July Client Newsletter
For my family, I think that July marks the beginning of our summer. As the end of June approaches, we are making plans for heading Up North for a week to spend time at the family cottage with friends and family. We always look forward to this week on the lake. We spend time reading (and sleeping) in the sun on the dock, take lots of long walks, eat ice cream, and usually find ourselves eating dinner at one of my all time favorite spots, the patio at Pink Pony on Mackinac Island. We have traditions that are just ours and that we look forward to every year. The cottage and the time Up North is a critical piece of our family’s Personal Statement of Financial Purpose. This time away and time together is a key component of what we work for. This is a rhythm to our lives, a constant in the ever changing dynamics of our family, a place that we recharge, reconnect, reengage at the end of a busy 6 months, and before the craziness of the next 6 months engulfs us. It may not always make the most financial sense to take trips to “the island” or shop (in Petoskey, Harbor Springs, Mackinac Island) or pay for bowls of ice cream, but the memories and conversations and time together is priceless.
As we work together to create, refine, or review your Personal Statement of Financial Purpose, are there family traditions, experiences, or rhythms that need to be built into what you are trying to create for your family? Maybe it is just having a reminder of spending time together. Maybe it is as simple as adding a phrase of finding joy in the time together. Maybe it is something around making memories. Whatever it is for you and your family, having this component in your Personal Statement of Financial Purpose can be a great way to refocus yourself on an aspect that so often gets overlooked when discussing financial things: sometimes the things of greatest value do not show up on a personal balance sheet.
If you would like to set up some time to relook at your Personal Statement of Financial Purpose or are just thinking about this for the first time, please let me know. Give me a call, shoot me a text, write out an email, or use this link to set up some time to have a conversation: Schedule a Meeting
July Element Focus is....Estate Document Review (not really an element, but just as important)
If you are utilizing the Elements App, you already know that there is not an Element for Estate document review. Reviewing your estate documents, is not something that is a lot of fun to do and is not something that most people think about doing. However, making sure that your estate documents are current and correct can go a long ways in helping your loved ones in the case of an emergency. What are we looking for when we review estate documents? There are several key components that we want to look into.
First, do you have estate documents created, and if so, are they signed? This does not necessarily mean that you need to have a trust created, it may just simply mean having things like a will, powers of attorney, guardianship for your children, HIPPA release forms, etc. Hopefully you will never need these documents, but if at some point your family needs to provide care or make decisions for you, they will thank you for having these in place.
Second, if you have these documents, have you reviewed them lately? Life changes on a daily basis and sometimes these changes can effect who and what we need listed in our estate documents. This generally isn’t something that changes on an annual basis, but if we are not attentive to reviewing the choices which we have made, we can sometimes find ourselves in a position where we are years away from our original choices and these original choices do not currently correspond to how we wold like things today.
A third component to reviewing estate documents, doesn’t have to do with estate documents directly, but with account titling. If you have a trust, and you would like your assets to pass to your heirs through the trust, are your accounts titled correctly to make sure this occurs. Many people have gone through the process of creating the trust documents, but have failed to take the next steps of funding the trust. If you do not have a trust (you may not need a trust), have you made sure that your accounts have beneficiaries listed on them so that your accounts are not subject to probate. Simply naming beneficiaries on your accounts can be an effective way to easily leave money to your heirs (or favorite charities) without having the accounts tied up in probate and having the court decide what they think your wishes would have been.
If you haven’t created estate documents, haven’t reviewed them recently, need to review beneficiaries, or just have questions, please let me know and we can work through these items together.
July Planning Opportunities
Along with reviewing estate documents, comes reviewing life insurance policies. Life insurance is a key component of any financial plan. For most people, life insurance is a way that they can make sure that their family can continue on with their current lifestyle if you were to pass away. It is in essence, life style maintenance or income replacement. However, it is more than that as well. If one person passes away it may actually trigger more ongoing expenses for the remaining family. Maybe there is additional day care needs, household maintenance expenses, even food prep or more dinners out. The unexpected shift in family structure when one family member passes away can cause dynamic shifts in the overall family budget, not to mention funeral and burial expenses, celebration of life gatherings and most importantly being able to make sure that your family has the necessary funds to be able to afford to grieve without worrying about money.
If you have questions about what type of life insurance to purchase or how much, let’s have a conversation. I will be reviewing your current life insurance policies (if I have them) and evaluating your overall insurance needs based on your current information in the Elements App through out the month of July. If there are any updates needed or if I do not have your current life insurance policy information, please let me know.
Client Actions
It’s summer - no homework this month. However if you have life insurance policies which you have not yet uploaded to Blue Leaf, this would be a great time to that.
Market Update
Stocks continued to rise, continuing their late May momentum – at least in the US – with the S&P 500 returning 6.61% in June and putting year-to-date gains at 16.88%. From the 2022 lows, the S&P 500 has recovered nearly 25% but remains over 7% away from its all-time high in early 2022. While US large cap, mega cap in particular, sit on top of the year-to-date leaderboard, mid and small cap stocks surged in June, outpacing the S&P 500 for the month. Globally, developed and emerging international equities lagged through the month, though developed markets are still ahead of US mid and small caps on a year-to-date basis.
Following the Federal Reserve’s June meeting, their tone shifted to be more hawkish than before. While they have long had a fairly hawkish stance in their fight against inflation, some recent language shifts appeared to begin to tone that down. Also, the market had been expecting a significant pivot in terms of policy and the Fed to be able to move into an easing stance and begin rate cuts later this year or early next. However, the Fed has made a seemingly concerted effort to change those expectations by alluding to multiple more rate hikes this year, and that they were a couple of years away from cutting rates. Despite the shift in language and tone, the market still believes better probabilities lie in rate cuts in the first half of next year.
While the market still expects rate cuts, the Fed’s language did shift yields upward in the short- to-intermediate section of the yield curve. The upward shift in yields put pressure on bond prices, where the Bloomberg US Aggregate fell 0.36% in June, putting its year-to-date gains at 2.09%.
Portfolio Update
The S&P 500 surged higher in June, maintaining and furthering the positive trends in equity markets throughout most of 2023 thus far. The glimmers of optimism that appeared earlier this year appear to have been sustained through the first half, despite a rocky end to the first quarter with bouts of banking concerns. Part of this may be due to hopes of productivity gains amid an artificial intelligence wave while improving economic data - although still mixed - has helped the equity market shrug off the Federal Reserve’s increasingly hawkish messaging.
Despite the noise and a decent amount of negative commentary, the overall economic picture remains mixed. Recent improvements in areas such as consumer sentiment and high-level economic conditions have outweighed continued weakness in services conditions and certain leading indicators, as well as slightly slipping data in overall orders and global output. We remain cautiously optimistic a "soft landing" is ahead of us. Based on this information, the data indicates taking on a benchmark level of risk between equities and fixed income so we have slightly increased the amount of equities held in our portfolios.
Hopefully that wasn’t to much information for you to get through. Maybe it provided a leisurely read while you enjoyed some time on a chair in the sun, or maybe in the shade enjoying a nice breeze. Summer is a great time to refocus and reevaluate and then to take action. If you have thought of some things that you would like to adjust, change, or discuss, let’s put some time on the calendar to have a conversation. However, let’s not take time away from enjoying life, making memories with the family, or just reconnecting with the ones you love. Enjoy this time and possibly a different rhythm in life while you can knowing that I am keeping an eye on the big picture for you and we can always reconvene our conversations when the fun of summer starts to fade into the beautiful colors of a Michigan fall.
Have a great July!