Blog

Deductibles vs Premiums

One of the biggest factors in choosing insurance, whether it’s auto, homeowners, or health insurance, is the cost. But the cost isn’t just the monthly premium you’re paying; it’s the entire out-of-pocket cost you will pay if you have a claim.

It’s easy to elect the least expensive premium plan because so many of us have the “it could probably never happen to me” mentality and paying less on a monthly basis is much more appealing. But consider why you’re buying insurance in the first place…or the peace of mind of knowing that even though it “probably” couldn’t happen, there’s a chance it will and you want to be covered.

Protecting Yourself with Insurance

When it comes to insurance, we’re used to insuring our cars and homes and other important tangible assets that we may not be able to afford to replace easily. But nothing is more important than your life and ability to earn a living. YOU are your greatest asset that you need to protect.

The ESG tipping point: Are we there yet?

 

Washington - During the course of the past few weeks, markets have been volatile, and across our industry many asset classes have experienced outflows. However, some environmental, social and governance (ESG) strategies have continued to experience net inflows. Observing this, many investment consultants and members of the media have been asking us, "Have we reached the tipping point for ESG investing?" Incongruously, we have also been asked if the pandemic will derail ESG momentum.

As we have said in the past, we believe a tipping point for investors has already been reached and we see ESG increasingly embedded in the corporate and public psyche. Even an event as tragic and massive as the pandemic will not derail this trend, for at least three important reasons:

The importance of simplifying accounts

Overview

There are many reasons you may have multiple investment and banking accounts.

  • Job changes resulted in multiple retirement plans located at different institutions
  • You started investing in companies or mutual funds by directly buying a small number of shares over a long period of time
  • A family member gifted shares of stock to you
  • A bank offered great rates on savings or loans that you just could not pass up
  • You don't trust the financial services industry, and decided to keep multiple accounts to decrease the risk of an institution going out of business or someone stealing your money

These all seemed like good ideas at the time, but there are many reasons you should simplify.

Sticking to Principles

Financial downturns are unpleasant for just about everyone. For investors, sticking to core principles can help.

A famous American football coach once said, “You don’t rise to the occasion, you sink to the level of your training.”The implication is that, in times of great stress, the most reliable recipe for success is sticking to a set of fundamental principles.

From February 20 to March 20, the S&P 500 Index returned –37.4%, with daily returns ranging from –12.0% to +9.4%. A drop of nearly 40% in the stock market combined with a spike in volatility can make many investors reconsider their investment approach. Some might suddenly find stock-picking approaches more alluring. After all, who has not heard the claim that a volatile market is precisely the environment in which many traditional active managers thrive? But is there any truth to this claim?

What is the Fed doing and what does it mean for fixed income?

What has the Fed done?
The U.S. Federal Reserve (Fed) has pulled out its alphabet bazooka in an effort to ensure sufficient liquidity and the smooth functioning of financial markets, while also providing credit to businesses that are affected by the spread of COVID-19 and the stall in global economic activity. In addition to lowering the Federal Funds rate to a range of 0-0.25%, the Federal Reserve has restarted its quantitative easing program (QE), expanding the mandate to include commercial mortgage backed securities (CMBS) and putting no limit on the size of asset purchases. The Fed has also restarted the term asset backed securities loan facility (TALF), included municipal bonds as eligible collateral at the Money Market Mutual Fund Liquidity Facility (MMLF) and Commercial Paper Funding Facility (CPFF), and created both the Primary Market Corporate Credit Facility (PMCCF) and the Secondary Market Corporate Credit Facility (SMCCP).

No 401(k)? No Problem

Saving for retirement can be daunting, so it’s no surprise that employer-sponsored retirement plans can be a key stepping-stone into the world of investing—and to a healthy retirement nest egg. 

While that’s great for those with access to an employer-sponsored plan, such as a 401(k), 403(b) or 457 plan, those without access to a plan at work may find themselves struggling to figure out where to begin saving for the future. 

That’s particularly true for millennials. About 72 percent of non-investing millennials are employed full-time, but don’t have access to an employer-sponsored plan, or are not employed full-time, according to a recent study by the FINRA Investor Education Foundation and CFA Institute. That compares to just 21 percent of millennials currently investing with retirement-only accounts. 

But the lack of access to an employer-sponsored plan or to full-time employment doesn’t mean you can’t save for retirement. In fact, saving for the future can be one of the best ways to use your money, no matter your current employment status. 

“While employer-sponsored retirement plans are fantastic tools to help people save for retirement, there are plenty of options for those who don’t have access to one,” said Gerri Walsh, President of the FINRA Foundation.

Here’s a look at your options: 

What does the coronavirus mean for investors?

Financial markets have fallen sharply on concerns of the coronavirus, a respiratory illness first identified in Wuhan, China, spreading globally. While the headlines have been worrying, and no loss of human life is insignificant, it is important to understand the facts. The framework we have adopted for discussing this virus is to consider the three components of a pandemic—contagion, severity and treatment—and how the evolution of those components can shift the market narrative.

 

How Markets Work and the FAANG Mentality

Is the market getting by with a little help from the FAANGs? And does their performance stand out historically? Investors may be surprised that it's common for a subset of stocks to drive a sizable portion of market returns. 

The stocks commonly referred to by the FAANG moniker—Facebook, Amazon, Apple, Netflix, and Google (now trading as Alphabet)—have posted impressive gains through the years, with all now worth many times their initial-public-offering prices. The notion of FAANG stocks as a powerful group holding sway over the markets has sunk its teeth into some investors. But how much of the market’s recent returns are attributable to FAANG stocks? And does their performance point to a change in the markets? 

Three Possible Paths for Fed Interest Rate Policy in 2020

The US Fed held rates steady in December and plans to continue that stance through 2020. But a lot can happen to change the Fed’s mind—after all, it entered 2019 expecting to hike rates and ended up with three cuts. What does 2020 have in store?

The outlook is unusually cloudy. Geopolitical events like the US-China trade war could reignite, and the looming US elections, with every House seat, 35 Senate seats and the presidency on the ballot, could leave the US economy and financial markets on volatile ground. 

Given the substantial amount of uncertainty, we don’t think it’s practical to put a single forecast on the Fed’s policy actions for 2020. We think a better approach is to establish a range of scenarios and what the Fed might do in each case. As the year progresses, we can better evaluate which path the US economy is on and update expectations accordingly.

As we see it, there are three main paths that could influence the Fed’s next moves (Display).