FORECASTS & TRENDS E-LETTER
By Phil Denney
April 2, 2024

IN THIS ISSUE:

1.  Market At All Time High!!! What Should I do?!

2.  When You Die, 10 Things To Not Leave Behind For Your Kids

Market At All Time High!!! What Should I do?!

I hope you aren’t getting nervous by all the chatter about the “Market” at an all-time high. When I started in this business after retiring from the U.S. Army way back in July 1994, the market indexes were a bit lower. The Dow Jones was at 3,764.50, the S&P 500 was at 458.26, and the Nasdaq Composite was at 722.16.

I have learned that the solution to all-time highs was more all-time highs. There have been a few bear markets along the way, but here we are today. I also learned that what the market was doing on any given day didn’t matter unless I needed my money at the time for income or some major expense.

A body of scientific evidence has repeatedly supported Gallop’s customer engagement research, which found that about 70% of decisions are based on emotional factors and only 30% are based on rational factors. Emotional investing is when your emotions influence your investment decisions. Buy low and sell high. It’s a simple concept and one of the most basic well-known tenets of investing. And yet, it’s equally well known that most people end up buying high and selling low.

Over the last 30 years of personal investing and helping others with their investments, I have learned to not let the daily noise on the financial networks cause me to make investment decisions based on emotions. Here are a few things to help you:

• Remember the purpose of and overall goals of your investments. What is your time horizon? Do you need your money now or in 20 years?
• Your investment allocation should consider your risk tolerance and understanding of the investments. You need to know how they work and when you can get your money back.
• Keep a long-term focus and not a short-term focus on the current noise of the market.
• Diversify your portfolio with non-correlated investments to help reduce volatility and the emotions that come with it. Everyone’s overall allocation is different, and is based on risk tolerance, required rate of return and liquidity needs.
• Liquidity – You need a cash reserve as a cushion to provide a sense of comfort during turbulent times and prevent you from selling at the wrong time. How much should be in your cash reserve? It varies from one person to the next. The rule of thumb I was taught was 3-6 months of expenses. I have learned that for some it can be 3-5 years of living expenses. You must decide your comfort level. How much will help you sleep at night, even if your investments drop in value?

So what should you do when you hear the markets are hitting all-time highs? Change the channel, go for a walk, or have a cup of coffee. Follow your investment plan and focus on your long-term financial goals.

When You Die, 10 Things To Not Leave Behind For Your Kids

I found an interesting article on MSN.com where they compiled a list of 20 things to not leave behind for your kids. I picked 10 of them to share with you below.

Thinking about what to leave behind for your kids is more about legacy than logistics. It’s a fine balance between sharing memories and avoiding leaving a mess. The goal should be to enrich your kids’ lives, not burden them with sorting, organizing, or disputing over what you’ve left behind.

1. Cherished heirlooms. They might seem like a great idea, but they can cause family disputes. Consider selling them and splitting the proceeds among your kids to keep it fair. It sidesteps the whole drama of who inherits grandma’s china.
2. Debt. Leaving behind debt can be stressful, especially having just experienced your passing. Cleaning up your financial affairs is one of the best parting gifts you can offer.
3. VHS tapes. Let’s face it, they’re outdated. Your kids might not even have the means or desire to watch them. At least consider digitizing them, it will save a lot of space. I converted all our VHS tapes of our daughter growing up to DVDs several years ago. Of course that only works for as long as you can get a DVD player. These days, computers don’t seem to come with a DVD player built in. I had to buy an external player for my laptop.
4. Boxes of old photos. Sifting through endless boxes of pictures can be overwhelming and the boxes take up space. Scanning and digitizing them can save a lot of hassle. And your kids won’t have to feel guilty about what to keep or toss.
5. Gifts with conditions and special instructions. Just don’t do it. Gift freely and without conditions for the smoothest handover. Your kids will appreciate the simplicity and clarity. Trust them with their choices. Keep in mind that if they blow it, you won’t be around to be sad about it.
6. Property you don’t own outright. Properties with outstanding mortgages can complicate things. Property you have partial ownership of with other people (besides your spouse) may lead to legal headaches for your kids.  Clear ownership makes for a smoother transition.
7. A paperwork mess. A disorganized pile of paperwork is daunting for anyone. It is important to keep your documents organized to make it easier for your kids to handle your affairs. This includes financial records, personal documents, estate planning documents (wills, trusts, etc.) and anything else necessary. You don’t need to keep every trade confirmation, every financial statement or tax record forever. Depending on your situation the timeframes vary from 3 to 7 years for most documents relating to tax records. Here is what the IRS says. Consider scanning them and saving them on a flash drive or your computer.
8. Trust property confusion. Trust property should be handled within the trust if you have one. Do not mention it in your will. Mixing them up can confuse things. Keep trust matters separate to ensure everything goes smoothly. Keep the legal documents straightforward. Your trust overrules your will as long as you have taken the time to fund the trust properly.
9. Assets with named beneficiaries. Just like with trust property, insurance policies and retirement accounts should not be included in your will. Whoever or whatever is the stated beneficiary on your insurance policy or retirement account will get it no matter what your will says. Do not confuse the matter. If the beneficiary is an underage child, you need to think that through too.
10. Inheritance for beneficiaries with disabilities. Direct inheritance can affect government benefits for those with disabilities. A special needs trust is a smart workaround. It supports your loved one without risking their benefits. I strongly stress the need to work with an attorney to decide whether this is the right option and to draw it up according to your state’s laws.

The above is a bit simpler for me. My wife and I only have one adult child, so there will be no fighting over our stuff among siblings. If you need a way to help organize your financial affairs, we have a FREE guide called Your Financial Life.

I think it’s important to have an attorney help you make sure your estate documents are in good order and to make sure your assets go to the ones you intend. Texas has a board that certifies Estate Planning Attorneys. Unfortunately, not every state has this type of legal organization. If you don’t live in a state with a legal certification program, ask around for a referral from friends like I did or Google it. Don’t be cheap either. It is important regardless of your net worth. Everyone at least needs a will.

Remember, “We leave this world just as we entered it, with nothing. In spite of all our work there is nothing we can take with us.”

Sincerely,

Phil

 

Forecasts & Trends is published by Halbert Wealth Management, Inc., a Registered Investment Adviser under the Investment Advisers Act of 1940. Information contained herein is taken from sources believed to be reliable but cannot be guaranteed as to its accuracy. Opinions and recommendations herein generally reflect the judgement of the named author and may change at any time without written notice. Market opinions contained herein are intended as general observations and are not intended as specific advice. Readers are urged to check with their financial counselors before making any decisions. This does not constitute an offer of sale of any securities. Halbert Wealth Management, Inc., and its affiliated companies, its officers, directors and/or employees may or may not have their own money in markets or programs mentioned herein. Past results are not necessarily indicative of future results. All investments have a risk of loss. Be sure to read all offering materials and disclosures before making a decision to invest. Reprinting for family or friends is allowed with proper credit. However, republishing (written or electronically) in its entirety or through the use of extensive quotes is prohibited without prior written consent.