Wealth with Intention

In our last blog post, we discussed how recency bias can damage your investments by causing current crises to loom large, while rewriting your memories of past challenges. Recency tricks us into overpaying during heady times, and bailing at bargain rates, when our confidence fades.

One of the best ways to combat recency bias is by focusing instead on the basics that have served investors well for centuries. 

In our blog post series, we’ll cover five of our favorites:

1.     You can’t invest if you haven’t saved.
2.     Markets are inspired by ingenuity, tempered by diversification.
3.     The price you pay matters.
4.     Patience is a virtue.
5.     Investing is personal.

Today, let’s talk about saving.

Saving Is a Super Power

Before you can invest, it’s important to save. However, knowing this is true doesn’t make it easy to do. Bottom line, saving means giving up something today so you’ll have something in the future.

Saving also isn’t as exciting as investing. When you invest, t...

After many years of low inflation, the headlines about inflation in 2022 have been startling. While we always discuss inflation when working through retirement planning assumptions, it’s easy to forget how high levels of inflation can impact our day-to-day lives.  

While inflation is real, and needs to be managed, we also can’t rule out the possibility that we’ll still see stagflation and/or a recession (although neither has happened yet). Heightened levels of market volatility across stock and bond markets alike may have left you once again wondering whether this time is different. 

It’s important to remember that we’re inherently biased to pay more attention to recent alarms than long-ago news. In the right context, this form of recency bias makes perfect sense. As we go about our lives, it’s often best to prioritize our most immediate concerns—or else. No wonder we’ve gotten so good at it.

However, as an investor, if you overemphasize the news that looms the largest, you’re far m...

There’s been a lot going on this year - politically, financially and economically - from rising interest rates, to elevated inflation, to ongoing market turmoil.

So how will all this activity translate into annual performance in our investment portfolios? Markets often deliver their best returns just when we’re most discouraged. While we wait to find out the results, here are six financial action items that you can tackle before the year ends. 

1. Revisit Your Cash Reserves

Where is your cash stashed these days? After years of offering essentially zero interest in money markets, savings accounts, and similar platforms, some banks are now offering higher interest rates to savers. Others are not. Plus, some money market funds may have quietly resumed charging underlying management fees they had waived during low-rate times. 

It might be a good time to shop around. If you have significant cash reserves, now may be a good time to compare rates and fees among local institutions, virtual...

After taking a closer look at interest rates in part 1 and inflation in part 2, we come to the heart of the matter: When interest rates, inflation, or both are on the rise, what should an investor do?

The big picture overview is that the team at Great Lakes Investment Management is continuing to deploy the same core principles and values we use to help people invest across time and through various market conditions. 

These include:

• Building and maintaining personalized investment portfolios of stocks, bonds, select alternative investments, and cash reserves
  
• Minimizing exposure to concentrated investment risks through global diversification
  
• Reducing the impulse to act on fear, excitement, and similar reactions to unfolding news
  
• Keeping an eye on tax ramifications and other costs

These core principles become even more important during increased geopolitical uncertainty and economic stress as they serve to guide you past any periods of doubt.

Future Uncertainty

With so much g...

In our last blog post, Understanding Interest Rates, we discussed how rising and falling interest rates can impact a healthy economy. In this post, we’re going to talk about inflation - what it is and how it’s affecting our financial plans.  This is a question that many investors are asking themselves these days and it’s important to understand if and how inflation has been contemplated as part of your financial plan.

How Is Inflation Measured?

Inflation is the rate at which money loses its purchasing power over time. As you might guess, there are many ways to measure this. There are various economic sectors, such as energy, food, housing, and healthcare, which can complicate the equation by exhibiting wildly different inflation rates at different times. There is ongoing debate over which figures are most relevant under what conditions.

There’s also today’s inflation rate, versus the rate at which inflation has changed or is expected to change over time.

For example:

• Measured by...

Part One: Understanding Interest Rates

If you’ve been concerned about rising interest rates, you’re not alone. With rates at historically low levels for so long, it’s something we’ve been preparing for for a while now. Still, it’s something we will continue to keep a close eye on and we want you to have a solid understanding of what this means to you. 

In March, The Federal Reserve raised its federal target funds rate by a quarter point. It was the first increase since December 2018, but it wasn’t a huge surprise. Fed Chair Jerome Powell had already said we should expect as much, with the potential for additional increases before the year-end.

Along with interest rates, inflation remains a related topic of conversation, not to mention the economic toll and humanitarian tragedy being wrought by Russia’s actions. Unfortunately, there is only so much we can do to alleviate the heartbreaking news coming out of Ukraine. 

But as a financial planner, I can at least help you put these rela...

Is it just me, or do you also feel like the last two years have flown by? It’s always a busy time of year with the holidays, but it’s important that we take some time to financially prepare for the end of the year and the beginning of a new year. 

Here are some things to consider as you weigh potential tax moves before the end of the year.

Defer Income to Next Year

Consider opportunities to defer income to 2022, particularly if you think you may be in a lower tax bracket then. For example, you may be able to defer a year-end bonus or delay the collection of business debts, rents, and payments for services in order to postpone payment of tax on the income until next year.

Accelerate Deductions

Look for opportunities to accelerate deductions into the current tax year. If you itemize deductions, making payments for deductible expenses such as medical expenses, qualifying interest, and state taxes before the end of the year (instead of paying them in early 2022) could make a differenc...

Did you recently change your name as part of your divorce? If so, it's time to get it updated everywhere.

First Steps to Changing Your Name After a Divorce

When you have your final divorce papers identifying your name change, your first step will be to contact the Social Security Administration to legally change your name on your Social Security Card. The details of what you’ll need are listed out on their website under "corrected card" (https://www.ssa.gov/ssnumber/ss5doc.htm). 

You can either visit your local social security office or send your documentation by mail with form SS-5. Your social security number will not change - just the name associated with your social security number. It typically takes at least two weeks to receive your new card in the mail, so you can take this time to make a list of all the places where your name will need to be changed. The IRS is automatically notified when you update your information with the social security administration.

Once you receive...

Post-Divorce Tip: Update Your Passwords

If you grew up with a sibling, you likely learned about conflicts of interest the hard way. I remember one instance where my mom said we could split the last Oreo cookie and my brother gave me the half without the cream filling – I was mortified. In situations like that, you can see how easy it is for a decision maker to prioritize themselves over the other person. Technically there’s a number of ways to half a cookie, but finding a fair split is another matter.

When it comes to financial advisors, consumers are tasked with choosing someone who will treat them fairly and an important part of this is understanding inherent conflicts of interest.  

There are many, many titles in this industry: money coaches, financial consultants, advisors, brokers, planners, wealth managers, and so on. And since there aren’t legal requirements associated with using these terms, it can get confusing. To help sort it out, advisors have started to identify themselves by their pay structure rather than ...