Keep Calm and Stick with your Plan

Some of you may be alarmed by news of the down market, but it’s time to take a breath and not panic. So what is going on? The Dow Jones Industrial Average (Dow) suffered a correction, which is defined as a 10 percent decline from its peak. Down markets are never pleasant for investors in the short-term. But a long-term term investor, with at least a 5-year holding period, should stay the course. If an investor’s portfolio has been corrected constructed to match the importance of his or her goals and tolerance toward risk, then selling in a panic is almost a sure-fire way to lose money.

But why did the market take a downturn? While there’s really no clear answer to that question. But part of the answer is likely investor panic.  As the market slowly declines, many investors panic and sell too which fuels the fire. Those who sell their holdings in an acute down market are often times left in a worse position than they would otherwise have been in if they had held their investments through the market decline and waited for the markets to recover. 

So what can you do? It is imperative when developing and maintaining your investment portfolio that you always plan for a down market. Your portfolio should be well balanced and ready for a down-market so you don’t have to panic.

Recent market declines highlight the reality that markets do fluctuate and thus, the importance of a strategic financial plan.  The future is unpredictable, but we are confident that the only way to beat inflation in the long-term (5 plus years) is through a well-diversified, equity portfolio.

The author, Ara Oghoorian, can be found under our tab, “find an advisor”, or by clicking here.

Ara Oghoorian

I have over 20 years experience in finance including working for the Federal Reserve Bank of San Francisco, U.S. Treasury, and most recently a wealth management firm in Washington DC providing financial advice and tax preparation. I hold the CFP, CFA, and EA designations.

This Week's Featured Guest: Beverly Harzog

"Your Money" was excited to have Beverly Harzog on the show this week. As an expert on credit, Beverly just published The Debt Escape Plan: How to Free Yourself From Credit Card Balances, Boost Your Credit Score, and Live Debt-Free. Catch a part of the show below as she outlines the main reasons of debt accumulation. 

Kent Smetters

Kent Smetters is the Boettner Chair Professor at The Wharton School of the University of Pennsylvania, the Interim Faculty Director of the Penn Wharton Public Policy Initiative, and a Faculty Research Fellow at the NBER. He was the former Deputy Assistant Secretary of the U.S. Department of the Treasury, and he subsequently served as a member of the U.S. Congress’ bipartisan Blue Ribbon Advisory Panel on Dynamic Scoring. Kent holds bachelor degrees in Economics and Computer Science from The Ohio State University as well as an MA and PhD in Economics from Harvard University. He previously cofounded a national registered investment advisory firm that built a new technology platform, grew the firm to over 50 advisors and then sold the firm to a large, publicly-traded company. Growing up in a financially poor family, Kent donates his time to “Your Money” to help families work, save and set goals in order to achieve the most in life. Kent is often cited in major news outlets.

This Week's Featured Guest: Daniel Pink

"Your Money" welcomed Daniel Pink, author of three New York Times bestsellers, including Drive: The Surprising Truth About What Motivates Us. He discusses motivation and rewards in the context of the workplace. Catch the clip below:

Kent Smetters

Kent Smetters is the Boettner Chair Professor at The Wharton School of the University of Pennsylvania, the Interim Faculty Director of the Penn Wharton Public Policy Initiative, and a Faculty Research Fellow at the NBER. He was the former Deputy Assistant Secretary of the U.S. Department of the Treasury, and he subsequently served as a member of the U.S. Congress’ bipartisan Blue Ribbon Advisory Panel on Dynamic Scoring. Kent holds bachelor degrees in Economics and Computer Science from The Ohio State University as well as an MA and PhD in Economics from Harvard University. He previously cofounded a national registered investment advisory firm that built a new technology platform, grew the firm to over 50 advisors and then sold the firm to a large, publicly-traded company. Growing up in a financially poor family, Kent donates his time to “Your Money” to help families work, save and set goals in order to achieve the most in life. Kent is often cited in major news outlets.

This Week's Featured Guest: Tony Crabbe

"Your Money" welcomed business psychologist Tony Crabbe on the show this week, author of Busy: How to thrive in a world of too much. Tony discusses what being "busy" really means, and how it influences our lives. Catch a portion of the conversation below: 

Kent Smetters

Kent Smetters is the Boettner Chair Professor at The Wharton School of the University of Pennsylvania, the Interim Faculty Director of the Penn Wharton Public Policy Initiative, and a Faculty Research Fellow at the NBER. He was the former Deputy Assistant Secretary of the U.S. Department of the Treasury, and he subsequently served as a member of the U.S. Congress’ bipartisan Blue Ribbon Advisory Panel on Dynamic Scoring. Kent holds bachelor degrees in Economics and Computer Science from The Ohio State University as well as an MA and PhD in Economics from Harvard University. He previously cofounded a national registered investment advisory firm that built a new technology platform, grew the firm to over 50 advisors and then sold the firm to a large, publicly-traded company. Growing up in a financially poor family, Kent donates his time to “Your Money” to help families work, save and set goals in order to achieve the most in life. Kent is often cited in major news outlets.

This Week's Featured Guest: Dr. Dawn Graham

This week on "Your Money," Dr. Graham gave her insights into negotiation. Dr. Graham is the Director of Career Management for Executive MBA at the Wharton School, as well as a certified personal trainer. Below are a couple tips to keep in mind when negotiating. 


Kent Smetters

Kent Smetters is the Boettner Chair Professor at The Wharton School of the University of Pennsylvania, the Interim Faculty Director of the Penn Wharton Public Policy Initiative, and a Faculty Research Fellow at the NBER. He was the former Deputy Assistant Secretary of the U.S. Department of the Treasury, and he subsequently served as a member of the U.S. Congress’ bipartisan Blue Ribbon Advisory Panel on Dynamic Scoring. Kent holds bachelor degrees in Economics and Computer Science from The Ohio State University as well as an MA and PhD in Economics from Harvard University. He previously cofounded a national registered investment advisory firm that built a new technology platform, grew the firm to over 50 advisors and then sold the firm to a large, publicly-traded company. Growing up in a financially poor family, Kent donates his time to “Your Money” to help families work, save and set goals in order to achieve the most in life. Kent is often cited in major news outlets.

Last Week's Featured Guest: Dr. Charles Murray

Dr. Charles Murray was the featured guest on "Your Money" last week. Dr. Murray is an accomplished writer with many books to his name. His insights from his most recent book, The Curmudgeon's Guide to Getting Ahead, can be heard below. 

Kent Smetters

Kent Smetters is the Boettner Chair Professor at The Wharton School of the University of Pennsylvania, the Interim Faculty Director of the Penn Wharton Public Policy Initiative, and a Faculty Research Fellow at the NBER. He was the former Deputy Assistant Secretary of the U.S. Department of the Treasury, and he subsequently served as a member of the U.S. Congress’ bipartisan Blue Ribbon Advisory Panel on Dynamic Scoring. Kent holds bachelor degrees in Economics and Computer Science from The Ohio State University as well as an MA and PhD in Economics from Harvard University. He previously cofounded a national registered investment advisory firm that built a new technology platform, grew the firm to over 50 advisors and then sold the firm to a large, publicly-traded company. Growing up in a financially poor family, Kent donates his time to “Your Money” to help families work, save and set goals in order to achieve the most in life. Kent is often cited in major news outlets.

Kent on MarketPlace Radio about the Fed's bank inspection

Kent Smetters

Kent Smetters is the Boettner Chair Professor at The Wharton School of the University of Pennsylvania, the Interim Faculty Director of the Penn Wharton Public Policy Initiative, and a Faculty Research Fellow at the NBER. He was the former Deputy Assistant Secretary of the U.S. Department of the Treasury, and he subsequently served as a member of the U.S. Congress’ bipartisan Blue Ribbon Advisory Panel on Dynamic Scoring. Kent holds bachelor degrees in Economics and Computer Science from The Ohio State University as well as an MA and PhD in Economics from Harvard University. He previously cofounded a national registered investment advisory firm that built a new technology platform, grew the firm to over 50 advisors and then sold the firm to a large, publicly-traded company. Growing up in a financially poor family, Kent donates his time to “Your Money” to help families work, save and set goals in order to achieve the most in life. Kent is often cited in major news outlets.

'A Big Grenade' In The Room -- Kent recently featured on NPR: Will New Retirement Rules Protect Americans From Wall Street?

Bottom line: The industry apparently got to the Department of Labor and was successful in watering down the new rules designed to protect retirement savers.

http://www.npr.org/2015/04/21/401049273/will-new-retirement-rules-protect-americans-from-wall-street

Kent Smetters

Kent Smetters is the Boettner Chair Professor at The Wharton School of the University of Pennsylvania, the Interim Faculty Director of the Penn Wharton Public Policy Initiative, and a Faculty Research Fellow at the NBER. He was the former Deputy Assistant Secretary of the U.S. Department of the Treasury, and he subsequently served as a member of the U.S. Congress’ bipartisan Blue Ribbon Advisory Panel on Dynamic Scoring. Kent holds bachelor degrees in Economics and Computer Science from The Ohio State University as well as an MA and PhD in Economics from Harvard University. He previously cofounded a national registered investment advisory firm that built a new technology platform, grew the firm to over 50 advisors and then sold the firm to a large, publicly-traded company. Growing up in a financially poor family, Kent donates his time to “Your Money” to help families work, save and set goals in order to achieve the most in life. Kent is often cited in major news outlets.

Kent in the NYT Times, talking about President Obama's plan for protecting retirement savers

Kent Smetters

Kent Smetters is the Boettner Chair Professor at The Wharton School of the University of Pennsylvania, the Interim Faculty Director of the Penn Wharton Public Policy Initiative, and a Faculty Research Fellow at the NBER. He was the former Deputy Assistant Secretary of the U.S. Department of the Treasury, and he subsequently served as a member of the U.S. Congress’ bipartisan Blue Ribbon Advisory Panel on Dynamic Scoring. Kent holds bachelor degrees in Economics and Computer Science from The Ohio State University as well as an MA and PhD in Economics from Harvard University. He previously cofounded a national registered investment advisory firm that built a new technology platform, grew the firm to over 50 advisors and then sold the firm to a large, publicly-traded company. Growing up in a financially poor family, Kent donates his time to “Your Money” to help families work, save and set goals in order to achieve the most in life. Kent is often cited in major news outlets.

Identity Theft Poses Extra Troubles For Children

A recent NY Times (http://www.nytimes.com/2015/04/18/your-money/a-childs-vulnerability-to-identity-theft.html?ref=your-money) article talks about how thieves are getting access to Social Security  and other personal information from health insurance company Anthem. A 2011 study of 40,000 children caught in a data breach found that some one else was using 10.2% of the SS numbers.

Thieves use children SS numbers because they have a clean credit report, making it attractive to someone else who wants to start their credit history. Also, kids do not typically check their credit reports.

One way to protect your kid's identity is to put a freeze on their credit reports.  Equifax, Experian and TransUnion are the three agencies that track your financial history and sell this information to companies we want to do business with. So, you put a freeze on credit reports with these agencies.

Credit freeze is a better option than fraud alerts as credit freeze is more stringent. But these agencies are not supporters of credit freezes, as they lead to more administrative work. Every agency has it's own procedure for setting a freeze, so check out their websites.

The credit freeze however won't stop all identity thefts, as some thefts do not need credit reports. For example, a SS number can be used to file taxes and get refunds, to gain legal authorization to work, and to enjoy health care benefits.

So use some additional precautions to avoid identity theft.  Do not carry your kids' SS card everywhere. Always question people that require their SS number. Also, warn your kids to be careful when online and never give out their SS without your permission.

Kent Smetters

Kent Smetters is the Boettner Chair Professor at The Wharton School of the University of Pennsylvania, the Interim Faculty Director of the Penn Wharton Public Policy Initiative, and a Faculty Research Fellow at the NBER. He was the former Deputy Assistant Secretary of the U.S. Department of the Treasury, and he subsequently served as a member of the U.S. Congress’ bipartisan Blue Ribbon Advisory Panel on Dynamic Scoring. Kent holds bachelor degrees in Economics and Computer Science from The Ohio State University as well as an MA and PhD in Economics from Harvard University. He previously cofounded a national registered investment advisory firm that built a new technology platform, grew the firm to over 50 advisors and then sold the firm to a large, publicly-traded company. Growing up in a financially poor family, Kent donates his time to “Your Money” to help families work, save and set goals in order to achieve the most in life. Kent is often cited in major news outlets.

How will rising interest rates impact your portfolio?

The Fed has recently indicated that it might push interest rates up in the summer. The market price of bonds moves inversely (i.e. in opposite direction) as interest rates, thus the value of your bonds might decline. However, the market has already incorporated that possibility. Still, when the Fed actually does pull the trigger, bond prices might dip a bit. But don't try to time the market: if bonds (maybe combined with some stocks) are the best investment match for your goal(s), stick with the bonds. We always knew that they would be a little bit risky, which is why they pay more than your bank account.

Kent Smetters

Kent Smetters is the Boettner Chair Professor at The Wharton School of the University of Pennsylvania, the Interim Faculty Director of the Penn Wharton Public Policy Initiative, and a Faculty Research Fellow at the NBER. He was the former Deputy Assistant Secretary of the U.S. Department of the Treasury, and he subsequently served as a member of the U.S. Congress’ bipartisan Blue Ribbon Advisory Panel on Dynamic Scoring. Kent holds bachelor degrees in Economics and Computer Science from The Ohio State University as well as an MA and PhD in Economics from Harvard University. He previously cofounded a national registered investment advisory firm that built a new technology platform, grew the firm to over 50 advisors and then sold the firm to a large, publicly-traded company. Growing up in a financially poor family, Kent donates his time to “Your Money” to help families work, save and set goals in order to achieve the most in life. Kent is often cited in major news outlets.

Nice article in US News about checking up on your insurance policies.

Nice article in USNews about checking up on your insurance policies. 
http://money.usnews.com/money/personal-finance/articles/2015/04/03/is-it-time-to-give-your-insurance-policies-a-checkup
 
Several good reasons to do an insurance check-up:
1) You can save money: Aflac found that 42 percent of workers waste up to $750 annually on insurance benefit mistakes.
2) You can get discounts: bundle up all your policies to one carrier and save fees. Or, install devices such as burglar alarms and water leak detection systems to earn credits on premiums.
3) Maybe your life has changed since you bought insurance: You might have bought your life insurance when you got married but now have two kids. So you might need an upgrade on your insurance policies. Maybe you got more jewelry, or the value of your existing items has increased.

 

Kent Smetters

Kent Smetters is the Boettner Chair Professor at The Wharton School of the University of Pennsylvania, the Interim Faculty Director of the Penn Wharton Public Policy Initiative, and a Faculty Research Fellow at the NBER. He was the former Deputy Assistant Secretary of the U.S. Department of the Treasury, and he subsequently served as a member of the U.S. Congress’ bipartisan Blue Ribbon Advisory Panel on Dynamic Scoring. Kent holds bachelor degrees in Economics and Computer Science from The Ohio State University as well as an MA and PhD in Economics from Harvard University. He previously cofounded a national registered investment advisory firm that built a new technology platform, grew the firm to over 50 advisors and then sold the firm to a large, publicly-traded company. Growing up in a financially poor family, Kent donates his time to “Your Money” to help families work, save and set goals in order to achieve the most in life. Kent is often cited in major news outlets.