Why Lawson Kroeker Favors Long-Term Investment Advice Over Speculation: And, Does Speculating Over Investment Advice Even Work?
As winter approaches the Midwest, some experts say the bear market is stirring from hibernation, ready to come out of its den. As the bull market continues an extensive run since March 2009, many investors wonder what investment advice should guide their decisions.
In truth, if you’ve ever worked with our team at Lawson Kroeker, you know that the headlines don’t have much impact on the steady focus of our Chartered Financial Analysts®. Read on as we share further insights on the topic.
“Is it different this time?” is a common question when talking of the current market conditions and working with those seeking investment advice. There are always variations in how the stock market plays out, and this time is no different. As discussed in one of our “As We See It” quarterly reflection pieces, the factor that differentiates this long bull market run is the speculative (or fast) money flowing in and out of the market.
Is the bull market aging? Peaks in speculation and momentum are telltale signals of an aging bull market. Investors, in a rush of fear of missing out (FOMO), often make purchases at a time when the prices should influence the opposite behavior. This often occurs with initial public offerings (IPOs), which entice investors with the hopes of investing in the next great thing. Unfortunately, many of these IPOs fail their investors, who watch their speculative money slip away quickly after it peaks.
What are areas of new speculation? One of the newest speculative types of investments has been in cryptocurrencies. Many investors jumped to acquire the Bitcoin, but there’s been no emergence of a single platform to support it or provide widespread acceptance of this currency. Those who purchased Bitcoins watched as their value increased from around $900 in early 2017 to around $19,000 in December of that year.
Given the anticipation that the value would significantly increase from there, investors continued to hold tight to Bitcoins as the value then dropped to around $4,400 in the fall of 2018.
Speculative investing and trends come and go, but the investment philosophy at Lawson Kroeker remains consistent, focused and diligent. As we’ve done since our founding year, our team embraces a long-term view of investing that helps build success over time. Contact us today to learn more.
Are You a Thinker? So Are We.
With all you’ve got to do, there’s rarely enough time to really dig into what’s happening in the market. That’s why Lawson Kroeker publishes a quarterly reflection piece, written specifically for the Lawson Kroeker Community of Thinkers. That’s what we call people like you: smart investors who want to know what’s shaping the market and gain some insight into the current investing climate.
When you subscribe to the Lawson Kroeker Community of Thinkers, you’ll receive this piece, called “As We See It,” designed to cover some thought-provoking topics. Here are a few recent subjects that have been covered in recent issues:
Trade Wars: You’ve no doubt seen this phrase tossed around on news sites and in the papers, but what constitutes a trade war and what’s the impact on the global economy. This is your brief primer.
It’s Different This Time: Many investors fear that it’s “different this time,” that a maturing market is expected to tank in a spectacularly unprecedented way. Find out what really is unique about the current condition, and whether there’s any reason to be concerned about this market.
What to Expect When it’s Tax Time: Every year, there are changes to the tax law that affect personal and corporate returns. Find out how changes in how itemized deductions are handled and a changing corporate tax rate are expected to impact your tax return.
The Greenhouse Effect: Surprisingly, this post has nothing to do with the environment, but instead revisits the wisdom of the late Frank Lawson, co-founder of Lawson Kroeker. Find out how the maturing trajectory of an investment can be compared to the cultivation of plants.
The Difference Between Information and Insight: No matter how many gauges you put in the cockpit, information is only as good as the pilot that uses it. Learn how information and insight come together for a better investment strategy.
To access these, plus ongoing issues of “As We See It,” become a member of the Lawson Kroeker Community of Thinkers today!
Planning for Retirement: Good News. It’s Not Too Late.
For many Americans, planning for retirement hasn’t been a regular part of their financial planning. The causes are different for every household, but nearly half of all Americans have no retirement savings at all, and for those that have been able to save, the median balance is only $10,000. Currently, the average contribution rate to a retirement account is only around 3%.
Americans are feeling the expected impact of their inability to save, with only 17% feeling confident in experiencing a comfortable retirement in the future. These types of statistics lead advisors to counsel their clients to take drastic measures: either delay retirement by 10 years or learn to live on a smaller budget so that up to 60% of their income can be directed to saving for retirement.
For many Americans, these options aren’t realistic. Scaling back a budget to only 40% of what a household is accustomed to is a challenge but working an extra 10 years with potentially escalating age-related health challenges could also be unrealistic.
It’s important to note that strategies like these are not universally applicable. Each household has different needs and circumstances and requires a personalized and specific solution for retirement planning. With that in mind, there may be two reliable practices that could help many households get back on track for retirement planning:
Set aside six percent. This action particularly benefits younger investors, but it also helps those in their 40s and 50s who are behind in planning for retirement. It helps to begin this practice and then look every six months at how it is impacting their retirement savings. It won’t take long to see progress.
Investors may also be encouraged when they see how their retirement savings stack up to others in their age group. A little sense of competition with peers can spur more positive behaviors.
Best of all, increasing savings from three to six percent isn’t likely to force a household to put austerity measures in place. While there may be a bit of a cinch on the budget at first, this change is relatively easy to accommodate.
Delay retirement by two years. Working for another 10 years is a hard concept to consider when you’re reaching retirement age and beginning to count the years. Two years can help build up savings while still presenting a retirement date that allows time for plenty of leisure and fun. It’s also good to do your homework to see how a delay of two years impacts social security benefits. It might be worth a short delay.
If you’re planning for retirement, don’t worry if you find that you’re a bit behind. Our team at Lawson Kroeker Investment Management can help you build an investment portfolio that will help ensure a secure future while allowing you to enjoy life right now. Contact us for an appointment. There’s no time like today!