Are We “Shovel-Ready”?

By | Investments

A famous line of dialogue came from the 1989 film “Field of Dreams”: “If you build it, he will come.” Perhaps the quote endures because of its inherent irony — it’s not always true. In fact, during the Obama Administration, there was an unfortunate lesson best illustrated by paraphrasing this quote: “If you fund it, it will get built.” Unfortunately, even President Obama was forced to concede that the 2009 American Recovery and Reinvestment Act’s $69 billion funding for “shovel-ready” infrastructure improvements was ill conceived.1

The problem? With provisions requiring project funding to be committed within about a year and a half of passage of the bill, not enough attention was paid to the time-consuming myriad of bidding, design and approval processes that caused inevitable delays.2

That’s one thing about short-term planning: It seldom leads to long-term success. For example, if you need a new roof on your home, it may be better to invest in a high-quality roof replacement that will last the rest of your life. If you opt to pay for a cheaper “patch job,” you may end up having to replace the whole roof later. Big projects like that could cause stress on your retirement savings, especially toward the latter years of retirement. If you’d like help planning and budgeting for big and small expenses in retirement, please give us a call. 

According to President Trump’s latest bill, his promised U.S.-Mexico border wall is to be an integral part of America’s infrastructure. That’s because in March, the president called for immediate budget cuts of $18 billion from a variety of programs in order to put a down payment on construction of the border wall.3 Programs with proposed cuts in his budget include the Transportation Investment Generating Economic Recovery (TIGER) grant program, a popular infrastructure funding tool for cities and states.4

While that proposed budget has little chance of being passed in its current form, it may be worth pondering what the new administration considers to be viable infrastructure projects during its tenure. It has been reported that Trump is prioritizing “shovel-ready” projects to begin within 90 days of passing an infrastructure funding bill.5

Some investment analysts are excited about Trump’s infrastructure plans, many of which are slated to be privately funded. In fact, given the White House’s propensity toward deregulation, it may forge a path for more predictable, streamlined regulatory processes to facilitate expediting new projects.6

Trump’s team put together an infrastructure wish list early on in his budget proposal process. The inventory includes a vast array of interesting options, such as Project Clean Lake in Cleveland, an Atlantic coast pipeline for natural gas and a satellite-based next-gen air traffic control system.7

 

 

 

Content prepared by Kara Stefan Communications

1 Mark Niquette. Bloomberg. March 2, 2017. “Trump’s $1 Trillion Infrastructure Dream Faces the Same Old Nightmares.” https://www.bloomberg.com/news/articles/2017-03-02/trump-s-1-trillion-infrastructure-dream-faces-the-same-old-nightmares. Accessed March 28, 2017.

2 Ibid.

3 Andrew Taylor. Chicago Tribune. March 28, 2017. “White House calls for domestic cuts to finance border wall.” http://www.chicagotribune.com/news/nationworld/politics/ct-mexico-border-wall-cost-funding-20170328-story.html. Accessed March 28, 2017.

4 Melanie Zanona. The Hill. March 12, 2017. “Infrastructure grants could be on chopping block in Trump budget.” http://thehill.com/policy/transportation/323287-infrastructure-grants-could-be-on-chopping-block-in-trump-budget. Accessed March 28, 2017.

5 Maxwell Tani. Business Insider. March 25, 2017. “‘Seems like it’s going to be about his corporate cronies’: Environmental groups fret over Trump’s infrastructure plan.” http://www.businessinsider.com/environmental-impact-trumps-infrastructure-plan-2017-3. Accessed March 28, 2017.

6 Diana Britton. Wealth Management. Feb. 1, 2017. “Are We Entering the Golden Age of Infrastructure?” http://www.wealthmanagement.com/alternative-investments/are-we-entering-golden-age-infrastructure. Accessed March 28, 2017.

7 President-elect Trump. Dec. 14, 2016, “Emergency & National Security Projects.” https://assets.documentcloud.org/documents/3409546/Emergency-NatSec50Projects-121416-1-Reduced.pdf. Accessed March 28, 2017.

We are an independent firm helping individuals create retirement strategies using a variety of insurance and investment products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic financial planning strategies and should not be construed as financial advice. All investments are subject to risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. 

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.

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The Fiduciary Standard: What It Means

By | Planning

Recently, the U.S. Department of Labor published the final regulation of what is known as the “Fiduciary Rule,” delaying implementation for 60 days from its scheduled start date. The newly expanded definition of fiduciary investment advice is scheduled to go into effect June 9, 2017.1

The rule holds certain financial professionals to a fiduciary standard that requires them to put their clients’ interests above their own. Starting in June, that rule will extend to any financial advice regarding retirement accounts, such as IRAs and 401(k) plans.2

The Fiduciary Rule is designed to deter certain types of financial professionals from making recommendations that benefit their own financial gain rather than providing individuals with the most appropriate advice for their situation. Financial professionals who aren’t required to adhere to the fiduciary standard are held to a suitability standard, which means that their recommendations must be suitable to their clients’ situations but aren’t necessarily in their best interest. A financial professional held to the fiduciary standard, on the other hand, is legally obligated to recommend products based on the best interest of his or her client. 3

However, note that even when the Fiduciary Rule is implemented, it will not apply to non-retirement accounts.4 That’s why it’s important to work with a financial adviser you trust to always look out for your best interest and who is held to a fiduciary standard.

Please note that there could still be further changes to the rule or further delays to its implementation. This is possible because back in February, President Trump issued a memorandum directing the DOL to examine the Fiduciary Rule and decide if it should be revised or withdrawn.5

 

 

 

Content prepared by Kara Stefan Communications

1 DrinkerBiddle. April 6, 2017. “Fiduciary Rule Delayed – But It’s Not Entirely What Was Expected.” http://www.drinkerbiddle.com/insights/publications/2017/04/fiduciary-rule-delayed?utm_source=Drinker_Communications&utm_medium=Email&utm_campaign=Fiduciary-Rule-Delayed. Accessed April 7, 2017.

2 Kathleen Elkins. Business Insider. April 6, 2016. “The Obama Administration’s New $12 Trillion-Dollar Rule Highlights a Major Misconception People Have About Financial Advice.” http://www.businessinsider.com/dol-fiduciary-rule-limited-to-retirement-accounts-2016-4. Accessed April 7, 2017.

3 Investopedia. April 18, 2017. “DOL Fiduciary Rule Explained as of April 18, 2017.” http://www.investopedia.com/updates/dol-fiduciary-rule/. Accessed April 20, 2017.

4 Ibid.

5 DrinkerBiddle. April 6, 2017. “Fiduciary Rule Delayed – But It’s Not Entirely What Was Expected.” http://www.drinkerbiddle.com/insights/publications/2017/04/fiduciary-rule-delayed?utm_source=Drinker_Communications&utm_medium=Email&utm_campaign=Fiduciary-Rule-Delayed. Accessed April 7, 2017.

We are an independent firm helping individuals create retirement strategies using a variety of insurance and investment products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic financial planning strategies and should not be construed as financial advice. All investments are subject to risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. 

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.

AE03175036C

 

Kiplinger: Your Magic Retirement Number? How Much You’ll Spend

By | Planning

Your retirement plan is meaningless unless you can pinpoint how much you’ll need to live the life you want.

Remember the old ad campaign in which everyone was literally carrying around his or her retirement number?

One guy had his with him as he rode a bike. Another carried his as he jogged. A married couple went to sleep with theirs on the bed between them.

The point, of course, was that every person has one — an amount you need to save “to retire the way you want.”

That’s almost always the focus when people talk about retirement: Will I or won’t I have enough?

But to me, the most important number isn’t how much you’ve accumulated — it’s how much you think you’ll spend when you no longer have a paycheck coming in. That’s the starting point for a solid retirement plan.

It isn’t about a big, heavy number you have to carry around with you; instead it’s an ugly six-letter word.  Click here for the full story.

Thought for the Week: Becoming Comfortable With Uncomfortable Investments

By | Investments

BUY LOW, SELL HIGH

The adage to “buy low and sell high” sounds like an obvious path to building a large nest egg. The premise is as simple as it gets. All that is required is to buy stocks cheap, sell them when they become expensive, and repeat until rich.

The problem is that executing such a strategy is extremely difficult to pull off on a consistent basis. Knowing when a stock is cheap or expensive requires expert-level skills in accounting, finance, and valuation techniques along with a thorough understanding of an investment’s competitive landscape.

The best stock pickers spend years in school and cut their teeth on far more losers than winners as they fine tune their analytical processes. They then compete with other stock pickers armed with a similar toolkit, so they must also have access to superior information or see something that their competition is missing to profit over the long run.

Therefore, I find this proverbial advice to be useless because of the difficulty in implementation, but that does not mean that investors should wing it or avoid stock ownership altogether. In fact, the following chart highlights an investment strategy that any investor can execute. Click here to read more. 

 

Thought for the Week: Should Investors Sell All Their Bonds?

By | Investments | No Comments

THE COMING BLOODBATH

It seems as if we cannot go a day without hearing about the impending destruction of the bond market as interest rates continue to move higher. I have lost count of the number of email newsletters I have received warning that it will be a “bloodbath” in bonds. Let’s quickly run through some bond math to see why the fearmongering has become so vocal on the subject.

A bond represents a “fixed” income stream over time. If an investor buys a $100 bond that yields 5%, then they will receive $5 in income each year for the duration of the bond. Assuming no default, this $5 payment will never change.

What does change is the price. If our investor decided that they no longer wanted to own this bond, they could sell it to someone else. Like most things, the value of this bond will change over time based on how attractive it looks to a potential buyer.

One big driver of value is the yield relative to other bonds available to buy. For example, if a year goes by from the original time of purchase, and similar bonds now offer 4% yield, then the older bond paying 5% is more attractive to a buyer because it offers $1 more income ($5 – $4 = $1). Since the bond has more value, the owner of the bond could sell it for a higher price than what they paid.

However, if similar bonds are now paying 6%, then the older bond is going to be worth less because these newer bonds are the ones offering more income. This is the crux of the fear mongers’ argument.

They believe that since interest rates will likely rise for several years, current bond prices have nowhere to go but down. Technically speaking, they are correct. Rising interest rates do make older bonds less attractive. However, I strongly disagree that the solution is to sell all bonds for three reasons. Click here to read more.

Thought For The Week: The Amazing Power of Dividend Growth

By | Investments | No Comments

DIVIDEND PAYING STOCKS DOMINATE Those who own stocks that pay dividends have voiced concern over the volatility experienced over the last few months, and some have even asked if they should move out of them until things calm down a bit.

Before we discuss the merits of such a strategy, let’s get a sense of why dividend-paying stocks are owned by analyzing their returns over the long run. Click to read more. 

Thought for the Week: Should Investors Consider Going Passive?

By | Investments | No Comments

Should Investors Consider Going Passive?

The decision to either actively or passively invest remains one of the longest running financial debates. The media has recently amplified the drama by televising regular stand offs between those for and against active management that rival the crudeness and civil disobedience witnessed in last year’s presidential debates. Click to read more.

 

Kiplinger: Are You Ready For Retirement?

By | Kiplinger, Planning | No Comments

By Ken Heise

Retirement is a huge transition, much like getting married or having kids.

And just like those other life events, it takes preparation.

Financial professionals tend to focus all their attention on the money side of things. (It’s what we’re paid for, after all.) But the people who are typically the most successful in retirement think beyond the bottom line to the other changes and challenges they might struggle with in their new lives.

So, before you trade in your ID badge for a fishing rod or tennis racket, ask yourself these questions to help prepare for retirement:

Click here for the full story.

Happy Thanksgiving!

By | Uncategorized | No Comments

Heise Advisory Group will be closed for the Thanksgiving Holiday on Thursday, November 24th and Friday, November 25th.
Normal office hours will resume on Monday, November 28th.  Happy Thanksgiving! Have a safe and wonderful weekend!

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Gratitude 365

By | Food for thought | No Comments

Healthier, More hopeful, Improved Sleep Quality, Increased Self Esteem, Increased Helpfulness and Empathy, Increased Resilience…

I imagine most of us could use a bigger dose of at least a few of these things. Guess what it comes from…GRATITUDE—scientifically proven benefits from the active practice of gratitude*.

This is the time of year we talk about gratitude quite a bit. We sit around our tables with family and friends; we express what we are thankful for, eat more than we intend to, laugh harder than we normally do, and embrace longer than we usually would…

What about the rest of the year? Most people are appreciative automatically when life is good. However, I believe we need to practice gratitude because life is not always good and especially when life is not good.

Ways to practice: a gratitude journal, think of someone you are grateful for each day, incorporate acts of kindness into your life, notice something beautiful or interesting each day, thank people sincerely, compliment a stranger, smile at someone (the real kind that makes your eyes crinkle), stay away from gossip, live in the present…

At my house there’s a jar sitting in the kitchen.  In our office it sits on the front desk. When we think of something we are grateful for, we write it down and put it in the jar. It absolutely changes my perspective on the day, it forces me to list what I’m grateful for and decide what to put in the jar. Above all, I’m always grateful it is a long list :).

 

Meaghan Shaffer

Director of Marketing and Operations

 

* www.newsweek.com/5-scientifically-proven-benefits-gratitude-398582

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