Where are the Stock and Bond Markets Headed?

Here is a webinar where I lay out an overview of the valuations and historical precedents for the stock and bond markets.

About Picket Fence Financial: Picket Fence Financial is a fee-only, NAPFA registered financial planning firm dedicated to saving folks from Wall Street. Picket Fence Financial feels people have been poorly served by the commission structure of Wall Street. Clients of the typical Wall Street firms receives sales pitches that are loaded with conflicts of interest. You can find out  more information about Picket Fence Financial at http://www.picketfencefinancial.com.

About Kirk Kinder: Kirk Kinder, CFP® (Certified Financial Planner) is the founder and President of Picket Fence Financial. Kirk worked for the Motley Fool (http://www.fool.com/) where he served as their Director of Member Services. The Fool’s approach of exposing Wall Street’s dirty secrets appealed to Kirk. They shared a common belief that financial planners entrusted with other’s money should have their client’s interests at heart. After leaving the Fool, Kirk worked at a fee-only financial planning firm in Palm Harbor, Florida. There Kirk finished his studies for the Certified Financial Planner designation. Kirk then started Picket Fence Financial with offices in the Baltimore/DC area and Tampa/Clearwater, Florida vicinity. Kirk also has a Masters degree in Personal Financial Planning from the College for Financial Planning – the organization that manages the education requirement for the CFP. Kirk has been quoted in several financial publications including the Wall Street Journal, Kiplingers, Investor’s Business Daily, Standard and Poor’s, and Bloomberg Wealth Manager to name a few. Kirk has also been featured on the local Fox, ABC and NBC affiliates in Baltimore and Tampa Bay. 

Bel Air, Maryland Financial Planner Discusses Long Term Care Insurance

Here is an interview I did with Melissa Barnickel of Baygroup Insurance where we discuss the costs of long term care, the features of LTC insurance, and the reasons to purchase the insurance.




About Picket Fence Financial: Picket Fence Financial is a fee-only, NAPFA registered financial planning firm dedicated to saving folks from Wall Street. Picket Fence Financial feels people have been poorly served by the commission structure of Wall Street. Clients of the typical Wall Street firms receives sales pitches that are loaded with conflicts of interest. You can find out  more information about Picket Fence Financial at http://www.picketfencefinancial.com.

About Kirk Kinder: Kirk Kinder, CFP® (Certified Financial Planner) is the founder and President of Picket Fence Financial. Kirk worked for the Motley Fool (http://www.fool.com/) where he served as their Director of Member Services. The Fool’s approach of exposing Wall Street’s dirty secrets appealed to Kirk. They shared a common belief that financial planners entrusted with other’s money should have their client’s interests at heart. After leaving the Fool, Kirk worked at a fee-only financial planning firm in Palm Harbor, Florida. There Kirk finished his studies for the Certified Financial Planner designation. Kirk then started Picket Fence Financial with offices in the Baltimore/DC area and Tampa/Clearwater, Florida vicinity. Kirk also has a Masters degree in Personal Financial Planning from the College for Financial Planning – the organization that manages the education requirement for the CFP. Kirk has been quoted in several financial publications including the Wall Street Journal, Kiplingers, Investor’s Business Daily, Standard and Poor’s, and Bloomberg Wealth Manager to name a few. Kirk has also been featured on the local Fox, ABC and NBC affiliates in Baltimore and Tampa Bay. 

Quoted in WSJ article regarding Jeremy Grantham’s Predictions

by Kirk Kinder on April 7, 2013

One of the smartest minds in finance, in my opinion, is Jeremy Grantham, the head of GMO LLC, which manages $106 Billion in client money. Grantham warned of the impending doom that hit in 2008 and called a bottom in 2009. I have followed his writings since 2001, and he has been extraordinarily close when predicting forward 7 and 10 year returns on various asset classes. If you look at his current predictions, it should scare investors. For instance, he is calling for large capitalization stocks (big boys and girls like Disney, GE, Coca-Cola, Walmart, etc.) to return a -0.6% over the next 7 years with small capitalization stocks (companies like Alaska Air, Aetna Health, Starwood properties, etc.) to return -1.7% over the same period. In fact, returns for all asset classes don’t look too pretty according to Grantham. Maybe he is wrong, which is always a possibility in investing, but he does have a track record that forces me to take notice. I certainly concur with this view that these assets are overvalued. My recent webinar shows you how I came to these conclusions: http://www.savingyoufromwallstreet.com/2013/03/market-overview-webinar/

Places You Should Invest
In a recent Wall Street Journal article, I talked with Murray Coleman about using Exchange Traded Funds (ETF) for asset classes the Grantham does like for the ensuing 7 years. Two of Grantham’s favorite areas to invest are timberlands, farm land, and high quality dividend stocks with solid balance sheets. Farm land ETFs don’t really exist right now. You can buy ETFs that invest in companies focused on supporting the farming industry, but Grantham likes the actual land. This isn’t available in ETF form or mutual funds right now. However, options exist for timberlands and high quality dividend stocks. From the article:

Two areas he has been more positive about–timber and high-quality dividend-paying stocks–are also asset classes favored by Picket Fence’s Mr. Kinder. In client portfolios, he is adding to positions in the iShares S&P Global Timber & Forestry ETF (WOOD) and the Guggenheim Timber ETFCUT -1.24%(CUT).

“There’s a strong diversification benefit to including timber ETFs into the mix,” Mr. Kinder says. “Although it wouldn’t be surprising to see a short-term pullback in lumber prices, the fact that Grantham sees longer-term value adds to our conviction about that asset class.”

As for higher quality stocks, he is currently investing in the SPDR S&P Dividend ETF (SDY). “It focuses on companies that have raised their dividends over the past 20 years, which highlights businesses with strong balance sheets,” Mr. Kinder says. “These are the bellwethers that Grantham seems to like.”

Other options exist, especially for the high dividend ETFs, but these are the options I like for timber and high dividend paying stocks. So as you look for ways to invest your money for the next few years, you may want to think about adding these asset classes to your portfolio. Just ensure you research the options before investing.

Kirk Kinder, CFP® is the Founder of Picket Fence Financial, a fee-only financial planning and investment management company dedicated to saving folks from Wall Street. Picket Fence Financial does  this through a few different ways. One, our fee-only approach ensures our advice is tailored to our clients needs and not driven by commissions.  Two, we minimize costs for clients by utilizing low cost Exchange Traded Funds (ETF) and aligning our internal operations to keep our company costs down (and passing this along to our clients). Third, we offer a la carte planning, which means our clients decide how they want to work with us. Rather than forcing clients into our model of planning, we offer hourly, retainer, or asset management options (or a combination thereof).

All information on this site are the opinions of Kirk Kinder, CFP® and should not be construed as investment, tax, estate or insurance advice. Please consult your own specialist for personal assistance.

Mistakes Parents Make When Paying for College

I was recently featured on WBAL Channel 11 discussing mistakes parents with college planning: Top 6 college tuition mistakes parents make | Maryland News – WBAL Home

While parents make several mistakes planning to pay for college, I featured six of the most common mistakes I see:

1. Not creating competition among colleges: If your child identifies a school, you should have your child apply to two or three similar schools. For example, if your child applies to a small, liberal arts private school, you should apply to similar schools. Often children apply based on geographic considerations, rather than similar schools, even if they aren’t close geographically. By applying to similar schools, the student has a chance to create competition. If your child’s first choice comes back with a lower amount of aid than a similar school, you can appeal the decision by your child’s first choice.

2. Assuming you can’t afford private college: It is common knowledge that private school is more expensive than state schools. So many parents completely write off private school. Often, private school may not cost more than a state university. Aid is based on the Expected Family Contribution (EFC), and a family may qualify for more aid at a private school, especially if the family has more than one child in college.

3. Ignoring community colleges: It’s natural for parents to want to provide everything for their child, but community colleges are a solid way to save money. If the child finishes at a four year school, the degree reads the name of the four year school with no reference of attending a community college. Community colleges are excellent institutions and offer students a chance to get the pre-requisites out of the way at a much lower cost.

4. Worrying too much about the FAFSA: Parents often make drastic maneuvers to qualify for more aid. The primary way of doing this is by re-positioning assets. There are lots of insurance and annuity salesmen who prey on parents promising higher college grants by selling products to improve their FAFSA outcome. While it is true life insurance and annuities are exempt from the FAFSA calculations, most people don’t end up with more aid due to these maneuvers. Once a family make more than $50,000, the grants are harder to receive. Additionally, moving assets into these vehicles has a material impact on retirement and taxes.

5. Not Thinking Strategically about the tax return: Some parents make unnecessary moves to get more aid, but the opposite is true as well. If a parent doesn’t think about the tax ramifications for each taxable event, they can jeopardize potential aid. One time events usually lead to lower aid. The Expected Family Contribution is based primarily on the tax return. Some examples of common one time events are:
- Taking capital gains in a year by selling a stock
- Getting a one time bonus
- Selling a rental property for a gain or even selling a business
- Taking an IRA distribution, especially one to pay for college.

6. Sacrificing retirement savings for college: As mentioned previously, parents want to do everything they can for their children including paying for college. However, many parents are behind on retirement savings. Your child can get loans for school. Parents can’t get loans for retirement. If the choice is saving for retirement or paying for college, then retirement rules the decision.  Even worse, some parents actually remove money from retirement vehicles to pay for college. This has big tax ramifications and can materially affect the financial aid the student is eligible to receive.

Kirk Kinder, CFP® is the Founder of Picket Fence Financial, a fee-only financial planning and investment management company dedicated to saving folks from Wall Street. Picket Fence Financial does  this through a few different ways. One, our fee-only approach ensures our advice is tailored to our clients needs and not driven by commissions.  Two, we minimize costs for clients by utilizing low cost Exchange Traded Funds (ETF) and aligning our internal operations to keep our company costs down (and passing this along to our clients). Third, we offer a la carte planning, which means our clients decide how they want to work with us. Rather than forcing clients into our model of planning, we offer hourly, retainer, or asset management options (or a combination thereof).

All information on this site are the opinions of Kirk Kinder, CFP® and should not be construed as investment, tax, estate or insurance advice. Please consult your own specialist for personal assistance.

Maryland Financial Planner Provides Market Outlook Feb 13

Here is my latest webinar discussing the outlook for the US stock market. With the market flirting with the 2007 highs and the press hyping the market, are we in for a huge bull market or should caution rule the day?
Find out my thoughts.


Kirk Kinder, CFP® is the Founder of Picket Fence Financial, a fee-only financial planning and investment management company dedicated to saving folks from Wall Street. Picket Fence Financial does  this through a few different ways. One, our fee-only approach ensures our advice is tailored to our clients needs and not driven by commissions.  Two, we minimize costs for clients by utilizing low cost Exchange Traded Funds (ETF) and aligning our internal operations to keep our company costs down (and passing this along to our clients). Third, we offer a la carte planning, which means our clients decide how they want to work with us. Rather than forcing clients into our model of planning, we offer hourly, retainer, or asset management options (or a combination thereof).

All information on this site are the opinions of Kirk Kinder, CFP® and should not be construed as investment, tax, estate or insurance advice. Please consult your own specialist for personal assistance.

Where is the Market Headed?

The markets are hitting highs. Investors are giddy. Let the good times roll...or not. In this month's webinar, we will explore the longer term valuation of the markets as well as some intermediate and shorter term trends. If you would like to attend live, you can sign up here: https://www3.gotomeeting.com/register/543679150.

I will also post a replay a couple days later on this website, but if you attend live, you can ask questions.

Kirk Kinder, CFP® is the Founder of Picket Fence Financial, a fee-only financial planning and investment management company dedicated to saving folks from Wall Street. Picket Fence Financial does  this through a few different ways. One, our fee-only approach ensures our advice is tailored to our clients needs and not driven by commissions.  Two, we minimize costs for clients by utilizing low cost Exchange Traded Funds (ETF) and aligning our internal operations to keep our company costs down (and passing this along to our clients). Third, we offer a la carte planning, which means our clients decide how they want to work with us. Rather than forcing clients into our model of planning, we offer hourly, retainer, or asset management options (or a combination thereof).

All information on this site are the opinions of Kirk Kinder, CFP® and should not be construed as investment, tax, estate or insurance advice. Please consult your own specialist for personal assistance.

Press Release on Picket Fence Financial

Kirk Kinder, CFP of Picket Fence Financial was featured in an article by ETFdb, an organization that teaches individuals and financial advisors how to use ETFs. A press release for the article can be found here.

ETFdb Features Picket Fence Financial

A recent ETF Insights by ETF Database featured a Q&A with me. I talked about my experiences with Exchange Traded Funds (ETF) as well as where I think the industry is heading. You can view the article here.

ETFs have found their way into countless portfolios as investors of all walks have embraced these vehicles as the preferred means for achieving low-cost, diversified exposure to virtually any asset class. While the product lineup continues to grow every week, with the total number of ETPs now approaching the 1,500 mark, many still feel hesitant to jump aboard or are perhaps intimidated by the sheer variety of offerings available at their fingertips. Kirk Kinder, founder and President of Picket Fence Financial, recently took time out of his schedule to discuss what he feels remains a roadblock to ETF adoption rates as well as his personal experiences and observations regarding the development of the industry as a whole.

ETF Database (ETFdb): Why do you think many financial advisors have generally been slow to embrace ETFs in their practice?
Kirk Kinder (KK): I think a couple reasons exist as to why advisors haven’t embraced ETFs in their practice. The first is education. It requires the advisor to become educated on how ETFs function, the landscape of the industry, and how the underlying benchmarks are created. It also requires educating clients, which is quite a task. Clients know mutual funds. Making the move to ETFs can raise the concern flag with clients. I made the move to ETFs in 2003 and 2004. The ETF universe was really getting started then so it was an undertaking teaching clients about ETFs. In fact, a client with about $2 million with our firm scheduled a meeting to essentially fire us due to our move to ETFs. He didn’t feel comfortable with them compared to mutual funds. He had other advisors who weren’t using ETFs and apparently frowned upon them. The day before the meeting, he read an article in an AARP publication about how ETFs were an institutional tool and the future of investing. We went from the firing line to being seen as cutting edge and sophisticated.
 The second reason the move is slow is commissions. A large percentage of advisors are still paid with commissions, and ETFs don’t offer that 5% upfront payday for advisors. Hopefully, these advisors will become fewer and fewer over the years. Let’s also not forget that the mutual fund industry is going to put up a fight to keep their gravy train running. Not many ETFs would survive with the expense ratios of mutual funds. So I expect the fund universe to keep bad mouthing ETFs.
ETFdb: ETFs have received some bad press over the past few years. Have you had any bad experiences with ETFs that turned you off?
KK: I haven’t had a bad experience. Even the flash crash of May 2010 had no effect since it corrected itself. I don’t use limit orders so that kind of event shouldn’t affect my clients. One big complaint I hear from advisors is low volume in certain ETFs. Even in this situation, advisors can work with specialists that help market makers create or redeem the shares. It is the liquidity of the underlying holdings that is important, not the ETFs. This is one area of ETFs advisors are still ignorant.
ETFdb: Are there additional ETFs that you’d like to see launched? Or is the current lineup sufficient for your clients’ needs?
KK: I would like to see more precise bond ETFs. We are starting to see it already as iShares launched bond funds focusing on industrials, utilities, and other sectors. I would like to see the ability to buy a segment of the bond market such as short term utility company bonds or Australian long dated government bonds. I know this is difficult with liquidity of the bonds, but I am hoping that we continue to see the bond market(s) parsed in ETFs. On the equity side, I have enough ETFs on the market to satisfy the needs of my firm.
ETFdb: How long have you been using ETFs for? Do you see this product structure as the preferred means for building diversified, low-cost, long-term portfolios?
KK: Absolutely! I have been using ETFs almost exclusively since 2003. These vehicles are the best option for diversification, low-costs and tax efficiency. After 2008, I showed several prospects who were in mutual funds how they coughed up hundreds or thousands of dollars in capital gains even though their mutual funds were down 30% or more. It is eye opening for clients and prospects when they see this happen.
ETFdb: Aside from the well-known benefits offered through the ETF wrapper, what do you personally embrace about this product structure?
KK: I think transparency is the best trait of ETFs beyond the known low cost, diversification, and tax-efficient characteristics. People don’t trust Wall Street today. Having a product that is completely transparent as to how it operates, is valued, and its holdings is critical. People want to know a defined system exists for its operation, not activity behind a curtain.
ETFdb: What do you expect in terms of ETF adoption going forward? What types of investors have been slow to adopt or are potentially major beneficiaries of embracing ETFs?
KK: I expect ETF adoption to continue to explode. As the RIA community continues to take assets from the traditional brokerage world, ETFs will see an increase in assets under management. I also expect advisors to continue adopting ETFs. Numerous avenues exist to learn about ETFs that an advisor almost has to have his or her head in the sand not to pick up information on ETFs. One area that has been slow to adopt ETFs, in my opinion, is retirement plans. While tax efficiency wouldn’t apply in a 401(k) or 403(b) plan, the low cost and diversification benefits will appeal to these plans.  With the new Department of Labor rulings requiring disclosure of fees starting this fall, I expect fees to take center stage in the retirement plan world, and companies offering ETFs will see a considerable uptick in business.
ETFdb: What are your thoughts on how the industry has evolved in the last few years? Going forward, what do you see as the potential growth areas for ETFs?
KK: The industry seemed to start as a boutique then grew into an experimental phase. By that, I mean ETFs started out with very broad based index products with only a few providers. Once assets accumulated, the experimental phase began with several ETF providers coming on scene with a multitude of ETFs. It felt like providers were throwing ETFs into the marketplace just to see which ones stick. While I think ETFs will still have some growing pains as each provider creates an identity, it seems like niches have been identified for providers. Product launches are also better thought out. I have had a few ETF providers talk to me about what I am looking for in ETFs and bouncing product ideas off of me.
We could still see another explosive experimental period if actively managed ETFs start to garner assets. That is an area for potential growth. From the consumer perspective, I think we will see more ready-made portfolio companies like Betterment that attract assets to ETFs. Also, the retirement plan arena will be another growth area for ETFs.
Bottom Line: The exchange-traded product structure will continue to attract self-directed investors and professional money managers who have been hesitant to change their ways as the ongoing education effort picks up steam and makes the cost, diversification, transparency, and tax efficiency benefits more well-known and better understood.

 Kirk Kinder, CFP® is the Founder of Picket Fence Financial, a fee-only financial planning and investment management company dedicated to saving folks from Wall Street. Picket Fence Financial does  this through a few different ways. One, our fee-only approach ensures our advice is tailored to our clients needs and not driven by commissions.  Two, we minimize costs for clients by utilizing low cost Exchange Traded Funds (ETF) and aligning our internal operations to keep our company costs down (and passing this along to our clients). Third, we offer a la carte planning, which means our clients decide how they want to work with us. Rather than forcing clients into our model of planning, we offer hourly, retainer, or asset management options (or a combination thereof).
 
All information on this site are the opinions of Kirk Kinder, CFP® and should not be construed as investment, tax, estate or insurance advice. Please consult your own specialist for personal assistance.

Bernanke Two Step Webinar Reminder

Just a reminder that my webinar, the "Bernanke Two-Step" will be tomorrow at 1pm EDT. This will be particularly timely as the Fed will be announcing its meeting notes about the same time as the webinar so you can find out how this will affect your portfolio. Also, I will review the first idea of how to make a higher yield on your cash without taking a great deal more risk. For the next three months, I will focus on a new way to get you more than the sub 1% yield from the banks.

Space is limited to 100 participants.
Reserve your Webinar seat now at:
https://www3.gotomeeting.com/register/875462382

Kirk Kinder, CFP® is the Founder of Picket Fence Financial, a fee-only financial planning and investment management company dedicated to saving folks from Wall Street. Picket Fence Financial does this through a few different ways. One, our fee-only approach ensures our advice is tailored to our clients needs and not driven by commissions.  Two, we minimize costs for clients by utilizing low cost Exchange Traded Funds (ETF) and aligning our internal operations to keep our company costs down (and passing this along to our clients). Third, we offer a la carte planning, which means our clients decide how they want to work with us. Rather than forcing clients into our model of planning, we offer hourly, retainer, or asset management options (or a combination thereof).

All information on this site are the opinions of Kirk Kinder, CFP® and should not be construed as investment, tax, estate or insurance advice. Please consult your own specialist for personal assistance.