Monthly Archives: September 2016

Preparing for Misfortune

by Ryan Kurtz

Right in middle of the Bible, there is a book called Ecclesiastes written by one of the wisest and wealthiest men that ever lived.  His name is Solomon.  In Ecclesiastes 11:2 Solomon gives us a very useful verse that is sometimes overlooked.  It says;

Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.   

It is interesting to me that Solomon says that we do not know what misfortune will happen.  You mean we can’t predict it or see it coming?   Sometimes, we can’t.  How many people saw the dot com bubble burst coming in the late 90’s or the financial meltdown coming in 2008?  Those and a number of other times of “misfortune” are current examples of why Solomon tells us to divide our portion.

The word that is often used in the financial industry for divide is diversifying.

Let’s take a look at some of the places that people currently diversify their wealth.  None of these investments are bad places to invest, but as Solomon warns us, too much of your assets into any of these may be putting you at increased risk when “misfortune” occurs on the earth.

  • Money in the Bank – It is good to have some cash available. If your car breaks down or an unexpected expense arises, it is good to have money safe and available.

The risk to having too much cash is that you are constantly losing purchasing power to inflation.  We estimate that each year there is around a 3% increase in expenses due to inflation.  If you make 0.25% in a bank account, you are losing 2.75% of your money to inflation.  Having too much in cash sometimes can be a bad thing.

Most financial advisors recommend having 3 to 6 months of living or operating expenses in cash.  It is also advisable to have cash set aside for any purchases you may need to make in the next 3 years.

  • Real estate – Real estate has been a great long term investment. Not only can you collect income from owning real estate that someone else is using, you can increase the value of investment by the property growing in value over time.

The risk to owning real estate is the potential of the real estate market contracting or collapsing.  This has happened before and could happen sometime again.  Another risk to real estate is lack of liquidity.  If you need money and it is tied up in real estate, it could take several months or even years before you can sell it depending on the current state of the market.

Owning real estate should be done with resources that you can keep invested for the long term.  Avoid excessive amounts of debt when buying real estate and, if possible, don’t buy it all in the same location.

  • Stocks – Owning stocks has been a great investment for future growth. The risk to owning too much of one company is the potential to lose a lot of your money quickly.  A company could lose ½ of its value or more over short periods of time.

Buying stocks is often best done within mutual funds.  This way you can invest into stocks while not owning too much of any one company.

  • Mutual Funds – A great and relatively inexpensive way to invest is in a mutual fund. A mutual fund is where a number of investors pool their money together and pay someone to manage it for them.  You can use mutual funds to invest in different assets like stocks or bonds with someone else doing the work of looking for good investments for you.

A risk to owning a mutual fund is the potential loss of value of the investments that it is invested in and therefore, a loss to the investor.  Most mutual funds are not good short term investments for this reason.

  • Business – One of the places people often invest their wealth is into a business that they run or manage. Most people like investing into their business because it is what they understand and they can see firsthand how their money is being used. Sometimes they are forced to invest into their business because investing into the business may be what keeps the business going.

When possible, it is advisable to take money out of the business to invest in other businesses or real estate.  Since an income or salary often will come from a business they own or operate, it may make sense to make it a priority not to have all of your assets invested here.

So, what is the best investment to prepare for misfortune?  The best investment you can make may be to put some time and resources into putting together your own financial plan.  A financial plan will tell you which investment or combination of investments is best for you.  All of the investments listed are good ones.  A good financial plan will tell you how much you should invest into each so you are prepared when misfortune does occur on the earth.

If you need help putting together a financial plan for yourself, you are welcome to contact the Bare Wealth Advisor office to set up a meeting with one of our advisors.  We would be happy to help you.

What a Team-Based Approach Looks Like

by Jeremy Walter

As a company, we as advisors work together as one team.  Some clients realize this, others may not – and even though there is a lead advisor responsible for each relationship we have, the whole team is working together behind the scenes as a team to provide that level of service.

This is relatively unique in our industry, and I wanted to call attention to it because I feel it delivers a lot of value to each advisor and ultimately to the client we’re serving.

Practically, this means each one of us has to lay our pride and any selfishness aside and not be a lone ranger.  We don’t have separated books of business.  We formally meet every Monday as a team to discuss each planning case and review each meeting we have coming up, as well as informally during the week as other topics come up.  When clients call in, multiple team members are familiar with the case and can answer questions even if the lead advisor isn’t available.

Why do we do this?  For a number of reasons.  Chief of which, we believe that there is wisdom in a multitude of counselors (Prov. 15:22).  Combined, the advisory team has 55 years of industry experience (20, 10, 10, 7, 8).  That’s significant.  Additionally, we each have different perspectives and specialties within the planning realm – all framed by what we believe the Bible has to say about general money principles.  It also is a great way of learning from each other, and as we continue to bring new team members on they are able to see how we operate and learn new technical or biblical skills within the advice we give to clients.

This makes for a significantly better client experience – from both the prompt service of multiple team members and multiple perspectives mentioned above, as well as a confidence that we are placing their interests before the individual interest of a singular advisor and holding each other as an advisory team to that.

Speaking from a personal perspective – I regularly rely on Ron’s holistic planning perspective, Curtis’ technical planning skills, Ryan’s insurance experience, and Jim’s expertise in Medicare planning and annuities.  Without each of these team members, I’m less effective as an advisor.  With them, I’m equipped to better serve and advise each client relationship I’m personally leading.

So next time you’re chatting with one of our advisors, know that a lot of the conversation you’re being a part of was influenced by more than the person sitting in front of you.  We feel this is better for the business and, again, ultimately a better client experience.