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Planning for Your Priorities

From Advisor Evan Hewitt

Work in financial planning long enough, and you find that all financial plans are rooted in non-financial questions.

 

We don’t start with, “How much do you want to have when you retire?”

We ask, “What do you want to do when you retire?”

 

We don’t start with, “How much do you want your children to inherit?”

We ask, “What kind of impact and legacy do you want to enable with your wealth?”

 

In this week’s reflection, advisor Evan Hewitt shares a timely reminder that all financial planning starts with your vision, priorities, and core values. Your plan is, at best, a vehicle for you to fund a life of true contentment and purpose.

Election Year Returns: If you’re worried about what the stock market will do this year, a look at history is always a good place to start when considering the upcoming election year. One notable takeaway from data dating back to 1928 is that average full-price returns in election vs. nonelection years are basically the same-at 7.3% and 7.5% respectively—but the path to getting there is very different.

Chasing the Biggest Stocks: The stock market looks a lot like the wealth profile in this country—the rich keep getting richer. The biggest stocks are a lot bigger than the others:

Corporations in the S&P 500 aren’t evenly distributed. In fact, the top 25 companies in the S&P 500 are as big as the rest of the index combined.

The biggest stocks also have the highest valuations:

Of course, this makes sense because the biggest stocks have earned their valuation. These companies have continued to innovate and grow at levels we’ve never seen at this scale, and that’s reflected in their returns.

It’s no secret that the best time to invest in these companies is before they reach the top 10. However, once they reach the top, it’s also much harder to maintain the same levels of growth. As Warren Buffet said, “Size is the enemy of outperformance.”

The Effect of Giving: This is a little long but it’s worth the read and consideration—

Giving is a significant part of our mission at Compass Ion. You can learn more about our current Guide for Good here.