Investing is often seen as a strategic game in which timing is everything. Many investors believe they can predict market movements, getting out when things look bad and jumping back in when they look good. The reality is that market timing is difficult, if not impossible, and good returns are not dependent on market timing.

Moreover, active trading can lead to increased fees, expenses and taxes — some of the very things that we want to reduce and can control. After all, it’s not what you make that’s important; it’s what you keep!

Focusing on just returns ignores the core reason are often investing: to fund our lives. Having cash and income for today and growth for the future is the key to balancing needs now and for the rest of our lives.

A sustainable and effective strategy for accomplishing this is to adopt a disciplined approach to proactive rebalancing, which focuses on maintaining a diversified portfolio aligned with your goals and adjusting it based on changes in your personal situation, market conditions and tax laws. Our team is here to align your financial planning with your overall goals and vision, while taking advantage of current market and economic conditions.

The Potentially High Cost of Trying to Time the Market

Market timing is the practice of making buy or sell decisions about financial assets by attempting to predict future market-price movements. The allure of market timing is understandable; who wouldn’t want to avoid downturns and maximize gains by entering and exiting the market at the perfect time? However, as mentioned, market timing is incredibly difficult, if not impossible, to execute consistently.

Investing is a long game. Staying invested through market highs and lows is much more likely to generate competitive returns than attempting to time the market, especially over longer periods of time.

Market timing is often driven by fear when things move down and greed when they move up. The results can be disastrous. Research has shown that missing just a few of the market’s best days can significantly impact long-term returns. These best days often occur during periods of high volatility, when market timers are most likely to be out of the market.

In fact, 78 percent of the stock market’s best days occur during a bear market or during the first two months of a bull market. If you missed the market’s 10 best days over the past 30 years, your returns would have been cut in half. Missing the best 30 days would have reduced your returns by a staggering 83 percent.

This is why we believe the most effective strategy is to stay the course and focus on your vision — not on the inevitable market fluctuations.

Financial markets are influenced by a myriad of factors, including economic indicators, geopolitical events and investor sentiment. These factors interact in complex and often unpredictable ways, making it virtually impossible to forecast market movements accurately on a consistent basis.

The chart below shows the potential for significant losses when investors try to time the market.

Market timing requires making investment decisions based on future expectations. This can lead to emotionally driven decisions, such as selling in a panic during market downturns or buying impulsively during rallies. Emotional investing often results in poor decision making and lower returns.

“Buy and Hold” Can Cause Missed Opportunities

The buy-and-hold investment strategy, which involves purchasing assets and retaining them over the long term regardless of market fluctuations, is grounded in the principle that, despite short-term volatility, markets generally appreciate over time. However, this approach may overlook opportunities presented by market volatility.

In today’s investment landscape, many firms employ algorithms and models that apply a one-size-fits-all approach to clients’ portfolios. These systems often fail to consider individual needs, personal visions, tax situations and estate-planning requirements.

Effective financial planning demands more than automated solutions; it requires a nuanced approach tailored to each client’s unique circumstances. Our dedicated team of 28 professionals is committed to delivering personalized strategies designed to optimize your financial success.

The Advantages of Proactive Rebalancing

While the buy-and-hold investing strategy provides a solid foundation, it can sometimes fall short of optimizing returns under evolving conditions. Proactive rebalancing offers a more dynamic alternative by regularly adjusting your portfolio to reflect changes in personal circumstances, market conditions, and tax laws.

You already know that rebalancing your portfolio refers to the process of returning the values of your portfolio’s asset allocations to the levels defined by an investment plan — levels that ideally will match your tolerance for risk and desire for reward.

Proactive rebalancing takes the concept of rebalancing a step further. It helps ensure continued investment alignment with long-term market gains while helping you avoid the pitfalls of market timing. By frequently reviewing and adjusting your portfolio, you can capitalize on current market conditions — such as acquiring undervalued assets at lower prices or selling overvalued assets to realize gains.

Also, proactive rebalancing has the potential to enhance tax efficiency. For instance, it can involve selling underperforming investments to offset gains elsewhere in your portfolio, thereby reducing your overall tax liability. This approach also helps ensure that your portfolio remains aligned with your financial goals and risk tolerance, adapting as your situation evolves — whether you are nearing retirement or experiencing changes in income.

Conclusion

I believe proactive rebalancing is a much more effective investing strategy than market timing or “buy and hold.” This strategy combines the stability of disciplined investing with the flexibility to adjust to changing conditions, enhancing potential long-term returns and helping ensure tax efficiency.

Our team is dedicated to aligning your financial planning with your overall personal vision. This includes helping preserve assets, tax planning, estate planning and wealth management — all without relying on market timing. Let us help you navigate the complexities of financial planning to achieve your long-term goals. Feel free to reach out to me personally or to our team whenever we may be of service.

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Any opinions are those of Randy Carver and not necessarily those of Raymond James. This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete.

Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional. Rebalancing a non-retirement account could be a taxable event that may increase your tax liability.

This information is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. All opinions are as of this date and are subject to change without notice. Investing involves risk and you may incur a profit or loss regardless of strategy selected, including asset allocation and diversification. Past performance is not a guarantee of future results.

The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market. Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance. Individual investor’s results will vary.

Often, people view investing primarily as a pathway to financial gain. However, while generating wealth is certainly a significant motivator, it is not the only reason we invest, and for most people, is not the primary reason.

Financial planning is about achieving your personal goals and vision, both now and in the future. Proper planning enables you to have the independence to do what you want and the peace of mind to know you will be able to retire optimally. At its core, investing is a means to that end — achieving your personal vision and long-term goals.  These could be paying for a child’s education, buying a boat, retiring or anything else that is important to you.

It’s a journey that requires patience, discipline and a broader perspective beyond the fluctuations of your assets and the broader markets.

Our entire team helps clients with Personal Vision Planning^® — not just investing or financial planning. We want to understand what your personal vision is and then be your partner for the long term as you set out to achieve it. Personal Vision Planning encompasses tax and estate planning, investing assets, minimizing taxes and expenses, and protecting your assets from creditors and predators.

A myriad of considerations go into creating a personal plan for you; which is just the first step. Once we have set up your personal financial plan, we continually monitor it and update your portfolio and planning as needed, based on your circumstances, legislative changes  and market fluctuations. This requires looking beyond just the numbers and tuning out all the noise we are exposed to daily.

Returns Don’t Tell the Whole Story

Just looking at the percentage return on an investment doesn’t really give the whole story on what you made.

In the real world, both the sequence of return and overall volatility make a big difference. For example, let’s say you invest $100,000. In the first year, the value of your portfolio goes down 50 percent, and in the second year, it goes up 60 percent. Your simple average return is 5 percent per year (60% – 50% = 10% / 2). Yet the $1,00,000 you invested is worth only $80,000. ($100,000 – 50% = $50,000, plus 60% is $30,000 = $80,000.) On the other hand, if you made a simple 5 percent return per year, you would have $105,000 at the end of the first year and $110,250 at the end of year two.

The role of our team is to minimize volatility while maximizing net cash flow. We are focused on guiding you to achieve the best net return after taxes, fees and expenses while managing your cash flow.

The Deeper Purpose of Investing

When thinking about why we invest, it’s crucial to go beyond the numbers and charts. Here are three fundamental reasons why we choose to invest:

1. To achieve financial independence: Investing helps us build a financial safety net, which provides us the freedom to make choices without being constrained by financial limitations. This could mean retiring early, starting a business or having the flexibility to pursue our passions.
2. To obtain security and stability: By growing our wealth, we can secure our future and that of our loved ones. This involves planning for significant life events such as buying a home, funding our children’s education or ensuring a comfortable retirement.
3. To leave a legacy and impact: Many of us invest with the intention of leaving a legacy. This might involve passing on wealth to future generations, supporting charitable causes or contributing to community development.

Investing Is a Long-Term Process, but the Media Are Short-Term-Focused

Investing is not a get-rich-quick scheme. It requires a long-term perspective and the ability to stay the course despite market volatility.

However, the influences on our lives — especially the media — are focused on the short term. It can be easy to feel pressured to react to market and economic fluctuations. The media tend not to believe in buy and hold; instead, they believe we must proactively take advantage of market and economic conditions. I urge you to resist this approach. Here at Carver Financial, we do not believe anyone can time the markets, although we can take advantage of what is happening.

To time the market successfully, you have to be right twice. You have to sell at the right time (sell high), and you have to buy back into the market at a low (buy low). It is very difficult to achieve this on a consistent basis over the life of your portfolio.

Three important components of focusing on the long term when investing:

1. Compounding returns: One of the most powerful forces in investing is compound interest. Over time, the returns on our investments start generating their own returns, leading to exponential growth. This process takes time and patience to realize its full potential.
2. Market volatility: Markets are inherently volatile in the short term. Daily price fluctuations can be influenced by a myriad of factors, many of which are unpredictable. A long-term approach helps us avoid the pitfalls of reacting impulsively to short-term market movements.
3. Achieving personal goals: Our personal vision and goals often span many years, if not decades. Whether it’s funding retirement, buying a dream home or building a legacy, these objectives require sustained effort and a long-term commitment.

Avoid the Temptation of Day-to-Day Watching

In the current age of instant information, it’s easy to get caught up in the minute-by-minute movements of the market. However, this can be detrimental to our investment success. Here are three reasons why we should avoid the temptation of day-to-day watching:

1. It can lead to emotional decision making: Constantly monitoring the market can lead to emotional decision making. Fear and greed are powerful emotions that can cause us to make impulsive choices, often to our detriment.
2. It causes us to lose focus of our long-term goals: By keeping our focus on our long-term goals, we can maintain a clear sense of purpose and direction. This helps us stay disciplined and stick to our investment strategy, even during turbulent times.
3. It can reduce stress: Obsessing over daily market movements can be stressful and exhausting. By taking a step back and adopting a long-term perspective, we can reduce stress and maintain a healthier relationship with our investments.

Investing is about much more than just making money. It’s a means to achieve our personal vision and long-term goals. By adopting a long-term perspective and avoiding the temptation to watch the market day-to-day, we can navigate the complexities of investing with greater confidence and purpose.

Ultimately, the true value of investing lies in the fulfillment of our dreams and the realization of our aspirations.

Our team is your partner in helping you minimize taxes and expenses while meeting your near- and long-term goals.

As we approach another election, and the pace and quantity of news (aka noise) continues to increase, it is important to stay focused on what is truly important and on what we can control. We are here for you as always. Feel free to reach out to me personally, or to any of our team, with questions or whenever we may be of service.

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Any opinions are those of Randy Carver and not necessarily those of Raymond James. This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete.

 

 

One in three seniors will die with dementia, according to a 2023 report from the Alzheimer’s Association. It’s a sobering statistic, and when you consider it alongside increasing longevity, it’s easy to see why planning for the potential impact of diminished capacity on your or a loved one’s future finances is critical.

The Alzheimer’s Association report also reveals that an estimated 6.5 million Americans ages 65 and older are living with Alzheimer’s, and more than 11 million Americans are providing unpaid care for someone struggling with dementia.

Numbers like these prove that planning for the possibility of long-term care and considering who will make decisions if you can’t is not simply smart; it is necessary. Planning now — before you have the need or are unable to share your wishes — is essential to protecting your Social Security payout and other assets.

Protecting yourself

People who are unable to manage their finances and take care of themselves need extensive help. In many cases, it makes sense to prepare a power of attorney (POA) for someone who is no longer able to take care of himself or herself. A POA is a legal document that gives an individual, called the “agent” or “attorney-in-fact,” the authority to take action on behalf of another person, called the “principal.”

An attorney will define the terms of the POA based on the principal’s needs. The agent can have either extensive or limited authority to make legal decisions about the principal’s property, finances or health care. There are several types of POAs, including conventional, also known as a limited power of attorney; durable, which lasts for a lifetime unless you cancel it; springing, which comes into play only for specific events; and medical, also known as a durable power of attorney for health care.

Protecting a college-aged child

Most people know the benefit of getting a POA in place for an older person who is in declining health, but did you know that it is a good idea to have a POA for children over the age of 18 as well?

Once your child reaches the age of 18, he or she is legally considered an adult. If your over-age-18 child were to get into an accident and had to be hospitalized, it is likely that you will not be authorized to obtain information about his or her medical status because, after age 18, that child is considered an adult, and the Health Insurance Portability and Accountability Act (HIPPA) will protect the confidentiality of that information.

You can avoid the frustration inherent with this type of emergency simply by getting a durable POA for your college-aged child. This document will make it possible for you to assist him or her, even from a distance. In addition to accessing his or her health records, you can help handle important legal issues on your child’s behalf, ensuring that matters are dealt with appropriately.

Protecting a disabled senior

Yet when it comes to handling Social Security payments for a disabled senior, establishing powers of attorney, medical directives or guardianship arrangements may not be enough. The Social Security Administration (SSA) requires a special designation known as “representative payee.”

A representative payee is someone who acts on behalf of another person who is incapable of representing himself or herself and is responsible for directing payouts exclusively to meet a beneficiary’s needs. If the SSA determines that an individual is incapable of managing his or her benefits or directing someone else to do so, the Administration will appoint a representative payee. Family members may consult the SSA if they believe their family member necessitates a representative payee.

Generally, a family member or friend serves as representative payee. If friends or family are not able to serve as payees, the SSA will look for qualified organizations to fill that role.

The SSA requires that all legally incompetent adults and most minor children (a disabled child or young adult entitled to Supplemental Security Income, for example) have a representative payee. In most cases, the person in this role cannot be paid for the work he or she does on behalf of the incapacitated person, and the SSA requires that person to keep careful records.

A critical thing to keep in mind about the responsibilities of someone acting as a representative payee for you is that the permissions that accompany the role do not extend to other facets of your affairs. Someone who makes medical decisions or signs legal documents on your behalf needs to be granted a power of attorney or guardianship.

If you assume the role of representative payee for a loved one, the SSA offers a range of resources via ssa.gov, including a series of training videos, a downloadable guide and a frequently asked questions (FAQs) page. The process of applying to be a representative payee will likely require a trip to a Social Security office and a completed SSA-11 form explaining why the beneficiary needs assistance and why that person has selected you for the job.

Recall, too, that this designation will be in addition to any other legal or medical role you might be playing for your loved one. It’s just one piece of the larger whole that, with forethought and planning, can help ensure that your loved one’s — or you – have confidence in your financial future.

As with most financial issues, planning ahead can help you avoid potential problems and protect the financial future you’ve worked so hard to earn. Please reach out to us if we can be of assistance with any aspect of your financial planning, whether Social Security or otherwise. We are here to guide you to your long-term vision.

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Any opinions are those of Randy Carver and not necessarily those of Raymond James. This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete.

 

 

A recent Allianz study reports that, while 88 percent of Americans say that working with a financial advisor would help them reach their financial goals, including planning for a comfortable retirement, only 44 percent work with a financial advisor. That percentage is down from 48 percent in 2022.

The reasons for this gap between inspiration and execution vary. For example, 23 percent of respondents in the Allianz survey say they don’t discuss certain topics, including longevity and health-care costs, with an advisor because they haven’t prioritized finding a solution.   Other’s don’t feel that the cost of having an advisor is justified when they can try a do it yourself approach.  Other’s feel they can’t afford a professional advisor.

Benefits of Working with a Financial Advisor vs. DIY

In today’s digital age, access to investment information and tools has empowered many people to explore the world of do-it-yourself (DIY) investing. While managing your own investments may seem cost-effective at first glance, it’s essential to consider the potential trade-offs compared to working with a professional financial advisor or planner. Ultimately, while the allure of saving on advisor fees may be enticing, the value that a professional brings, including tax-saving strategies and asset-protection measures, may provide a higher net income to you.

One of the perceived advantages of DIY investing is the potential cost savings associated with bypassing the fees typically charged by financial advisors. With an abundance of online brokerage platforms and investment resources readily available, anyone can access to research, analysis tools and trading platforms and execute investment decisions independently.

However, DIY investing also comes with inherent risks and challenges. Navigating the complexities of financial markets requires a deep understanding of investment principles, risk-management techniques, tax considerations, the ability to stay disciplined amid market volatility and a myriad of other factors.  Individuals often overlook, or are unprepared to manage, income-tax optimization and reduction of internal or “hidden” fees.

Perhaps most significantly, without the guidance of a professional advisor, individuals may be susceptible to emotional decision making, behavioral biases and suboptimal investment strategies that could undermine their long-term financial goals.

According to the National Financial Education Council, a lack of personal finance knowledge costs the average American $1,300 each year. This number increases for those who have substantial wealth.

A  recent Vanguard study found that, on average, a hypothetical $100,000 investment would grow to more than $190k under the care of an advisor over a period of 25 years, whereas the expected value from self-management (DIY) would be $110,000. This hypothetical study assumes a 5 percent net return and a 3 percent net annual value-add for professional financial advice to performance.

Also, the value of working with an advisor goes beyond what you might see in a return on your investments. We don’t know what we don’t know. Advisors can save you money through management of tax issues, estate planning and asset protection.  One seemingly simple mistake or oversight in managing your finances can be extremely costly — and often irreversible.

Our financial advisors have the training, certifications, and experience to advise you on every type of financial topic imaginable.  You will benefit from the combined expertise of our advisors, who have more than 300  years combined  experience.

Wealth Managers vs. Financial Planners or Financial Advisors

While the terms “wealth manager” and “financial planner” or “financial advisor” are sometimes used interchangeably, they represent distinct roles with unique areas of focus, services and expertise. Understanding these differences is crucial for individuals seeking comprehensive financial guidance tailored to their needs and aspirations or those who want to do it on their own.

A wealth manager primarily focuses on the management and growth of an investment portfolio. There is typically no consideration for an individual’s specific tax planning, income, cash needs or other every-day financial issues. A wealth manager is paid to invest the money in a portfolio. Someone who does their own financial planning or investing  may use wealth managers to manage their mutual funds, ETFs or separately managed accounts. The wealth manager is generally compensated with a fee based on the amount of assets he or she is managing for the client.

On the other hand, a financial planner takes a holistic approach, considering all aspects of an individual’s financial life beyond investment management. Financial planners work closely with clients to develop comprehensive strategies that encompass budgeting, retirement planning, tax optimization, risk management, estate planning and more. They serve as strategic partners, helping clients articulate their financial goals and navigate life transitions with confidence.

The primary distinction between wealth managers and financial planners lies in their scope of services and areas of focus. While wealth managers focus on portfolios, they do not provide any tax optimization or personal planning.

One of the hallmarks of financial planning is its holistic nature, emphasizing the interconnectedness of various financial, tax and legal components. Rather than viewing each aspect of an individual’s financial life in isolation, financial planners take a comprehensive approach, recognizing the intricate relationships among income, expenses, investments, insurance, taxes and estate planning.

Carver Financial Services is focused on your personal vision.   By considering the broader context of your overall goals and objectives we can identify opportunities for optimization and risk mitigation across multiple dimensions. This holistic perspective enables us to craft personalized strategies that align with your personal values, priorities and long-term objectives.  While there are hundreds of planning firms in the Unitted States our approach is truly different.  We are focused on your entire life and assisting with everything from finding the best medical care or asset protection.  From providing once in a lifetime experiences to connect our clients with other like minded individuals for companionship,

Comprehensive Advice Is an Invaluable Resource

We understand that 1 percent of a portfolio may be tens of thousands of dollars, and the desire to save this amount can be compelling. However, the value our team provides to you will likely return far more than the cost while also providing you and your family with a resource in terms of both time and money.

By implementing very intentional planning for you ranging from tax-efficient investment strategies, retirement planning techniques, and estate planning considerations we can help you minimize tax liabilities and maximize after-tax returns over time.

Even if you are paying thousands of dollars to work with us, you can still have a higher net return.

Ultimately, the cost of working with a financial advisor is generally 1 percent or less of your portfolio. If an advisor can provide more than 1 percent of value, then you are ahead. Various studies have indicated that a financial advisor can provide 3 percent or more net return. Aside from that, the real value may be in the ability to have the ongoing advice of a professional team with whom you can discuss all financial matters, ranging from estate planning to college funding and asset protection.

Often, the financial returns provided are because of what didn’t happen versus what did. People often look at their portfolio returns but do not see the tax savings, the reduction of internal expenses, the protection from creditors or being able to avoid a catastrophic health expense because of the advisor’s advice and guidance.

Having an advisor provides you with an invaluable resource.

We Are Different

Our firm is very different from most others.   As Bill Graham famously said about The Grateful Dead – “they are not the best at what they do, they are the only ones who do what they do”.    We provide a community and a wide array of resources beyond simply wealth management and financial planning. We are here to assist with all aspects of your life, not just the financial aspect. We provide comprehensive financial guidance while offering live events, client trips in worldwide locations, a monthly blog, videos and a host of other resources.

Investments, portfolios and financial planning are simply a means to an end for us, with the “end” being your ability to lead your best life possible with the least amount of stress.

Our Personal Vision Planning® process encompasses all aspects of your life ranging from planning your text trip, protecting your assets, to finding the best medical care just to name a few. We can identify opportunities for optimization, address potential blind spots and help you navigate life’s financial complexities with confidence and peace of mind.

There is neither a cost nor any obligation to connect and see if you are a good candidate for what we do, and if we are a good fit for you.  If nothing else we can provide a second opinion.  Please reach out whenever we may be of service.  We look forward to hearing from you.

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Any opinions are those of Randy Carver and not necessarily those of Raymond James. This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete.