The United States has elected Joe Biden to be its next President. Despite there being a last-ditch effort by President Trump to muddy the waters with claims of massive voter fraud, the country is beginning to move ahead. The S&P 500 has rallied 6.04% as of the morning of this writing (November 18th) from the day after Election Day (November 4th) and is pricing in a smooth transition of power. This transition of power is what separates the United States of America from other countries in the world and is the backbone of what makes our country so strong. President Trump has displayed that he has no intentions to concede, and will fight the results of the election until he has extinguished every option. This uncertainty may provide some market volatility in the short term, but I expect that volatility to be short-lived.
As Regis Philbin once asked, “Who wants to be a millionaire?”
You’re might be saying to yourself “I do, but I don’t want to go on a game show to do it.”
With a combination of patience, persistence, and self-control…you too can be a millionaire without having to answer any multiple-choice questions.
Here’s how you can do it.
We are halfway through 2020 and it feels like we are at a crossroads. The first 6 months of 2020 have been a whirlwind, to say the least.
Strictly speaking of the stock market, we saw the S&P 500 decline by an unprecedented fall of -33.92% in the span of a few weeks quickly followed by a slingshot rebound in the market of 44.47%. At the halfway point of the year, the S&P 500 was down -4.84% as of the close on June 30th. With everything that has happened this year, being down -4.84% feels pretty good.
This post isn’t going to have much to do with personal finances at all. I tell my clients that financial planning is really planning for when life happens. Well, life happened to me in the past year. I was born on Father’s Day in 1985 so it’s always been a holiday I had a connection with, yet I never gave much thought to it and what Father’s Day actually meant until now (unfortunately, in my family, we didn’t pay much attention to “Father’s Day” in its own right-- even though my Dad was one of the best).
COVID-19 and the call to flatten the curve has wreaked absolute havoc on the United States economy. GDP shrank -4.8% in the 1st Quarter of 2020 and the 2nd Quarter is looking to have a large contraction with an even larger recovery in the 3rd Quarter. Total first-time unemployment claims since mid-March have grown to 36.5 million, which represents a 22.4% unemployment rate. The S&P 500 closed at an all-time high of 3,386.15 on February 19th and closed at a low of 2,237.40 nearly a month later on March 23rd. That means the S&P 500 fell by -33.92%. Since the end of WW2, over the past 75 years, there have only been four instances where the S&P 500 fell greater – assuming the worst is now over. This was, by all means, an epic drawdown in the market. However, had we not social distanced the economic repercussions would have been even worse.
That is the bad news.
A river cutting through sedimentary rocks throughout millennia can create something mind-blowing like the Grand Canyon. Just like the Grand Canyon wasn’t created overnight, your investments need consistent contributions and decades of appreciation to build generational wealth. Too often, we invest for a couple of years into a 401(k) or IRA thinking our few thousand-dollar investments should be a hundred-thousand dollars. And when that isn’t the case, we give up contributing altogether.
In short…probably not.
According to a study by Northwestern Mutual, 21% of Americans have zero retirement savings and 33% have less than $5,000 saved for retirement. Also, 33% of Baby Boomers have less than $25,000 saved for retirement. According to the same study, the average amount Americans have saved is $84,821 and only 25% have more than $200,000 saved for retirement. What’s more crazy is almost 75% of Americans believe Social Security will “not at all likely” or “somewhat likely” be available when they retire. A study by Provision Living states Millennials would like to have $687,000 saved for retirement, but will likely only have $357,000. At least Millennials have time to change investing contributions. Baby Boomers are right at the doorstep of retirement and are in bigger trouble as their ideal retirement would have $574,000 savings but realistically will have $228,000. The dichotomy between fantasy and reality is great for all generations. We know there is a problem but are not taking the necessary precautions to deal with that problem.
It isn’t even 2020 yet, and it seems like we are already in full swing for election season. On both sides of the aisle, there are doom and gloom proclamations if the other party wins the Presidential election. Republicans say the stock market will go into a downward spiral if someone like Elizabeth Warren or Bernie Sanders were to win the election. Democrats say the stock market is already on the brink and will tank if Donald Trump is re-elected. And the media, especially the financial media, LOVES this. The financial media plays into these fears because they know investor uncertainty drives people to view their programs – which only act as fuel for the fire and are far from being a calming source. But as disruptive as elections seem to be, do they have an impact on the stock market?
Major League Soccer is the fastest growing professional sports league in the United States. After a decade of struggling and the league on life support, the league has rebounded and is expanding teams at an incredible pace. In fact, my city of Nashville is getting a team in 2020. I was curious one Saturday night about where MLS stands with team revenue, player compensation, etc. when compared to other leagues. It turns out, the MLS Players Association publishes player compensation on their website dating back to the 2013 season. So, I did what I do when I discover information like this – create a database and see what I can find with statistical analysis. This may sound like the worst Saturday night in existence; but for me, it’s like Christmas morning.
Picking a financial advisor can be a daunting task. "What do I look for? Where do I start? Do I even need one?” These are a few of the questions you may ask yourself when starting the process. Many times, not knowing the answers will stop the process right there. This checklist will help you through this process and know what to look for and ask.
Andrew Luck shocked the sports world on Saturday night when he announced he was retiring from the NFL. The former #1 Draft Pick was in the middle of what many considered the prime of his career. He was widely regarded as one of the top quarterbacks in the league and the Colts were likely going to be a Super Bowl contender for the next few seasons. A player of his caliber retiring at the age of 29 is almost unheard of. The owner of the Indianapolis Colts speculated that Andrew was leaving potentially $500 million on the table by retiring now rather than playing out his career into his late 30s or early 40s like Peyton Manning, Drew Brees, and Tom Brady.
I thought it would be interesting to see what can you learn from Andrew Luck’s retirement and how you can apply it to your own situation. Whether you are a professional athlete, young professional, or pre-retiree – there is something for you in this post.
I recently wrote about stock market indexes, and began to think about how there are different indexes for countries and wondered if there were any city or state specific ones? As much as I researched, I could only find an ETF for Nashville which has recently been liquidated. Their plans were to launch city-specific ETF’s if the Nashville investment vehicle was successful.
I recently finished “Zero to One” by Peter Thiel. I’m a few years late to it being released, but it has left quite an impact on my outlook. While the book delves into the mindset necessary to build a successful startup, there is one specific chapter in the book that struck a chord with me.
Chapter 6 is titled “You Are Not A Lottery Ticket” and the entire time I was reading it I could not stop thinking about how applicable this notion is to personal finances. I don’t want this post to turn into a full on book report, so I will briefly summarize what Peter states.
