The Mille Lacs County Times http://millelacscountytimes.com The Mille Lacs County Times cover community news, sports, current events and provides advertising and information for Milaca, Minnesota and it's surrounding areas. Wed, 28 Jan 2015 02:20:53 +0000 en-US hourly 1 Crash causes fire http://millelacscountytimes.com/2015/01/27/crash-causes-fire/ http://millelacscountytimes.com/2015/01/27/crash-causes-fire/#comments Wed, 28 Jan 2015 02:20:53 +0000 http://millelacscountytimes.com/?p=109343 A Milaca man suffered injuries on Saturday, Jan. 24 when the vehicle he was driving crashed into a sign and started on fire. Jered Glauvitz, age 35, was driving a 2005 Chevrolet Silverado northbound  on 85th Avenue at 140th Street at about 9:45 p.m. when he went off the road and struck the sign, according to the Minnesota State Patrol.  That’s when the truck started on fire. The Milaca Fire Department assisted at the scene. Glauvitz was taken to Fairview Northland Medical Center in Princeton where he was treated for non life-threatening injuries. The State Patrol stated that alcohol was  factor in the crash.

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Milaca Patriot’s Pen Contest winners http://millelacscountytimes.com/2015/01/27/milaca-patriots-pen-contest-winners/ http://millelacscountytimes.com/2015/01/27/milaca-patriots-pen-contest-winners/#comments Wed, 28 Jan 2015 02:20:06 +0000 http://millelacscountytimes.com/?p=109350 patriots pen

Milaca Siemers-Hakes VFW Post 10794, along with the VFW Auxiliary, sponsored the Patriot’s Pen contest allowing area kids in grades 6-8 to compose an essay about patriotism and veterans. Winners of the area 2014 contest from Milaca received a total of $225 in cash prizes. Pictured, from left, are Milaca Principal and VFW Post 10794 member Damian Patnode, third place winner Mackenzie Alderink, first place winner Amelia Homstad, teacher Cory Pedersen, and teacher Maggie Schindler. Not pictured is second place winner Ethan Dehn.

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Please Seal Your Unused Well http://millelacscountytimes.com/2015/01/27/please-seal-your-unused-well/ http://millelacscountytimes.com/2015/01/27/please-seal-your-unused-well/#comments Wed, 28 Jan 2015 02:20:05 +0000 http://millelacscountytimes.com/?p=109347 red pump

The Mille Lacs Soil and Water Conservation District (SWCD) asks that you please seal unused wells. Unsealed, unused wells are a threat to drinking water. Often hidden by vegetation and debris, large diameter hand dug wells pose a serious safety hazard.

Water in the ground flows through soil and bedrock formations and can flow from one well to the next.  Pollutants that enter old, unsealed wells can move through soil to nearby drinking water wells. Your unused well could allow you or your neighbor’s drinking water to become contaminated. Please seal your unused wells.

How do you seal an unused well? It’s not something you should do yourself. To protect your drinking water, a well must be properly sealed using approved grout material that will safely seal your well. By law, unused wells must be sealed and a Boring and Sealing Record must be on file with the Minnesota Department of Health. A licensed well contractor will seal your well with the proper materials and will file the required paperwork with the Minnesota Department of Health for you.

Financial assistance from the Mille Lacs Soil and Water Conservation District (SWCD) is available to help you seal eligible unused wells. Contact Lynn Gallice at 320-983-2160 or lynn.gallice@millelacsswcd.org

Please protect your drinking water and seal your unused well soon.

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Wrong-way driver on Highway 169 http://millelacscountytimes.com/2015/01/27/wrong-way-driver-on-highway-169/ http://millelacscountytimes.com/2015/01/27/wrong-way-driver-on-highway-169/#comments Wed, 28 Jan 2015 02:00:58 +0000 http://millelacscountytimes.com/?p=109345 The vehicle of Scott Bouma of Milaca was hit south of Princeton on Jan. 20 when a man driving southbound in the northbound lane of Highway 169 hit his vehicle while making a u-turn on the highway. Harlan Meyer, 78 of Nowthen, made the u-turn while trying to reach a crossover in order to correct the direction of his vehicle. Meyer sustained minor injuuries, according to the Minnesota State Patrol, and was taken to Mercy Hospital in Coon Rapids. Bouma was uninjured. Meyer’s vehicle was totaled. Bouma’s vehicle sustained severe damage, the State Patrol said.

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Market Correction: 5 Moves http://millelacscountytimes.com/2015/01/27/market-correction-5-moves/ http://millelacscountytimes.com/2015/01/27/market-correction-5-moves/#comments Tue, 27 Jan 2015 23:30:25 +0000 http://millelacscountytimes.com/?guid=7741feaaaf1257a6d0054b89cfee750c Despite a good 2014, the stock market went through some tough days. At one point in October the Standard & Poor’s 500 was down about 8% from its all-time high reached just a month before, then a few weeks later rebounded to set records.

Such downdrafts will come again. While we are not now in correction mode – generally defined as a 10% or greater drop in an index – does such yo-yoing portend a market correction, and what can you do to prepare?

1. Do nothing. Assuming you have in place a financial plan with an investment strategy, you really need do nothing when a correction occurs. Ideally, you rebalanced your portfolio along the way, and put your asset allocation largely in line with your plan and your risk tolerance.

Making moves in reaction to a market correction (official or otherwise) is rarely a good idea. At the very least, wait until after the big plunge is over.

As quarterback Aaron Rodgers told the fans in Green Bay after the Packers 1-2 start: Relax. The team then racked up a 12-4 season and came within one victory of the Super Bowl.

2. Review your mutual funds. Rough markets are good times to look at various mutual funds and exchange-traded funds in your portfolio. How did they hold up compared with similar investments during the market downturn? When the market changed direction?

For example, during the 2008-2009 market rollercoaster, I looked at funds to see how they did in both the down market of 2008 and in the up market of 2009. If a fund did worse than the majority of its peers in 2008, I expected better-than-average performance the next year. Underperformance during both periods was a huge red flag.

3. Don’t get caught up in media hype. If you watch financial news outlets long enough, you will unfailingly find some expert to support about any opinion about the stock market during any type of rally or dip. This can be especially dangerous for investors who might already feel afraid when markets tank, however slightly.

I don’t discount the great and useful information the media provide, but take much of it with some skepticism. Instead, lean on your financial plan and your investment strategy as a guide during market turbulence.

4. Focus on risk. Use stock market corrections and downturns to assess your portfolio’s risk and, more importantly, your own tolerance for risk.

Assess whether your portfolio held up in line with your expectations. If not, perhaps you take more risk than you planned (whether aware of doing so or not). Also assess your feelings about your portfolio’s performance: If you find yourself unduly fearful about the recent market moves, consider revisiting your allocation and your financial plan once Wall Street settles down.

5. Look for bargains. If you eyed a particular stock, ETF or mutual fund before the market drop, this might be the time to make an investment. I don’t advocate market timing – but snagging a good long-term investment makes an even better deal when that investment is on sale.

Don’t believe me? Then believe investing guru Warren Buffett’s championing of buying low.

Markets always correct at some point. Smart investors factor this into plans and don’t overreact. Be a smart investor.

Follow AdviceIQ on Twitter at @adviceiq.

Roger Wohlner, is a fee-only financial adviser based in Arlington Heights, Ill., where he provides financial planning and investment advice to individual clients, 401(k) plan sponsors and participants, foundations, and endowments. Please feel free to contact him with your investing and financial planning questions. Roger is active on both Twitter and LinkedIn. Check out Roger’s popular blog The Chicago Financial Planner where he writes about issues concerning financial planning, investments, and retirement plans. He is also a regular contributor to Investopedia, has written for US News Smarter Investor Blog and has been quoted extensively in the financial press including The Wall Street Journal, Forbes and Smart Money. Roger is a member of NAPFA, the largest professional organization for fee-only financial advisors in the country. All NAPFA Registered Advisors sign a fiduciary oath promising to act in the best interests of their clients.

AdviceIQ delivers quality personal finance articles by both financial advisors and AdviceIQ editors. It ranks advisors in your area by specialty, including small businesses, doctors and clients of modest means, for example. Those with the biggest number of clients in a given specialty rank the highest. AdviceIQ also vets ranked advisors so only those with pristine regulatory histories can participate. AdviceIQ was launched Jan. 9, 2012, by veteran Wall Street executives, editors and technologists. Right now, investors may see many advisor rankings, although in some areas only a few are ranked. Check back often as thousands of advisors are undergoing AdviceIQ screening. New advisors appear in rankings daily.

 

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Despite a good 2014, the stock market went through some tough days. At one point in October the Standard & Poor’s 500 was down about 8% from its all-time high reached just a month before, then a few weeks later rebounded to set records.

Such downdrafts will come again. While we are not now in correction mode – generally defined as a 10% or greater drop in an index – does such yo-yoing portend a market correction, and what can you do to prepare?

1. Do nothing. Assuming you have in place a financial plan with an investment strategy, you really need do nothing when a correction occurs. Ideally, you rebalanced your portfolio along the way, and put your asset allocation largely in line with your plan and your risk tolerance.

Making moves in reaction to a market correction (official or otherwise) is rarely a good idea. At the very least, wait until after the big plunge is over.

As quarterback Aaron Rodgers told the fans in Green Bay after the Packers 1-2 start: Relax. The team then racked up a 12-4 season and came within one victory of the Super Bowl.

2. Review your mutual funds. Rough markets are good times to look at various mutual funds and exchange-traded funds in your portfolio. How did they hold up compared with similar investments during the market downturn? When the market changed direction?

For example, during the 2008-2009 market rollercoaster, I looked at funds to see how they did in both the down market of 2008 and in the up market of 2009. If a fund did worse than the majority of its peers in 2008, I expected better-than-average performance the next year. Underperformance during both periods was a huge red flag.

3. Don’t get caught up in media hype. If you watch financial news outlets long enough, you will unfailingly find some expert to support about any opinion about the stock market during any type of rally or dip. This can be especially dangerous for investors who might already feel afraid when markets tank, however slightly.

I don’t discount the great and useful information the media provide, but take much of it with some skepticism. Instead, lean on your financial plan and your investment strategy as a guide during market turbulence.

4. Focus on risk. Use stock market corrections and downturns to assess your portfolio’s risk and, more importantly, your own tolerance for risk.

Assess whether your portfolio held up in line with your expectations. If not, perhaps you take more risk than you planned (whether aware of doing so or not). Also assess your feelings about your portfolio’s performance: If you find yourself unduly fearful about the recent market moves, consider revisiting your allocation and your financial plan once Wall Street settles down.

5. Look for bargains. If you eyed a particular stock, ETF or mutual fund before the market drop, this might be the time to make an investment. I don’t advocate market timing – but snagging a good long-term investment makes an even better deal when that investment is on sale.

Don’t believe me? Then believe investing guru Warren Buffett’s championing of buying low.

Markets always correct at some point. Smart investors factor this into plans and don’t overreact. Be a smart investor.

Follow AdviceIQ on Twitter at @adviceiq.

Roger Wohlner, is a fee-only financial adviser based in Arlington Heights, Ill., where he provides financial planning and investment advice to individual clients, 401(k) plan sponsors and participants, foundations, and endowments. Please feel free to contact him with your investing and financial planning questions. Roger is active on both Twitter and LinkedIn. Check out Roger’s popular blog The Chicago Financial Planner where he writes about issues concerning financial planning, investments, and retirement plans. He is also a regular contributor to Investopedia, has written for US News Smarter Investor Blog and has been quoted extensively in the financial press including The Wall Street Journal, Forbes and Smart Money. Roger is a member of NAPFA, the largest professional organization for fee-only financial advisors in the country. All NAPFA Registered Advisors sign a fiduciary oath promising to act in the best interests of their clients.

AdviceIQ delivers quality personal finance articles by both financial advisors and AdviceIQ editors. It ranks advisors in your area by specialty, including small businesses, doctors and clients of modest means, for example. Those with the biggest number of clients in a given specialty rank the highest. AdviceIQ also vets ranked advisors so only those with pristine regulatory histories can participate. AdviceIQ was launched Jan. 9, 2012, by veteran Wall Street executives, editors and technologists. Right now, investors may see many advisor rankings, although in some areas only a few are ranked. Check back often as thousands of advisors are undergoing AdviceIQ screening. New advisors appear in rankings daily.

 

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Diversification: Now Harder http://millelacscountytimes.com/2015/01/27/diversification-now-harder/ http://millelacscountytimes.com/2015/01/27/diversification-now-harder/#comments Tue, 27 Jan 2015 19:01:24 +0000 http://millelacscountytimes.com/?guid=3ffac2c0af4efaae1519a4596ccaccde We hear all the time that spreading our portfolio’s holdings across many classes of assets is the best defense against losses when the bears hit Wall Street. There’s a good chance your diversification strategy may now not work as you intended, though.

Here’s why.

The cornerstone of diversification is a mixture of investments, each of which has broadly differing patterns of strength and weakness. That way, strengths in one investment can potentially offset weaknesses in another at any given time. The greater the difference in performance patterns of any two investments, the bigger the potential benefit from diversification.

Historically, such alternative investments as real property and precious metals provided a non-correlated counterbalance in portfolios to traditional holdings such as stocks. Over the past decade, some investments that once differed significantly began performing more alike; this reduced their potential to offset each other’s ups and downs in your portfolio. As financial instruments and global markets became increasingly liquid and accessible, different asset classes became more closely interrelated.

Correlation is a common measure of the variation in performance between two investments. The closer two investments’ correlation is to zero, the greater their potential to diversify your holdings. In other words, the less alike two investments are, the less they can drop in the same market conditions.

Different asset classes once tended to correlate at a relatively low level. And the correlations they did have tended to vary; even as one pair became highly correlated, others went in the opposite direction.

The chart below shows how diversification potential for U.S. equities and other assets differed over time. The best diversification potential occurred when chart values were relatively near the center (that is, the zero axis). Weaker diversification potential occurred when values fell near to the top or bottom edges of the chart.

The weakest sustained potential occurred when correlation remained near 1.0 for long periods, as in recent years, between U.S. and foreign stocks.

 

The Correlation Picture, 1992 to 2014

Each of the lines above represents the correlation between U.S. stocks and the indicated investment class over time, reflecting annualized 36-month returns for trailing 5-year periods. A correlation of 1.0 means that all changes are synchronized exactly. A correlation of minus 1.0 means that the amount of change synchronizes precisely but that the changes run in opposite directions.

A correlation of 0 denotes no statistically measurable relationship between changes in one set of returns and changes in another. Note: In the chart above the following indexes and benchmarks represent the following stocks:

Convergence of key asset classes’ performance may be clear but the underlying reasons are complex, making potential solutions complex. Some point to the 2008-09 financial crisis or the aggressive explosion of ultra-diversified hedge funds and exchange-traded funds. Others credit the melting borders of international trade. No one answer seems to constitute a sole reason.

Investors need to consider not only the risk and reward potential for each investment category but those categories’ correlations, as well. This lets you know how much of a portfolio can rise or fall at once.

Follow AdviceIQ on Twitter at @adviceiq.

Stephen P. Giulietti, CFP, CIMA, is Senior Vice President - Wealth Management, Financial Advisor at Morgan Stanley Wealth Management in Boston. Contact him at stephen.p.giulietti@morganstanley.com.

The information contained in this article is not a solicitation to purchase or sell investments. Any information presented is general in nature and not intended to provide individually tailored investment advice. The strategies and/or investments referenced may not be suitable for all investors as the appropriateness of a particular investment or strategy will depend on an investor's individual circumstances and objectives. Investing involves risks and there is always the potential of losing money when you invest. The views expressed herein are those of the author and may not necessarily reflect the views of Morgan Stanley Smith Barney LLC, Member SIPC, or its affiliates.

Stephen Giulietti may only transact business in states where he is registered or excluded or exempted from registration http://www.morganstanleyfa.com/giulietti/. Transacting business, follow-up and individualized responses involving either effecting or attempting to effect transactions in securities, or the rendering of personalized investment advice for compensation, will not be made to persons in states where Stephen Giulietti is not registered or excluded or exempt from registration.

AdviceIQ delivers quality personal finance articles by both financial advisors and AdviceIQ editors. It ranks advisors in your area by specialty, including small businesses, doctors and clients of modest means, for example. Those with the biggest number of clients in a given specialty rank the highest. AdviceIQ also vets ranked advisors so only those with pristine regulatory histories can participate. AdviceIQ was launched Jan. 9, 2012, by veteran Wall Street executives, editors and technologists. Right now, investors may see many advisor rankings, although in some areas only a few are ranked. Check back often as thousands of advisors are undergoing AdviceIQ screening. New advisors appear in rankings daily.

All indexes cited above are generally considered representative of their broad asset classes. Investors cannot invest directly in any index. Index returns are hypothetical and do not reflect the effects of taxes, fees, commissions or other costs of investing. Returns are calculated from monthly index values between July 1984 and June 2014. Past performance does not assure future results.

 

 

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We hear all the time that spreading our portfolio’s holdings across many classes of assets is the best defense against losses when the bears hit Wall Street. There’s a good chance your diversification strategy may now not work as you intended, though.

Here’s why.

The cornerstone of diversification is a mixture of investments, each of which has broadly differing patterns of strength and weakness. That way, strengths in one investment can potentially offset weaknesses in another at any given time. The greater the difference in performance patterns of any two investments, the bigger the potential benefit from diversification.

Historically, such alternative investments as real property and precious metals provided a non-correlated counterbalance in portfolios to traditional holdings such as stocks. Over the past decade, some investments that once differed significantly began performing more alike; this reduced their potential to offset each other’s ups and downs in your portfolio. As financial instruments and global markets became increasingly liquid and accessible, different asset classes became more closely interrelated.

Correlation is a common measure of the variation in performance between two investments. The closer two investments’ correlation is to zero, the greater their potential to diversify your holdings. In other words, the less alike two investments are, the less they can drop in the same market conditions.

Different asset classes once tended to correlate at a relatively low level. And the correlations they did have tended to vary; even as one pair became highly correlated, others went in the opposite direction.

The chart below shows how diversification potential for U.S. equities and other assets differed over time. The best diversification potential occurred when chart values were relatively near the center (that is, the zero axis). Weaker diversification potential occurred when values fell near to the top or bottom edges of the chart.

The weakest sustained potential occurred when correlation remained near 1.0 for long periods, as in recent years, between U.S. and foreign stocks.

 

The Correlation Picture, 1992 to 2014

Each of the lines above represents the correlation between U.S. stocks and the indicated investment class over time, reflecting annualized 36-month returns for trailing 5-year periods. A correlation of 1.0 means that all changes are synchronized exactly. A correlation of minus 1.0 means that the amount of change synchronizes precisely but that the changes run in opposite directions.

A correlation of 0 denotes no statistically measurable relationship between changes in one set of returns and changes in another. Note: In the chart above the following indexes and benchmarks represent the following stocks:

Convergence of key asset classes’ performance may be clear but the underlying reasons are complex, making potential solutions complex. Some point to the 2008-09 financial crisis or the aggressive explosion of ultra-diversified hedge funds and exchange-traded funds. Others credit the melting borders of international trade. No one answer seems to constitute a sole reason.

Investors need to consider not only the risk and reward potential for each investment category but those categories’ correlations, as well. This lets you know how much of a portfolio can rise or fall at once.

Follow AdviceIQ on Twitter at @adviceiq.

Stephen P. Giulietti, CFP, CIMA, is Senior Vice President - Wealth Management, Financial Advisor at Morgan Stanley Wealth Management in Boston. Contact him at stephen.p.giulietti@morganstanley.com.

The information contained in this article is not a solicitation to purchase or sell investments. Any information presented is general in nature and not intended to provide individually tailored investment advice. The strategies and/or investments referenced may not be suitable for all investors as the appropriateness of a particular investment or strategy will depend on an investor's individual circumstances and objectives. Investing involves risks and there is always the potential of losing money when you invest. The views expressed herein are those of the author and may not necessarily reflect the views of Morgan Stanley Smith Barney LLC, Member SIPC, or its affiliates.

Stephen Giulietti may only transact business in states where he is registered or excluded or exempted from registration http://www.morganstanleyfa.com/giulietti/. Transacting business, follow-up and individualized responses involving either effecting or attempting to effect transactions in securities, or the rendering of personalized investment advice for compensation, will not be made to persons in states where Stephen Giulietti is not registered or excluded or exempt from registration.

AdviceIQ delivers quality personal finance articles by both financial advisors and AdviceIQ editors. It ranks advisors in your area by specialty, including small businesses, doctors and clients of modest means, for example. Those with the biggest number of clients in a given specialty rank the highest. AdviceIQ also vets ranked advisors so only those with pristine regulatory histories can participate. AdviceIQ was launched Jan. 9, 2012, by veteran Wall Street executives, editors and technologists. Right now, investors may see many advisor rankings, although in some areas only a few are ranked. Check back often as thousands of advisors are undergoing AdviceIQ screening. New advisors appear in rankings daily.

All indexes cited above are generally considered representative of their broad asset classes. Investors cannot invest directly in any index. Index returns are hypothetical and do not reflect the effects of taxes, fees, commissions or other costs of investing. Returns are calculated from monthly index values between July 1984 and June 2014. Past performance does not assure future results.

 

 

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Your Investment Policy Statement http://millelacscountytimes.com/2015/01/27/your-investment-policy-statement/ http://millelacscountytimes.com/2015/01/27/your-investment-policy-statement/#comments Tue, 27 Jan 2015 19:01:14 +0000 http://millelacscountytimes.com/?guid=0b7393e38270bbcab9ceda6fe41a1263 A written statement that outlines your goals and investment strategy is a must for all investors. When market risks arise for real, an investment policy statement helps you stay committed to your plan.

New York Times columnist Paul Sullivan says an investment policy statement is “to a financial plan what a Range Rover is to a minivan. Both will carry your children safely, but only the Range Rover will power up a gravelly mountain.”

Who among us hasn’t had to soldier through some rocky markets from time to time? Whenever markets do turn sickeningly steep, second-guessing your plan is instinct. A well-maintained investment policy statement serves as a reliable touchstone during these risky times, when your human emotions may otherwise overtake your financial resolve.

A 2013 Russell Investments survey found that most financial advisors didn’t use an investment policy statement for all of their clients. One in five didn’t have it at all. This is a significant concern. You may rarely refer to your investment policy statement on any given day, but it’s like a parachute, when you do need it, you really need it.

Your investment policy statement should include detailed, up-to-date descriptions of the factors influencing your ongoing investment experience, such as:

  1. Investor “personality.” Your risk tolerance and other individual challenges and opportunities that shape your investment expectations.
  2. Financial life goals. Your and your family’s desired goals, including tax considerations, dollars and specific time horizons.
  3. Investment approach. How your advisor manages your investment portfolio to advance your goals, including your investment strategy, desirable portfolio holdings and target asset allocations.
  4. Roles and responsibilities. Whom the portfolio is for, your investor rights and responsibilities, and ditto for your advisor.
  5. Procedures. Guidelines for how you and your advisor review, rethink and revise the statement to keep it current.

Besides keeping you on track, on a more practical front, this document comes in handy when you, your family members or others involved in your financial affairs forget the details of your personalized investment strategy. Is my portfolio a 60/40 fixed income/stock allocation or a 70/30? Which accounts are earmarked for retirement and which are for college funding? Is my portfolio on track toward my stated goals or does it need adjustments? A quick check of your statement can answer these questions.

Having these sorts of details laid out in plain view is especially important if you are unable to handle your portfolio, and a spouse or other family member must take over the decision-making. With an investment policy statement to reference, the person acting in your place can resolve questions that might otherwise be difficult to answer.

In short, an investment policy statement gives you both the big picture as well as the granular details in writing. This way, come what may, everyone can best act in synchronized concert toward the same goals: yours.

Follow AdviceIQ on Twitter at @adviceiq.

Sheri Iannetta Cupo, CFP, is a principal of SageBroadview Financial Planning with offices in Morristown, N.J., and Farmington, Conn. The SageBroadview blog covers a wide range of financial planning and life topics.

AdviceIQ delivers quality personal finance articles by both financial advisors and AdviceIQ editors. It ranks advisors in your area by specialty, including small businesses, doctors and clients of modest means, for example. Those with the biggest number of clients in a given specialty rank the highest. AdviceIQ also vets ranked advisors so only those with pristine regulatory histories can participate. AdviceIQ was launched Jan. 9, 2012, by veteran Wall Street executives, editors and technologists. Right now, investors may see many advisor rankings, although in some areas only a few are ranked. Check back often as thousands of advisors are undergoing AdviceIQ screening. New advisors appear in rankings daily.

 

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A written statement that outlines your goals and investment strategy is a must for all investors. When market risks arise for real, an investment policy statement helps you stay committed to your plan.

New York Times columnist Paul Sullivan says an investment policy statement is “to a financial plan what a Range Rover is to a minivan. Both will carry your children safely, but only the Range Rover will power up a gravelly mountain.”

Who among us hasn’t had to soldier through some rocky markets from time to time? Whenever markets do turn sickeningly steep, second-guessing your plan is instinct. A well-maintained investment policy statement serves as a reliable touchstone during these risky times, when your human emotions may otherwise overtake your financial resolve.

A 2013 Russell Investments survey found that most financial advisors didn’t use an investment policy statement for all of their clients. One in five didn’t have it at all. This is a significant concern. You may rarely refer to your investment policy statement on any given day, but it’s like a parachute, when you do need it, you really need it.

Your investment policy statement should include detailed, up-to-date descriptions of the factors influencing your ongoing investment experience, such as:

  1. Investor “personality.” Your risk tolerance and other individual challenges and opportunities that shape your investment expectations.
  2. Financial life goals. Your and your family’s desired goals, including tax considerations, dollars and specific time horizons.
  3. Investment approach. How your advisor manages your investment portfolio to advance your goals, including your investment strategy, desirable portfolio holdings and target asset allocations.
  4. Roles and responsibilities. Whom the portfolio is for, your investor rights and responsibilities, and ditto for your advisor.
  5. Procedures. Guidelines for how you and your advisor review, rethink and revise the statement to keep it current.

Besides keeping you on track, on a more practical front, this document comes in handy when you, your family members or others involved in your financial affairs forget the details of your personalized investment strategy. Is my portfolio a 60/40 fixed income/stock allocation or a 70/30? Which accounts are earmarked for retirement and which are for college funding? Is my portfolio on track toward my stated goals or does it need adjustments? A quick check of your statement can answer these questions.

Having these sorts of details laid out in plain view is especially important if you are unable to handle your portfolio, and a spouse or other family member must take over the decision-making. With an investment policy statement to reference, the person acting in your place can resolve questions that might otherwise be difficult to answer.

In short, an investment policy statement gives you both the big picture as well as the granular details in writing. This way, come what may, everyone can best act in synchronized concert toward the same goals: yours.

Follow AdviceIQ on Twitter at @adviceiq.

Sheri Iannetta Cupo, CFP, is a principal of SageBroadview Financial Planning with offices in Morristown, N.J., and Farmington, Conn. The SageBroadview blog covers a wide range of financial planning and life topics.

AdviceIQ delivers quality personal finance articles by both financial advisors and AdviceIQ editors. It ranks advisors in your area by specialty, including small businesses, doctors and clients of modest means, for example. Those with the biggest number of clients in a given specialty rank the highest. AdviceIQ also vets ranked advisors so only those with pristine regulatory histories can participate. AdviceIQ was launched Jan. 9, 2012, by veteran Wall Street executives, editors and technologists. Right now, investors may see many advisor rankings, although in some areas only a few are ranked. Check back often as thousands of advisors are undergoing AdviceIQ screening. New advisors appear in rankings daily.

 

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Planning to Head Off Regrets http://millelacscountytimes.com/2015/01/26/planning-to-head-off-regrets/ http://millelacscountytimes.com/2015/01/26/planning-to-head-off-regrets/#comments Mon, 26 Jan 2015 22:00:21 +0000 http://millelacscountytimes.com/?guid=aeda81c19a7cabf63be56170ffca0586 Financial planning depends on your answers to a lot of questions. Some of your responses will surprise you. So will the seriousness of some of the questions.

If you don’t know what a financial advisor might ask you, you’re not alone, according to recent surveys showing that most people have never engaged a professional planner to help with money. A common question that we get after telling people that we own our own financial planning firm: “What do you ask clients or prospects at the first meeting?”

When we first sit down with a new prospect, we try to determine what that person visualizes for his or her own future in terms of actual desires and not desires the person feels obliged to have. We consider the work of two insightful writers.

George Kinder, a veteran in the financial services industry, believes the following questions focus the discussion on your true underlying desires regarding money and planning.

Imagine you have all the money you will ever need now and in the future. What will you do with it? How will you live your life? What will change?

These questions cover the suppressed goals, eliminating our normal human tendency to believe that we lack enough money to fulfill our actual desires. We often create artificial constraints in our minds; eliminating our perceived lack of money from the discussion helps sharply bring into focus the future we want.

Once we clarify true desires, we conduct a realistic discussion concerning possibilities. Often, we adjust a plan so that what can at first seem like unreasonable desires become realities.

An article by palliative-care nurse Bronnie Ware discusses the five major regrets of people facing certain and imminent death. Ware spent several years caring for patients in the last 12 weeks of their lives and recorded their dying epiphanies in the blog “Inspiration and Chai.” A couple of universal themes in the regrets:

I wish I'd had the courage to live a life true to myself, not the life others expected of me. In this most common lament, people realize that their life is almost over and they never honored even half of their dreams and had to die realizing that this loss was due to choices they did or didn’t make.

I wish that I had let myself be happier. Ware reveals how many of the dying do not realize until the end that happiness is a choice. “Fear of change had them pretending to others, and to themselves, that they were content, when deep within, they longed to laugh properly and have silliness in their life again,” she writes.

What's your greatest regret so far and how will you set out to change and achieve your dreams before you die? Why wait until you face the inevitable end to live the life you wish?

Working with a financial coach helps you uncover and clarify true desires for your life and your loved ones’. This allows your financial coach to work with you to develop a plan to explore your possibilities. The real value of a financial advisor or coach: help you continue to focus on your real issues and work to help modify your behavior to fulfill your dreams.

Follow AdviceIQ on Twitter at @adviceiq.

Dan Crimmins is the co-founder of Crimmins Wealth Management LLC in Woodcliff Lake, N.J. His blog is Roots of Wealth.

AdviceIQ delivers quality personal finance articles by both financial advisors and AdviceIQ editors. It ranks advisors in your area by specialty, including small businesses, doctors and clients of modest means, for example. Those with the biggest number of clients in a given specialty rank the highest. AdviceIQ also vets ranked advisors so only those with pristine regulatory histories can participate. AdviceIQ was launched Jan. 9, 2012, by veteran Wall Street executives, editors and technologists. Right now, investors may see many advisor rankings, although in some areas only a few are ranked. Check back often as thousands of advisors are undergoing AdviceIQ screening. New advisors appear in rankings daily.

 

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Financial planning depends on your answers to a lot of questions. Some of your responses will surprise you. So will the seriousness of some of the questions.

If you don’t know what a financial advisor might ask you, you’re not alone, according to recent surveys showing that most people have never engaged a professional planner to help with money. A common question that we get after telling people that we own our own financial planning firm: “What do you ask clients or prospects at the first meeting?”

When we first sit down with a new prospect, we try to determine what that person visualizes for his or her own future in terms of actual desires and not desires the person feels obliged to have. We consider the work of two insightful writers.

George Kinder, a veteran in the financial services industry, believes the following questions focus the discussion on your true underlying desires regarding money and planning.

Imagine you have all the money you will ever need now and in the future. What will you do with it? How will you live your life? What will change?

These questions cover the suppressed goals, eliminating our normal human tendency to believe that we lack enough money to fulfill our actual desires. We often create artificial constraints in our minds; eliminating our perceived lack of money from the discussion helps sharply bring into focus the future we want.

Once we clarify true desires, we conduct a realistic discussion concerning possibilities. Often, we adjust a plan so that what can at first seem like unreasonable desires become realities.

An article by palliative-care nurse Bronnie Ware discusses the five major regrets of people facing certain and imminent death. Ware spent several years caring for patients in the last 12 weeks of their lives and recorded their dying epiphanies in the blog “Inspiration and Chai.” A couple of universal themes in the regrets:

I wish I'd had the courage to live a life true to myself, not the life others expected of me. In this most common lament, people realize that their life is almost over and they never honored even half of their dreams and had to die realizing that this loss was due to choices they did or didn’t make.

I wish that I had let myself be happier. Ware reveals how many of the dying do not realize until the end that happiness is a choice. “Fear of change had them pretending to others, and to themselves, that they were content, when deep within, they longed to laugh properly and have silliness in their life again,” she writes.

What's your greatest regret so far and how will you set out to change and achieve your dreams before you die? Why wait until you face the inevitable end to live the life you wish?

Working with a financial coach helps you uncover and clarify true desires for your life and your loved ones’. This allows your financial coach to work with you to develop a plan to explore your possibilities. The real value of a financial advisor or coach: help you continue to focus on your real issues and work to help modify your behavior to fulfill your dreams.

Follow AdviceIQ on Twitter at @adviceiq.

Dan Crimmins is the co-founder of Crimmins Wealth Management LLC in Woodcliff Lake, N.J. His blog is Roots of Wealth.

AdviceIQ delivers quality personal finance articles by both financial advisors and AdviceIQ editors. It ranks advisors in your area by specialty, including small businesses, doctors and clients of modest means, for example. Those with the biggest number of clients in a given specialty rank the highest. AdviceIQ also vets ranked advisors so only those with pristine regulatory histories can participate. AdviceIQ was launched Jan. 9, 2012, by veteran Wall Street executives, editors and technologists. Right now, investors may see many advisor rankings, although in some areas only a few are ranked. Check back often as thousands of advisors are undergoing AdviceIQ screening. New advisors appear in rankings daily.

 

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Anatomy of a Bumpy Start http://millelacscountytimes.com/2015/01/26/anatomy-of-a-bumpy-start/ http://millelacscountytimes.com/2015/01/26/anatomy-of-a-bumpy-start/#comments Mon, 26 Jan 2015 20:30:51 +0000 http://millelacscountytimes.com/?guid=94f686a84794ab679e8b58fb17929b66 The stock market has had bumpy start this year. Surprised? It mirrors January 2014. Lack of central bank stimulus, oil’s price decline and a few tepid reports are to blame this time.

Still, things worked out OK last year and may well this year. At Friday’s close, the Standard & Poor’s 500’s total return (price plus dividends) was down 0.26% for the month, although it has climbed back from the much-deeper mid-month low.

The early-2014 market suffered a sudden drop that puzzled investors spoiled by the easy, Federal Reserve-fueled returns of 2013. The prior year’s disproportionate gains led to quite a bout of portfolio rebalancing as institutions reduced equity exposure that previously rising stock prices drove into the red zones.

While 2014 wasn’t quite half as good as 2013, it was nonetheless enough to set off another wave of portfolio rebalancing. Mix in some legitimate fears about slowing economic growth with angst over falling prices, and there’s fright about what the coming year will bring. Similar to last year, the stock market failed the "first five days test" (thought of as a harbinger for the year's performance) and is also headed for a negative month, though neither of those omens proved accurate in 2014.

Not every year’s rally is brought up short by calendar rebalancing, but the current market is missing some of the high-octane fuel that keeps markets going around the annual turns.

Valuations aren’t cheap, despite the perennial equity fund manager protestation that they’re “reasonable.” The S&P 500 price/earning multiple is 19.7, a good four percentage points over its historical average.

Most of all, the fall of 2014 lacked the spark of boundless optimism that new programs of quantitative easing, or QE, have set off in previous years. The Fed ended its bond-buying stimulus effort in October. Nor did it have another surprise about-face on QE from the Fed, like the one in September 2013 that launched the market back on its way to half of that year’s gains.

In fact, this January lacked any momentum at all, as even the perennial Santa Claus rally faded at the finish and left the S&P 500 with a rare (though minimal) December decline. Small wonder that smaller gains could still lead to rebalancing and help fuel modest losses at the outset of the year.

Other factors are at work, of course, not least of which is the confidence- damaging plunge in oil prices. Lower energy costs are generally an economic good, but like a falling currency the benefits can take time to work their way into the economy.

The current 45-degree plunge, another example of a one-way trade run amuck, has had its initial effects by fanning fears about fading economic growth and failed bond principal payments. Waves of job and budget cuts in the energy sector are following, such as the Schlumberger (SLB) decision last week to ax 9,000 workers. The energy sector and energy-related activity has been one of the few sources of decent new jobs in the current U.S. recovery, particularly in manufacturing.

The supply-demand picture in oil isn’t as out of balance as the recent momentum would have it. Nor was it in 2008, when surging prices hit $150 a barrel. At that time every story of a refinery fire or unplanned shutdown - both common occurrences in a dirty, dangerous industry – immediately set prices on another spike higher. Now every story of increased supply or pause in demand, welcome a year ago, is another fright for traders.

Put the release of December retail sales– a big decline with a miss of consensus – into this volatile environment. Thus you have an easy-to-understand story about anxiety selling, even if the logic is a bit confused. The month’s sales were much better than the headline number would have you think. The year-on-year comparison for December unadjusted sales figures showed growth of 4.6%, above the average for the last 22 years (4.2%), while November-December combined showed year-on-year growth of 3.8% in unadjusted sales dollars, compared to 3.4% growth in 2013.

Certainly the fourth-quarter earnings season isn’t helping much. The current “blended” earnings rate for the quarter, according to FactSet, is a very meager 0.6%. The blended rate, a mix of estimated and actual results, is at this early stage almost entirely based on estimates. Earnings aren’t really expected to be quite that low, of course, as the necessary “positive surprise” factor requires a cushion of three to four percentage points.

But it’s the lowest expectation since the results for last year's weather-scarred first quarter, one not helped by the string of disappointing results from the big banks. Weak earnings growth isn’t a wonderful foundation for rising stock prices.

It’s a good time for caution. I don’t think the equity bull has been killed quite yet, though these things are admittedly difficult to discern in real time, and the stock market and the business cycles aren’t getting old, they are old. Such creatures may not die of pure old age, but they certainly don’t get new life from it either.

Yet bear markets almost never take hold in the spring, and a couple of benign central bank meetings could be all that it takes to have the S&P at 2100 and people talking about Fortress America again.

Follow AdviceIQ on Twitter at @adviceiq.

M. Kevin Flynn, CFA, is the president of Avalon Asset Management Company in Lexington, Mass. Website: avalonassetmgmt.com.

AdviceIQ delivers quality personal finance articles by both financial advisors and AdviceIQ editors. It ranks advisors in your area by specialty, including small businesses, doctors and clients of modest means, for example. Those with the biggest number of clients in a given specialty rank the highest. AdviceIQ also vets ranked advisors so only those with pristine regulatory histories can participate. AdviceIQ was launched Jan. 9, 2012, by veteran Wall Street executives, editors and technologists. Right now, investors may see many advisor rankings, although in some areas only a few are ranked. Check back often as thousands of advisors are undergoing AdviceIQ screening. New advisors appear in rankings daily.

]]>
The stock market has had bumpy start this year. Surprised? It mirrors January 2014. Lack of central bank stimulus, oil’s price decline and a few tepid reports are to blame this time.

Still, things worked out OK last year and may well this year. At Friday’s close, the Standard & Poor’s 500’s total return (price plus dividends) was down 0.26% for the month, although it has climbed back from the much-deeper mid-month low.

The early-2014 market suffered a sudden drop that puzzled investors spoiled by the easy, Federal Reserve-fueled returns of 2013. The prior year’s disproportionate gains led to quite a bout of portfolio rebalancing as institutions reduced equity exposure that previously rising stock prices drove into the red zones.

While 2014 wasn’t quite half as good as 2013, it was nonetheless enough to set off another wave of portfolio rebalancing. Mix in some legitimate fears about slowing economic growth with angst over falling prices, and there’s fright about what the coming year will bring. Similar to last year, the stock market failed the "first five days test" (thought of as a harbinger for the year's performance) and is also headed for a negative month, though neither of those omens proved accurate in 2014.

Not every year’s rally is brought up short by calendar rebalancing, but the current market is missing some of the high-octane fuel that keeps markets going around the annual turns.

Valuations aren’t cheap, despite the perennial equity fund manager protestation that they’re “reasonable.” The S&P 500 price/earning multiple is 19.7, a good four percentage points over its historical average.

Most of all, the fall of 2014 lacked the spark of boundless optimism that new programs of quantitative easing, or QE, have set off in previous years. The Fed ended its bond-buying stimulus effort in October. Nor did it have another surprise about-face on QE from the Fed, like the one in September 2013 that launched the market back on its way to half of that year’s gains.

In fact, this January lacked any momentum at all, as even the perennial Santa Claus rally faded at the finish and left the S&P 500 with a rare (though minimal) December decline. Small wonder that smaller gains could still lead to rebalancing and help fuel modest losses at the outset of the year.

Other factors are at work, of course, not least of which is the confidence- damaging plunge in oil prices. Lower energy costs are generally an economic good, but like a falling currency the benefits can take time to work their way into the economy.

The current 45-degree plunge, another example of a one-way trade run amuck, has had its initial effects by fanning fears about fading economic growth and failed bond principal payments. Waves of job and budget cuts in the energy sector are following, such as the Schlumberger (SLB) decision last week to ax 9,000 workers. The energy sector and energy-related activity has been one of the few sources of decent new jobs in the current U.S. recovery, particularly in manufacturing.

The supply-demand picture in oil isn’t as out of balance as the recent momentum would have it. Nor was it in 2008, when surging prices hit $150 a barrel. At that time every story of a refinery fire or unplanned shutdown - both common occurrences in a dirty, dangerous industry – immediately set prices on another spike higher. Now every story of increased supply or pause in demand, welcome a year ago, is another fright for traders.

Put the release of December retail sales– a big decline with a miss of consensus – into this volatile environment. Thus you have an easy-to-understand story about anxiety selling, even if the logic is a bit confused. The month’s sales were much better than the headline number would have you think. The year-on-year comparison for December unadjusted sales figures showed growth of 4.6%, above the average for the last 22 years (4.2%), while November-December combined showed year-on-year growth of 3.8% in unadjusted sales dollars, compared to 3.4% growth in 2013.

Certainly the fourth-quarter earnings season isn’t helping much. The current “blended” earnings rate for the quarter, according to FactSet, is a very meager 0.6%. The blended rate, a mix of estimated and actual results, is at this early stage almost entirely based on estimates. Earnings aren’t really expected to be quite that low, of course, as the necessary “positive surprise” factor requires a cushion of three to four percentage points.

But it’s the lowest expectation since the results for last year's weather-scarred first quarter, one not helped by the string of disappointing results from the big banks. Weak earnings growth isn’t a wonderful foundation for rising stock prices.

It’s a good time for caution. I don’t think the equity bull has been killed quite yet, though these things are admittedly difficult to discern in real time, and the stock market and the business cycles aren’t getting old, they are old. Such creatures may not die of pure old age, but they certainly don’t get new life from it either.

Yet bear markets almost never take hold in the spring, and a couple of benign central bank meetings could be all that it takes to have the S&P at 2100 and people talking about Fortress America again.

Follow AdviceIQ on Twitter at @adviceiq.

M. Kevin Flynn, CFA, is the president of Avalon Asset Management Company in Lexington, Mass. Website: avalonassetmgmt.com.

AdviceIQ delivers quality personal finance articles by both financial advisors and AdviceIQ editors. It ranks advisors in your area by specialty, including small businesses, doctors and clients of modest means, for example. Those with the biggest number of clients in a given specialty rank the highest. AdviceIQ also vets ranked advisors so only those with pristine regulatory histories can participate. AdviceIQ was launched Jan. 9, 2012, by veteran Wall Street executives, editors and technologists. Right now, investors may see many advisor rankings, although in some areas only a few are ranked. Check back often as thousands of advisors are undergoing AdviceIQ screening. New advisors appear in rankings daily.

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Picking Benchmarks Wisely http://millelacscountytimes.com/2015/01/26/picking-benchmarks-wisely/ http://millelacscountytimes.com/2015/01/26/picking-benchmarks-wisely/#comments Mon, 26 Jan 2015 20:30:39 +0000 http://millelacscountytimes.com/?guid=f6fbc5886865145ecd276d6c1a72ab50 Maybe your family just wrapped up its holiday tradition of big gatherings where grandma headed the fireside sing-along or everyone got a year’s wisdom from your goofy brother-in-law. Maybe too you seethed silently at how well one relative is doing financially. As the holidays fade, we all must recognize our unrelenting desire to compare ourselves to loved ones – a path to both bad moods and potentially bad money moves.

In Predictably Irrational, author Dan Ariely writes, “Humans rarely choose things in absolute terms. We don’t have an internal value meter that tells us how much things are worth. Rather, we focus on the relative advantage of one thing over another, and estimate value accordingly.”

He adds, “We not only tend to compare things with one another but also tend to focus on comparing things that are easily comparable – and avoid comparing things that cannot be compared easily.” In other words, we often use completely irrelevant benchmarks to gauge our success and make decisions.

We compare our car or clothes with our siblings’. We compare how our children act relative to the neighbors’ kids. We decide how much to spend on our holiday shopping after we figure out how much our friends or family members plan to spend on theirs.

None of these comparisons makes rational sense. But we still find it far easier to take a shortcut and pursue easy comparisons that provide a simple, concrete (but irrelevant) answer. The question of how things best fit into our own lives seems far more abstract.

Every now and then a client of mine will lament refinancing a mortgage at 4% after his or her brother got 3.75%. The interest rate provides a simple, easy-to-understand comparison but misses the big picture. Digging deeper, we find that the benchmark brother paid closing costs and my client didn’t.

In 10 years, the monthly savings of that 0.25 percentage point difference will finally cover the closing costs. Suppose my client only wants to stay in the home for five? The brother’s rate is lower but ends up costing more eventually.

Nowhere is benchmarking more prevalent and more irrelevant than in investing. How your portfolio performs against the Standard & Poor’s 500, for instance, has no bearing on your financial well-being.

Some of you likely beat the S&P 500 in 2008 – and you didn’t jump for joy. Earning returns that are merely better than minus 37% (what the S&P lost that year) hardly gives you reason to celebrate. Also, if diversified, your portfolio almost certainly lagged the S&P 500 in 2014.

On this two-way street, you can’t expect to match the S&P 500 in good years or bad. Ignore the index, or at least take it with a degree of skepticism.

Your portfolio ought to be designed to provide you with the lifestyle you want. In most cases, such a plan does not mean a blind effort to maximize returns. Comparing your holdings to an arbitrary benchmark, especially over short periods, tells you nothing about whether your money will allow you to achieve your life goals.

Take an example from recent history: Your holiday budget needs to reflect your own money limit, not that of your relatives who try to accomplish different goals than you do in both life and spending.

For instance, in one recent holiday season, my wife and I did not exchange gifts. We had just moved into and furnished a new home and we spent Christmas in the hospital after delivering our second child. This year, we planned to spend more on gifts for our 3-year-old son than our 1-year-old daughter – not because we love him more but because his younger sister’s needs and wants are different and less expensive than his. We felt no need to force spending for the sake of equality between our two children.

The turn of the year provides time for reflection on the past 12 months and an opportunity to look forward. Take comfort in the certainty surrounding your family traditions but also set a goal to ignore irrelevant comparisons in your day-to-day life.

Follow AdviceIQ on Twitter at @adviceiq

Joe Pitzl, CFP, is the managing partner at Pitzl Financial in Arden Hills, Minn. He writes for the blogs Beyond the Money and Financial Fairway. Follow Joe on Twitter at @joepitzl.

AdviceIQ delivers quality personal finance articles by both financial advisors and AdviceIQ editors. It ranks advisors in your area by specialty, including small businesses, doctors and clients of modest means, for example. Those with the biggest number of clients in a given specialty rank the highest. AdviceIQ also vets ranked advisors so only those with pristine regulatory histories can participate. AdviceIQ was launched Jan. 9, 2012, by veteran Wall Street executives, editors and technologists. Right now, investors may see many advisor rankings, although in some areas only a few are ranked. Check back often as thousands of advisors are undergoing AdviceIQ screening. New advisors appear in rankings daily.

]]>
Maybe your family just wrapped up its holiday tradition of big gatherings where grandma headed the fireside sing-along or everyone got a year’s wisdom from your goofy brother-in-law. Maybe too you seethed silently at how well one relative is doing financially. As the holidays fade, we all must recognize our unrelenting desire to compare ourselves to loved ones – a path to both bad moods and potentially bad money moves.

In Predictably Irrational, author Dan Ariely writes, “Humans rarely choose things in absolute terms. We don’t have an internal value meter that tells us how much things are worth. Rather, we focus on the relative advantage of one thing over another, and estimate value accordingly.”

He adds, “We not only tend to compare things with one another but also tend to focus on comparing things that are easily comparable – and avoid comparing things that cannot be compared easily.” In other words, we often use completely irrelevant benchmarks to gauge our success and make decisions.

We compare our car or clothes with our siblings’. We compare how our children act relative to the neighbors’ kids. We decide how much to spend on our holiday shopping after we figure out how much our friends or family members plan to spend on theirs.

None of these comparisons makes rational sense. But we still find it far easier to take a shortcut and pursue easy comparisons that provide a simple, concrete (but irrelevant) answer. The question of how things best fit into our own lives seems far more abstract.

Every now and then a client of mine will lament refinancing a mortgage at 4% after his or her brother got 3.75%. The interest rate provides a simple, easy-to-understand comparison but misses the big picture. Digging deeper, we find that the benchmark brother paid closing costs and my client didn’t.

In 10 years, the monthly savings of that 0.25 percentage point difference will finally cover the closing costs. Suppose my client only wants to stay in the home for five? The brother’s rate is lower but ends up costing more eventually.

Nowhere is benchmarking more prevalent and more irrelevant than in investing. How your portfolio performs against the Standard & Poor’s 500, for instance, has no bearing on your financial well-being.

Some of you likely beat the S&P 500 in 2008 – and you didn’t jump for joy. Earning returns that are merely better than minus 37% (what the S&P lost that year) hardly gives you reason to celebrate. Also, if diversified, your portfolio almost certainly lagged the S&P 500 in 2014.

On this two-way street, you can’t expect to match the S&P 500 in good years or bad. Ignore the index, or at least take it with a degree of skepticism.

Your portfolio ought to be designed to provide you with the lifestyle you want. In most cases, such a plan does not mean a blind effort to maximize returns. Comparing your holdings to an arbitrary benchmark, especially over short periods, tells you nothing about whether your money will allow you to achieve your life goals.

Take an example from recent history: Your holiday budget needs to reflect your own money limit, not that of your relatives who try to accomplish different goals than you do in both life and spending.

For instance, in one recent holiday season, my wife and I did not exchange gifts. We had just moved into and furnished a new home and we spent Christmas in the hospital after delivering our second child. This year, we planned to spend more on gifts for our 3-year-old son than our 1-year-old daughter – not because we love him more but because his younger sister’s needs and wants are different and less expensive than his. We felt no need to force spending for the sake of equality between our two children.

The turn of the year provides time for reflection on the past 12 months and an opportunity to look forward. Take comfort in the certainty surrounding your family traditions but also set a goal to ignore irrelevant comparisons in your day-to-day life.

Follow AdviceIQ on Twitter at @adviceiq

Joe Pitzl, CFP, is the managing partner at Pitzl Financial in Arden Hills, Minn. He writes for the blogs Beyond the Money and Financial Fairway. Follow Joe on Twitter at @joepitzl.

AdviceIQ delivers quality personal finance articles by both financial advisors and AdviceIQ editors. It ranks advisors in your area by specialty, including small businesses, doctors and clients of modest means, for example. Those with the biggest number of clients in a given specialty rank the highest. AdviceIQ also vets ranked advisors so only those with pristine regulatory histories can participate. AdviceIQ was launched Jan. 9, 2012, by veteran Wall Street executives, editors and technologists. Right now, investors may see many advisor rankings, although in some areas only a few are ranked. Check back often as thousands of advisors are undergoing AdviceIQ screening. New advisors appear in rankings daily.

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