How To Prepare For Volatility In The Market

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By Jeff Gilbert

Here’s the thing: Even though we had been enjoying our record-long bull market and knew that it couldn’t last forever, no one saw our current situation coming. For example, when we turned the page of our calendar to 2020, analysts predicted modest returns (1) and the financial world saw little risk of a recession. 

But just because we didn’t see this coming doesn’t mean you are powerless. While the severity of our current events is not to be minimized, we can battle fear and anxiety by going beyond the headlines and educating ourselves with the facts. With that in mind, here are 4 ways to prepare your finances for more volatility. 

1. Keep A Level Head

Times of uncertainty are not ideal for making drastic changes or decisions. In today’s digital world, we have 24/7 access to news media outlets, and there are a lot of them. With so many different voices fighting for our attention, headlines are getting more and more alarmist. We are constantly bombarded with articles and videos telling us what we need to do based on the last hour’s market performance. 

That’s why one of the worst things you can do in a volatile market is let your emotions drive your actions. Volatile times call for a logical outlook. Remember: The numbers you see in your account are just that—numbers. They don’t mean anything unless you sell. Don’t let fear get the best of you. This brings me to my second point.

2. Consider Long-Term Results

Instead, stick to your long-term perspective. The market might be down tomorrow and it might be down a month from now. But if you needed your money tomorrow or a month from now, you wouldn’t have invested it in the stock market. Stock market investing is for the long term, so you shouldn’t let short-term volatility scare you. Volatility and market drops will only hurt you if you panic sell when the market is down and lock in those losses. 

History shows us that about every four years the markets post negative annual returns. In spite of that, the S&P 500 Index has averaged gains of 12% from 1979 to 2019. (2) Here is a graph that shows this long-term stability, despite short-term market fluctuations. This is the Dow Jones Industrial Average (DJIA) showing over the last 30 years of investment value, which is a fair representation of the market as a whole if you are an average investor. 

If you remember the 2008/2009 crash, as seen above, the market recovered well. The market always recovers, and it will continue to do so. 

3. Trust Your Portfolio

Markets go up and down, and investment professionals understand the movements and prepare for them. If you’re a client of ours, then we designed your portfolio with this in mind. We knew it would happen and you are ready for it. 

Just because the Dow Jones Industrial Average is bouncing all over the place doesn’t mean that your portfolio is. Your portfolio consists of not just stocks but also bonds and other assets as well. They are designed to work together and balance each other out so that you won’t experience the wild ride that other investors experience. We custom-design every portfolio with your specific time horizon and investment goals in mind, so you have the opportunity to achieve your goals regardless of what the markets do today or tomorrow.

4. Talk To A Professional About Risk

This is not the time to go it alone. It’s extremely beneficial to talk with someone who has been through these situations before and can help answer concerns specific to your needs and phase of life.

Depending on your age and financial circumstances, you might not feel like you have as much time to let the market bounce back. This is why it is even more crucial to make sure the types of investments you have align with your risk tolerance and time horizon. Are you ready to see all your options for protecting your money and build a foundation that can lead to success in any market? We at Balboa Wealth Partners are here for you. Give me a call at 949-445-1465 or email me at jgilbert@balboawealth.com to schedule an appointment.

About Jeff

Jeff Gilbert is the founder and CEO of Balboa Wealth Partners, a holistic financial management firm dedicated to providing clients guidance today for tomorrow’s success. With nearly three decades of industry experience, he has worked as both an advisor and executive-level manager, partnering with and serving a diverse range of clients. Specializing in serving high- and ultra-high-net-worth families, Jeff aims to help clients achieve their short-term and long-term goals, worry less about their finances, and focus more on their life’s passions. Based in Orange County, Jeff works with clients throughout Southern California as well as Arizona, Oregon, and Washington. To learn more, connect with Jeff on LinkedIn or email jgilbert@balboawealth.com. 

Advisory services provided by Balboa Wealth Partners, Inc., an Investment Advisor registered with the SEC. Advisory services are only offered to clients or prospective clients where Balboa Wealth Partners and its Investment Advisor Representatives are properly licensed or exempt from registration.

Securities offered through Chalice Capital Partners, LLC, member FINRA, SIPC.

Balboa offers advisory services independent of Chalice. Neither firm is affiliated.

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(1) https://www.nytimes.com/2020/01/01/business/wall-street-markets-2020.html

(2) http://www.moneychimp.com/features/market_cagr.htm

(3) https://www.macrotrends.net/1319/dow-jones-100-year-historical-chart

Insurance Policies For Each Stage Of Life

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By Jeff Gilbert

 

Raise your hand if you have insurance. That’s probably most of you. But did you know that you may need different types of insurance, and definitely different amounts of coverage, for each stage of your life? Here’s a breakdown to give you some direction as you make insurance decisions to protect yourself from the risk and uncertainty that is simply part of life.

College Students

Many students are still eligible for health and auto insurance through their parents’ plans. They don’t typically have dependents or property. This may lead you to think that students don’t need to be part of the insurance conversation, but there is one type of policy that could make a difference to your finances: a hospitalization policy. Hospitalization policies cover unexpected medical costs students accrue from surgery or hospitalization, essentially shielding them and their parents from going into debt to pay for medical expenses.

Young, Single, Working, And On Your Own

The most important types of insurance that those in this stage of life should consider include health, renters, auto, and disability insurance. Most likely your employer will provide health insurance for you, but if they don’t, it is important to research your options to find the best rates available. Renters insurance is very affordable and often required by landlords. It will help protect you in the case of stolen or destroyed property (think jewelry, laptops, or other big-ticket items). And when it comes to auto insurance, it is important to shop around and find the most competitive coverage.

Finally, for this stage of life, disability (or critical illness or income replacement) insurance should be considered. This type of insurance pays a portion of lost wages if you are unable to continue your job due to an accident or illness. Because there are limits and gaps in coverage from your employer, state, and workers’ compensation, it is vital that you also have your own disability policy.

Newly Married Homeowners

As a newly married couple with a house, it’s time to turn your attention to life, homeowners, and liability insurance. The last thing you want to do is get married, buy a new home with your spouse, and unexpectedly pass away. In this extreme case, you would be leaving your spouse responsible for paying off the entire mortgage with one income. If you have life insurance for yourself, you would alleviate such a risk.

Speaking of your home, homeowner insurance policies vary in what they cover, so it is important to make sure you understand the terms. Weigh the pros and cons of purchasing a more expensive policy that will pay for the full cost of rebuilding your home and for replacing your possessions versus a policy that just pays for your home’s market value. (1)

Finally, you should also consider liability insurance, also known as umbrella coverage, which essentially will protect you beyond the protection of homeowners and auto insurance. Because your net worth is growing, this type of insurance is important.

Proud Parents

The most important types of insurance to have at this stage include life insurance and health insurance for your children, as well as disability insurance. On your existing medical policy, it is important to claim a life event when you are pregnant or within a month of your child’s birth. This will allow you to add your baby to your medical policy.

If you don’t already have a life insurance policy, now is the time to get one. If you do have a policy, be sure to boost your coverage to include the future cost of raising a child, college costs, and maybe even coverage for a stay-at-home parent. Either way, make sure that your children and spouse are taken care of should anything happen to you.

Another type of policy to revisit is disability insurance. Now that you are providing for children, possibly paying off a mortgage, and reworking your budget to include childcare or a reduced income for a stay-at-home parent, your income needs to be guaranteed. Make sure that you cover the risk of not being able to work due to an injury, accident, or unforeseen complication.

Empty Nesters And Pre-Retirees

This is a pivotal life stage where making decisions for the future comes into play. You may still need many of the above-mentioned policies, but you should also look into long-term care insurance. This type of insurance covers the future costs of long-term care, which may include in-home care or the costs of living at a nursing home to assist with the basic personal tasks of everyday life. There could come a time when you cannot take care of yourself independently, and you don’t want to drain your savings to get the care you need. There are different types of policies, including traditional LTC policies or hybrid LTC policies, so do the research to find the best choice for your situation.

Retirees

Once you retire, your insurance priorities change. For the most part, you will not need to protect your ability to earn income since you are no longer working. However, as you get older, insurance can significantly lessen the impact of medical expenses and long-term care costs. 

When you officially retire and lose your employee healthcare coverage, you will either have to reassess or obtain new coverage on the following: health insurance, Medigap, Medicare prescription drug plans, and long-term care insurance. If you retire early, you may need an additional short-term health insurance policy since Medicare does not kick in until you reach age 65. It is also important to consider Medigap policies since Medicare will most likely not cover all of your medical expense needs. Also, because Medicare Part A and Part B do not cover most prescription drugs, you will need to shop around for Medicare Prescription Drug Plans (Part D). Finally, as discussed in an earlier stage, it is very important to make sure you have LTC insurance. The longer you wait, the more expensive this type of coverage will be.

And remember to take the time to review all of your in-force policies to make sure you aren’t over-insured, and update beneficiaries of your life insurance policy as needed.

What Stage Can We Help You With?

With different stages of life come very different insurance needs. The Balboa Wealth Partners team would love to help you determine what insurance policies and coverage would benefit you in your unique life circumstances and stage of life. To learn more about what we do or to request a complimentary consultation, give me a call at 949-445-1465 or email me at jgilbert@balboawealth.com.

About Jeff

Jeff Gilbert is the founder and CEO of Balboa Wealth Partners, a holistic financial management firm dedicated to providing clients guidance today for tomorrow’s success. With nearly three decades of industry experience, he has worked as both an advisor and executive-level manager, partnering with and serving a diverse range of clients. Specializing in serving high- and ultra-high-net-worth families, Jeff aims to help clients achieve their short-term and long-term goals, worry less about their finances, and focus more on their life’s passions. Based in Orange County, Jeff works with clients throughout Southern California as well as Arizona, Oregon, and Washington. To learn more, connect with Jeff on LinkedIn or email jgilbert@balboawealth.com. 

Advisory services provided by Balboa Wealth Partners, Inc., an Investment Advisor registered with the SEC. Advisory services are only offered to clients or prospective clients where Balboa Wealth Partners and its Investment Advisor Representatives are properly licensed or exempt from registration.

Securities offered through Chalice Capital Partners, LLC, member FINRA, SIPC.

Balboa offers advisory services independent of Chalice. Neither firm is affiliated.

____________

(1) http://www.plannersearch.org/assets/brochures/fpa_choosing%20the%20right%20insurance_web_060315.pdf

3 Ways To Prepare Your Teenager For Financial Independence

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By Jeff Gilbert

Teenagers aren’t always known for being logical and responsible, especially with money. But given the right tools and opportunities, this is an ideal time for them to set a financial foundation that will benefit them for the rest of their life. So, before they leave the nest and head out into the real world, take these steps to help them prepare for financial independence.

1. Let Them Earn An Income

Kids learn best by doing, by having hands-on chances to try something, fail or succeed, and learn from the experience. If your teen is old enough, let them get a part-time job, either permanently or temporarily, during school breaks. If they’re not quite old enough (or too busy with extracurricular activities), pay them for doing jobs around the house, whether that’s mowing the lawn, making dinner, or cleaning out the garage. 

Letting your teen earn their own income is exciting! It teaches them about taxes, gives them their own spending money, helps them become a more responsible and independent person, and allows them to feel empowered and capable.  

2. Help Them Set Financial Goals

Once your teen has some income to work with, help them set financial goals. They may want to save for a car, some college expenses, or even a post-graduation trip with friends. Whatever it is, help them calculate how much they need to save each month to reach their goal by a certain date. This gives them something tangible to work toward and shows them the value of saving. If they are motivated to save for something in the future, it encourages them to weigh the opportunity cost of buying something now versus saving it for later.

3. Show Them How To Track Spending

We all know how little purchases can add up to huge expenses over time. Coffee on your way to work. Take-out on your way home. A small purchase on Amazon. Before you know it, $100 is out the window. 

Your teen can keep their spending in check by tracking their own expenses. As a tech-savvy teen, they’ll likely find a budgeting app more appealing than using the old pen-and-paper method. A quick online search will reveal several apps out there that can help your teen stay on top of their spending and track expenses in real time. 

Set Them Up For Success!

Teaching your teen the importance of financial independence is no easy feat. But if you put in the hard work now, they’ll be less likely to depend on you financially in their 30s and beyond. At Balboa Wealth Partners, we’re dedicated to helping you and your teen reach financial success. Give me a call at 949-445-1465 or email me at jgilbert@balboawealth.com if you’d like us to do just that!

About Jeff

Jeff Gilbert is the founder and CEO of Balboa Wealth Partners, a holistic financial management firm dedicated to providing clients guidance today for tomorrow’s success. With nearly three decades of industry experience, he has worked as both an advisor and executive-level manager, partnering with and serving a diverse range of clients. Specializing in serving high- and ultra-high-net-worth families, Jeff aims to help clients achieve their short-term and long-term goals, worry less about their finances, and focus more on their life’s passions. Based in Orange County, Jeff works with clients throughout Southern California as well as Arizona, Oregon, and Washington. To learn more, connect with Jeff on LinkedIn or email jgilbert@balboawealth.com. 

Advisory services provided by Balboa Wealth Partners, Inc., an Investment Advisor registered with the SEC. Advisory services are only offered to clients or prospective clients where Balboa Wealth Partners and its Investment Advisor Representatives are properly licensed or exempt from registration.

Securities offered through Chalice Capital Partners, LLC, member FINRA, SIPC.

Balboa offers advisory services independent of Chalice. Neither firm is affiliated.

Our 2020 Mid-Year Economic Update

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By Jeff Gilbert

As everyone knows, 2020 has not been a normal year by any stretch of the imagination. The world as we know it has been turned upside down by five letters and a number: COVID-19. While the coronavirus pandemic is at its core a health issue, it has been the cause of many other issues, perhaps the greatest being economic. Today we’ll take a look at what is going on in the economy, most of which can trace its roots back to COVID-19.

Stock Market

The year started off strong, with the S&P 500 reaching all-time highs and peaking on February 19. Then it all fell apart. In a little over a month, the index fell 34%, bottoming out on March 23. It’s been a bumpy ride, but the market has climbed out of the hole it was in and gained back 36% (as of May 27) from that low. (1)

Now, it may seem as if the S&P 500 has made up for all of its losses if it lost 34% and then gained back 36%. However, that is not the case because each percentage is based on its relative high or low. The index peaked at 3,386.15 points before falling 34% to 2,237.40. That loss was 1,148.75 points. Growth of 36% from the low point only accounts for 798.73 points, which means that the index overall is still down 10% from February’s high.

In addition to stock prices improving, volatility is calming down as well. In mid-March, things were swinging around so fiercely that the S&P 500 achieved double-digit movement in single days. Things have calmed down a lot since then, but volatility is still higher than it was pre-crisis. Things just seem calm now compared to the craziness of what has been called the longest March ever. (2)

Unemployment

Perhaps the area that has been impacted the most by the COVID-19 containment efforts is employment. It’s hard to keep a job when companies are being shut down and people aren’t allowed out of their homes. Weekly new unemployment claims have shattered all previous records by multiples. The official unemployment rate for April is 14.7%, though estimates put it closer to 20% due to some data-collection errors. (3) There are now approximately 25 million Americans receiving unemployment benefits (4) on top of millions who have seen hours and wages cut and business revenues fall.

Federal Reserve & Government Intervention

The Federal Reserve stepped up early on in the pandemic to slash rates to near zero. It has also worked hard to provide financing for businesses trying to stay afloat in these turbulent waters. 

Congress has passed a number of bills to aid both individuals and organizations, the largest being the $2 trillion CARES Act, which was signed into law on March 27. The Act provided individual stimulus checks, enhanced unemployment benefits, and loan programs to help businesses. Despite extreme actions taken by both the Federal Reserve and the federal government, some economists still say that they will need to do more before meaningful recovery will take place. (5)

Economy

As the country eases out of lockdown and restrictions are being loosened, there has been an uptick in economic activity, though not enough to stop the economy from contracting. The leisure and hospitality industries have been devastated (6) while the service sector is still struggling under social distancing guidelines. (7) Factory activity is still down and agricultural conditions are deteriorating. (8) Overall, pessimism reigns supreme over the economy even while some Federal Reserve policymakers believe we are either at or near the bottom and are expecting a rebound in the second half of the year. (9) The global economy is continuing to decline, but at a slower pace than it did in April, (10) which seems to confirm their predictions.

As you can see, this year has been anything but normal so far and there are more than likely going to be even more plot twists as we enter the summer and fall. While the global economy seems to be gasping for breath, it is not the end of the world. We may have some hard months and years ahead of us, but it isn’t the first time our nation has faced challenges like this.  

We’re Here For You

While our economic woes may not be new for history, they very well could be new for you. In difficult times like these, it is helpful to have a trusted advisor that you can turn to for financial guidance and support. If you don’t want to go through this economic crisis alone, our team at Balboa Wealth Partners is here for you. Give me a call at 949-445-1465 or email me at jgilbert@balboawealth.com so we can have a no-obligation conversation about where you are and how we may be able to help.

About Jeff

Jeff Gilbert is the founder and CEO of Balboa Wealth Partners, a holistic financial management firm dedicated to providing clients guidance today for tomorrow’s success. With nearly three decades of industry experience, he has worked as both an advisor and executive-level manager, partnering with and serving a diverse range of clients. Specializing in serving high- and ultra-high-net-worth families, Jeff aims to help clients achieve their short-term and long-term goals, worry less about their finances, and focus more on their life’s passions. Based in Orange County, Jeff works with clients throughout Southern California as well as Arizona, Oregon, and Washington. To learn more, connect with Jeff on LinkedIn or email jgilbert@balboawealth.com. 

Advisory services provided by Balboa Wealth Partners, Inc., an Investment Advisor registered with the SEC. Advisory services are only offered to clients or prospective clients where Balboa Wealth Partners and its Investment Advisor Representatives are properly licensed or exempt from registration.

Securities offered through Chalice Capital Partners, LLC, member FINRA, SIPC.

Balboa offers advisory services independent of Chalice. Neither firm is affiliated.

____________

(1) https://www.google.com/search?q=s%26P+500&oq=s%26P+500&aqs=chrome..69i57j69i59j0l3j69i60j69i61j69i60.5893j0j7&sourceid=chrome&ie=UTF-8

(2) https://www.carsonwealth.com/insights/market-commentary/market-commentary-economy-slightly-improves-as-restrictions-loosen/

(3) https://www.forbes.com/sites/shaharziv/2020/05/10/dont-be-fooled-by-official-unemployment-rate-of-147-the-real-figure-is-even-scarier/#5965a85455dd

(4) https://www.carsonwealth.com/insights/market-commentary/market-commentary-economy-slightly-improves-as-restrictions-loosen/

(5) https://www.marketwatch.com/story/feds-beige-book-says-businesses-are-pessimistic-about-pace-of-a-recovery-2020-05-27

(6) https://www.marketwatch.com/story/feds-beige-book-says-businesses-are-pessimistic-about-pace-of-a-recovery-2020-05-27

(7) https://www.carsonwealth.com/insights/market-commentary/market-commentary-economy-slightly-improves-as-restrictions-loosen/

(8) https://www.marketwatch.com/story/feds-beige-book-says-businesses-are-pessimistic-about-pace-of-a-recovery-2020-05-27

(9) https://www.marketwatch.com/story/feds-beige-book-says-businesses-are-pessimistic-about-pace-of-a-recovery-2020-05-27

(10) https://www.carsonwealth.com/insights/market-commentary/market-commentary-economy-slightly-improves-as-restrictions-loosen/

How To Prepare For The Potential Economic Impact Of Our Current Crisis

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By Jeff Gilbert

COVID-19 may be primarily a health crisis, but it’s already had a significant impact on our economy. With thousands of businesses temporarily shut down and millions of people staying at home, we could be on the brink of a recession. And as some economists have predicted, the longer our economy is on pause, the harder this potential recession may hit. (1)

Regardless of what the future holds, here are 5 ways to financially prepare for the next economic downturn. 

1. Don’t Panic

Right off the bat, stop and take a deep breath. Accept that there are going to be things that happen during a recession that are out of your control. Your portfolio will dip. Your work hours may be cut or you could lose your job altogether. The media will go on and on about the disastrous state of our economy. There will be moments of fear and doubt. 

But instead of giving in to these feelings, focus on the facts. We’ve had 12 recessions since World War II—and we’ve recovered from all of them in an average of 11 months. (2) This too shall pass.  

2. Build Up Your Cash Reserves

Nearly 70% of Americans have less than $1,000 in savings. (3) If you’ve kept your cash reserves pretty lean up until this point, now is the time to build them up. Make sure you have at least six months of expenses in an emergency fund. If you’re nearing retirement, you may want to bump it up to a year or two. Keep this money in a liquid savings or money market account where you have easy access to it when you need it. 

One quick way to build up cash reserves is to cut out any unnecessary spending. This could be subscription services, shopping, vacations, and so on. You can also sell any items you no longer want or need. Remember, this isn’t forever. You can increase your spending once you’ve built up your savings. This is all about recession-proofing your finances so you’re ready for whatever comes next.

3. Pay Off Debt

Debt is an issue for most people even when the economy is at its best. But this issue magnifies when your investments take a hit and there’s a risk of losing your job. Make a plan now to pay off as much debt as you can. This could be anything like credit card debt, medical debt, car loans, and student loans. The more you pay off now, the fewer expenses you’ll have in the future (and the better off you’ll be if things take a turn for the worse).  

4. Don’t Stop Investing

Our gut reaction is to sell when the market is shaky and buy when it’s strong. But this is the exact opposite of what we should do. In reality, a recession is the perfect time to buy investments at a steep discount.

The average bear market lasts 1.3 years with an average 36% dip. But bull markets usually last 6.6 years with an average 339% increase. (4) This means that if you buy when the stock market is at its worst, you’ll reap the benefits of huge gains when it rebounds (which it historically always has).

5. Diversify Your Skill Set

Losing your job is everyone’s biggest fear during a recession. Minimize your chances of a layoff by keeping your skill set sharp. Some common ways to do this include: 

  • Maintaining certifications
  • Taking online classes
  • Earning an advanced degree
  • Taking on new responsibilities at work

Even if your company ends up downsizing and you’re on the chopping block, improving your skill set will make you more marketable to future employers, which will make it easier to find a new job. 

How We Help

Recessions are inevitable. There’s nothing we can do to stop them. But there are concrete ways you can prepare for the next one. In addition to the suggestions above, one way to recession-proof your finances is to get unbiased advice and guidance from a financial professional. 

At Balboa Wealth Partners, we’re dedicated to guiding you toward financial independence. Whether you need help managing your assets or creating a financial plan to help get you through the next recession, we’re here to help. Give me a call at 949-445-1465 or email me at jgilbert@balboawealth.com to get started.

About Jeff

Jeff Gilbert is the founder and CEO of Balboa Wealth Partners, a holistic financial management firm dedicated to providing clients guidance today for tomorrow’s success. With nearly three decades of industry experience, he has worked as both an advisor and executive-level manager, partnering with and serving a diverse range of clients. Specializing in serving high- and ultra-high-net-worth families, Jeff aims to help clients achieve their short-term and long-term goals, worry less about their finances, and focus more on their life’s passions. Based in Orange County, Jeff works with clients throughout Southern California as well as Arizona, Oregon, and Washington. To learn more, connect with Jeff on LinkedIn or email jgilbert@balboawealth.com. 

Advisory services provided by Balboa Wealth Partners, Inc., an Investment Advisor registered with the SEC. Advisory services are only offered to clients or prospective clients where Balboa Wealth Partners and its Investment Advisor Representatives are properly licensed or exempt from registration.

Securities offered through Chalice Capital Partners, LLC, member FINRA, SIPC.

Balboa offers advisory services independent of Chalice. Neither firm is affiliated.

____________

(1) https://www.brookings.edu/blog/up-front/2020/04/01/covid-19-and-the-economy/

(2) https://www.nber.org/cycles.html

(3) https://www.gobankingrates.com/saving-money/savings-advice/americans-have-less-than-1000-in-savings/

(4) https://www.ftportfolios.com/Common/ContentFileLoader.aspx?ContentGUID=4ecfa978-d0bb-4924-92c8-628ff9bfe12d

How To Manage Your Finances In A Crisis

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By Jeff Gilbert

Change is hard on everyone. And the changes that are happening daily due to the coronavirus pandemic, not to mention the roller-coaster ride our markets are on, are disrupting our lives, causing us to feel uncomfortable and worried about the future. We are living in unprecedented times and no one can predict what will happen or what our nation’s and world’s recovery is going to look like. 

But just because we didn’t see this coming doesn’t mean you are powerless. There are certain measures you can take to give you peace of mind now, as well as opportunities for you to improve your financial picture and make positive changes that could benefit you for years to come. 

Here are 5 financial actions you can take during these turbulent times.

1. Check In With Your Advisor About Your Portfolio

Your advisor is educated about what’s going on and will be able to give you clarity on exactly what is happening to your portfolio. This is an important first step since you should feel confident that you have a well-balanced portfolio, based on your needs and your risk level. 

2. Take Advantage Of Lower Prices By Maintaining Discipline 

This quote by Warren Buffett is all too applicable: “Be fearful when others are greedy and greedy when others are fearful.”

In every stock market downturn, opportunities are waiting for those with the right perspective to see it. Where many people go wrong in volatile times like these is selling near the bottom of a bear market, staying on the sidelines during a good portion of the recovery, and then jumping back in closer to the next top. Put that together, and you not only lose money but also lose out on potential growth and compound interest from the time you were out of the market. Emotional investing will cost you.

It may seem counterintuitive, but keep investing consistently. When stock market prices are down, think of it as an opportunity to snap up some bargains before the recovery takes place. In the previous market crash of 2008/2009, the people who continued to invest strategically made a significant return on their investment. 

3. Consider Tax Loss Harvesting

Tax loss harvesting is the strategy of selling a security that has experienced a loss. By realizing a loss, investors can offset taxes. The sold security is usually replaced by a similar one to maintain the desired asset allocation and expected returns. With the markets hitting low points, it might be an ideal time for you to sell something and take the loss, but then buy something to participate in the market’s recovery. If you look for the opportunity to invest in something similar or rebalance, you win and have a tax deduction to use for this year and potentially even future years. 

Before doing this, talk with your advisor about how much of a difference this could make on your financial plan.

4. Look Into A Roth Conversion

Market downturns are the perfect time to convert to a Roth IRA and pay significantly less in taxes, not to mention we may be at the lowest tax rates we will see in our lifetime. Let’s say you have an IRA that used to be worth $100,000 and is now worth $75,000. You could convert this position now and pay less in taxes than what you would have paid when it was worth $100,000…25% less.

There are many factors to consider when deciding if a Roth conversion is right for you, such as your current income versus your expected retirement income, your projected minimum required distributions, the tax implications, current liquidity, etc. Making this decision is something you should discuss with your advisor. 

5.  Look For Unique Opportunities

A few other opportunities you could take advantage of with lower interest rates and stock prices are the following:

  • Consider refinancing your home.
  • Purchase future travel at a discount. 
  • Fund a 529 for your child’s college tuition with low market prices.
  • Refinance any outstanding debt.
  • Buy a home at a discount if you are renting. 

Are You Ready To Take Control?

When this market volatility has passed (and it will), some will lose, some will break even, and some will get ahead. We at Balboa Wealth Partners want to see you get ahead, and we welcome the opportunity to help you make decisions that will enhance your finances so that when we go back to our regular routines, we do so with more clarity and confidence. To get in touch, email us at jgilbert@balboawealth.com or call 949-445-1465 to set up a phone or virtual appointment. 

About Jeff

Jeff Gilbert is the founder and CEO of Balboa Wealth Partners, a holistic financial management firm dedicated to providing clients guidance today for tomorrow’s success. With nearly three decades of industry experience, he has worked as both an advisor and executive-level manager, partnering with and serving a diverse range of clients. Specializing in serving high- and ultra-high-net-worth families, Jeff aims to help clients achieve their short-term and long-term goals, worry less about their finances, and focus more on their life’s passions. Based in Orange County, Jeff works with clients throughout Southern California as well as Arizona, Oregon, and Washington. To learn more, connect with Jeff on LinkedIn or email jgilbert@balboawealth.com. 

Advisory services provided by Balboa Wealth Partners, Inc., an Investment Advisor registered with the SEC. Advisory services are only offered to clients or prospective clients where Balboa Wealth Partners and its Investment Advisor Representatives are properly licensed or exempt from registration.

Securities offered through Chalice Capital Partners, LLC, member FINRA, SIPC.

Balboa offers advisory services independent of Chalice. Neither firm is affiliated.

What You Need To Know About Recessions And Bear Markets

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As global markets continue their roller coaster ride due to fears surrounding the coronavirus, our most recent bull market officially turned into a bear market. But what does that mean? And are we on the verge of another recession like the one we had in 2008?

In light of all these concerns, today we’ll share what you need to know about recessions and bear markets. If you are worried about your portfolio, we understand and we’re here to help. Feel free to contact our office to get answers to your specific questions. 

What Is A Bear Market?

A bear market happens when an overall market benchmark, such as the S&P 500, dips by 20% or more from its most recent high. (1) This is often accompanied by negative investor sentiment and more selling than buying.

It’s important to highlight that normal stock market volatility isn’t an indicator of a bear market. Normal dips and swings are necessary for long-term growth and shouldn’t be cause for concern.

What Is A Recession? 

A recession is defined as two consecutive quarters of economic decline (emphasis on the word economic). They’re measured using factors such as the employment rate, gross domestic product, bond yield curves, and other factors independent of the stock market. (2)

Economists declare recessions retroactively. For example, the Great Recession wasn’t confirmed until November 2008—11 months after it started. (3)

Bear Markets Vs. Recessions: How Are They Related?

A bear market relates to the stock market. A recession relates to the economy. Contrary to popular belief, the stock market is not the economy. What drives the stock market is investor emotions—which, as we all know, can be fickle. As humans, we have a tendency to be overly optimistic when there’s no data to support our feelings, and pessimistic when data looks great. 

Recessions are the complete opposite. Tangible factors determine the state of our economy. There’s no emotion involved. Which begs the question: Why do people correlate recessions and bear markets? 

If you look back on history, recessions and bear markets have usually occurred around the same time. Of the last 11 S&P 500 bear markets we’ve had since 1957, 63.6% came after a recession. (4) The two go hand in hand, but they’re not the same.

Not even highly educated economists can predict a bear market or recession. There’s a lot of speculation that goes on in the news, but it’s just that—speculation.

What Should Investors Do?

The best thing to do as a long-term investor is to find an optimal portfolio that balances your comfortable level of risk and return. The actions you take in the stock market should be independent of whether economists think we’re entering a bear market or recession.

And as many financial experts have advised: Your 401(k) right now is like your face: Don’t touch it. Selling due to fear when the market is down locks in your losses and can do long-term damage to your financial future.

Speak With Your Advisor

Whether you’re new to investing or an experienced investor, it’s helpful to consult with an objective third party during times like this. Human nature causes us all to act out of emotion when our accounts go down. As an independent firm, we put your best interests first. We seek to serve as a support system for our clients, helping them make informed financial decisions that are not driven by emotion.

We’re Here For Your Friends And Family

If you have friends or family who need help with their investments, we are happy to offer a complimentary portfolio review and recommendations. We can discuss what is appropriate for their immediate needs and long-term objectives. Sometimes simply speaking with a financial advisor may help investors feel more confident and less concerned with the most recent market activity.

About Jeff

Jeff Gilbert is the founder and CEO of Balboa Wealth Partners, a holistic financial management firm dedicated to providing clients guidance today for tomorrow’s success. With nearly three decades of industry experience, he has worked as both an advisor and executive-level manager, partnering with and serving a diverse range of clients. Specializing in serving high- and ultra-high-net-worth families, Jeff aims to help clients achieve their short-term and long-term goals, worry less about their finances, and focus more on their life’s passions. Based in Orange County, Jeff works with clients throughout Southern California as well as Arizona, Oregon, and Washington. To learn more, connect with Jeff on LinkedIn or email jgilbert@balboawealth.com. 

Advisory services provided by Balboa Wealth Partners, Inc., an Investment Advisor registered with the SEC. Advisory services are only offered to clients or prospective clients where Balboa Wealth Partners and its Investment Advisor Representatives are properly licensed or exempt from registration.

Securities offered through Chalice Capital Partners, LLC, member FINRA, SIPC.

Balboa offers advisory services independent of Chalice. Neither firm is affiliated.

___________

(1) https://www.investopedia.com/a-history-of-bear-markets-4582652

(2) https://www.bankrate.com/personal-finance/smart-money/watch-these-indicators-know-when-recession-could-be-coming/

(3) https://www.usatoday.com/story/money/2019/08/19/recession-what-does-mean-and-what-like/2030642001/

(4) https://dqydj.com/relationship-bear-markets-recession/

Can A Donor-Advised Fund Save You Money On Taxes?

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By Jeff Gilbert

Can you think of one person who doesn’t want to save money on their taxes and be generous at the same time? Neither can I. Donor-advised funds could be a great option to lower your taxable income, which will decrease the amount you pay in taxes and simultaneously give more money to causes you care about. 

What Is A Donor-Advised Fund (DAF)?

A DAF works like a personal giving account where you can contribute money that is tax-deductible, advise on which charity you want the funds to be given to, and all the assets will grow tax-free until it leaves the account. (1) Although some DAF providers require a minimum contribution every couple of years, there is no law on how long the funds can stay in the account. That money will grow in the fund until you want to send it to a charity of your choice. 

Potential Tax Benefits 

Lower Your Income Tax By Itemizing Deductions 

With the new tax law in effect, which increases standard deductions to $24,800 for people who are married filing jointly and $12,400 for individual filers in 2020, you need more write-offs to justify itemizing your deductions. (2)

A DAF is ideal for when you earn or receive a sizable amount of money in one year. When you contribute to the fund, you can take an immediate tax credit for that lump sum of money and disperse that amount over any length of time to charities of your choice.

You just have to make sure that your cash donations are no more than 60% of your adjusted gross income. That is the maximum you can write off in one year. (3)

However, you could also use these funds to your advantage every few years without a lump sum of money. Here’s a scenario where you could receive more than $114,400 in deductions over 4 years:

You save $10,000 each year for 3 years and claim standard deductions for those years. In the fourth year, you contribute that $30,000 plus your annual $10,000 savings into a DAF. Now you have $40,000 that you can claim as itemized deductions in one year. 

By doing this, you receive a tax credit of $15,200 more than you would have if you claimed a standard deduction each year and were donating the same amount of money. This keeps more cash in your pocket and sends more money to causes you already give to or want to give to. 

Save On Capital Gains

Do you have a lump sum of appreciated publicly traded securities? The most common publicly traded securities donated are stocks, bonds, and mutual funds that have grown in value since you invested in them. (4) Donating part or all of these funds can reduce or eliminate the amount you pay in capital gains tax, which can also apply to real estate gains. 

Contributing noncash assets to a DAF makes sending money to charities simple and takes care of worrying about capital gains tax, all while that money grows tax-free.

Keep in mind that the annual deduction limit for securities and other appreciated assets is 30% of your adjusted gross income. (5)

Easily Keep Records

Maintaining records of your contributions is a huge plus when it comes time to file your taxes. DAF providers keep track of your contributions and provide you a single tax document you can give to your accountant, which takes the pressure off you to maintain those records.

There are many charities you can donate to that are not qualified charitable donations, but putting money into a DAF guarantees your donations go to a registered 501(c)3 non-profit organization.

Since DAFs can include actively managed funds and they take care of all the records and transfers, there could be administrative and investment fees associated with starting a DAF. Schwab and Fidelity (two of the three largest providers of donor-advised accounts) charge whichever is greater, 0.60 percent of assets or $100. (6)

Are You Ready To Save Money With A Donor-Advised Fund?

Using a DAF for your philanthropy is such an understated path to giving and saving at the same time. What was mentioned above are only a handful of ways you can take advantage of tax deductions and maximize the impact your charitable contributions have on worthy causes.

Let’s see if a donor-advised fund can help you save on taxes and is also a good fit for your financial plan. Give me a call at 949-445-1465 or email me at jgilbert@balboawealth.com.

About Jeff

Jeff Gilbert is the founder and CEO of Balboa Wealth Partners, a holistic financial management firm dedicated to providing clients guidance today for tomorrow’s success. With nearly three decades of industry experience, he has worked as both an advisor and executive-level manager, partnering with and serving a diverse range of clients. Specializing in serving high- and ultra-high-net-worth families, Jeff aims to help clients achieve their short-term and long-term goals, worry less about their finances, and focus more on their life’s passions. Based in Orange County, Jeff works with clients throughout Southern California as well as Arizona, Oregon, and Washington. To learn more, connect with Jeff on LinkedIn or email jgilbert@balboawealth.com. 

Advisory services provided by Balboa Wealth Partners, Inc., an Investment Advisor registered with the SEC. Advisory services are only offered to clients or prospective clients where Balboa Wealth Partners and its Investment Advisor Representatives are properly licensed or exempt from registration.

Securities offered through Chalice Capital Partners, LLC, member FINRA, SIPC.

Balboa offers advisory services independent of Chalice. Neither firm is affiliated.

___________

(1) https://www.vanguardcharitable.org/giving-with-vc/how-it-works

(2) https://www.investopedia.com/everything-to-know-about-individual-2020-taxes-4775907

(3) https://www.aefonline.org/tax-benefits

(4) https://www.schwabcharitable.org/public/charitable/features/non_cash_contribution_options/appreciated-public-traded-securities.html

(5) https://www.aefonline.org/tax-benefits

(6) https://www.reuters.com/article/us-donor-advised-idUSBRE95K0YT20130621

What Should You Do About The Coronavirus And Stock Market Volatility?

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The financial markets took a big dip early this week over fears about the spreading coronavirus, erasing gains from earlier this year. After the Dow lost over 800 points on Tuesday, it was down a total of 1,900 points in two days. 

Investors are understandably nervous about their money and their health. If you are worried about your portfolio, you’re not alone. But during stock market volatility, it’s important to keep a level head to avoid financial mistakes.

Stay Calm

At times like these, it’s important to put current conditions into perspective. This is not the first time the market has taken a tumble and it won’t be the last. Declines in the Dow Jones Industrial Average are actually fairly regular events. In fact, drops of 10% or more happen about once a year on average.

Keep An Eye On The Situation

We simply do not have enough information yet to know how the coronavirus will impact the economy in the short and long term. It’s possible that the virus will soon be well-contained and the markets will recover. But it is also possible that the virus will spread and impact global markets, which would lead to a full correction or even a longer-term recession. 

It’s important to remember that markets dislike uncertainty. With so much uncertainty over how fast the virus could spread and the potential impacts, volatility right now is extreme. As we get more information, it is likely that day-to-day market fluctuations will decrease. 

Play Dead

There’s an old saying that the best thing to do when you meet a bear market is the same as if you were to meet a bear in the woods: play dead. While easier said than done, successful long-term investors know that it’s important to stay calm during a market correction. We don’t know yet whether the coronavirus fears will translate into an official correction, but the risk always exists.

Market volatility has increased in recent years and the media can often make it seem like each episode is worse than the one before. In reality, volatility does not hurt investors, but selling when the market is down will lock in losses.

Remember That Your Portfolio is Diversified

We understand that volatility and market declines are stressful. However, we encourage you to keep in mind that while the stock market may be down significantly, your portfolio is made up of both stocks, bonds, and other assets that are designed to work together to decrease overall losses. It’s important to consider your specific portfolio, investment horizon, and circumstances when reflecting on economic events. If you have questions about your portfolio, get in touch with our office.

Review Your 401(k) and Other Accounts

Now is a good time to take a look at all of your investment accounts, including your 401(k) to make sure it is well-diversified. If you have not reviewed the investment accounts that we do not manage, get in touch with our office and we’ll take a look and offer recommendations to minimize potential losses.

Speak With Your Advisor

Whether you’re new to investing or an experienced investor, it’s helpful to consult with an objective third party. Human nature causes us all to act out of emotion when our accounts go down. As an independent firm, we put your best interests first. We seek to serve as a support system for our clients, helping them make informed financial decisions that aren’t driven solely by emotion. 

We’re Here for Your Friends and Family

If you have friends or family who need help with their investments, we are happy to offer a complimentary portfolio review and recommendations. We can discuss what is appropriate for their immediate needs and long-term objectives. Sometimes, simply speaking with a financial advisor may help investors feel more confident and less concerned with the day-to-day market activity.

5 Ways To Prepare For A More Affordable Retirement

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By Jeff Gilbert

Retirement is expensive. That’s one thing everyone can agree on. But what if there were steps you could take now to actively reduce the amount of money you’ll need later on? That’s exactly what we’ll talk about today. Ready? Here are 5 ways to prepare for a more affordable retirement. 

1. Pay Off Your Mortgage

Your mortgage is arguably your largest recurring expense in retirement. Getting rid of this payment before you enter your golden years can significantly reduce the amount of money you need each month. 

Start by calculating how much extra money you could throw toward your principal. Could you make one extra payment every few months? What about one extra payment a year? 

If there’s not a lot of wiggle room in your monthly budget, consider cutting down on discretionary expenses. Or earmark any extra money you get from bonuses or tax refunds for your mortgage. Every little bit counts.

2. Downsize Or Relocate

If you’re still living in the same house where you raised your family, there’s a good chance you don’t need all that space in retirement. Downsizing may seem extreme, but it’s a quick way to reduce your long-term retirement costs, lower utility bills, and pay off debt. Plus, a one-story house with a smaller yard may be easier to keep up with as you age. 

If you’re not tied down to your current city, take it a step further by relocating to an area with a lower cost of living. You might be surprised by how much further you can stretch your retirement dollars. For example, a $1 million nest egg lasts around 13 years in California, but 23 years in Mississippi. (1)

3. Travel During The Off-Season

Ask 50 people what they plan on doing in retirement, and I’m sure most of them will say travel. Whether it’s traveling across the country to visit the grandkids or traveling around the world to visit the Eiffel Tower, it’s on everyone’s list—and for good reason. After working 30+ years, you deserve to go to all those places on your bucket list. 

But if you want to stretch your travel budget even further, consider traveling during the off-season. It has many perks. Not only are airlines, hotels, and activities cheaper, but you beat the crowds too! Plus, you have extra money left over to jump-start your next trip. Sounds nice, right? 

4. Consider Long-Term Care Insurance

It’s estimated that nearly 70% of people turning 65 today will need some type of long-term care during retirement. (2) This could be anything from a home health aide (which costs an estimated $4,290 a month) or a private room in a nursing home (which costs an estimated $8,517 a month). (3) Unfortunately, these outrageous costs often result in financial plan failures for 32% of households with a $1 million net worth. (4)

So, what do you do? We recommend buying a long-term care insurance policy. While Medicare covers costs for acute illnesses, long-term care insurance fills in the gap by covering personal costs for health home aides, assisted living facilities, nursing homes, and more. 

Studies show we’ll all have long-term care expenses at some point. Insurance helps preserve your nest egg and fill in the gaps where Medicare falls short.

5. Delay Social Security

The average life expectancy is 84.3 for men and 86.6 for women. If your health and family history indicates that you may live this long (or longer), delaying Social Security until age 70 could earn you thousands of more dollars in retirement.   

For example, the chart below shows how much your monthly Social Security payout would be if your estimated payment was $2,000 at full retirement age and you claimed benefits at age 62, 66, and 70.* 

If you start collecting benefits at this age… your monthly payout will be this much…
62 (reduced benefits) $1,500
66 (full benefits) $2,000
70 (increased benefits) $2,640

*Assuming a full retirement age of 66

According to this example, you earn $1,140 more a month if you wait to claim benefits at age 70 instead of 62.  

How We Help You Prepare For A Secure Retirement

As you can see, there are many ways to prepare for a more affordable retirement. We hope that you’re able to implement some of these strategies today, so you can live out your retirement dreams later on. 

At Balboa Wealth Partners, we’re passionate about helping you live your ideal retirement life. If you’d like to chat with a financial professional about your current situation, we invite you to schedule a no-obligation conversation today. During this meeting, we review your current retirement plan, answer any questions you may have, and help you create a financial road map that leads to success. To get started, give me a call at 949-445-1465 or email me at jgilbert@balboawealth.com.

About Jeff

Jeff Gilbert is the founder and CEO of Balboa Wealth Partners, a holistic financial management firm dedicated to providing clients guidance today for tomorrow’s success. With nearly three decades of industry experience, he has worked as both an advisor and executive-level manager, partnering with and serving a diverse range of clients. Specializing in serving high- and ultra-high-net-worth families, Jeff aims to help clients achieve their short-term and long-term goals, worry less about their finances, and focus more on their life’s passions. Based in Orange County, Jeff works with clients throughout Southern California as well as Arizona, Oregon, and Washington. To learn more, connect with Jeff on LinkedIn or email jgilbert@balboawealth.com. 

Advisory services provided by Balboa Wealth Partners, Inc., an Investment Advisor registered with the SEC. Advisory services are only offered to clients or prospective clients where Balboa Wealth Partners and its Investment Advisor Representatives are properly licensed or exempt from registration.

Securities offered through Chalice Capital Partners, LLC, member FINRA, SIPC.

Balboa offers advisory services independent of Chalice. Neither firm is affiliated.

___________

(1) https://finance.yahoo.com/news/long-1-million-retirement-last-090000023.html

(2) https://longtermcare.acl.gov/the-basics/how-much-care-will-you-need.html

(3) https://www.genworth.com/aging-and-you/finances/cost-of-care.html

(4) https://www.businessinsider.com/10-things-to-know-about-long-term-care-2016-9