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Charlie Kevin Video

Retirement: Everything is Different Now!

You may be the type of person that enjoys managing your own investments.  And there’s nothing wrong with that.  However, as you approach or are in retirement things can be very different.  In fact, when your investment goal switches from accumulation to producing retirement income it may seem as though everything is different now!  

 

In this video, Kevin explains why managing your own investments is different when you are retired, and why a fiduciary financial planner may be worth the investment.  

 

Key Points:

We believe a globally-diversified investment approach is still the best plan for capturing positive returns in the long run. Furthermore, chasing the top-performing asset classes and changing your portfolio based on news headlines or current events has been shown to produce lower returns over the long run.  In other words, if you find yourself wanting to change your portfolio as soon as investment headlines turn negative, having a fiduciary financial planner may help you stay focused on your goals instead of abandoning your investment plan during a downturn.  

 

Whether you manage your investments yourself or you have a trusted advisor, here are three things everyone should do to increase your chances of success in retirement.  

  1. Write down an Investment Policy Statement to help you stay focused on your investment goals when everything in the news is negative.
    • For example; “I will invest this way to reach my goals in retirement….”
  2. Be careful chasing the high performing asset classes.
    • A diversified portfolio should stay diversified.
  3. Have someone who will hold you accountable in order to help you focus on your long-term goals when the going gets tough.

 

We appreciate your feedback! Please leave a comment on the video or reach out at https://www.leadingedgeplanning.com/ if you have any thoughts on the video!

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk and there can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this video will be profitable, equal any corresponding indicated historical performance level(s), or be suitable for your portfolio. Moreover, you should not assume that any information or any corresponding discussions serves as the receipt of, or as a substitute for, personalized investment advice from Leading Edge Financial Planning personnel. The opinions expressed are those of Leading Edge Financial Planning as of 10/31/2020 and are subject to change at any time due to the changes in market or economic conditions.

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Charlie Education Kevin Pilots

Southwest Airlines Voluntary Pilot Reduction Options: VSP and ExTO

 

Southwest Airlines, in an effort to reduce its workforce, has just offered pilots Voluntary Separation Pay (VSP) and Extended Emergency Time Off (ExTO). Both are generous packages (in our opinion) and an excellent option for some pilots. How do you know if it’s right for you? In this video, Kevin & Charlie discuss what is in each package, how it may affect your overall financial picture, if you can afford to take one of them, and ultimately how to decide if you should be part of the voluntary reduction.

Not only are we financial planners but Charlie is a fellow SWA pilot (senior FO out of ATL). We understand what it’s like to walk in your shoes and we want to be a resource for you when it comes to making this difficult decision. Give us a chance to run your financial situation through our simulations to determine if VSP or ExTO is the right answer for you. Call us at 865-240-2292.

 

(Please pardon our hazy image quality. We wanted to get this important message out to you quickly and used our laptop to film it, instead of our standard video equipment. Thanks for your understanding!)

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk and there can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this video will be profitable, equal any corresponding indicated historical performance level(s), or be suitable for your portfolio. Moreover, you should not assume that any information or any corresponding discussions serves as the receipt of, or as a substitute for, personalized investment advice from Leading Edge Financial Planning personnel. The opinions expressed are those of Leading Edge Financial Planning as of 06/04/2020 and are subject to change at any time due to the changes in market or economic conditions.

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Charlie Education Kevin

Why Not Buy Individual Stocks?

So, you want to be a stock picker? This video may make you think twice. There are stories of someone getting lucky with a homerun stock return but it’s rare.  (More than 50% of stocks do not beat their market). Kevin explains why it’s so difficult to successfully invest in individual stocks and the effect of skew. He also examines the history of investment returns when owning the top 5 stocks individually versus owning those stocks within a diversified portfolio.  The information may surprise you!

Explaining Skewness (from Investopedia.com)
– Skewness, in statistics, is the degree of distortion from the symmetrical bell curve in a probability distribution.
– Distributions can exhibit right (positive) skewness or left (negative) skewness to varying degrees.
– Investors note skewness when judging a return distribution because it, like kurtosis, considers the extremes of the data set rather than focusing solely on the average.

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk and there can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this video will be profitable, equal any corresponding indicated historical performance level(s), or be suitable for your portfolio. Moreover, you should not assume that any information or any corresponding discussions serves as the receipt of, or as a substitute for, personalized investment advice from Leading Edge Financial Planning personnel. The opinions expressed are those of Leading Edge Financial Planning as of 06/08/2020 and are subject to change at any time due to the changes in market or economic conditions.

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Charlie Education Kevin Pilots

Warren Buffet Hates Airlines… So What?!

Berkshire Hathaway recently sold its entire stake in Delta, Southwest, American, and United Airlines and stock prices fell after the announcement.  What is interesting is all but one out of the four of the airline’s stock prices have gone higher since the low on May 4th when Warren Buffett’s sale was made public.

Stock pricing adjusts daily to numerous events.  The decision of one investor, albeit a highly successful and world-renowned investor, should not be your only guiding principle of how to handle your investments.  Mr. Buffett has had biases against investing in airlines.  Here is one of his famous quotes from the 2007 Berkshire Hathaway Annual Letter:

“The worst sort of business is one that grows rapidly, requires significant capital to engender the growth, and then earns little or no money. Think airlines. Here a durable competitive advantage has proven elusive ever since the days of the Wright Brothers. Indeed, if a farsighted capitalist had been present at Kitty Hawk, he would have done his successors a huge favor by shooting Orville down.”

— Warren Buffett, in the 2007 Berkshire Hathaway shareholder letter

Even Warren Buffet isn’t exempt from making the occasional mistake. Time will tell if his decision to sell was the right one or not.   Individual stocks and market prices are set by the collective knowledge of all investors.  In this video, Kevin discusses how to take advantage of this collective knowledge rather than follow the few outliers who are trying to outsmart the system.

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk and there can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this video will be profitable, equal any corresponding indicated historical performance level(s), or be suitable for your portfolio. Moreover, you should not assume that any information or any corresponding discussions serves as the receipt of, or as a substitute for, personalized investment advice from Leading Edge Financial Planning personnel. The opinions expressed are those of Leading Edge Financial Planning as of 05/21/2020 and are subject to change at any time due to the changes in market or economic conditions.

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Charlie Education Kevin

Don’t Abandon Your Financial Plan in Response to Headlines – This is Why

It’s tempting to abandon your financial plan when the world is experiencing unprecedented circumstances.  Although the pandemic is new and scary, don’t let the headlines play on your fears and knock you off your path.    

History shows that recessions and recoveries are filled with short term spikes and falls. These short term events often serve as a distraction to our long term goals.  Having a financial plan and sticking with it through the ups and downs has proven time and again to give you the best chance of success.  

In truth, the greater potential danger to our financial plan is not the pandemic and market volatility – it’s inflation (the loss of purchasing power in the future). If you react to the headlines and lock in your losses by withdrawing from the market you are also pulling your money from the opportunity to keep up with inflation and therefore, running out of money in retirement.

Stand firm and trust your plan.  Feeling unsure?  Give us a call, 865-240-2292.

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk and there can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this video will be profitable, equal any corresponding indicated historical performance level(s), or be suitable for your portfolio. Moreover, you should not assume that any information or any corresponding discussions serves as the receipt of, or as a substitute for, personalized investment advice from Leading Edge Financial Planning personnel. The opinions expressed are those of Leading Edge Financial Planning as of 05/06/20 and are subject to change at any time due to the changes in market or economic conditions.

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Charlie Education Kevin Video

The Shape of Economic Recovery

The coronavirus has wreaked havoc on our financial markets. Now that we are settling into the chaos many economists are starting to predict what shape the recovery might look like; V, U, W, L, etc. What do those letters mean? And does it even matter HOW the economy recovers, as long as it DOES indeed recover?

Kevin walks you through how those letters represent the different recession models and how each could affect your financial plan.

We love getting your questions. Let us know what topics you would like us to cover. 

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk and there can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this video will be profitable, equal any corresponding indicated historical performance level(s), or be suitable for your portfolio. Moreover, you should not assume that any information or any corresponding discussions serves as the receipt of, or as a substitute for, personalized investment advice from Leading Edge Financial Planning personnel. The opinions expressed are those of Leading Edge Financial Planning as of 04/21/2020 and are subject to change at any time due to the changes in market or economic conditions.

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Charlie Education Kevin

5 Things You Can Do to Prepare for This Bear Market

Who could have imagined we would start with the spread of a virus, add in some political election turmoil, and now we have an OPEC price war.  Wow!

Although we can’t control viruses and oil price wars, there are many things we CAN do to prepare for this bear market or recession.  Here are five things to do in order to not freak out and bring peace to your financial life:

1. STOP WATCHING THE NEWS AND START READING IT.

It’s important to be informed.  However, the 24-hour news cycle, selling fear and anxiety, is at an all-time high. Instead of watching TV or sensationalized videos, read your news from reputable sources. This will help reduce your emotional reaction while helping you stay knowledgeable and informed. Call us if you would like suggestions of reputable sources.

2. EVALUATE YOUR PERSONAL BUDGET & BALANCE SHEET.

For those of you that have very low debt and a sufficient emergency fund, you can rest easy.  Even if you’re laid off or furloughed you will have sufficient cash to prevent you from raiding your retirement funds.  If this is not you, consider the following:

● Develop a spending plan to eliminate all short-term, high-interest debt as soon as possible.
● Refocus your spending on necessary items only.
● Increase your emergency savings through automatic payroll deductions.
● Avoid new purchases unless cash is available.

3. CONSIDER A REFI ON YOUR MORTGAGE.

A good friend, and client, recently refinanced his mortgage to a 15-year 2.56% interest rate. This past week we saw mortgage rates fall to the lowest level in almost 50 years. That’s a game-changer for retirement planning!

4. STAY IN THE FIGHT.

You don’t have to be invested in 100% equities all the time, but staying in the market in some capacity is required to capture the long term market gains that are available to all of us.  It’s been shown that leaving the market only to return later may diminish your returns significantly.  In fact, if you miss out on just a few of the positive days in the market, your long-term stock averages could suffer tremendously.  You have to manage risks in the stock market – not avoid them completely.

 

The chart below shows how $10,000 invested in the S&P 500 index, for the 20-year period of 1999 through 2018, would have performed under various scenarios.

5. FOCUS ON YOUR GOALS & YOUR INVESTMENT TIME HORIZON.

Remember, the money you will need in one to five years is not at risk in stocks.  It’s only a paper loss until you sell the stocks. You wouldn’t sell your house or rental real estate property just because the price declined so why would you sell your stocks?  Furthermore, more conservative portfolios recover faster from downturns than aggressive ones.  For example, according to Charlies Schwab, a portfolio with more than 70% stocks and the rest in bonds took more than two years to recover from the 2008 financial crisis, compared with just seven months for a portfolio with more than 70% in bonds and the rest in stocks.

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk and there can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this article will be profitable, equal any corresponding indicated historical performance level(s), or be suitable for your portfolio. Moreover, you should not assume that any information or any corresponding discussions serves as the receipt of, or as a substitute for, personalized investment advice from Leading Edge Financial Planning personnel. The opinions expressed are those of Leading Edge Financial Planning as of 03/12/2020 and are subject to change at any time due to the changes in market or economic conditions.

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Charlie Education Kevin

How will the coronavirus affect my investment portfolio?

The question everybody seems to be asking these days is: How will the coronavirus (now officially named COVID-19 by the World Health Organization) affect my investment portfolio? 

Of course, the unsatisfying answer is: we honestly have no idea.  You can count the unknowns.  The virus is now up to more than 73,332* cases and almost 1,870* fatalities—and counting.  But nobody knows whether the virus will eventually run rampant across the Chinese economy or burn itself out.  Nobody knows if it will spread widely beyond China and become a global crisis or remain largely confined to the Middle Kingdom.  Either way, it’s hard to predict the impact of the virus on the Chinese or global economy, much less on the U.S. and global stock markets.

There are three different ways to guesstimate the impact of our latest pandemic:

The first and easiest is to look at how U.S. and world markets responded to past health scares. When the public became aware of the SARS epidemic (a previous strain of the coronavirus) back in 2003, the S&P 500 index fell 14% over the subsequent two months, from mid-January to mid-March. But, according to a historical look-back by the MarketWatch economists, the market was up 20.76% a year later. The Avian flu outbreak in 2006, the Swine flu outbreak in 2009, the Ebola outbreak in 2014 and the Zika epidemic in 2016 saw initial downturns between 5.5% and 7%, but a year later, the markets had recovered by between 10 and 36 percent.

We can note that the S&P 500 index fell 3% in the two weeks after January 17, when the coronavirus outbreak first made headlines. Since then, the index has bounced back to all-time highs.

The second is to assess the impact that the COVID-19 outbreak is having on the Chinese economy—which, while its stocks are seldom a major part of U.S. investment portfolios, would certainly affect the world economy through disrupted supply chains and reduced demand for products and services sold by outside firms. China now makes up 15.5% of the global economy. It is a major purchaser of commodities like oil and agricultural products, and companies as diverse as smart phone makers and auto companies rely on its manufacturing output.

The Chinese government is trying to contain the spread of the virus by imposing severe travel restrictions and by forcing 50 million people in affected areas to remain in their homes—which, of course, means they are not going to work and not being productive. At the same time, however, the Chinese government is pumping liquidity into its economy—an estimated 1.7 trillion yuan from the People’s Bank of China—in order to contain the economic damage it is causing with the quarantine measures. Will the two balance each other out? We can note in passing that the SARS epidemic caused a temporary 2.4% decline in Chinese production. Nobody knows if the new epidemic will have the same, greater or lesser impact.

The third way to evaluate the potential damage of the pandemic is to focus on certain individual companies that are being affected by the initial phase of the outbreak. A recent U.S. News & World Report analysis singled out Carnival Corp., whose Diamond Princess cruise ship is currently quarantined at a dock just off the Japanese coastline—with 3,600 passengers onboard. More than 200 of them have come down with the coronavirus, which means that this single ship has more cases than any individual country besides China. Carnival stock is down about 17% since mid-January.

The article also mentions Wynn Resorts, which has major holdings in China’s gambling Mecca of Macao. The company’s Macao resorts have been shut down by the Chinese government, causing Wynn to lose $2.6 million a day. The stock is down roughly 15% from its peak.

You may not have heard of Yum China Holdings, but it is the parent company of the KFC, Pizza Hut and Taco Bell brands. The $20 billion company has had to shut down its China-based locations, and the stock has lost 15% of its market value this year.

Finally, consider Nike, which has closed half of its company-owned stores and stores managed by partners in China. About 17% of the company’s revenues come from China, and Chinese factories produce about 20% of Nike products. Nike’s stock doesn’t seem to have been hammered like the other companies on this list, but you can expect a reported decline in earnings this quarter.

So what does this mean? Anybody who tells you that they know how the COVID-19 epidemic will play out in American household portfolios would have to be considered a charlatan. We simply don’t know. But so far, history suggests that the market reactions to past pandemics have been temporary, just like all other kinds of market downturns. Not knowing when to get out and back into the markets constrains our options to hanging on and hoping—maybe expecting—that this time around won’t be very much different.

We’re always available for your questions.  Don’t hesitate to reach out, 865-240-2292.

Charlie & Kevin

*As of 02/18/20 according to the World Health Organization

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk and there can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this video will be profitable, equal any corresponding indicated historical performance level(s), or be suitable for your portfolio. Moreover, you should not assume that any information or any corresponding discussions serves as the receipt of, or as a substitute for, personalized investment advice from Leading Edge Financial Planning personnel. The opinions expressed are those of Leading Edge Financial Planning as of 02/15/2020 and are subject to change at any time due to the changes in market or economic conditions.

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Charlie Education Kevin Pilots

When Should an Airline Pilot Begin Taking Social Security?

As an airline pilot, you may be eligible to start drawing your Social Security as soon as you retire from the airlines, but should you? As with so many things in finance, it depends. Optimizing your social security benefit is complicated and it can be confusing trying to grasp all of the moving parts. Plus, what about…

 

✈︎  When is your government-defined Full Retirement Age?

✈︎  Will your spouse receive any benefits?

✈︎  Do you anticipate retirement income from other sources?

✈︎  And,… will Social Security even be around by the time I retire? (Spoiler alert: yes, we think it will.)

 

Kevin and Charlie discuss how the answers to these questions correlate and share their 3 RECOMMENDATIONS on how to decide when is right for you to begin your benefit.

We love hearing from you! Please don’t hesitate to call or email if we can help you, 865-240-2292.

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk and there can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this video will be profitable, equal any corresponding indicated historical performance level(s), or be suitable for your portfolio. Moreover, you should not assume that any information or any corresponding discussions serves as the receipt of, or as a substitute for, personalized investment advice from Leading Edge Financial Planning personnel. The opinions expressed are those of Leading Edge Financial Planning as of 02/10/2020 and are subject to change at any time due to the changes in market or economic conditions.

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Charlie Education Kevin Pilots Video

Mandatory Pilot Retirement Age Coming Fast? Get a Plan from a Pilot Specialist

Whether retirement is 5 years away or 15, it’s time to plan NOW.

Are you nearing the end of your aviation career? You may not be ready to take off your epaulettes quite so soon, but the FAA currently mandates all airline pilots retire at the age of 65. Are you financially ready to make the transition?

We are airline pilot specialists!

The planners at Leading Edge have years of experience helping pilots from all of the major U.S. airlines grow and protect wealth so they can have as much fun in retirement as they did flying airplanes! In this video, Charlie Mattingly, Principal, CFP®, MBA and fellow airline pilot describes the value Leading Edge can bring to your financial plan.

Want to skip ahead in the video?

Here are the topics broken down by time marker:

00:04  How does Leading Edge Financial Planning help people execute on plans?
00:36  Why is it a good time to invest TODAY vs waiting?
01:12  Leading Edge helps determine if a second business or real estate is a good idea.
02:33  How can Leading Edge help lessen financial emotion?
03:46  Why should a pilot choose Leading Edge?
04:59  Worst and best financial analogies with flying. (Just for fun!)

Click HERE to book a free one-hour consultation.  Or call us at 865-240-2292.

More reading:
International Civil Aviation Organization (ICAO)
Fair Treatment for Experienced Pilots Act

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk and there can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this video will be profitable, equal any corresponding indicated historical performance level(s), or be suitable for your portfolio. Moreover, you should not assume that any information or any corresponding discussions serves as the receipt of, or as a substitute for, personalized investment advice from Leading Edge Financial Planning personnel. The opinions expressed are those of Leading Edge Financial Planning as of 01/27/20 and are subject to change at any time due to the changes in market or economic conditions.