March 2024 Blog Newsletter

March Blog Newsletter cover Website

March Captain’s Log

Compass log book rope

Unlocking Investing Success: The Power Of Diversification And Staying The Course

Investors, especially do-it-yourself investors, often grapple with the impulse to chase after the latest shiny investment opportunities. This tendency can lead to strong opinions based on personal beliefs, influencing their investment behavior.

Clients must resist the urge to outsmart the power of a diversified portfolio and stay the course. Successful clients have remained steadfast over the years, heeding the advice of Anchor Wealth advisors. Conversely, those who opt for individual stocks and bonds, or attempt to time the market by selling stocks and bonds in anticipation of market downturns and replacing them with cash or CDs, typically underperform our clients that stayed the course in a diversified portfolio over time.

Warren Buffet exemplifies this principle by purchasing investments and holding onto them for the long term. He focuses on the next decade rather than worrying about short-term fluctuations.

Let us use the Standard and Poor’s 500 Index (S&P 500) as an example. The S&P 500 returned 18.40% in 2020, 28.71% in 2021, -18.11% in 2022, and 26.29% in 2023. I recall the conversations we had with clients after 2022 and in 2023, when sentiments leaned towards anticipating a further market downturn. However, what followed was a 26.29% return for the S&P 500.

I coach our team at Anchor Wealth and our clients to begin with the end in mind. We consider the purpose of the money and how clients intend to utilize it. By determining the client’s retirement spending needs per month, Anchor Wealth can design a risk-reward diversified portfolio tailored to achieve their long-term goals.

It is crucial to maintain diversification and stay the course with investments for the long term. Clients who avoid individual stocks and bonds, refrain from market timing based on emotions, and avoid holding excessive cash typically enjoy higher returns and less risk on their investments over time.

In recent client and prospect conversations and observations, I have been reminded of the importance of this principle. It has become clear enough that I feel compelled to share this reminder with all of our Anchor Wealth clients.

Reach out to Anchor Wealth and schedule a review with your advisor today.

Investing involves risk. Depending on the types of investments, there may be varying degrees of risk. Investors should be prepared to bear loss, including total loss of principal. Diversification and asset allocation strategies do not assure profit or protect against loss.

Interest Rates: What Does 2024 Look Like If You’re Planning A Large Expense

Are you gearing up to purchase your first home? Buy a new car? Have another large expense on the horizon? Whatever your game plans, the key to successful financial planning lies in understanding the ins and outs of interest rates. Much like the external factors that influence the rise and fall of the ocean, interest rates are subject to a variety of elements that shape their trajectory.

Current Interest Rates: What Does 2024 Look Like

Let’s start things off on a positive note – interest rates in 2024 are predicted to be more favorable compared to 2023. However, it’s essential to understand that predicting these rates precisely is like forecasting the weather – unpredictable. Although the Federal Reserve has paused interest rate hikes for the beginning of 2024, rates can still fluctuate due to various factors such as inflation, unemployment, GDP growth, and the balance of supply and demand for money.

Affordability and Timing

Interest rates wield a direct influence on affordability, but holding out indefinitely for a lower rate is no foolproof strategy. Timing the market is a tricky endeavor, and the decision to wait or proceed with a significant purchase, such as a home or car, should factor in considerations beyond interest rates alone. Keep in mind that while timing matters, it’s not the sole determinant.

Some things to consider are the seasonal buying cycle: spring and summer are generally better for buying houses as there is more inventory on the market. Fall is normally the best time to purchase a car as dealerships are unloading the current year’s stock in preparation for new models.

Conduct a thorough evaluation of your personal finances and consult with a financial advisor to determine if it’s the right time for a major expense or if adjustments to your budget are necessary to meet your purchasing and long-range goals.

Refinancing is an Option

If interest rates keep climbing or are slow to go down, don’t panic. Refinancing in a year or two is a strategic option if you are trying to lower your interest rate, allowing you to secure better terms and manage your finances effectively. Staying proactive and monitoring interest rate trends is key to making the most of refinancing opportunities.

Personal Finances and Expert Guidance

Your unique financial situation matters. Health reasons, children and grandchildren, and job factors all influence financial decisions. As you navigate interest rates in 2024, remember that an informed approach is your best ally. An advisor can help clear the financial fog, empower you with a plan tailored for your personal situation, and expertly advise you on making significant purchases now and how they influence your financial goals.

By Chris Perry, CFP, Wealth Advisor

Adam’s Nightstand

I am currently reading The Holy Grail of Investing: The World’s Greatest Investors Reveal Their Ultimate Strategies for Financial Freedom by Tony Robbins. For many of you, Tony Robbins is a familiar name. He is a global entrepreneur, investor, NY Times #1 best-selling author, philanthropist, and the world’s #1 life and business strategist. The current book is the last installment in a trilogy of books he has written.

I enjoy reading about investing while staying in tune with what is happening around the world in the world of investing for the benefit of our clients at Anchor Wealth. I like to gather different perspectives from many successful individuals to come to my own conclusions about what is best for our clients at Anchor Wealth.

In the book, Tony interviews and collaborates with a dozen of the world’s most successful investors in private equity, private credit, private real estate, and venture capital, sharing their favorite strategies and insights. One consistent theme throughout all successful investors is how important diversification is!

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Pickleball Y’All?

Pickleball was invented in 1965 on Bainbridge Island, a short ferry ride from Seattle, Washington. Three dads – Joel Pritchard, Bill Bell, and Barney McCallum — whose kids were bored with their usual summertime activities — are credited for creating game. Pickleball has evolved from original handmade equipment and simple rules into a popular sport throughout the US and Canada. The game is growing internationally as well, with many European and Asian countries adding courts.

On Friday, March 1st 25 clients and their guests joined the Anchor Wealth Management team for an exclusive clinic at the UW Health Sports Factory in Rockford.

Jen Selchow, owner of the Rockford Pickleball and PPR Pro along with her staff taught participants the basic rules of the game, serving, dinking, groundstrokes, return of serve, defending offesive lobs and overheads.

There was even a chance for some good, clean competition.

All the participants received a pickleball racquet and picked up some new skills for the next time they play.