Growing up in Southern California, soccer runs through my veins. Although, I have to be honest. I suck. My two left feet have a habit of crossing one another. I get frozen in a moment of worry. Although, I could always kick the snot out of the ball! Since my aim & dribbling skills were sub-par, they placed me as a fullback. I did a great job of clearing the ball and running people down, making stops, but never made goals. I still had fun though and loved it!
My oldest daughter, Gabby, is just turning 10 years old next week. (Don’t tell anyone, but we’re getting her a new pet… shhhhhh)
She has been playing soccer since she was four years old. Been in traveling league since sshe turned eight. I find myself pushing her and prodding her towards it. With bribes of ice cream for every goal, she’s caught onto it! She now loves soccer and said she wants to do it in high school & college. Over the last few years, one of the joys of my life has been coaching soccer and other sports with her and for her.
Yup. I’m re-living my “glory days”. I’m living vicariously through my daughter.
Gabby was blessed with a big, fantastic brain (and a great work ethic) that will carry her a very long way. Unfortunately, Gabby also seems to have inherited her dad’s awesomely average athletic ability.
Anyhow, as I’m out there running around after nine and ten-year-old girls, I find that so much of what they need to learn is the fundamentals of soccer.
For example, how to properly knock the ball with their laces rather than their toes. Also, positioning has become more and more important. Making sure the girls know where to be on the field for given situations and scenarios—where they should be for corner kicks and goal kicks.
Honestly, I’m normally a pretty calm, sedated guy. Yet, when it comes to coaching, I get fired up—really fired up. I’m jumping and shouting, pointing and sharing. One day, I got called out by my assistant coach for being a little over the line. It was needed.
But hey, overall, I love those kids and really want them to succeed. I also put my arms around them and lavish the praise, trying to find something to cheer each of them with from time to time.
What’s most frustrating about this age group is how the girls can be in completely different places in their skills, ability, and knowledge.
In relation to financial planning, some of you need to work on your fundamentals like my soccer team. Others of you may have more knowledge, but could use a couple of strategies and adjustments.
I have one specific idea for each of you. This way no matter where you are at- there’s something you can learn today.
I just finished meeting with a young professional. He makes good money- about $120k/year. He’s transitioning between jobs & has been struggling with savings.
He has accumulated some money in his 401k- which is awesome- but has a small amount of credit card debt. He should be doing more.
He is currently on the path to working until he is 75 or will retire early and be broke the rest of his life.
Let’s not be on that path! Let’s make sure we are saving enough.
- Take advantage of ANY match from your 401k/403b. Put away AT LEAST up to the match
- Save monthly in an account out of your reach (think investment account/ money market/ whatever). AT LEAST $200/mo to $300/mo if not SUBSTANTIALLY more
- Max out your 401k/403b- current limit is close to 18k
- Max out your Roth or back-door Roth
- Review over your situation with a financial professional for other opportunities
Overweight your portfolios with mid-caps.
We looked all the way back to 1998 and looked to see what was the high point for the year, the low point for the year, and the year-ending performance.
LOW POINT: If you compared the S&P 500, a large cap index, versus the S&P 400 Mid Cap index, the low point was nearly equal. In 9 years, the S&P 500 Index had the lowest low point whereas the S&P 400 Midcap had FEWER instances of only 8 of the lowest low points.
What is even more fascinating is what happened in the last two downturns. In 2008 and 2009, large caps did have the edge by a 1% or 2%, but in 2000 to 2002 as the tech bubble burst, mid caps handily beat large caps on the downside- by more than 4% every year in all 3 of the years!
So, it could be possible in a really cruddy year (but not guaranteed) that mid-caps could do better.
UPSIDE: Mid-caps had a significant edge on the upside- exactly 4%! Midcaps were well on their way to an average high double digit (17%) high-point compared to 13% for large caps. Over 18 years, mid-caps beat ‘em out 15 out of 19 times. That’s also big! It’s not just 1 or 2 years as outliers- it’s consistent.
What isn’t in this bit of data is that the recovery years have been particularly robust. For example, in 2009, large caps were up about 25% and mid-caps were up 38% and in 2003, large caps were up 26% vs 35% for mid-caps.
So, not only are mid-caps about equal, if not possibly better on the downside, they kill it on the upside!
YEAR-END: What really matters at the end of the day isn’t the high and isn’t the low- it’s the amount of gains that you ended up with.
So, let’s take a look at the data…
Think about that for a minute…
For large caps- the S&P 500-That’s 6% a year EVERY year averaged over 19 years. That’s a total return of about 114%. You’ve more than doubled your money. Not too bad!
For mid caps- That’s 10% a year EVERY year average over 19 years. That’s a total return of about 190%. That’s an additional return of 76%!!!
On $100,000 investment, that’s the difference between having $214,000 from large caps versus $290,000 in mid caps. That’s a tremendous difference my friends!!!
Alright, let’s bring this all together.
Mid-caps have consistently been a good piece of the puzzle.
Any one year can have its fluctuations and on cruddy years, just think about the negative January effect, it’s about a 50/50 shot that large caps can outperform during the low points in the markets.
What I like about mid-caps is that they can and usually stay fairly close to large caps and give us a great chance to outperform the large cap index.
Anyhow, something to work on for everyone.
Do you have the fundamentals down? Do you need more advanced strategies? Give me a ring or enter an application for a strategy session by clicking on the button below.
Advisory services through Capital Advisory Group Advisory Services LLC and securities through United Planners Financial Services of America, a Limited Partnership. Member FINRA and SIPC. The Capital Advisory Group Advisory Services, LLC (CAG) and United Planners Financial Services are not affiliated.
The views expressed are those of the presenter and may not reflect the views of United Planners Financial Services. Material discussed is meant to provide general information and it is not to be construed as specific investment, tax, or legal advice. Individual needs vary & require consideration of your unique objectives & financial situation.