Financial Planning 43rd Edition: When Markets Move Fast, Do the Opposite
INVESTMENT MANAGEMENT || FIDUCIARY ADVICE || RETIREMENT PLANNING
"In the middle of precipitous market drops, it is reasonable to feel like you need to take action in order to protect your investment holdings. While doing so may bring you some short-term stress relief, it will likely come at the cost of lower long-term returns..."
Regular Reminder: We Have Two Alexis’!
Alexis Eubanks Alexis Delia
If you’ve been a client of Tilia for very long, chances are you’ve heard from both Alexis Eubanks & Alexis Delia. Together, these two carry a lot of weight for our company. Newer clients tend to get them confused sometimes, so we just wanted to take a moment and highlight their roles.
Alexis Eubanks is our Operations Manager, and heads up all of the administrative functions of the firm. She directs all traffic when it comes to opening accounts, money movements, general account maintenance & is our primary conduit to our custodian, Charles Schwab. Alexis’ role also includes training and supervising our growing Operations staff.
Alexis Delia is part of Tilia’s Investment Advisory team. Alexis currently manages nearly 50 client relationships at our firm, and she has been actively collaborating with our other advisors to deepen her understanding of Tilia’s client base. After two years of dedicated apprenticeship and extensive studying, we are proud to announce that Alexis has successfully passed the challenging Certified Financial Planner™ exam! Her commitment to excellence and passion for the industry make her a rising star at Tilia, and we are grateful to have her as part of our team.
Sources: Source: Bilello.com “The Week in Charts”
https://www.kitces.com/blog/ben-dobler-hsas-health-savings-accounts-hsa-high-deductible-health-plan-ppo-premium-deductible-triple-tax-savings-advantage-calculation/
When Markets Move Fast, Do the Opposite
After a relatively calm start to the trading year, U.S. stocks have fallen dramatically in the last week. As of April 8th, the S&P 500’s year-to-date performance through the first 66 trading days is the 4th worst on record, dating back to 1928. We’ve witnessed intraday swings in the major stock indexes of 6% or more at times.
In the middle of precipitous market drops, it is reasonable to feel like you need to take action in order to protect your investment holdings. While doing so may bring you some short-term stress relief, it will likely come at the cost of lower long-term returns. Looking at the 10 worst starts to the year since 1928, including this year, the 9 other periods had an average return for the remainder of the year of +19.98%. 6 of the 9 other periods the S&P 500 registered a positive return for the remainder of the year, with the worst return being -10.1% (1973), while the best return was +53.0% (1935).
When volatility is neck-breaking, and market sentiment is in the gutter as it is now (CNN Fear & Greed Index is currently at 5 out of 100, in “Extreme Fear” territory), we encourage clients to move slowly, and think twice about making changes to their portfolio. If you must act to feel better, talk to us about incremental adjustments that increase your diversification without greatly altering your long-term return potential. The bottom line is that you should feel like you don’t need to alter course at all. If you are in the accumulation phase, you are likely to come out of any downturn in a stronger position than you went into it. If you are retired or close to it, your portfolio likely includes a cushion of bonds and/or money market to protect your next few years of income needs so you won’t be forced to sell stocks while they are depressed in value. If stocks fall enough to where your portfolio is 5% below your target weighting of stocks, we’ll add to your stocks at very attractive prices. Your investment plan, and your portfolio will survive this current panic, and will thrive again in the future. Patient investors will reap the rewards when optimism inevitably returns to financial markets.
Health Savings Accounts (HSAs): Powerful savings tool but not right for everyone
Health Savings Accounts (HSAs) have gained popularity due to their “triple tax savings” benefits—tax-deductible contributions, tax-free growth, and tax-free withdrawals for qualified medical expenses. However, accessing these benefits requires enrollment in a High-Deductible Health Plan (HDHP), which comes with potential financial trade offs compared to traditional insurance plans. HDHPs generally have higher deductibles that apply broadly to medical services, potentially leading to greater out-of-pocket costs, especially for families with significant healthcare needs. These costs should be weighed against the retirement savings advantages offered by contributing to an HSA.
Traditional health insurance plans, while lacking HSA eligibility, offer benefits that may be more advantageous for those with consistent or high medical expenses. Tax-free premiums, separate out-of-pocket maximums for prescriptions, and access to Flexible Spending Accounts (FSAs) provide alternative tax savings and cost management strategies to an HSA. Generally, clients in lower tax brackets or nearing Medicare eligibility may find that the stability of a traditional plan outweighs the benefits of an HSA. Please contact Tilia’s advisory team if you would like assistance ensuring your healthcare choices align with both short-term medical needs and long-term financial goals.
