Resources
Stay abreast of the stories and headlines that may impact you.
Small businesses tend to have certain traits that may offer an advantage over large companies. For example, these traits may include the flexibility to try out new ideas, staff up or down quickly, and adapt nimbly to a changing market. There may also be the indomitable spirit, determination, confidence and optimism that is inherent among entrepreneurs who believe they can make a go of it. Now, in the midst of one of the most challenging times in U.S. modern history, that temperament is being put to the test.
Let’s face it — the coronavirus has taken both lives and businesses, and the numbers aren’t good. According to recent surveys, a full recovery in the small-business market could take anywhere from six months to five years or longer.1
However, the news isn’t all bad. A survey conducted last summer by MetLife & the U.S. Chamber of Commerce found that 86% of small businesses responded that they had either partially (34%) or fully (52%) reopened since the initial shutdown. The key for many is that they took proactive steps to pivot their business model. These changes included:
- Launching an e-commerce site or increasing their use of e-commerce
- Changing their point-of-sale (POS) technology and offering more digital payment options
- Offering curbside pickup and/or delivery
The survey also found that despite the uncertain future, 75% of small businesses remain optimistic.2
Optimism can carry us far. If there is one trait that can help people get through tough times, it’s the hope that things will get better. One path toward renewed optimism is being better prepared for crisis situations. If you’d like some assistance in assessing your strategy and how insurance products may fit into that strategy, we’re here to help.
According to Harvard Business Review, some long-established business models have effectively pivoted to offerings that cater to today’s stay-at-home consumers while increasing profit margins. For example, some restaurants have narrowed their menus to a fewer number of meals that they can produce cost-effectively in volume, offering them at a flat rate for a set number of meals per week or per month. Some farmers, with the loss of commercial revenues, have begun selling direct to consumers. Not only do these types of pivots help generate sustainable profitability during the economic downturn, but some of these new channels of business may remain popular and profitable enough to continue post-pandemic.3
These pivots may point to a key indicator of success during an economic decline. Research shows that businesses with a track record of survival focus on reducing costs to reduce prices rather than downgrade the quality of their goods or services.4
Fresno Retirement Consultant Takeaways
As your Fresno retirement plan consultant we felt the following ideas were top notch: There may also be the indomitable spirit, determination, confidence and optimism that is inherent among entrepreneurs who believe they can make a go of it. A survey conducted last summer by MetLife & the U.S. Chamber of Commerce found that 86% of small businesses responded that they had either partially (34%) or fully (52%) reopened since the initial shutdown. Research shows that businesses with a track record of survival focus on reducing costs to reduce prices rather than downgrade the quality of their goods or services.4
Diversifying your retirement assets among a variety of vehicles and alternatives—both insurance and investment oriented, depending on what is appropriate for your situation—may offer you a better chance of meeting your retirement income goals throughout your lifespan. We help our clients with problems sometimes associated with retirement such as stopping spend down and avoiding probate. In doing so we leverage strategic wealth management as well as retirement annuity designed to help accomplish those goals.
When searching for Fresno financial advisors, look no further than Soutas Financial & Insurance Solutions Inc. your Fresno financial planning consultant is committed to helping take the complexity out of retirement planning. By using a variety of insurance and investment strategies that focus on Asset Protection, Long-Term Care Strategies, Legacy Planning, Tax Efficient Strategies IRA, 401(k) & 403(b) Rollovers Life Insurance Annuities Medicare, we can help you develop an overall retirement income strategy specific to you and your family. We have a strong team of professionals helping ensure you receive all the assistance you need not only in developing your retirement income strategy, but in maintaining it throughout your retirement. Contact us today at 559-230-1648 or visit us today at Soutas Financial your top financial advisors in Fresno, Ca., to get your retirement plans on track for success!
Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM). AEWM and Soutas Financial & Insurance Solutions, Inc. are not affiliated companies. California Insurance License # OK48173
Other Fresno Financial Advisor Articles
Soutas Financial & Insurance Solutions Inc.
333 W. Shaw Avenue Suite 106
Fresno, CA 93704
(559) 230-1648
Soutas.com
Content prepared by Kara Stefan Communications.
1 Rieva Lesonsky. U.S. Chamber of Commerce/CO—. Aug. 11, 2020. “4 Smart Ways to Pivot Your Business Model Now.” https://www.uschamber.com/co/start/strategy/pivoting-your-business-to-survive-pandemic. Accessed Nov. 30, 2020.
2 Rieva Lesonsky. U.S. Chamber of Commerce/CO—. Sept. 1, 2020. “Pivoting Helps Small Businesses Thrive During COVID-19 Pandemic.” https://www.uschamber.com/co/start/strategy/metlife-us-chamber-small-business-index-covid-19. Accessed Nov. 30, 2020.
3 Mauro F. Guillén. Harvard Business Review. July 7, 2020. “How Businesses Have Successfully Pivoted During the Pandemic.” https://hbr.org/2020/07/how-businesses-have-successfully-pivoted-during-the-pandemic. Accessed Nov. 30, 2020.
4 Michael Greiner and Scott Julian. Harvard Business Review. July 13, 2020. “Avoid Making This Strategic Mistake in a Recession.” https://hbr.org/2020/07/avoid-making-this-strategic-mistake-in-a-recession?ab=at_articlepage_whattoreadnext. Accessed Nov. 30, 2020.
We are an independent firm helping individuals create retirement strategies using a variety of insurance products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic retirement income strategies and should not be construed as financial advice.
The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.
860314 – 03/21
In November, the Dow experienced its best month since 1987, while the S&P 500 and Nasdaq indexes enjoyed their best month since April of this year.1
With the election behind us and a vaccine on the horizon, the stock market has plenty to celebrate. Many consumers used the pandemic period to shore up their savings, which bodes well for their prosperity in the coming year. There is a low chance of increased taxes or massive reforms given the divide in Congress, and while interest rates remain low, the home-buying market is poised to soar on renewed consumer confidence. All of these factors may be historically good news for investment markets.2
The stock market increases 82% of the time in the first year of new presidential terms,3 and the S&P 500 has averaged 11.7% returns in the first year of every presidential term since the end of World War II, regardless of party affiliation. Furthermore, the S&P 500 has averaged 15.6% returns with Democratic presidents compared 10% with Republican presidents. Industries like technology, health care, financials and industrials tend to thrive under a Democratic president.4
Despite jobs and economic growth taking a hit in 2020, that fortunately wasn’t reflected in the stock market. For more insight on how to plan for the coming year, feel free to reach out to one of our financial advisors for a review.
Fresno Financial Planner Takeaways
When it comes to Fresno retirement planning Soutas Financial, the best financial advisors in Fresno, Ca, puts your future first. Don’t forget these great reminders: With the election behind us and a vaccine on the horizon, the stock market has plenty to celebrate. The stock market increases 82% of the time in the first year of new presidential terms,3 and the S&P 500 has averaged 11.7% returns in the first year of every presidential term since the end of World War II, regardless of party affiliation. Despite jobs and economic growth taking a hit in 2020, that fortunately wasn’t reflected in the stock market.
Diversifying your retirement assets among a variety of vehicles and alternatives—both insurance and investment oriented, depending on what is appropriate for your situation—may offer you a better chance of meeting your retirement income goals throughout your lifespan. We help our clients with problems sometimes associated with retirement such as stopping spend down and avoiding probate. In doing so we leverage Medicare long term care as well as risk management designed to help accomplish those goals.
When searching for Fresno financial advisors, look no further than Soutas Financial & Insurance Solutions Inc. your Fresno financial planner is committed to helping take the complexity out of retirement planning. By using a variety of insurance and investment strategies that focus on Asset Protection, Long-Term Care Strategies, Legacy Planning Tax-Efficient Strategies, IRA, 401(k) & 403(b) Rollovers, Life Insurance, Annuities, Medicare, we can help you develop an overall retirement income strategy specific to you and your family. We have a strong team of professionals helping ensure you receive all the assistance you need not only in developing your retirement income strategy, but in maintaining it throughout your retirement. Contact us today at 559-230-1648 or visit us today at Soutas Financial to get your retirement plans on track for success!
Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM). AEWM and Soutas Financial & Insurance Solutions, Inc. are not affiliated companies. California Insurance License # OK48173
Other Fresno Financial Advisor Articles
Soutas Financial & Insurance Solutions Inc.
333 W. Shaw Avenue Suite 106
Fresno, CA 93704
(559) 230-1648
Soutas.com
Content prepared by Kara Stefan Communications.
1 Matt Egan. CNN. Nov. 30, 2020. “Trump said the stock market would crash if Biden won. The Dow just had its best month since 1987.” https://www.cnn.com/2020/11/30/business/stock-market-dow-jones-trump-biden/index.html. Accessed Nov. 30, 2020.
2 Jeremy Siegel. Knowledge@Wharton. Nov. 21, 2020. “Jeremy Siegel: What’s Ahead for the Stock Market?” https://knowledge.wharton.upenn.edu/article/siegel-markets-economy/. Accessed Nov. 30, 2020.
3 Mark Hulbert. Marketwatch. Nov. 28, 2020. “Opinion: Here are your odds that stock prices will be higher at the end of 2021.” https://www.marketwatch.com/story/here-are-your-odds-that-stock-prices-will-be-higher-at-the-end-of-2021-2020-11-24?mod=MW_section_top_stories. Accessed Nov. 30, 2020.
4 Savita Subramanian. Merrill Lynch. Oct. 8, 2020. “The Markets and Presidential Elections.” https://www.ml.com/articles/market-volatility-presidential-elections.html#financial-research-and-insights. Accessed Nov. 30, 2020.
We are an independent firm helping individuals create retirement strategies using a variety of insurance and investment products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic financial planning strategies and should not be construed as financial or investment advice. All investments are subject to risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.
The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.
860314 – 03/21
If it rains where you live, it can flood at your house. Extreme weather, leading to hurricanes, storm surges, flash floods and rising bodies of water, is no longer a problem exclusive to coastal areas. Almost every home in America is potentially a flood zone.
A flood zone is simply a measure of risk. You may live in an area designated as low, moderate or high risk, but make no mistake: even low- and moderate-risk zones experience flooding. Between 20% and 25% of all flood claims come from low- to moderate-risk areas.1 The question is: What you can do about it?
Five inches of water in a 2,500-square-foot home can cause up to $45,000 worth of damage.2 Standard homeowner’s insurance policies do provide coverage for flood damage, so the best way to help protect your finances is to buy flood insurance to repair flood damage. It’s a good idea to learn which flood zone you live in to help determine whether or not to purchase insurance. To do so, enter your address at Realtor.com and check out the “Flood Factor” tool to gauge your home’s food risk on a scale of 1 to 10.
Premiums are determined by location, level of risk, design and age of the structure, amount of deductible, and extent of coverage. Policies renew annually, so be aware that new construction in your area can change the landscape and affect your flood plain and risk level.3 Typically, there is a 30-day waiting period before coverage begins, so don’t wait until hurricane season.
Basic flood insurance covers the building, built-in appliances, central heating and air conditioning systems, permanently installed paneling, wallpaper, cabinets and carpets. The garage is covered up to a 10% value of the total building. However, you may not be able claim personal property losses for inside your house or basement unless you also buy contents coverage.4
Here are a few tips to make it easier for you to make flood damage claims:5
- Take photos and/or video of your important possessions and bring this documentation with you during an evacuation or keep it in a safe place, such as the cloud. These documents can help you expedite a full-flood insurance claim.
- Once the flood has receded, take photos/video of any water in the house and residual water damage, including of personal property covered by your contents rider. It’s helpful to retain these items if you have a place to store them outside your home, as an insurance adjuster may request to see damaged items to begin processing your claim.
- Create a list of damaged or lost goods, including their age and value. If available, attach receipts. Moving forward, retain receipts of big-ticket items and keep them with your insurance policy in a safe (and high) location.
Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM), AEWM and Soutas Financial & Insurance Solutions, Inc. are not affiliated companies. California Insurance License #OK48173 841830 – 03/21
Fresno Financial Consultant Takeaways
When searching for Fresno financial advisors, look no further than Soutas Financial & Insurance Solutions Inc. your Fresno retirement planning advisor is committed to helping take the complexity out of retirement planning. By using a variety of insurance and investment strategies that focus on Asset Protection, Long-Term Care Strategies, Legacy Planning, Tax-Efficient, Strategies IRA, 401(k) & 403(b) Rollovers, Life Insurance, Annuities, Medicare, we can help you develop an overall retirement income strategy specific to you and your family. We have a strong team of professionals helping ensure you receive all the assistance you need not only in developing your retirement income strategy, but in maintaining it throughout your retirement. Contact us today at 559-230-1648 or visit us today at Soutas Financial to get your retirement plans on track for success!
Investment advisory services offered only by duly registered individuals
through AE Wealth Management, LLC (AEWM). AEWM and Soutas Financial & Insurance Solutions, Inc. are not affiliated companies. California
Insurance License # OK48173 814111 – 2/21
Other Fresno Financial Advisor Articles
Soutas Financial & Insurance Solutions Inc.
333 W. Shaw Avenue Suite 106
Fresno, CA 93704
(559) 230-1648
Soutas.com
1 Alex Soojung-Kim Pang. The Atlantic. April 30, 2020. “To Safely Reopen, Make the Workweek Shorter. Then Keep It Shorter.” https://www.theatlantic.com/ideas/archive/2020/04/safely-reopen-make-workweek-shorter/610906/. Accessed June 2, 2020.
The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.
Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM). AEWM and Soutas Financial & Insurance Solutions, Inc. are not affiliated companies. 719276 – 12/20
The recent pandemic created quite a dilemma for working parents when schools and daycare centers closed. Employees required to report to work were hard-pressed for child care. As parents adjusted to working from home, many also had to manage their children’s online classes and cabin fever since they weren’t able to see friends or engage in extracurricular activities.
However, some benefits have emerged from the crisis. Families ended up spending a lot more time together. After some initial fried nerves, many learned to adapt and even enjoyed the close proximity, which led to a remarkable increase in the sales of board games, crafts and puzzles.1 Additionally, more fathers became involved in parenting and household chores, which was a boon for working moms. Going forward, if more employers adopt remote work as a permanent employment model, parents will likely become more adept at juggling the demands of child care while working at home. This could lead to a wide range of benefits, including saving money on after-school care, enhanced work/life balance and closer-knit families.
Fresno Financial Planner Takeaways
When searching for Fresno financial advisors, look no further than Soutas Financial & Insurance Solutions Inc. your Fresno portfolio advisor is committed to helping take the complexity out of retirement planning. By using a variety of insurance and investment strategies that focus on Asset Protection, Long-Term Care Strategies, Legacy Planning Tax-Efficient Strategies, IRA, 401(k) & 403(b) Rollovers, Life Insurance, Annuities, Medicare, we can help you develop an overall retirement income strategy specific to you and your family. We have a strong team of professionals helping ensure you receive all the assistance you need not only in developing your retirement income strategy, but in maintaining it throughout your retirement. Contact us today at 559-230-1648 or visit us today at Soutas Financial to get your retirement plans on track for success!
Investment advisory services offered only by duly registered individuals
through AE Wealth Management, LLC (AEWM). AEWM and Soutas Financial & Insurance Solutions, Inc. are not affiliated companies. California
Insurance License # OK48173 841830 – 03/21
Other Fresno Financial Advisor Articles
Soutas Financial & Insurance Solutions Inc.
333 W. Shaw Avenue Suite 106
Fresno, CA 93704
(559) 230-1648
Soutas.com
1 Dell Technologies. 2020. “Future of Connected Living.” https://www.delltechnologies.com/en-us/perspectives/future-of-living.htm#tab0=2. Accessed Aug. 10, 2019.
2 Dell Technologies. 2020. “Future of Connected Living.” https://www.delltechnologies.com/en-us/perspectives/future-of-living.htm#tab0=1. Accessed Aug. 10, 2019.
3 Dell Technologies. 2020. “Future of Connected Living.” https://www.delltechnologies.com/en-us/perspectives/future-of-living.htm#tab0=0. Accessed Aug. 10, 2019.
4 Ibid.
5 Dell Technologies. 2020. “Future of Connected Living.” https://www.delltechnologies.com/en-us/perspectives/future-of-living.htm#tab0=4. Accessed Aug. 10, 2019.
The national debt is a measurement of how much the federal government owes creditors, most commonly depicted as a percentage of gross domestic product (GDP). A high debt-to-GDP ratio is considered viable when the economy is expanding, because that growth allows the government to generate higher tax revenues to help pay down the debt. However, it’s not good when the economy is in decline, which is the current status not only in the U.S., but in many countries throughout the world.1
For context, the stimulus efforts and tax cuts that allowed the U.S. to emerge from the Great Recession significantly increased the national public debt. In 2010, the debt ratio was 52% of GDP, but by the end of 2019, it had risen to 79%, the largest increase in any decade since the post-WWII 1940s.2 But now, according to the Congressional Budget Office, the U.S. debt ratio is estimated to reach 98% by the end of the year.3
Speaking of debt, how has your household fared in the wake of this year’s economic decline? Has your debt-to-income ratio increased substantially, or do you have it under control with plenty of income to cover your expenses? It can be a challenge to balance your need to pay off debt with your need to invest for the future. It’s a good idea to maintain a balance so you can continue reducing debt while saving for the long-term. It’s also important to regularly evaluate your financial strategy to ensure it reflects your current goals and objectives, so please keep us in mind any time you’re considering making changes to your strategy.
At the recent Bloomberg New Economy Forum, there were calls for more government stimulus support to boost consumer spending and keep the economy running, and not just in the U.S. Christine Lagarde, the president of the European Central Bank, warned that stimulus needs to continue playing a role until the virus is contained. Like many countries across the globe, Southeast Asia took a hit during the second quarter, rebounded in the third and has braced for increased outbreaks occurring in the final quarter of 2020.4
Wall Street analysts warn that it won’t take much for the U.S., Europe and Japan economies to contract again in the next two quarters, despite the bounce back last summer.5 Overall, economists expect the global economy to shrink by 5% in 2020, in part due to the 20% reduction in world trade.6
One idea to help rebuild economies is to retrain workers who have lost jobs during the pandemic in fields, such as cybersecurity, software programming and other technology positions.7
Fresno Financial Planner Takeaways
When it comes to Fresno retirement planning Soutas Financial puts your future first. Don’t forget these great reminders: For context, the stimulus efforts and tax cuts that allowed the U.S. to emerge from the Great Recession significantly increased the national public debt. In 2010, the debt ratio was 52% of GDP, but by the end of 2019, it had risen to 79%, the largest increase in any decade since the post-WWII 1940s.2 But now, according to the Congressional Budget Office, the U.S. debt ratio is estimated to reach 98% by the end of the year.3 It’s a good idea to maintain a balance so you can continue reducing debt while saving for the long-term. It’s also important to regularly evaluate your financial strategy to ensure it reflects your current goals and objectives.
Diversifying your retirement assets among a variety of vehicles and alternatives—both insurance and investment oriented, depending on what is appropriate for your situation—may offer you a better chance of meeting your retirement income goals throughout your lifespan. We help our clients with problems sometimes associated with retirement such as stopping spend down and avoiding probate. In doing so we leverage Medicare long term care as well as risk management designed to help accomplish those goals.
When searching for Fresno financial advisors, look no further than Soutas Financial & Insurance Solutions Inc. your Fresno financial planner is committed to helping take the complexity out of retirement planning. By using a variety of insurance and investment strategies that focus on Asset Protection, Long-Term Care Strategies, Legacy Planning Tax-Efficient Strategies, IRA, 401(k) & 403(b) Rollovers, Life Insurance, Annuities, Medicare, we can help you develop an overall retirement income strategy specific to you and your family. We have a strong team of professionals helping ensure you receive all the assistance you need not only in developing your retirement income strategy, but in maintaining it throughout your retirement. Contact us today at 559-230-1648 or visit us today at Soutas Financial to get your retirement plans on track for success!
Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM). AEWM and Soutas Financial & Insurance Solutions, Inc. are not affiliated companies. California Insurance License # OK48173
Other Fresno Financial Advisor Articles
Soutas Financial & Insurance Solutions Inc.
333 W. Shaw Avenue Suite 106
Fresno, CA 93704
(559) 230-1648
Soutas.com
1 Andrew Van Dam. The Washington Post. June 5, 2020. “The unluckiest generation in U.S. history.” https://www.washingtonpost.com/business/2020/05/27/millennial-recession-covid/. Accessed Oct. 5, 2020.
2 Richard Pew. Pew Research. April 28, 2020. “Millennials overtake Baby Boomers as America’s largest generation.” https://www.pewresearch.org/fact-tank/2020/04/28/millennials-overtake-baby-boomers-as-americas-largest-generation/. Accessed Oct. 5, 2020.
3 Kathy Koch. EY. March 4, 2020. “The Millennial Economy 2018.” https://www.ey.com/en_us/tax/the-millennial-economy-2018. Accessed Oct. 5, 2020.
4 Hillary Hoffower. Business Insider. Feb. 6, 2020. “How the American millennial is overcoming debt, the dollar, and the economy they were handed.” https://www.businessinsider.com/millennials-great-recession-student-debt-affordability-crisis-2020-1. Accessed Oct. 5, 2020.
5 Kathy Koch. EY. March 4, 2020. “The Millennial Economy 2018.” https://www.ey.com/en_us/tax/the-millennial-economy-2018. Accessed Oct. 5, 2020.
6 Realtor Magazine. Aug. 31, 2020. “Millennials Are Fueling Housing’s Rebound.” https://magazine.realtor/daily-news/2020/08/31/millennials-are-fueling-housing-s-rebound. Accessed Oct. 5, 2020.
7 Laura Bogart. Buzzfeed News. Sept. 28, 2020. “Millennials Are Trying To Shake The Stigma Of Moving Back In With Their Parents.” https://www.buzzfeednews.com/article/laurabogart/millennials-moving-back-in-with-their-parents-adulting?bftwnews&utm_term=4ldqpgc#4ldqpgc. Accessed Oct. 5, 2020.
8 Olivia Rockeman. Bloomberg. Oct. 1, 2020. “Free to Work Remotely, Young Americans Are Covid Road Tripping.” https://www.bloomberg.com/news/articles/2020-10-01/covid-news-remote-work-lets-young-americans-take-road-trips?sref=PJUU2CLn. Accessed Oct. 5, 2020.
We are an independent firm helping individuals create retirement strategies using a variety of insurance products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic retirement income strategies and should not be construed as financial advice.
The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.
03/21 – 841830
A lot of factors affect real estate prices, including interest rates, inventory, local foreclosure and short-sale rates, and even natural disasters. This year, as it was during the Great Recession, underwater mortgages and the potential foreclosure rate is a concern. Being “underwater” or “upside down” means that you owe more on your mortgage than the current value of your home.
This tends to happen during an economic downturn when home values drop significantly. However, being underwater on a mortgage is only a problem if you need to sell during the decline.1 If you can wait it out and keep paying your mortgage, you can pay down your principal balance. It’s also possible that home prices could rebound.
As many homeowners struggle during this difficult time, it’s important to understand that there are two main types of bankruptcy: Chapter 7 and Chapter 13. Chapter 7 is the most common, and it involves discharging all or a portion of outstanding debt through liquidation. This is usually because the filer does not have the income level to make it possible to repay their debts.
Chapter 13 usually involves coming up with a payment plan to pay a reduced percentage of debts based on earnings amount. A Chapter 7 bankruptcy will leave a mark on your credit report for seven to 10 years. A Chapter 13 bankruptcy is less onerous. If you work to pay down the debt according to the plan, and improve your credit score, you may be able to apply for an FHA, VA or USDA mortgage one year from the date the papers are filed with the court; two to four years for a conventional mortgage.2 Be sure to consult with a professional mortgage lender or broker to help decide what’s best for your unique situation.
COVID-19 has put a strain on the mortgage industry, and that is expected to continue in 2021. The bulk of the burden is on mortgage service companies. While they do hold reserve funds for expected defaults, those funds may not be sufficient for the number of workers displaced due to the pandemic. When homeowners stop paying their mortgage, servicers stop paying mortgage holders, and the entire system could be jeopardized.3
Interestingly, real estate analytics firm Attom Data Solutions reveals that, while more homes were sold this year in Republican districts, home prices were significantly higher in Democrat-heavy districts (avg. $245,000 vs. $429,000).4 Furthermore, only 4.9% of homeowners in Democrat counties were underwater, compared to 7.2% of homeowners in Republican counties. However, property taxes were lower in Republican districts (average $2,676 vs. $5,127), and Republican counties had fewer homes in foreclosure.5
Unexpectedly, mortgage fraud overall has gone down despite the pandemic. In fact, a recent study by CoreLogic found that mortgage fraud in the 12-month period ending in June 2020 decreased 26.3% nationally. This is attributed to high refinancing rates and low interest rates.6
Fresno Retirement Advisor Takeaways
Fresno financial planning is our utmost concern here at Soutas Financial and we thought these takeaways were worth mentioning again: Being “underwater” or “upside down” means that you owe more on your mortgage than the current value of your home. As many homeowners struggle during this difficult time, it’s important to understand that there are two main types of bankruptcy: Chapter 7 and Chapter 13. Chapter 7 is the most common, and it involves discharging all or a portion of outstanding debt through liquidation. Unexpectedly, mortgage fraud overall has gone down despite the pandemic. In fact, a recent study by CoreLogic found that mortgage fraud in the 12-month period ending in June 2020 decreased 26.3% nationally. This is attributed to high refinancing rates and low interest rates.6
Diversifying your retirement assets among a variety of vehicles and alternatives—both insurance and investment oriented, depending on what is appropriate for your situation—may offer you a better chance of meeting your retirement income goals throughout your lifespan. We help our clients with problems sometimes associated with retirement such as stopping spend down and avoiding probate. In doing so we leverage stop spend down as well as long-term care strategies designed to help accomplish those goals.
When searching for Fresno financial advisors, look no further than Soutas Financial & Insurance Solutions Inc. your Fresno retirement planning advisor is committed to helping take the complexity out of retirement planning. By using a variety of insurance and investment strategies that focus on Asset Protection, Long-Term Care Strategies, Legacy Planning, Tax-Efficient Strategies, IRA, 401(k) & 403(b) Rollovers, Life Insurance Annuities, Medicare, we can help you develop an overall retirement income strategy specific to you and your family. We have a strong team of professionals helping ensure you receive all the assistance you need not only in developing your retirement income strategy, but in maintaining it throughout your retirement. Contact us today at 559-230-1648 or visit us today at Soutas Financial to get your retirement plans on track for success!
Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM). AEWM and Soutas Financial & Insurance Solutions, Inc. are not affiliated companies. California Insurance License # OK48173
Other Fresno Financial Advisor Articles
Soutas Financial & Insurance Solutions Inc.
333 W. Shaw Avenue Suite 106
Fresno, CA 93704
(559) 230-1648
Soutas.com
Content prepared by Kara Stefan Communications.
1 Ellen Chang. Bankrate. July 10, 2020. “Underwater or upside-down mortgage: What to know and do.” https://www.bankrate.com/mortgages/underwater-mortgage-what-to-do/. Accessed Nov. 3, 2020.
2 Erik J. Martin. Bankrate. July 8, 2020. “Getting a mortgage after bankruptcy: What to know.” https://www.bankrate.com/mortgages/how-to-get-a-mortgage-after-bankruptcy/. Accessed Nov. 3, 2020.
3 Peter G. Miller. Bankrate. March 25, 2020. “Is now the time to get a mortgage? Advice on what to do during the pandemic.” https://www.bankrate.com/mortgages/is-now-a-good-time-to-get-a-mortgage/. Accessed Nov. 3, 2020.
4 Attom Data Solutions. Nov. 3, 2020. “Which Political Party is Better for Homeowners?” https://www.attomdata.com/wp-content/uploads/2020/10/Political-Infographic-2020.jpg. Accessed Nov. 3, 2020.
5 Otto Trading. Nov. 3, 2020. “Homeowners in Republican areas more likely to be underwater on their mortgage.” https://ottotrading.live/homeowners-in-republican-areas-more-likely-to-be-underwater-on-their-mortgage/. Accessed Nov. 3, 2020.
6 CoreLogic. 2020. “Mortgage Fraud Trends Report.” https://www.corelogic.com/insights-download/2020-mortgage-fraud-trends-report.aspx. Accessed Nov. 24, 2020.
We are not permitted to offer, and no statement contained herein shall constitute, tax or legal advice. Individuals are encouraged to consult with a qualified professional before making any decisions about their personal situation.
We are an independent firm helping individuals create retirement strategies using a variety of insurance products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic retirement income strategies and should not be construed as financial advice.
The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.
03/21 – 841830
According to a recent paper by a Wharton Business School professor, one in 10 U.S. households have filed for bankruptcy at some point. Moreover, approximately 1 million file for personal bankruptcy each year. Yet, even in the wake of total household debt soaring to a record $14.3 trillion in the first quarter of 2020, the number of personal bankruptcy filings is at a 15-year low.1 However, it seems possible we might see that change soon.
Last spring, Congress passed legislation authorizing economic stimulus payments of up to $1,200 for qualifying taxpayers, as well as higher unemployment insurance payments for those who lost jobs due to the pandemic. However, months followed with no additional help from the government and many businesses flailing while millions of Americans sat out — or at least sat at home — and reduced their participation in the economy. This is the type of scenario in which many people may quietly file for bankruptcy.
Unfortunately, not only does filing for bankruptcy create a sinking feeling of defeat, but it also costs you. Court fees can cost around $300 and, if you hire legal representation, you could pay up to $2,000. If you had that money, you might be able to continue making minimum debt payments. It’s also important to consider the long-term effects of a bankruptcy filing. The act will place a mark on your credit report for seven to 10 years, and because many employers now check credit reports for prospective employees, it could harm your chances of landing a job.2
However, there are certain advantages to filing for bankruptcy. First of all, the act triggers an automatic stay so creditors must stop collection efforts, including repossessing property. It puts a stop to many evictions, foreclosures, wage garnishments and utility shutoffs, and ultimately the court may decide to discharge some your debt obligation and reduce future payment requirements. Unfortunately, some property could be seized by the bankruptcy court and sold to pay your creditors, and many credit card companies will automatically cancel your credit cards when you file for bankruptcy.3
In recent years, there’s been a significant marketing push for “debt relief,” which is generally one step short of filing for bankruptcy. These programs negotiate debt settlements that scale back money owed. However, they too can damage your credit score for many years.4
Other debt relief programs include restructured loans (often used for mortgages) and outright loan forgiveness programs — which has become a hot congressional topic with regard to student loans. But before entering any debt relief program, perhaps your best option is to speak with a qualified, nonprofit credit counseling agency for a free debt analysis. Make sure you select a legitimate resource which, by law, serves the clients’ best interests by recommending a debt solution that works best for you — not the agency.5
There is a popular opinion among economists that our economy will remain hamstringed as long as millennials and younger adults keep graduating from college with burdensome student loan debt.6 While following a normal path from entry-level job to mid-career positions, persistent monthly loan payments prevent or slow their ability to follow the normal path of buying a home, having children and all the other activities that lead to consumerism and economic growth. While so many young adults remain on the discretionary spending sideline, there is less capital available to fuel the economy.
Fresno Financial Consultant Takeaways
As your Fresno retirement plan consultant we felt the following ideas were top notch: In the wake of total household debt soaring to a record $14.3 trillion in the first quarter of 2020, the number of personal bankruptcy filings is at a 15-year low.1 However, it seems possible we might see that change soon. However, there are certain advantages to filing for bankruptcy. First of all, the act triggers an automatic stay so creditors must stop collection efforts, including repossessing property. Other debt relief programs include restructured loans (often used for mortgages) and outright loan forgiveness programs — which has become a hot congressional topic with regard to student loans. There is a popular opinion among economists that our economy will remain hamstringed as long as millennials and younger adults keep graduating from college with burdensome student loan debt.6
Diversifying your retirement assets among a variety of vehicles and alternatives—both insurance and investment oriented, depending on what is appropriate for your situation—may offer you a better chance of meeting your retirement income goals throughout your lifespan. We help our clients with problems sometimes associated with retirement such as stopping spend down and avoiding probate. In doing so we leverage strategic wealth management as well as retirement annuity designed to help accomplish those goals.
When searching for Fresno financial advisors, look no further than Soutas Financial & Insurance Solutions Inc. your Fresno financial planning consultant is committed to helping take the complexity out of retirement planning. By using a variety of insurance and investment strategies that focus on Asset Protection, Long-Term Care Strategies, Legacy Planning, Tax-Efficient, Strategies IRA, 401(k) & 403(b) Rollovers, Life Insurance, Annuities, Medicare, we can help you develop an overall retirement income strategy specific to you and your family. We have a strong team of professionals helping ensure you receive all the assistance you need not only in developing your retirement income strategy, but in maintaining it throughout your retirement. Contact us today at 559-230-1648 or visit us today at Soutas Financial to get your retirement plans on track for success!
Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM). AEWM and Soutas Financial & Insurance Solutions, Inc. are not affiliated companies. California Insurance License # OK48173
Other Fresno Financial Advisor Articles
Soutas Financial & Insurance Solutions Inc.
333 W. Shaw Avenue Suite 106
Fresno, CA 93704
(559) 230-1648
Soutas.com
Content prepared by Kara Stefan Communications.
1 Knowledge@Wharton. Oct. 6, 2020. “What Drives Household Bankruptcy?” https://knowledge.wharton.upenn.edu/article/what-drives-household-bankruptcy/. Accessed Oct. 27, 2020.
2 Ibid.
3 Ken LaMance. Legal Match. Oct. 16, 2020. “Advantages and Disadvantages to Bankruptcy.” https://www.legalmatch.com/law-library/article/bankruptcy-advantages-and-disadvantages.html. Accessed Oct. 27, 2020.
4 The Black Chronicle. Oct. 25, 2020. “Credit Card Debt Relief Programs Guide: Which Solution Is Right for Your Financial Situation?” https://blackchronicle.com/credit-card-debt-relief-programs-guide-which-solution-is-right-for-your-financial-situation/. Accessed Oct. 27, 2020.
5 Mike Winters. Lifehacker. Oct. 2, 2020. “What Are Your Debt Relief Options?” https://twocents.lifehacker.com/what-are-your-debt-relief-options-1845256374. Accessed Oct. 27, 2020.
6 Chris Arnold. NPR. Nov. 25, 2019. “Forgiving Student Debt Would Boost Economy, Economists Say.” https://www.npr.org/2019/11/25/782070151/forgiving-student-debt-would-boost-economy. Accessed Oct. 27, 2020.
We are not permitted to offer, and no statement contained herein shall constitute, tax or legal advice. Individuals are encouraged to consult with a qualified professional before making any decisions about their personal situation.
We are an independent firm helping individuals create retirement strategies using a variety of insurance products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic retirement income strategies and should not be construed as financial advice.
The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.
03/21 – 841830
The 401(k) originally began as a company profit-sharing plan. Companies had been funding defined benefit pensions for years, but as their annual profits and stock prices experienced volatility, they looked for ways to share that burden with employees. Through profit sharing, workers made money when the company did and made less during down years. While the actual section 401(k) tax law provision came later, this plan allowed employees to defer salary contributions into a retirement account before deducting taxes and established rules to ensure the plan was available to all employees, not just executives.1
Once the 401(k)-style plan was established, it could be used to invest in more than just company stock. Instead, it was a way to put investment control into workers’ hands without limiting their retirement income prospects based on their company’s performance. By contributing to their retirement portfolio and customizing how it was invested, employees had the opportunity to out-earn previous pension benefit levels and live a fuller retirement lifestyle.2
That hasn’t proven to be the case for many workers. The shift to personal savings and investment money management hasn’t led to high levels of reliable income as pensions did.3 After all, your average worker doesn’t have in-depth investment knowledge or the time to follow the markets closely. And, unless they were willing to pay an advisor for advice, they wouldn’t get much help in this area.
This is one reason to work with a financial advisor who is willing to help you manage your entire financial picture. It’s important to ensure that any individual investment portfolio doesn’t overlap too much with 401(k) holdings so you stay properly diversified. By the same token, you should consider all of your holdings when establishing an asset allocation to help you meet your financial goals. We’re happy to evaluate your portfolio, including your 401(k) investment options. Just give us a call.
In recent years, more employers have started offering “financial wellness benefits” to help employees manage their 401(k) investments. These may involve online resources or actual advisors with whom you can consult regarding your 401(k) plan.4 However, your employer-sponsored advisor may not be able to advise you on your entire investment portfolio.
Employers used to absorb the cost of managing a pension fund, but today employees have to pay individual fees for a wealth manager to manage their 401(k), and it’s not cheap. The average fee to manage a 401(k) account is around 0.5 percent a year. Over a 40-year time span, those fees can really add up and impact total earnings.5
Despite any drawbacks, 401(k) plans often offer a benefit unlike no other investment: free money. Many employers will match worker contributions up to a certain percentage. This allows them to still contribute to their employees’ retirement savings even though they are not providing a pension plan. Recently, the IRS announced 401(k) plan contribution limits for next year. While the salary deferral amount remains the same at $19,500 ($6,500 catch-up for age 50-plus), it raised the overall contribution limit from $57,000 to $58,000 in 2021. This helps if your employer plan permits special after-tax salary deferrals, and it can benefit self-employed workers who have a solo or individual 401(k) or SEP retirement plan.6
Fresno Retirement Consultant Takeaways
When it comes to Fresno retirement planning Soutas Financial puts your future first. Don’t forget these great reminders: The 401(k) originally began as a company profit-sharing plan. Companies had been funding defined benefit pensions for years, but as their annual profits and stock prices experienced volatility, they looked for ways to share that burden with employees. Despite any drawbacks, 401(k) plans often offer a benefit unlike no other investment: free money. Many employers will match worker contributions up to a certain percentage. This allows them to still contribute to their employees’ retirement savings even though they are not providing a pension plan. Recently, the IRS announced 401(k) plan contribution limits for next year.
Diversifying your retirement assets among a variety of vehicles and alternatives—both insurance and investment oriented, depending on what is appropriate for your situation—may offer you a better chance of meeting your retirement income goals throughout your lifespan. We help our clients with problems sometimes associated with retirement such as stopping spend down and avoiding probate. In doing so we leverage strategic wealth management as well as retirement annuity designed to help accomplish those goals.
When searching for Fresno financial advisors, look no further than Soutas Financial & Insurance Solutions Inc. your Fresno financial planner is committed to helping take the complexity out of retirement planning. By using a variety of insurance and investment strategies that focus on Asset Protection, Long-Term Care Strategies, Legacy Planning, Tax Efficient Strategies IRA, 401(k) & 403(b) Rollovers Life Insurance Annuities Medicare, we can help you develop an overall retirement income strategy specific to you and your family. We have a strong team of professionals helping ensure you receive all the assistance you need not only in developing your retirement income strategy, but in maintaining it throughout your retirement. Contact us today at 559-230-1648 or visit us today at Soutas Financial to get your retirement plans on track for success!
Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM). AEWM and Soutas Financial & Insurance Solutions, Inc. are not affiliated companies. California Insurance License # OK48173
Other Fresno Financial Advisor Articles
Soutas Financial & Insurance Solutions Inc.
333 W. Shaw Avenue Suite 106
Fresno, CA 93704
(559) 230-1648
Soutas.com
Content prepared by Kara Stefan Communications.
1 Elizabeth Bauer. Forbes. March 7, 2020. “Fact Check: Were 401(k)s Really An ‘Accident Of History’?” https://www.forbes.com/sites/ebauer/2020/03/07/fact-check-were-401ks-really-an-accident-of-history/#7f70362f6110. Accessed Oct. 28, 2020.
2 Maryalene LaPonsie. U.S. News & World Report. July 22, 2020. “What’s the Difference Between a Pension Plan and a 401(k)?” https://money.usnews.com/money/retirement/401ks/articles/pension-vs-401-k. Accessed Oct. 28, 2020.
3 Monique Morrissey. Economic Policy Institute. Dec. 10, 2019. “The State of American Retirement Savings.” https://www.epi.org/publication/the-state-of-american-retirement-savings/. Accessed Oct. 28, 2020.
4 James Mahaney. Pension Research Council. Feb. 20, 2020. “What’s Behind the Growth of Financial Wellness Programs.” https://pensionresearchcouncil.wharton.upenn.edu/blog/whats-behind-the-growth-of-financial-wellness-programs/. Accessed Oct. 28, 2020.
5 Ethan Schwartz. Bloomberg. Oct. 8, 2020. “401(k) Fees Are Eating Your Retirement Savings.” https://www.bloomberg.com/opinion/articles/2020-10-08/401-k-fees-are-eating-your-retirement-savings. Accessed Oct. 28, 2020.
6 Ashlea Ebeling. Forbes. Oct. 26, 2020. “IRS Announces 2021 Retirement Plan Contribution Limits For 401(k)s And More.” https://www.forbes.com/sites/ashleaebeling/2020/10/26/irs-announces-2021-retirement-plan-contribution-limits-for-401ks-and-more/#76dc757f215f. Accessed Oct. 28, 2020.
We are an independent firm helping individuals create retirement strategies using a variety of insurance and investment products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic financial planning strategies and should not be construed as financial or investment advice. All investments are subject to risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.
The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.
03/21 – 841830
Overview
Starting on Jan. 25, 2021, the stock market witnessed an extreme trading frenzy driven by a relatively small number of stocks. It began with GameStop, a struggling brick-and-mortar retail chain, which last summer was trading at around $4 per share.
GameStop has been a lackluster stock for much of its history. Since the company went public in 2002, GameStop shares experienced only a few brief spikes and had never traded above $63 until last month.
This price hike was driven by a group of retail investors who recognized that GameStop (GME) shares have long been a target for short sales among Wall Street hedge fund managers. Using social media to encourage individual investors to start purchasing GME shares, a buying frenzy ramped up the price within a matter of days. The main social media website used to encourage the buying spree is called Reddit.
What Is Reddit?
Reddit is a crowd-sourced information and commentary website. It hosts a wide range of subject-specific discussions on message boards, one of which is led by amateur traders dubbed “WallStreetBets.”
These retail investors use the online community forum to discuss stocks they buy and sell. In early January, the discussion began to focus on GameStop, which was a popular retailer for many young adults who grew up purchasing their games and video equipment at local stores.
However, most people these days purchase their games from online resources, which they can download and begin using immediately without having to leave home. This has hurt GameStop revenues in recent years, so its stock price basically plateaued and has remained in the $4 to $20 range, with little upside potential. What got the attention of these Reddit forum members, however, was that a large percentage of the company’s shares were “short” positions.2
How “Shorting” Works
Most investors make money by purchasing shares at one price and then selling them at a higher price. Shorting is designed to do exactly the opposite.
To short a stock, an investor borrows shares of that stock “on margin.” This means he puts a fraction of the current value of those shares (e.g., 10%) into a brokerage margin account, and the rest of the value is basically considered a loan from the broker. During the period in which the investor buys on margin, he pays interest on the outstanding loan.
Shorting is buying a stock the investor believes will drop in price. First, he borrows shares from a brokerage and then immediately sells them for cash. However, he can delay having to return the shares or repay the brokerage until later. If the stock price falls, as expected, the investor then buys back his position at the lower price and returns the shares to the brokerage. He pockets the extra money he made between selling them at one price and buying them back at a lower price. For example:
• Sell 100 shares of borrowed stock at $8 per share (profit: $800)
• Buy back 100 shares when the price drops to $5 per share (cost: $500)
• Return 100 shares to the brokerage and pocket the $300 profit
However, this strategy can be risky. Should the stock’s price increase rather than decrease, the investor may have to buy back those shares at a higher price in order to return them to the lender — in which case he’d take a loss on the deal.
• Sell 100 shares of borrowed stock at $8 per share (profit: $800)
• Buy back 100 shares after the price rises to $10 per share (cost: $1,000)
• Return 100 shares to the brokerage and take a loss of $200
The investor can wait to see if the price will drop again, but the problem is that as the value of those shares increases, the borrower may have to add more money to his margin account to cover the increased value. Also, he incurs the risk of the share price rising even higher, which means he could lose even more money.
As the share price continues to increase, investors who shorted the stock will start to buy it back in order to cut their losses — only this tends to increase the price even more. Those who do not buy the stock back early enough in the cycle may end up owing a lot more money to the brokerage.
“Ultimately, what is a stock worth? The only answer is, what another guy will pay for it. It’s that simple. If someone wants to pay you $480 for GameStop, well then, that’s the price.”3
The GameStop Gambit
Investors on the Reddit forum noticed that short-sellers had taken big positions in GameStop. That’s when they devised the plan to drive the price up so that those short-sellers would likely sell to minimize their losses. This is called a “short squeeze,” and it also serves to drive share prices even higher.
What made the scheme remarkable is that social media allowed small investors to collaborate on a strategy designed to create demand for a stock and artificially enhance its share price. The more people who invested in the stock, the higher its price climbed. As the rising market got the attention of the media, more traders bought into the play. GameStop even got a boost from Tesla CEO Elon Musk, who tweeted out to his 42 million followers: “Gamestonk!!” with a link to the WallStreetBets message board. The Reddit forum tripled its membership to 6.5 million in just that one week.
This coordinated campaign enabled small individual investors to benefit using the traditional investment strategy. They bought the stock when the price was low and then sold it when the price skyrocketed, thus pocketing substantial gains. Hedge fund managers with shorted stocks found themselves holding high-priced shares they couldn’t — or didn’t dare — unload.
The buying frenzy wasn’t limited to GameStop. Savvy traders began purchasing other heavily shorted stocks that have suffered during the pandemic, such as AMC Entertainment and Bed Bath & Beyond.4
Clearinghouse Rules
Remember the bit about investors having to keep a certain amount of cash in a margin account at their brokerage? The same holds true for brokerages. The clearinghouses that facilitate trades require brokerages to hold a certain amount of reserves to ensure they can pay out gains on shares sold. 239-561-1155 www.advantageretirementgroup.com 239-561-1155 www.advantageretirementgroup.com
Because the buying frenzy was sudden and explosive, some of those brokerages had to halt trades for certain stocks in order to bolster those reserve requirements. This left some investors in the lurch because they couldn’t sell at a higher price; they had to wait until the next morning when trading resumed to sell their stock — and at that point the price had dropped from its zenith.
One of those brokerages was Robinhood, a trading app popular among younger investors for its ease of use and ability to purchase fractions of shares — which requires less money. Robinhood halted and/ or limited trades for a number of those shorted stocks in order to tap its credit lines and raise an additional $1 billion overnight to meet reserve requirements.5
GameStop Lessons
The GameStop gambit demonstrates some of the risks associated with trading on margin — which is basically investing with money you don’t have. Short-selling is a key tactic among hedge funds, because they are managed on the premise of “hedging their bets.” One of the interesting lessons learned in January is that social media can be used to coordinate the efforts of millions of smaller, individual investors — a volume strategy previously available only to large fund managers.
With that said, it’s worth reiterating some of the basic tenets of investing — especially for people nearing retirement. One of the reasons the GME strategy worked is because it was largely facilitated by younger investors — who could afford to take that kind of risk. For investors looking for a less rollercoaster, more long-term growth strategy, keep the following guidelines in mind.
1. Due Diligence — A company’s stock price is only one factor when deciding where to invest. With GameStop, investors bought shares even though they knew the increasing price did not reflect the company’s true value. In fact, GameStop had recently announced a planned closure of 1,000 stores, which is why hedge funds shorted it.6 But be aware that, unless you are betting on a price drop, financial problems are usually a red flag.
2. What Goes Up — Most investors are looking for a stock with the potential for rising share prices, which generally reflects sound fundamentals, expanding revenues and positive growth prospects. However, rapid-fire price growth in just a few days? That’s generally a sign of high risk.
3. Must Come Down — In most investing scenarios, share prices tend to reflect the financial health of a company. If prices escalate higher than warranted, there’s a very good chance they will drop again. In this case, it’s all a matter of market timing as to whether an investor will profit or lose money.
One of the biggest positives to take away from that week is that people are starting to invest at a younger age, and today’s investment apps make it easier for them to do so with small trades. The media attention has likely spurred even more people to learn how and where to invest.
Final Thoughts
There is a lot more to investing than just pressing a few buttons on your smartphone app. The mechanics may be easier, but it’s important to understand how the markets interact, how they respond to different economic cycles, what to look for in a growth stock or, as we learned, a deteriorating stock. Perhaps most important is evaluating our personal circumstances to create an investment strategy designed to meet specific goals.
Day traders and short-term investors frequently take the time necessary to monitor a stock and buy/sell based on momentum and direction. Most of us have other jobs and other priorities that make this time-consuming task rather difficult. A short-term, speculative growth strategy is generally not appropriate for someone nearing retirement. And for long-term goals, a long-term strategy is generally lower risk and requires less attention. However, for investors with the time and money, it may be worthwhile to apportion some of your assets for more active money management. In this scenario, it is prudent to consult with an experienced investment advisor to help make informed buy and sell decisions.
Fresno Financial Planner Takeaways
Fresno portfolio advisor– Soutas Financial appreciated these points: Most investors make money by purchasing shares at one price and then selling them at a higher price. Shorting is designed to do exactly the opposite. Shorting is buying a stock the investor believes will drop in price. First, he borrows shares from a brokerage and then immediately sells them for cash. The GameStop gambit demonstrates some of the risks associated with trading on margin — which is basically investing with money you don’t have.
Diversifying your retirement assets among a variety of vehicles and alternatives—both insurance and investment oriented, depending on what is appropriate for your situation—may offer you a better chance of meeting your retirement income goals throughout your lifespan. We help our clients with problems sometimes associated with retirement such as stopping spend down and avoiding probate. In doing so we leverage Medicare long term care as well as risk management designed to help accomplish those goals.
When searching for Fresno financial advisors, look no further than Soutas Financial & Insurance Solutions Inc. your Fresno financial advisor is committed to helping take the complexity out of retirement planning. By using a variety of insurance and investment strategies that focus on Asset Protection, Long-Term Care Strategies, Legacy Planning Tax-Efficient Strategies, IRA, 401(k) & 403(b) Rollovers, Life Insurance, Annuities, Medicare, we can help you develop an overall retirement income strategy specific to you and your family. We have a strong team of professionals helping ensure you receive all the assistance you need not only in developing your retirement income strategy, but in maintaining it throughout your retirement. Contact us today at 559-230-1648 or visit us today at Soutas Financial to get your retirement plans on track for success!
Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM). AEWM and Soutas Financial & Insurance Solutions, Inc. are not affiliated companies. California Insurance License # OK48173
Other Fresno Financial Advisor Articles
Soutas Financial & Insurance Solutions Inc.
333 W. Shaw Avenue Suite 106
Fresno, CA 93704
(559) 230-1648
Soutas.com
1 Google Finance. Feb. 2, 2021. “GameStop Corp. Performance.” https://www.google.com/finance/quote/GME:NYSE?sa=X&ved=2ahUKEwj27-L_-8vuAhW NmVkKHQDzBP0Q3ecFMAB6BAgBEBk. Accessed Feb. 2, 2021.
2 Yun Li. CNBC. Jan. 30, 2021. “GameStop, Reddit and Robinhood: A full recap of the historic retail trading mania on Wall Street.” https://www.cnbc.com/2021/01/30/gamestop-reddit-and-robinhood-a-full-recap-of-thehistoric-retail-trading-mania-on-wall-street.html. Accessed Feb. 1, 2021.
3 Eddy Elfenbein. Crossing Wall Street. Jan. 29, 2021. “CWS Market Review – January 29, 2021.” https://www.crossingwallstreet.com/archives/2021/01/cws-market-reviewjanuary-29-2021.html. Accessed Feb. 1, 2021.
4 Yun Li. CNBC. Jan. 30, 2021. “GameStop, Reddit and Robinhood: A full recap of the historic retail trading mania on Wall Street.” https://www.cnbc.com/2021/01/30/gamestop-reddit-and-robinhood-a-full-recap-of-thehistoric-retail-trading-mania-on-wall-street.html. Accessed Feb. 1, 2021.
5 Ibid.
6 Katie Brockman. Nasdaq. Jan 30, 2021. “3 Lessons Investors Can Learn From GameStop — And Where to Invest Instead.” https://www.nasdaq.com/articles/3-lessons-investorscan-learn-from-gamestop-and-where-to-invest-instead-2021-01-30. Accessed Feb. 1, 2021. 239-561-1155 www.advantageretirementgroup.com
This content is provided for informational purposes. It is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet the particular needs of an individual’s situation. None of the information contained herein shall constitute an offer to sell or solicit any offer to buy a security. The information and opinions contained herein provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by AE Wealth Management. Neither AEWM nor the firm providing you with this report is affiliated with or endorsed by the U.S. government or any governmental agency.
Investing involves risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.
Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC. The advisory firm providing you this report is an independent financial services firm and is not an affiliate company of AE Wealth Management, LLC. Investing involves risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. The information and opinions contained herein provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by AE Wealth Management. This information is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet the particular needs of an individual’s situation. None of the information contained herein shall constitute an offer to sell or solicit any offer to buy a security or insurance product.
-03/21 – 841830
Fresno Financial Advisor News: The Shape of Economic Recovery
Overview
Following the longest recorded economic expansion in history, the U.S. hit its peak in monthly economic activity in February 2020. And yet, this was quickly followed by two consecutive quarters of economic decline — thanks to the coronavirus invasion on U.S. shores. In fact, the second quarter of 2020 suffered the steepest quarterly drop on record (9.1%), having never experienced a drop greater than 3%.1
The fallout was immediate and severe. In April 2020, more than 20 million jobs were lost, wiping out gains achieved over nine straight years of job growth. Job losses were particularly egregious among lower-wage, lower-educated workers, as well as for women — largely due to layoffs in the leisure and hospitality industry.
By June, the National Bureau of Economic Research (NBER) officially declared a recession, widely heralded as the worst since the Great Depression. However, quick moves by the Federal Reserve, a stimulus package passed by Congress and a concerted push by the Trump Administration to reopen the economy during the summer facilitated a remarkable turnaround. In the third quarter, the U.S. economy expanded by an annualized 33.1% — its biggest expansion ever.2
The rebound was not without drawbacks. Gross domestic product (GDP) was still 3.5% below pre-pandemic level, and reopening the economy proved to be devastating in terms of human life.3 Whereas it previously had been prevalent mainly in large metropolitan areas and “hot spots” around the country, the coronavirus spread uncontrolled to virtually every state, city and town in the U.S.
Fresno Retirement Consultant News: Investment Scams on the Rise
Overview
In 2020, the U.S. Securities and Exchange Commission (SEC) issued an alert regarding a significant increase in investment scams. The sudden rise was attributed to the outbreak of the virus and subsequent market and economic declines. According to analysis of consumer complaint data by the Federal Trade Commission (FTC), there was a 70% upsurge in income scams during the second quarter of 2020 compared to the same period in 2019.1
The FTC reports that Americans lose more money on investment scams than any other type of income fraud. While the median loss is just above $16,000, people in their 50s and 60s — the age when many are motivated to make up for lost ground with retirement savings — lose an average of $24,000.2
Cyber Fraud
According to the Association of Certified Fraud Examiners, cyber fraud appears to be the fastest-growing concern. Law enforcement, corporations and individuals are reporting substantially more attempts at ransomware attacks and/or business compromise schemes.3
Another form of cyber fraud is “social engineering,” in which scammers use human interaction to trick people into eschewing standard security protocols for a friend. For example, a grifter may pretend to be a friend or colleague and encourage someone to open an email attachment that is infected with malware or to divulge confidential information. The scammer may use scare tactics to warn an individual that his computer is vulnerable to cyber attacks, urging him to install and run the malware they provide.
Fresno Financial Consultant News: Is the Economy Slowly, Silently Sliding?
Prospects for stock market growth have remained resiliently and optimistically cheerful this year, despite the nine-month-long pandemic. Unfortunately, the time may be at hand for a stock market price correction that better reflects the state of the global economy.
The lack of ongoing fiscal stimulus which, even if passed, may not feasibly be able to distribute funds before the election or even before the end of the year, may have a greater effect on the economy than just individual households. Federal Reserve officials continue to call for more government stimulus, warning that the economy remains in a “deep hole.” However, this close to the highly anticipated and contentious election, government efforts are more focused on politics and judicial branch activities than the economy. As a result, some market analysts are questioning whether their initial year-end projections are overpriced based on an expected rebound that may not materialize.1
As we approach year end, you should schedule a time with your financial advisor to review your investment portfolio. While we do not typically recommend dramatic changes based on the current state of the economy, the stock market or even the outcome of a presidential election, we do encourage our clients to regularly evaluate their portfolio to ensure it is aligned to their goals and risk tolerance. Now more than ever, we believe it’s important to have an asset allocation strategy designed to weather volatile times.
There is a group of people who may be able to anticipate market trends even more quickly than Wall Street analysts — the corporate executives and officers of S&P 500 companies with firsthand knowledge of their businesses. If actions speak louder than words, prospects look pessimistic. Throughout September, these executives began selling personal shares of their own company stock at a rate not seen since 2012.2
Fresno Retirement Advisor News: Fixed Income vs. Stock Portfolio
Early this year, many stopped spending and began saving money. This wasn’t difficult as many areas of the economy were — and possibly still are — shut down. For some, vacation plans were canceled, and the normal level of entertainment activities and dining out have been curbed. If you’ve remained employed, chances are good you’ve been able to step up your level of savings this year. However, with current interest rates, it can feel like savings accounts are stagnating. Should you take the risk of investing for higher returns amid today’s continuing market uncertainty?1
It’s worth noting that by mid-August, the S&P 500 had fully recovered from the 34% pandemic-induced plunge that occurred between February and March earlier this year.2 Of course, this is great news for equity investors who stayed in the market, but stock portfolios continue to be worrisome. You may wonder if financial rewards are truly commensurate given the level of anxiety associated with market declines, but there are ways to help reduce your risks and still have the opportunity for growth. If you’d like to discuss various options, please feel free to contact us.
Traditionally, stocks have yielded higher long-term gains than bond portfolios, but the tradeoff is more volatility. A recent analysis by a Wharton professor shows that historical dynamic has shifted somewhat throughout the past five decades. In fact, fixed-income portfolios have performed as well, if not better, than the U.S. stock market during this time frame. Perhaps even more surprising, fixed income has exhibited similar or more volatility than comparably performing stock portfolios.3
Fresno Financial Advisor News: The Millennial Economy
The millennial generation hasn’t had it so great. A recent economic analysis reports that since entering the workforce five to 20 years ago, the average millennial has experienced slower economic advancement than any other generation in U.S. history.1 It’s not just a matter of long periods of high unemployment. It’s also because getting that first “real” job during a recession often means a lower entry-level salary that can affect their lifelong earning potential.
Not only that, but millennials can’t seem to catch a prolonged break. They’ve experienced the impacts of 9/11, the Great Recession and now the COVID-19 pandemic — all within the past 20 years.
These setbacks matter to all generations because millennials represent the future of the U.S. economy. As of July 2019, millennials surpassed baby boomers as the nation’s largest living adult generation.2 It’s important that this demographic make inroads in entrepreneurial or job creation endeavors while continuing to advance industries, both old and new. Growth in these areas increase GDP and wealth prospects for the entire nation.
And yet, in contrast to the historical trend of each generation boasting progress faster than the prior generation, this has not necessarily been the case among millennials. On one hand, as of 2018, 40% owned their own homes and 40% of millennial women had children. However, their numbers pale compared to Generation X, among which 45% owned their homes and 53% of women had children at the same age as today’s millennials.3
Other Fresno Financial Advisor Articles
Our firm is not affiliated with the U.S. government or any governmental agency.
We are an independent firm helping individuals create retirement strategies using a variety of insurance products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic retirement income strategies and should not be construed as financial advice. Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM). AEWM and Soutas Financial & Insurance Solutions, Inc are not affiliated companies. California Insurance License # OK48173
The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. Investing involves risk, including possible loss of principal. Insurance product guarantees are backed by the financial strength and claims-paying ability of the issuing company. Diversification cannot ensure a profit or guarantee against losses in a declining market. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference. 722736 – 9/20
Our firm provides links to third-party articles in an effort to assist users in locating information on topics that might be of interest to them. Information presented has not been verified and is not guaranteed, nor can we attest to the accuracy of information provided. Linking to an article or website does not constitute a representation of the services offered by our firm, nor does it constitute an endorsement by our firm of the sponsors of the site or the products presented on the site. The information is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet the particular needs of an individual's situation.
Talk to your financial professional and your tax advisor about how Social Security benefits can fit into a complete retirement income strategy. Financial professionals are able to provide you with information but not guidance or advice related to Social Security benefits. We are not affiliated with the U.S. government or any governmental agency.
These financial calculators are designed as educational tools to help you estimate answers to common financial questions. They are not intended to predict future returns or results, nor do they represent the performance of any specific investment or product.