The Bucket List

Several years ago, I read a self-help book that promised to help me manage money better.  I do not remember much about the book, not even the title.  I do remember one exercise that was very useful.

I was supposed to create what is now commonly known as a “bucket list.”  I should list all of the things I wanted to do during my lifetime.  It did not matter how long the list was.  When finished with the list, I should then review it and think about how a change in money management practices could help me achieve those goals.  That would help me to set a budget, make more responsible spending decisions, et cetera.  After all, you need money to pay for most of the things you want to do in life.

I found the exercise to be very enlightening.  To my surprise, I saw that most of the items related to travel.  I realized that I needed to do a better job at maintaining an emergency fund and set a formal budget for travel.  I had been tapping the emergency fund whenever I wanted to visit some place new, which is a bad idea.  I setup a direct debit from my checking to my savings account so that savings could be automatic.  This act created a formal budget for both emergency savings and travel.

Today’s list is very different.  My revised list includes completing several projects around the house, paying off my mortgage a few years early, donating more money to my favorite charity, buying a nice road bike, and squirreling away more money for unexpected expenses and retirement.  Sure, there are a few personal goals that are not tied to money; I am not completely shallow.  In balance, the list is much more practical than years ago, when I wanted to see the world.

I still do not want to wake up one day at age 80 and realize all I ever did was work, work, work.  The list can help me stay focused on important things and achieve some of my goals.  Hopefully, I can strike the right balance between the practical (saving for retirement) and the fun (buying that road bike).  I encourage you to take some time to create your own list.

Then, please share your list with your financial advisor.  Goals change over time, so he or she should be aware of what you want from life.  Together, you can develop a financial plan to direct your savings in a manner that will bring you closer to achieving your goals.

Cristy Freeman, AAMS
Senior Operations Associate

 

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Gonna Make You Sweat

My last blog featured a story about financial planners using yoga in their business practice. Somehow, I’ve managed to find yet another connection between finance and exercise. As I was online perusing Bloomberg the other day, a headline about sweaty Wall Streeters caught my eye. At first I was grossed out by the mental image that immediately came to mind, then I saw something about spin-class meetings. The article was describing a growing trend on Wall Street to conduct client meetings after early morning exercise classes rather than having the usual post-work, waistline-expanding drinks and dinner.

Given the exponential rise in obesity-related diseases in this country, I see this as a positive move. I’ve also noticed an increased interest in health in our own office on Wall Street in Asheville. Gone are the days of the bottomless candy bowl and rarely will you find any doughnuts in the kitchen. There is a slight uptick in sweet treats around the holidays, but it’s nothing like it used to be. And when we do receive a thoughtful, delicious yet sugary gift from a client or vendor it seems to take much longer to disappear these days. We have added a fitness-related event our calendar, as well – this year marks the third annual Parsec Prize 5k in October, where proceeds go to the recipients of the year’s Parsec Prize winners. Many of our employees participate in the race and enjoy a little friendly competition.

Some of us enjoy a lot of competition – I’ll have to miss the 5k this year to participate in my third CrossFit Garage Games (I had already committed to it before I knew the dates were the same), and I’m no longer the only CrossFitter at Parsec. Speaking of which, I work out at 6 a.m. most mornings – any takers?

Sarah DerGarabedian, CFA
Director of Research

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Parsec Expands Social Media Presence

We are happy to announce that you can now find us on Facebook and follow our Twitter feed.  We still have our website and blog.  The new additions give us another means of communicating with our clients and others who might be interested in Parsec.

You may be wondering why it took us so long.  We have lots of regulations with which we must comply.  We wanted to understand what we could and could not say.  We also wanted to create something that might be meaningful to our readers.  It was rather difficult finding the right balance.

We began posting to Facebook and Twitter this month.  We hope you enjoy the new offering.

Cristy Freeman, AAMS
Senior Operations Associate

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Meditation and Miniskirts

I never thought I would be able to find a connection between yoga, finance, and short skirts, but my patience has finally paid off. Since it’s a beautiful Friday in June, today’s blog will feature a couple of excerpts from the fun and funky side of financial news:

Down Markets, Down Dog
Some advisors are combining yoga with financial planning as a way to bring mindfulness to investing. It may seem counterintuitive to pair an ancient practice associated with quieting the mind with the pursuit of material gain, but proponents claim it helps them remain calm during a financial crisis and refrain from making emotional decisions. Some even teach breathing techniques to clients to help them get through difficult financial situations. As one advisor puts it, “Investing is very emotional. Yoga keeps it all balanced.”

Up Markets, Short Skirts
Quite possibly the nerdiest girl band ever, Machikado Keiki Japan sings about Abenomics, Prime Minister Shinzo Abe’s plan involving fiscal stimulus, monetary easing, and structural reforms. The best part is the hemline indicator – the girls’ skirts vary in length with the level of the Nikkei. For every 1,000 yen increase in the stock price average, the skirts will get shorter at their concerts. Apparently, fashion’s link to the economy is not new – miniskirts became popular in the ‘60s as the economy boomed, hemlines lengthened in tandem with the oil crisis of ’73, and shortened again in the go-go ‘80s. Fashion as an economic indicator – does this mean I can ditch my copy of The Economist for Vogue?

Sarah DerGarabedian, CFA
Director of Research

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Dirty Laundry

Don Henley’s song “Dirty Laundry” came to mind as I watched a news clip recently. A reporter interviewed an elderly lady in Moore, Oklahoma. Standing in front of a pile of debris, the lady recounted the moments when the tornado destroyed her home. She told of sitting on a stool with her dog in her lap. She was tossed about and did not know where her dog was. She just hoped he was still alive.

At that moment, the reporter heard the dog and pointed to a nearby pile of rubble. The elderly lady immediately began lifting pieces of debris. The reporter and camera person just stood there. The lady pleaded for help. The reporter finally came to her aid and helped free the little dog. The microphone appears on the left side of the shot. Oh, we do not want to miss a single sound of this event.

Why did it take a desperate plea before the reporter helped this poor woman? She should have jumped in there with the lady and lifted the debris. Have we lost all sense of humanity and compassion?

In recent blog posts and newsletter articles, several of us here at Parsec have talked about the need to take care of physical and mental health through exercise, a healthy lifestyle, and community involvement. Life cannot be solely about your investment portfolio. Yes, you need money to survive. Selecting an appropriate asset allocation and developing an investment plan are important. In my opinion, focusing solely on your investment portfolio will not give you the balanced life that you need. As the saying goes, you cannot take it with you when you die.

As you have probably heard, the American Red Cross is accepting donations for the victims of the tornado. Their website is www.redcross.org. If you are able to donate to them or the charity of your choice, I am sure your assistance would be appreciated.

It is so easy to lose focus in the daily grind of life. Let’s try to keep some prospective and help each other when we can.

Cristy Freeman, AAMS
Senior Operations Associate

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Ikaria or Bust

Last fall I read a fascinating article in the New York Times Sunday Magazine entitled “The Island Where People Forget to Die.”  The article is about the nonagenarians and centenarians of Ikaria, a rugged and remote Greek island in the Northern Aegean.  It explores the possible factors that allow these people to lead longer, healthier lives.   

Dan Buettner, the article’s author, opens with the story of Stamatis Moraitis, a Greek war veteran who had settled in Port Jefferson, NY after the war.  Moraitis claimed that in 1976, he was diagnosed with lung cancer.  He considered going through chemotherapy, but elected instead to return to his homeland and spend his last days in the village of his childhood.  At first, he spent his days in bed being tended to by his elderly mother and his wife.  When childhood friends heard he was back, they paid daily visits, often bringing a bottle of wine to share.  Soon, he was working in the garden and making the walk up the hill to church.  He woke when he wanted, worked in the vineyard, had lunch, took a long nap.  Evenings were spent with family and friends.   Today, he is over 97 years old.  Is this all true?  I don’t know, but Moraitis is 97 and healthy and loving life!

Buettner spent five years studying the lives and habits of the people of Ikaria.  Working with his partner, a demographer from Belgium, they verified that Ikariotes reach the age of 90 at two and a half times the rate of Americans and they are often healthier.  More impressive is the fact that Ikariotes live 8 to 10 years longer than Americans before succumbing to cancer, heart disease, dementia and Alzheimer’s disease.

So, what did Buettner uncover in his study on the centenarians of Ikaria?  In addition to the Mediterranean diet focusing fresh vegetables and fruit, yogurt, olive oil and red wine, Ikariotes are very communal and they spend many hours a day socializing with their fellow villagers.     They don’t drive, so walking is their form of exercise.  They nap every day and attend church every Sunday.  And reportedly, a healthy sex life is enjoyed by more than 80% of Ikairote men over 65.

I just returned from a Retirement Income Summit where the overriding theme was how to prepare our clients for the cost of health care in their retirement.  In my last post http://parsecfinancial.wordpress.com/2013/04/10/remember-wear-sunscreen/, I touched on this topic.

What has become abundantly clear is that it is imperative that we focus as much attention on leading healthy, active and productive lives as we spend on saving for a comfortable retirement.

While I don’t expect I will pack up everything and move to Greece, I think I could certainly find a way to incorporate many of the Ikariote habits into my daily life…now, I just need to find a way to sneak in that nap!

Tracy Allen, CFP®
Financial Advisor

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Parsec Supports Brother Wolf Animal Rescue

In this quarter’s newsletter, I talked about volunteering.  We all have a passion for something – helping homeless people, caring for the elderly, providing financial education, et cetera.  My cause is animal rescue. 

I mentioned that some of us at Parsec set up a fundraising team for Brother Wolf’s 4th annual “Run for the Paws.”  Our team, Hoofin’ for Woofin’, raised $1,275 for the no-kill shelter.  Several people here have pets.  The majority of them are rescues, so we received almost all of our donations from folks here at Parsec. 

Held this past Sunday, the event itself brought in over $15,000.  Brother Wolf will use the funds to provide medical care, food, and shelter for hundreds of animals at the shelter or in foster homes. 

Our mascot, Quinn.
Our mascot, Quinn.

Misty Cardone, her husband Phil, their dog Quinn, Laura Greene, and I participated in the one-mile walk along with lots of other walkers and their dogs.  Barbara Gray and her Yorkie, Brianna, cheered us on from the sidelines.  

Our cheerleader Brianna
Our cheerleader Brianna

The weather was beautiful.  We finally had a warm, sunny day instead of the persistent gloom and cold we have endured all winter.

Our involvement with the shelter does not end with “Run for the Paws.”  For the second year, we are sponsoring Brother Wolf’s Critter Camp.  Children will learn about animal care, pet behavior, pet training, and animal rescue.  In my opinion, teaching children to be caring and compassionate to animals makes them better human beings. 

I encourage all of you to consider what inspires you and get involved in your community.  As I said in the newsletter article, volunteering may not lead to higher portfolio returns or increased financial worth.  It can provide you with personal satisfaction, something money cannot buy.

Cristy Freeman, AAMS
Senior Operations Associate

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Gross National Happiness

One of the most commonly used measures by which we gauge the health of our economy is GDP growth. GDP, or gross domestic product, is defined by Investopedia as, “the monetary value of all the finished goods and services produced within a country’s borders in a specific time period.” Economists look at GDP growth over time (quarter over quarter, year over year, etc.) to determine a country’s economic health and productivity. If you look at the definition, you can see that the implication is that more money = good. Nothing unusual there – most people tend to agree that more money = good, right? Take the recent winner of the $338 million Powerball jackpot. We all assume that whoever bought that ticket is about to be the happiest person on the planet. I can’t tell you how many times I catch myself daydreaming about what I would do if I won the lottery (note to my employers: I NEVER do this on work time, and it never involves me running out of my office without a backward glance). In talking with others about it we tend to agree that, while money can’t exactly buy happiness, a certain amount can provide the freedom to pursue what makes us happy, unfettered by the drudgery required to pay bills and feed our families. At least, that’s what we think.

I recently watched a documentary entitled, “Happy” which touches on the lives of various people around the globe, and seeks to discover what makes them happy. Surprisingly, some of the happiest people were also the poorest, financially speaking. A common theme among these self-described happy people was a supportive community of family and friends, as well as a sense of purpose in life. Researchers have found that money does affect happiness, up to a point – the point where basic needs are met. Beyond this, levels of happiness do not vary significantly between those making $50,000 a year and those making $5,000,000 a year (note to my employers: this does not get you off the hook for raises). Some of this is determined at a genetic level, almost as if we are all born with a “set point” for happiness, and no amount of good fortune or tragedy will cause a person to deviate from their set point for long.

Getting back to GDP – my favorite part of the documentary was about Bhutan, a country that has chosen to measure growth not by the monetary value of goods and services, but by the happiness of its citizens. Instead of a GDP index they have a GNH index, which stands for gross national happiness. According to the “short” (over 100 page) guide to the index I found online, “the GNH Index is meant to orient the people and the nation towards happiness, primarily by improving the conditions of not-yet-happy people. In the GNH Index, unlike certain concepts of happiness in current western literature, happiness is itself multidimensional – not measured only by subjective well-being, and not focused narrowly on happiness that begins and ends with oneself and is concerned for and with oneself. The pursuit of happiness is collective, though it can be experienced deeply personally. Different people can be happy in spite of their disparate circumstances and the options for diversity must be wide.”

One of my coworkers wrote a piece for our second quarter newsletter about the positive physical and emotional benefits we can reap by volunteering and giving back to our communities. The researchers interviewed for the documentary agreed that the happiest people tend to be the ones with strong ties to friends, family, and community, and who feel they have a sense of purpose in the world. As folks transition into retirement, I think it is especially important to remain active in the community and regularly get together with friends and family. Humans are social animals; we have evolved to thrive in groups and to enjoy helping others. That kind of happiness is free and available to everyone. But I’m still going to buy an occasional lottery ticket.

Sarah DerGarabedian, CFA
Director of Research

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Trouble on My Mind

In 2007, Leona Helmsley passed away.  She famously left $12 million for the care of her beloved Maltese named Trouble.  The courts eventually decided that $2 million was a more appropriate sum.  The story created a lot of buzz.  Some people were appalled that she would leave such a huge amount to an animal.  Others understood why she did it and found nothing wrong.

Whether or not you agree with what she did, the story highlights a topic that may not be discussed during estate planning.  What happens to your pets when you pass away or are unable to care for them due to serious illness or disability?  You may think your children or a friend would step in and care for your pet.  Unless you have made advance plans, there are no guarantees that will happen.

When I began writing this post, I already knew that pets are regarded as property, not a furry child.  I have referenced my pets in my will.  As I researched this blog, I realized that was not enough.  Wills are not processed right away, so your wishes for your pet could be unknown for some time.  Also, wills do not apply unless you are dead.  A serious illness or disability would not require the reading of a will.

Pet protection agreements and trusts are other vehicles that can be used to outline care for your pet.  The documents can include instructions for feeding, exercise, toys, anything you want.  They can specify funds for care and outline a disbursement plan. 

Pet trusts are recognized in 46 states.  Since it is a trust document, it is more complicated and would require the assistance of an attorney.  For that reason, a pet trust could be more expensive than a pet protection agreement.

If you live in the Asheville area, Brother Wolf Animal Rescue offers classes about estate planning for your pet.  Visit their website at www.bwar.org and click the Events page for dates and times of upcoming classes. 

I dearly love my pets.  When I adopted them, I became responsible for their care for their entire life.  If they outlive me, I want to know their lives will be just as happy as when I was with them.  You feel the same way, or you would not have read this post all the way to the end. 

When you are thinking about who should get Grandma’s pearls, please take a moment and consider what should happen to your furry friends.  You should mention it to your estate planning attorney, if you have one.  Just like Grandma’s pearls, you want to know your friends will be treasured when you are gone. 

Cristy Freeman, AAMS
Senior Operations Associate

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An Orgy of Value Destruction

This is how University of Minnesota economist Joel Waldfogel describes the holiday season. I put it in the title because I figured the word “orgy” would capture your attention. If you blundered into this blog from a Google search, you’re probably going to be sorely disappointed. Since this is our last blog entry before Christmas, I thought it would be fun to share some statistics I found regarding holiday gift-giving.

I have never been a big proponent of spending money I don’t have on stuff that nobody wants just because it’s what everybody else is doing. Of course, everyone loves a gift card, but after a few years of exchanging gift cards with our adult relatives (explain the point of this, please) my husband and I decided that we would only buy gifts for the younger children and my in-laws (because if we didn’t do the latter…well, you know). Now we are free to celebrate the season without incurring massive amounts of debt. As a result, I tend to weather the month of December with much more holiday cheer and far less stress than would otherwise be the case.

Clearly, this practice is not very common. Waldfogel has found that Americans spend about $65 billion on holiday gifts every year, with the average person giving 23 gifts. And all that time and money is largely a waste, because – surprise! – most people don’t like what they get.  Apparently, the typical value of a gift to its recipient is 20% lower than its cost, hence the “orgy of value destruction.” But if you’re one of the poor souls trapped in a vicious cycle of obligatory gifting, what do you do?

In this Bloomberg article, two tips were proffered based on the findings of behavioral economics. The first is to beware an “egocentric bias” – you may pine for pastured pork, but your vegan aunt probably won’t appreciate a cured pork gift basket from a local farm. The second is to manage your expectations. Chances are, the recipient of what you think is a fabulous, expensive gift will either, a) forget about it 2 seconds later, or b) be just as happy with something more personal and less costly. One way to avoid this whole predicament, Waldfogel suggests, is to make a donation to charity in the recipient’s name. My husband and I have repeatedly suggested this to my mother-in-law, but for some reason it hasn’t been well-received – I think she views it as too impersonal. So I’m going with #11 on Dave Barry’s Annual Gift Guide – an emergency underpants dispenser for $6.95. It’s economical, and it’s definitely personal. And if she values it at $5.56, I can live with that.

Happy Holidays!

Sarah DerGarabedian, CFA
Director of Research

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