Our Wealth Services Advisors and Personal Insurance Experts provide insights about topics and trends that could impact your financial and personal goals.
PERSONAL FINANCE QUARTERLY SPRING 2022 Our Wealth Services and Personal Insurance Experts provide insights about topics and trends that could impact your financial and personal goals.
Financial Considerations to PrepareYour Kids After Graduation As new college graduates begin to navigate life after school, their financial decisions will either help or hinder their goals. It’s important to you as a parent that your children are financially independent, so here’s how you can help your children transition from college to their career. Create a financial mission
Avoid becoming the bank of mom and dad. You have given your child your time, your love, and your money to set them up for success. So, what do you do if your now-adult-child asks for financial aid? • Focus on the essentials. Offer to help with only critical bills, such as health insurance or car insurance, so coverage is never lost. If you decide to help your children only in an emergency, make sure you stick by this. Explain to them in detail what you consider an emergency and avoid granting any assistance unless it constitutes what you both agreed upon originally. • Formalize the process. It’s in everyone’s interest to formalize the specifics of a loan, particularly for a large dollar amount. It may be awkward the first time, but leaving a loan open- ended reduces the likelihood you’ll be repaid, and that can create challenges down the road. • Weigh other options. If you are considering tapping into your retirement savings to help your child financially, look at every other available option first. While you may feel it necessary to pay for a child’s college education, pulling from retirement funds should be a last resort. Helping your college graduate become financially independent should pay dividends as they gain more experience. We hope you found these ideas helpful and are always happy to answer any questions you have on how to get the whole family involved. Please click here to contact us.
statement. A mission statement aligns goals to values. To adapt this concept to your child’s life, have an open conversation about what’s important to them. Try asking them what they think money is for, how to earn it, save it, and spend it. Ask them what their goals are and how they’d like to achieve those goals. Write it down and make sure they use it as a guide when they make monetary decisions. Establish smart spending habits. Take a run to the grocery store and have your child plan the process from
start to finish. That means planning the list, what you plan to cook, and how much you’ll need. You can model planning ahead and let them practice their budgeting skills! Then, at the grocery store, help them stick to what’s on the list. Be on the lookout for impulsive decisions as an opportunity to gently correct. You can also help them compare the cost of eating out versus a meal prepared at home. Exhibit delayed gratification. Most successful adults say they were taught to wait for things they wanted at a young age, which helps them avoid debt. Pick out an item or experience to save for while they are still in school. Create a chart using the number of days and amount of money it’ll take to afford it. Cross off the days as they pass while adding up the accumulated funds. Factor in setbacks due to any impulse purchases along the way.
This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guar-antee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment. “Alera Group Wealth Services” is a brand name utilized by Alera Group, Inc. and certain subsidiaries and affiliates (collectively “Alera”). Advisory Services offered through Alera Investment Advisors, LLC. Securities offered through Triad Advisors, LLC, Member FINRA/ SIPC. Triad Advisors LLC is separately owned and other entities and/or marketing names, products or services referenced here are independent of Triad Advisors. Information provided by Alera should not be considered tax or legal advice. Should you require tax or legal information, please con-sult your tax advisor or attorney.
Personal Finance Quarterly | Spring 2022
Tips For Home Renovations Home renovations can be a time-consuming and complicated process. There is a saying in renovations: It always takes twice as long and costs twice as much as initially quoted by the contractor. This could be due to changing the scope of your renovation during the process, uncovering unforeseen issues behind the walls like structural damage or electrical wiring that isn’t up to code or perhaps your contractor inadequately estimating the project timeline and costs upfront. These tips can help you protect your investment and feel more secure during the renovation process. Before Renovations Begin Consult with your insurance agent before you begin renovations of your home. Your policy includes a clause that requires you to notify your carrier if the renovation increases the value of your home by more than five percent or $500,000. Your agent can also recommend additional ways to make sure your home and valuables are properly protected throughout the renovation. Your agent can work with your insurance carrier to determine the post-renovation replacement cost on your home. This review addresses cost increases in construction materials, labor, changes in building codes, installation of any home safety loss prevention devices, change in square footage, identification of new custom features or additional premium credits for which you may now qualify. Safety and Burglary Prevention During Renovation • Maintain a secure environment. If your contractor has to disable your home’s fire alarm by covering smoke detectors with dust covers, experts recommend that these devices be temporarily replaced with heat detectors. Heat detectors are normally placed in garages, kitchens and mechanical rooms and are not activated due to high levels of dust in the air. This is also a good time to consider upgrading your alarm system to include low temperature monitoring and installing a water shut off device, or sump pump.
• Keep a clearly marked and readily available fire extinguisher on every level of the home during and after the renovations. • Control debris and other potentially dangerous materials. Be sure construction materials and debris are stored and disposed of properly. Dumpsters should be located well away from your home and emptied on a regular basis. Demolition debris, sawdust and litter should be removed at the end of each day, leaving your home in broom-clean condition. Your contractor should store any toxic or explosive materials appropriately and away from potential ignition sources, children and pets. Fireproof cabinets are required for the storage of all flammable liquids to meet NFPA and OSHA standards. Prohibit smoking on the job site, as 5% of job site fires begin with the careless disposal of smoking materials.¹ • Protect your valuables. If you move away while your home is undergoing a renovation project, consider storing all valuables, including fine art and jewelry, in a secure, offsite storage facility. Consult with your agent prior to removing any valuables to ensure they are covered while offsite. Your agent may also have recommendations on secure storage facilities.
Sources: [1] nfpa.org/news-and-research/fire-statistics-and-reports/fire-statistics/fires-by-property-type/structures-under- construction/fires-in-structures-under-construction-undergoing-major-renovation-or-being-demolished[1] nfpa.org/
Click here to read the full article from our carrier partner Nationwide Private Client. If you have questions about your post-renovation replacement costs, request a time to chat with our team here.
Personal Finance Quarterly | Spring 2022
Is a Recession in the Cards? Written and prepared by: Robert Janson, CIMA®, AIF® Senior Vice President, Senior Portfolio Manager, Wealth Services
of these. The recent decline for the S&P 500 Index was 13%. Small caps (Russell 2000) were down 21% while mid-caps (S&P 400) were down 25%. The market was already in correction mode due to rising interest rates before Russia invaded Ukraine. The slowing economy and the turmoil surrounding inflation make the Federal Reserve’s job very difficult. The stock and bond markets have already priced in much of this uncertainty. The best action for investors in the current markets is to maintain a long-term perspective and take advantage of opportunities by rebalancing or redeploying investments while prices are lower. In our bond portfolios, Alera Group Wealth Services in October of 2020, and again, in November of 2021, reduced the duration of our bond strategy to lower the interest rate risk while maintaining diversification. We also increased the exposure to inflation protected bonds. This allows our portfolios to continue to reduce the downside risk of rising interest rates, while reinvesting in higher yields as shorter-term bonds mature. In our equity strategy, we have recently tilted our equity portfolios toward value stocks, which typically
include less economically sensitive sectors such as consumer staples, are more reasonably priced and typically better positioned to sustain earnings growth in a slower economy. We still maintain exposure to companies with strong fundamentals that can produce consistent earnings and dividends, as well as those bringing innovation and market share dominance in a slower growing economy. Talk to your advisor if you have any questions.
Prior to the Russian invasion of Ukraine, the US economy was already slowing after the rapid growth of the post-Covid recovery period. Now, the Federal Reserve is balancing competing objectives of wrestling inflation while maintaining economic growth, made all the more perilous by chaos in the oil markets. With all of the economic cross currents and uncertainty, the possibility of a recession has grown. In the simplest terms, a recession is generally defined by experiencing at least two consecutive quarters of falling GDP. The recession caused by the Covid-19 shutdown in 2020 broke this “rule” by only lasting two months. The GDP growth for the current quarter is expected to still be positive but much slower than the previous quarters since the recovery began. Keep in mind that the economy’s ability to withstand higher prices and some job reshuffling is better now given that the job market is still very strong and personal and corporate finances are much healthier than they have been in recent memory. Historically, the stock market has had three types of downturns associated with recessions. Not every recession has caused a major market downturn like we saw in the 1930’s Depression, 1973-1974 Arab Oil Embargo and the 2008- 2009 Great Recession. Those three recessions/ depressions caused the stock market to fall by 50% or more. Some may wonder if the current Russian oil sanctions and rising oil prices are an echo of the Arab Oil Embargo. The simple answer
is that we are far more energy independent than we were in the 1970’s and are finding other sources for the energy provided by Russia. Not every recession leads to a complete disaster in the stock market. There have been a number of times throughout history where the United States went into a recession but did not experience a debilitating market crash. There were five recessions when the market dropped by at least 20% into bear market territory. The market was already in correction mode due to rising interest rates before Russia invaded Ukraine. In 1948, 1957-1958, 1960-1961, 1969-1970 and 1981-1982. The average drop was 27% and the average length of the recession was about 11 months. There were four recessions that did not cause the stock market to drop into bear market territory – 1945, 1953-1954, 1980 and 1990. The average market drop was 16% and the average length of the recessions were about 8 months. Recessions aren’t great for the stock market, which is an obvious statement, but they don’t always signal the end of the world either. The current downturn is already worse than three
Interested in a market recap of Q1 2022? Register for our webinar on April 27 th at 11:00 am CDT.
Personal Finance Quarterly | Spring 2022
Seasonal Spotlight
Weddings Arrive early to the ceremony. While it may seem enticing to arrive “fashionably late” for a wedding, one standout tip is to arrive early. This allows for ample time to appreciate the scenery, mingle among other guests, and still have enough time to find your seat before the ceremony begins. Be mindful of your use of tech. Staying connected is a good thing, but sometimes it’s better to be present in the moment, not online. A nice reminder going into wedding season is to set your phone to silent prior to the ceremony. Additionally, if you plan on taking photos, make sure that your flash is off so to not disrupt the event. Boating Respect the captain. Regardless of who’s boat you may find yourself on, it’s important to remember that proper boating etiquette is to listen to whoever is driving. To keep yourself and other passengers safe, be sure to follow the commands of the captain, whether that be to remain seated, wear a life jacket, or to turn the music down. Being on a boat is a great time but can be dangerous when the rules are not followed properly! Snack time! If you’re lucky enough to be invited on a boat, the least you can do is provide some snacks. It can be hot, wet, and cramped on a boat. A good tip for snacking or drinking is to bring items that don’t require much maintenance or clean-up. An additional tip is to think ahead and pack a trash bag to easily toss everything into once finished! Graduation Parties R.S.V.P. Whether you can attend or not, it’s proper etiquette for graduation parties, or any event rather, to RSVP. Graduation parties often times include catering, and by rsvp-ing, you’re allowing the host to gain a better understanding of how many people to account for when making food and drink preparations. To gift or not to gift? If you are attending a graduation party for someone that you know well, i.e. a family member, family friend, or someone of the like, it is proper etiquette to bring them a gift—no matter how big or small. Money is often times assumed to be the expected gift, but that isn’t the case! A gift of sentiment or meaning is just as much appreciated. However, if you do choose to gift cash or check, a nice way to add some personalization it is to include a congratulatory note to the graduate. While these tips hopefully help you to make the most of your social agenda, the most important reminder on social etiquette is to continue to be respectful of other people’s wishes when it comes to COVID-19. For the latest updates on COVID-19 restrictions and mandates, please refer to https://www.cdc.gov/. Happy socializing!
A Social Etiquette Handbook for 2022
It’s been a while since things have felt, well, normal. Though, with mask mandates and COVID-19 restrictions continuing to be lifted around the country, it seems as if a return to normalcy is on the horizon. And just in time for the warmer months, too! This upcoming spring and summer will likely involve an influx in opportunities to socialize, and while this might be exciting to some, it may be slightly daunting for others. Regardless of how it affects you, over two years of isolation and quarantine, we are all in need of a good refresher on the basics of social etiquette. Whether you’ll be attending a family member’s wedding, an outing on your friend’s boat, or your neighbor’s graduation party—here are some tips and reminders to keep in your back pocket as your social calendar fills up these coming months.
Personal Finance Quarterly | Spring 2022
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