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. Sat, 25 Apr 2015 01:00:36 +0000 en-US hourly 1 Ordinance rezones commercial to industrial http://millelacscountytimes.com/2015/04/24/ordinance-rezones-commerical-to-industrial/ http://millelacscountytimes.com/2015/04/24/ordinance-rezones-commerical-to-industrial/#comments Sat, 25 Apr 2015 01:00:36 +0000 http://millelacscountytimes.com/?p=110999 Mille Lacs County approved a new development code, effective May 1, that will rezone close to 571 acres to commercial and 285 acres to industrial.
About half of the area set for rezoning commercial or industrial is residential and the other half is agricultural.
The new code was designed to attract more business and industrial development by having more area zoned so that businesses and industries looking for places to locate can readily find it in the county.
The new code also is designed to be more user friendly than the present code and protect both property rights and the environment.
The Mille Lacs County Board of Commissioners approved the new code on April 7 after a presentation by Anita Duckor and Ann Beckman with the consulting firm Duckor & Associates, which assisted the county in the process of drafting the new code. The process took more than a year, which involved a steering committee and 10 public meetings to gather public input across the county. The county’s new comprehensive plan was used as a guide for the new code.
The code contains a new C-2 highway commercial district, more allowed uses, a new industrial district and an aggregate overlay district showing where gravel pit mining can take place.
The steering committee had called for about 797 acres to be rezoned commercial and 329 acres to be rezoned industrial. But because of the number of landowners objecting to having their properties rezoned, the Planning Commission recommended only 571 acres for rezoning to commercial and 285 to industrial. Property owners still have a year from the date that the development code takes effect to opt out.
The new development code does not address landowner behavior, property maintenance issues or neighborhood disputes.

Landowner behavior issues can include unruly parties, trespassing, dogs and parking.
Property maintenance issues include junk vehicles, tall grass and improper waste disposal. Neighborhood disputes could include issues with property lines or the use of a shared driveway.
The development code addresses only land use, such as districts, allowed  uses and conditional uses.
A couple tools in the new code are a technical appendix and an administrative manual. The technical appendix contains the technical standards relating to road improvements and administrative standards pertaining to shoreline districts, and the Wild and Scenic River District floodplain.
Public feedback during hearings on the plan when it was being drafted showed that residents want the new plan to give fair and equitable treatment, be consistent, easy to understand, have transparency, and be business friendly and enforceable.
Transparency means the code informs the public of townships that have special requirements. Land Services Director Michele McPherson noted that the new code is for the rural area outside the townships of Princeton and Greenbush, which have their own zoning. Mudgett and Daily townships have some density standards.
Allowed uses under the new code are agri-tourism (having people learn about life on a farm), wineries, renewable energy use production, gravel pits and second dwellings on parcels. An allowed use means the property owner doesn’t have to get a conditional use permit, which saves the property owner time and money in not having to go through the permit process that includes Planning Commission and public review.
However, if an activity is an allowed use under the development code, it still has to meet various standards, including environmental regulations and any state rules.
Gravel pit operations are to be conducted so they minimize the effect of noise, glare and odor on adjacent properties.
The county will be saving some staff time by not having to deal with as many conditional use permits. Many of the permit applications over the years were requests to put a second dwelling on a property. Now the second dwelling will be an allowed use so that a permit will not be required, though there are still standards.
Highlights of the code’s zoning changes are:
• Rezoning to R-2 those areas outside the statutory shoreland districts in Kathio Township.
• A new conservation ag district to reflect the 10-acre lot minimum requirement in Dailey Township.
• A new agricultural district to reflect the 40-acre minimum lot in Mudgett Township.
Areas that the code targets for being commercial or industrial are based on various location characteristics. These include being adjacent to transportation intersections, adjacent commercial or industrial zoning, access to municipal services, and places where existing businesses are inappropriately zoned.
McPherson said the new code should make the county more competitive with other counties when it comes to potential commercial and industrial clients.
“In this day and age” when companies visit counties to see if they might be good locations, they want to be able to “walk in, get their building permit and be up and running in six months,” McPherson said

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A cappella group, Tonic Sol-Fa coming to Milaca http://millelacscountytimes.com/2015/04/24/a-cappella-group-tonic-sol-fa-coming-to-milaca/ http://millelacscountytimes.com/2015/04/24/a-cappella-group-tonic-sol-fa-coming-to-milaca/#comments Sat, 25 Apr 2015 01:00:29 +0000 http://millelacscountytimes.com/?p=111004 Tonic Sol-Fa

The most in-demand vocal group in the Midwest, Tonic Sol-Fa, will return to Milaca for a performance at the high school at 7:30 p.m. Friday, April 24.
Tickets are $10 for students and $15 for adults, and admission is free for kindergarten-age students and younger. Purchase tickets at the door on the day of the show or at Milaca Teal’s Market. The event will raise money for the Milaca Choir.
“People who have seen us before are in for a treat. It is great for the family. They are really going to enjoy it,” said Tonic Sol-Fa’s tenor and vocal percussionist, Greg Bannwarth.
Tonic Sol-Fa first began at St. John’s University with a few college friends that liked singing together. One member knew of an agent that was looking to book an a cappella group for an upcoming show. The only original member in the group today is lead vocalist Shaun Johnson. Bannwarth joined one year later. Bass, Jared Dove, joined in 2000.
In 1995, six months into beginning the group, members were able to perform and record music full time. They overcame the music industry’s apprehension to a cappella acts through personal connection and networking.
“When you start to get noticed for your own original work, as well as records labels start talking to you, that is always a nice moment,” Bannwarth said.
With use of social media to self-promote, the group has sold 2 million copies and has toured extensively throughout the United States and abroad. Tonic Sol-Fa does 150 performances annually to a combined audience of over 250,000 people in 48 states.
Experience has caused the group to grow in many ways, especially in regards to their fan base. They took home two Independent Grammy wins for “Best Original Holiday Song” and “Best Original Pop Song” out of 6650,000 entries. Tonic Sol-Fa was also inducted into the Midwest Music Hall of Fame.
From a musical standpoint, Bannwarth has seen an improvement in Tonic Sol-Fa’s musical writing and production showmanship.
“We are who we are on stage and those are our personas,” Bannwarth said.
A few member changes have taken place over the years. Tonic Sol-Fa previously performed as a quartet until the end of January 2015. Now they are on a nationwide search for a fourth member.
During the performance on Friday, Tonic Sol-Fa will play a combination of songs from their older albums, as well as a few from their newest album called “Original,” which will be released by the end of summer.
“We are currently in the midst of recording this album. We are working with a few particular Nashville artists on the record. Best selects from previous albums will be on it. It should be 12 total new tracks, two unheard tracks and the rest have not been recorded, just been live,” Bannwarth said.
Tonic Sol-Fa looks forward to their upcoming Milaca performance. Having performed in the area once before, the group knows it will be a wonderful crowd within a great community that is welcoming and shows support for their music.
“It’s always like coming home when you do shows in the Midwest and Minnesota. They treat you like family and it makes it all worthwhile,” Bannwarth said.
To find out more about Tonic Sol-Fa, visit www.tonicsolfa.com.

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Fire strikes Pease Produce http://millelacscountytimes.com/2015/04/24/fire-strikes-pease-produce/ http://millelacscountytimes.com/2015/04/24/fire-strikes-pease-produce/#comments Sat, 25 Apr 2015 01:00:10 +0000 http://millelacscountytimes.com/?p=111002 One of Pease’s last remaining businesses went up in flames April 14.
Part of the facilities of Pease Produce, a wholesale processor of fresh eggs, cheese and butter located at 240 Central Ave. in Pease, was destroyed by fire on Tuesday night, April 14.
There were 20,000 to 25,000 eggs lost to the fire, Pease Produce owner Steve Hubers said. They had come in earlier on the day of the fire. Pease Produce also lost two trucks, maybe three, Hubers said.
Witnesses in Pease say they heard an explosion around 11 p.m.
Hubers said he was called by Mille Lacs County Dispatch at about 11:15 p.m. and was told that a woman in town saw the fire as she was letting out her dog.
“She saw an orange glow and told the dispatcher that ‘The Produce’ was on fire.
Hubers and his wife, Anita, who live southwest of Pease, raced to the scene of the fire, he said. Flames were shooting out of the building, Hubers said.
The fire lit up the night sky and wasn’t controlled until early morning. Firefighters from Milaca, Princeton, Zimmerman, Foreston and Onamia were among eight fire departments called to fight the blaze. Hjort Excavating helped in tearing down some of the building after a roof collapsed.
At one point, firefighters were consuming 2,000 gallons of water per minute. Greg Lerud, one of Milaca’s fire chiefs, said tanker trucks were filling with water on the south side of Milaca and from a dry well on the southeast side of Pease. Firefighters cleared the scene at about 3:45 a.m. Wednesday, Lerud said.
“The fire departments did an amazing job. At one point they were concerned that the fire would take everything out,” he said, referring to nearby businesses, including the Pease Cafe. Only Pease Produce was affected by the fire. An adjacent Pease Produce building housing storage and a secondary cooler did not burn to the ground.
The building that burned is a former location of Timmer Implement. It housed Pease Produce’s office, a dock, the company’s primary cooler, storage and a packing facility.
Steve Hubers said the business plans to rebuild. Earlier this year his son-in-law bought into the business as Huber’s partner.
“We need to rebuild for him. It’s his future,” Hubers said.

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Biz Owners’ Cash Needs http://millelacscountytimes.com/2015/04/24/biz-owners-cash-needs/ http://millelacscountytimes.com/2015/04/24/biz-owners-cash-needs/#comments Fri, 24 Apr 2015 20:00:23 +0000 http://millelacscountytimes.com/?guid=b97478b2e838c7f45a6bca7adca0be5d As a business owner, you’ve heard “cash is king.” And the truth is, it is. Besides the cash that keeps your business operating every day, you need to prepare for extra cash needs you and your business have.

To start, let’s clear up the confusion between profit and cash. Profit isn’t cash you can spend. Too many times when I talk with business owners, they tell me about all the money they make, and then they start telling me about some new toys they want to buy.

I bet that most of you don’t want to take your profits and blow them. Having cash isn’t just about paying your bills or buying new stuff. It’s also about living a financially protected life now and in the future. Keeping enough cash to take care of these items helps you sleep better at night.

1. Lean times. There’s always a disaster around the corner. If your business is doing well, that’s great. And if you are in business for a while, you know that good times don’t last forever.

You need a disaster fund for both your personal expenses as well as business ones. During a downturn in the economy (which is a question of when, not if), you’ll be glad you put away some cash.

2. Retirement. Every time I hear people say they’ll retire on the proceeds from the sale of their business, I want to scream: “Are you crazy?” I can tell you that very few business owners can do that. The rest of us have to make sure we save on a regular basis.

Take some of your profit and put it away so that you can afford to retire. This gives you the choice on when it’s time to leave. Isn’t that something you want?

3. Cash flow hiccups. For example, an accident or illness can keep you out of work for a long time. I know this one from firsthand experience. When I went through my cancer treatments, I was lucky I had a cash cushion. As much as I wanted to work, it took me over two years before I was even close to being able to come back.

4. Business growth. If you think you can get all the cash you need from your bank to grow your business, think again. It is going to want you to come up with a significant amount of cash from alternative sources. Your bank is probably willing to be your partner, but not the only one providing the money.

All of these extra cash needs add up. Do yourself a favor. Take a few minutes to write them down and save for them. It’s a giant step toward living a life that is financially secured.

Follow AdviceIQ on Twitter at @adviceiq.

Josh Patrick is a founding principal of Stage 2 Planning Partners in South Burlington, Vt. He contributes to The New York Times You’re the Boss blog and works with owners of privately held businesses helping them create business and personal value. You can learn more about his Objective Review process at his website.

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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As a business owner, you’ve heard “cash is king.” And the truth is, it is. Besides the cash that keeps your business operating every day, you need to prepare for extra cash needs you and your business have.

To start, let’s clear up the confusion between profit and cash. Profit isn’t cash you can spend. Too many times when I talk with business owners, they tell me about all the money they make, and then they start telling me about some new toys they want to buy.

I bet that most of you don’t want to take your profits and blow them. Having cash isn’t just about paying your bills or buying new stuff. It’s also about living a financially protected life now and in the future. Keeping enough cash to take care of these items helps you sleep better at night.

1. Lean times. There’s always a disaster around the corner. If your business is doing well, that’s great. And if you are in business for a while, you know that good times don’t last forever.

You need a disaster fund for both your personal expenses as well as business ones. During a downturn in the economy (which is a question of when, not if), you’ll be glad you put away some cash.

2. Retirement. Every time I hear people say they’ll retire on the proceeds from the sale of their business, I want to scream: “Are you crazy?” I can tell you that very few business owners can do that. The rest of us have to make sure we save on a regular basis.

Take some of your profit and put it away so that you can afford to retire. This gives you the choice on when it’s time to leave. Isn’t that something you want?

3. Cash flow hiccups. For example, an accident or illness can keep you out of work for a long time. I know this one from firsthand experience. When I went through my cancer treatments, I was lucky I had a cash cushion. As much as I wanted to work, it took me over two years before I was even close to being able to come back.

4. Business growth. If you think you can get all the cash you need from your bank to grow your business, think again. It is going to want you to come up with a significant amount of cash from alternative sources. Your bank is probably willing to be your partner, but not the only one providing the money.

All of these extra cash needs add up. Do yourself a favor. Take a few minutes to write them down and save for them. It’s a giant step toward living a life that is financially secured.

Follow AdviceIQ on Twitter at @adviceiq.

Josh Patrick is a founding principal of Stage 2 Planning Partners in South Burlington, Vt. He contributes to The New York Times You’re the Boss blog and works with owners of privately held businesses helping them create business and personal value. You can learn more about his Objective Review process at his website.

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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Attacking That Card Debt http://millelacscountytimes.com/2015/04/24/attacking-that-card-debt/ http://millelacscountytimes.com/2015/04/24/attacking-that-card-debt/#comments Fri, 24 Apr 2015 17:00:22 +0000 http://millelacscountytimes.com/?guid=5831d8e353b2c5990306fff7688a8a06 The price to sleep better at night for Lisa was $40,000. That was how much she owed in credit card debt. But getting her to take the painful steps to reduce that debt was tough. For instance, there were the gifts she loved to give to her beloved niece.

Years of good-hearted or fun purchases added up to an intimidating amount. Lisa made the minimum payment each month, but the balance just didn’t seem to be going anywhere. Lisa, in her 50s, felt that she had to do something, but didn’t know what that was.

She tried asking for help. The first few phone calls she made didn’t end up so well. A couple of financial representatives tried to sell her products and never returned her calls after she asked them about her debt problem.

Exhausted by this emotional burden, month in and month out, Lisa reached out to Andrew Feldman, a financial planner in Chicago.

Feldman sat down with Lisa. They sized up her situation. Adding up the balances, they discovered that she owed $40,000 in credit card debt at annual interest rates around 15%.

She and her advisor created a plan to keep her from accumulating more debt and to start reducing it. The first thing was calling her credit card issuers to ask them to lower her interest rates. They refused, but it was worth trying anyway.

Feldman asked her to make more than the minimum payments every month, starting from an additional $50 and increasing from there. Making a payment that was not much higher than the interest meant it would take her forever to get out of debt. The $50 initial payment got her used to tackling her debt; the escalating amounts from there were designed to actually whittle it down.

He suggested ways to downsize her lifestyle: no more fancy presents for her niece, cut back on dining out and stop writing checks to charities. Having a well-paying job, a comfortable lifestyle and a generous nature, Lisa didn’t love that. She resisted some of his ideas, particularly when it came to her niece.

The advisor changed her mind by pointing out that her situation could get a lot worse than it was. “You have to plan for you losing your job tomorrow,” Feldman told her. He showed her the math of adding extra payments to motivate her.

So, instead of buying gifts, Lisa took her niece out to the zoo. She donated her time, rather than money, to the charity she supported, volunteering to work at an animal shelter.

Taking these steps and seeing results were a great encouragement for her. The more she saw her balance dropped, the more confident she felt.

Staying committed was difficult, but she was not alone. Her advisor kept reminding her that there’s light at the end of the tunnel, especially when financial hiccups happened. Lisa had an accident with her car that cost her thousands. It was a frustrating setback, but she started repaying her debt as soon as she could.

Sometimes, people just need their hands held, Feldman said.

That was almost three years ago. Lisa made her last payment this year. Feldman called her, congratulated on her achievement and said half-jokingly, “Let’s not do this again.” She readily agreed.

Follow AdviceIQ on Twitter at @adviceiq.

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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The price to sleep better at night for Lisa was $40,000. That was how much she owed in credit card debt. But getting her to take the painful steps to reduce that debt was tough. For instance, there were the gifts she loved to give to her beloved niece.

Years of good-hearted or fun purchases added up to an intimidating amount. Lisa made the minimum payment each month, but the balance just didn’t seem to be going anywhere. Lisa, in her 50s, felt that she had to do something, but didn’t know what that was.

She tried asking for help. The first few phone calls she made didn’t end up so well. A couple of financial representatives tried to sell her products and never returned her calls after she asked them about her debt problem.

Exhausted by this emotional burden, month in and month out, Lisa reached out to Andrew Feldman, a financial planner in Chicago.

Feldman sat down with Lisa. They sized up her situation. Adding up the balances, they discovered that she owed $40,000 in credit card debt at annual interest rates around 15%.

She and her advisor created a plan to keep her from accumulating more debt and to start reducing it. The first thing was calling her credit card issuers to ask them to lower her interest rates. They refused, but it was worth trying anyway.

Feldman asked her to make more than the minimum payments every month, starting from an additional $50 and increasing from there. Making a payment that was not much higher than the interest meant it would take her forever to get out of debt. The $50 initial payment got her used to tackling her debt; the escalating amounts from there were designed to actually whittle it down.

He suggested ways to downsize her lifestyle: no more fancy presents for her niece, cut back on dining out and stop writing checks to charities. Having a well-paying job, a comfortable lifestyle and a generous nature, Lisa didn’t love that. She resisted some of his ideas, particularly when it came to her niece.

The advisor changed her mind by pointing out that her situation could get a lot worse than it was. “You have to plan for you losing your job tomorrow,” Feldman told her. He showed her the math of adding extra payments to motivate her.

So, instead of buying gifts, Lisa took her niece out to the zoo. She donated her time, rather than money, to the charity she supported, volunteering to work at an animal shelter.

Taking these steps and seeing results were a great encouragement for her. The more she saw her balance dropped, the more confident she felt.

Staying committed was difficult, but she was not alone. Her advisor kept reminding her that there’s light at the end of the tunnel, especially when financial hiccups happened. Lisa had an accident with her car that cost her thousands. It was a frustrating setback, but she started repaying her debt as soon as she could.

Sometimes, people just need their hands held, Feldman said.

That was almost three years ago. Lisa made her last payment this year. Feldman called her, congratulated on her achievement and said half-jokingly, “Let’s not do this again.” She readily agreed.

Follow AdviceIQ on Twitter at @adviceiq.

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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60/40 Mix: Not So Great http://millelacscountytimes.com/2015/04/24/6040-mix-not-so-great/ http://millelacscountytimes.com/2015/04/24/6040-mix-not-so-great/#comments Fri, 24 Apr 2015 13:00:52 +0000 http://millelacscountytimes.com/?guid=dc68f612da9c6b7e2be5b44ba9d05211 The magic asset allocation number so often touted is a 60/40 split between stocks and bonds. This is supposed to give you the growth potential of equities and the stability of fixed-income. Trouble is, that mix didn’t do so well over the past 10 years.

Most likely the reason is that almost all asset classes suffered during the financial crisis, which the past 10 years captures. So the supposedly safer types of securities didn’t do such a terrific job offsetting the massacre in stocks.

None of this is to say that a stock-bond mix is a bad idea. It’s simply not a panacea.

Today, it is easier than ever to own a broadly diversified stock/bond portfolio, often represented as a pie. You can buy blended 60/40 “pie” portfolios in the form of a mutual fund. A good example is the DFA Global Allocation 60/40 (DGSIX) fund, which has a broad range of both domestic and international stocks and bonds, for a rough breakdown of 60% equities and 40% bonds. 

Over the past 10 years, target-date pie funds became popular in 401(k) plans, where the stock/bond blend shifts toward bonds progressively as you age, until you reach a retirement target date.

Macintosh HD:Users:aiqinc:Desktop:unnamed.jpg

The latest portfolio pie offerings are from robo-advisors who place a slick Internet user interface between the investor and the fund. The replacement of a human contact with a website is what warrants the word “robo.” For some investors, this gimmick creates a sensation of customized, technologically advanced wealth management.
 
The number of investment pie offerings today nearly equals the number of pizza pie offerings in Manhattan – sometimes referred to as “grease wheels.” Using the Dimension fund as a proxy, let’s look at how the pie approach worked during the last major downturn.

Macintosh HD:Users:aiqinc:Desktop:DGSIX.jpg

Back in those harrowing days, the investment pie approach was not particularly effective in avoiding major downside volatility, to say the least. It also placed a major drag on long-term investment performance.

Over the past 10 years, the 60/40 Dimension fund appreciated at an average annual rate of 6.4%. That 6.4% was about 1.5 percentage points below the performance of the main U.S. equity-only benchmark, the Standard & Poor’s 500 index, as embodied by the Vanguard 500 (VFINX) fund.

At one prominent robo-advisor, Wealthfront, with websites that offer forward-looking performance, expectations show about a 5% expected yearly return. While that’s not bad, it’s not exactly sizzling.

What about asset allocations other than 60/40? Well, there’s no elixir here, either. Three exchange-traded funds let you try different levels of risk: AOK, AOM and AOA iShares stock/bond blended portfolios for conservative (30% stock), moderate (40%) and aggressive (70%) strategies, respectively. These three ETFs haven’t been around for 10 years, but their five-year record still lags behind the S&P 500’s. The aggressive ETF has a 10.9% annual return as of the end of March – the other two had about half that – versus the S&P’s 14.4%.

One likely reason for the ETF’s lagging returns is the stock rally after March 2009. The relatively small slug of bonds in the aggressive ETF slowed it down, compared with the all-stock S&P. The other two didn’t have enough stocks to power a better showing.

While pie investing may not have delivered great returns, it does have the benefits of being simple, disciplined and non-emotion-based. JP Morgan Asset Management estimates that the average investor earned about a 2.5% average annual return over the past 20 years, substantially less than the disciplined pie investor.

Why? Too many of these investors made emotion-driven decisions at bad times. They bailed out when the stock market tanked, and got in after it had rebounded, and re-entry was expensive. Fear and greed often appear to dominate the investment allocation process, alas.

And no asset allocation, regardless of its breakdown, can cure the ill effects of unwise stampeding in and out of markets.

Follow AdviceIQ on Twitter at @adviceiq.

Nicholas Atkeson and Andrew Houghton are the founding partners of Delta Investment Management, a registered investment advisory firm in San Francisco, and authors of the new book, Win by Not Losing: A Disciplined Approach To Building And Protecting Your Wealth In The Stock Market By Managing Your RiskAdditional market commentary and investment advice is available via their websites awww.deltaim.com and www.deltawealthaccelerator.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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The magic asset allocation number so often touted is a 60/40 split between stocks and bonds. This is supposed to give you the growth potential of equities and the stability of fixed-income. Trouble is, that mix didn’t do so well over the past 10 years.

Most likely the reason is that almost all asset classes suffered during the financial crisis, which the past 10 years captures. So the supposedly safer types of securities didn’t do such a terrific job offsetting the massacre in stocks.

None of this is to say that a stock-bond mix is a bad idea. It’s simply not a panacea.

Today, it is easier than ever to own a broadly diversified stock/bond portfolio, often represented as a pie. You can buy blended 60/40 “pie” portfolios in the form of a mutual fund. A good example is the DFA Global Allocation 60/40 (DGSIX) fund, which has a broad range of both domestic and international stocks and bonds, for a rough breakdown of 60% equities and 40% bonds. 

Over the past 10 years, target-date pie funds became popular in 401(k) plans, where the stock/bond blend shifts toward bonds progressively as you age, until you reach a retirement target date.

Macintosh HD:Users:aiqinc:Desktop:unnamed.jpg

The latest portfolio pie offerings are from robo-advisors who place a slick Internet user interface between the investor and the fund. The replacement of a human contact with a website is what warrants the word “robo.” For some investors, this gimmick creates a sensation of customized, technologically advanced wealth management.
 
The number of investment pie offerings today nearly equals the number of pizza pie offerings in Manhattan – sometimes referred to as “grease wheels.” Using the Dimension fund as a proxy, let’s look at how the pie approach worked during the last major downturn.

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Back in those harrowing days, the investment pie approach was not particularly effective in avoiding major downside volatility, to say the least. It also placed a major drag on long-term investment performance.

Over the past 10 years, the 60/40 Dimension fund appreciated at an average annual rate of 6.4%. That 6.4% was about 1.5 percentage points below the performance of the main U.S. equity-only benchmark, the Standard & Poor’s 500 index, as embodied by the Vanguard 500 (VFINX) fund.

At one prominent robo-advisor, Wealthfront, with websites that offer forward-looking performance, expectations show about a 5% expected yearly return. While that’s not bad, it’s not exactly sizzling.

What about asset allocations other than 60/40? Well, there’s no elixir here, either. Three exchange-traded funds let you try different levels of risk: AOK, AOM and AOA iShares stock/bond blended portfolios for conservative (30% stock), moderate (40%) and aggressive (70%) strategies, respectively. These three ETFs haven’t been around for 10 years, but their five-year record still lags behind the S&P 500’s. The aggressive ETF has a 10.9% annual return as of the end of March – the other two had about half that – versus the S&P’s 14.4%.

One likely reason for the ETF’s lagging returns is the stock rally after March 2009. The relatively small slug of bonds in the aggressive ETF slowed it down, compared with the all-stock S&P. The other two didn’t have enough stocks to power a better showing.

While pie investing may not have delivered great returns, it does have the benefits of being simple, disciplined and non-emotion-based. JP Morgan Asset Management estimates that the average investor earned about a 2.5% average annual return over the past 20 years, substantially less than the disciplined pie investor.

Why? Too many of these investors made emotion-driven decisions at bad times. They bailed out when the stock market tanked, and got in after it had rebounded, and re-entry was expensive. Fear and greed often appear to dominate the investment allocation process, alas.

And no asset allocation, regardless of its breakdown, can cure the ill effects of unwise stampeding in and out of markets.

Follow AdviceIQ on Twitter at @adviceiq.

Nicholas Atkeson and Andrew Houghton are the founding partners of Delta Investment Management, a registered investment advisory firm in San Francisco, and authors of the new book, Win by Not Losing: A Disciplined Approach To Building And Protecting Your Wealth In The Stock Market By Managing Your RiskAdditional market commentary and investment advice is available via their websites awww.deltaim.com and www.deltawealthaccelerator.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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Gen Y Money To-Dos http://millelacscountytimes.com/2015/04/23/gen-y-money-to-dos/ http://millelacscountytimes.com/2015/04/23/gen-y-money-to-dos/#comments Thu, 23 Apr 2015 19:00:50 +0000 http://millelacscountytimes.com/?guid=c6e34eccdb528ae349ac764203850b3c If you’re a millennial (born between 1980 and 2000, aka Gen Y), you face financial questions besides just getting through to next payday. Here’s how to seriously plan with your money.

Recent research shows the demographic wave of 75 million American millennials will surpass the number of baby boomers this year, making it the nation’s largest generation.

Millennials are often described as diverse, educated and tech-savvy, with big career goals and an optimistic outlook. When it comes to finances, however, this generation appears averse to risk – maybe because many of these young professionals came of age during the Great Recession. Some even feel unable to purchase a house or retire until much later in life than their parents, in many cases because of young adults’ staggering student debt.

Last and not least, almost one in four millennials trusts no one for financial advice.

No matter how you refer to this new booming generation – and it often defies easy description – its size constitutes a significant force in the economy locally and nationally. With millennials estimated to make up a third to half of the American workforce in just five more years, the time is now for you in Gen Y to understand your financial potential and future.

Plan. Critical for long-term success, your financial action outline doesn’t need to be complicated but rather provide a starting point and create a baseline for measuring your goals.

If like many in your generation you prefer portable, connected devices as personal technology, incorporate programs and apps into your initial planning. For instance, finance sites such as Mint can help you document your money goals, time horizons and investment objectives and, most importantly, create a strategy and action plan.

Your plan can also serve as a basis for an individual or family budget. If you’re unsure where to start, consult a financial professional.

Start investing. With time on your side, invest early on to maximize your returns. Keep investments simple and costs low initially. For instance, consider low-cost, broad-based index funds in your portfolio to diversify holdings, reduce management expenses and mitigate tax consequences.

Automating transfer of money from your paycheck to your investment account streamlines this process. You can start with a small amount of your pay until you get more comfortable, and increase amounts later.

Plan for retirement. It’s never too early to create a retirement plan. Retirement accounts provide tax-deferred growth, a powerful feature to help boost long-term returns and provide income decades from now when you stop working.

If your company offers a 401(k) plan, see if your employer matches a portion of your contributions. At the very least, contribute enough to receive your full company match, often around 5% of your annual pay (though percentages vary).

With the limit on employee contributions to 401(k)s up to $18,000 in 2015, you stand an even a greater chance to maximize investing for your far-off golden years.

Trim fees. Creating a financial plan includes physically reviewing all incoming revenues and outgoing expenses, the actual (on paper or on screen) paystubs and statements.

You may notice a number of fees tacked onto bills, loans and other expenses that you previously overlooked. Banks, for instance, often quietly change rules and start charging you increasing amounts for services you once received for free.

Every fee means less money in your pocket. See how many fees you can reduce or remove in the year and reinvest those dollars in a savings or retirement account.

Either can be your best financial friend if you have time on your side.

Follow AdviceIQ on Twitter at @adviceiq.

Taylor Schulte, CFP, is founder and chief executive officer of Define Financial in San Diego, responsible for company’s vision, strategy and execution. He specializes in helping individuals, families and small business achieve their financial goals, from investment management, financial and retirement planning to charitable giving, college planning and insurance services. While he works with a wide range of clients, Schulte has a keen understanding of the millennial generation’s financial needs and a progressive, forward-thinking approach. Schulte was recently honored with the 2015 Five Star Wealth Manager Award, a recognition limited to fewer than one in 20 wealth managers in San Diego. He also regularly contributes to the San Diego Downtown News.

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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If you’re a millennial (born between 1980 and 2000, aka Gen Y), you face financial questions besides just getting through to next payday. Here’s how to seriously plan with your money.

Recent research shows the demographic wave of 75 million American millennials will surpass the number of baby boomers this year, making it the nation’s largest generation.

Millennials are often described as diverse, educated and tech-savvy, with big career goals and an optimistic outlook. When it comes to finances, however, this generation appears averse to risk – maybe because many of these young professionals came of age during the Great Recession. Some even feel unable to purchase a house or retire until much later in life than their parents, in many cases because of young adults’ staggering student debt.

Last and not least, almost one in four millennials trusts no one for financial advice.

No matter how you refer to this new booming generation – and it often defies easy description – its size constitutes a significant force in the economy locally and nationally. With millennials estimated to make up a third to half of the American workforce in just five more years, the time is now for you in Gen Y to understand your financial potential and future.

Plan. Critical for long-term success, your financial action outline doesn’t need to be complicated but rather provide a starting point and create a baseline for measuring your goals.

If like many in your generation you prefer portable, connected devices as personal technology, incorporate programs and apps into your initial planning. For instance, finance sites such as Mint can help you document your money goals, time horizons and investment objectives and, most importantly, create a strategy and action plan.

Your plan can also serve as a basis for an individual or family budget. If you’re unsure where to start, consult a financial professional.

Start investing. With time on your side, invest early on to maximize your returns. Keep investments simple and costs low initially. For instance, consider low-cost, broad-based index funds in your portfolio to diversify holdings, reduce management expenses and mitigate tax consequences.

Automating transfer of money from your paycheck to your investment account streamlines this process. You can start with a small amount of your pay until you get more comfortable, and increase amounts later.

Plan for retirement. It’s never too early to create a retirement plan. Retirement accounts provide tax-deferred growth, a powerful feature to help boost long-term returns and provide income decades from now when you stop working.

If your company offers a 401(k) plan, see if your employer matches a portion of your contributions. At the very least, contribute enough to receive your full company match, often around 5% of your annual pay (though percentages vary).

With the limit on employee contributions to 401(k)s up to $18,000 in 2015, you stand an even a greater chance to maximize investing for your far-off golden years.

Trim fees. Creating a financial plan includes physically reviewing all incoming revenues and outgoing expenses, the actual (on paper or on screen) paystubs and statements.

You may notice a number of fees tacked onto bills, loans and other expenses that you previously overlooked. Banks, for instance, often quietly change rules and start charging you increasing amounts for services you once received for free.

Every fee means less money in your pocket. See how many fees you can reduce or remove in the year and reinvest those dollars in a savings or retirement account.

Either can be your best financial friend if you have time on your side.

Follow AdviceIQ on Twitter at @adviceiq.

Taylor Schulte, CFP, is founder and chief executive officer of Define Financial in San Diego, responsible for company’s vision, strategy and execution. He specializes in helping individuals, families and small business achieve their financial goals, from investment management, financial and retirement planning to charitable giving, college planning and insurance services. While he works with a wide range of clients, Schulte has a keen understanding of the millennial generation’s financial needs and a progressive, forward-thinking approach. Schulte was recently honored with the 2015 Five Star Wealth Manager Award, a recognition limited to fewer than one in 20 wealth managers in San Diego. He also regularly contributes to the San Diego Downtown News.

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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Blended Family Estate Tips http://millelacscountytimes.com/2015/04/23/blended-family-estate-tips/ http://millelacscountytimes.com/2015/04/23/blended-family-estate-tips/#comments Thu, 23 Apr 2015 17:30:10 +0000 http://millelacscountytimes.com/?guid=9f43827fbc095f21429b805de34324e0 Are you one of the many people in a family where you or your partner (or both) brought children from a previous relationship? In such so-called “blended families,” your death might enhance the conflicting emotions and competing interests that ignite inheritance feuds.

Here’s what to know – and avoid – in estate planning for when two families get cobbled together into a new one. These lessons apply to all kinds of families, but are especially acute when stepchildren are involved.

Statistics paint a dynamic picture of this domestic phenomenon:

  • 60% of all remarriages eventually end in legal divorce.
  • About three in every four divorced persons eventually remarry.
  • Some 43% of all marriages are remarriages for at least one of the partners.
  • Almost two out of three (65%) of remarriages involve children from a prior marriage.

The first step to creating an estate plan includes open, honest communication with your children and spouse to determine what they expect from you financially. In addition, you can use a number of strategies to help ease familial tension.

Pre- or postnuptial agreement. If you’re part of an engaged or married couple, discuss what financial support you both can expect from each other, especially when children from previous marriages and relationships are in the picture. Then draw up the right documents.

Prenuptial (before marriage) and postnuptial (after marriage) agreements provide a detailed outline of each party’s rights and responsibilities during the marriage and in the event of divorce, including such items as payment of expenses or living arrangements.

Though laws of individual states govern enforcement of prenuptial agreements, they are typically recognized nationwide.

Beneficiary designations. Regularly update designations on such assets as your retirement accounts, life insurance policies and annuities. Divorce and remarriage are two major life events that absolutely necessitate these updates.

These designations dictate that, after your death, specified assets go directly to the beneficiaries. The biggest value of these direct transfers: bypassing probate, the legal (and often lengthy and sometimes pricey) process of distributing property in an estate.

The last thing you want is to unknowingly list your former spouse as beneficiary. Reviewing and adjusting your beneficiaries after a life-changing event ensures that assets go to heirs you want.

Revocable living trust. Another vehicle to help direct who receives your assets, this trust enables a successor trustee to carry out your wishes if you die or are incapacitated.

If you’re part of a blended family, a revocable trust can be particularly beneficial because you can change the document while you are still alive. Although assets in a revocable trust count as part of your estate when you die and therefore incur estate taxes, your assets avoid probate and are not a matter of public record.

Different states have different requirements regarding creation, execution and scope of these documents.

Will. You use this document to specify how your wealth will be distributed after your death; you can also amend your will at any time during your life.

Added advantages of a will: You can name a trusted, third-party executor to make fiduciary decisions in your beneficiary’s best interest and you can name a guardian for any minor children.

The techniques discussed above are just a few of the most common ways to resolve inheritance issues for blended families. Others include qualified terminable interest property (QTIP) trusts that can increase your control over the assets and distribution after your death and, later, the death of your spouse if he or she is the beneficiary. In short, what remains of the assets distributes to named heirs after the death of your surviving spouse.

Estate planning carries complex and significant legal and tax implications. Consult an estate planning attorney or tax professional to help you.

Follow AdviceIQ on Twitter at @adviceiq.

Kimberly Nguyen is an associate consultant with Wipfli Hewins Investment Advisors, LLC, in Rockford, Ill.

The information presented herein is standard information and intended only as a broad discussion of generally available incapacity-planning tools that a reader might consider discussing in detail with their attorney or other qualified professional advisor(s). None of the information contained herein is specific to the laws, rules or regulations of any state or other governing body, and as such cannot be construed as, or used as a substitute for, legal advice. Further, none of the information contained herein has been written or personalized for any individual, and the information may not be applicable or beneficial to anyone’s personal situation(s). The documents and processes identified herein can be complicated, and in many cases require the assistance of a qualified attorney to execute effectively. To the extent that you have questions about or wish to make use of any of the tools or processes identified herein, you are encouraged to seek the advice of your attorney. You assume full responsibility for your use of the general information contained herein and acknowledge and agree that by using the information contained herein Hewins Financial Advisors, LLC, its affiliates, agents and/or employees shall have no responsibility or liability for any claim, damage or loss resulting from your use of such information. 
 
Hewins Financial Advisors, LLC and Wipfli Hewins Investment Advisors, LLC (together referred to as “Hewins”) are independent, fee-only investment advisers registered with the Securities and Exchange Commission under the Investment Advisers Act of 1940. The views expressed by the author are the author’s alone and do not necessarily represent the views of Hewins or its affiliates. Hewins is a proud affiliate of Wipfli LLP. A copy of Hewins’ current ADV Part 2A discussing our investment advisory and financial planning services and fees is available for review upon request.

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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Are you one of the many people in a family where you or your partner (or both) brought children from a previous relationship? In such so-called “blended families,” your death might enhance the conflicting emotions and competing interests that ignite inheritance feuds.

Here’s what to know – and avoid – in estate planning for when two families get cobbled together into a new one. These lessons apply to all kinds of families, but are especially acute when stepchildren are involved.

Statistics paint a dynamic picture of this domestic phenomenon:

  • 60% of all remarriages eventually end in legal divorce.
  • About three in every four divorced persons eventually remarry.
  • Some 43% of all marriages are remarriages for at least one of the partners.
  • Almost two out of three (65%) of remarriages involve children from a prior marriage.

The first step to creating an estate plan includes open, honest communication with your children and spouse to determine what they expect from you financially. In addition, you can use a number of strategies to help ease familial tension.

Pre- or postnuptial agreement. If you’re part of an engaged or married couple, discuss what financial support you both can expect from each other, especially when children from previous marriages and relationships are in the picture. Then draw up the right documents.

Prenuptial (before marriage) and postnuptial (after marriage) agreements provide a detailed outline of each party’s rights and responsibilities during the marriage and in the event of divorce, including such items as payment of expenses or living arrangements.

Though laws of individual states govern enforcement of prenuptial agreements, they are typically recognized nationwide.

Beneficiary designations. Regularly update designations on such assets as your retirement accounts, life insurance policies and annuities. Divorce and remarriage are two major life events that absolutely necessitate these updates.

These designations dictate that, after your death, specified assets go directly to the beneficiaries. The biggest value of these direct transfers: bypassing probate, the legal (and often lengthy and sometimes pricey) process of distributing property in an estate.

The last thing you want is to unknowingly list your former spouse as beneficiary. Reviewing and adjusting your beneficiaries after a life-changing event ensures that assets go to heirs you want.

Revocable living trust. Another vehicle to help direct who receives your assets, this trust enables a successor trustee to carry out your wishes if you die or are incapacitated.

If you’re part of a blended family, a revocable trust can be particularly beneficial because you can change the document while you are still alive. Although assets in a revocable trust count as part of your estate when you die and therefore incur estate taxes, your assets avoid probate and are not a matter of public record.

Different states have different requirements regarding creation, execution and scope of these documents.

Will. You use this document to specify how your wealth will be distributed after your death; you can also amend your will at any time during your life.

Added advantages of a will: You can name a trusted, third-party executor to make fiduciary decisions in your beneficiary’s best interest and you can name a guardian for any minor children.

The techniques discussed above are just a few of the most common ways to resolve inheritance issues for blended families. Others include qualified terminable interest property (QTIP) trusts that can increase your control over the assets and distribution after your death and, later, the death of your spouse if he or she is the beneficiary. In short, what remains of the assets distributes to named heirs after the death of your surviving spouse.

Estate planning carries complex and significant legal and tax implications. Consult an estate planning attorney or tax professional to help you.

Follow AdviceIQ on Twitter at @adviceiq.

Kimberly Nguyen is an associate consultant with Wipfli Hewins Investment Advisors, LLC, in Rockford, Ill.

The information presented herein is standard information and intended only as a broad discussion of generally available incapacity-planning tools that a reader might consider discussing in detail with their attorney or other qualified professional advisor(s). None of the information contained herein is specific to the laws, rules or regulations of any state or other governing body, and as such cannot be construed as, or used as a substitute for, legal advice. Further, none of the information contained herein has been written or personalized for any individual, and the information may not be applicable or beneficial to anyone’s personal situation(s). The documents and processes identified herein can be complicated, and in many cases require the assistance of a qualified attorney to execute effectively. To the extent that you have questions about or wish to make use of any of the tools or processes identified herein, you are encouraged to seek the advice of your attorney. You assume full responsibility for your use of the general information contained herein and acknowledge and agree that by using the information contained herein Hewins Financial Advisors, LLC, its affiliates, agents and/or employees shall have no responsibility or liability for any claim, damage or loss resulting from your use of such information. 
 
Hewins Financial Advisors, LLC and Wipfli Hewins Investment Advisors, LLC (together referred to as “Hewins”) are independent, fee-only investment advisers registered with the Securities and Exchange Commission under the Investment Advisers Act of 1940. The views expressed by the author are the author’s alone and do not necessarily represent the views of Hewins or its affiliates. Hewins is a proud affiliate of Wipfli LLP. A copy of Hewins’ current ADV Part 2A discussing our investment advisory and financial planning services and fees is available for review upon request.

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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U.S. Stocks Are a Bad Gauge http://millelacscountytimes.com/2015/04/23/u-s-stocks-are-a-bad-gauge/ http://millelacscountytimes.com/2015/04/23/u-s-stocks-are-a-bad-gauge/#comments Thu, 23 Apr 2015 13:31:40 +0000 http://millelacscountytimes.com/?guid=f3d2980e477fa8a99ee86c1d628e9042 Too often, clients fire an advisor because their diversified portfolios underperform the U.S. stock market. Abandoning the sound strategy of diversification in this way often results in a financial travesty.

It may be entertaining to watch Donald Trump point his finger and curtly say, “You’re fired!” When a client says the same thing to an advisor, it isn’t so funny. By using domestic stocks as a yardstick to measure portfolio performance, clients hurt themselves.

The February issue of Inside Information, Bob Veres’ financial newsletter, puts a name to this phenomenon: “frame-of-reference risk.” The term comes from Roger Gibson, chief investment officer, and Christopher Sidoni, director of investment research, at Gibson Capital, in Wexford, Pa., who warned of this phenomenon recently. Veres reported on a presentation they gave at the American Institute of CPAs (AICPA) Personal Financial Planning conference in Las Vegas in January.

Gibson describes frame-of-reference risk as clients’ tendency to compare the performance of their diversified portfolios with current returns in the U.S. stock market. He points out, “If the discrepancy gets too painful, they will fire you and abandon a diversified approach at the wrong time.”

Based on the emphasis the media give U.S. equities, one could easily conclude they must be the largest, most important asset class in the world. Not at all: U.S. stocks represent a third of global market capitalization. And domestic equities’ total value ($22.5 trillion, according to the St. Louis Federal Reserve) is less than 10% of the world’s wealth ($263 trillion, per the Credit Suisse Global Wealth Report).

Neither do U.S. stocks consistently produce the best returns. In the 1970s, commodities dwarfed American stock returns. In the 1980s, international stocks led the way. In the 1990s, domestic stocks were the stars. In the 2000s, the leader was real estate.

Domestic stocks make up three-quarters of American mutual fund portfolios, according to research firm Morningstar. Yet by its very definition, in my experience, a fully diversified portfolio will have only about 10% to 20% in U.S. stocks.

Nonetheless, most investors judge the performance of their portfolios by American stocks. They may compare the returns of a diversified portfolio with news reports about the Standard & Poor’s 500 and the Dow Jones Industrial Average, which cover only the largest companies.

Between 1994 and 1999, Gibson’s multi-asset class strategy delivered a 13.05% annual return, which paled in comparison with the U.S. market’s 23.55%. He lost one-third of the assets he managed in 1999, as clients fired him. They abandoned their diversified investment strategy at just the wrong time to save themselves from the 2000-02 U.S. stock market downturn, when real estate and commodities soared. Gibson’s multi-asset class portfolios did 9.96% yearly from 2000 to 2005, when U.S. stocks rang up losses.

This pattern, familiar to many financial planners, is the sad consequence of frame-of-reference risk.

Another aspect of that risk is our human tendency to stay in a comfort zone where most of our neighbors are doing pretty much what we’re doing. One client even told Gibson, “I would rather follow an inferior strategy that wins when my friends are winning and loses when my friends are losing, than follow a superior strategy that at times causes me to lose when they’re winning.”

Unfortunately, this tendency can lead us into disasters. Diversified portfolios are once again underperforming the U.S. stock market. Predictably, an increasing number of investors are abandoning diversification, right in time to get nailed.

Gibson and Sidoni’s conclusion seems to be that educating clients to stay the course is a no-win game. In their view, advisors need to craft a less efficient, lower-return long-term strategy that clients will consistently follow rather than a more efficient strategy that clients may abandon in mid-stream.

While that view seems pragmatic, it really misses the mark. It doesn’t necessarily serve clients well to dumb down portfolios to match clients’ dysfunctional money scripts, which are the unconscious beliefs about money that often drive self-sabotaging behaviors. Instead, advisors could create better outcomes by helping clients uncover and modify those scripts. This approach can help keep clients from saying, “You’re fired!” at the wrong time for the wrong reasons.

Follow AdviceIQ on Twitter at @adviceiq

Rick Kahler, MSFP, ChFC, CFP, is a fee-only planner and author. He is president of Kahler Financial Group in Rapid City, S.D. Find more information at KahlerFinancial.com. Contact him at Rick@KahlerFinancial.com, or 605-343-1400, ext. 111.

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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Too often, clients fire an advisor because their diversified portfolios underperform the U.S. stock market. Abandoning the sound strategy of diversification in this way often results in a financial travesty.

It may be entertaining to watch Donald Trump point his finger and curtly say, “You’re fired!” When a client says the same thing to an advisor, it isn’t so funny. By using domestic stocks as a yardstick to measure portfolio performance, clients hurt themselves.

The February issue of Inside Information, Bob Veres’ financial newsletter, puts a name to this phenomenon: “frame-of-reference risk.” The term comes from Roger Gibson, chief investment officer, and Christopher Sidoni, director of investment research, at Gibson Capital, in Wexford, Pa., who warned of this phenomenon recently. Veres reported on a presentation they gave at the American Institute of CPAs (AICPA) Personal Financial Planning conference in Las Vegas in January.

Gibson describes frame-of-reference risk as clients’ tendency to compare the performance of their diversified portfolios with current returns in the U.S. stock market. He points out, “If the discrepancy gets too painful, they will fire you and abandon a diversified approach at the wrong time.”

Based on the emphasis the media give U.S. equities, one could easily conclude they must be the largest, most important asset class in the world. Not at all: U.S. stocks represent a third of global market capitalization. And domestic equities’ total value ($22.5 trillion, according to the St. Louis Federal Reserve) is less than 10% of the world’s wealth ($263 trillion, per the Credit Suisse Global Wealth Report).

Neither do U.S. stocks consistently produce the best returns. In the 1970s, commodities dwarfed American stock returns. In the 1980s, international stocks led the way. In the 1990s, domestic stocks were the stars. In the 2000s, the leader was real estate.

Domestic stocks make up three-quarters of American mutual fund portfolios, according to research firm Morningstar. Yet by its very definition, in my experience, a fully diversified portfolio will have only about 10% to 20% in U.S. stocks.

Nonetheless, most investors judge the performance of their portfolios by American stocks. They may compare the returns of a diversified portfolio with news reports about the Standard & Poor’s 500 and the Dow Jones Industrial Average, which cover only the largest companies.

Between 1994 and 1999, Gibson’s multi-asset class strategy delivered a 13.05% annual return, which paled in comparison with the U.S. market’s 23.55%. He lost one-third of the assets he managed in 1999, as clients fired him. They abandoned their diversified investment strategy at just the wrong time to save themselves from the 2000-02 U.S. stock market downturn, when real estate and commodities soared. Gibson’s multi-asset class portfolios did 9.96% yearly from 2000 to 2005, when U.S. stocks rang up losses.

This pattern, familiar to many financial planners, is the sad consequence of frame-of-reference risk.

Another aspect of that risk is our human tendency to stay in a comfort zone where most of our neighbors are doing pretty much what we’re doing. One client even told Gibson, “I would rather follow an inferior strategy that wins when my friends are winning and loses when my friends are losing, than follow a superior strategy that at times causes me to lose when they’re winning.”

Unfortunately, this tendency can lead us into disasters. Diversified portfolios are once again underperforming the U.S. stock market. Predictably, an increasing number of investors are abandoning diversification, right in time to get nailed.

Gibson and Sidoni’s conclusion seems to be that educating clients to stay the course is a no-win game. In their view, advisors need to craft a less efficient, lower-return long-term strategy that clients will consistently follow rather than a more efficient strategy that clients may abandon in mid-stream.

While that view seems pragmatic, it really misses the mark. It doesn’t necessarily serve clients well to dumb down portfolios to match clients’ dysfunctional money scripts, which are the unconscious beliefs about money that often drive self-sabotaging behaviors. Instead, advisors could create better outcomes by helping clients uncover and modify those scripts. This approach can help keep clients from saying, “You’re fired!” at the wrong time for the wrong reasons.

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Rick Kahler, MSFP, ChFC, CFP, is a fee-only planner and author. He is president of Kahler Financial Group in Rapid City, S.D. Find more information at KahlerFinancial.com. Contact him at Rick@KahlerFinancial.com, or 605-343-1400, ext. 111.

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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Lucy Diane Krist http://millelacscountytimes.com/2015/04/23/lucy-diane-krist/ http://millelacscountytimes.com/2015/04/23/lucy-diane-krist/#comments Thu, 23 Apr 2015 11:29:45 +0000 http://millelacscountytimes.com/?p=110980 Krist001Lucy Diane Krist, 84, of Oelwein, Iowa died Tuesday, April 7, 2015 at Oelwein Health Care Center in Oelwein, Iowa.
Diane was born on August 28, 1930, in St. Paul, MN the daughter of Thomas A. and Madelon (Keller) Bakke. She graduated in 1948 from Murray High School, St. Paul, MN, and went on to attend the University of Minnesota. On July 3, 1950 she was married to Wesley James Krist, in Mason City, IA. She worked for many years for the State of Minnesota as a telecommunications management analyst until her retirement in 1995. Her faith was very important to her; and she spent many hours teaching the value of the Bible principles and giving others hope for the future. She was considered an expert at sewing, knitting, cards and board games. She loved family, friends and her cats.
She is survived by her children Kevin (Annette) Krist, Milaca, MN, Kirk Krist, Ogilvie, MN, Neil (Sandy) Krist, Manchester, IA, and Lynette (Larry) Frazier, Oelwein, IA; eight grandchildren Brent Krist, Kent Krist, Kirk Krist, Joshua Krist, Penny Wolbeck, Joanette Kick, Michael Frazier, and Melissa Frazier; and many great-grandchildren.
Diane was preceded in death by her parents, ex-husband Wesley, and two grandchildren Tory and Tracy Westlund.
There will be a funeral service held on Saturday, May 2, 2015, at 1 p.m. at The Kingdom Hall of Jehovah’s Witnesses in Oelwein, IA with Wayne A. Hanson officiating. Friends may call from 11 a.m. till service on May 2, 2015

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