‘MySJS’ Now Available With New Mobile App

In today’s always-on, information-at-your-fingertips world, we know you may want to check your portfolio on the go. Our new mobile app lets you do just that, and provides you with the same information you can find at your MySJS site.

The free MySJS app is available for any Apple or Android device – just visit your App Store and search for “SJS Investment Services” to download.

Your login credentials for the mobile app are the same as for your MySJS website.

(The MySJS app is provided to SJS by a third-party partner of SJS.)

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MarketPlus Investing: Choosing Your Target

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By SJS Managing Director Jennifer Smiljanich

In this modern, mobile society, we all face a nearly unlimited menu of choices.

As it relates to work life alone, you can choose to stay at the same company for years, change jobs often, become part of the gig economy, retire and start a second career, or even run a business from your own home. Each path comes with different risks, and rewards.

The same is true with your investment portfolio. There are always many choices to consider:

• What do I invest in – stocks or bonds – or both?

• What about gold or real estate?

• How do I invest – via mutual funds, individual securities, or Exchange Traded Funds (ETFs)

• When do I invest – should I invest all at once or invest over time?

• When do I need to make any changes?

Helping you answer these questions with a clear understanding of your needs, goals, and preferences is part of the MarketPlus Investing® process. Your MarketPlus Investing portfolio is made up of institutional quality mutual funds, which may include both stocks and bonds.

We think it’s important to take time to make sure that we find the right design for your life situation, with a foundation supported by academic learning and science. We consider many factors in determining the right portfolio mix for you, including your age, income need, time until you need to start taking withdrawals, the length of time you will need that income, your current level of income, and your personal comfort with the ups and downs in the market – to name just a few.

The relative mix of stocks and bonds in a portfolio is the factor we believe has the most impact on expected risk and return. Stocks have historically outperformed bonds, although there have been periods, notably the early 2000s, when bonds have outperformed stocks.

Data Source: Dimensional Fund Advisors

What’s the difference between the two? Stocks offer ownership in a company. If you hold Apple stocks, you own a portion of Apple. In contrast, if you own an Apple bond, you are lending money to Apple, and you are entitled to repayment of interest and principal on your loan. If Apple were to go bankrupt, bondholders have a preferred place in line ahead of stockholders for a return of their investment.

The target mix of mutual funds that may include both stocks and bonds in your MarketPlus investment portfolio likely will vary over time. Typically, the mix will tilt away from stocks and toward bonds as you get older. Other life events may lead you to adjust your allocation – maybe a change in your need for funds, loss of a spouse, retirement or career move, reduced comfort with risk, or an update to your investment purpose. Market factors may also affect your desired allocation, such as the interest rate environment or market cycle changes.

We stand ready and willing to review your target with you, and to help you discern the right choice for you, wherever you are on life’s journey.

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Important Disclosure Information:

There is no guarantee investment strategies will be successful. Past performance is no guarantee of future results. Diversification neither assures a profit nor guarantees against a loss in a declining market. MarketPlus Investing® models consist of institutional quality mutual funds. Mutual fund investment values will fluctuate, and shares, when redeemed, may be worth more or less than original cost.

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Reap What You Sow

By SJS Senior Client Portfolio Manager Tom Kelly, CFA

Sometimes, things don’t happen as you might expect. The first quarter of 2019 will be remembered for bringing us the longest government shutdown in U.S. history, continued trade wars with China, lowered consumer confidence – and U.S. investment markets that were up more than 13 percent, as shown in the graph below.[1]

The year started out with a bang rivaling the fireworks displays of New Year’s Eve, as U.S. stocks posted their best January in 30 years – all of this coming on the tail of the bear market at the end of 2018.[2]

While there may have been temptation to act to protect against further losses, this more often than not leads to loss and regret. Prudent investors who stayed the course would have been rewarded for their discipline.

The first three months of 2019 have been a budding reminder that the markets efficiently price in information before we even know or hear about it. Market timing is a fool’s errand.

In fact, Nobel laureate William Sharpe – who created the Sharpe Ratio return/risk metric, which is used to help investors understand the return of an investment compared to its risk – determined that someone who tries to time the markets must be right 74 percent of the time in order to outperform a buy-and-hold approach on a risk-adjusted basis.[3],[4] The cost of being wrong gets exacerbated during periods of volatility, just as the desire to tweak and tinker increases.

Instead of market timing, MarketPlus Investing® is based in part on the idea that diversification may be a smarter way to increase expected return for a given level of risk. Adding diversification should increase the Sharpe Ratio, which helps demonstrate that excess returns above the “risk-free rate” (the return of a U.S. Treasury bill) are the result of good investment decisions instead of increased risk taking.[3]

Investment droughts will arise, so instead of trying to predict when and where the ‘rain’ might come, we recommend that you preemptively plant your assets in rich soil – a MarketPlus portfolio designed with comprehensive market coverage, calculated risk exposure, and cost-efficient implementation.

As spring approaches, the new green shoots popping up everywhere serve as a great reminder of the growth that follows the strain of a harsh winter. Just as the work is done far before you see the fruits of your labor, our science-based process of structuring and designing portfolios to help you achieve your financial goals has weathered the test of time, through seasons both good and bad.

So, go out and enjoy working in your garden, cultivating relationships, or rooting yourself in a new hobby this spring. You can be sure we’ll be following the same nurturing approach with your portfolio by maintaining the discipline of our MarketPlus Investing philosophy.

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Sources:

[1] S&P 500, 2019 YTD Performance as of 3/31/2019. Morningstar.
[2] Amrith Ramkumar, “Stocks Post Best January in 30 Years.” Wall Street Journal, 2/1/2019.
[3] Marshall Hargrave, “Sharpe Ratio Definition.” Investopedia.com, 3/9/2019.
[4] William Sharpe, “Likely Gains from Market Timing.” Financial Analysts Journal, vol. 31/no. 2, 1975.

Important Disclosure Information:

Past performance is no guarantee of future results. Indices are not available for direct investment; therefore, their performance does not reflect the expenses associated with the management of an actual portfolio. Diversification does not assure a profit or protect against loss.

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Suggested Reading

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10 Commandments … of Money

By SJS Founder & CEO Scott Savage

Now seems like a good time to share one of our most requested SJS features – the 10 Commandments … of Money.

We think good advice certainly bears repeating!

1. Thou shall diversify investments, because markets tend to be efficient.

2. Thou shall not live beyond thy means.

3. Thou shall not attempt to time the market.

4. Thou shall not give unearned money to thy children, robbing them of a vital learning opportunity.

5. Thou shall not abandon investment discipline during a Bear Market.

6. Thou shall not abandon investment discipline during a Bull Market.

7. Thou shall not covet thy neighbor’s hedge funds.

8. Thou shall not hire a money manager based on recent track records.

9. Thou shall not overpay for the delivery of investment advice.

10. Thou shall not pay undue taxes in an investment portfolio.

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MarketPlus Investing® – It Takes Discipline

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By SJS Managing Director Jennifer Smiljanich

The start of a new year always seems to be a good time for reflection. A time to think about the journey we took throughout the past year. A time to look forward to the year ahead. And, a time to think about a certain “D word.” That’s right, Discipline! That difficult thing we know we should work on, but still find ourselves struggling with.

We resolve to do all the right things, to choose to eat healthier, to make time for exercise, and to work on relationships with family and friends. Discipline. It’s hard.

At SJS, our quarterly Investment Committee meetings give us the opportunity to reflect on and to evaluate the discipline of our MarketPlus investment strategy, and what that means to you. Our commitment to you is that we will maintain the discipline of our investment philosophy and our science-based process of designing portfolios to help you achieve your financial goals in an up, down, or sideways market.

At times, we have made adjustments to the way in which we implement MarketPlus Investing on your behalf. Any investment change is subject to careful consideration, and may come as a result of market conditions, investment alternatives offering lower costs, more diversification, or better exposure to an investment premium. Since our beginning in 1995, our portfolios have seen a number of adjustments, about two dozen in total (graphic below).

We do know that it’s not easy being an investor, especially a patient one. As human beings, we are prone to an emotional response when we see the markets go up, and even more so when markets go down. Behavioral studies tell us that losses loom larger than gains – the pain of a loss is psychologically twice as powerful as the pleasure of a gain.[1]

We are here to offer you an ear to listen and a hand to hold when the markets are choppy. And we will continue to offer you a disciplined investment process that puts your portfolio in the way of market returns, and the anticipated benefits of investment premiums supported by academic research.

If we can free up some time for you to focus on the people and the causes you care about, well – that’s just another “plus.”

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Sources:

[1] “Loss Aversion,” www.behavioraleconomics.com.

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Stock Picking – Who’s Keeping Score?

By SJS Founder & CEO Scott Savage

Today’s financial media – where TV personalities and financial professionals alike freely offer their investment “picks of the day.” They might present well-founded arguments or emotional appeals when they recommend a buy or a sale to their audience. But you can bet they’ll always have some pick or prediction to make. What’s rare, though, is when those individuals are held accountable for how well their picks performed.

An exception to this is Barron’s – which we believe is a respected weekly financial publication – which takes the time to follow up on how their “Roundtable” has performed. Barron’s 2019 Roundtable is made up of what Barron’s refers to as “Wall Street’s smartest investors.”[1] Each year, Barron’s asks these experts for their opinions about the economy and the direction of the markets, and also invites them to provide a number of stock picks for the upcoming year.[2] At the beginning of the following year, Barron’s publishes what they call their “Roundtable Report Card,” and lets their readers be the judge of how well the industry experts fared.

In January 2018, nine of Barron’s experts – including Merrill Lynch’s Abby Joseph Cohen and Chairman and CEO of Gamco Investors, Mario Gabelli – looked into their respective crystal balls and made their picks. Each expert recommended anywhere from four to ten stocks for the year. How do you think their picks performed?

We took each Roundtable panelist’s picks and did a simple calculation to average their total return on the year, and then averaged those returns to come up with an overall average (mean). 

We found those results interesting – the average manager’s stock picks actually declined more than 12% from January 15 to December 31, 2018. In fact, we found that only three of the nine Roundtable members’ picks had an average return that beat the -8.6% return of S&P 500 Index for the year.[2] While we respect the experience and collective knowledge of the group interviewed by Barron’s, the results of their 2018 stock selections support our long-held belief that picking stocks is a very difficult game, even for the most seasoned professionals.

We believe that diversification is the best way to manage the risk of investing in global stock markets. While diversification doesn’t mitigate all risks, it is a foundational component of MarketPlus Investing®, in which we carefully evaluate your exposure to risk.

In addition to broad diversification, we incorporate intentional biases toward small-cap, value, and profitable companies in your portfolios, which we’ve designed to efficiently capture market returns where they have historically occurred and where market indicators imply they will continue.[3] And we support the notion of accountability – letting you know how your portfolio has performed compared to an index invested in a similar mix of stocks and bonds.

While your portfolio might not always beat the index year in and year out, over time, your assets are diversified and allocated to best capture the returns of the market – and the goal is to do so with a smoother ride than if you held just a handful of stocks. We’ll remain true to our time-tested and disciplined process and remain accountable to you. And we’ll leave the stock picking to the experts.

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Sources:

[1] “What’s Next for the Stock Market and the Economy, According to the Experts,” Barrons.com, January 14, 2019.

[2] “How Stock Picks from Our Experts Fared in 2018 – Roundtable Report Card,” Barrons.com, January 14, 2019. 

[3] Past performance does not guarantee future results.

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Industry Speak vs. ‘SJS Speak’

Could you repeat that, please?

By SJS Founder & CEO Scott Savage

Have you ever read an article in a magazine or newsletter, and come away feeling more confused and with less understanding *after* having read it?

Too often, those who write these types of articles spend their time using words that may make the writer sound smarter and well-informed without giving consideration to the people who are actually reading the article. They use lots of big words and industry jargon to give the impression that they REALLY know their stuff. But, in the end, you – the reader – don’t learn anything much.

Consider the following paragraph about SJS, written in a style that we like to call “industry-speak”:

Industry-Speak

Many of our clients come to us to help determine if their net worth is sufficient to fund their liquidity needs, to amortize their debt, and for help investing their 401(k) plans, Roth IRAs, and Trust accounts. They turn to us for a proper asset allocation as to maximize their total return while minimizing flow-through and realized capital gain taxes, and to help them understand how MarketPlus Investing® is better than active investments, including hedge funds, private equity, and Bitcoin. A Monte Carlo simulation is often used to determine the statistical probability of successfully matching assets and liabilities. Also, clients ask for advice on estate planning, gifting, and philanthropic options to consider. SJS provides periodic performance reporting, using time-weighted return calculations relative to an appropriate industry benchmark.

At SJS, we prefer to speak WITH you or TO you – never “at” you. We know some of you may like to read technical terms and take a deep dive into those jargon-infested waters. But many of you just want us to tell you what you need to know, with the message delivered in a concise, easy-to-understand way.

The following paragraph says basically the same things as the “industry-speak” item above – but in a way that we think cuts right to the heart of the matter:

SJS-Speak

As a client of SJS, you want to know whether you have enough money to retire comfortably and take care of the people you love. You want your money to be properly invested for your stage of life and circumstances, and to avoid paying unnecessary taxes. You want SJS to be accountable to your results and make sure that you, the client, are getting paid for the risks you are taking.

Industry-speak or SJS-speak – which do you prefer?

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Bond Returns – Could The ‘Drought’ Be Ending?

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By SJS Director of Institutional Investment Management Kirk Ludwig

Whether you’re an SJS client living in Ohio or Arizona – or somewhere in between – chances are good that you have experienced an environmental drought at some point during your lifetime.

In the bond market, we have been experiencing our own version of a “drought” over the past decade – a shortage of income (or, yield) from our bonds, with respect to the fixed income allocations in our MarketPlus® portfolios. A drought begins and intensifies when there is a continued shortage of rainfall. Over time, the ground dries up. The “green” goes away as plants, shrubs, and trees die or fall dormant. The ground remains fertile but, in the absence of precipitation to generate new growth, crops fail to produce their yield.

Typically, we think of bonds, or fixed income, as the “safer” part of our portfolios, since they generate income while providing portfolio stability. However, since the Great Recession in 2007, short-term bond rates have hovered near zero percent, evaporating any income from this part of the portfolio.[1] Now that the U.S. economy is feeling more stable, the Federal Reserve has increased their target rate to 2.25%, which in turn has showered the bond market with a much needed income boost.[2]

Similar to how a gentle rainfall would not immediately end a weather drought, a gradual increase in interest rates doesn’t automatically lead to higher income. When interest rates go up, the principal value of a bond will actually adjust lower to make up for the higher market rate. This adjustment period often dampens fixed income returns in the short-term, but leads to a higher income stream in the future. As a result, the returns in fixed income investments year-to-date in your portfolio have been fairly flat.

We are eager to start capturing greater yields, but we have to be patient. In the current interest rate environment, the bond portion of our MarketPlus portfolios will gradually start capturing the increase in rates as shorter-term bonds mature and proceeds are reinvested at today’s higher yields. The Federal Reserve will likely continue to raise short-term rates in the near future, which means bond returns may continue to be flat for a while. However, we believe that we will soon start to see evidence of higher yields as they sprout within the portfolios.

A recovery following a drought is gradual. It doesn’t happen like a flood – instantly inundating. The recovery occurs by having a steady, soaking rain for a few days or more. Before you know it, your resources are recovering and the drought has ended.

Our hope is that our client portfolios start to benefit from these drought-ending rate increases, and that their future “harvest” will be more bountiful.

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Sources:

[1] Daily Treasury Yield Curve Rates, U.S. Department of the Treasury.

[2] U.S. Rates and Bonds, Bloomberg.com.

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Charitable Giving And Tax Considerations For Year-End

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By SJS Managing Director Jennifer Smiljanich

As the year winds down and we get ready to close the book on 2018, there are still many things to be done. Dinners to prepare, holiday gifts to buy, wish lists to fulfill.

In the hustle and bustle of the holiday season, there are even some things that can be done with respect to your investments.

As you likely know, there is a new tax law in effect this year – officially known as the Tax Cuts and Jobs Act – that went into effect on January 1, 2018. This new law changes some of the rules pertaining to charitable giving. In our conversations with you, this topic has come up with more frequency.

The new law doesn’t change the basic rules for charitable deductions (other than increasing the deduction limit for cash contributions from 50% to 60% of your adjusted gross income). But because the law nearly doubled the standard deduction (to $12,000 for single filers and $24,000 for married filers), fewer people will benefit from itemizing deductions.

So what can you do to still fulfill your charitable intent, while also making tax-smart decisions?

Consider gifting stocks, bonds or mutual funds with a tax gain to charity in lieu of a cash donation. 

If you donate the securities directly to the charity, you do not pay tax on the gain, and because you do not owe tax on the security sale, you may be able to give a larger gift. We can help you facilitate your year-end gifting, subject to custodian deadlines.

If your tax preparer determines that your deductions may no longer exceed the standard deduction amount, there may be a benefit to bundling your charitable donations.  

By adjusting the timing of donations to fall within a given calendar year, you might be able to increase your total deductions over the standard deduction, and see a potential tax benefit.

The rules for qualified charitable distributions still remain, allowing people older than 70 1/2 to transfer up to $100,000 from their IRAs to charity each year, and have it count as their required minimum distribution (RMD) without being added to their adjusted gross income. 

The tax-free RMD from an IRA may be of greater benefit to those who can no longer itemize. Your charitable gift isn’t included in your adjusted gross income, and therefore isn’t taxed. We can help with any final distributions yet to be made.

As always, we’re happy to work with you, and your tax professional, to get things done in a way that makes sense for you. Please contact us if you have questions!

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Important Disclosure Information:

SJS Investment Services does not provide tax advice. Please consult your tax professional for specific advice. This material has been prepared for informational purposes only. 

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Is Your Investment Professional A Butcher? Or A Dietitian?

By SJS Founder & CEO Scott Savage

It’s a sunny Saturday afternoon. You’re in the mood to barbecue, so you hop in the car and head over to your friendly neighborhood butcher shop to get some meat to throw on the grill.

Or, maybe it’s a weekday afternoon, and you’re headed off to an appointment with a dietitian who is going to evaluate your diet and its healthfulness – or not – to help you figure out what you should be eating more of, or less of, and why.

Two different kinds of encounters, with very different end results. When you visit the butcher, you expect that he’s going to sell you some meat – and it will probably be tasty, although not necessarily healthy – and it will also be good for his bottom line to make the sale.

On the other hand, when you visit the dietitian, you can expect that she’s going to tell you what foods would be best for you to eat. Even though you’re probably paying her a fee for the appointment, her advice is given without any consideration to what might be in it for her.

Believe it or not, you can take the story of the butcher and the dietitian, and apply it to the investment world.

The storyboard below, created by the HighTower Company[1], shows the difference between an investment professional who works at a broker dealer – the butcher – and an investment professional who works for a Registered Investment Advisor (or RIA) such as SJS Investment Services – the dietitian.

Broker dealers (think – butcher) are supervised by a group called FINRA, a self-regulatory oversight body, or SRO. That’s right – broker dealers are supervising themselves. (FINRA is overseen by the Securities and Exchange Commission, which does have the power to approve or reject any rules FINRA may wish to adopt.)

RIAs (now, think – dietitian) are regulated directly by the Securities and Exchange Commission, and are held to what’s called “a fiduciary standard” by the SEC.

What does that mean? Simply put, firms like SJS have a responsibility to behave in a way that is in the best interest of our clients. There should be no conflicts of interest.

A broker dealer’s standard of care is one of what’s called “suitability.” As long as the investments being sold can be considered “suitable,” FINRA is satisfied. Even if the broker may recommend investment products to his clients because they offer him a higher commission – and not necessarily because the products may be in a client’s best interest.

How does that sound to you? Does a “suitable” investment sound good enough? Or are you thinking, “That doesn’t seem right. Somebody should make all investment professionals play by the same rules.”

There was an attempt to do so. In 2016, the Department of Labor introduced the Fiduciary Rule to require broker dealers to operate under the same standard of care as RIAs.

But, those broker dealers carry a lot of sway in Washington D.C. The Securities Industry and Financial Markets Association (SIFMA) and the Financial Services Institute (FSI), which represent the independent broker-dealer industry, argued in statements to the Fifth Circuit Court of Appeals that they are not in the business of advice, and not in an advice relationship of trust and confidence with their customers.[2],[3]

Go ahead, re-read that last paragraph.

In my experience, just about all broker dealers’ ads and marketing materials sure sound like they want you to believe they are in the advice business.

Sadly, the Fiduciary Rule went down in flames earlier this year. The SEC has proposed a new “Regulation Best Interest” rule that would establish a standard of care for all broker dealer representatives and require them to act in the best interest of their clients when making recommendations.[4] However, at this point in time, the “butcher versus the dietitian” remains the current state of things in the investment world. Investors still need to beware of a butcher in dietitian’s clothing.

We realize this scenario is complicated. Remember, we’re always here for you, to answer any questions you might have, or to simply talk through what we believe are the differences between a broker dealer, and an RIA like SJS. Just give us a call!

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Sources:

[1] “HighTower Whiteboard Animation: Brokers vs. Fiduciaries,” YouTube.com, March 16, 2012.

[2] “DOL Rule One Step Closer to Death,” wealthmanagement.com, May 1, 2018.

[3] “Financial Industry Celebrates, Mourns Fiduciary Rule Decision,” www.fa-mag.com, March 16, 2018

[4] “Proposed Rule: Regulation Best Interest,” www.sec.gov, April 18, 2018.

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Suggested Reading

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Changing Or Creating A Trust?

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Let Us Help You Put Your Plan Into Action!

By SJS Managing Director Jennifer Smiljanich

When’s the last time you updated your trust document? Or, maybe your life circumstances have you considering one for the first time. No matter your situation, the process of changing or setting up a trust might be unfamiliar to you. We understand. The whole process is just not top of mind until, one day, it is.

Trusts are vehicles designed to protect and transfer wealth, but if you’re like many people, you don’t review your trust documents very often, or make changes to them. Many of us are part of the “set it and forget it” crowd until some life event, or just the sheer passing of the years, makes us think: “We probably should take a look at our trust and estate planning documents.” And then there’s the immediate follow-up surprise: “How many years has it been? Can’t be!”

Well, all that passing time, or just the unfamiliarity of a new trust, can leave you at a disadvantage when it comes to coordinating your investment management account titling and beneficiary designations with your trust documents. But here’s the good news. Let SJS Investment Services know your intentions, and we can help set your mind at ease.

As your investment advisors, we are here to help you through the process. That’s the first and most important reason to give us a call when you are considering a trust or making changes to the one(s) you have. It’s not enough to simply update your trust documents; you also have to implement your plan. Working with you and your estate planning professional, we’ll help you take care of changing beneficiaries on all your accounts, updating account titling, and all the other tedious but crucial tasks required to put your estate plan into action. As a client of SJS, please know that you have a partner to help you reach the finish line!

Also, let us know about any life transition you might be experiencing. Maybe it’s a marriage, the birth of a child, the loss of a spouse, a recent inheritance, a divorce, a new home, or a business sale. There are so many life situations. You’ll be comforted to know we have been there for our clients through them all. Many times!

We can help you navigate all of the forms and documents needed to change your name, address, beneficiaries, and so on for your investment accounts. When you work with SJS, your wealth isn’t the only thing we take care of. We take care of you. That’s why we’re here!

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Suggested Reading

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5 Financial Tips For Your College Grad

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By SJS Managing Director Jennifer Smiljanich

It’s that most wonderful time of year!  School buses are back on the roads, those long, hot summer days are getting cooler and shorter, and autumn is right around the corner. Some of you are experiencing the happy, and maybe bittersweet, occasion of a son or daughter (or grandson or granddaughter) who has recently graduated from college and is now leaving the nest.

Maybe your new college grad is moving across the country, and you’re worried about him supporting himself while paying big-city rent. Or maybe your child is worried about what it means to really be “on her own,” and what to do if she runs short on cash.

We know you’ve worked to provide a good foundation to help your son or daughter get started on the right foot. Building good financial habits takes both time and discipline. But sometimes it takes a mistake – or two – along the way to learn the lesson. To avoid some of the most painful lessons, here are five tips for helping your 20-somethings get on solid ground:

Set a budget, and stay within it.

One of the most important life lessons is living within your means. For someone living on their own for the first time, handling all of the bills may be new. Budgeting tools can help your graduate plan on how they can cover the rent on the “have to have” apartment, while paying the loan on their car, utilities, groceries, and other basic needs.[1]

Count on there being an emergency! Be prepared.

An emergency fund goes a long way to easing the stress of the unexpected. Keeping extra funds set aside in a checking or savings account, up to three to six months of living expenses, is a good plan.[2]

Keep score, and be diligent about debt.

Building good credit at a young age is important, especially as entry-level incomes may be low.[3] Be sure to pay off credit card balances each month, pay rent on time, and keep up on any student loan debt payments. Then, when they are ready to buy a house in the future, they won’t need you as a co-signer!

The future is now – start saving.

After setting aside emergency funds and covering ongoing debt and expenses, encourage your adult children to save as much as they can. Even just saving enough to maximize their employer retirement plan match is a good start. As their salaries grow, or if they earn a bonus, they can think about increasing contributions. If your grad doesn’t have access to a retirement plan, he or she can contribute to an IRA.[4] And if you would like to help with their savings, you might consider gifting them funds they could use for IRA contributions – as long as they have adequate earned income.

Don’t forget the insurance.

Health insurance. Renter’s insurance. Disability insurance. These important coverages can help protect your children and their livelihood, as well as their personal belongings.[5]

And of course, the team at SJS is here to help. We know that money doesn’t come with an instruction manual, and financial decisions can sometimes be complicated. We are happy to offer our suggestions, or just lend an ear to listen.

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Sources:

[1] “7 Simple and Free Budgeting Tools,” money.usnews.com. January 14, 2015.

[2] “Emergency Fund: Why It Matters,” nerdwallet.com. August 8, 2018.

[3] “How to Build Credit,” www.experian.com. 2018.

[4] “2018 IRA Limits on Contributions and Income,” thebalance.com. July 13, 2018.

[5] “A New Grad’s Guide to Insurance,” bankrate.com. July 7, 2018.

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How To Get Back To Counting Sheep

By SJS Founder & CEO Scott Savage

Do you ever lie awake at night, and instead of counting sheep, find yourself pondering these questions?

• Is my money in the right place, with the right advisor?

• Am I getting the attention I deserve?

• Is my advisor always objective when making recommendations?

• Is my advisor a fiduciary?

Well, let us attempt to give you some answers, so you can get back to those sheep!

As an independent Registered Investment Advisor, or RIA, your SJS team lives by a simple rule – to  always act in the best interest of our clients. Our role is to serve you, not to sell you something.

“Fiduciary” is a buzz word that has been tossed around a lot lately, in the news and in TV commercials. But, it’s a word, and a concept, that we think is very important. An Investment Advisor is always a fiduciary who, by law, is required to act in your best interest. But, all investment advisors may not be created equal – even if they are technically fiduciaries. We think an advisor who truly has your best interests at heart will take the time to get to know you – to know who and what you care about, so you can plan for them, too.  It’s not just about the money – it’s your life’s work. It’s about taking care of your family, and planning for your future and the legacy you leave behind. We believe a good investment advisor will take his or her role very seriously. When you can work with people you trust, people who will put you first all the time, every time – why would you work with anyone else?

And, your investment advisor should be someone you trust, and your true partner. Someone who acts in your best interest because it’s the right thing to do, not just because the law says so. Someone who sits on the same side of the table to serve only one person – YOU. We might be biased, but we think an advisor who provides a science-based investment process, like MarketPlus Investing®, gives you the best of both worlds: a major money center investment experience wrapped in the small-town values of people who care.  We call that the “plus” in MarketPlus Investing.

We don’t just talk the talk. We put you first, all the time, every time.  Your side of the table is our side of the table. We’re here to help you live your dreams, live a life you love, and care for the people you love, too.

So, instead of worrying about your investments and whether your advisor has your best interests in mind, you can rest easy.  Sweet dreams!

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MarketPlus Investing®

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It’s More Than Just “Investing”!

By SJS Managing Director Jennifer Smiljanich

We won’t blame you if you think that MarketPlus Investing® – our proprietary investment strategy designed to help you achieve your specific financial goals – is all about investing. After all, it’s right there in the name!

Of course, the investing piece is important. We’re a Registered Investment Advisor – investing is what we do. But, we like to focus on the “Plus” in MarketPlus Investing, as well.

One of the “pluses” – in fact, what we consider to be the most important “plus” – is that you come first. All the time, and every time. Not just when we’re in the office, or when it’s convenient. But all the time – whenever you need us. We are here for YOU. We want to know what’s on your mind – not just what you think about the unseasonable weather we’ve been having, or where you might vacation this summer – but what’s REALLY on your mind.

It’s about YOU. What are your hopes and dreams for the future? What’s most important to you at this moment? What are your biggest worries – about money, or about other facets of your life

While we are here to do some advising, the most important part is when YOU do the talking, and we do the listening. The answers lie with you. We’re just here to help you find them.

How are you feeling? Are you nervous or anxious, or feeling burdened about an upcoming change in your life? Are you excited and looking forward to a new endeavor? Let us know what’s on your mind, and we can help you navigate through the emotions that can often challenge our objective thinking. We are always just a phone call or email away.

So many events make up your life – the good, the bad, and even the mundane. You deserve to feel in control, with a sense of well-being and confidence. SJS is here to help you get there.

When we say, “You come first,” – we mean it! At SJS, we’re all about the “plus”!

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Non-Profits – Are You Planning for the Next 100 Years?

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By SJS President Kevin Kelly, CFA

Despite all the complicated rhetoric about business and finance and strategy and methods, by doing the basics as a finance chair or board of directors, you stand a good chance of creating an endowment that lasts many years –  perhaps forever.

The fact is that responsible governance is less about the newest trends in leadership and investing, and more about being responsible and calm no matter what the markets are doing.

We’ve been guiding and advising non-profits for decades through up and down market cycles, and experience tells us that these things work:

Develop a long-term plan and stick to your investment strategy.

We can help. Many institutions have turned to us for guidance, and we can share what we believe are the best strategies, and help you model those strategies within your organization. Then we do what we do best – which is keeping you focused during markets ups and downs.

Institutionalize the vision and the plan. 

You know there will be investment committee changes and asset reallocation required. There will be spending policy changes and leadership turnover. Every change need not be a new direction, if you make the vision and the plan the guiding force of the organization.

Surround yourself with experience. 

You don’t have to know everything. You just have to know people who know a lot about the different aspects of your responsibilities. When you bring all those people together, you tend to set yourself and your organization up for success. We are often part of that team. Call us, and we’ll share with you everything we know. We’ll also recommend others who are just as knowledgeable and giving.

You probably guessed that your role is not a solo act – it is a team sport.

By building a great team, you stand the best chance of keeping your cause funded for decades – if not centuries – to come.

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SJS And Your Metroparks – How Are They Alike?

By SJS Founder & CEO Scott Savage

Metroparks Toledo – a place where people choose to spend their time to the tune of four million visits each year – is an organization built on three tenets: 1. Restoring, 2. Preserving, and 3. Protecting.[1] The parks system is widely admired for restoring ecosystems across thousands of acres of land. In early 2018, Howard Marsh Metropark was dedicated, restoring 1,000 acres that had been used as farmland to a functioning wetland near the Lake Erie shore.[2] As a marsh, the land filters runoff water before it reaches the Lake and provides an important spawning habitat for fish, as well as a stopover habitat for a variety of birds.

Metroparks Toledo is appreciated for preserving rare and important habitats. And, it’s applauded for protecting the land by developing beautiful, natural parks that are true gifts for generations to come. The work takes planning, agility, collaboration, and perseverance. Metroparks Toledo possesses all of these qualities plus an ambitious vision: a park located within five miles of every resident – a regional centerpiece for why many people decide to live and work in northwest Ohio. With 16 parks now open for people to go out and enjoy, that vision is becoming a reality.

Restoring, preserving, and protecting. The same words describe our mission at SJS Investment Services. SJS works to restore calm to our clients who are in the midst of life’s most challenging transitions. We strive to preserve people’s wealth, hard-earned through the decades of their careers. And, we endeavor to protect family and organizational legacies well into the future so our clients can care for the people and the causes that matter the most to them.  These endeavors, too, take planning, agility, collaboration, and perseverance. Plus, we help each client articulate their vision for the future. People count on SJS Investment Services to be there and to help them make their vision a reality.

As a leader of both SJS – the company I founded – and the Metroparks Board of Commissioners, restoring, preserving, and protecting are values that I was raised with and believe in. It’s no coincidence that the same tenets that I believe make for good environmental strategy also may make for a good financial strategy. (After all, couldn’t we consider the environment a form of wealth, too?) I view both as vital to today’s quality of life. And as a legacy we leave to future generations.

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Sources:

[1] “The Value of Metroparks,” metroparkstoledo.com.

[2] “Howard Marsh Metropark to Open April 28 Near Lake Erie,” metroparkstoledo.com.

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Planning for the Future … With YOU, Front and Center

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By SJS Managing Director Jennifer Smiljanich

Yogi Berra once said:

“It’s tough to make predictions, especially about the future.”

We agree, Yogi! We’re living in a fascinating time where a massive shift in technology and demographics is reshaping nearly every industry, including ours. It’s difficult to remember what technology was like ten years ago, let alone imagining what technology may bring us five to ten years from now.

While the reshaping of the future may be difficult to predict, adapting to these changes can only occur through mindful planning. As you might expect, planning comes naturally to the SJS team. We spend many hours of our day helping you and your families plan for the future. So it may not come as a surprise that we also take the time to plan internally for the future of SJS, putting careful thought into how we grow and adapt to this changing world.

As we grow, our task is to understand what is valuable and meaningful to you today, and also anticipate what may be valuable and meaningful for your tomorrow. The tools we use and the technology we adopt might change more frequently than we’d like, but the connection we share with you is the core of our business – and that will never change. Simply put, we will always want to share in your life’s milestones and to help you reach your goals.

As part of our planning process, the SJS team recently determined the foundation established in 1995 remains as strong as ever and will continue to guide us into the future. Our guiding principles start with servant leadership, which results in a “You Come First. All the Time. Every Time.” culture.

By staying true to these principles, the action steps we take as we move toward the future will be thoughtful and measured. At the end of the day, to serve YOU is the “why” behind the “what” at SJS. You are the heart of why we do what we do. As we continually plan for the future SJS, you – our clients – remain front and center with us.

These principles also apply to how we treat each other, as coworkers and team members, to create the culture at SJS. What makes SJS a special place? We look out for each other, work together, and help one another, to serve this purpose.

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Let’s Talk Finances … With Your Kids!

By SJS Advisor Andrew Schaetzke CFP®

Maybe you’ve tried to talk with your kids or grandkids many times about financial responsibility. Or maybe you haven’t wanted to bring up the “taboo” subject of money. That’s okay. We can. And we can have the conversation on your behalf. Just call us to set up an appointment to talk finances and how money works.

Every young person needs to know that money can be his or her friend… or enemy. We can help make it the first one, by covering a few basics with them over the course of about an hour. We can touch on everything from living within your means, to paying yourself first. We’ll even share how saving money works, and how to make it work for you. We’ll talk about the difference between good debt and bad debt and what happens if you have any of the latter.

You say your son or daughter isn’t a math fan? He or she will like hearing about and seeing this math. We’ll discuss what money invested today has the possibility to become in 30 years. And, what opportunities may be missed if those same dollars are spent impulsively on a purchase with little or no lasting value.

It’s an eye-opening education that may be difficult for parents to deliver, but something we do all day. Take us up on the offer. It costs nothing but could be worth so much. And, at the very least, can begin to plant the seed of financial awareness and responsibility. You’ve worked to provide for those you love in every other way. Here’s one more very important way to show you care.

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Investment Advice You Don’t Hear Every Day

By SJS Founder & CEO Scott Savage

Andrew Carnegie – steel tycoon, philanthropist, and one of the wealthiest businessmen of the 19th century – once commented about creating wealth:

“Put all of your eggs in one basket. Then, watch that basket!”

Does that advice surprise you? Well, prepare to be even more surprised – because we agree wholeheartedly. Many SJS clients have generated their wealth through concentrated bets that began as very small investments, perhaps sweat equity, and grew over time to become significant. In other cases, their baskets didn’t do a very good job of nurturing those eggs. Some of our clients can tell tales of complete failures along the road to success. That may surprise you, too. Viewing accomplishments from the present day has a way of smoothing out the memories of past hardships, just as viewing financial markets at their current levels tends to smooth over memories of past volatility. This perspective comes with the passage of time.

Regardless of the bumps along the way, individual talent, innovation, and hard work applied to America’s free economy have historically yielded many success stories. We have plenty of these stories to share and see no reason why the future should be any less full of promise.

For clients who have spent their lives building their wealth, it can sometimes be difficult to give up their perceived “control” of their basket – of a business interest, real estate, or concentrated stock held over generations – and let us handle their investments. This “control,” which may be somewhat illusory, gets replaced with the so-called risk inherent in the financial markets. Maybe you’ve experienced similar feelings? This is completely normal, and can be a huge emotional obstacle to overcome. Some people never get there.

But we strive to help these investors see the benefits of making this trade off when the time is right, to give up the concentrated bet for a diversified portfolio that may offer a smoother experience over time. While investors may start off with all of their investment “eggs” in one basket, academic research and empirical evidence strongly support widespread holdings in the publicly traded financial markets. And consistent exposure to areas of the market that systematically add value are time-tested strategies to preserve and protect wealth. These strategies are the foundation of MarketPlus Investing®.

How does MarketPlus Investing fit into your picture? Eventually, the day may arrive when you know it’s time to preserve and protect your wealth, and move your eggs from that single basket into many, many more.

So, how can we help you “preserve” your wealth? First and foremost, by keeping you informed so you’re less likely to react to your emotions and potentially harm your portfolio. Emotions can be the great enemy of successful investing. And how can we help you “protect” your wealth, and from what? You might think market volatility is the only danger, but historically, inflation – and the associated decreased purchasing power – can be the bigger and historically persistent risk. It’s the white noise playing in the background of every minute of every day, and often doesn’t get the media play that an old fashioned market correction gets. This is yet another reason why we believe a well-diversified portfolio, designed with calculated risk exposure, can be so important to maintain wealth for the future needs of your families and loved ones. And this is the reason why we created MarketPlus Investing in the first place.

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Three Common Mistakes Many Investors Make

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MarketPlus® Investing Helps Investors Avoid These Common and Costly Pitfalls 

By SJS President Kevin Kelly, CFA

You’d think that anyone who wanted to be a highly successful investor could achieve that goal on his or her own, given all the access to financial information and the speed of information we enjoy today. After all, the Internet, television, radio, magazines—just about everywhere you turn—provide round-the-clock access to anyone who’s interested.

Why then does the 2014 edition of the “Quantitative Analysis of Investor Behavior” performed by DALBAR, a financial services research firm, confirm that individual investors’ portfolio performance trails overall market performance? And not just for one year, but for 30 years running. In 2013 alone, with the S&P 500 up about 32%, the average do-it-yourself mutual fund investor underperformed with an average 25.5% return.* Over the 30 years ending December 2013, the S&P 500 gained 11% annually while the average individual investor earned less than 4% annually.  According to the AAII Journal, in some years the gap between the benchmark performance and the average individual investor portfolio was as high as 10%. (Steven Sears, The American Association of Individual Investors Journal, July 2012.)

Why the disparity? And why isn’t the gap smaller now that we have such easy access to information? Through our experience at SJS Investment Services helping clients invest through our time-tested process called MarketPlus Investing, we have discovered three main reasons why individual investors often have difficulty investing on their own:

Timing the Market

Individual investors often believe the best way to drive increased performance is to try to time the market. They watch the trends and attempt to get in when the market is low and get out when the market is high, then wait for it to drop again before getting back in. Our experience tells us this is a fool’s errand, and numerous studies prove it. Marlena Lee, in her paper titled “Stock Returns Over Business Market Cycles,” published in March 2009, demonstrates why trying to stay out of harm’s way through market timing is a less than optimal strategy. She calls it a “costly decision.”

Stock Picking

Individual investors sometimes try to pick one, two, or a handful of stocks that they think are going to out perform the market. And given the thousands of securities that are out there, the odds in an individual investor’s favor are pretty slim, particularly over time. MarketPlus Investing is a science-based process built on the Nobel Prize-winning work of Eugene F. Fama that places portfolio design at the center. Owning various asset classes instead of trying to pick stocks may minimize risk. And based on an investor’s financial goals, the focus is on designing a portfolio diversified across and within asset classes, not individual stocks.

Chasing Performance

Individual investors often choose an investment based on performance and with the assumption that that performance will continue. They, in essence, look to the past success of the fund manager and hope that the manager will have the same success in the future. In the study “Luck vs. Skill in the Cross Section of Mutual Fund Returns,” in the October 2010 issue of the Journal of Finance, the authors, Eugene F. Fama and Kenneth R. French, showed that active fund managers cannot accurately speculate on where individual prices are going to go and systematically beat the market. We couldn’t agree more. Our experience with new clients has been that they have rarely been rewarded by chasing performance.

At the root of these common mistakes that many individual investors make is the simple fact that too many investment decisions are made emotionally, without a process and in the absence of discipline. That’s perhaps the biggest asset we bring to our clients. At SJS Investment Services, we like building relationships with our clients and getting to know them, but when it comes to investing on their behalf, we have a process and a discipline. Our clients hire us to help guide their futures. But they really hire us to stick to our process, maintain discipline and be there for them. And it’s a role we’re equipped and honored to take on.

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Important Disclosure Information:

It is not possible to invest directly in an index.

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