Tag: Investing

4 Ways Millennials Are Getting Money Right

Published in: Resources |

Millennials experienced the financial crisis first-hand. And many of us were unlucky enough to graduate college during the worst job market since the Great Depression.

But through these challenging experiences, we were taught a unique set of money lessons that have helped us thrive. Here are some ways millennials are getting money right:

1. We learned the importance of budgeting and saving for a rainy day.

According to a 2017 survey from Earnest, Amino and Ipsos, 71% of millennials use a budgeting tool or keep a budget (compared to 41% of Americans overall), and 68% of us can cover a $500 emergency without going into debt (compared to 43% of Americans overall).

2. We’ve taken advantage of online financial resources and education, which makes us more confident about making decisions about money.

Women ages 25-34 are more likely than their elders to report they learned about finances from one or both parents (62%, compared to 45% of older women), and over half (51%) say they are very confident in their investing skills. This final statistic is in stark contrast to their elders: Only 36% of women ages 35–49, 14% of women ages 50-69, and 11% of women ages 70-84 said they feel confident in their investing skills.

3. For the better part of our adult lives, we’ve been told not to expect all the Social Security we’re entitled to — so we’re saving more aggressively for retirement.

Although many often-cited statistics lament that we’ve accumulated less wealth than Gen Xers did at our age, this is primarily because Gen Xers were able to gain access to the housing market sooner. When you look at our liquid financial assets, in 2018, millennials held 40% of their money in retirement accounts. This is pretty impressive compared to Gen Xers, who held just 28% of their liquid assets in retirement accounts in 2002, when they were the same age (22-37).

4. Student loans have made it more difficult for us to save for a house, of course, but even that is looking more promising these days.

In the first three quarters of 2019, the largest increases in the homeownership rate came from people under the age of 35.

Continue the Discussion at one of our Conversation Circles

Millennials are being careful and responsible when it comes to money, and it’s time we challenged that popular belief that they make poor money decisions (i.e. spending it on avocado toast). If you’d like to talk more about personal finances, money messages, and generational differences when it comes to finances, consider joining us at one of our Conversation Circles.

Rewriting the Rules: Emotions Should Play a Role in Money Matters

Published in: Resources |

Most financial advisors say that you should keep emotions and investing separate:

“Emotions cloud your judgment.”

“Emotions have no place among the pie charts and annualized returns reflected in your financial plan.”

“It’s best to compartmentalize your feelings and save them for your therapy appointments.”

But we’re here to say that this is a myth, and that emotions SHOULD play a role in money matters.

Where the Myth Comes From

This myth is partially derived from the conventional wisdom that thinking and feeling are two separate processes guided by different regions of the brain.

But modern neuroscience research has shown that those areas of our brains are actually highly interconnected by neurons that translate both cognitive and emotional messages.

For this reason, it’s nearly impossible to completely disentangle our thoughts and feelings. One pair of researchers highlighted a common experience that emphasizes this point: You may justify a car purchase by claiming you got a good deal, but the true determining factor may have been that you liked how the car made you feel.

Does That Mean We Endorse Making Panicked Decisions Every Time The Market Swings? Of Course Not.

Even when the market has our stomachs in knots, we provide much-needed objective reasoning to our clients. In fact, regardless of the market environment, nearly every big choice in our clients’ lives involves plenty of dialogue, analysis and projections to estimate how it would affect their future.

But both intuition and emotion play important roles in this process. A person’s history, their current situation, and their future ambitions influence every money decision they make; disregarding this is doing a disservice to their lived experience.

Rewrite the Rules with The Humphreys Group

Investments are so much more than just figures and statistics. They represent our security, independence, values and legacy. Some clients may view their investments as validation that they worked hard in life; others use them to support causes they believe in and give back to their communities. Some investors see their investments purely as assurance that their loved ones will remember them and live well after they’re gone.

While most advisors would prefer to focus on the analytics of the investments, it takes a special advisor to acknowledge the values behind the numbers.

We must talk more about our feelings in the context of money. We have seen that embracing our emotional side and having those pivotal conversations can lead to better financial outcomes. If you want read more about common money myths and how we can break them, download our free eBook, “Rewriting the Rules: Telling Truths About Women and Money.”

Financial Tips for Planning a Wedding

Published in: Resources |

At The Humphreys Group, we know that money and emotions go hand in hand. And this is especially true when it comes to weddings: you want it to be the perfect wedding for you and your partner, you want all your loved ones there on this special day, and you want everyone to be happy.

But costs can run away from you, and suddenly you find yourselves overwhelmed and over budget. According to WeddingWire, on average couples underestimate their wedding spend by nearly 45 percent. The all-in average wedding costs is $38,700, which includes the engagement ring ($5,000), ceremony/reception ($29,200), and honeymoon ($4,500).

WeddingWire’s study found that the top five reasons couples tend to overspend on weddings are:

  • Initial budget was set lower than reality
  • Fell in love with things “we needed to have” during planning
  • Added custom/personalized elements
  • Guest count changed
  • Opted for upgrades

With all the guests (the average is 126), wedding party members (average is 10), and vendors (on average, 14 vendors are hired for photography, venue, hair and makeup, the wedding dress, cake, flowers, and the DJ) involved… it can get expensive.

So, here, we’ve included a few financial strategies you can implement for your wedding that will make a world of a difference.

List Three Priorities Beforehand

Before you start the wedding planning process, sit down with your partner and write down three priorities or must-haves. For example:

We want to:

  • book an outdoor venue,
  • have a live band, and
  • provide a photobooth for our guests to enjoy.

You and your partner may opt to do this separately first, then come together and whittle down your priorities into a joint list. Writing down your priorities is key. Later on, when you’re inevitably tempted to splurge on décor, or a videographer, or a wedding dress that caught your eye, you can look back at your priorities and become more grounded about what really matters to you. At The Humphreys Group, we often talk to our clients about aligning their spending with their values, and this is a version of that exercise.

Have a Conversation about Wedding Planning Duties

It’s also important to have a real conversation with your partner about their role in wedding planning and decision-making.

  • Some brides prefer to take care of all the planning. If you’re a bride who owns the “planner role,” how does your partner feel about that? Do they want to play a role, too?
  • Conversely, does one partner want the other to handle all of the planning, but is the thought of that overwhelming?
  • Does one person want to take the lead, but delegate various tasks to their partner?
  • Or do you want to divide the responsibilities 50/50 as you go along?

You also need to agree on a decision-making process:

  • Will you make decisions together?
  • Or will the person who does the research make the ultimate decision? For example, if it’s one partner’s job to research photographers, will they unilaterally decide who to hire, or will they circle back to the other person and ask for their input after showing photography options?

Being on the same page about how you’ll handle key decisions — decisions that often involve your budgeting style and money matters — will make you feel less stressed and more confident that you’re planning the wedding you both want to have.

Utilize Free Resources

And finally, don’t forget to use your resources! There’s no shortage of wedding advice websites, but one of the best is A Practical Wedding. The site offers a wide variety of tools that help with the nuts-and-bolts aspects of wedding planning, including budgeting spreadsheets, timelines regarding when to do what and when, and more.

But most importantly, the website also interviews real women about their wedding experiences: what they thought they’d spend, what they actually spent, what they loved most about their wedding and what they’d do differently. Getting advice from real, married couples helps manage your expectations and also prompts you to really think about your priorities and what matters most to you.

Contact Humphreys Group Today for More Financial Tips

If you’d like to talk more about financially planning for weddings or other big moments in your life, reach out to us today.

Women, Men and Investing: We Debunk the Myths

Published in: Resources |

There’s a myth that has permeated the financial services industry for decades: that men are better investors than women. But it turns out that assumption is simply not the case.

According to a 2016 Fidelity study, female investors tend to outperform male investors by an annual average of 0.4%. This doesn’t seem like much, but it accumulates to a significant financial difference over time.

For example, let’s say a man and a woman each invest $100,000. Assuming a 4.6% average annual return for the man and a 5.0% average annual return for the woman, her investment will have grown to $432,200 after 30 years, while his will be valued at only $385,400. That’s nearly a $50,000 difference and is half of the original investment!

Why Are Women More Natural Long-Term Investors?

First, men tend to buy and sell their investments more often. The same Fidelity study found that men made an average of 55% more trades in 2016 than their female counterparts. This can be financially injurious because the more an investor trades, the more he risks making an investment right before it decreases in value or selling the investment right before it gains momentum. Because women are more likely to hold on to their investments throughout market fluctuations, they capture more growth over time.

Digging deeper, why do women hold on to their investments longer? There are a lot of reasons. As women, we usually conduct more research before investing and maintain a long-term perspective more often. We tend to view investing less as a game to be won and more as a means to accomplish our goals. Regardless of the psychology, women’s success in the investment world is good news.

Rewrite the Rules with The Humphreys Group

The media portrays investors as men in suits walking down Wall Street. But the data tells a different story. Let’s keep breaking the money stereotypes that have held women back for way too long. Read more about common money myths in our free eBook, “Rewriting the Rules: Telling Truths About Women and Money.”

Want to Improve Your Financial Health in 2020? Do This One Thing

Published in: Resources |

Creating New Year’s resolutions is a great way to kick off the new year, but sometimes our goals can be so big, lofty, and vague that we don’t know where to begin, or feel too intimidated to even start. What does “improve financial health,” “eat better,” “travel more,” or “stop procrastinating” even look like? What does it entail?

If “improve financial health” is on your list, here’s one tip: The single most important thing you can do to improve your financial health is to track your income and expenses. Whether by paper-and-pen or Mint.com (or other apps), you need to take a clear-eyed, realistic look at your income and expenses. Are you underearning or overspending? Some of both?

Tracking and categorizing your expenses can be tedious and daunting, so we encourage you to approach it with the mindset that it’s just data — data that is necessary to evaluate whether you should make spending shifts and how to make them.

Remember, you can’t embark on a journey until you’ve located yourself on the map. You can’t make choices about how to change your spending until you have insight into the choices you’re making now.

But the payoff is huge: Clarifying your income and expenses will give you the information you need to evaluate trade-offs, make informed decisions, and feel confident. There’s no secret sauce, but it all adds up to better financial outcomes.

Make Small Course Corrections Now

Making small course corrections to spending and retirement contributions now will have far greater impact than large corrections you make later. Try resisting the temptation of immediate gratification by thinking of these changes as advocacy for yourself at ages 70, 80, or older.

If you have access to a 401(k) plan, you should absolutely contribute, at least enough to equal your employer’s matching contributions. But it’s never too soon to start supplementing your savings with a health savings account (HSA), a traditional IRA, or a Roth IRA. If you’re self-employed, consider supplementing with a SEP IRA. For women who are closer to retirement, consider obtaining long-term care insurance, especially if you have a family history that indicates you may experience health challenges later in life. Such policies can be costly, yes, but they can make a world of difference.

Work with a Financial Advisor in 2020

Work with a financial advisor to crunch the numbers to see if you are on track. Armed with your financial data and some well-considered assumptions, you can get a realistic idea of where you stand now and devise a plan to make the course corrections that work best for you. If you’re interested in discussing your financial picture with The Humphreys Group, reach out to us today.

How Women Can Build a Sound Investing Strategy in 2020

Published in: Resources |

When it comes to investing, women gain a performance edge thanks to their innate patience, low-trading frequency, and goal-driven strategies. Some writers have noted differences between women and men when it comes to money-related decisions and provide evidence that women investors exhibit marathon-like behaviors when it comes to investing: they make steady choices that will result in bigger long-term financial gains and stability, and react to setbacks with less stress and emotion that men.

Women Are Better Investors — Here’s Why

According to a 2016 Fidelity study, female investors tend to outperform male investors by an annual average of 0.4%. This doesn’t seem like much, but it accumulates to a significant financial difference. For example, let’s say a man and a woman each invest $100,000; assuming a 4.6% average annual return for the man and a 5.0% average annual return for the woman, her investment will have grown to $432,200 after 30 years, while his will be valued at only $385,400. That’s nearly a $50,000 difference and is half of the original investment!

What factors are at play here? First, men tend to buy and sell their investments more often. The same Fidelity study found that men made an average of 55% more trades in 2016 than their female counterparts. This can be financially injurious because the more an investor trades, the more he risks making an investment right before it decreases in value or selling the investment right before it gains momentum. Because women are more likely to hold on to their investments throughout market fluctuations, they capture more growth over time.

Why exactly do women hold on to their investments longer? There are a lot of reasons. As women, we usually conduct more research before investing and maintain a long-term perspective more often. We tend to view investing less as a game to be won and more as a means to accomplish goals and reach life’s milestones. And while women aren’t afraid of risk, their heightened risk awareness leads them to allocate their risk-budget prudently, which leads to better, long-term outcomes.

Finding the Right Balance in Investing

I believe it’s vital to have a disciplined investment philosophy and to follow basic best practices. For context and as an example, at The Humphreys Group, we begin by reviewing and discussing the wide world of investment objectives and strategies that are available with each of our clients — expanding their knowledge, ensuring they are informed, and ascertaining the best strategy or strategies that will work for them. Some areas we cover:

Investing 101: Remember you are buying assets for their potential to increase in value, provide income, or do both. This means you need to expect fluctuations in returns, volatility, and cycles of depreciation and appreciation; long-term goals such as retirement, buying a home, or paying for college are investments that often weather such cycles.

Stocks vs. Bonds: Stocks mean investors own shares of a company, and those shares will increase or decrease in value based on how well the company performs. Bonds are considered less risky than stocks; they are a form of a loan to a company and investors’ payoff comes in the form of company interest payments on those bonds.

Asset Allocation: Multiple factors contribute to how you should approach asset allocation. We recommend that, when making decisions about where and how much to invest, you should take into account your unique views on your risk tolerance and risk capacity levels, financial goals, financial timetables, required income, and tax considerations. It’s also important to consider the variety of external factors that have the potential to affect investments, such as: market volatility, short- and long-term risk, inflation, and purchasing power.

The balance really depends on your unique situation — What goals are you investing for? How much do you have in investable assets, outside of your standard financial picture? — tolerance for risk, and time horizon. If you are closer to retirement, for instance, it’s often best to re-allocate to more conservative investments to help protect your nest egg as you move away from a steady, 9-to-5 paycheck. If you are younger with many years standing between you and retirement, you can afford to be more aggressive with your investment strategy, as you have more years to reconcile any losses from market volatility. Enlisting the help of a qualified, credentialed financial advisor can help you feel confident that you’re making the right decisions.

Evaluating Your Financial Situation

Take time to calculate and evaluate your net worth. Understanding this figure is vital to understanding your total financial picture and determining next steps, especially when it comes to investing. The number illustrates your financial realities and can help inform your financial direction and decisions, today and well into the future. Once you understand your total financial picture and where you stand, you can take specific, actionable steps toward successfully saving, investing, and reducing debts. Routinely assessing your net worth can help you stay on a steady path toward your long-term goals.

Education is always a good place to start as well, and women already excel at doing their homework and the research needed to get smart about a topic. What’s most important is to take risk that’s appropriate for your situation. Also, consider that risk and reward go hand in hand.

Be risk-smart — think about your risk capacity (how much risk you are able to take on, given your resources, expertise, and plan) versus your risk tolerance (how emotionally comfortable you are with taking investment risk). Remember that diversification is your friend — you can reduce risk by diversifying across types of investments, investing consistently over time, and maintaining a long-term investment horizon.

Work with an advisor to develop a clear sense of the level of investment risk needed to accomplish your goals. If that level is too high for your risk tolerance, you may need to refine your goals or make other changes, such as allocating more to savings.

The Emotions of Giving: How to Reconcile the Cost of Kindness

Published in: Resources |

November is a month for giving thanks in the U.S., but it’s also become a month devoted to giving on a much broader scale. Throughout the next several weeks, many of us will explore ways to help service organizations in our communities, or take action to volunteer at non-profits that benefit from our unpaid labor because they can expand the services they provide during year-end holidays. Many of us also contribute financially to causes that matter to us — some of us for the first time, others because of longstanding traditions that involve financial gifts to people and places that matter to us.

The numbers of organizations and causes to which we can contribute our hours, abilities and money continues to grow; we know our giving is more helpful than not. And yet, sometimes, when we’re trying to hold fast to the notion that it’s better to give than to receive, we feel unsettled and uneasy about the time, effort and money we are putting forth.

Let’s face it: sometimes giving is difficult.

At The Humphreys Group, we acknowledge that giving, much like investing, can be an emotional process with complex and complicated ties to past lessons and experiences in our lives. We don’t stop there, however. Instead, we encourage our clients to do the work that can help them reconcile what we call the “cost of kindness.” We invite those who struggle with giving to:

  • Explore memories of giving experiences that may have been challenging for them — for instance, if there were occasions it felt like a duty or obligation — and give voice to the range of emotions that such experiences prompted at the time.
  • Examine whether their giving behaviors fell short of the results they envisioned — for instance, that their dollars didn’t go far enough, weren’t acknowledged or weren’t used in the best of ways — and led to feelings of disappointment, frustration, sadness or anger.
  • Urge them to recognize possible conflicts that giving might have caused. For instance, “over-giving”— choosing to give more financially than one could actually afford.

It’s well-documented that people feel better and can heighten their capacities to express empathy for others when they give naturally, voluntarily and from the heart — as well as within their means and in alignment with their values. For those who want to commit to giving but who need to find perspective on the emotions that surround their giving, we emphasize that reflecting on past giving behaviors and the feelings that resulted can offer fresh perspectives and inform any future giving endeavors.

As we begin to give thanks for another year, we welcome the opportunity to help you assess what you’ve gained and what you’ve given — and how you might continue giving in the future. Contact us today to begin the discussion.

Why Women Are Natural Long-Term Investors

Published in: Resources |

Many of us have heard the expression, “It’s a marathon, not a sprint,” when faced with adjusting our attitudes to meet a long-term challenge. We at The Humphreys Group have been thinking how these words also apply to individuals and couples who aim to develop winning, long-term financial plans, and to female investors in particular.

Consider the notable lesson learned from participants in the 2018 Boston Marathon, where more women literally “went the distance” than men and gained the attention of multiple observers for doing so. Female participants — in one of the most grueling and well-known 26.2 mile races in the United States — lasted longer and finished in greater numbers when bad weather led to increasingly challenging course conditions; just 3.8 percent of women dropped from the race, compared to 5 percent of male runners.

The stamina of female marathoners did not go unnoticed. Shortly after the race, The New York Times ran an opinion piece by Lindsey Crouse, a runner and NYT senior staff editor, who asserted the idea (and added related links) that women have the capacity to withstand both physical challenges and mental stresses for long periods of time — in some cases much longer than men.

In an article for Business Insider several months later, Shana Lebowitz explored the theory that women may be more driven to complete a race as their end goal, whereas men tend to want to win a race above all else. Drawing a connection between women’s racing mindset and other areas where women exhibit an attitude that relies on mental staying power, she noted: “And the implications of this gender difference go beyond marathons, or athletic prowess.”

Backing up Lebowitz’s observation are those who’ve examined the possible relationship between gender and financial investing traits. Some writers have noted differences between women and men when it comes to money-related decisions and provide evidence that women investors exhibit marathon-like behaviors when it comes to investing: they make steady choices that will result in bigger long-term financial gains and stability, and react to setbacks with less stress and emotion that men.

Others assert that the concerns some women voice about their supposed lack of investing abilities are not strongly supported. MarketWatch emphasizes that, despite professing lower levels of confidence in their investing abilities and exhibiting more risk-averse tendencies when it comes to investing, women generally possess the characteristics of solid long-term investors.

The 2020 Boston Marathon is still months away. We can’t predict April’s weather conditions, but everyone who persists toward that finish line is a winner in our book. In the spirit of those who are preparing to travel a lengthy course — including a financial one — we encourage you to contact The Humphreys Group to see how we can help you stay on track and go the distance with your investment strategy.

Investing on Your Terms: How to Get Started

Published in: Resources |

If you’ve worked with an experienced advisor at The Humphreys Group, or stayed up-to-date with our communications and outreach, it’s clear the research we do and the personal interactions we have with each client are driven by a desire to dispel long-held – and wrongly-held – beliefs that men are overall better at investing and money matters than women.

We work with our clients to help them appreciate that their experiences – overseeing household finances, dealing with work budgets, participating in community projects – have made them savvier about money than they may realize. We point out that women often earn better investment results than their male counterparts. And we chalk up our clients’ successes to a variety of factors, including women’s tendencies to do more investment research and maintain longer-term perspectives on their financial plans than most men do.

It appears growing numbers of women are hearing similarly empowering messages, and increasingly beginning to learn, talk, write about and engage in investing behaviors worldwide. A recent article in The Guardian by Hilary Osborne highlights several books, podcasts, seminars and other resources where women who want to hone their investment skills can learn to do so. Another online resource makes it clear that maintaining a savings account without considering investing may not be a sufficient strategy for most women in the 21st century.

It may seem daunting to undertake an investment plan. Perhaps you are a woman who is new to investing — or maybe you are already an investor but have questions about your current strategy. In any case, we want you to know we are here to help. We consider the unique needs of each client to support her confidence and knowledge about investing, and the advice our experts offer is grounded in a few straightforward principles:

  • Focus on a short-list of investment principles and strategies that will work for you
  • Take time to learn about and curate your financial resources and investment plan(s)
  • Don’t get distracted by shifting investment trends and jargon

We already know pay gaps between women and men persist, and that many women leave the workforce earlier and live longer than men. Achieving financial equality in their lives remains an issue of interest and concern for many women. Contact The Humphreys Group to start a conversation about your investment journey. And if you haven’t done so already, remember to download a free copy of “Rewriting the Rules: Telling the Truth about Women and Money” to better understand the financial knowledge and smarts you already possess.