Financially navigate the CoronaVirus​

Financially navigate the CoronaVirus​

Secure your future against the CoronaVirus​

Here at Freeman Capital we are committed to providing you with resources and information that will help ease your fears and answer the questions you may have especially during volatile and uncertain times.

Coronavirus continues to dominate headlines and yesterday we experienced the second biggest single day market decline since the October crash of 1987. 

Fear is at the heart of every market drop. Usually, it’s fear of the unknown. In this case, there are several unknowns for investors to contend with. Why exactly is this virus spreading so fast? How far will it spread? How long will it last? These are questions that no financial advisor can answer.

But fear, as we know, is a bad reason to make decisions. Fear of missing out, for example, often makes us behave too rashly. On the other side of the coin, fear of not getting out leads us to toss away opportunities or abandon the progress we’ve made to our goals.

Fortunately, whenever we feel fear, there are tools that we can use to steady ourselves.

One tool is history. Past performance, as you may have heard, is no guarantee of future results. But past is also prologue, which means history can give us a good idea of what to expect in the future. For example, here is how the S&P 500 performed over a 6-month period after other recent epidemics.(1)

Epedemics and Long Term Impact on the Market

Epidemic

Month End

6-month % change of S&P

SARS

April 2003

+14.59%

Swine flu

April 2009

+18.72%

Cholera

November 2010

+13.95%

MERS

May 2013

+10.74%

Ebola

March 2014

+5.34%

Zika

January 2016

+12.03%

Now, these are all imperfect comparisons, as they dealt with different viruses, at different times, in different regions, in different contexts. The point is that the markets, while occasionally impacted in the short term by epidemics, are rarely impacted over the long-term. And as we are investing to help you achieve your long-term goals, it’s the long-term that we care about.

So if you are contributing to a brokerage or retirement account, now is the time stick with your plan and keep contributing to your accounts.

These are unprecedented times and over the coming weeks things are likely to get worse before they get better and the prospects of going into recession are becoming more likely (in fact we may be in one already.) So what should you be doing to prepare?

Do you have a fully funded emergency fund?

During a recession, you need to be concerned about job stability. The best way to hedge against job instability, is to have a fully funded emergency fund. We like our clients to have at least three to six months of their monthly expenses saved in a readily available fund, preferably a high yield savings account.

If your emergency savings is not where you’d like it to be, there is no time like the present to start focusing on it. Cutting back on unnecessary expenses and lowering your monthly bills as much as possible will help you build it up faster.

Recessions are scary times and hard to predict when they will happen. Now is as good a time as any to make sure you are financially prepared to weather through a recession and come out of it in a position of strength.

How We Can Help:

  1. Schedule your 1st FREE call with your planner to help design your life.

Freeman Capital Advisors is a registered investment adviser.  Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies.  Investments involve risk and, unless otherwise stated, are not guaranteed.  Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.

Daryl Shaw

Daryl Shaw

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Pay Off Student Loan Debt Faster With This Easy 5-Step Formula

According to the Federal Reserve Bank of New York, 11.5% of student loans are delinquent by 90 days or more, or are in default. Although this seems like a small percentage, for the borrowers faced with mounting defaulted or delinquent student loan debt, the effects can be devastating. Delinquencies and defaults can negatively affect your ability to borrow more in the future, increase interest rates, and even cause tax refund offsets or wage garnishments. This can be avoided with just a few specific actions.

General Student Loan Debt Facts

First, let’s start with a general picture of the student loan landscape. The most recent reports indicate:

  • There is $1.56 trillion in total U.S. student loan debt
  • 44.7 million Americans have student loan debt
  • 11.5% of student loans are 90 days or more delinquent or are in default
  • The average monthly student loan payment (among those not in deferment) is $393
  • The median monthly student loan payment (among those not in deferment) is $222

Pay Off Your Loans Faster

Paying off your student loans at a quicker pace can save you, the borrower, money in the long run. Here are five steps you can follow to get ahead of the game:

  1. Make more than the minimum payments. For example, let’s assume you have $100,000 of student loan debt at a 7% interest rate with a standard 10-year repayment term. By paying only $100 extra per month, you can save $4,696 in interest costs and pay off your student loans 1.08 years earlier.
  2. Get advice from a professional financial advisor. Advice from a professional can make all the difference in the world when it comes to getting the most “bang” for your retirement buck.
  3. Split your payments in two. Say you owe $30,000 in student loans with an average interest rate of 7%. Over a standard 10-year repayment period, you’d be making monthly payments of $348. If you instead make $174 payments every two weeks, you’ll be debt-free 13 months sooner and save $1,422 in interest.
  4. Refinance. You can potentially save tens of thousands of dollars throughout the life of your loan by refinancing. There are three main benefits to refinancing student loans:
    • You can get a lower monthly payment, freeing up cash for other expenses or investing.
    • You can pay off your loan faster, saving you money in interest.
    • A lower monthly payment decreases your debt-to-income ratio, making it easier for you to qualify for a mortgage.
  5. Invest. If your student loan interest rates are less than 6%. Then you have some room to use the market to your advantage. Here is an example:Let’s say you only have $50,000 in student loans. With a 20-year term and a 4% rate, the monthly payment will be $303. If you contribute $500 per month to your payment, you’ll be student loan debt free in around six years.You start by investing $500/month in a tax-sheltered portfolio at a yearly 8% rate. You’ll have nearly $46,000 in your portfolio at the end of six years. Your student loan at that time would be $38,754. After just six years, your investment portfolio could exceed your student loan balance by $7,246.

These strategies require a full overview of your financial situation and goals. Who better to help you through this process than one of our CERTIFIED FINANCIAL PLANNER™ professionals? Sign up today to get started!

Freeman Capital Advisors is a registered investment adviser.  Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies.  Investments involve risk and, unless otherwise stated, are not guaranteed.  Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance. 

Passive Investing Principles You Need to Know

If you’re one of the growing number of people interested in passive investing, here are some key principles that can help you get started:

 

Saving is NOT passive investing

Saving is not investing at all. Saving is saving. Saving accumulates cash to pay for short-term expenses, whereas investing is designed to grow money for longer-term wealth building or retirement.

In a savings account, your money really isn’t working for you. With the tiny interest rates the majority of banks offer, your money is actually shrinking when you adjust for inflation! 

 

You can set it and (practically) forget it

Your work retirement plan is probably the easiest way to get invest passively. You can set up automatic payroll deduction so a percentage of your check goes into a 401(k), 403(b), IRA, etc. In most cases, these retirement accounts are invested in stocks, bonds and/or mutual funds. 

So you’re investing in the market every month without lifting a finger.

 

Paying your bills may get you in the game 

Some utility companies allow you to buy shares of their company by paying a little extra on your bill. You can buy pieces of the company while doing an activity you already engage in every month. Utilities are generally considered to be conservative, low-volatility stocks. They tend to be great for long-term core holdings in your portfolio. 

 

Let it snow(ball)

It’s possible to invest in such a way that your stocks actually buy you more stocks without any activity on your part. Many companies reward their shareholders once a quarter by paying dividends. Dividends are basically a portion of the company’s earnings; as a shareholder, you get to participate in those earnings.

Dividend reinvestment plans (DRIP) take your quarterly dividend payments and automatically reinvest them into buying more shares of the company stocks. That means your stocks are buying more stocks. 

Your dividend payments can put cash in your pocket. DRIP plans passively put your money back into stocks that you like — and keep your money working for you. 

 

Consider being a little less passive

If you want to be slightly more involved in your investments, consider applying a buy-and-hold strategy to your favorite “blue chip” stocks. 

A blue chip is a nationally recognized, established, and financially strong company. These companies often sell name-brand products or services. Their stocks are solid performers that tend to do well in all kinds of economic conditions. As a result, they’re considered by many to be attractive candidates for holding long-term.

Even though passive investing can be simple, there are still countless options available. You may want to speak with a financial professional who can help you explore the possibilities and determine what seems to be the best fit for your goals.

Freeman Capital Advisors is a registered investment adviser.  Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies.  Investments involve risk and, unless otherwise stated, are not guaranteed.  Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.

When you get right down to the nitty-gritty, the main idea behind investing is creating a future lifestyle that you can truly enjoy. 

Ideally, it won’t be too far into the future — and you won’t have to complicate your present lifestyle too much in the meantime. 

That’s why the idea of passive investments is so appealing to many. You don’t have to spend huge blocks of time researching individual stocks… reading the Wall Street Journal to stay up-to-date on market developments… or stressing out about whether or not to sell shares on the latest downturn. 

If you prefer episodes of Insecure over the talking heads on CNBC, taking a more passive approach to investing may be the right move for you.

Passive investing generally refers to a strategy for long-term investment with minimal amount of trading activity. The benefits of using this strategy include:

Simplicity
Requires smaller on-going time commitment
In many cases, it’s cheaper. You’ll likely pay fewer transaction fees and less in taxes than more active strategies.
It often generates better results when compared to more active strategies over medium to long timeframes. 

Investors who lean in the direction of more active investing will point out a few downsides to taking the passive route:

Less flexibility. With longer holding periods and less rebalancing (buying and selling to get exposure to different sectors or asset classes), you’re more locked into the investments once you make them.

For investors who like to jump on hot trends, this is a downside.
Potential underperformance in the shorter term. Passive investing tends to go for smaller, more conservative returns that compound over time. More active investors can target more aggressive growth, which can lead to bigger gains — and also more frequent, bigger losses, too.

Depending on your goals (and your risk tolerance), you may find that the pros of passive investing outweigh the potential cons.

The Key to Investing Successfully When Recession Hits

Are we headed into a recession?  If we are, what can investors do to keep their money safe?

With the Federal Reserve cutting interest rates for the first time since the financial crisis (with more cuts potentially on the horizon), the ongoing trade war between the U.S. and China, and the increase of volatility in the stock market, many people are legitimately nervous about what the near-term future holds for the economy and their investment portfolios.

If you look at a chart of the S&P 500 over the past month, it looks a lot like a roller coaster.

You may be tempted to pull all of your money out of the market and wait for smoother days. But here’s the thing about roller coasters:You don’t jump off the ride just because there are ups and downs. 

Big drops are part of the experience. Whether recession is right around the corner or in the distant future, it’s helpful to prepare yourself in advance. That way you’ll be ready whenever it shows up.

Preparation is the Name of the Game

The effectiveness of your preparation may depend on this one fact more than any other:

What YOU Do Matters Much More That What The Market Does. It’s a deceptively simple statement, but it contains a powerful truth. The stock market will rise and fall. You can’t control that (you can’t predict it, either).

As an investor, you must focus on what you can control. The one thing you can truly control is your own behavior. This is good news because your decisions have a much greater impact on your investing success how the market performs… or anything else for that matter.

Case in point:

The percentage of your income you invest matters more than the percentage return you get from your investments. To illustrate this, let’s say you earn $35,000 per year and you decide to invest 1% of your income for 30 years. Let’s say the market delivers a solid 10% gain every year. After 30 years, you’d have about $57,000.

Now let’s flip it. Let’s say you decide to invest 10% of your income and the market returns an impossibly low 1% annually. You’d still end up with about $121,000more than twice as much as in the first scenario. 

See how that works?

Your decision about how much you want to invest far outweighs market performance when it comes to building wealth.

That’s Why Planning Is So Important… No one knows for sure what the stock market’s going to do next. But you do know that the market trends higher over the long term.

Studies show that, in general, the more buying and selling investors do, the worse their portfolios perform. Studies also show that emotionally-driven investing decisions tend to do more harm than good. You may have already been aware of these findings. If you didn’t know about them before today, now you’re up to speed.

Based on these facts, here 4 critical pieces to include in your plan going forward — recession or not:

  • Get started sooner rather than later. The more time you give yourself to save, invest and allow compounding returns to work, the faster your money is able to grow.Trying to “time the market” is a major mistake that hurts countless investor’s profitability. Getting in the game is more important than getting the timing exactly right.Plus, if a recession does come, you may be able to buy your favorite stocks at major discounts.
  • Plan to invest for the long term. The market will always have ups and downs. If you obsess over every gyration, you’ll stress yourself out and potentially sabotage your own gains. With longer-term perspective, volatility will bother you a whole lot less. Both your profit potential and your blood pressure will benefit from that.
  • Talk with a financial advisor to help you map out your future. An advisor can give you more education about the various ways you can use your money to accomplish your personal financial goals.The Investment Funds Institute of Canada released a report that found investors who get regular financial advice are 1.5 times more likely to stay on course with their long-term financial plan.Advisors help their clients manage their behavior and decisions — which is a bigger leverage point than the performance of their individual investments.
  • Stick to your plan, despite your emotions (even when they scream at you). Once you set a plan to reach your goals, don’t let your emotions throw you off the path. Again, a longer-term perspective can reduce the risk of making an emotional decision. Your advisor can also help you stay focused.

While it’s natural to be nervous about the economy and the market, fear doesn’t have to dominate your thinking or dictate your decisions.

Remember that what you do matters more than what the market does and follow the 4 steps above. And if you can use some assistance, the financial advisors at Freeman Capital will be more than happy to help you explore the various investing options available to you.

Freeman Capital Advisors is a registered investment adviser.  Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies.  Investments involve risk and, unless otherwise stated, are not guaranteed.  Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.

Investing Made Easy

We know that wealth in our community doesn’t stop with investing. Credit is a key factor for many, especially those looking to buy a home. This Credit Building webinar will help you understand how your credit score is calculated, what your credit report says about you, and what you can do to ensure that your credit report is accurate and reflects positively on you.

Our first Community Speaker Series webinar is hosted by Momodou “Mo” Mambouray and moderated by Community Leader, @om.manii.

What you’ll be able to do after this webinar:

  • Understand why credit is important
  • Know how to interpret a credit report
  • Know the key areas that dictate what your credit score is
  • Actionable steps to build your credit ⠀

    Space is limited to the first 100 registrants so shoot us an email for a link to secure your spot today!

Freeman Capital Advisors is a registered investment adviser.  Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies.  Investments involve risk and, unless otherwise stated, are not guaranteed.  Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.