December 6, 2013 by Jean Keener, CFP, CRPC, CFDS
The December financial planning newsletter is now available. It covers several tax items:
- Year-end tax planning tips for 2013 including new taxes to be aware of for higher income tax payers
- IRS regulations affecting legally married same-sex tax payers for 2013
In addition, we have consideration of whether or not you should pay off your mortgage in retirement and what actions you should take as a result of stock market predictions. As always, there’s also an investment market update. Please click here to read the newsletter.
November 25, 2013 by Jean Keener, CFP, CRPC, CFDS
We are thankful once again to the readers of the Keller Citizen for voting Keener Financial Planning Keller’s 2013 Best of the Best Financial Planner. Receiving this public support and recognition from our local community for the fifth year in a row affirms our continuing commitment to providing objection, expert financial advice on a fee-only basis.
Our clients have a wide range of goals. Some of the most common areas with which we help are retirement, college, rebuilding after divorce, changing careers, getting control of your finances, and investing more effectively. The common thread is: identifying each client’s unique goals, working with them to discover the best path to reach them, and defining clear action steps along the way. And all of these services are provided on an as-needed basis.
Here’s the full list of all the winners from www.KellerCitizen.com. Thanks again for your support!
November 16, 2013 by Keener Financial Planning
D Magazine says:
“How we did it: We ask every Certified Financial Planner in the Dallas-Fort Worth Chapter of the Financial Planning Association to cast an online ballot. Outside-firm votes counted more than inside-firm votes. Self-nominations were tossed out. A panel of esteemed local financial planners reviewed the list. Only CFPs made the list.”
As we work hard to provide the highest quality objective financial advice for our clients, having Principal Jean Keener be publicly recognized by her peers means a lot to us and is greatly appreciated.
September 22, 2013 by Jean Keener, CFP, CRPC, CFDS
The answer will probably be surprise you.
You’ve likely noticed that the U.S. stock market has offered booming returns over the past three or four years: up an average of 17.4% in the past 36 months alone. Then you look at the money invested in international equities (the EAFE index up just 8.7% a year), bonds (the Barclay’s Aggregate Bond Index up 2.5% a year), and just about any other sector you could name, and it looks like they were holding you back.
Wasn’t that a huge opportunity cost in diversifying away from U.S. stocks? Didn’t you lose money not being in U.S. stocks all that time?
Surprisingly, the answer is no. In fact, a recent article in the Journal of Financial Planning offers a neat illustration showing why diversifying in a variety of assets–even though some inevitably underperform others–can actually raise your total portfolio returns over the longer term.
The article starts by pointing out the fact that positive and negative returns are not equal. For small losses, they’re close: a 10% decline requires an 11% gain in order to get back the money you lost. If you lose 20%, you have to gain back 25% before you have what you had before the market took a bit out of your portfolio.
But what if you lose 30%? Now you have to get back 43% in order to have what you started with.
Lose 40% of your portfolio value, and you aren’t whole until you get a whopping 67% return on the remaining assets. Lose 50% and, of course, you need a 100% return to get back to where you were.
The point? If diversification minimizes extreme portfolio movements in either direction, it can lead to greater wealth creation–just because of the mathematics of gains and losses.
To illustrate this, the authors produced an interesting chart. They plotted the S&P 500′s returns from mid-1993 through mid-2013, which includes the thumping, roaring bull market of the later 1990s and two rather nasty market pullbacks. Then they assume that somehow you would be able, via a broad asset mix, to reduce the downside by 50% and also give up 50% of every upside in the index–an even trade, right?
In fact, this strategy doesn’t look so great during the booming late 1990s, when the “tempered” index returns fell behind the market returns. But over time, due to its outperformance during market busts, the tempered market returns produced more terminal wealth than the index itself.
Then the authors looked at what would happen if an investor did what many investors today are probably thinking about doing: abandoning those tempering, underperforming “other” investments and going all in on U.S. stocks. They create a hypothetical investor named “Dick” who became very impatient watching his tempered portfolio underperform the index for the first seven years of the chart as the bull market roared through the investment world. So he made a bold decision: Banish diversification! Full speed ahead with U.S. stocks! He switched to the U.S.-only portfolio, and, as you can see on the graph, he has underperformed ever since.
Article adapted with permission of Financial Columnist Bob Veres. The full study is available at http://www.fpanet.org/journal/RiskManagementasAlphaGenerator/
August 22, 2013 by Jean Keener, CFP, CRPC, CFDS
The August Personal Finance Newsletter is now available. It includes information on how this summer’s Supreme Court rulings on same-sex marriage affects financial planning for couples in Texas and other states. It also covers an update on the bond market, how to fix an error on your credit report, and 2013 rule changes for taking the home office deduction on your federal tax return. In addition, we’re please to announce this fall’s Countdown to Retirement workshop schedule at the Keller Public Library. Please click here to read the newsletter.