Nature as a model

Nate Crosby |

Happy May 23rd and good morning to you! I picked up this gem of a statistic from a Yahoo Finance article that was released this morning. You can read it here but this, in my opinion, is the meat of the article and is why we maintain stock exposure in a bear market. 

“Over the last 80 plus years, if you were just out of the equity market the 10 best days of any decade, your return over the last 80 years would be something like a cumulative 50%. If you were in the market the entire period, exposed to equities all along the way, your cumulative return would be 21,000%.” Patience and inner calm are rewarding attributes. 

Businessowners, Salespeople and Entrepreneurs, this is for you!

This week Carly Snyder of CAG Marketing will begin a series with guest Malery Sloan on the Dynamic Growth Podcast. In the series they will discuss tips on choosing 3rd party consultants, how to get started with social media and how to create an overall marketing strategy that includes social media. There are some who have social media pages and then there are people like Malery who have a devout following. I’m going to go out on a massively sturdy limb and say this series will be our most downloaded episodes within a few days of each release.

Wealth & Earning Power - A Holistic Approach

In 2011, we had a vision of creating a holistic and integrated solution to growth. I remember meeting with a client who owned 5 restaurants, and during a review meeting I was asking standard checklist questions: Do you have an updated Will or Trust? “Yes.” How much life insurance coverage do you have? “15 times annual income.” What are the liability limits on your auto insurance? “$12,500.”  I choked on my coffee.

The man rattled off $12,500, which at the time was state minimum coverage, without giving that answer any thought. Why would he? That was the insurance policy an agent had helped him purchase back when he was 19 and he had renewed it every year without being prodded to ask the question, “What would happen if I caused an accident that resulted in damage that exceeded $12,500?” 

I can tell you what my thought was. I wanted to shout, “tell everyone in your family to stop driving right now!” He owned real estate and investment accounts and he had spent a lifetime building up his wealth with the only thing protecting it from a patch of ice on a highway was $12,500. He was a brilliant businessowner, but no one had ever asked him that question. It was at that moment that I realized risk mitigation needed to be inhouse. We hired insurance professionals to assist in the planning process (Shout out Julie Maglott and the team) to better assist and protect client’s wealth and earning power.

Growth comes in many forms. On the investment side we can grow long-term through appreciation and passive income creation, but that process can be accelerated if we can also help our people in the business space grow faster organically. With a multiplier effect, increased sales leads to higher revenue which leads to better funding of investment accounts which leads to higher probability of retirement on the client’s terms. That’s were Carly comes in. So, pick her brain, you’ll likely come away with more ideas than you can implement.

Thinking of your Investment Plan like a Tree

Nobody is looking forward to talking about the next bull market (up market) than I am. However, the current cycle must run its course and we are not there yet. In my opinion, the most probable (not to be confused with possible) outcome is the Federal Reserve must create an environment for sustained growth either by pausing interest rate increases sooner than expected or by reversing course. Perhaps we could get some help if the supply chains open up more, but with China just now opening back up from their zero-tolerance COVID shutdown, that seems less probable to me. We do have our eyes on China for investment opportunities. The Chinese government has talked about stimulus to jumpstart their economy back into gear, but I digress. I have spent the past several newsletters letting investors know our bear market strategy and how we are positioning our risk-based portfolios to capitalize. If you have specific questions about your portfolio, please contact me.

Today I wanted to introduce a concept which I have used in the past that I think helps investors view their plan. I think it is helpful to think of your investment plan like a mature tree. When storms bring turbulent winds that healthy tree will sway back and forth, but the base of the tree will remain solidly rooted in the ground. In our plans we are acquiring assets that represent different parts of that tree. At the top we may have our growth stocks which long-term are appreciating, but those will be the investments that are affected most by turbulence. In the middle of the trunk, we see things like blue chip dividend paying stocks and real estate. At the base of the tree, you have the sturdy roots of your plan which would include things like cash equivalents, life insurance, annuities, CDs, and possibly gold. 

In my opinion, the life insurance portion might be the most underutilized of all assets. Especially in a time when our tax code doesn’t allow Roth IRA contributions to keep up with practical funding limits and there are limitations for many people whose income prohibits them from investing in a Roth IRA which provide investors in retirement with tax-free withdrawals. For those who qualify medically, I encourage you to examine the tax-free income power of an indexed universal life policy. Many of the most reputable companies are offering interest crediting over 8% in positive market years with no negative market exposure*. These policies give policy holders opportunity to make tax-free withdrawals and leave a tax-free benefit to their family. The life insurance policy also helps self-complete the accumulation plan for a family in the event the policyholder does not live a long-full life. The roots to our plans are important and just as beautiful.

*Guarantees in a life insurance contract are made by the life insurance company. It is very important to choose a life insurance company with a strong financial balance sheet. Ask for their AM Best Score or Rating. 

This newsletter represents the opinions of Crosby Advisory Group. Investing involves risk including the potential loss of principal. Carefully consider all risks and fees before investing. Not all investments are suitable for all investors. This newsletter is not designed to replace individual consultation. 

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