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Financial Wellness for Gen X and Millennials – It’s About More than Investments

Part 1: Car Insurance

I’ve noticed a few recurring themes from financial plans this past year. They have nothing to do with investments, but they are in many ways, so much more important. It turns out, there are a few items in your financial life that require consistent maintenance. Dropping the ball could cost you quite a bit of money.

If you have any financial assets, you need full liability coverage car insurance. The state minimum amount will not be enough to cover you in an accident when you’re at fault, and the other party can sue you personally after the insurance maxes out. In Louisiana, the state minimum liability insurance is 15/30/25. That means $15,000 for bodily injury per person, $30,000 for bodily injury to more than one person in an accident, and $25,000 for damage to the other person’s vehicle. So, the next time you total someone’s $80,000 Tesla, you’re on the hook after the first $25,000. But the larger risk is the bodily injury limits. Have you ever seen a hospital bill, with an ambulance ride, for less than $15,000? If you carry minimum liability insurance, the injured person will be suing you for the remainder of their medical bills.

You need the maximum liability coverage of 100/300/100. That’s $100,000 bodily injury per person, $300,000 per accident, and $100,000 in property damage. In addition to full liability insurance, you might also want uninsured and under-insured coverage in case the other driver is at fault and doesn’t have enough insurance. To protect your assets further, you should consider purchasing an umbrella policy on your homeowner’s insurance that pays an amount above the maximum car insurance rates.

There are a few things you can do to lower your car insurance premiums. You might consider a higher deductible of $1,000 rather than $250 or $500. If you don’t owe anything on your car, and you have enough in savings to buy a replacement car, you might consider dropping collision coverage on your vehicle. If you run the numbers, self-insuring may be cheaper over the life of your vehicle.

Many car insurance companies are offering a discount to drivers who place a tracking device in their car for up to six months. This allows the insurance company to confirm the number of miles driven and analytical data such as speed and brake usage. Drivers deemed to be “safe” drivers are given a discount of up to 20% based on the data collected. This can backfire, however, if you’re a hot-rodder, so consider you’re driving style before taking this route.

Are you adding a teenage driver to your car insurance soon? Good luck! As parents before you know all too well, car insurance for teenage drivers is expensive. However, many insurance companies offer discounts for teens who have completed approved driver’s education classes and logged enough practice time behind the wheel with a parent. Teens can also get a discount for having good grades. Check with your insurance company to find out what information they need to apply for a teen driver discount.

I used to be the person who never changed car insurance, accepting the annual premium increase into infinity. It makes sense to shop your coverage every couple of years. Although the process is tedious, many people find significant savings by switching companies.

This is Part 1 of a series on financial wellness for Gen Xers and Millennials. Check back next week for a discussion on shopping your cash savings rate.

4th Quarter 2016 Market Commentary

Executive Summary

  • Year in Review – “Worst Start”, Brexit, Trump surprise victory
  • Small cap and Value stocks outperform
  • Interest rates decline mid-year, then rise to finish year higher
  • Will the US pass income tax and corporate tax reform in 2017?
  • Late innings for the current US economic expansion
  • The folly of forecasts 

In 2016, the US stock market reached new highs. You may recall that the market began the year with the “worst start” of any year on record. The “worst start” began early, with a 5% decline in the Dow Jones Industrial Average in the first four trading days in January. It continued in mid February, with US stocks down more than 11% for the year. By year-end the S&P 500 Index was up 11.96%. That’s a remarkable difference in market performance within the same calendar year. It makes the case for long-term thinking and following a disciplined approach to investing.

Last year was also a year marked by surprises. In June, voters in the United Kingdom voted to leave the economic agreement with the European Union. Prior to the voting results, almost every poll, and certainly the financial markets, expected a vote to remain in the EU. The reaction from financial markets to this surprise was initially strong. The Dow Jones Industrial Average lost 900 points in two days, and the British Pound declined below $1.30, a level not seen for over 30 years. However, within a week, global stock markets recovered their initial losses and even climbed higher. It was a remarkably fast reversal in market sentiment.

Markets reacted strongly to the surprise victory of Donald Trump in the US Presidential Election in November as well. This time, markets corrected even faster … literally overnight. On November 8, the day before the election, almost every poll predicted a win for Hillary Clinton. The New York Times gave Clinton an 85% chance of winning, and famed pollster Nate Silver of FiveThirtyEight predicted a 71.4% chance for a Clinton victory. To say that Trump’s win was unexpected is an understatement. What is more interesting, however, is the initial reaction and subsequent reversal in financial markets. As the election results became clear, Dow futures fell as much as 800 points. S&P 500 Index futures declined 5%, prompting a halt in trading. In Japan, the stock market was open overnight and closed down -5.4%. European markets initially traded down but finished the trading day higher than the open. US stocks initially opened lower on November 9, but recovered by mid-morning and closed in positive territory for the day. Stocks continued to rally through the end of the year. Read more

1st Quarter 2016 Market Commentary

If I simply told you that US Large Cap stocks were up 1.35% and bonds were up 3.03% in the first quarter of 2016, I’d be leaving out a large part of the story. In between January 1 and March 31, stocks declined as much as 10% in early February, only to reclaim the entire loss and post a small positive return by quarter end. That’s a rocky ride, even compared to historical market moves. International developed stocks fared worse, the MSCI EAFE Index was down -3.01% for the quarter. Emerging market stocks finally shined, with the index up 5.71%. Commodities posted a slight positive return, up 0.42%. Global REITS had strong performance, up 7.22% in the first quarter of the year.

While Americans watched our new favorite reality show “The 2016 Presidential Election,” there were several fascinating and important stories developing for investors around the world.

Negative Interest Rates in Japan

On January 29, the Bank of Japan (BOJ) announced a negative interest rate policy. The Japanese equivalent of the Fed Funds rate is now -0.1%.[1] This negative policy rate is effectively a penalty on banks that do not lend aggressively since banks have to pay interest on excess reserves. The BOJ is now the second major central bank to adopt a negative interest rate policy. The European Central Bank (ECB) has been negative since mid 2014. Other countries with negative policy rates include Switzerland, Sweden and Denmark.

The BOJ’s announcement was a shock to market participants, sending Japanese stocks higher and the Yen lower against the US Dollar. Previously, Bank Governor Haruhiko Kuroda stated that Japan would not adopt negative interest rates. Currently 60% of global government bonds are paying less than 1%, with almost 30% paying less than zero. [2] It remains to be seen whether these extreme and unconventional central bank policies will have a positive or negative effect on their home economies.

Read more

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Financial Advice – It’s Not Only Cost, but Quality

 

There have been countless articles written on the cost of financial advice in recent years.  Every time I pick up a Wall Street Journal or a popular personal finance column there’s a story about fees. They are right to criticize.  Financial services costs remain high even though advances in technology have reduced costs dramatically.

This laser-like media attention on costs has sparked a revolution in financial services. Investors are flocking to low cost ETFs, whose AUM surpassed that of hedge funds in 2015. For Do-It-Yourself investors, online, automated investment services called robo-advisors provide basic asset allocations for one-third the traditional costs of similar advice.

These reductions in costs are good for investors. After all, the less you pay to invest, the more returns you get to keep. I would like to see the media turn its attention now, to the quality of financial advice, not just the cost.

Providing financial advice does not have a uniform education requirement, licensure, continuing education, or self-regulatory institution like many other established professions. Anyone who can pass a low level test has the right to call him or herself a “financial advisor.” Financial planners do not need credentials to enter the field.  The disparity in the quality of financial advice investors receive can be enormous. Some financial advisors have zero educational background or training in investing. Other advisors have PhDs and many professional designations. Might a difference in the price of these two individuals make sense?

Read more

3rd Quarter 2015 Market Commentary

 

A wave of downward volatility greeted global investors during the third quarter of 2015. Many markets were down more than 10% from recent highs. This is often called a market “correction” by the media. Emerging market stocks took the worst of the hit. The MSCI Emerging Markets Index lost -17.90% during the quarter that ended September 30. Year to date, the emerging markets index is down -15.48%. International developed stocks gave back gains posted in the first half of the year. The MSCI EAFE Index was down -10.23% for the quarter and is -5.28% for the year. US Stock fared better than international stocks and were down -6.44% during the quarter. Commodities lost -14.47% during the quarter and are down -15.80% year to date. Global real estate also suffered losses, and the S&P Global REIT Index is down -4.36% year to date. Investors rushed to bonds for safety, pushing interest rates lower yet again. The Barclays Aggregate Bond Index is up 1.13% for the year.

Here is a word of caution before I continue discussing recent negative performance. Long-term investors should avoid making changes to their portfolio based on short-term market movements. The volatility we’ve seen this summer is neither extraordinary nor outside the norm. The S&P 500 Index declines on average -14.2% in a calendar year. [1]  The most recent pullback of -12.7% (from the highest point to the recent low) is less than that 35-year average. The rest of this letter is an explanation of what happened during the quarter and not a prediction. In ThirtyNorth’s conference room in New Orleans, there is a real crystal ball. It serves as a constant, tongue-in-cheek, reminder that no one can predict the future.

1,000 Point Drop

On Monday, August 24th, the Dow Jones Industrial Average opened down over 1,000 points. The index bounced back and ended the day off 588 points. “Dow Drops 1,000 Points” is an exciting and fear-provoking headline. Remember that 1,000 points on a base of 16,500 is 6.1%. Five years ago, the Dow Jones was at a level of 10,000, and a drop of 1,000 points would have been a 10% decline. Why do we have such difficulty interpreting a 1,000-point drop? Many financial headlines made comparisons to “Black Monday”, the day in 1987 when the Dow Jones dropped and closed down 22.6%. Can you guess how many points the Dow dropped on that day? Read more

2nd Quarter 2015 Market Commentary

Exciting global economic news dominated the second quarter, yet financial markets recorded modest movements. The US stock market recorded a small, positive result, and the S&P 500 Index is up 1.23%. International stocks rose at first, but fell as Greece struggled to repay its debts. The MSCI EAFE Index is up 5.52% year to date. Emerging markets inched higher, and the MSCI Emerging Markets Index is up 2.95%. Real estate saw a major correction, particularly in the US, as interest rates rose. The S&P Global REIT Index is now down -4.09% for the year. Commodities gained, but the Bloomberg Commodity Index is still negative -1.56% through June 30.

In April, European stocks hit a new high, breaking a record set in March 2000. [1] The European Central Bank’s bond-buying program boosted European stocks. Although the Euro rose against the US Dollar to $1.19, it is well below its value of $1.34 a year ago. In May, France and Italy recorded positive GDP growth. France is the second largest economy in the Eurozone. Italy is the third largest.[2] European stocks retreated when Greece missed a payment to the International Monetary Fund. The broader outlook for the Eurozone economy remains optimistic.

The US economy contracted -0.2% in the first quarter. This was the Bureau of Economic Analysis’ third revision on June 24, 2015. [3] Falling exports caused much of the contraction. It is not clear if strength of the US dollar or a labor dispute at West Coast ports led to the decrease. For the fifth year in a row, first quarter GDP was negative. In each of the previous five years, annual GDP growth was slow but positive. The Federal Reserve Board reduced its GDP forecast in March and again in June. [5] Chairman Janet Yellen signaled the Fed will still raise rates in 2015. Yellen stated to Congress in mid July:

“If the economy evolves as we expect, economic conditions likely would make it appropriate at some point this year to raise the federal funds target”. [6]
Read more

Blair duQuesnay named to Investment News “Top 40 Under 40” list for 2015

Blair duQuesnay named to InvestmentNews “4o Under 40” list for 2015

New Orleans, LA (June 22, 2015)– Blair duQuesnay, Chief Investment Officer and Principal of ThirtyNorth Investments LLC, has been selected to InvestmentNews annual list of the Top 40 Under 40. This award recognizes 40 professionals under age 40 in the investment and financial planning industry across the nation, and the finalists were selected from an initial pool of 1,200 nominees.

The roles played within the industry of this year’s winners span from investment management, to media, financial technology and taxation. All recipients of InvestmentNews Top 40 Under 40 are being recognized as leaders nationally for their accomplishments, contributions to the industry, leadership and promise.

“Our 40 advisers and associated professionals are making a difference today,” said Christina Nelson, managing editor of InvestmentNews. When asked about the competition among the 1,200 nominees, she added “We had a tough time narrowing down the pool to just 40 – and that’s good news.”

Blair duQuesnay received a Finance degree from the University of Georgia’s Terry College of Business. She is also a Chartered Financial Analyst (CFA) charterholder and a CERTIFIED FINANCIAL PLANNER™. Blair provides frequent insights into the investment and financial planning industry, across print, broadcast and social media.

The entire list of InvestmentNews 40 Under 40 can be found by clicking here:

 

 

3rd Quarter 2014 Market Commentary

For the first time in almost three years, global financial markets cooled during the third quarter, particularly during the month of September. US large cap stocks, measured by the S&P 500 Index, lost -1.4% in September, but year to date are up 8.34%. A broader measure of the US stock market, the Russell 3000 Index lost -2.08% in September and is up 6.95% for the year. International stocks, hurt by strength of the US dollar, have returned -1.38% year to date. The MSCI Emerging Market index was down -7.41% in September but remains positive for the year at 2.43%. Interest rates increased slightly in September, causing the US Aggregate Bond Index to lose -0.68% for the month. Bonds are up 4.10% year to date. Global real estate continues to shine; the S&P Global REIT Index is up 10.81% through the third quarter. Commodities took the largest hit for the quarter and are now down -5.59% for the year.

Practically all of the news on the US economy was positive during the quarter. The third revision for second quarter Gross Domestic Product (GDP) showed that the economy increased at an annual rate of 4.6%. This follows a decrease of 2.1% during the first quarter of 2014. [1] The September jobs report showed that employment rosters increased by 248,000 for the month, and that the unemployment rate dropped to 5.9%. On average, the US has created 213,000 jobs per month over the past year.[2] The Federal Reserve Bank’s long-term estimate of full employment is 5.4%, which means we are just 0.5% from normal levels of employment.[3] US household net worth reached another all-time high of $81.5 Trillion in the second quarter.[4] More than five years into the current economic recovery, might we finally be ready to believe it?

Dollar Strength

Strength in the US economy signals a likely impending increase in interest rates, causing the US dollar to surge during the third quarter. The US Dollar Index, which measures the dollar against a basket of major global currencies, soared nearly 8% between June and late September. Read more

Blair DuQuesnay Ranked Top 100 Social Advisor

Brightscope, the online financial information company dedicated to bringing transparency to opaque markets, recently published a list of Top 100 Social Financial Advisors in the US. ThirtyNorth’s Director of Investments, Blair duQuesany, made the list at number 46.

According to Brightscope Co-Founder and CEO, Mike Alfred, “It has been reported that nearly half of investors would like to interact with advisors online but they cannot find them. Social media has become a required communication tool and BrightScope wants to recognize advisors taking advantage of the impact a robust digital profile can have on an advisor’s practice.”

View the entire list here.

Follow Blair duQuesnay on Twitter @BlairHduQuesnay

Third-party rankings and recognition from rating services, organizations, and publications are no guarantee of future investment success. Working with a highly-rated advisor does not ensure that a client or prospective client will experience a higher level of performance. A more thorough disclosure of the criteria used in formulating these rankings is available by contacting the advisor.

Suzanne Mestayer Named as New Orleans Federal Reserve Board Member

Suzanne T. Mestayer, managing principal of ThirtyNorth Investments LLC in New Orleans, was appointed to the board of directors of the Federal Reserve Bank of Atlanta’s New Orleans branch.

Federal Reserve Bank of Atlanta branch directors provide economic information from the branch territory to the district bank’s president and head office directors.

They use the information in formulating monetary policy and making discount rate recommendations. Continued reading article on The New Orleans Advocate