I trust the year is off to a good start for you. It’s certainly kicked off with a bang! I’ve gathered some helpful materials to guide you through significant events that might be affecting your finances right now.
Let’s dive into something that’s been in the news constantly: the devastating fires sweeping across Los Angeles. There’s a lot at play here, particularly from a financial planning perspective. But first, it’s important to remember the human cost involved. On a recent episode of the “Conan O’Brien Needs a Friend” podcast, Conan’s assistant, Sona, speaks about her family losing their home to these fires. Her story is a heart-wrenching reminder of the profound impacts these disasters can have, far beyond just financial losses. My thoughts go out to anyone affected by this tragedy.
These fires are a stark reminder of a growing risk we all face as property owners. It’s a topic that often comes up in my work with financial planning clients nationwide. Personally, living in a fire-risk area adds another layer of concern. Just last month, I penned a blog post about the escalating risk and costs tied to home ownership, noting how extreme weather has made casualty insurance far less affordable. Many find themselves in areas where insurance becomes prohibitively expensive and opt to self-insure. Unfortunately, this dire scenario has become a grim reality. Writers Laurence Darmiento and Summer Lin covered a situation where people first lost their home insurance, only to watch the fires take their homes. David Stein discusses potential strategies we might consider in tackling these issues, asking, “Who Should Bear the Cost? Socialized vs. Market-Based Risk Management?”
Switching gears, we’ve also seen the inauguration of a new presidential administration this month. While it’s still early days and tough to predict specific policy changes, one notable shift is the renewed focus on cryptocurrencies. Nick Maggiulli talks about this, highlighting how “The New Currency is Attention.” Meanwhile, there’s a change in how people view America’s tech giants and their CEOs. I recently had a conversation with a client distressed over profiting from these ‘oligarchs,’ prompting us to rethink their investment strategy. I shared my thoughts from a 2020 piece on Socially Responsible Investing, a time when people were re-evaluating their financial ethics.
I generally hold off discussing proposed policies until they become law, as the final policies often differ significantly from initial proposals. However, given the current uncertainty, Adam Grossman’s piece on what might come regarding taxes is worth a read. He provides a clear rundown of areas to watch closely in his article, “Whither Taxes?”
Before the administration change, a new law passed that benefits those receiving government pensions. Mike Piper delves into this in “Social Security Fairness Act of 2023 Passed (WEP and GPO Eliminated).”
Thinking about expectations, I couldn’t help but reflect on Mark Twain’s words: “It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.” We’ve long understood that high stock valuations and low interest rates likely herald lower returns, a sentiment I touched on in my 2018 post. Yet, as Michael Batnick points out, “Stocks are More Expensive Than They Used To Be Because the Companies are So Much Better.” On the bonds front, poor anticipated returns have materialized, and now, with higher yields, investors are contemplating the next steps. Ben Carlson ponders whether it’s the right moment to lock in 5% yields.
On a personal note, over the years, my stance on financial advisors has evolved quite a bit. I initially wrote from a critical perspective, questioning the industry’s value. But now, as a financial planner who works solo, I recognize the complexities and the need for sound advice beyond just managing portfolios. Jeremy Zuke, a colleague from Abundo, addresses key areas we help clients navigate in his article, “Investments Are a Small Part of Financial Advice.”
Connection is crucial, especially in retirement. The lack of meaningful social interaction is a genuine concern that transcends generations. Derek Thompson’s “The Anti-Social Century” explores this issue deeply. If you’re more of a listener, check out the episode of The Plain English podcast where Thompson discusses the main takeaways.
As this month wraps up, I hope you find peace and connection in your journey.
And finally, here are some resources you might find handy: “The Best Retirement Calculators” can aid in simulating various retirement scenarios, considering everything from withdrawal strategies to tax implications. Signing up for a free Empower account can help you keep track of your finances, asset allocation, net worth, and more.
Chris Mamula here, signing off. After retiring from physical therapy at 41, I focused on financial independence and now write, educate, and offer planning at Abundo Wealth. Reach out at [email protected] or [email protected] for more information. Adviser affiliations also mean you might spot affiliate links throughout this site, which provide compensation to support this content. They don’t add to your cost, and we only promote services we believe can benefit you. Buyer beware, particularly when it comes to display ads, over which we have less control.
