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Hello Friends,

The past two and a half years have taught us many lessons and most people have worried enough to last a lifetime. We are now in another season which, if we let it, could easily lend itself to more worry. Jumping from one thing to stress about to the next. What we as humans do best. From masking, vaccines, and quarantines to inflation, interest rates, the stock market, the war in Ukraine and potentially, even your fantasy football league standing.

While worrying can have a cost, the benefit of worrying is that it heightens our awareness to what actually matters and can inspire action. The cost of worrying can be so painful that it lights the fire inside to do something productive about it. This has been our experience in our conversations with many of you about how you approach things differently having lived through a global pandemic. There is a renewed energy around not deferring the things you want to do in life. We love hearing about all the fun you have been having spending time with family and friends, traveling and adventuring. Carpe Diem! We see you realized how little is guaranteed, how little is helped by worry, and that there is a true sense of urgency to get out and do the things you want to do. Everything from opening that expensive bottle of wine on a Tuesday with pizza because what are we saving this for? To finally doing that home upgrade you have always wanted - how lovely is it to have coffee every morning on the sun porch? Or booking that beach trip with your friends and returning with stomach pains from laughing so hard. There is so much room for joy and less room for worry when you get out and do it. Sometimes we need to answer, “If not now, when?”

If we are not intentional, the season we are in now could easily send us back down the worry and defer cycle. We may end up worrying about things we cannot control and deferring what we want to do in life. What we are suggesting if this resonates with you or someone you love is to take the lessons you have learned the past few years and consider a different way to deal with uncertain times. There are plenty of smart financial planning strategies to consider in times like these (more on that below on our visit to Logic Lane) but there is a lot of joy to be had by how you use the resources you have available to you today. Remind yourself that you have worried enough and by using your money to do something that brings you happiness, you can use your money to create calm, peace and experiences with those you love most.

We talk a lot about building wealth without regret and research tells us that a key to live a life without regrets is to get out and live it, mistakes and all. What we also know is that if you have done and continue to do a good job of saving money, it can be a very hard shift to stop worrying about it and allowing yourself to enjoy it. Great savers can struggle transitioning to spending. If you can’t enjoy spending it, then why do you work so hard for it? Without intention you can end up at a point in life with more money than you will ever get the chance to enjoy. Instead of wringing your hands in angst about the current value of your long term investment accounts, consider running the same hands through the sand on the beaches of Kauai, around the fork of a plate full of spaghetti in Florence, or around the sticky, warm fingers of your grandchild or godchild as you walk around the block. So much of what makes life worth living is the experiences we have with those we love. Our financial resources are what facilitate these opportunities to enjoy your “one wild and precious life” and have a stronger sense of alignment with how we are spending our time.

If you are taking the time to read this newsletter, odds are you have done a good job of reducing your money worries by thinking through your financial situation, preparing, and saving. You have already considered in your planning that investments fluctuate in value. You understand that temporary declines do not equate to permanent losses unless you make them so. Times like now are when we must stay disciplined and patient and trust that investing has never been and will never be a straight line up and to the right. There has been a 53/47 split between "up" and "down" trading days in the US stock market over the last 50 years. In spite of the near "every-other-day” volatility, the S&P 500 still earned an +11.1% per year return. Focus on the long game. It doesn’t have to be sexy to be successful.

If you are looking for practical ideas of how to channel your concern into something productive for your financial situation, there are potentially things you can do, and we have strategies to share. Continue reading to meet some Logic Lane neighbors who are working through many of the same concerns that you are.  You might see yourself in one of the situations below and as always, if you want to discuss your situation, know we are here to help.

1. Retired Robin – 65 years old, retired and living off her investments. Good news. She is not going to be living under a bridge or eating cat food because the stock market is down 25% or 30% or 50%. She has flexibility, options and can adjust to preserve the security of her retirement. Robin retired young and has a 30+ year time horizon for retirement. That value of her accounts was previously $3M and is currently $2.4M with the investment performance this year. She was withdrawing $9,000 per month ($108,000 per year) in addition to her Social Security of $2,500 per month to support her lifestyle in retirement. If her account value stays at this level or lower for the next 3 to 6 months, she is going to change her withdrawals temporarily to $8,000 per month until her account recovers in value. Her other assets include $200,000 in cash, and a $750,000 paid off home. While the stock market and bond market are both down approximately 20% in 2022, her personal income could temporarily change from $11,500 per month to $10,500 per month, a change of about 8%. If she is in a situation where could not absorb the 8% change in her personal income, she has 200 months or approximately 16 years of saving in her emergency fund to supplement the $1,000 decrease to her monthly income. She also has her home she could use for retirement income, or she always the option to downsize and supplement her savings with more money. Robin didn’t get to be 65 with a net worth of over $4M by panicking and making short term decisions with her life savings. She knows that temporary declines do not equate to permanent losses, unless you make them so. She is resilient, calm about her money and just booked that flight to Kauai with her girlfriends .

2. Cheap and Charitable Chuck – While Chuck may not be a fan of the “Optional Gratuity” that has shown up just about everywhere, he is exceptionally charitable. His advice on combatting inflation and the increased cost of just about everything? “Stop tipping McDonald’s and Starbucks.” He continues, “I wonder when my utility bill is going to show up with an Optional Gratuity line?” Chuck is all for paying a great tip, but he prefers to carry cash and personally hand it to the person doing the work vs simply having everything he buys cost 20% more all the sudden. Chuck is also very charitable. Most recently he is focused on those that lost everything in Hurricane Ian and seeing how he can help. He is donating through the Red Cross, and he has also reached out to his personal network to see if there is a family he can help get back on their feet. Chuck has been through hard times himself and knows what it can mean to have someone provide support when you are struggling to put the pieces back together.

3. Opportunistic Olivia and Oliver - If you are in your building and saving years like Olivia and Oliver or retired and continuing to save, it is Black Friday. As Olivia comments, “It is the same investments I was buying through my monthly 401(k) and investment account contributions, now marked 20% off!” But unlike Black Friday, these opportunities, much to economic forecasters and the major media outlets dismay, are impossible to predict consistently. And not every time a buying opportunity presents will you personally be in the position to take advantage. If you are like Oliver, you might have just spent a portion of your available cash on a car purchase, are saving up for a down payment, and/or are looking to change jobs and want to have a larger than normal rainy day fund. Or maybe you are lucky like Olivia who just didn’t have the time to figure out how much she wanted to invest and when the market went down another 10%, and she was able to reposition some funds. It only happens occasionally, but Olivia will take luck over skill any day.

4. Tax Tiffany – Despite the name, Tiffany hates taxes. She views this decrease in values as an opportunity to pay less in taxes over her and her kids’ lifetime. Tiffany is taking advantage of the lower values by converting some of her retirement funds on which has not paid taxes, called pre-tax funds or traditional IRA, and proactively converting some of her money to after-tax money or Roth IRAs. Yes, by doing this she is paying taxes today, but here is her logic. She is 50 years old and in the 24% tax bracket. She can convert $100,000 of her IRA money (previously $130,000 when the market was higher) to an account with future tax-free growth and pay $24,000 in taxes today. If she earns an average rate of return of about 7%, this money could double in value three times by her age 80 to a hypothetical $800,000 of tax free money. She may need it for herself, but this would be the money she would touch last in retirement and ideally leave for her kids. With her math, assuming the same tax rate of 24% in 30 years for and apples to apples comparison, she is paying $24,000 in taxes today vs. $192,000. Way to go, Tiffany.

5. Cash Carl – Carl loves cash. If you talk with Carl for more than 10 minutes, he will likely be asking you where you bank and what rate you are earning on your cash. It is one of his goals to make sure everyone knows that not all banks are created equal. It is shocking to him how many people don’t realize this! The same high yield savings account at a major bank branch location may only be paying you 0.10% while an online bank may be currently paying 2.25%! Carl keeps $1M in various banks (did we mention he loves cash?) and at 2.25% vs. 0.10% this is the difference of $21,500 of interest annually. He doesn’t have a favorite online bank, but some of the ones he has used are Ally, Synchrony, and Marcus.


*These case studies are for illustrative purposes only. Actual performance and results will vary. These case studies does not constitute a recommendation as to the suitability of any investment for any person or persons having circumstances similar to those portrayed, and a financial advisor should be consulted. This case study does not represent actual clients but a hypothetical composite of various client experiences and issues. Any resemblance to actual people or situations is purely coincidental.