Lies and Truths #11 You Are Already Rich

Here is another TRUTH in our series from the book "The Lies My Broker Taught Me and 101 Truths About Money & Investing."

TRUTH:  You are Already Rich!

"In comparison to all of the humanity that has inhabited this planet in the past and today, you already have vast amounts of wealth available to you.  You have access to food, clothing, education, shelter, technology, and freedom; unimaginable to the masses in the world today and suffering without running water, health care, food, shelter, or sanitary living conditions.  Even the kings of a thousand years ago could scarcely have imagined the wealth of your kind.  Indeed, you are already rich."

So, maybe all of us in this country are really part of the 1%?  Something to think about.  Let's live today in an awareness of how RICH we are! 

We have a few copies of this book to give away.  Just call 920-893-5262 and tell us you read this post and we will send one out to you--unless they are all gone.'  If you would like to see all the posts in this series, just click the "Lies and Truths" link at the bottom of this post.

Subtle Differences

I was doing some researching and ran across the website of a very "intelligent" sounding financial advisory firm. Their website is very well done. They advertise that they are fee-only planners, and (like us) are independent. They present a good image. They even have a name in their title that is very much like the name of a firm with which Veritas has a business relationship. The more I looked at their site, the more I felt like they are our clone from another dimension: similar sized staff, articles about market panic, references to Money Smart Week, and a golf event.  If I were an outsider, I would see almost no difference between this firm and Veritas Financial Services.

But then I dug a little deeper. One of their FAQs (frequently asked questions) is about active management. I am quoting their reply directly:

"Active investment management is the use of analytic research, forecasting, experience and expertise to decide what securities to buy or sell and when. This process aims to achieve a greater rate of return than the market by identifying mispriced assets. In contrast, passive investing subscribes to the Efficient Market Hypothesis and promotes index investing based on the premise that it is not possible to beat the market. These are the two main schools of thought in investment management and attract significant debate and contention within the industry and academia.

Actually, there is NO contention amongst academics about which method is best, only on Wall Street. But anyway, here is their next section on "which is best."

We employ an active investment strategy as we feel greater returns can be achieved with this method. While the majority of investors don’t beat the market, our results have shown that it is not impossible.

And something makes them different from "the majority of investors?” This is a common psychological misperception, similar to how over half of drivers think they are “above average.” I continue, from their website:

Our process can be referred to as “tactical asset allocation” [TRANSLATED: “MARKET TIMING”] in which we make changes…based on our current Market Outlook [TRANLATED: “GUESS”]. With these adjustments we aim to add value for our clients by anticipating broad market and economic themes. We also utilize active mutual fund managers…to make the decisions of which specific companies are best poised to profit from these themes. While many tout index funds because of lower expense ratios, our experience [BUT WHAT RESEARCH?] has shown that there are fund managers who are worth the higher cost [ARE THEY INDENTIFIABLE IN ADVANCE?] and we spend a lot of our research time trying to identify those managers and make sure the costs are appropriate for the value provided."

Here is a case of an intelligent-looking firm in all respects that falls victim to the same cancer of active management, and not only that-- MARKET TIMING (ie "tactical asset allocation"). The sad truth is, they interpret mutual fund manager luck in making correct bets as a consistent, repeatable, and predictable skill they can employ for their investors.

Nothing could be farther from the truth.

Granted, index funds are often held in high esteem for being less expensive, but inexpensive isn't everything. It is also the asset mix that matters. At Veritas, we use structured Free-Market funds and emphasize appropriate asset allocation and true diversification. We do NOT advocate actively-managed funds.

It is highly unlikely that the average investor can decipher and discern these subtle differences. That is why our goal is, week in and week out, to educate you, the investor.

Jeremy Burri
Financial Advisor Coach

Registered Investment Advisor

Employer Fiduciary Liability

Did you know that you can be sued by your employees for the performance (or lack of) and fees in your retirement plan? The Dept of Labor sets clear standards for the structure of retirement plans, yet many employers are unaware of this fact and maintain plans that are OUT of compliance.

Employers are often also under the false assumption that the investment provider is liable for these things or acting as a "fiduciary" along with the employer. Sadly, in most cases the investment provider  is not assuming ANY fiduciary liability, and thus would leave you to fend for yourself (just ask your provider if they are acting as a fiduciary).

In a January 25th class, we'll look at the regulations for employers and how to protect yourself from employee litigation. Additionally, in this class Paulette Ruminski will talk about health insurance issues that may pose a legal threat to employers.

Join us here at Veritas at 7:30 AM for a complimentary breakfast or 11:30 AM for a complimentary lunch.  To register, call 920-893-5262 or email Jo Ann at jo.ann@veritasinvesting.com and we will reserve a space for you.

Jeremy Burri
Financial Advisor Coach

Investment Advisor Representative

IF NOT CLASS (Community Living Assistance Services & Supports Act) — then WHAT?

CLASS, the provision of the 2010 Health Care Reform Act that asked all employers to enroll their employees into a government-run long term care insurance program, has been dissolved.

If you are a business owner, you might be surprised to learn that long-term care benefits now rank as important to employees as life and disability…maybe, in time, even above the healthcare benefits you may currently provide.

Some Myths & Truths about long-term care to consider:


Myth: My employees are not concerned about long-term care benefits.

Truth: 77% of Americans age 30 to 65 think they should know more about long-term care than they currently do.

Myth: Employees do not value this benefit as much as other benefits currently offered to them.
Truth: Employees today, especially if they are Baby Boomers, are vowing to do things differently after seeing their parents’ savings swallowed up by nursing home care, and/or experiencing the stress and financial burden of spouses or children serving as caregivers.

Myth: Medicare will pay for any long-term care needs during retirement.

Truth: Encourage your employees to look at Page 4 of their annual Social Security statement which reads, “Medicare does not pay for long-term care, so you may want to consider options for private insurance”.

Myth: The risk of a financial burden to an employee from benefits an employer currently offers (health, disability, life) supercedes long-term care risks.

Truth: 3 in 900 (.33%) = Odds a having a car accident

21 in 900 (2.3%) = Odds of being admitted to a critical care unit

630 in 900 (70%) = Odds of needing long-term care

Myth: Long-term care is primarily for nursing homes.

Truth: Long term care plans have evolved with much emphasis and greater benefits being placed on staying in your home (even paying family members as caretakers) vs. a nursing facility.

Myth: Long-term care benefits are too expensive.

Truth: Rates are based on age and health (the younger you are and if in good health) the lower the rates will be and why there are many advantages to consider during one’s working years. Also, there are group discounts available, even if offered on a voluntary basis. And, the Wisconsin Partnership Plan offers tax deductions to individuals and business owners who purchase long-term care insurance. The cost may be 100% tax deductible for business owners. Plus, one can purchase “limited pay” policiesso that insurance protection is paid-in-full prior to retirement age.

In the wake of the dissolving of the CLASS Act, however, an urgent question that may remain unanswered is “If not CLASS, then what?

Consider offering Long-Term Care Benefits to your employees. To find out more and explore some options, call me at 920-893-5262.

Paulette Ruminski
Insurance Advisor Coach

Food Pantry Donation

The Plymouth Food Pantry was presented with a check for $2,525 from Plymouth Professional Business Women.   Funds were raised at the group's annual silent auction.  On the far right is VERITAS' office manager, Cathy Knuth.  We are proud to relate that Cathy is the newly-appointed secretary of PBW.

Separating Myths and Truths of Investing

Teaching investors the truth about investing is a part of our mission.

Are you an investor? Considering the ups and downs of the stock market, the struggles (or outright disappearance) of some of the best-known banks and brokerage houses, and the constant (and often contradictory) media hype—you might wonder if the best thing to do is put your money under a mattress. How do you know what to do?

Don’t despair! It IS possible to find the truth about investing, to discard long-held (and dangerous) Wall Street myths--and to become a successful investor.

Here are just four common myths that can sabotage the returns of uninformed or unwary investors:

• Stock Selection: Picking stocks that are expected to do well in the future. Have you seen the articles that promise to reveal, “Ten Best Stocks for the New Year” or something similar? One financial company’s prospectus even boasts that they use “superior fund managers” to pick stocks! Stock selection is a Wall Street myth.

• Track-Record Investing: The use of performance history to determine the best investment for the future. Have you or a professional looked for superior-performing mutual funds? Track-record investing is a Wall Street myth.

• Market Timing: An attempt to alter or change the mix of assets based on a prediction of what the market will do in the future. Did you, or someone you know, “get out of the market just in time?” Did they know exactly what day to get back in? Market timing and predicting up and down markets is a Wall Street myth.

• Costs of Investing: The belief that investing costs are limited to commissions and other disclosed fees. Many fees are NOT disclosed but can create financial leaks in your portfolio? Thinking that costs are always disclosed is another Wall Street myth.

What is the truth? The truth is that no one can consistently and predictably add value through stock selection. The truth is that an investment manager’s track record of past success has nothing to do with ability to do so in the future. The truth is that free markets work; only new and unpredictable news and events affect market prices. And the truth about costs is that what you can’t see CAN hurt you. The solution is called Modern Portfolio Theory and is based on years of academic research.

You don’t have to use traditional investment methods to be a successful investor! Would you like to know more? Make 2012 the year you discover the truth about investing. Each month we will present the class, “Myths and Truths: the History of Investing.” Call us at 893-5262 if you would like to receive a schedule of educational opportunities or if you would like to talk about it with us.

Margaret Wittkopp

Investment Advisor Representative

 

Margaret is Going to be ON THE RADIO

On January 14, 2012, Margaret Wittkopp will be featured on THE BIZ CONNECTION! 

The Biz Connection is a new radio program airing every Saturday at 11 AM Central Standard Time at WJUB 1420 AM Radio, The Breeze.  The program is aimed at the business community along the Lakeshore in Sheboygan County and Manitowoc County, Wisconsin.   Each week, hosts Jim Rosetti and Ron Nielsen learn about their guest's business and its ups and downs and discover ways business owners can learn from the experiences of their guests. 

Margaret will be talking about the VERITAS alternative to traditional investing as well as our three-pronged approach to financial services.  

If you aren't near a radio, you can listen online by clicking here on THE BREEZE and then clicking on the little play arrow that says "LIsten Live in HI-FI."  

You can also find the show by going to the website for The Biz Connection.  The Biz Connection guys are on Facebook too.

 Call in during the show with questions for Margaret, 920-246-9582.