After taking a closer look at interest rates in part 1 and inflation in part 2, we come to the heart of the matter: When interest rates, inflation, or both are on the rise, what should an investor do?

The big picture overview is that the team at Great Lakes Investment Management is continuing to deploy the same core principles and values we use to help people invest across time and through various market conditions. 

These include:

• Building and maintaining personalized investment portfolios of stocks, bonds, select alternative investments, and cash reserves
  
• Minimizing exposure to concentrated investment risks through global diversification
  
• Reducing the impulse to act on fear, excitement, and similar reactions to unfolding news
  
• Keeping an eye on tax ramifications and other costs

These core principles become even more important during increased geopolitical uncertainty and economic stress as they serve to guide you past any periods of doubt.

Future Uncertainty

With so much...

In our last blog post, Understanding Interest Rates, we discussed how rising and falling interest rates can impact a healthy economy. In this post, we’re going to talk about inflation - what it is and how it’s affecting our financial plans.  This is a question that many investors are asking themselves these days and it’s important to understand if and how inflation has been contemplated as part of your financial plan.

How Is Inflation Measured?

Inflation is the rate at which money loses its purchasing power over time. As you might guess, there are many ways to measure this. There are various economic sectors, such as energy, food, housing, and healthcare, which can complicate the equation by exhibiting wildly different inflation rates at different times. There is ongoing debate over which figures are most relevant under what conditions.

There’s also today’s inflation rate, versus the rate at which inflation has changed or is expected to change over...

Part One: Understanding Interest Rates

If you’ve been concerned about rising interest rates, you’re not alone. With rates at historically low levels for so long, it’s something we’ve been preparing for for a while now. Still, it’s something we will continue to keep a close eye on and we want you to have a solid understanding of what this means to you. 

In March, The Federal Reserve raised its federal target funds rate by a quarter point. It was the first increase since December 2018, but it wasn’t a huge surprise. Fed Chair Jerome Powell had already said we should expect as much, with the potential for additional increases before the year-end.

Along with interest rates, inflation remains a related topic of conversation, not to mention the economic toll and humanitarian tragedy being wrought by Russia’s actions. Unfortunately, there is only so much we can do to alleviate the heartbreaking news coming out of Ukraine. 

But as a...

Is it just me, or do you also feel like the last two years have flown by? It’s always a busy time of year with the holidays, but it’s important that we take some time to financially prepare for the end of the year and the beginning of a new year. 

Here are some things to consider as you weigh potential tax moves before the end of the year.

Defer Income to Next Year

Consider opportunities to defer income to 2022, particularly if you think you may be in a lower tax bracket then. For example, you may be able to defer a year-end bonus or delay the collection of business debts, rents, and payments for services in order to postpone payment of tax on the income until next year.

Accelerate Deductions

Look for opportunities to accelerate deductions into the current tax year. If you itemize deductions, making payments for deductible expenses such as medical expenses, qualifying interest, and state taxes before the end of the year (instead of paying them in early 2022) could...

Did you recently change your name as part of your divorce? If so, it's time to get it updated everywhere.

First Steps to Changing Your Name After a Divorce

When you have your final divorce papers identifying your name change, your first step will be to contact the Social Security Administration to legally change your name on your Social Security Card. The details of what you’ll need are listed out on their website under "corrected card" (https://www.ssa.gov/ssnumber/ss5doc.htm). 

You can either visit your local social security office or send your documentation by mail with form SS-5. Your social security number will not change - just the name associated with your social security number. It typically takes at least two weeks to receive your new card in the mail, so you can take this time to make a list of all the places where your name will need to be changed. The IRS is automatically notified when you update your information with the social security administration.

...

Post-Divorce Tip: Update Your Passwords

If you grew up with a sibling, you likely learned about conflicts of interest the hard way. I remember one instance where my mom said we could split the last Oreo cookie and my brother gave me the half without the cream filling – I was mortified. In situations like that, you can see how easy it is for a decision maker to prioritize themselves over the other person. Technically there’s a number of ways to half a cookie, but finding a fair split is another matter.

When it comes to financial advisors, consumers are tasked with choosing someone who will treat them fairly and an important part of this is understanding inherent conflicts of interest.  

There are many, many titles in this industry: money coaches, financial consultants, advisors, brokers, planners, wealth managers, and so on. And since there aren’t legal requirements associated with using these terms, it can get confusing. To help sort it out, advisors have started to identify themselves by...

Balance is a universal principle that works wherever it is applied. For example, a balanced nutritional program is better than an unbalanced one; a balanced exercise program is better than an unbalanced one; and a balanced life is better than an unbalanced life.

This same investing principle of balance has historically worked in portfolio management. Adding diversity of style, geography, and asset class has historically mitigated volatility, and made it easier for our clients to remain “buckled in.”

Balance helps us to see what’s worked in the past and make decisions from an informed place. Then, it allows us to make wise investment choices based on what we know about consistency and courage.

Asset Classes Move In and Out of Favor

Diversification across asset classes may keep investors from chasing last year’s performance. What works in one year doesn’t necessarily work in the subsequent years. Oftentimes, last year’s outperformer falls to the...

A historical perspective can help inform and guide investment decisions. In a recent blog post, I shared how this combined with the investing principle of consistency was the best way I’ve found to increase your returns. But it doesn’t stop there. Maintaining that disciplined perspective often requires that we exercise the principle of courage in investing, especially during times of uncertainty and fear.

Every Generation Faces Challenges...Have the Courage to Stay With It

Each generation faces challenges that often appear both unique and overwhelming, but when viewed through the sobering lens of history, we find they are neither. Today, we face any number of challenges which, while significant, are arguably no more daunting than: A global depression, two world wars, the Cold War, the assassination of one president and the resignation of another, 9/11.

And yet the market has continued its inexorable climb. After all, humans are remarkably resilient, as well as masterful...

When you listen to financial news commentators, it can feel as though financial markets and investment decisions are capricious and arbitrary. Over the short term, that might be accurate. However, over the long term, there are universal investment principles that may ultimately help govern your success and which guide all of our wealth management and investment decisions.

Adhering to principles like balance, consistency, and courage will help you stay on course and provide a buffer from the constant drone of crisis and fear promoted by some news and media outlets.

While I’ll share info about all three of those principles of investing (you can read more about the other two, courage and balance, in their own posts), we’re going to start with consistency.

Investing With Consistency Brings Long-Term Results

Humans are not fans of consistency, yet it’s one of the most powerful principles of investing. I cannot tell you how many clients I’ve worked with over...