne, and a hundred other tragedies and triumphs disappear from living memory.  

But the world will never forget what they did there.  

They slogged in trenches and stormed beachheads.  They parachuted from planes and plumbed the ocean’s depths in submarines.  They built bridges, broke codes, and brought food to desperate, war-wracked villages.  They liberated countries and concentration camps.    

Why did they do it?  Why did they go, leaving their families, jobs, and futures?  Not because they were paid lots of money or promised great rewards.  For most, it wasn’t even because they or their loved ones were in any real danger.  

They went because it was the right thing to do. 

They truly are the Greatest Generation.  And now, they are almost gone.  

But this is why we have days like Veterans Day.  While November is usually dominated by thoughts of turkey, family, and football, we really have two Thanksgivings this month.  There’s the more famous one, sure, and it’s important, too.  

But we also have an earlier Thanksgiving.  A day to give thanks for one of the most important things in our country – our veterans.  

Now, Veterans Day is for all living veterans, not just those who served in World War II.  But, since we don’t have much time left with the men and women who served in that epic conflict, we think it’s important to do all we can to honor and help them before they’re gone.  

Fortunately, there are many ways we can serve those who served our country.  We can share our money, our talents, and our time by:

  • Volunteering at veterans’ hospitals, nursing homes, and clinics.
  • Working with Local Veterans Assistance Programs to run errands or do housework.  
  • Donating funds to various charity organizations that serve veterans.  

Even something as simple as delivering a homemade card, heartfelt thank you letter, or batch of cookies can make a real difference.  

If you’re interested, here are two websites to get you started: 

www.dav.org/help-dav/volunteer/volunteer-locally-help-veterans/

www.volunteer.va.gov/

***

It’s no exaggeration to say the world we know, the country we live in, and the freedoms we enjoy would all be drastically different were it not for those who served in the second World War.  So, this Veterans Day, we hope we all can remember to give thanks for our veterans.  

There were sixteen million of them once.  All serving so that uncountable millions more would live free from tyranny.  Now, they are almost gone – and it’s up to us to ensure that what they accomplished lives on forever.  

Because it’s the right thing to do.

On behalf of everyone here at Minich MacGregor Wealth Managment, we wish you a happy Veterans Day!

1 “WWII Veteran Statistics,” The National WWII Museum, https://www.nationalww2museum.org/war/wwii-veteran-statistics

Urgent! Phishing SMS/text message scam on the rise: Here’s what to do

Written by Minich MacGregor Wealth Management on . Posted in Uncategorized.

There’s been an increase in phishing attempts initiated via text or SMS messages, referred to as smishing. In the smishing scam, individuals receive fraudulent text or SMS messages that appear to be from a legitimate source such as Schwab or another financial provider. The fraudulent text attempts to lure individuals to provide their account credentials. In the sample below, the individual is led to believe that their card has been blocked and includes a link to take action. The link directs to a fake website requesting they enter their account credentials, which fraudsters can then use to gain access to their funds. 

These communications are not from Schwab. Schwab is diligently working to have all linked websites shut down immediately.

Helpful Tips

Be cautious when responding to texts or emails from unknown sources, including clicking attachments and links.

If you receive a fraudulent text, you may safely ignore and delete the message if you have NOT acted on the text.  

If you have clicked on the hyperlink and supplied credentials, you should immediately change your log in and password for your email account and financial provider. 

You should go directly to the financial provider’s website or use an authorized mobile app, when accessing your accounts.

Confirm that you are accessing a secure website. Secure websites begin with “https”, not “http” and are denoted with a padlock icon in the address bar.

Back to Basics #2 – Asset Allocation

Written by Minich MacGregor Wealth Management on . Posted in Archives, Uncategorized.

In April, we started a series of articles called “Back to Basics” where we look at the basics of financial planning and investing.

We shared this article in our most recent newsletter.  We wanted to share it again via email as a pimer for next week’s Back to Basics #3 Investment Funds.

Back to Basics #2:
Asset Allocation

When it comes to investing, there’s a lot of terminology and jargon you might see bandied about by financial professionals or the media.  Most of these terms are not hard to understand – but they may seem baffling at first glance.

Understanding some basic investing terms is helpful, because it can help transform investing from some arcane art into a simple process.  And the more you see investing as a process based on rules and logic, rather than something based on emotions, the more likely you will find success.

One important term every investor shoulder understand is asset allocation.

Improper asset allocation is one of the most common mistakes an investor can make.  Why is asset allocation so important?  Look at it this way: If you were to eat only one food every day for your entire life, your body would be very unhealthy.  If you were to exercise only one group of muscles for your entire life, your body would be very weak.  And when you invest all your money in the same way, the same could be true of your finances.

Asset allocation is basically a strategy that spreads your investments across different “asset classes.”  The three main classes are equities (stocks), fixed income (bonds), and cash.  There are other classes, of course, like commodities and real estate.  And there are sub-classes as well.  For example, “stocks” can be divided up into many different classes, like international stocks, small, mid, and large-cap stocks, etc.

The thinking behind asset allocation is that by mixing your investments within these different classes, you take on less risk.   That’s because if one class goes down in value, the other classes you’ve invested in can compensate.

Here’s an example of why asset allocation is so important.  Let’s say that in Year 1, the stock market goes through the roof.  So, you put all your money into stocks.  But in Year 2, the stock market performs poorly.  It’s possible you could end up losing a lot of money.

Now let’s say that instead of putting all your money into stocks, you put 50% into the bond market.  When the stock market went down, investors started pouring their money into bonds, causing bond prices to go up.  That means that even though your stock holdings decreased in value, your bond holdings increased, meaning you could still break even or possibly come out ahead.

Of course, this is a very general, very simplified example.  We’re certainly not recommending you do anything like that.  (We would never recommend any particular investment or strategy to anyone without first sitting down and learning more about their goals, needs, challenges, and fears.)  But hopefully it illustrates the point: Putting all your eggs in one basket is rarely a good idea.