It seems that every day I notice another article or study on Gender Lens Investing. This isn’t surprising considering that there are now at least 35 options of gender lens funds.
What is Gender Lens Investing?
Gender Lens Investing is a subset of “Impact Investing”; that is investments that are made to have a positive (and profitable) social and environmental impact on the world. Traditionally GLI has meant investing in companies that have larger than average representations of women in leadership positions and on their corporate boards of directors. But there are other approaches to consider: providing women entrepreneurs access to funding, or investing in products and services that improve the lives of women.
How Does It Fit Into a Portfolio?
The easiest way for the average investor is access Gender Lens Investing is through ownership of corporate stocks, or mutual funds that hold these stocks. Investors or fund managers consider factors such as pay equity, board representation, parental leave policies, anti-harassment policies, and management training programs. Some GLI mutual funds focus on just one of these areas.
You Don’t Have to Sacrifice Performance
Investors often think that by pursuing investments that focus on improving the lives of women and girls they must necessarily accept lower returns. But this is emphatically not true. A study by Bank of America Merrill Lynch found that companies with at least 30% women in management have enjoyed higher subsequent one-year Returns on Equity since 2012. Companies with more women in board seats or senior leadership are performing better in terms of sales, profitability and invested capital(1)
If you are interested in adding GLI to your portfolio, speaking with a financial advisor is a great place to start.
(1)https://www.piie.com/publications/wp/wp16-3.pdf
Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through GPS Wealth Strategies, a registered investment advisor and separate entity from LPL Financial.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
All investing involves risk including loss of principal. No strategy assures success or protects against loss. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
If You Have Unrealized Losses
2020 was a wild ride for a lot of companies. If you have a stock or mutual fund in a taxable account that was on the losing end of this pandemic, consider selling (“realizing losses”) to offset any gains you have. Capital losses that exceed capital gains in a year may be used to offset ordinary taxable income up to $3,000 in any one tax year, and you can carry forward the remainder until the amount is exhausted.
If You Expect Your Income to Change
Perhaps you were furloughed this year, but still have funds to contribute to retirement for 2020. If you think your income will increase in the future, now is the time to embrace the Roth. You’ll pay taxes on the contribution at your current rate. When you take distributions in the future, while you are presumably in a higher tax bracket, they will not be taxed. This is also the time to consider converting existing Traditional IRAs or 401(k) to Roths. This move can have unintended consequences, like pushing you into a higher tax bracket, so proceed with caution.
You Are Able to Save More Money
If you are not maxing out your employee retirement plan or IRA, consider year-end a great time to remedy that as much as you can afford. Even just increasing your contribution by a percentage or two can have a huge impact on your retirement savings. Compounding is real, folks! If you are making the maximum allowable contribution, find out if you are eligible for a Health Savings Account. You may be able to contribute $3,550 ($7,100 for a family) and an additional $1,000 if you are age 55 or over.
Taking just a little time to review year-end finances can make a big difference in the long run. As always, if you don’t know where to start or are confused about your options, consulting a CERTIFIED FINANCIAL PLANNER™ is a great place to start.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. This information is not intended to be a substitute for specific individualized tax advice .We suggest that you discuss your specific tax issues with a qualified tax advisor.
Many investors, especially those currently seeing major losses due to COVID-19’s impact on the markets, have developed a low tolerance for volatility. As a result they have moved a significant portion of their investments into bonds or other fixed yield vehicles. What many investors may not realize is that wholesale switches from one asset class to another in order to avoid volatility, can actually increase it. Secondly, for investors with a long-term perspective on their investments, volatility is actually a good thing, as it is the primary driver behind the sustained market gains over the last century.
Unquestionably, the stock market has experienced some fairly severe volatility in the recent weeks due to the uncertainty surrounding the worldwide Coronavirus pandemic. But a more thorough review of the historical record provides a clearer perspective on market volatility over the decades that actually favor investors who manage to hang on even in the worst of market declines.
Winning with Market Volatility
Since World War II, the stock market has experienced, on average, an intra-year decline of 14 percent each and every year; and in that same period, the market ended lower, on average, by 18 percent every third year. Bear markets, with an average decline of nearly 30 percent, have occurred every fifth year. Yet, over that same span of nearly seven decades, stock market values have grown 100-fold, which means that, $1,000 invested in the stock market 70 years ago would have grown to $100,000 despite the periodic market declines.
The very profound and highly instructive take away from this is that market declines have, thus far, been nothing more than a momentary interruption in an enduring market advance. Hence, volatility is simply a necessary phenomenon of a market that works. On the other hand, market risk – the risk of incurring losses as stock prices fall – is human-induced. The only way investors actually lose money is when they sell their stocks.
Those who are suddenly spooked into bailing out of the market after it has already fallen 10 or 15 percent, will always lose money. Yet, history shows that the stock market rewards investors who can bear the volatility of stocks and avoid the harmful behavioral traps through various periods of performance. So, the real risk to investors isn’t being in the next 20 percent market decline, its being out of the next 100 percent market increase.
Building Your Portfolio around Market Volatility
Proper Diversification
Proper diversification is the key to withstanding increased volatility and reducing downside exposure. A well-diversified, strategically allocated portfolio will almost always decline in value less than the stock market indexes. If your portfolio only declines 7 percent while the stock market declines 12 percent, you’ll have less to recover when the market rebounds.
Focus on your Long-Term Objectives
During periods of increased market volatility, such as the current volatility caused by COVID-19, it does little good to worry about the market-shifting macro events of the day that will have little or no impact on the long-term performance of your portfolio. The stock market decline of 2008 will turn out to be nothing but a small blip for a portfolio invested for 20 years. It took years for the investors who fled the market in 2008 to recoup their losses, while those who kept their sights on their objectives and stayed the course have enjoyed record gains in their portfolio.
Patience and Discipline
Volatile markets can cause investors to make costly mistakes, such as trying to time the market (which is very difficult at best), or chasing performance, or trying to pick the winners. These mistakes can cost investors a significant portion of their portfolio value. It takes patience and discipline to adhere to a strategy and avoid the herds. Stocks should be deliberately bought and sold according to a strategy, not in response to emotions. If you don't work with a financial advisor, now is a good time to consider it. They can assist with a solid strategy, since they are able to look at the current markets without any emotional attachment.
Though we don’t know how Coronavirus and its affect on the market will progress, we do know that strong planning and diversification may help you navigate the current storm.
*The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. This content is developed from sources believed to be providing accurate information. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel. Neither the information presented nor any opinion expressed constitutes a representation by us of a specific investment or the purchase or sale of any securities. All investing involves risk , Asset allocation and diversification do not ensure a profit or protect against loss in declining markets.
If you’re currently considering purchasing investment property, there are an equal measure of risks and rewards. Like any investment, risk can be managed, but you want to be aware of the risks prior to investing in property. And like any investment, there can be rewards, some quite large.
The following is a breakdown of both the risks and the rewards of purchasing investment property:
Risks:
Rewards:
If you do decide to invest in property, spend some time researching trends, the area you are looking to purchase in, and start looking for a property or two to add to your portfolio.
*This content is developed from sources believed to be providing accurate information. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel. Neither the information presented nor any opinion expressed constitutes a representation by us of a specific investment or the purchase or sale of any securities. Asset allocation and diversification do not ensure a profit or protect against loss in declining markets. This material was developed and produced by Advisor Websites to provide information on a topic that may be of interest. Copyright 2014-2019 Advisor Websites.
Have you made up your mind on just about everything, even before you know what it is? For instance, when you meet someone, is your opinion of the person formed from the first impression? Or, when you hear a political argument from the other side, is your mind opened or closed? Are you able to concede the “good points” the other side makes, or do you dismiss the whole argument?
We encounter people and ideas every day, and, while most of us would like to think we are open-minded, human nature, being what it is, makes it extremely difficult to discard our preconceived opinions. So, we almost instinctively filter out the information that doesn’t support our preconceived notion or opinion, at least initially. Behavioral psychologists refer to this kind of selective thought process as “confirmation bias.”
Well, when you consider that our investment choices are usually guided by a thought process, it can mean everything.
If that thought process is clouded by confirmation bias, you may be making important, sometimes life-changing, investment decisions with one-sided information, and that can dramatically skew the big picture you need to make a fully informed decision. Some of the more costly mistakes investors make can be attributed to confirmation bias which often leads to poor decisions based on incomplete information.
Take, for example, the investor who hears his colleagues bragging about the latest hot stock they all bought which has already doubled in price. No one wants to be left out of the next big thing, but at least this investor has the sense to do some research on his own. As he pours through the reports and surfs the internet for validation of their claims, half of his mind is racing with thoughts of the new car he will buy, as well as the possibility that he will be thought of as a “chump” for not getting in on the deal. Granted, he is allowing greed and fear to creep into the process; however, in doing so, it begins to filter out any information that might raise red flags and, instead, focuses on the information that validates the investment. Now, imagine that this investor made that investment at the height of the Dot Com Bubble.
Confirmation bias works subtly, some would say insidiously, inside the minds of investors as they seek nothing more than to make the best possible decisions with their money. Even for those who spend as much time analyzing the cons as they do the pros of a given investment, confirmation bias tricks the mind into giving more weight or credence to the pros, if there is already a preconception in favor of it. Or, more overtly, it simply allows us to dismiss or discount information that doesn’t conform to our beliefs. That’s a very dangerous mindset when your money is at stake.
Overcoming confirmation bias is not as easy as you might think. It’s one thing to be aware of it and even make a point of dealing with it. However, it’s that same bias that often prevents us from taking the necessary steps to avoid it.
If you are the president of the United States, let’s say, and your policies seem to always go in the wrong direction as far as the public is concerned, you may convince yourself that you are right and the public is wrong if all you do is surround yourself with people who agree with you. Having the strength and security to include people who have differing viewpoints in your life can cure you of confirmation bias; if you are willing to examine their viewpoints with an open mind.
Overcoming confirmation bias doesn’t mean abandoning your beliefs or even your preconceived opinions; rather it means recognizing how your bias could lead to making bad decisions in any aspect of life.
Being aware of it and recognizing that it could, in fact, cloud your judgment is the first step. Then, in gathering and analyzing information, focus on that which doesn’t conform to your opinion or belief and try to understand why. This might involve inviting those who don’t share your opinion to give you their view without you arguing yours. Just listen and evaluate. The same can be done by reading blogs and articles by people with different views. The most important thing is to work through the thought process more rationally without fighting opposing viewpoints.
*This content is developed from sources believed to be providing accurate information. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel. Neither the information presented nor any opinion expressed constitutes a representation by us of a specific investment or the purchase or sale of any securities. Asset allocation and diversification do not ensure a profit or protect against loss in declining markets. This material was developed and produced by Advisor Websites to provide information on a topic that may be of interest. Copyright 2014-2015 Advisor Websites.
If you’re a fan of political dramas on televisions, you’ll know that the turbulent world of politics has an affect on the global financial markets. But what about in real life? How much does art - if you can call shows like Scandal, Veep, and House of Cards art - imitate life, and vice versa?
The truth of the matter is that 2017 is turning out to be a bit of an unpredictable political year, and a lot of that can be boiled down to the win in November 2016, when Trump was elected President of the United States. And whether you are a pro or anti of his presidency, I think we all can agree that the political climate is ever changing. The truth of the matter is that surprisingly politics don’t have as much of an influence over markets as much as TV would like us to believe - in the long term.
Financial markets are resilient, but are not immune to the big events happening in the world. For example, when the United Kingdom voted to leave the European Union, aka Brexit, the markets took a hit. However within a week or so, global markets managed to bounce back1. Elections are also credited with contributing to the ebbs and flows of markets. “Elections can be viewed by traders as an isolated case of potential political instability and uncertainty, which typically equates to greater volatility in the value of a country's currency,” Investopedia explains. “A change in government often means a change in ideology for the country's citizens, which usually means a different approach to monetary or fiscal policy, both of which, especially the former, are big drivers of a currency's value.2”
On a global scale, politics affect currency when a country's trust is lost or challenged. The opposite can be said in the lead up to a major political event, when the change in power can be perceived as positive. “The hope is that a new leader might make changes that boost a country’s economic growth potential or improve its financial outlook,” according to a very interesting study from Charles Schwab. The article examines some of the global market changes of when a major political reform may occur. But just as when a so called ‘negative’ political event occurs, and the markets are hit but bounce back, the positive happens. “The effect of an initial burst of political enthusiasm may not be durable. Stock markets tend to be disappointed as the honeymoon vibe wears off.3”
So at the end of the day, it’s important to not take speculation of the effect of political change on financial markets to heart. Instead trust the advice of people who are in the industry through all climates.
Resources
2. http://www.investopedia.com/articles/forex/11/international-events-affect-forex.asp
*This content is developed from sources believed to be providing accurate information. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel. Neither the information presented nor any opinion expressed constitutes a representation by us of a specific investment or the purchase or sale of any securities. Asset allocation and diversification do not ensure a profit or protect against loss in declining markets. This material was developed and produced by Advisor Websites to provide information on a topic that may be of interest. Copyright 2014-2017 Advisor Websites.
Remember way back to your first paycheck. The moment you open the envelope anticipating the windfall when all your hard work pays off. Then, like a swift kick to your gut, realty hits. Your takeaway earnings are almost always way lower than what you expected.
Once the shock and horror of taxes goes away, money management comes into play. Most of the time these days, paychecks are spent before the money hits your account. If only at the moment of your first paycheck you had implemented the ‘holy grail’ of personal finance, pay yourself first. According to a recent article from Forbes, “only 23% of Americans have enough emergency savings to cover six months of expenses (the amount many advisers recommend for financial security should something unforeseen happen)—and 26% have no emergency savings at all.1”
Building the habit of paying yourself when you pay your bills could be the difference between uncertainty and financial stability. So what exactly does pay yourself first mean? Investopedia says, “‘Pay yourself first’ is a phrase popular in personal finance and retirement planning literature that means automatically routing your specified savings contribution from each paycheck at the time it is received. Because the savings contributions are automatically routed from each paycheck to your investment account, this process is considered to be paying yourself first; in other words, paying yourself before you begin paying your monthly living expenses and making discretionary purchases.2”
It’s never too late to establish these habits. Use the services available to you from your financial institution instead of waiting for saving to feel like second nature. Consider putting as much as you can on autopilot as you possibly can automate your paycheck to pay yourself first. Forbes suggests, “direct-depositing contributions to a retirement account before that money hits your checking account. And if your employer allows for multiple automated transfers, you can also have a set amount transferred into emergency savings or another account earmarked for a specific savings goal.3”
1. https://www.forbes.com/sites/learnvest/2014/07/24/are-you-paying-yoursel...
2. https://www.investopedia.com/terms/p/payyourselffirst.asp
3. https://www.forbes.com/sites/learnvest/2014/07/24/are-you-paying-yoursel...
*This content is developed from sources believed to be providing accurate information. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel. Neither the information presented nor any opinion expressed constitutes a representation by us of a specific investment or the purchase or sale of any securities. Asset allocation and diversification do not ensure a profit or protect against loss in declining markets. This material was developed and produced by Advisor Websites to provide information on a topic that may be of interest. Copyright 2014-2018 Advisor Websites.
