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5 Reasons Wealth Transfers Fail
Knowing these common legacy pitfalls can help your family avoid them.
Who Gets What, When?
It won’t always be easy, but it’s worth deciding how you want to share your legacy so the process goes smoothly.
Holding Equities for the Long Term: Time vs. Timing
Legendary investor Warren Buffett is famous for his long-term perspective. He has said that he likes to make investments he would be comfortable holding even if the market shut down for 10 years. Investing with an eye to the long term is particularly important with stocks. Historically, equities have typically outperformed bonds, cash, and inflation, though past performance is no guarantee of future results and those returns also have involved higher volatility. It can be challenging to have Buffett-like patience during periods such as 2000-2002, when the stock market fell for 3 years in a row, or 2008, which was the worst year for the Standard & Poor's 500* since the Depression era. Times like those can frazzle the nerves of any investor, even the pros. With stocks, having an investing strategy is only half the battle; the other half is being able to stick to it.
Science-Backed Ways to Reframe a Negative Mindset
Do you sometimes face a flood of anxious thoughts as soon as your head hits the pillow, or struggle to get a negative interaction out of your mind? You can thank your brain’s negativity bias, left over from prehistoric times when humans faced life-threatening scenarios daily. Neuropsychologist Rick Hanson says that this means your brain is “like Velcro for bad experiences, but Teflon for positive ones.” While this is meant to keep you safe, it can be draining to ruminate endlessly about events out of your control (COVID-19 and market volatility, we’re looking at you). That’s why many successful people talk about the steps they’ve taken to overcome negativity bias, from Oprah Winfrey to Richard Branson. The following are seven research-backed and social-distancing-safe ways to help shake off the rain clouds.
Bear Markets Come and Go
The longest bull market in history lasted almost 11 years before coronavirus fears and the realities of a seriously disrupted U.S. economy brought it to an end. If you are losing sleep over volatility driven by a cascade of disheartening news, it may help to remember that the stock market is historically cyclical. There have been 10 bear markets (prior to this one) since 1950, and the market has recovered eventually every time.
The Importance of Estate Planning
The world lost a sports legend last month when Kobe Bryant, along with 8 others, including his daughter, died in a tragic helicopter crash in southern California. When there is a universally mourned loss such as this, we are reminded that tomorrow is not a guarantee. We are also reminded of the importance of estate planning, and the certainty an estate plan can bring to those you love. If you do not already have a plan in place, we have laid out some concepts and strategies to help start the process. As always, your Loft Advisor is here to assist when you are ready to put a plan in action.