There are specific life insurance policies that can become a financial asset to you. Think of it like an investment account, such as an IRA or mutual fund.

Permanent Life Insurance

Permanent life insurance policies allow you to invest in conservative investments, like mutual funds or ETF’s. You can customize your investments, allowing your policy to align with your goals and risk tolerance. There are two types of permanent life insurance.

Whole Life Insurance

Whole life insurance is the most common type. This policy allows you to accumulate cash value. When you pay for the policy each month, a portion of it is placed onto a cash value account. This is basically a savings account component with the life insurance policy.  It is noteworthy that the premiums on these policies typically won’t increase over the life of the policy.

Universal Life Insurance

Universal life insurance is the second type that allows policymakers to grow an asset over time. What sets this one apart is that the premiums are not set and can change at any point. There is something called “variable universal life insurance” which allows investors to have more freedom over their investments. This could lead to higher returns in the long run.

How To Use Your Policy

To use your life insurance policy as an asset you must grow your investments and develop the power to borrow against what you have saved. These earnings are also growing on a tax-deferred basis.

• Use your policy as collateral for a loan: This will help you get approved for a loan or potentially get a better rate on the loan. This is a form of showing lenders that you are trustworthy as a borrower.
• Take a loan from your policy: You can borrow against the cash value of your permanent life insurance policy. When you do take a loan from your policy and it is not paid off by the time of your death, then that benefit is subtracted from what your beneficiaries would have received.
• Withdraw funds: You can simply take money from your policy that is cash. This is also money that will not be paid to your beneficiaries later. If your withdrawal is a large amount, then you may pay taxes from dipping into your investments.
• Option for accelerated benefits: This option is available in a time of severe medical emergencies.
• Surrender the policy: You can cancel your insurance policy and get back the cash value that you put in. Keep in mind to read the fine print, because often time there are quite high fees when doing this. Similarly, if you to withdraw from a retirement account early.

Matt’s Corner

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The post Life Insurance as An Asset appeared first on New Century Investments.

Maintaining a portfolio that aligns with your objectives and risk tolerance requires something called rebalancing. Your portfolio has a certain mix of asset types, like stocks, bonds, and real estate. Asset prices fluctuate, meaning their weighting will shift over time. This leads to the goal of maintaining and investment mix that supports you as an individual. Rebalancing also mitigates volatility and manages potential risk.

Periodic Time-Based Rebalancing

Rebalancing looks like selling assets that have appreciated beyond your long-term weighting and purchasing assets that have fallen below your target level. This strategy involves rebalancing at regular intervals, like annually, quarterly, irrespective of asset price movements.

Threshold or Price-Based Rebalancing

This strategy involves rebalancing once the portfolio deviates from the target mix. A mix is typically made up of stocks and bonds. Stocks are risky and bonds are safe. Moderate portfolios are typically 60% stocks and 40% bonds while aggressive portfolios are 80% stocks and 20% bonds. If a moderate portfolio starts to become more aggressive, then it is time to rebalance.

When To Rebalance?

Market Volatility

Investors commonly look to rebalance during stock market upward and downward trends. Volatility is not always a time to rebalance, and the goals is not to overreact to the market. Someone may want to increase their stock holdings, during an upward trend. If this was a moderate portfolio and veered into 70% holdings in stocks, it might be time to rebalance again.

Major Life Events

These events include retirement, expecting a child, buying a home, or going through a major health event. As life changes, so will your financial goals. Life changes will beckon you to re-evaluate your portfolio and rebalance as needed. This typically happens as people approach retirement. Retirees want a portfolio that is much safer than when they were in their 30s. They are reliant on that money to live and for their estate to pass on to their loved ones. Another situation could be that family member did pass and you received an inheritance. This would also be a time to invest and rebalance.

Diversification

This is the key to a well-performing portfolio. If you are concerned that your portfolio is not diversified enough or want to add a new investment, then it is time to rebalance.

It’s Been a While

Lastly, if you have not visited your portfolio in over a year and cannot remember what is going on it may be time to rebalance. Professionals recommend rebalancing quarterly or on an annual basis. This may not change much but provide clarity that you are on track.

Financial professionals are the best resources to draw on for rebalancing portfolios, based on tools and experience. Working hard to tend to your portfolio will reap exponential returns.

Matt’s Corner

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The post Benefits Of Rebalancing Your Portfolio appeared first on New Century Investments.

If you are dreaming of buying your dream home, traveling the world, or funding your kids through their education, then how do you even begin to save for all these goals? How do you know what is enough to store away each month? This does require some planning and critical thinking but is worth the effort.

Prioritize

The first step is to write down a list of all the things you want to save for, and how much is needed for each one. It is recommended to keep the list as small as you can. Now, it is time to prioritize your list based on needs, wants, and wishes. There are essential things you should be saving for, including retirement and an emergency fund. Then, you can prioritize buying a home or planning to have a child.

Categorize

Next, sort your goals by the length of time it will take to save. The 1^st category is for your short-term savings goals that you want to achieve in the next 2 years. The 2^nd category is for savings goals that you want to achieve in the next 3 to 10 years. This could be for a down payment on a home or for your child’s wedding. The 3^rd category is for long-term savings goals that will not be touched sooner than 10 years from now. This could be for retirement or education. It is important to categorize this way because it will help you decide how to invest.

Invest

It is important to spend more time in the market than to try and time the market for great returns. For short-term goals it makes more sense to invest in less volatile investments, such as certificates of deposits, money market funds, or cash. This will keep your funds more stable to ensure you have the amount you need. If your goals are 3 to 10 years from now, you can strategize a moderate portfolio. More money can sit in stocks but have a good balance of safer investments to preserve capital. For long-term goals, you can have a riskier portfolio that is invested in aggressive stocks. It is still important to have some measure of safety and to not forget about diversifying. Focus on investing first for the goals that are at the top of your priority list.

Review

Taking quarterly, semi-annual, or annual meetings to re-assess your goals and your investment allocations are vital to keeping you on track. You may need to rebalance your portfolio, like selling some stocks and buying more bonds, if your stocks appreciate above your target allocation. The closer you get to your goals, the safer your portfolio should look. This also gives you the space to change your goals or adjust where needed as you realize you may need to save more for a specific goal. Have the long game in mind when planning your investment strategy to save for your goals. Stick to the plan and thank yourself later.

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In the world of investing, much like in life, perspective shapes reality. Imagine two investors: one, an optimist who sees the stock market as a landscape filled with opportunity, even in the darkest of times; the other, a pessimist who views every downturn as a signal of impending doom.

The optimist, let’s call her Sarah, has been investing steadily for years. She knows that the stock market is inherently volatile, but she also understands that history shows a consistent upward trend over the long term. When the market dips, Sarah doesn’t panic. Instead, she sees it as a sale—a chance to buy high-quality stocks at a discount. During these times, she carefully evaluates companies, looking for strong fundamentals and solid growth potential. While others are selling in fear, Sarah is buying, confident that the market will eventually recover and reward her patience.

On the other hand, we have Jack, the pessimist. Jack is wary of the stock market, always fearing the next big crash. He believes that today’s world is fundamentally different—full of political turmoil, economic uncertainty, and technological disruptions that spell the end for traditional investments. Jack remembers the crash of 2008 all too well and is convinced that another one is just around the corner. So, when the market starts to drop, Jack sells his holdings, cutting his losses before things get worse. He avoids investing during downturns, preferring to wait until “things get better.”

Over the years, Jack’s pessimism costs him dearly. While he sits on the sidelines, the market recovers from each downturn, often reaching new highs. Sarah, meanwhile, sees her portfolio grow. Her willingness to invest when others are fearful pays off as the market rebounds, often stronger than before.

This isn’t just a story about two people; it’s a lesson rooted in history. The stock market, despite its ups and downs, has trended upward over time. Investors who have the courage to stay the course during tough times—when stocks are shifting from weak hands to strong ones—often come out ahead.

In fact, some of the best returns in the stock market have come from investing during downturns. The pessimists who fled to safety missed out on these opportunities, while the optimists who stayed invested or even added to their positions reaped the rewards. It’s a testament to the power of optimism and the belief that, despite the noise and fear, the market will continue its long-term upward march.

The story of Sarah and Jack highlights a fundamental truth about investing: it’s not just about what the market does, but how you react to it. The optimist sees downturns as opportunities, not threats, and this perspective makes all the difference. So, the next time the market dips, ask yourself—are you a Sarah or a Jack?

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The post The Tale of Two Investors: The Optimist and the Pessimist in the Stock Market appeared first on New Century Investments.

The Media is a powerful entity that has the power to impact the way you trade, invest and save. In this article, I will turn our focus to Financial Media, and I will discuss how the financial media, like all other industries, influences your decisions and why you should be aware of it.

What is the Financial Media?

The financial media is a category of media that covers financial news and information. It includes TV, radio, newspapers, magazines, and the internet. The media uses both paid and non-paid advertising to market its products or services.

The Financial Media is a large source of income for many companies because it allows them to reach a large number of consumers at once. Companies can use this opportunity to advertise not only their products but also their brand name which will help them gain customer loyalty over time through increased brand awareness due to frequent exposure through advertisements within these outlets.

How the Financial Media uses the news to impact consumer behavior.

How the Financial Media uses it’s power to affect the everyday consumer’s behavior.

The media is often pressured by their advertisers, who want to be able to sell more ads. In order to create more interest and attention, they may sensationalize information that is not financially relevant to the average consumer to sell more advertising space and time. The financial media industry also relies heavily on generalizations and oversimplifications which can lead consumers astray when making important financial decisions. For example:

●     A man hears about a savings account that pays 5% interest so he opens one with his bank – after all, 5% is better than most other available options (like CDs or bonds). However, what he didn’t realize was that this special account was a promotional offer that goes away after 6 months and charges high close-out fees and carries other hidden stipulations.

●     A woman hears about how all her friends are retiring early because they have enough money saved up in their 401k accounts so she decides she’ll do the same thing- but again fails miserably because she forgot about what happens when you withdraw money from an IRA before age 59 1/2…

The main point is to make sure to research into the information and not take everything at face value.

What is their motivation?

The media wants you to buy their product, which is often packaged as an annual subscription or monthly fee. They also want you to click on ads. By promoting other businesses’ products and services, they’re able to make more money from selling ads on their own platform.

The media is frequently inclined to exaggerate information that has little financial application to the average person but is still interesting enough for them to share with their readers/viewers/listeners to create attention and drive up ad revenue for themselves and others (e.g., companies whose products or services were mentioned in the article).

The media will do whatever it takes—even going so far as creating fear in your mind—for you stay tuned into their content because this means that they can get paid over time by having loyal viewers who tune back in regularly; this creates long-term engagements which are much harder for competitors like blogs or podcasts because these platforms don’t have an established audience built up already so it becomes harder for them compete against established media outlets when trying to attract new users who may be looking at different ways of getting information about personal finance matters without feeling overwhelmed by too much content available online today (i.e., there’s always room for improvement).

Who wins?

The media wins because it makes money from ad revenue, which is paid for by other companies and often also these companies are in the financial industry. The companies also win because they can use their advertising dollars to generate an ROI for their business.

And who loses?

Unfortunately, the consumer loses. They lose because they are being bombarded with information that may not be useful to them, and they also lose because this information is often time-consuming and expensive. It’s not uncommon for the average person to spend hours in front of a computer or television screen each day just trying to get their daily dose of information from sources like Facebook and Twitter (or even just answering emails).

It’s possible that this overload of media could also be affecting our health as well; constant exposure to screens can lead to eye strain, headaches and other symptoms associated with what’s known as “Digital Eye Strain”. Nowadays it seems like everyone has been affected by this issue at some point or another—but there are ways around it!

We should all be aware that while certain outlets and personalities may seem unbiased, they are not as impartial and objective as you might think.

It’s important to note that while some financial outlets and personalities may seem unbiased, they are not as impartial and objective as you might think. Most of the media has a bias towards certain companies or products, and even if they don’t, they’re still often working with advertisers who do. This is why it’s so important to do your own research before making any major purchases, especially in the finance industry.

The best way to ensure that you’re getting unbiased information on a product or service is by reading reviews online—especially those written by independent writers who aren’t being paid by the company in question!

Conclusion

Remember, there are agendas at work here. They may be hard to see or understand, but they’re there. If you can recognize this fact, then you’ll have a much better chance at navigating through the information maze that surrounds us all today. There are plenty of great financial news sources out there, you just have to do a little research!  Contact us if you have any questions about your portfolio or the events going on in the current economic environment. We are here to help!

Matt Ward, CFP®

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Matt.Ward@newcenturyinvestments.com

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The post The Media and How it Uses its Power to Impact Consumer Behavior appeared first on New Century Investments.

Several of us are concerned with the election ahead. Could it drag on for weeks and will this impact the stock market? What if Biden wins, won’t there be corporate tax hikes? Is the election going to cause the stock market to crash? These are very common questions that people ask me frequently.

First of all, anyone on TV or that writes eye-popping news headlines is clueless about the direction of the markets like the rest of us. Remember what Warren Buffett says about the stock market. He knows no way to reliably predict the stock market, therefore we should avoid speculating the short-term and invest for the long-term of at least 5 years.

This first table shows each calendar year’s return from the S&P 500 back from 1920-2019. The years highlighted were the election years.

I have a separate chart, not displayed in this email, breaking this table down further by whether a Democratic candidate versus a Republican candidate won the office. It’s quite interesting to see the number of times a Democratic win led to a positive year versus a Republican win, and how that played into the returns. If you are interested in seeing whether the election years above were won by Democrats or Republican Candidates and the pattern of returns, give me a call.

Corporate tax hikes, dramatic elections (although this election could be amongst the top), and fear of stock market crashes during election years is nothing new.

Here’s a table showing the last 4 months of an election year for the last 12 elections.

9/1 – 12/31 during election years
1972: Up 7.17%                                 1988: Up 5.83%                                 2004: Up 8.81%
1976: Up 6.03%                                 1992: Up 6.23%                                 2008: Down -30.49%
1980: Up 12.55%                               1996: Up 14.40%                               2012: Up 2.39%
1984: Up 1.83%                                 2000: Down -13.91%                         2016: Flat -0.71%

There’s quite a bit of green on the board dating back to 1972.

There is no evidence of election years impacting the stock market. In 2000, the internet bubble burst, and followed by that was the tragic memory of September 11. These events were not based on President Bush’s policies. Again in 2008 when the housing bubble burst and the global financial crisis began, this stuff was already before the 2009 start date for President Obama when Lehman Brothers collapsed. In fact by the first quarter of 2009, the worst of the stock market crash was behind us. The next 6 months were followed by a gain of 30.26%.

So, the question most people ask, what should we do to our investment portfolios? Should we take money out of the markets, add money in, rebalance, leave it alone, etc.? This can be answered based upon your unique situation.

Think about this, the stock market is extremely efficient. News travels at light speed these days. The stock market is already pricing in a 50% chance that we have Trump reelected, or that Biden is elected. This is not a surprise to us like the novel Coronavirus was. Therefore, sure, there could be some volatility ahead. However, based on the historical evidence from 1920 through today, we don’t see there is really any correlation between the Presidential election and the path of the markets.

Let me be clear, I’m not predicting that the stock market will go up, nor am I predicting it will go down from here. I’m clueless like the rest of us. I recommend that you look at your financial time horizon and your financial situation. This election year may present yet another buying opportunity for us with a longer time horizon and more aggressive investment profile. If you are closer to retirement, you may want to look at your portfolio and decide if anything needs to be done. You can call me if you have questions or want to run any ideas by me. I’m happy to provide you my two-sense.

We have 5 weeks until the election, and each day that we get closer to the 11/3 date, the news headlines about markets and elections will pop up. If you are worried or looking at this is as an opportunity, you can call me. I’m happy to work with you and discuss your situation to help you make the best financial decision for your circumstance.

Call today at 817-238-6300!

Email at Matt.Ward@NewCenturyInvestments.com

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Matt Ward, CFP^®

The post Deep Dive: Election Years & the Stock Market appeared first on New Century Investments.

This sequence of returns shows that we hardly saw any returns even near the 7-10% average we know as stock market investing.

Rather than fearing market downturns, we should try to welcome them as they lead to greater opportunity. If we had invested during the years the market was negative we actually saw returns closer to 10%! 

See the chart below to look at the swings in the S&P 500 by each decade. However, even as there were double-digit swings both ways, we still see an annualized return of 10%. We see from 1930-2019, each decade has posted returns that look like this:

Stock markets rarely return the ~10% average they have posted since 1930.  In fact, a lot of the time the returns have been 20% and greater swings.  The next several years could be volatile.  It could look something like the blue font above, and it could look better, or it could look worse.  I’m setting realistic expectations that bull runs don’t last forever. But over time, the bulls win. Businesses continue expanding, economies work towards positive GDP growth, and stock markets trend upward, over time.

Look at the following chart.  History reveals that markets trend upward.  There will be periods of volatility and there will be periods of strong growth.  Buying when everyone is selling, and when there is volatility, is buying low, the Warren Buffett way.  Remember this over the next few years.

Matt Ward, CFP®

817-238-6300

Matt.Ward@newcenturyinvestments.com

The post Setting Expectations for Stock Returns Over Next Few Years appeared first on New Century Investments.