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What is a Bear Market?

 

Bear Market

One little known fact is how a bear market received its name. A bear, when attacked or going after its prey, will use its paw and motion downward to defend itself or get its prey.

Bear markets are a fact of life and one part of an overall market cycle. It has been over ten years since we have seen a bear market and due to recent volatility, it has come into the conversation. I am sure you have heard this term as well, but do you know what it means?

The technical definition of a bear market is where the markets have declined 20% or more from their recent highs. Should markets fall 20% or more in a few days it may not indicate a bear market. Certainly, if the markets decline, in total, 20 % or more over time and it is believed it will continue and not rebound it would be considered a bear market.

Bear markets are usually accompanied by an economic slowdown and rising unemployment. A bear market is usually indicative of an economy that is experiencing a lull which means corporate profits will experience a decline, spending will as well and layoffs will occur too. This is a natural part of the economic cycle and one you need to prepare for as part of your overall financial plan.

This part of the economic cycle is not one to be afraid and should be embraced. Bear markets do not mean all companies and all industries are being impacted negatively. There will be companies that will be well prepared to sustain themselves during an economic slowdown or bear market. It may mean a slight shift in your investment philosophy during these times. Also, for those with a long-term time horizon, the decline experienced during a bear market could present a tremendous opportunity to buy great companies at a significant discount.

Your financial plan must incorporate strategies on building portfolios that will endure in both bull and bear markets. I would also suggest stress testing your retirement plan against a bear market. Retiring during or shortly before a bear market can have an overall impact on your retirement plan. Testing this in advance of your retirement will help prepare you for retiring in this type of environment. This was most recently experienced by those who were retiring during the 2007-2009 bear markets.

We would be happy to discuss a bear market and how the Mitlin process helps you prepare for one. Bear markets are a natural part of an overall economic cycle and should not be ignored. It also does not necessarily mean all companies are set for a decline; it also presents opportunities. Just contact us, Mitlin Financial, at (844) 4-MITLIN x12 to schedule a time to discuss bear markets and your portfolio. Be sure to share this article with friends, family, and business acquaintances who might be interested too. We look forward to helping you, and them, get on the right path and stay there.

This article represents the opinion of Mitlin Financial Inc. It should not be construed as providing investment, legal and/or tax advice.

529 Plan, What is that?

 

College Savings

 

In 1996 the Small Business Job Protection Act created 529 Plans, also known as “qualified tuition plans”. This account which allows taxpayers a tax-advantaged way to save for education expenses for a designated beneficiary, after 24 years, might be the account that most know nothing about.

According to a recent survey by Edward Jones, 67% (a 5% increase since 2012) of Americans do not recognize a 529 plan as an educational savings tool. Almost half, 48% of those who did recognize the 529 plan as an education savings vehicle were unaware that it could be used to pay for K-12 tuition expenses. College savings is an area that needs more investor education. This could certainly help alleviate the debt obligations of our students going forward and it is clear that current student debt is a burgeoning problem.

When you think about the enormous costs of sending your children to school, which according to the College Board is $49870 for the average private four-year school, you would think that more people would be using all tools available to them to save for college. The 529 savings account can be an excellent tool to begin to save for this lofty expense. The monies saved for your respective beneficiary grows tax-free as long as you use it for higher education.

The Tax Cuts & Jobs Act of 2017 added provisions that may allow you to also use these funds for K-12 expenses. The additional benefit of using these funds for K-12 could be another benefit if you have plans to send your children to a private school in the future. Keep in mind, some of the 529 plan benefits may be lost in certain states. In New York, for example, the state benefits received will be recaptured if the proceeds are used for K-12 and it will be considered a nonqualified withdrawal. You will want to check with your state, as your 529 plan may not follow the new tax law.

There is a struggle for most people to balance saving for college and for retirement at the same time. This is a fine balance that needs the attention of proper planning. Although you will not be able to borrow money for retirement, you will be able to do so for college, and you will want to have a plan in place to address both. Not having money in place for your children’s education may have an impact on your retirement down the road, but at the same time, overfunding your college savings at the expense of your retirement accounts will do the same.

The key here is to have a strategy in place that will allow you to save for both. Just like we advise clients to start saving for retirement early, it works the same way for education too. The more money you save for college early on, the less money you will have to add later on because you will benefit from the concept of compounding.

Think about it; if you start working after leaving school and start funding your retirement right away, you will be in a position to lower your retirement contributions when you have children and be able to start allocating the difference to their college funds. Depending on how many children you have and what your goals are for supporting their education, you may be able to shift this strategy back by the time your child is ten years old. Getting caught with a child at the age of eighteen and having nothing allocated for college education will, in most cases, place a strain on your financial situation.

529 plans can be a vital tool in your education funding savings strategy. I think it is disheartening that this tool is not well known and very much underused. It is vital to engage a fiduciary advisor as early on in your life as you can. This relationship will provide you with an advisor that can be in a position to guide you, advise you, and see you through the planning of your life to make sure you are financially prepared for all of the events ahead of you. This will be a relationship that will guide you through the financial ups and downs of the lives of you and your family. The goal is to make sure you are aware of the options that exist and the best ways available for you and your family to save for your financial futures.

Mitlin Financial assists our clients in addressing their college funding needs. We are here to help you instill these concepts within your own family. Feel free to contact us, Mitlin Financial, at (844) 4-MITLIN x12 if you or someone in your family needs assistance in getting started on their plan today.

This article represents the opinion of Mitlin Financial Inc. It should not be construed as providing investment, legal and/or tax advice.

Mitlin Financial Welcomes Rosealba "Rose" Hosten to the Team

 Rosealba Hosten Mitlin Team Photo

Mitlin Financial, Inc. is pleased to announce that Rosealba "Rose" Hosten has joined us as the newest member of our team.
 
Rosealba comes to us with over fourteen years of experience as an Executive Assistant in the financial industry.  She will be overseeing many of the day to day operations of the office and will be available to answer your questions and assist you going forward.  We are committed to providing our clients with a high level of service and Rose is looking forward to continuing the experience.
 

Please join me in welcoming Rose to Mitlin Financial and feel free to contact her at (631) 952-4466 x12 or via email at This email address is being protected from spambots. You need JavaScript enabled to view it..  Rose looks forward to speaking with you and meeting you in the near future.

 

This article represents the opinion of Mitlin Financial Inc. It should not be construed as providing investment, legal and/or tax advice.

When Volatility Strikes, Whats Your Plan?

Planning Photo

Investing is not something you can simply do in a vacuum and the goals of your portfolio should be tied to an overall financial plan. Overall, markets have been on the rise for the last ten years plus, but there certainly have been some hiccups along the way including the most recent effects of the pandemic.

Looking back in history, there are always events, incidents, political unrest, and other things that would make a good case for not investing. In many cases, these events tend to cause short term fluctuations and do not last forever. Depending on where you stand in terms of time horizon, these fluctuations could present an opportunity that may not be seen again or could be a tremendous stress.

Ideally you want to begin your investment process with an overall financial plan. This will provide you with the guidance needed to see if you are on or off track when markets take a change for the worse. Realistically we do not believe our investments will always go up, but at the same time there is a level of concern when they do not. Much of the anxiety we feel when our investments decline is not the loss of the money itself, but the fact of what those funds will buy us. Meaning, will our future goals be impacted by this decline in assets? Will we need to delay or adjust our retirement? This is where the plan comes in handy to provide you with a gauge to see if the market fluctuations could impede our goals.

Making adjustments is something that needs to be addressed with your portfolio on an ongoing basis, as we are all in a constant state of change. Events that take place may require you to make a change to your investments and others may allow you to keep things the same. Evaluating the changes to the markets and their impact on your overall plan is paramount and may be the driver to making adjustments that could lead to your success or failure in reaching your goals.

You must have an open line of communication with your wealth advisor as these events take place. As we have seen over the past ten plus years, many events that have taken place have not had a major impact on the overall success of the market. There have been significant short-term fluctuations at times, for example, the last quarter of 2018, but nothing that has lasted all that long or caused too much concern until the recent pandemic. The economic event we have been currently living through is unique in the fact that it is a health event causing an economic one. Anxiety is at an unusually high level because people are not only concerned about reaching their financial goals, but maintaining their health too.

Hindsight is always 2020, no pun intended. I look back over the years that I have been an advisor and recall several instances where clients were so concerned with short term events that they made rash and costly decisions. It is always wise to heed caution during a volatile incident, but you also want to make sure that it does not force you to do something that will sacrifice your long-term performance.

Flexibility and making adjustments over time are extremely important. You should make sure that your portfolio is an accurate representation of your time horizon, risk tolerance, and financial plan. When you know that this is true, this should help you feel more comfortable when markets adjust. It is those people that have not aligned their portfolio with these factors that may be in for a surprise. In cases like this, it may make sense to make some adjustments more quickly if your comfort level has gone out of range.

Many investors in recent years have made adjustments to the amount of equities they have versus bonds, simply because they have not been able to get the yield they need or expect from the bond market. This is a prime example of making an adjustment based upon market conditions and/or events. Many of these same people will most likely return a greater percentage of their investment assets to bonds when we see interest rates on bonds return to levels we saw in years past.

Developing and maintaining a financial plan and having your investments represent these goals will dictate if and when adjustments should be made to your portfolio. It all starts with having the proper risk, asset allocation in your portfolio, and plan for your future. I would be happy to discuss your situation regarding the asset allocation, risk profile of your portfolio, and overall plan.

Just contact us, Mitlin Financial, at (844) 4-MITLIN x12 to schedule a time for this review. Be sure to share this article with friends, family, and business acquaintances who might be interested too. We look forward to helping you, and them, get on the right path and stay there.

This article represents the opinion of Mitlin Financial Inc. It should not be construed as providing investment, legal and/or tax advice.

Changing the Face of Financial Planning

 Black Financial Advisor

Over the last few weeks, the world has come to see how broken our system truly is. People of all colors have flocked to the streets to let their voices be heard, and to demand that the change starts now. This fundamental change has to come at all levels, and across all industries.

As a young black financial planner, I’ve come to realize that my industry needs a major shift of tides. Black people as a whole, make up 1.2 trillion of purchasing power yet are so underrepresented in financial services. In 2018, the CFP Board released a study that showed, out of the then, 80,000 CFPs only 1,200 of them were black. Now, why is this racial disparity here you ask? It stems from systematic issues that are so deeply ingrained in American culture. Issues such as redlining, which led to less economic activity, as well as poor funding of school systems in predominantly black neighborhoods. Historically, black people have had less opportunity, compared to their white counterparts. Which has changed the way we view money, family structure, as well as ourselves.

I believe that it’s time we change the face of the profession. America is a mosaic filled with people from all different races, and color and the financial planning industry should resemble it. Black financial planners, even though few, are a beacon of hope. We bring with us empathy for the trials and tribulations that our people face. We come with new and creative ideas that will help thrust the financial planning industry to the forefront. Then, most of all we uplift our communities. We inspire little black girls and boys to dream. To dare to be different, as well as do things they never thought they could, because they never saw someone who looks like them do it.

Where do we go from here?

To see the changes that we want in the profession I believe that we need to focus on the next generation of black planners. We must mentor the ones who are developing in the industry now so that they can survive the ups and downs of the business. Next, we must also be there and present in our communities as advocates for financial literacy. This is important because not only will it help to bridge the wealth gap in America, it will allow us to be visible and shed light on a profession that may not be known in the community. Then, we must eliminate barriers to entry, by donating to organizations such as the Association of African American Financial Advisors and the African American Diversity Scholarship through the American College, whose mission is to develop the next generation of advisors and provide them with a community to help them advance themselves and the profession.

I believe that we are at a turning point not only in our industry but, in America as a whole. It is up to every one of us, to put our best foot forward and be the change that we want to see.                                                                                               

 

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This article represents the opinion of Mitlin Financial Inc. It should not be construed as providing investment, legal and/or tax advice.

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