Valentine’s Day Approaches – Plan Ahead or Pay the Procrastinator Tax!

Dog eating chocolates from heart shaped Valentine's box

Failing to plan is planning to . . . have your puppers eat all your chocolates!

It is just 22 days until Valentine’s Day.
You’re welcome.
Valentine’s Day might be just one day of the year, but it is a very big one day.  In the United States alone, the National Retail Federation projects Valentine’s spending to eclipse $18 billion, of which over $4 billion is spent on jewelry and another $2 billion spent on flowers.  Men spend nearly twice as much as women on the special day ($198 for men vs. $100 for women).  In fact, with the exception of 2009, Valentine’s Day spending has increased every single year since 2000. With the holiday rapidly approaching in just a few weeks, here are several ways you can treat that special someone in your life without breaking the bank.
1. Have flowers delivered a week prior to Valentine’s Day or anytime after.  There is high demand within a few days of the holiday, so some flexibility in when flowers are being delivered can bloom some great deals.  Many flower shops offer 7-day guaranteed freshness on the flowers you buy, meaning that if you receive them a week ahead, they should still be lovely for the special day.
2. Enjoy a wonderful dinner together at home.  Wine and proteins can cost upwards of 80% less when purchased at the store and prepared at home instead of fighting for a table at a restaurant.  This means you can get a top quality filet or that special bottle of Pinot Noir without starving yourself the weeks leading up to it.
2.5.  If you are dead set on going out, consider saving some money each week beginning now to help cover the cost so that it isn’t such a shock when you get the bill. Packing a couple more lunches and making coffee at home for a few weeks isn’t so bad . . . and you could keep doing this after Valentine’s Day and start a trend of saving more money.
3. Valentine’s Day sparks not only jewelry gifts, but engagement and wedding ring purchases as well.  The tradition of diamonds and “two months’ pay” might be a great rule of thumb for the jeweler, but that’s not who the jewelry is for, so play by your rules here.
Let me put it another way: Driving yourself in debt to buy jewelry does not say “I love you.”  It says “I am gullible and you should not trust me with money, ever.”  Buy jewelry you can actually afford, not just what they are willing to let you pay for with extended credit and terms that amount to you selling a kidney.
When I proposed to my wife, I found a unique sapphire ring from a jeweler that specializes in estate pieces.  Having been handcrafted about 100 years ago, her ring truly is one of a kind, and because we used the same ring for the wedding ring I was able to afford a larger stone than I would have been able to afford at a traditional jewelry store or from an online retailer. Funny enough, there was no objection from her, and she married me a year and a half later.
4. Early sales on Valentine’s things are going on now.  Pay less now, or pay more later, or pay a lot more the day before/day of.  Your choice!
4.5.  Valentine’s gifts oftentimes go on clearance either on Valentine’s Day itself or the day after.  Consider snagging some sweet bargains (get it – chocolates . . . sweet) on February 15th.
5. Create a gift yourself!  A homemade gift can be very personal and tailored to the person you’re giving it to, making it not only something they’ll enjoy, but cherish more because YOU made it.  Some ideas include hot cocoa mixes for two, a thumb drive or CD with your favorite songs on it, or a handmade Valentine’s Day card.  Or if you’re feeling really adventurous, you can dress up and read from Romeo and Juliet in the most ridiculous accent possible under your lover’s balcony.  Not that I did that a couple of years ago . . .
5.5.  Celebrate early!  Akin to the flowers idea, if you aren’t dead set on February 14th being THE day you need to celebrate, consider celebrating early and not fighting the market for everything you want to pamper yourself and your partner with.  My wife and I this year found a wonderful six-course beer dinner, pairing each dish with a tasty brew at less than half of what it would have cost us to go out on exactly February 14th.
To close this heartwarming edition of The Briggs Blog, I would like to leave you with an Irish blessing.  Until next time…
May you always have walls for the winds,
a roof for the rain, tea beside the fire,
laughter to cheer you, those you love near you,
and all your heart might desire.
Blessings and friendship,
Steven
For more terrific financial tips, check out the Briggs Financial Facebook and Instagram pages, and sign up for The Briggs Blog monthly email at the end of this blog post to have articles like this one delivered to you monthly. No spam, just terrific content delivered directly to you!
Finally, if you feel that working with a financial coach could help you stay on track in reaching your personal financial and investment goals, schedule a free consultation or email me at steven@briggswealth.com – I would love to meet you!

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Losing Money in the Name of Diversification!

All the Pretty Pearls

Diversification can reduce individual investment risk if managed well.

A common buzzword in the investment world is the concept of “diversification.” Diversification at its core is the technique of mixing a wide variety of investments within a portfolio. The rationale behind this is that when your investments are diversified, you offset the risk of any one investment performing poorly to have a broadly negative effect on your portfolio. In and of itself, this is a sound idea.
However, an aspect of diversification that is not readily spoken of is whether the individual assets themselves are appropriate for the investor. For example, a younger investor with a higher tolerance for risk being diversified with bond exposure may actually pose a higher level of risk – the bonds may pose a higher risk of lost return over longer periods of time. This keeps in mind that “loss” does not just mean losing money, but also the money that could have been earned, but was lost instead due to an inappropriate allocation. Similarly, an older client with a goal of capital preservation having exposure to a sector fund, while yes they are diversified, exposes the portfolio to risks not aligned with that client’s goals. In both cases, diversification is applied inappropriately because the investments being diversified into do not align with the goals of the client.
From my experience, there are a couple of scenarios where this has most likely occurred. One of these situations is when a bank or insurance/mutual fund company tries to sell shares of their specific mutual fund, where the recommendation only has to be “suitable” for the client.  The adviser may not be taking the client’s other investments into account, or really getting to know the client well, or may just not really understand what managing risk actually means.  All of these situations are perilous for the investor.
The other, and I think far more difficult to spot, are “Target date” retirement funds. These funds will typically present themselves as self-managing portfolios that adjust the risk profile of the fund over time, shifting from being heavier in equity positions early on to a more balanced selection of equity and bond/fixed income holdings as the fund holder gets closer to retirement. Sounds great in theory – the portfolio manages the risk exposure by itself, no need to worry about balancing different funds out. However, what I have found in many of these target retirement funds are 2.5 major flaws.
Flaw #1: The investment allocation is inappropriate for the client. The typical trend I see in target funds with bad allocations is that they are more conservative than is appropriate for the client. Now, that sounds good to an extent on its surface – more conservative means that there’s less of a chance of being exposed to losses. However, it also means losing exposure to gains you should have had exposure to, and missing that growth can really hurt, especially when that lost growth is compounded by more lost growth over a 20 or 30-year time horizon.
Flaw #2: The investments they use are actually just other mutual funds they own. A key problem to this approach is that those funds each have their own individual mandates and goals that may not reflect the owner of target retirement fund. So while you may have an allocation from a 36,000 ft point of view, that does not mean the strategies being used in those funds and their investments actually align with your goals.
Flaw #2.5: The investments they use are actually just other mutual funds they own AND THEY ARE GARBAGE. I have seen some rather interesting and poor-performing funds stuffed inside the structure of a Target Date fund allocation. This can be done to prop up fund strategies they are having a tough time selling on their own, making a fund look more broadly supported than it is. They can defend the decision to include it based on suitability, but that doesn’t mean any adviser would go out of their way to actually recommend the bad fund.
Diversification of investments is a sound approach to helping mitigate the risk of individual companies having an overly severe impact on the performance of a portfolio.  However, diversification cannot be a mindless exercise of “putting a little on everything” akin to placing chips all over a craps table – this is a dangerous endeavor that can cause long-term damage to your returns.  With careful planning, diversification is a tool that can be carefully used to manage the risk of a portfolio while maintaining alignment with your goals.
For more terrific financial tips, check out the Briggs Financial Facebook and Instagram pages, and sign up for The Briggs Blog monthly email at the end of this blog post to have articles like this one delivered to you monthly. No spam, just terrific content delivered directly to you!
Finally, if you feel that working with a financial coach could help you stay on track in reaching your personal financial and investment goals, schedule a free consultation or email me at steven@briggswealth.com – I would love to meet you!

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New Year’s 2018: It’s That Willpower Crushing Time of Year Again!

It can be exciting to leap into a new you . . . so long as you don’t fall into old habits.

It’s the first week of the New Year, and right now you have likely embarked on your New Year’s resolution. For some of us that’s diet or exercise, while others take on a new skill or plan to travel more. But for approximately half of us, that top New Year’s resolution is to save more money and be better about our finances.
When you begin to think about your finances, you likely start by taking a look at your credit card statements and then exclaiming “OH MY SWEET PETUNIAS WE ARE SPENDING TOO MUCH MONEY!” Without delay, you grab a notebook or get on your laptop and immediately start writing down what you’re spending on, how much money each bill is, maybe sorting it into categories, creating a fancy spreadsheet and then of course we need to color code the spreadsheet so we see in pixelated glory just how bad our spending really is (but there’s no reason why we cannot do that in a rainbow of digital paint options) and then about six hours later after hacking and slashing and not spending on anything anymore you exclaim “A Budget is Born” and, having solved that crisis of currency, you go to bed.
A couple of days later, you sleep in and end up running late for work, so on the way in you grab a Starbucks and a bagel, and you chastise yourself for it. The next day, you packed your lunch, but your work friends asked you to go with them out to eat, and you don’t want to be rude, so you leave your lunch in the work refrigerator and then forget it’s ever there. And then that weekend, wouldn’t you know it the shirt you looked at all holiday season is now at the lowest price you’ve ever seen, so it’d be a shame not to pick that up and a couple of other things you’ve needed to, since you’re there anyway. Within a couple of months, that budget that you poured sweat over and hacked and slashed and splashed rainbow colors on fades as a distant memory on a cloud (your Google drive).
But how did that happen? You made a budget and you tried to be so disciplined, so why didn’t the budget work?
I’ll give you a hint: Budgets do not change behavior.
The idea that just by making a budget you are going to save more money is akin to saying that you will play better golf because the hole is a par 4. You don’t score better because the expectation is lower – you score better by consistently practicing your swing, using good form, accounting for different environmental conditions, and making the best choices you can at each spot the ball goes. That’s what earns you a 4, or a 3, or a 10 on that hole.
Budgets do not change behavior. Budgets are the scorecard. They can help guide where you need to be to reach certain goals, like par does to a golf score on a round of 18 holes. It’s when you consistently practice better living habits, like deciding and following-through on spending less on discretionary purchases that will actually get you to the point where you save money. And just like any other skill, some days will be better than others. Some days, you’ll forget that lunch, and curse as you buy that meal in the workplace cafeteria. Don’t beat yourself up over it. Figure out why it happened, and create a better plan to avoid that situation again. You’ll make mistakes, and it’s by learning and not repeating those mistakes that, over time, your spending will decrease, and that’s when you’ll really start saving some money.
Some people have the personal willpower and discipline to attack these things on their own, but the success rate is not high. According to the University of Scranton, just 8% of New Year’s’ resolutions were actually successful, which means that there will be a healthy supply of people for me to send this blog post to in 2019. But in all seriousness, what it does demonstrate is that there is a great deal of power in accountability and in having a guide. Personal trainers do this for physical fitness, business coaches for sales and advertising, and there’s a reason why these industries exist – because they have been found to improve their client’s habits. If you feel like you are hitting a wall trying to save money or make better financial decisions, working with an adviser may be the key to overcoming your financial challenges.
Have a fantastic start to your 2018, and I will see you with the second edition of The Briggs Blog in early February!
For more terrific financial tips, check out the Briggs Financial Facebook and Instagram pages, and sign up for The Briggs Blog monthly email at the end of this blog post to have articles like this one delivered to you monthly. No spam, just terrific content delivered directly to you!
Finally, if you feel that working with a financial coach could help you stay on track in reaching your personal financial and investment goals, schedule a free consultation or email me at steven@briggswealth.com – I would love to meet you!

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