October 2020
There are less than three months remaining in 2020! However, the months ahead will likely continue to provide many ups and downs as we continue to work through all the issues related to Covid-19 and the upcoming election. Our mission is to help you preserve your assets and protect your lifestyle. A large part of that commitment is to educate you and help you navigate the uncertainty that exists as well as educate you on important topics that will impact your financial life. In this month's newsletter, we discuss the election, how to navigate uncertainty and the importance of understanding your Social Security retirement benefits.
Election 2020 - How We Think About Elections & Investment Decisions
While the specific circumstances of any given election are always unique, our approach remains the same. We recognize that to the extent a particular election outcome is widely expected (for example, based on strong, consistent polling data), current financial asset prices should already reflect that market consensus. The public information is discounted in the markets in real-time.
For us to believe there is a reason to change our overall portfolio positioning stemming from a particular election outcome, several things must be true. We’d need to believe we have an edge and high conviction in our ability to assess the likely outcome better than the market consensus. Our view would also have to be materially different from the consensus view. And we’d need to have conviction that our divergent election view would clearly translate into a specific investment outcome. But history tells us that the linkage between an election result and a market impact is not always clear. The 2016 presidential election was a perfect example of this, with stocks initially plunging on the surprising result and then soaring.
There are too much uncertainty and too many non-election variables that impact investment outcomes over time for us to likely see any value in positioning our portfolios for a particular result. Even if we had a higher degree of certainty as to both the outcome and the policies that would be implemented, the ultimate economic effects and outcomes would still be highly uncertain. Macroeconomics is far from hard science. There is a multitude of other factors and variables that impact economic and financial market outcomes.
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This Is Life
This very question places the focus on the destination and not the journey we experience. This investment and market environment is certainly getting more interesting and complicated as we approach a very pivotal election this November 2020.
Several factors have come into play in recent weeks and months:
And the list keeps growing!
I have been involved in the investment industry since 1987 and do not recall a time when so many issues/factors were relevant. BUT if the circumstances were different, and the above list of issues was not as long…… Would the challenge of managing and investing your capital be any simpler? The short and honest answer is NO! We believe having a written plan with a clear set of concise goals based on your specific needs, your dreams, and your concerns make the process more pragmatic and easier to execute.
A well-written plan adjusts, adapts, and is a living ever-changing document. It’s not focused on simply the ”destination” (retirement) but is built to weather and survive the journey (the path to retirement). It is just as important to work towards answering “Are we there yet?”, as it is to understand the importance of planning and managing the journey.
Our solution is the rigorous financial planning process we offer to all our clients. It’s part of the fee we charge. It's designed to get you to your destination, but also to make your journey into those years enjoyable and rewarding. The total experience. The right balance between working hard and enjoying life in the present while responsibly planning for your retirement. We are grateful for the trust and confidence you have placed in our team and firm. The attached piece provides some valuable information on how to “check off the boxes”. Click here to view.
Understanding Your Social Security Benefits
The Social Security Administration recently announced a 1.3 percent cost-of-living adjustment (COLA) will begin with benefits payable to more than 64 million Social Security beneficiaries in January 2021. This impacts those of you that have already started receiving your benefits. For those of you that have not started benefits, you may not fully understand the importance and options related to your Social Security retirement benefits. Social Security retirement benefits will likely play an important role in your retirement. As part of our planning process, we review your Social Security options and can help you decide the best time to elect benefits. We encourage you to set up a time to review or start a plan. We found this great resource from our partners at BlackRock. It provides a summary of Social Security and some important items to know. You can view it here.
We are here to help and offer objective advice. If you would like to discuss any of these topics or any questions relating to financial planning and/or our view of the markets, please click here and pick a time on our calendar.
