X

Articles

Please review Important Disclosure Information set forth in the last section of this website.

Saving Money On Home Ownership

-November 2015-

Last month, we looked at ways tenants could save money and combat rising rent prices. But if you’re one of the millions of Americans that owns a home, saving money on rent may feel like an irrelevant skill. Fortunately, there are plenty of ways for you to save on homeownership.

Saving During the Buy
Right House, Right Neighborhood – Any realtor will tell you that location plays a huge role in determining home value. However, a good location can have costs beyond the home price. Property taxes can vary wildly between suburbs. Saving hundreds or thousands a year could be as easy as looking just a few blocks from your target neighborhood.

Keep an Eye out for Easy Fixes – An overgrown yard, dirty basement or tacky wall colors can drive down the cost of a house even though yardwork, cleaning and restyling were things you were likely to do anyway. If you’re willing to do a bit of work, you can get a good house below its asking price while picky buyers are looking elsewhere. 

Check Your Taxes – Buying a new home can come with new tax opportunities—especially if it’s your first home or you plan to make major improvements. When tax season comes around, be sure you’re getting your maximum benefits, even if it means seeking professional tax advice.

Saving While Owning
Get it Green – If you haven’t considered energy efficient appliances, improved windows or better insulation, you need to review your utilities budget and find out how much you could save each year. If saving energy isn’t enough, you could make your own by buying or leasing solar panels. Green homes save money and have higher property values.

Refinancing – An obvious option to most homeowners, refinancing a mortgage provides a way to save on interest or restructure repayments. Refinancing isn’t always a good option, though; a refinanced mortgage needs to provide savings large enough to offset the costs it incurs.

Early Repayment – In most cases, mortgages allow you to repay the principal early without penalty. If you have extra money from a bonus or tax refund, consider putting it towards paying off your mortgage. For a mortgage charging 4.5 percent interest, every $1,000 paid early will save you $550 in interest over the next 10 years.

Light Right – Old incandescent and halogen bulbs use up lots of energy, most of which becomes heat. Using energy efficient LED lightbulbs and/or installing skylights (window or tube) will reduce the electricity needed to light a room while also cutting down on your air conditioning costs.

Saving When Selling
Only Stage the Key Rooms – Improvements can greatly improve resale value, but there is no need to spend big on every room. The kitchen, main living room and largest bedroom are the areas that tend to convince people of a home’s value. Focus your upgrades on those spaces; not every room of a house needs to dazzle prospective buyers. 

Be Patient – If you are certain of your home’s value, don’t feel pressured by a realtor to offer a discount. Realtors are there to help you, but they also work on a commission system that rewards high turnover. Dropping $10,000 from a list price barely affects their cut and allows them to move on to selling a different house. Be sure that any discounts are justified by market demands. 

Get Friends to Help Move – Hiring a moving service can be much faster and more convenient than moving yourself, but it will cost you thousands. For the price of providing lunch, you may be able to convince friends and family to help you load or unload a moving truck you rented yourself.

The Cost of Biases

-November 2015-

Behavioral finance—the interaction between human psychology and money—has become a major component of current economic theory. Experts on behavioral finance love to study how greed and fear cause massive swings in the markets.

But behavioral finance doesn’t just exist in academic theory and panicked stock crashes—it’s part of everyday life. The human brain isn’t a calculator and struggles to separate money from emotion. Every time we open our wallets, our financial biases and blind spots threaten to disrupt good decision-making.

Fortunately, biases become much easier fight once we learn to recognize them. Here are a few of the most common financial biases people face:

Bandwagon Effect

One of the strongest biases, the bandwagon effect is the tendency for people to change their opinion or behavior to match that of those around them. Bandwagons often create social pressures and can push people to spend far too much “keeping up with the Joneses.” Always evaluate your financial decisions on what works best for you, not what works best for others.

Familiarity Bias

Familiarity bias is when people show an irrational preference for something that they’ve used in the past. One common effect of this is default brand loyalty, which can hurt the efficiency of a budget or draw you into extra spending.  How many times have you bought a familiar product brand even when there is evidence another option might be better or cheaper? Give something new a try.

Ego Depletion

This bias is a kind of mental lapse. Self-discipline is difficult, and our brains can only do so much of it before taking a break. If we push ourselves too much, we often react strongly in the opposite direction. Ego depletion is what leads to shopping binges after you cut too much discretionary spending from your budget. Remember: rewarding yourself for progress is an investment in your goals.

Recent/Available Information Bias

When it comes to information, people are quick to embrace the new and forget the old. Information biases are responsible for many fads and false fears. For example, if you have two coworkers who were robbed in the past year, you may want to buy an expensive security system. Even if the thieves were caught and local crime rates are extremely low, your judgement is disproportionally affected by the information that is most recent and most available to you.

Survivorship Bias

This bias is the tendency to misinterpret a situation by focusing on the quality examples. It can be paraphrased as, “you only hear about the ones that make it big.” This bias is most dangerous to entrepreneurs or investors because it causes them to underestimate difficulties overestimate success. People should be brutally honest with themselves and consider the possibility of failure before investing their life savings in a business.

Zero-risk Bias

Humans love certainty; it eliminates risks and makes planning for the future much easier. We love it so much we’re often willing to pay more for extra peace of mind, even if it doesn’t make complete sense. For instance, people happily pay a lot of money for the reliability of a new car and then also buy the dealership’s short-term warranty to protect it against a breakdown. We know a new car is highly unlikely to have problems for a few years, but we still feel the need for added certainty.

Fighting for Financial Independence

-September 2015-
In America, the idea of “independence” is almost sacred. Every July 4th, we celebrate the start of the United States’ long road towards independence and control of its own interests.

When people make plans for the future, many put “financial independence” as their ultimate goal. But much like national independence, financial independence— living without the need to work for someone else—takes years of struggle against huge challenges.

Here are some of the essential concepts to help you win your war for financial independence. Each one battletested and proven effective by that other great struggle for independence: the American Revolution.

Coordinate your attack – Winning a war takes success on all fronts. If you neglect a certain area of your finances, all your progress could be completely undermined. For instance, going to great lengths to secure higher income for yourself becomes pointless if it forces your expenses to grow even faster. Even though you are worth more, your net worth will decrease and it will take more time to reach your goal. Every part of your financial plan needs to work together to secure victory in the shortest amount of time. (Siege of Yorktown, 1781)

Seize opportunities to advance – Sometimes a great financial opportunity appears, but we are too nervous to take advantage of the situation. Although caution is useful, having the courage to commit to a solid investment can pay huge dividends in the future. Watch for financial opportunities, judge them rationally and make a bold move if everything looks good. (Battle of Saratoga, 1777)

You can lose a battle and still win the war – Both financial plans and military strategies must survive
setbacks and short-term problems on their way to a longterm goal. If generals completely changed their campaigns every time something went wrong, no army would ever accomplish its objectives. Don’t let temporary market downturns or sudden expenses cause you to panic or abandon your goals. Expect difficulties and learn to push through, even when things are disrupted. (Battle of Bunker Hill, 1775)

Keep your morale up – Staying disciplined with saving, planning and investing is difficult in even the best of times. But if your attitude turns negative, you’ll never be able to reach the level of independence you desire. When things get tough, try to focus on the future and how great things will be when you reach your goals. Don’t forget to regularly reward your efforts; it’s better to occasionally deviate from your plans than to get worn out and give up entirely. (Winter at Valley Forge, 1777-8)

Drill your actions – As with all things, practice makes permanent. Habits take time to develop, so keep trying to put your financial plans into practice. If you continually allow or encourage yourself to break your rules, you’ll be creating bad habits that could end up being costly. Training is about getting so comfortable with an action that you can perform it in the middle of chaos. (Baron von Steuben, 1730-1794)

Get creative – The most impressive victories are the ones that an enemy never saw coming. Traditional tactics can work well in most situations, but taking time to find an original approach to your goals can get you to financial independence faster and more efficiently than anyone expected. (Battle of Cowpens, 1781)

The fight for financial freedom takes hard work, discipline and sacrifice. It’s a war unlike anything else, but its values are nothing new. By understanding the challenge and adapting the lessons of the past, we can learn how to keep winning independence for the future.

When it comes to economic growth, no country can compare to China. The country’s expansion over the past quarter-century has been staggering, posting annual GDP growth rates between 7.4 and 14.3 percent. What makes the growth rate even more impressive is the scale on which it’s happening: China is the world’s most populous country, home to approximately 1.3 billion people.

Although it is mostly communist, China has tried to introduce more free-market principles into its economy. It has encouraged—and limited—its citizens to make domestic investments. The government knows that if it can attract foreign investment while keeping Chinese capital within the country, it could perpetuate economic growth. The only question is how difficult it will be for citizens to integrate financial markets into their lives.

 

Lifetime Debt

-September 2015-

Debt is not a bad thing. Credit is not a bad thing. Mortgages are not bad things. Student loans are not bad things.

But they sure can cost you a lot of money, both now and in the future.

Paying to Pay
Debt, in whichever form, means paying extra for immediate access to money. Debt is said to be “efficient” if the benefit the money provides is greater than the extra cost of borrowing it.

In the United States, we love debt. At the end of 2014, America’s total household indebtedness was $11.83 trillion. Major sections of consumer debt include:

• $8.68 trillion in housing loans
• $1.16 trillion in student debt
• $950 billion in auto loans
• $700 billion in credit card debt

(Figures taken from the Federal Reserve Bank of New York’s “Household Debt and Credit Report” Q4-2014)

While using debt is routine for most people who need to buy homes and cars, go to college and cover major expenses, it is still extremely important to consider its cost. The website www.credit.com estimates that the average American surrenders $279,000 in debt interest over the course of his or her lifetime (not including student loan interest). What’s more, household debt is trending up; it has risen 43 percent since 2004. Student loans have grown particularly fast, climbing over 300 percent over that same time.

This is cause for concern among some economists and financial news pundits. The fear is that loans (particularly student loans) are siphoning off wealth people traditionally would have saved. Though broad loan usage helps stimulate the economy, high debt among individuals could stunt their financial growth.

A major part of the problem is that debt is self-sustaining. It not only grows on its own, but also puts people in a position to need more debt. A single event (e.g. medical cost) can trigger interest payments that ruin a family’s cash flow and send them into a debt spiral.

To the Limit
But does debt need to cost us anything? Many people successfully avoid, or even invert, debt costs by being careful. The classic example of this is using a credit card to accumulate rewards while religiously paying off the monthly balance. Unfortunately, this may still lead to losses; your spending habits are much harder to outwit than a credit card company.

As it turns out, debt causes us to spend more money—even if interest is avoided. Debt psychologically enables extra spending, giving us immediate gratification while delaying the pain of cost. The result is a mental lapse in valuation that makes us comfortable with paying higher prices or buying on impulse.

This distortion of debt value is particularly bad when buying high-priced items. We may labor over spending an extra $20 at a grocery store, but when buying a car or house, our reasoning is skewed by big numbers and long timeframes. Hundreds or thousands of dollars seem trivial when we already have to take out a huge loan with decades on the term.

What Can You Do?
Although it comes at a price, debt is still an important tool that can give people amazing opportunities. The good news is that you can do several things to reduce the cost of debt in your life:

• Improve your credit score – The difference between a “Fair” and a “Good” credit score can easily translate into tens of thousands of dollars in interest payments over your life.

• Pay with cash when possible – This might seem like an unrealistic or outdated idea, but it limits your ability to buy impulsively and reduces bloated credit spending.

• Fight for each dollar – Remember that $100 saved when buying a car is worth the same as $100 saved while shopping. Don’t let a loan inflate your target price for a big purchase.

• Consolidate – If you have numerous debts, consolidate them under a single bank loan. Interest rates are very low right now and a consolidation can save you thousands.

Keep Reaching for Your Financial Goals

-September 2015-
Few things are able to motivate us like self-improvement. But despite our initial enthusiasm, our personal goals can seem like impossible challenges after just a few days.

Financial goals are particularly difficult to accomplish. Spending money is an unavoidable part of modern life and financial goals can easily get lost in other money issues. What’s worse, the feedback from financial goals is blunt and immediate. As soon as we get started, our finances begin evaluating our success with clear positives and negatives. Financial goals also remember our mistakes. A one-time slip-up, like a significant purchase, can disrupt and damage a goal for months or even years.

The success of a goal often comes down to the strategies and tools used to support them. However, valuable techniques are often abandoned as soon as a little bit of progress is made. Can anyone expect to reach their goal if they don’t sustain their plans for meeting it?

Do you have a goal you’ve given up on? Give it another try. It’s never too late to renew your efforts. Use some of these steps to help make your goal a reality:

Be reasonable – It’s always important to be realistic; but for financial goals, it is essential. If you make your goals too extreme, you set yourself up for frustration and disappointment. It’s better to have an easy goal you can reach than an impossible goal that makes you quit. Once you have a little success, you can raise your expectations.

Set solid milestones and celebrate them – Milestones are a great way to track progress and boost your morale, but you need to make them an important part of your life. If you’ve made it halfway to your goal, celebrate in some way and give yourself a taste of what success will feel like. Stay positive; milestones are meant to show you how far you’ve come, not how far you still have to go.

Find some accountability – Talk with an advisor about your goals and having them check up on your progress can massively boost your discipline. Even if your advisor only asks for occasional updates, being accountable for your actions can provide a lot of encouragement to stick to your plan.

Automate what you can – Constantly trying to make the right choices can wear down your motivation.
Automating your target savings or debt payments can help you avoid the potential mistakes and will allow you to save your energy for other challenges.

Limit the number of goals – Reaching goals can be difficult, so don’t try to accomplish several of them simultaneously. Only start one or two financial goals at a time and don’t create new ones until your current efforts have become second nature.

Bend so that you don’t snap – Interruptions are inevitable. Much like setting a realistic goal, it’s important to have realistic expectations for your progress. If there is an unavoidable problem, adjust your goal accordingly and keep trying. Don’t give up on a goal just because of an unplanned setback.

Reaching goals is a skill that takes practice and experience. In accomplishing one goal, you learn which strategies work best with your personality. Even when you fail, you’ve learned more about what it takes to reach success. The important thing is being willing to try again.

Simple Fitness Truths

June 2015
-By Mark Olson-

Why is it that most of us have a sincere desire to manage our health and finances to their highest potential but few have effectively cared for those critical aspects of life over the long haul?

Most of us will acknowledge the primary cause is that life is complex, and the urgent tends to crowd out the important.  Another contributing factor is that we are surrounded by, and vulnerable to, varieties of myths and traps that keep us from taking, and then staying on, that higher road. 

One dominant health myth is that there is a magic diet or product that will allow us to be fit and maintain our target weight with a minimum amount of time or effort.  Six-pack abs in six weeks anyone?

The financial arena is loaded with illusions that financial security is an end-all or that a guru or scheme exists that can magically turn $100 into $1,000 virtually overnight.  The untimely death of a loved one can be a sobering reminder that financial security and blazing returns may not be so important after all.

So what is it that can help us rise above the complexities of life and do what is most important? 

The missing link, that can make all the difference, is a goal-focused plan that flows out of our deepest convictions overseen by someone who can hold us accountable.  One of the first steps of getting there is to be quiet enough, long enough, to define those elements in life that matter most.  Spouses, coaches, pastors, advisers and friends can be invaluable along that path.

If your conviction is that you are a steward of the physical aspects of your life, your goal-focused health plan may be to maintain a target weight and exercise some minimum amount per week.  If so, your long-term success could be assured by simply eating less calories than your body expends, finding ways to exercise consistently with activities that bring you joy and engaging people to hold you accountable.

If your conviction is that you are a steward of the financial aspects of your life, your goal-focused financial plan may be to maintain giving and saving at some target level and living on the rest.  If so, your long-term success could be assured by giving to the people and causes you care about most, investing in a globally diversified portfolio with a target return that flows out of your plan and engaging with some type of coach to help you adhere to your plan until your needs change.

In health, as well as finance, I have found that the differentiating keys to success over the long haul are defining reasonable goals and maintaining consistency through an appropriately balanced pace.  It’s all about average speed over a lifespan; not maximum speed at any emotionally charged point in time.

See you on the journey.

“There is no shortcut to anywhere worth going.”  Beverly Sills

“Slow and steady wins the race.”  Robert Lloyd

“The glory of God is man fully functioning.  Find your place to do that, and you will find the peace that passes all understanding.”  Irenius

Know Your Financial Math

May 2015
Please keep in mind that these are simple estimations and are not to be treated as precise technical calculations. They can be influenced by a number of factors and don’t take any personal information into account. The formulas help call attention to parts of your budget, but do not calculate exactly what you should expect.

The easiest and best place to start. Your cash flow is the total surplus or deficit you have each month after paying your expenses. If you find you are running a deficit most months, you need to cut your expenses down or find a way to boost your income.

Another easy formula, calculating how much a monthly (or weekly) expense will cost you over a whole year is an important insight for a budget. Paying $8 a month for a subscription may seem cheap, but you should realize it’s costing you $96 over the course of a year.

The EPA estimates that the average car owner uses about 500 gallons of gas a year (almost 700 if you drive a truck or SUV). While volatile gas prices make it impossible to project your exact gas expenses for a year, this formula makes it easy to understand how much a change in gas prices is worth: for every $0.01 gas drops, you could expect to save $5 annually.

Have you ever wanted a quick estimate of how long it takes for money to double? Try the “Rule of 72.” Just divide 72 by the annual growth rate of your account and you get an approximation of how many years it takes to double. (Example: 6 percent growth would be 72/6 = 12 years to double). If using this formula for investment account, remember that the market is unpredictable and average market performance does not guarantee future returns. Investments can be subject to losses, which will greatly change their nominal rate of return.

Although there are some major outliers, most new cars depreciate around 10% when driven off the lot and another 10% each year they are driven (for the first 5 years). So when looking at new cars, remember that most lose their value fast. Without a down payment, you’ll likely be underwater on the loan for the first year or two.

This equation is a bit more complex, but it’s pretty handy for people wondering how their rent cost compares to a 30‐year mortgage. Take 75 percent of the expected mortgage interest rate and add 3 percent to get the annualized rate of repayment. If you multiply this number by the initial mortgage amount, you get the annual cost. (Example: A 30‐year mortgage issued at 4 percent would have an annual repayment rate of (3+4×.75) = 6%. If the mortgage was for $200,000, you’d pay ($200,000×6%) = $12,000 a year ($1,000 a month) to stay on the 30 year schedule.) Keep in mind that this is an estimation of the mortgage costs only and does not include home insurance, mortgage insurance, property expenses or any of the other various costs of owning a home.

_________________________________________________________________
Remember that past performance may not indicate future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, strategy, or product referenced directly or indirectly in this newsletter will be profitable, equal any corresponding historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. You should not assume that any information contained in this newsletter serves as the receipt of personalized investment advice. If a reader has questions regarding the applicability of any specific issue discussed to their individual situation, they are encouraged to consult with a professional adviser. 

This article was written by Advicent Solutions, an entity unrelated to Guidestream Financial, Inc.. The information contained in this article is not intended to be tax, investment, or legal advice, and it may not be relied on for the purpose of avoiding any tax penalties. Guidestream Financial, Inc. does not provide tax or legal advice. You are encouraged to consult with your tax advisor or attorney regarding specific tax issues. © 2014 Advicent Solutions. All rights reserved.

The Dollar Vacation

May 2015
Every day, there are countless pressures on national currencies. Exchange rates are in constant flux, while supply and demand change the prices of a country’s goods and services. For those vacationing abroad, a sudden shift in the market can make big differences in how much money they can spend.

In 2014, the U.S. economy delivered a gift to its travelers: a strong dollar. Hitting its highest value in years, the dollar’s performance drove up U.S. exchange rates, decreasing international prices. While tourism costs followed the exchange rate down in most countries, some destinations stand out as especially good (or surprisingly bad) deals for Americans planning a vacation.

Better Deals Abroad:
Russia: Provided you know where to travel and how to get around safely, there is a great deal to be found in traveling Russia right now. International conflict and falling oil prices have crushed the ruble in currency markets over the past year, decreasing tourism costs by 30‐50 percent.

Romania/Bulgaria: As economic growth remains low in Eurozone countries, these countries have decreased their already low tourism costs over the past year. Many Americans do not realize that both these countries have extensive Black Sea coastlines that attract many vacationers.

Norway/Sweden: Although these Scandinavian countries are still some of the priciest destinations in Europe, both the krone and the krona have lost a considerable amount of strength over the past year. If you’ve been thinking about traveling to these countries, now might be the time.

Argentina: The disastrous bond default by the Argentine government has damaged the national economy and has upped the dollar’s exchange rate to the peso by about 50 percent. High consumer price inflation will limit how far these extra pesos go, but the overall effect is still cheaper tourism.

The Neighbors: The U.S. dollar made significant gains on both the Mexican peso and the Canadian dollar. Though neither country may feel particularly “foreign,” the money saved on short travel times can make them two of the easiest destinations for exploiting the strong U.S. dollar.

Countries Bucking the Trend:
China: Although it remains fairly cheap compared to the United States, China’s growth has outpaced the United States for decades, and its currency has grown in strength. China is no longer the bargain earlier travelers remember, and chances are good vacations there will only get more expensive.

Switzerland: Already a fixture on the list of most expensive places to visit, Switzerland threw off any dollar advantage in January when the Swiss Franc jumped in value after breaking ties with the Euro. Americans eager to see the Alps may wish to stay in the slightly more affordable Eurozone countries of France and Italy instead.

India: While the nominal exchange rate between the dollar and the Indian rupee remained relatively flat throughout the year, the country’s high inflation (over 5 percent annually) means your dollars will get you less. Much like China, India is still affordable in many areas, but its rapid growth likely means its cheapest days are behind it.

Alternative: See America First U.S. National Parks: Traveling around the United States won’t provide you with any currency advantage, but the recent drop in gas prices has
certainly made American road trips drastically cheaper than last year. The U.S. National Park Service protects 407 places of natural and historic significance and offers an annual pass for just $80.

The current strength of the dollar is a bonus for American travelers, but smart planning will always be the biggest factor to a successful vacation. Hunting for deals on airfare and choosing the best seasons to travel will have a bigger impact on the quality and price of a trip than any currency fluctuation. By taking time to detail your spending and itinerary, you can get the most out of any vacation.

_________________________________________________________________
Remember that past performance may not indicate future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, strategy, or product referenced directly or indirectly in this newsletter will be profitable, equal any corresponding historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. You should not assume that any information contained in this newsletter serves as the receipt of personalized investment advice. If a reader has questions regarding the applicability of any specific issue discussed to their individual situation, they are encouraged to consult with a professional adviser. 

This article was written by Advicent Solutions, an entity unrelated to Guidestream Financial, Inc.. The information contained in this article is not intended to be tax, investment, or legal advice, and it may not be relied on for the purpose of avoiding any tax penalties. Guidestream Financial, Inc. does not provide tax or legal advice. You are encouraged to consult with your tax advisor or attorney regarding specific tax issues. © 2014 Advicent Solutions. All rights reserved.

TEACHERS – THEIR IMPACT ON OUR COMMUNITY

March 2015
-By Kirk Hoffman-

My life experience allows me a unique perspective in regard to top teachers.  I come from a long line of educators.  My great-great grandfather helped found two universities and was the president of a third.  My great grandfather was a teacher, professor, and university president.  My grandmother was a public school teacher.  Both of my parents were public school teachers.  My wife works for Jackson Public Schools and my daughter is a public school teacher.

I also have worked in financial planning since 1986 and obtained my Certified Financial Planner™ certification in 2003.  This background has let me see the effect that top teachers have on individuals, businesses, and communities.

Over the years, I have witnessed individuals sharing the positive impact that my family of educators has had on their lives.  They’ve been thankful for the encouragement that they received as students.  They’ve appreciated having an adult in their life that cared about them.  They were happy to have someone help them identify their gifts and strengths and get them passionate about it.  They were thankful that someone was successful in inspiring them to go after their dreams.  They were grateful for the preparation that they received that made them successful in their careers.  Some of these appreciative students even became top teachers themselves.

I have also seen the impact of top teachers in working with individuals on their financial plans over the last 28 years.  I’ve had the opportunity to work with executives, business owners, and high net worth individuals.  A common theme among these accomplished individuals is how they equate their success to the educational opportunities that they had, and the teachers and professors that influenced them.  The individuals I’ve worked with who are supervisors within their companies report that the educational experience of their employees has a positive impact on the life of the entire company. The cumulative effect of top teachers positively impacts business success and entire communities.

From my perspective, we all benefit from having top teachers in our community.  Therefore, it is important to encourage those teachers and be supportive of educators in our community.  Financial and moral support is critical.  I know from my own family experience how difficult and frustrating the teaching profession can be at times.  Entering the teaching profession has been much more challenging for my daughter than it was for my parents.  My wife and I have been long time supporters of Jackson Public Schools.  Both of our daughters graduated from Jackson High.  They had a good experience, received a great education, and had some wonderful teachers.  They were well prepared to move on to university and have been successful there.  We’ve also been pleased and impressed over the years with how the Jackson community values education and supports the schools in the district. 

The Jackson business community, especially local manufacturers, have done an impressive job in collaboration with the schools.  My family of educators appreciates the community and business support, and encourages our community to continue that support.  Top teachers do make a difference.

Silicon Apps Overtake Silver Screens

February 2015
No one would debate that the mobile app market is huge. But just how big of a deal is it? Take a look at these stats:
•    The iOS apps catalog contains 1.4 million apps.
•    People spent $500 million on iOS apps in the first week of 2015 alone.
•    In 2014, Apple paid app developers a total of $10 billion.

Those numbers don’t even include Android apps. Android numbers are more difficult to compile, since multiple companies offer app stores. But, to give some perspective, Google paid out about $3 billion to its developers in 2014 for sales made through its official store. 
Compare all that with Hollywood, where U.S. movie revenue came in at about $10.35 billion, and you can see just how important app revenue has become. 

Although the numbers aren’t the complete story (iOS data doesn’t include Android apps or service businesses, and the Hollywood number doesn’t include international box office revenues), app revenues have been growing exponentially for years while Hollywood revenues have remained relatively stagnant. If the app economy hasn’t completely overtaken the U.S. movie industry yet, it soon will.
This surge in technology revenue isn’t limited to mobile apps. The tech sector is seeing sweeping growth in many areas. Everything from online software to IT services is growing at an incredible rate. Though there are exceptions, of course, the trend has significantly raised the value of many tech companies over the past several years. 

The question for many economists is whether the current trend is a normal growth spurt or whether the market is experiencing a new tech bubble. You don’t have to be ancient to remember the last tech bubble—it burst only 15 years ago. The so-called “dot-com” crash saw dozens of unbelievably fast-growing companies disappear overnight. 

So, are we in the same position? There certainly are major differences between now and then. In the late 1990s and early 2000s, tech companies were able to draw investor capital bases with little more than a hint of potential success. The running joke at the time was that all a company had to do to increase its share price was add “.com” to its name. Companies were going into debt renting office space and buying computers to rush into a very uncertain industry.  

Today, investors are more digitally savvy and know how to analyze “internet” companies more rigorously. Still, the risk of overvaluation is always possible. Some point out that several tech startups have unnaturally high stock prices and speculative sustainability. The rapid advance of technology coupled with quickly shifting cultural preferences for mobile technologies prevents investors from making anything more than educated guesses. 

If the tech market finds itself with another bursting bubble, beneficial technologies may still survive. For example, despite the dot-com crash in 2000, no one thought that online services were going to disappear or that they would never be lucrative. Individual companies were in danger, but it was obvious the tech sector as a whole would bounce back. 

What should you take away from all this as an individual investor? Even if you can’t predict the future, it is still valuable to be aware of how technology can shift the value of markets. Knowing the broad changes can keep you from acting on speculation, fear or greed. You should know what drives your investments’ success and how they fit into your personal portfolio. The best decisions are always made within the context of your personal financial plan, so speak with your financial advisor before making any changes. 
_________________________________________________________________
Remember that past performance may not indicate future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, strategy, or product referenced directly or indirectly in this newsletter will be profitable, equal any corresponding historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. You should not assume that any information contained in this newsletter serves as the receipt of personalized investment advice. If a reader has questions regarding the applicability of any specific issue discussed to their individual situation, they are encouraged to consult with a professional adviser. 

This article was written by Advicent Solutions, an entity unrelated to Guidestream Financial, Inc.. The information contained in this article is not intended to be tax, investment, or legal advice, and it may not be relied on for the purpose of avoiding any tax penalties. Guidestream Financial, Inc. does not provide tax or legal advice. You are encouraged to consult with your tax advisor or attorney regarding specific tax issues. © 2014 Advicent Solutions. All rights reserved.

1 2 3 4 5 6 7 8

Contact us

We look forward to connecting with you

Keep in touch with us

Please use the following information to contact us. For security reasons, please do NOT send sensitive information such as account numbers, social security numbers, balances etc. through the website. 

Name: GuideStream Financial, Inc.
Phone: 800-325-8975
Fax: 517-750-2752
Address: 8050 Spring Arbor Rd., PO Box 580, Spring Arbor, Michigan 49283