Mark Zaifman's thoughts on Money, Global Economic Trends and Politics

Beware of 'IRA Rollover Specialists' Masquerading as Financial Advisors

Posted by Mark Zaifman on Fri, May 15, 2015 @ 06:33 PM


False Promises, Dashed Dreams

A couple weeks ago, a client in Oakland emailed me an article from Money Magazine titled: 4 Disastrous Retirement Mistakes and How to Avoid Them.

The premise of this must read article for anyone getting close to retirement and wanting to rollover their IRA is to see past the hype being touting by many a financial salesperson masquerading as an advisor, but really only concerned with their commission payout and not your financial wellness and security.

My client who sent the article expressed her outrage and disbelief that this practice is so widespread. She asked if I would highlight this topic in my next blog post. Oh yes I will, gladly, was my response.

So with that said, below you’ll find some excerpts/highlights from this well written and informative article. Please pass it on to anyone you know that may be vulnerable to these slick sales pitches.


“Lured by a promise of higher earnings or guaranteed returns, you could roll your money into an investment that’s far more expensive than what you already own. Financial advisers gunning for IRA rollover dollars like to pitch variable annuities insurance products that allow you to invest in stock and bond funds, tax-deferred, and later convert your balance into regular income.

The drawback is the high fees you’ll pay every year for a VA—typically 2.4% of your assets for investment management and extras like income guarantees, according to Morning­star. But the more serious trouble comes when an adviser won’t stop at one, exposing you to large penalties”


“Another pitch is the tantalizing prospect of early retirement. The danger is that it’s based on sloppy or misleading math, says ­Gerri Walsh, head of investor education at FINRA.

Verizon retiree Cindy Rog­ers says her adviser told her that her annuity would produce ample income to cover her expenses, while the principal would last her lifetime, according to her FINRA complaint. But Rogers’ $3,700 monthly payouts mean she’s withdrawing 8% a year—twice what’s typically suggested for a retiree who’s 65, let alone 49. Including fees, she’s depleting her savings at a rate of 11% a year. Plus, Rogers owes an estimated $9,000 in tax penalties.”


“Chasing high returns can get you in trouble. Rolling money into what’s known as a self-directed IRA so that you can shoot for the stars is especially perilous. The SEC estimates that in 2011 investors had $94 billion in this type of IRA, which lets you invest in pretty much anything, from real estate to tax liens.

Last year the state securities regulators association warned that because self-directed IRAs can hold exotic assets, which IRA administrators don’t generally vet, the accounts leave you vulnerable to risky pitches.

In a video of a 2013 sales presentation, Curtis De­Young, founder of American Pension Services, a Utah-based retirement plan administrator, promised retirees the freedom to “take control of your own destiny” with a self-directed IRA. At the end of 2013 his nearly 5,500 clients had IRA accounts worth $352 million. But a lawsuit filed in April by the SEC claims that ­De­Young steered $22 million in clients’ money into now worthless real estate investments and loans to friends. A lawyer for De­Young told MONEY that the retirees chose the investments; the firm was merely an administrator.”


Increase Your Financial Literacy

One of the best ways to guard against getting ripped off is to increase your financial literacy. Knowledge is power and the more knowledge you have around your money, the more self-confident you’ll feel about the many financial decisions you’ll need to make as you approach retirement.

Don’t let the title turn you off because Personal Finance for Dummies, written by Eric Tyson of Nolo Press fame, is one of the best money books out there. It will teach you just enough to be dangerous.

Also, if you decide to seek guidance from a financial advisor, my recommendation is to work with a fee-only advisor that works in a fiduciary capacity. The simple truth is that advisors working in a fiduciary capacity are legally obligated to provide advice that is in your best interest, not the other way around.

Retirement planning in the 21st century demands a more efficient and effective approach that is transparent, accountable and open to new ideas and strategies. At age 75 and 10 years into retirement for example, there are no do-overs in regards to the financial decisions you made ten years ago.

That’s why financially speaking, getting it right the first time and finding an advisor that you can trust is how in retirement -  peace of mind is yours for the asking.


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Photo credit by James O'Gorman

Tags: book recommendation, fee-only financial planning, fiduciary, registered investment advisor

Is Your Financial Road Map Outdated?

Posted by Mark Zaifman on Thu, Apr 30, 2015 @ 05:25 PM


When was the last time you reevaluated your personal financial goals? Did you set initial goals when you were in your 20’s and haven’t looked back since?

So many new clients I meet are operating from outdated financial road maps. Even though their lives may have changed drastically over the years, their financial goals have remained static, stuck in time and in major need of an overhaul.

Just like maps become outdated, so do financial goals. Many times, what our financial goals look like when we’re young bears no resemblance to what we desire as we live life, get knocked around a bit and gain further awareness of our wants and needs.

Whose road map is it anyway?

Often times, we set financial goals without much insight into what’s driving the goals we’re establishing for ourselves. Often times, it’s the ‘back story’ that usually informs these decisions.

For example, say you grew up in a family where making money, a lot of money, was prized and reinforced into your psyche. Quantity vs. quality of life approach to your money or your life.

Perhaps your Dad or Mom or both were very ambitious and self-motivated. Growing up, you watched them achieve financial success. Let’s say they were very driven in their careers and sacrificed much to reach a certain level of financial status and power.

You graduate from college, spend the first 10 years or so figuring out what you want to do with your life and by your early 30’s, you’ve landed. Your career looks very promising and you’re happy. Now it comes time to start saving money and setting financial goals.

It’s at this point in your life where your relationship with money or lack thereof truly matters. Maybe you will follow the path your parent’s role modeled for you, maybe not. Regardless of the path you choose and the financial goals you establish, what’s most important is that your goals represent you and your vision.

Being conscious of your choices around earning, spending, saving and investing requires you to be mindful of your past money history and the assumptions and financial baggage you may still be carrying around unconsciously that heavily influence and impact your life today.

Many new clients I meet have been operating on auto-pilot in terms of their financial goals for most of their lives. The default position for many of us is to follow exactly what and how our parents dealt with their finances. For some this works fine. For most though, not so much.

Striving But Never Arriving

Another crucial aspect of reevaluating and or updating your financial road map is to make sure your goals are realistic given where you are right now, financially speaking. Very often, new clients I meet have set very unrealistic goals for themselves. Often times this leads to taking unnecessary and sometimes reckless investment choices.

Are your financial goals attainable? Do you have a viable chance of reaching the goals you set? Or do you constantly beat yourself up for not reaching your goals, only to take ever more risk with your money and striving yet never quite arriving.

Or are you someone that keeps moving the ‘goal posts’ on the road to financial independence farther and farther out of reach, with the result that you sabotage your chances of achieving financial success and most importantly, peace of mind around your personal finances.

It’s never too soon or too late to reevaluate your financial road map, so as the Nike saying goes, just do it!

Photo credit Patrick Barry

Tags: financial success, financial planning, relationship with money, financial goals

Are You Playing Chess or Checkers With Your Money and Financial Future?

Posted by Mark Zaifman on Fri, Mar 20, 2015 @ 11:29 AM

If you’re a boomer, perhaps you’ll remember Hasbro’s famous “The Game of LIFE”? The Game of Life challenges players to manage their money and get to retirement wealthy. Different spaces on the game board offer life challenges like babies, houses, night school, you name it. Spin to win!

Like with any game you play, besides having fun, ultimately, you also would prefer to win the game. So in that spirit, as you think about the way you manage your money and plan for the future, stop and ask yourself; are you playing checkers or chess and are you playing to win?

If you’re a Spiritus client, the answer is a given. You play to win and you think and act strategically. You know where you’re going and you have a dynamic financial road map that illustrates how you’re going to get there, move by move. Checkmate for you is about achieving financial independence on your terms, on your schedule and just as you planned.

Below are what I think are a dozen major differences between these two types of money management styles. How do you stack up? And wouldn’t you rather be a playing chess than checkers when it comes to your money and your life?


I could probably list another dozen or two differences, but you get the point. At the end of the day, what often determines whether you wind up with an ‘ocean view; retirement or a ‘garden view’ retirement is how well you planned. As the saying goes, fail to plan, plan to fail. That’s truer than ever.

Planning is not easy. It requires lots of thought, tapping into your imagination, trusting your intuition, visualizing your future, and that’s just for starters. Procrastination, inertia kicks in, life gets busy, demands at work pile up, and next thing you know, guess what, you’re 50 years old. What happened?

Show me anyone that reached financial success in life, especially if early in life and you can be pretty assured that person had a plan and played the game of life as a chess player.

Now it’s your turn to play. And this time, play like a master, plot your moves strategically, look over the horizon, course correct when needed and most importantly, have fun and play to win.


Checkers photo credit Phillip Taylor

Chess photo credit Tristan Martin 

The Possible End of College-How to Prepare Financially For an Unknown Future

Posted by Mark Zaifman on Wed, Mar 04, 2015 @ 12:46 PM


Kevin Carey, author of the new book, The End of College: Creating the Future of Learning and the University of Everywhere is a must-read for any parents of young children that hope and plan to send their kids to college.

Terry Gross, host of NPR’s Fresh Air just had Kevin Carey on her show and the interview she conducted was fascinating on many levels.

If you’re unsure how you’re going to save enough by the time your kids are ready to enroll in college and or how much too actually save, then it’s even more important you listen to this interview and check this very interesting book out of your local library and inform yourself further.

There’s no question that making sure your kids have the best opportunity to succeed in the future is a major priority for parents. The most often asked questions that comes up over and over again when developing comprehensive financial plans for young parents regarding this subject are:

 What will the future of education look like 15 years from now?

What will a 4-year college degree cost 15 years from now?

Should we put all our college savings into a 529 plan?

What happens if we fully fund a 529 plan over 15 years and our son/daughter decides not to attend college?

How will our income and investments impact our ability to receive financial aid?

Should we consider using student loans or saving enough to avoid any borrowing?

What are the best 529 plans currently available?

As if these questions are not challenging enough for parents to figure out, adding to this conundrum of what to do is Carey’s new book which challenges the entire assumption of what college will look like in the future. Here are a few excerpts from his book:

“A lot of parents start worrying about paying for college education soon after their child is born. After that, there's the stressful process of applying to colleges, and then, for those lucky enough to get admitted into a good college, there's college debt.”

“But author Kevin Carey argues that those problems might be overcome in the future with online higher education. Carey directs the Education Policy Program at the New America Foundation. In his new book, The End of College: Creating the Future of Learning and the University of Everywhere, Carey envisions a future in which "the idea of 'admission' to college will become an anachronism, because the University of Everywhere will be open to everyone" and "educational resources that have been scarce and expensive for centuries will be abundant and free."

"If only the rich can afford to go to the 'good colleges,' then we don't have a system of opportunity; we have a system of replicating privilege that already exists."

So does this book make the decisions parents face right now any easier when deciding the best course of action for their kid’s college education? Nope.

Yet two things are for sure. One, we have no idea what the concept of college education will look like 15-20 years from now. And two, the global economy will be even more hyper competitive in the future than it is right now. Maintaining a high quality of life will be that much harder.

All that said, if nothing else, this book will generate lots and lots of discussions around the kitchen and financial planning tables, that’s a given.

Carey does not claim to have a crystal ball that could predict the future. But he has done tons of research and devoted much time to pondering the future of college education. That research and higher education trends he sites alone make this book a great investment of your time.

Vanguard's John Bogle on including International Stocks in Your Portfolio

Posted by Mark Zaifman on Thu, Feb 05, 2015 @ 12:07 PM


Should you include international stocks in your investment portfolio? If yes, how much? If no, why not?

John Bogle spoke to this question when he was recently interviewed on CNBC. Thanks to my client Jim T. on the east coast for sending me the link to the video and suggesting I post to my blog.

Be wary of stocks outside the US: Bogle

Sharing his overall market view during the interview, Bogle recommended not to exceed 20% in non-U.S. securities if you must invest internationally. Interesting that he uses the phrase if you must. Obviously, he’s not a big fan of going abroad when investing.

Here at Spiritus, we use Ibbotson asset allocation models when constructing investment portfolios for our investment management clients With Ibbotson long considered the ‘gold-standard’ of asset allocation models, of course it made me curious to see how our portfolios compared to Bogle’s recommended 20% max international securities exposure.

For our 60/40 model, the most widely used at our firm (60% allocation to equities-40% allocation to bonds) we have a 17% allocation to international securities. So we’re within Bogle’s international comfort zone, aka- the Bogle sweet spot.

That said, our most aggressive Ibbotson model, which has a 95% allocation to equities and 5% allocation to bonds does exceed a 20% allocation to international securities. So definitely some food for thought here….

Key Takeaways per John Bogle

“Stick with U.S. securities. You don’t need to do international investing because the U.S. is an international economy. Because you earn your money in dollars - you save your money in dollars, you invest your money in dollars - you retire and receive your social security or pension in dollars, avoid the currency risk when you invest internationally.”

It is worth mentioning that many international funds do provide hedges against currency risk, but for most investors, that’s too confusing to sort out and often hard to figure out the mechanics behind the hedging strategy. So point taken, Mr. Bogle.

Next time you receive your investment statement, check out the total amount of your money that’s invested in international securities. See how that stacks up to Bogle’s recommended 20% max allocation to this asset class.

Are you over, under or sitting pretty in the Bogle sweet spot?

Tags: investing, stock market, John Bogle

Why Waiting for the Perfect Time to Develop a Financial Plan is Risky Business

Posted by Mark Zaifman on Thu, Jan 15, 2015 @ 03:37 PM


clocksHave you ever said to yourself, when X happens, I’ll do Y? In other words, you’re waiting for the stars to align in your favor and then you’ll decide to do what you’ve been putting off for a long time?

In terms of financial planning, my sense is that too many people are waiting for the ‘perfect’ time to develop a comprehensive financial plan instead of moving forward when life although not perfect, is pretty darn good. Yet I would suggest that waiting for the perfect time is not only a risky decision to make, it could also end up costing you big time over the long run.

Take for example the recent stock market crash in 2009. Lots and lots of investors were so spooked that they went 100% into cash. Many said to themselves, once things seem and feel better, I’ll get back into the market. Many investors, more than you can imagine, are still waiting for the ‘perfect’ time to get back into the market.

And what’s happened since the Dow hit a low of approximately 6600 in March of 2009? The stock market has nearly tripled in value since then. Was it considered risky to put your nest egg into cash back then? No way, that seemed like a smart and prudent move, right? But how much have you lost by keeping your money in cash and waiting for the perfect time to get back in? A lot!

Letting Perfect Be the Enemy of Good

Waiting for external circumstances to change before you do what’s needed is placing yourself in the weakest position possible. Why? Because in essence, you’re giving your power away to something you have zero control over.

Here are a few of the most common reasons people put off developing a financial plan. Some reasons you do have control over, others, not so much.

- I’m waiting for the stock market to dip to some magical number

- I’m waiting for the economy to get better

- I’m waiting until I have a new better paying job

- I’m waiting for the right person to come along

- I’m waiting until I have x amount saved up

- I’m waiting until my credit cards are paid off

- I’m waiting until I receive my inheritance

- I’m waiting until my kids are in college

- I’m waiting until my mortgage is paid off

-I’m waiting until my investments come back up in value

I could probably add another 10 reasons at least as to why you can convince yourself that waiting for something to happened, whether you can control the outcome or not, will stop you in your tracks in terms of moving forward on your to-do list, on something you already know is vital to your long-term financial wellness, not to mention your peace of mind.

Remember, whatever happens out in the world, you have the ability and capacity to control your destiny. You are in charge. We are given the gift of imagination, how wonderful is that? Now use that imagination, dare greatly and realize that you and you alone are the director of this movie called ‘Your Life”. Stop waiting for the perfect time and realize right now, right this moment, is the perfect time to take control of your life and get your financial house in order once and for all.

And always keep in mind, as the saying goes: You can’t control the wind, but you have the unique power to adjust your sails. Happy sailing…

CLICK HERE for more Financial Planning Q & A

Photo credit Francisco Gonzalez


Tags: financial planning, stock market

Worst Performance for Stock Pickers in 10 Years?

Posted by Mark Zaifman on Tue, Dec 09, 2014 @ 09:34 AM


When it comes to choosing a financial advisor to manage your investments, your choice will usually boil down to A) an advisor that falls more on the passive end of the investment spectrum or B) an advisor that follows a more active approach and is considered a stock-picker or market timer.

Of course, there are other very important considerations as well when making this decision such as:

  • Does your advisor work on a fee-only basis?  (we do)
  • Does your advisor avoid any conflicts of interests by intentionally and proudly choosing to be an advocate for their clients best interests by working in a fiduciary capacity?  (we do)
  • Does your advisor provide full transparency around their management fee and send a quarterly investment performance report that is understandable and simple to read and figure out?  (we do)
  • Does your advisor focus on tax efficiency when constructing and managing your portfolio?  (we do)

When I read about the poor showing of active stock-pickers in the recent Wall Street Journal article,  was there some schadenfreude on my end? Yes indeed. Let me explain.

At institutional investor and financial planning association conferences held around the country, attendees will usually feel like you’re on one team or the other. There are the advisors that choose to use a passive approach to investing by utilizing index funds and ETF’s that replicate market indexes, like the S&P 500 Index Fund for example.

And then there’s the other team that usually has a bit of swagger as they strut their stuff around the conference. This team believes that they can beat the market and indexes by actively choosing which stocks to buy.

And in the small middle, are hybrid advisors that use a little of both styles.

The “actives” vs. the “passives”; deciding which is a better strategy to employ for your clients - that debate has been raging for decades and I assume will continue on for decades to come. The actives believe we passives are missing great opportunities to beat the market.

Many in the active camp think what we do and how we do it is about as much fun as watching paint dry. And many of us in the passive camp think attempting to beat the market by superior stock picking or market timing is a fool’s errand meant to enrich the advisor that works on commission at the expense of the client.

The actives hold the legendary Peter Lynch that ran the Magellan Fund at Fidelity from 1977-1990 and averaged a 29% return as their standard bearer. We passives hold up luminaries like John Bogle, the founder of Vanguard and Warren Buffet as our icons.

The Proof is in the Pudding

“According to Lipper, around 85% of active large cap stock funds have lagged their yardsticks this year and it's their worst showing in three decades. If professional stock pickers are collectively this bad during a good stock market, how bad are they during a bad market?”

“Never mind how the S&P 500 is about to record its fifth consecutive yearly gain and ninth gain out of the past 10 years. Even with the wind in their sails, professional stock pickers still can't beat market indexes or the ETFs tracking them.”

Both of these quoted paragraphs above came from another recent article published by Seeking Alpha, the very popular personal finance site for active stock pickers.

Does this mean that deploying a passive investment strategy will always beat an active approach?

No way.

But for example, when usually only 3-4 actively managed mutual funds out of 10 beat their passively managed counterparts, why take the risk of thinking you’ll know which 3-4 actively managed funds will be the winners?

Instead of Seeking Alpha, Seek Value

When we talk to clients about our value proposition, it’s in a few areas where we have a lot of control-risk, managing costs and taxes and disciplined rebalancing. For many of our clients, taxes may be their largest expense and the changes to the tax code that took effect in 2013 makes our focus on tax efficiency even more valuable.

We have a lot of control over the tax efficiency of the portfolio just by implementing relatively simple strategies such as asset location (putting the right assets in the right accounts), managing the turnover of the portfolio, tax-loss harvesting, planning the timing of capital gains recognition or distributions from tax deferred accounts and gifting appreciated securities.

In terms of managing portfolio costs, as the saying goes, markets are unpredictable but costs are forever. The lower your costs, the greater your share of an investment’s return. Minimizing costs is a core principle of our investment management process. That’s because with investing, there is no reason to assume that you get more if you pay more.

Instead, every dollar paid for fund management fees or trading commissions is simply a dollar less earning potential return. The key point is that-unlike the markets-costs are largely controllable.

Indexing Can Help Minimize Costs

If—all things being equal—low costs are associated with better performance, then costs should play a large role in the choice of investments. Index funds and indexed exchange-traded funds (ETFs) tend to have costs among the lowest in the mutual fund industry.

As a result, indexed investment strategies can actually give investors the opportunity to outperform higher-cost active managers—even though an index fund simply seeks to track a market benchmark, not to exceed it. Although some actively managed funds have low costs, as a group they tend to have higher expenses. This is because of the research required to select securities for purchase and the generally higher portfolio turnover associated with trying to beat a benchmark.

Still not convinced passive investing vs. active investing is the smart and winning way to go, then check out Vanguard's 5 Myths and Misconceptions About Indexing, and my guess, sooner rather than later, you’ll be on our team.


Click here to learn more about becoming a long-term investor  

Image credit - Amanda Atkin

Fifty Shades of Financial Independence

Posted by Mark Zaifman on Fri, Nov 21, 2014 @ 03:01 PM


When you think about financial independence (FI), what comes to mind? What do you imagine your life would look like if working for money was purely optional?

This is a question that many of my clients have pondered deeply and thoughtfully and continue to evaluate and review. Not needing to work for money and wondering what to do with your life once you’re FI is, as they say, a ‘gold plated’ problem we should all be fortunate enough to have.

But with so many possibilities, so many shades of financial independence to explore and discover, such a new dynamic and reality to accept and embrace - the choice of how you design your life plan truly matters. And it matters just as much whether you reach FI in your 40’s, 50’s, 60’s or 70’s.

Whether you earned, saved, lived within or below your means and invested well on the road to financial independence OR you received a windfall from real estate appreciation like many of my Bay Area clients are experiencing, especially those living in Berkeley or Silicon Valley OR you inherited your FI, the road ahead remains full of exciting possibilities. So which path do you choose? What now becomes your life purpose, your dharma?


Inspired Retirement Planning - Reimagined!

Throughout history, the word retirement has been synonymous with “not working”. Whether it’s the traditional view of retirement - a life of leisure, filled with golf and vacation and walks on the beach or the more actual historic context  - as a mechanism to “force” people out of work they were no longer capable of doing (typically manual labor), retirement has always been about the end of work.

A growing base of research is finding that stopping work completely and trying to live a life of leisure does not actually create the happiness that we might have expected. To some extent, this appears to be one of the downsides of our adaptability as human beings; leisure as an occasional break from work is appealing, but a full time life of leisure can become boring once the novelty wears off.

For others, the problem is not simply that the leisure life feels less rewarding over time, but because being productively engaged in work actually brings about the meaning and purpose in life that fuels our positive well-being (not to mention that for many, our work environment is also a source of interaction with others that fuels our social well-being, too).

For many retirees, this phenomenon is leading to the rise of part-time work in retirement – a confusing and implicitly self-contradictory concept for many– and for others it’s driving them to adopt an entirely new “encore career”. The primary distinction for most of these “post-retirement jobs”, though, is that the purpose of the work is not for money and income; the purpose of the work is for purpose in life, whether that’s about engaging in meaningful work, leaving a legacy, impacting the world, or simply maintaining social ties.

Yet the challenge is that for so many retirees, what started out as a phenomenon to get older workers out of the way and into what would be a relative short “retirement” transition has now become an entire phase of life unto itself. And because “retirement” (and its non-work connotations) has been put forth as the ultimate goal at the end of a working career, retirees often transition into a full non-working retirement and then find themselves unhappy and unfilled after a few months or years. Which means that perhaps it’s time to rename retirement?

What’s the alternative in this case? Consider re-characterizing “retirement” as “financial independence” instead. The point of FI is simply to recognize that, once sufficient assets are accumulated, the decision about whether, where, and how much to work, can be made independent of the financial aspects of the work itself.

In other words, being FI is about being independent from the need to work, which then opens the door to more productive conversations about whether we want to work, and what meaningful work might be. For many of my clients the conversation of “what would you do, work or otherwise, if money was no object?” can be a remarkably freeing conversation, and lead to entirely new and productive avenues to explore.

So maybe it’s time to rename the concept and goal of retirement altogether, and to recognize that “financial independence” from the need to work for money is the real goal of saving and investing. So instead of labeling it “retirement planning”, how about we rename it “financial independence planning”.


Here’s the bottom line. For the majority of us baby boomers, this is not going to be your father’s or mother’s retirement scenario. We’re disrupting the entire concept of ‘retirement’, finding new ways to repurpose our lives and inspiring others to reimagine what their lives could look like when achieving financial independence. If not now, when?

Discover Inspired Retirement Planning

Tags: life transitions, retirement planning, financial independence

5 Reasons Stock Market Volatility Makes You a Smart Long-Term Investor

Posted by Mark Zaifman on Mon, Oct 20, 2014 @ 05:57 PM

investment planning strategy ma

If recent stock market volatility has you wanting to hide under the covers, you’re not alone. The 2009 stock market crash was a traumatic experience for investors as many watched their life savings plummet dramatically in a relatively short period of time.

And now, with the recent volatility, memories of those scary days still haunt many an investor that rightfully so, remains traumatized from that roller coaster ride from hell back in 2009. The thought that runs through many a mind in times of high volatility and high anxiety like we’re currently experiencing; is this going to be a repeat of 2009?

Since no one truly knows what the future holds, allow me to take a contrarian view and present five reasons why the recent stock market gyrations are a good thing and why a registered investment adviser like myself embraces the volatility and sees it as a healthy sign for markets instead of doom and gloom.

1. Opportunity or Crisis?

Emotions play a crucial role in your investment success. Behavioral finance has become a very hot topic as scholars attempt to understand what drives investors to sabotage their success and often make financial decisions that cause serious damage to their financial security.

And what’s the most destructive emotion when it comes to being an investor: FEAR! Fear will activate the fight or flight portion of your brain and once that kicks in, rational decision making gets thrown out the window.

So instead of letting fear emotionally hijack you, use this current volatility as a learning opportunity and not a crisis. If you’ve made reactive financial decisions in the past out of fear, now’s the perfect time to look inside of yourself and say enough is enough. I will no longer let fear rule my life and especially my financial decisions. Use this teachable moment as a reason to do some inner work on yourself and I promise it will be one of the best investments you’ll ever make.

2. Dollar Cost Averaging

If you contribute to a 401k or 403b on a regular basis, you are essentially dollar-cost averaging throughout the year. Some months your contributions will be invested when the markets are high, some months when it’s low, and right now, when it’s really low. That’s the beauty and simplicity of this investment strategy.

So reason number two as to why you should love this recent volatility; thanks to the recent pullback, the stock market is having a 10% off sale and you’re invited. The same funds you have been contributing to all year long are now in many cases 10-15% off their ‘original’ price. And who doesn’t love a bargain?

3. Are You Taking Too Much Risk?

Three weeks of decline in the stock market have broken the almost unprecedented calm that had enveloped markets for most of 2014. It’s been three years since the S&P 500 has posted a decline exceeding 10 percent over any period of days. So it sounds odd, but this downturn, in my opinion, is just what the markets needed. Let some excess out now so markets can head back up later.

Now’s the perfect time to take a pulse of your risk tolerance as well as risk capacity. First, have you been able to weather the recent volatility without feeling the need to make any changes to your investment strategy? And if the market were to drop another 10%, do you have the capacity to withstand that drop or will it cause you to have to make any drastic lifestyle changes you weren’t anticipating?

Now’s the time for an honest self-evaluation of the risk you’re taking and adjusting your portfolio accordingly if needed.

4. Margin Calls

There’s a reason most hedge funds have taken it on the chin with the latest market downturn and are down around 16% for the year. Most hedge funds are highly leveraged, meaning they borrow large sums of money to wager in the markets.

The same is true recently for many investors as margin loans have been going through the roof this year. Why? Because when markets stay calm for too long, it seems like a piece of cake to make money. So why not borrow even more money and double down or maybe triple down on the market and you’ll look like a genius, right?

Well now the inevitable has happened to loads of investors and that’s the dreaded margin call. Either put more cash in your account by tomorrow, the broker says to his client, or we’ll need to liquidate your holdings Mr. Jones, and have a good day.

Draining some of the excess speculation that has grown way too high for my liking is reason number four to love this volatility.

5. Stress Test Your Investment Strategy and Your Financial Advisor

If you have taken the time to design and develop a comprehensive financial plan, the odds are high you have a well thought out, diversified investment strategy that performs as planned during volatile periods like we’re experiencing.

Now’s a great time to see how your strategy has held up. Is the value of your portfolio down relative to the market or are you an outlier with a much larger loss? Is your asset allocation in line with your risk tolerance and risk capacity or have you deviated from your strategy so much that you now own a highly aggressive portfolio?

Do you feel confident that your financial advisor knows what they’re doing and has a steady hand at the wheel or is he or she making erratic trades and seeming more stressed than you?

My clients are all long-term investors, all of them. That doesn’t mean some don’t get spooked when the markets become so volatile, and I expect that. But what all of them have in common is the knowing and comfort that we have taken the time to develop and construct a customized investment strategy that aligns with their values and in this market most importantly, aligns with their capacity and tolerance for risk.

Bottom line - use this reason as well as reasons one through four and challenge yourself to become a smarter, more emotionally intelligent, long-term investor. It will be one of the best investments you’ll ever make.

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Tags: investing, stock market, registered investment advisor

Save Money, Plan, Feel Powerful and Get Healthy?

Posted by Mark Zaifman on Wed, Sep 03, 2014 @ 03:43 PM

save money be healthy

What does saving money and planning for your future have to do with your physical health?

As it turns out, plenty.

A recent article in the New York Times titled, Your 401(k) is Healthy. So Maybe You Are, Too really caught my attention. According to the article, “a new study from the journal Psychological Science finds that people who are good at planning their financial future are more likely to improve their physical health-and then actually become healthier.”

“The research, scholars say, offers keen insight into the sorts of people who are likely to make short-term sacrifices in the name of a brighter future. It suggests that there is something very abstract and fundamental about caring for the future. The sort of person who invests in retirement is the sort of person who takes care of their health.”

“Employees who contributed regularly to their 401(k) plan were not only more likely to take steps to improve their health but also, in aggregate, had a 27% improvement in their blood scores. Non-contributors continued to suffer health declines. The 401(k) contributors also showed relative improvements in safety behaviors, like seatbelt use.” 

Saving and planning for today in order to have an abundant and financially secure tomorrow. Sounds simple, right? Well, ask any Spiritus client, and they’ll be the first to admit that this goal is much easier said than done. Yet, that does not stop them from doing what’s needed. They’re able to think from the end, visualize the future they desire, stay on track and course correct when needed.

In addition to the personal satisfaction you’ll receive when you know your financial house is in order, it turns out these smart money habits actually increase your overall wellness. There are many reasons why making the time for financial planning is a great investment, but hands down, nothing beats the benefit of optimizing your health by planning and designing your future.

Stanford School of Business Study

As if one study this month illustrating the health benefits of saving and planning weren’t enough to have you pat yourself on the back for doing the right thing with your money and your life, along comes another study conducted by the Stanford School of Business that will be published in October.

“According to the study, individuals who feel powerful are more motivated to save. The cycle consists of saving money, feeling powerful, and feeling more inclined to continue to save. Individuals who felt powerless, on the other hand, tended to save less money and engage in consumption to compensate for their lack of power.”

"A sense of power is different from other factors that influence saving behavior, such as education, upbringing, and income level. We show that very subtle shifts in feelings of power can have quite an impact on saving. This is very important because it’s something that’s easy to change.”

Make Peace with the Past, Increase Your Financial Intelligence & Feel Powerful

Anyone who has ever been in therapy, or read a single self-help book is familiar with the term 'baggage' in terms of a relationship. But have you ever considered the damage caused by your 'money baggage'?

When you schlep your old and toxic ‘money baggage’ around from relationship to relationship, or from childhood to adulthood, or from starving artist to international superstar, you name it, you’re choosing, whether consciously or unconsciously, to burden your present and your future with the past.

It could be the time you needed to file for bankruptcy because you were young, stupid and got in over your head. It could be the time you bet the farm on a long shot investment that you were sure would make you rich, only to later lose everything. Or it could be the realization that you neglected planning for the future and now at 55, you’re scared to death about how you’re going to be able to ever save enough to retire let alone get your two kids through college and graduate school.

The above are just a few examples of the many burdens we weigh ourselves down with when it comes to our relationship with money. Yet I truly believe that one of the major reasons the New York Times bestseller Your Money or Your Life, became such an international bestseller is because it was one of the first books to teach us how important and vital it is to make peace with the past.

Making peace with the past, is at its core, about forgiveness. And in this case, it’s you, forgiving yourself.  Many times, even when we unintentionally hurt people we love by doing something stupid or reckless with our money, our loved ones in time forgive us, but we never forgive ourselves. That’s very self-destructive behavior and that needs to change in order to change our dynamic with money.

Part of what hinders the healing and forgiving process is that underneath the anger you feel towards yourself often is shame. And again, one of the teachings from Your Money or Your Life is no-shame, no blame.

The road to financial wellness is full of obstacles whether you have very little or have enough for many lifetimes, whether you have a small carry-on of money baggage or a large trunk, it doesn’t matter. Money is a very powerful energy that can provide you much abundance as well as much scarcity.

So to feel powerful when it comes to money, I'm suggesting these five steps:

1) make peace with the past;

2) rid yourself of low energy feelings and thoughts of shame as they’ll only bring you down and keep you stuck in the past;

3) increase your financial intelligence by learning a little more each year about your money;

4) make the investment and develop a financial plan because research shows it boosts your health and finally;

5) feel powerful, because now that you took control of your money and your life and you tossed your old money baggage out the window, it’s a wide open road ahead!


Photo credit by Tax Credits -


Tags: save money, financial planning, Your Money or Your Life, goal setting