Roche Financial Partners

There is a common misperception, illustrated by the images on the left, that the size of the population at or near retirement age (59 and over) dwarf their younger brethren and when they all hit retirement, could wreak financial havoc on the economy.

The reality is far encouraging. The two younger generations are larger individually and significantly larger collectively than the vaunted Baby Boomers.

In fact, 42.9 million* of the 73 million Baby Boomers are actually between the ages of 52 (people like Michelle Obama and Michael Jordan) and 61 (people like Bill Gates and Eddie Van Halen). These are hardly the faces of a graying population.

Oh and by the way, a June 2014 study from Merrill Lynch finds that 72% of pre-retirees over the age of 50 say their ideal retirement will include working - often in new, more flexible and fulfilling ways.

You could place the entire population of the globe, all 7.2 billion people, in the state of Texas and it would have the population density of New York City! Maybe a little cramped, but not exactly uninhabitable!

As a result of innovation, world grain production since 1950 has outpaced world population growth by over 24%.

The Technology we take for granted today would've been unimaginable 20 years ago and been considered some form of magic at the turn-of-the-century. Consider that your smartphone today has more computational power than all of NASA did back in 1969 and that a $300 Play Station video game console has the power of military supercomputer in 1997 (which by the way had a little higher price tag than the PlayStation). We are rapidly approaching what Ray Kurzweil's coined "the singularity," where computers' computational power begins to approach that of the human brain.

The impact this will have on our ability to fight disease, expand agricultural output, solve the world's freshwater crisis, address the world's energy needs, to name but a very few, borders on the world of science fiction.

The speed with which these new technologies are becoming available to the average citizen is truly breathtaking.

It took over 90 years before 80% of U.S. households had a telephone.
It took nearly 66 years before 80% of U.S. households had an automobile.
It took nearly 45 years for 80% of us to get a television (I used to joke with my father that when he finally got around to getting one we would put the country over the top).
However, it only took 20 years for 80% of us to get the internet.
And amazingly, we are at 68% pe*******on of smartphones after only nine years!

The impact that democratization of ideas, knowledge, products and services will have on our society will be truly profound.

Many of us can remember when gasoline was $0.50 a gallon and going to see a movie was a buck; however, we tend to look at these prices relative to our incomes today. When you look at overall expenses relative to income between 1900 and today, you will see something remarkable.

1. In 1900, living expenses actually exceeded income. By 1950, expenses were only 90% of income, and today those expenses are only 80% of income.

2. An even more remarkable change has been the dramatic increase in discretionary income. In 1900, 80% of the average budget went to the basic necessities (food, shelter and clothing). Today, over 50% of our income is discretionary and thus available for things of much higher purpose, comfort and/or fun.

The world has never been a better place to live in than it is today, and if history is any guide, it will keep getting better.

Compared with the "golden" days of the 1950s, the average American not only lives long, but better! People are more highly educated, earn more money and work less for it, operate in safer conditions, are for healthier and enjoy a much more luxurious lifestyle than their brethren in the 1950s could possibly have imagined.

Here are 30 reasons why you may have thought "it's not the right time to invest" or worse taken your money out of the markets over the last thirty years - a reminder that staying the course with a diversified portfolio is usually the right choice

Take Control of Your Financial World

Your Personal Financial Home Page is where you can find updated information on your financial plan and investment accounts. Your accounts are in one place - secure, but available to you at any time and from any place with an internet connection.

At Roche, we strive to make your life a little bit easier and your Personal Financial Home Page will help. Please contact your wealth advisor with any questions.

As you may have heard, following a historic referendum, British voters have elected to leave the European Union.

This momentous decision has prompted significant declines across global markets. Roche Financial Partners sees the UK vote to leave as a reminder that markets are unpredictable in the short term. In addition, we expect to see more instability and uncertainty over the next few months.

However, as always and particularly during these uncertain times, we are confident that we have positioned your investment portfolio to endure all market environments. Regardless of changes in economic, political, or geographical climates, we are confident that our investment tenets of restricting losses through effective diversification, minimizing investment costs, and staying focused on your plan are the right approach to achieve your goals.

As always, please feel free to reach out to us if you have any questions or concerns.

Best regards,

Robert Gregov, CFA, CFP®
Private Wealth Advisor

Well-constructed portfolios can help investors stick to the plan

In our view, careful portfolio construction matters in all market environments. Well-built investment portfolios require long-term allocation choices, and the rationale for these choices should be based on more than the recent past.

Per the chart, investors today face a diversity of asset classes when it comes to selecting appropriate allocations – and what is familiar may not always be best. US equities, for example, have outperformed most other asset classes in recent years. But historically, this outperformance has been unusual.

We think an overreliance on any single asset class introduces the risk that investors experience unnecessary volatility and miss out on potentially attractive returns. Taking a diversified approach potentially can help smooth the ups and downs of any particular investment.

What Has the Greatest Impact on Investment Results? 1985-2014

The #1 threat to your investment portfolio is unbridled emotion. More money is lost due to fear and greed (how we respond) than all of the financial, economic and geopolitical events combined. It’s not the events themselves but our response to the events that can cause the greatest harm.

How harmful? The average investor doesn’t come close to beating the S&P 500 Index and barely outpaces the rate of inflation.

The Value of Avoiding Large Losses

Avoiding a loss is the equivalent of capturing a gain of greater magnitude. In many cases, too much focus is mistakenly put on capturing the upside of the market. Although upside capture is necessary, it is not nearly as important as avoiding the downside of the market.

What this graph shows is that if you were somehow able to miraculously avoid participation in any down months in the stock market, you would only have needed to get 26% of the gains during the up months in order to match the market over that time. If participation in the down months was 40%, then only capturing 55% in the up months would have been needed to match the market.

Staying the Course

Volatility is not a recent phenomenon. Each year, one can expect the market to experience a significant correction, which over the last three decades has averaged approximately 14%. Although past performance is no guarantee of future results, history has shown that those who chose to stay the course were rewarded for their patience more often than not.

Investors tend to see short-term volatility as the enemy. Volatility may lead many investors to move money out of the market and “sit on the sidelines” until things “calm down.” Although this approach may appear to solve one problem, it creates several others:

1. When do you get back in? You must make two correct decisions back-to-back; when to get out and when to get back in.
2. By going to the sidelines you may be missing a potential rebound. This is not historically unprecedented; see chart below.
3. By going to the sidelines you could be not only missing a potential rebound, but all the potential growth on that money going forward.

We believe the wiser course of action is to review your plan with your advisor and from there, decide if any action is indeed necessary. This placates the natural desire to “do something”, but helps keep emotions in check.

Resolve in the New Year

In 2016 we wish prosperity for each and every one of you. The fact of the matter is that it will take resolve, preparation, and commitment to make it a reality.

A few weeks into the new year you might be testing the waters with any resolutions you made. Perhaps you have finally committed to that exercise regimen, diet, spending more quality time with loved ones. While you consider all these aspects of your well being, don't forget your financial health.

Resolving to spend more time and effort strengthening your financial situation is always prudent. Just like your physical and emotional health, it can be a limiting factor to achieving your life goals if neglected. It is not greedy or materialistic to apply the same clarity and focus you feel in reflecting on the last year to recalibrate your precious energy with your priorities.

How well did you fare with your finances in 2015? For a quick temperature check, ask yourself these questions. If you don't feel positive and confident on each one - well, then you may have found candidates to round out your new years resolutions.

Do I have a solid plan to pay for retirement?
Am I saving the right amount?
Do I have the appropriate insurance?
Am I living beyond my means?
Am I on track to funding my goals (vacation, new house, job leave, higher education, children's education, etc.)?
Is my estate in order should the unexpected happen?
Are my personal documents archived and protected?
Am I ready for tax season?
Do I trust who is managing my assets?
Is my advisor working in my best interest?

Akin to your fitness goals, these are targets to work towards in your financial fitness. In this moment of clarity at the start of another year, pause and resolve to improve your financial habits. Not sure where to start? We can help. You will thank us for it at the end of the year.

Be Prepared For Every Season Of Health

We talk a lot here at Roche about our passion in helping you along the path to financial peace of mind. A large part of that peace of mind is being prepared, for planned positive milestones such as education and retirement but also for the unexpected. This includes preparing for the different health that you and your family will have over the years. This issue can be difficult to face. The fact is that we are living longer than ever, extending our financial needs in retirement and often our medical needs in old age. This applies not only to ourselves but our loved ones. Planning ahead, preparing for all scenarios, and being realistic about the probability of some costly needs in the future are all part of successful life planning.

If you have ever personally experienced or assisted a family member or friend through a difficult passing of a loved one, then you know intimately how challenging the finer details and logistics can be to manage at a time when your heart is heavy.

Planning ahead will allow you to...

- Enjoy the sunset period of a loved one's life knowing they are in good care, arrangements made for the steep medical costs that can accumulate

- Spend time surrounded by loved ones celebrating the memory of the one who passed on, rather than lamenting in red tape and financial challenges

- Take comfort in knowing you have saved for and made appropriate legal arrangements for your own aging to ease the burden on your descendants

There are different areas to consider and manage carefully including insurance (medical, life, disability), estate planning (trusts, wills), funeral arrangements (burial plots, services, notices, account transfers on death, beneficiaries) to name a few.

Your wealth planner is your financial advocate in good times and bad. We will help you design the path for your successes and accomplishments while protecting and guiding you through the less fortunate life events that we all experience. At that time, perhaps more than any other, you will be relieved to know that you can depend on someone you trust who will have prepared you as best as possible for the unexpected and will guide you every step of the way.

Life, Liberty, and the Pursuit of Happiness

It is that time of year where we reflect on our freedom and our ability to live the American dream. We feel grateful for our right to life, liberty, and the pursuit of happiness. It sounds simple but we know that it isn't always.

Even with this right, our finances have been known to get in the way. Whether it is macroeconomic issues changing our living conditions like the Great Depression or our individual decisions that can handcuff us to spiraling debt. Each generation has had different spending habits, often shaped by a changing infrastructure like the reliability of Social Security or the availability of personal credit. Others shaped by the mortgage industry lending standards or misunderstanding the risk of their investments. There are a myriad of pitfalls to look out for, that are changing all the time as our country and economy evolves.

The constant is the power of a comprehensive wealth plan, carefully constructed by a qualified, experienced professional based on your individual needs, followed by meticulous ex*****on and monitoring of your financial situation.

At Roche, we are here to protect your dream, to shield you from these barriers, driven by the economy or by your own doing or oversight. Our goal - what keeps us motivated to stay on the cutting edge of credentials, technology, and industry research - is clear, to help you achieve financial peace of mind. We will be your financial advocate so that you can enjoy life, liberty, and the pursuit of happiness without interruption.

In case you needed a reminder of the importance of an education...
Unemployment rate in February by education....
No HS degree: 8.4%
HS degree: 5.4%
College degree: 2.7%

It is the time of year for graduating. Universities took their turn and high schools will be soon to follow. If you are attending a graduation this year, you are likely thinking back to when you were receiving your own diploma - what a precious time that was, how your life was in front of you for the taking, and maybe also how relatively little you might have known about life at that time, despite that freshly printed certificate attesting to your new found wisdom.

As you attend celebrations, personalize greeting cards, perhaps even write checks to wish your new graduate well, consider what else you could be gifting them. There may be countless life lessons you wish to share, advice that may or may not fall on deaf ears. The truth is many of the most important learning comes now for these graduates and most of them will need to experience the challenges first-hand to find their way and themselves.

There is a notable exception where instilling values is just not enough and letting the graduate make their own mistakes could be crippling to their future. Most graduates receive little to no education on their personal finances. Many finish school with loans, new housing expenses, and a welcome salary. There are the immediate issues to sort out including moving costs, down payments and security deposits, deciding the rate at which to pay down their loans, and where to put that gifted graduation money.

Then there are also the habits they will start now that will likely drive the level of financial comfort or dysfunction they will enjoy for years to come - balancing the lifestyle they want with the one they can afford, the appropriate use of charge or credit cards, how compounding interest can balloon up debts, how much to save, and where to start a retirement saving plan.

These first years can set up a graduate well because starting early is one of the best ways to build that nest egg. Alternatively, the all too common route of racking up credit card debt on top of school loans could threaten credit scores, the ability to later make any significant purchase, the chance of finding a partner who won't cringe at sharing this financial burden of past mistakes, and even their status of living independently.

Here are the top three facts to share with your new graduates:

1. Personal finance is more of a cumulative "game" - mis-steps have a way of sticking with you and impacting your options, even years from now. Conversely, wise steps taken now can have tremendous benefits to you for the rest of your life.

2. Start with the "big" things - don't live outside your means and pay all debts timely. "Living outside your means" is when your house, car, utilities, food, loan payments, fun expenses and minimum savings rate exceed your net income after taxes. This is a fast path to debt and heartache. Paying all debts timely, whether loans, credit cards or monthly expenses is also critical. The credit score companies are watching and any late or missed payments will stay on your record forever, affecting your ability to buy a house, car or higher education.

3. Even small things can have huge benefits, so make them a habit now. Don't charge an expense on your credit card that you cannot pay off in the same month. Stow away an emergency fund of 6 months of salary for car breakdowns, layoff, or health emergencies. Then save at least 15% of your gross income for retirement. You won't even miss that money since you just started to receive your salary.

This is an exciting time for the graduate and as wise as they are, there is so much more to come. So gift them with some personal finance guideposts that we promise they will thank you for. These are the dreamers that will soon make their stamp on the world - let's be sure their finances don't get in the way of that.

My Advisor, My Translator

Here we are, one quarter through 2015. Across our clients, we see many of their dreams coming true, setting the stage for a fantastic year. We are happy to play the role of advisor and ease you through these exciting, and sometimes terrifying life changes.

We are passionate about helping our clients and in most cases acting as translator - taking what sometimes can be confusing, overwhelming and anxiety-inducing financial details and de-mystifying them. As your life circumstances change: you plan to purchase that dream home, you downsize as you ease into retirement, you adjust to a loss in your family, you brace yourself for a major career change - we are here, to listen, to advise, to translate.

We partner with you to clarify your objectives and set into action the steps to help you achieve them. So whether it is taking that hard-earned, diligently saved money and putting it to work for you, consolidating your accounts so that you know exactly what you own, re-evaluating your net worth and mix of assets and liabilities, shoring up your financial security to give you the confidence to take that leap of faith in your career, clarifying exactly what impact downsizing will have to your comfort in retirement - we are happy to transform a situation filled with questions and doubts and together arrive at a plan that makes you feel confident, assured and positive about your next chapter.

Sometimes the advice we give is less extreme. Perhaps you are struggling with the alternatives provided in your company's 401k, your tax accountant called with some questions about your investments last year, your estate attorney sent you documents to review, you have options vesting - all scenarios where it can help to have a "translator" on your staff, to break down exactly what your options are, consequences of each, and recommend action.

We hope that you have had a productive first fourth of the year! Thank you for letting us do what we love and help you along the way. Here is to a prosperous 2015!

Four Leaf Clovers and a Pot of Gold

Today is March 17th, Saint Patrick's Day. This day conjures up visions of leprechauns, four leaf clovers and rainbows leading to a pot of gold. Sounds nice but in when it comes to protecting and growing that pot of gold, we need more than luck. Some think investing is an art, others a science. What we can tell you at Roche is we believe that smart investing is a lot more methodical than picking a hot stock or timing the market. Even luck can't help you and why chance it when it comes to your financial security?

Some take their pot of gold and hide it in their mattress or a low interest fixed income account to keep it safe. Even with inflation, that pot is getting smaller all the time. Others bet on luck, believing that they can find the four leaf clover in the field and take a chance on a portfolio that is not diversified. Still others have a dollar and a dream looking for that rainbow to an easy answer. If you saved a dollar everyday from age 18 for 50 years, you would have had $81,000 at age 68 (assuming 5% growth). Probably a better bet than a 1 in nearly 14,000,000 payoff.

Here at Roche, we carefully maximize your returns for the appropriate amount of risk given your situation including your term of investing, liquidity needs, risk tolerance and more. This investing strategy builds upon the wealth plan that we customize for you, the "how" you plan to achieve your dreams. As your advisor we ensure you have a carefully diversified portfolio, with thoughtful allocation, research-based investment selection, minimized cost of investing, optimized tax harvesting, and remain disciplined to your wealth plan. Why chance it? Protect and grow your pot of gold under the guidance of professionals.

144 Year History....

THIS 144-YEAR RECORD makes a compelling case for stocks over the long run. As the table shows, just 16 out of 139 five-year intervals ran in the red; even after adjusting for inflation, there were only 25 periods of loss out of 139. For 15-year intervals, there are no periods of loss, and just three after inflation adjustment. For 20- and 30-year periods, all cases are profitable, whether or not you inflation-adjust.
(Barron’s)

Why should investors approaching retirement add a two- to four-year investment cushion?

We think having a financial cushion designed to last up to four years makes sense for most investors getting close to or living in retirement. Over the past 50 years, the average bear market for U.S. stocks lasted a little more than one year, and the time it took the S&P 500® Index to recover to prior highs was about three-and-a-half years.

If you want a more personalized approach to asset allocation, consider what you will need soon and your capacity. How much risk can you afford to take over two to four years—about the time to weather a bear market? Invest the rest based on other factors—such as your risk tolerance, need for cash flow from your portfolio after four years, and other objectives.

Source: Schwab Center for Financial Research with data provided by Bloomberg. The periods show where the S&P 500 fell 20% or more over a period of at least three months. Past performance does not guarantee future results.

The added value of financial advisors

Recent Vanguard research shows that your advisor not only adds peace of mind, but also may add about 3 percentage points of value in net portfolio returns over time.

What does this mean?

Your advisor has the ability and the time to evaluate your portfolio investments, meet with you to discuss objectives, and help get you through tough markets. All of these factored together potentially add value to your net returns (returns after taxes and fees) over time.

With portfolio construction, your advisor can work with you to create a diversified portfolio, while ensuring you don’t pay too much for investments or in taxes on investment returns.

Wealth management entails making regular changes to your portfolio to help reduce risk, and when you’re ready to withdraw, you can do it in such a way to help limit the taxes you’ll pay.

Meeting your needs

This research is not an exact science. “About 3%” means advisors can potentially add about 3 percentage points to your portfolio returns over time. This is in comparison with those advisors who are not practicing the above-mentioned principles.

For some, advisors may offer much more than that in added value; for others, less. The potential 3 percentage points of return come after taxes and fees. This return is not added over a specific time frame but can vary each year and according to your circumstances. It can be added quickly and dramatically, especially during market declines or euphoria, when you may be tempted to abandon your well-thought-out investment plan. It may be added slowly. It will not appear on the quarterly statement but is real nonetheless.

Further, although every advisor has the ability to add this value, the extent of the value will vary based on your unique situation and the way the assets are actually managed, versus how they could have been managed.

The impact of rising rates will vary greatly

While bonds will likely be adversely impacted by rising rates, the impact won’t be uniform across all bond types. Different bond market sectors, structures and maturities respond differently to changing interest rates.

High-yield bonds tend to be less sensitive to rates than U.S. Treasuries. The same is true for shorter-term bonds. That’s why diversification can help manage risk and reduce the overall impact rising rates might have on your bond portfolio.

If you would like to learn more about how Roche Financial Partners can help you manage your interest rate risk, please contact us.

How much is enough? Finding peace this holiday season

In the midst of Black Friday and cyber Monday shopping, there will be a blur of holiday purchases made. While this period does jolt our economy, it is also easy to get carried away leaving many of us wondering "how much is enough?".

This brings to mind the many conversations with clients exploring this very question sometimes taken in the context of - "Can I really retire now?" "Is it wise for me to leave the corporate world to start my own business?" "Are we prepared to care for our aging parents?" "Am I saving enough for my children's future?" We find that our clients are sometimes overwhelmed at the prospect of this question, and the fear that it could never truly be answered.

The good news is that there absolutely are answers to these questions. With the help of a professional, we can get specific about planning for different scenarios in the future to ensure you are saving what you need to and that you are making the right life decisions with your finances as a backdrop. Taking into account all of your needs, your assets, your investment portfolio, and your goals - we can balance it all and set out on a clear path. Having this plan and a team of advocates for you, you will feel more confident, prepared, productive and aligned.

For our clients, we hope you take comfort in this peace. If you have friends or family who might be feeling quite the opposite, whether they are dealing with the loss of a loved one, facing a significant job change, fed up with their current advisor or have anxiety about their future and the role their finances will play - please consider sharing our website with them.

While you are scanning the shelves, waiting in line, or filling your virtual shopping carts, remember the best gift that you can give this season is peace of mind. In fact our relationship with some of you started in just that way - a gift from your family members. We pride ourselves on the trust of our clients and the skill we maintain to provide you with the most value possible. We are happy to help you and appreciate you entrusting us with those who mean the most to you time and time again.