Financial Architects - February 2019

WHY DO WE NEED A LEAP YEAR? The Calculations That Leave Us in Need of an Extra Day

Get Your Finances in the Zone What Hockey Can Teach Us About Protection and Liquidity A hockey rink is divided into three areas, or zones. There’s the defensive zone, where the goalie and defenders work to protect the net. Across the rink is the offensive zone, where a team needs to get the puck to put points on the board. To get from the defensive to offensive zone, a team needs to be effective at transitioning the puck through the neutral zone. The same can be said for finances. Any effective financial strategy not only has areas of wealth protection (defensive zone) and areas for opportunity (offensive zone), it has means of transitioning wealth between the two (neutral zone). Just like in hockey, it may at first appear as though the offensive zone is the most important to focus on — after all, that’s where goals are scored. But no advisor worth their skates would tell you to only focus on offense. Investing all of your money without maintaining your assets would be like pulling your goalie in the middle of the game. At Financial Architects, we prefer to develop a strong defensive zone first, making sure assets are diversified and protected. As Pat would say, scoring goals doesn’t mean much if you aren’t protecting your own net. It’s only after you have a solid backline of assets that you should start thinking about going on the offensive. That’s where liquidity comes in. When an emergency arises or you spot a good investment, you need to be able to react quickly and effectively. Just like how a pro hockey team transitions between defensive to offensive formations in the time it takes for a puck to bounce off the crossbar, your wealth needs to be flexible enough to respond to the unexpected. That’s why liquidity structure is one of our “5 Foundations of an Effective Strategy” (see following page). Lastly, no hockey team would be complete without players and a coach. Players are facets of your overall finances, such as your retirement strategy or insurance strategy, and each comes with their own strengths and weaknesses. A Financial Architect, much like a great coach, gets to know each player and unites them toward a single cause. Only then can your team’s potential be maximized.

Every four years, February gains an extra day at the end of the month. But what does this contribute to the year as a whole? You might be surprised by what this one day does for us! The 365 days in each year represent the time it takes for the Earth to circle the sun. However, the orbit actually takes nearly a quarter of a day longer than that. The additional 0.2421 of a day might not seem like it would make a significant impact, but after a few decades, it adds up. To ensure the calendar and seasons stay on the right timeline, the leap day was created. THE START OF THE LEAP YEAR The Egyptians were the first to officially calculate how many days it takes to orbit the sun, revealing the need for a leap year. Europeans at the time used a calendar that followed a lunar model, which needed an entire month added to retain consistency. The leap year wasn’t introduced into Europe until the reign of Julius Caesar. With the help of astronomer Sosigenes, Caesar created the Julian Calendar, which included 12 months and 365 days, with a single day added every fourth year. However, the Julian Calendar wasn’t perfect, because 0.2421 of a day can’t be rounded to a multiple of five, so it caused the calendar to have an extra 11 minutes every four years. Pope Gregory XIII fixed the problem in 1582 by creating the Gregorian Calendar. Now, a leap year occurs every four years except for the years that are evenly divisible by 100 and not 400. For instance,1800 and 1900 were not leap years because they were divisible by 100. A LEAP DAY BIRTHDAY The odds of being born on Feb. 29 are about 1 in 1,500, which leaves approximately 187,000 people in the U.S. and 4 million people around the world celebrating their birthdays on Feb. 28 or March 1. People born on a Leap Day are faced with dilemmas such as which date they should receive their driver’s license. Although it varies from state to state, most consider March 1 the appropriate day for leap-year 16-year-olds — who are celebrating their fourth “official” birthday — to receive their license. With all the changes the calendar has undergone, it still isn’t quite perfect. Experts say that in about 10,000 years, it will need to be changed yet again.

The information contained in this newsletter is derived from sources believed to be accurate. You should discuss any legal, tax, or financial matters with the appropriate professional. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Securities offered through The O.N. Equity Sales Company, Member FINRA/SIPC ( and Investment Advisory Services offered through O.N. Investment Management Company and FAI Advisors, Inc. Financial Architects, Inc. and FAI Advisors, Inc. are not subsidiaries or affiliates of The O.N. Equity Sales Company or O.N. Investment Management Company. We have representatives currently registered in the following states: AL, AZ, CA, CO, DC, FL, GA, IL, IN, LA, MD, ME, MI, MN, MS, MO, NC, NJ, NV, NY, OH, OR, PA, SC, TX, VA, WA, and WI. 2

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