Author Archive for Ed Burnett

The Dry Wood Pile

Posted on October 16th, 2014 in Stretching Your Income by

campfire in the mountainsAs we approach another winter in the upper Midwest, we are probably spending some time and consideration on how we can plan if we have another bitterly cold season; checking coats and boots, mittens and scarves for the kids, and of course having plenty of hot chocolate on hand! And if we do have another rough winter, we will feel the impact in many ways – especially with regards to heating expenses.

For just a moment, let’s think back in time… How did people heat their homes 200 years ago? We didn’t have forced air heating systems powered by natural gas.  Back in the day, they used wood burning stoves of course!

Back then this was a life or death necessity, so how did folks properly prepare for the ensuing winter cold? Someone would have to chop trees down and get firewood split early enough so that it could dry in time for it to be ready to burn when the snow flies. This was commonly referred to as, “the dry wood pile.” They would chop what they needed for that winter, and the remaining hardwoods were left for continued growth so that future generations could feel confident in their ability to heat their homes for years to come.

George Washington inside a grocery cart riding down the roller coasterHow big would they need to make that dry wood pile? Well, that would depend on how long and cold the winter would be. Could we use our experience from previous winters to estimate for this year? While we cannot accurately predict the coming winter based solely on history, we can probably guess within reason. Most likely, reasonable people would plan to have a little extra wood on the pile – just-in-case.

If they had a particularly brutal winter like the one we just had in 2013, or maybe even a few of these bad winters in succession, would there EVER, EVER be a time when someone would chop down the ENTIRE FOREST to make the dry wood pile? Of course not – that would be ridiculous. If they did, then someone would have to plant saplings so that the forest could regrow and future generations could plan for their survival. Some of those saplings would flourish and grow while others would die off. In any case, how would that affect those families and their abilities to plan for the next generation?

Neat story, right?  What does this have to do with investing…?

With all of the recent economic volatility, some people have been asking if they should be invested in the stock market now. Or if they are invested, should they sell and get out of the markets?

With this analogy in mind, I might respond to that question with, “how is your dry wood pile looking right now?” Do we have enough (cash and low or no risk money) available to pay our bills for a while – pay our rent or mortgage, buy groceries and clothes, provide for our transportation and medical needs? If not, then maybe we should look at options to help grow our “dry wood pile” by enough to make us feel safe for some amount of time – 6 months, 1 year, 3 years – whatever amount is right for you.

In any case, do we really want to chop down the entire forest? The next time you’re feeling anxious about the markets, why don’t you schedule a visit so we can analyze your “dry wood pile.”

We’re there when life happens.

The material contained herein has been prepared from sources and data we believe to be reliable but make no guarantees as to its accuracy or completeness. This material is published solely for informational purposes and is not an offer to buy or sell a security or investment product. Opinions and estimates are of a certain date and subject to change without notice.

Ed Burnett is a Registered Representative with The Schaeffer Group, LLC, where he implements a team approach to provide financial solutions for his clients. A life-long resident of Southeast WI, Ed is married with three terrific kids, is active in his church and community, and enjoys woodworking and running. Please contact Ed for a free financial consultation at 262-551-8900 or Ed@TheSchaefferGroupLLC.com

The Power of Standing Your Ground on Your Investments

Posted on June 24th, 2014 in Retiring by

SSchaeffer 14061711330The target is 8 feet high and 24 feet wide. As the kicker hurls the ball at speeds near 125 miles per hour, the sole defender has about a quarter of a second to react – and to get it right! I’m talking about the penalty kick. With the World Cup in the spotlight this month, let’s spend a few minutes and talk about SOCCER!

Most of us actually have a lot in common with soccer goalies. During penalty kicks, goalkeepers almost always choose their action before they can clearly observe the direction of the kick (see photo). You can plainly see that the goalie has already decided to move to his right – even before the ball is kicked.

Has there ever been a time when the markets were SO volatile that you’ve decided to take action on your investments – to do something – anything – with your investments?

An *analysis of 286 penalty kicks in the top leagues and championships worldwide shows that the overwhelming choice (94% of the time) is to move – either to the left or right. When the goalkeeper guesses the correct direction, they save 25-30% of the shots.

Yet 30% of the shots are kicked at the center of the goal, where, if keepers do not move, they save 60% of the shots directed there. We could logically conclude that the optimal strategy would be for goalkeepers to remain in the goal’s center.

How often do you suppose the goalkeeper stays his ground? Goalies held their ground only 6% of the time – yes, SIX percent! Wondering why they do that? According to researchers in this analysis, the reason relates to the fact that a goal scored produces worse feelings for the goalkeeper following inaction (staying in the center) than following action (jumping left or right). In other words, if you don’t make the save, at least you tried, and you feel better for having acted. Which leads us to a bias for action.

shutterstock_196096955Goalkeeper behavior reveals a widespread human tendency: a predisposition to act when facing stressful or dangerous situations, including the possibility of loss.

As investors, we go into “fight or flight” mode where flight means taking our money out of the market. It’s our instinct to hold onto or protect what we have because, for early humans, holding onto one’s assets was a matter of life and death.

Our compulsion to act, coupled with a fear of loss, can really trip us up – especially during periods of challenging investment times. Perhaps we can help…

When you feel compelled to move, why don’t you call us? Let us help you analyze your situation so that you can make an informed decision based on needs – not feelings. Sometimes it’s more powerful to just stand your ground.

Best Regards,

Ed Burnett

The material contained herein has been prepared from sources and data we believe to be reliable but make no guarantees as to its accuracy or completeness. This material is published solely for informational purposes and is not an offer to buy or sell a security or investment product. Opinions and estimates are of a certain date and subject to change without notice.

Ed Burnett is a Registered Representative with The Schaeffer Group, LLC, where he implements a team approach to provide financial solutions for his clients. A life-long resident of Southeast WI, Ed is married with three terrific kids, is active in his church and community, and enjoys woodworking and running. Please contact Ed for a free financial consultation at 262-551-8900 or Ed@TheSchaefferGroupLLC.com

Be Cautious on Common 401(k) Mistakes

Posted on May 28th, 2014 in Retiring by

retirement-401k-schaefferFor many of you, the biggest pot of money you have invested is your 401(k). This News & Insights article is intended to help you think about your retirement accounts, and some common pitfalls to avoid.

If you found a $100 bill on the sidewalk, would you just pass it by? No way! You would pick it up! Well, that’s exactly what you’re doing if you passing up a matching 401(k). While a matching 401(k) plan is becoming less and less common, there are still many employers offering a match, and if you don’t participate in the match, you’re leaving FREE money on the table!

One of the first questions (and perhaps the most important question) you need to ask your company benefits person is “How much is the match, and how much do I need to contribute to maximize the match?” With the answer to that powerful question, you may be able to get a raise without asking for it!

Another question to find out… “What are the available investment choices?” Now that you are contributing and getting the match, where do you invest? Some 401(k) plans have dozens of choices, and others just a few. In either case, it is important to make your investment choices based on how much time you have and your appetite for risk. There are some other factors to consider as well, and these factors may change When Life Happens.

Benjamin-black-eye-SchaefferSpeaking of life changing events, what about forgotten plans? Many people change jobs over the span of their working years. What happened to that “old” 401(k) – who’s watching over that plan? Have you moved since you changed jobs? Did you let your old company know of your move? If they can’t find you, then you may no longer be receiving that statement. Don’t forget your retirement accounts or pension plan assets from previous employers.

If you’re living well within your means, then you may be able to fund your account to the limit. In some years these limits periodically adjust, and current limits are $18,000 per year and if you’re age 50 or older, the maximum is $24,000. You’ll want to confirm these limits with your company benefits department for your specific situation.

With all of these details in mind, if there is anyone that you care about, that could benefit from a second pair of eyes, we would be glad to help them.

Best Regards,

Ed Burnett

The material contained herein has been prepared from sources and data we believe to be reliable but make no guarantees as to its accuracy or completeness. This material is published solely for informational purposes and is not an offer to buy or sell a security or investment product. Opinions and estimates are of a certain date and subject to change without notice.

Ed Burnett is a Registered Representative with The Schaeffer Group, LLC, where he implements a team approach to provide financial solutions for his clients. A life-long resident of Southeast WI, Ed is married with three terrific kids, is active in his church and community, and enjoys woodworking and running. Please contact Ed for a free financial consultation at 262-551-8900 or Ed@TheSchaefferGroupLLC.com

Why Buy Life Insurance For Your Kids?

Posted on January 10th, 2014 in Planning for the Future by

Abby_with_hatPrior to getting into the financial planning business, I really never understood the reasons – and importance of – life insurance for young people…

Thankfully, most of you have never faced a serious illness with your child, and I pray that you never know how that feels. I would like to share a story with you about my little girl and her near death experience as an infant.

Shortly after birth our daughter Abigail became quite ill. She lost the use of her left arm and much of the left side of her body and she seemed to be in constant pain and distress. Upon examination they found a mass growing on the INSIDE of her spinal cord. Further investigation discovered aneurysms in her circulatory system with the largest one located on top of her heart. At just a few weeks old, she underwent an open heart surgical procedure which was recommended, in the doctor’s words, “…to prevent death.”

That procedure did prevent her death, and to this day she still has that tumor in her spine. Many elements of her case are extremely rare and even after genetics testing, we have no definitive answers as to why the aneurysms formed, if they might form again, or what the mass is inside her spine.

What does any of this have to do with Life Insurance?

Abby_birthday_partyLife Insurance is simply where the insurer promises to pay a designated beneficiary a sum of money (the “benefits”) upon the death of the insured person, and may include “benefits” for loss income or funeral expenses. Life Insurance protects your family from your loss of income due to an untimely death. But outside of a group employer, you can’t just apply for life insurance and automatically get it. You must medically qualify for the coverage. That means that the insurance company will determine if you are an “acceptable risk” for them to take. They will ask questions about your medical history, and test your blood and urine. At the conclusion of the underwriting process, if you are very healthy, then you may get the policy at a “preferred rating”, which means you receive the policy as close to free as possible. If you are at “reasonable risk”, but not squeaky clean, then you may receive a “standard rating” – this is average. On the other hand, if you are too great a risk then they may “decline” your application.

We applied for life insurance for my Abigail after she fell ill – she was declined. Today, her disease remains to be undiagnosed. So when my daughter becomes of age, she will likely never have the choice to protect her future family with life insurance.

What if we had purchased life insurance before she got sick?

If we had purchased life insurance for her in the few short weeks between her birth and when her symptoms began, she would already have it and would have the choice to keep it forever! Additionally, she would have had the options of increasing her coverage amount in the future WITH NO MEDICAL QUESTIONS.

Do you want to protect your grandchild or your child’s future insurability?

Many of our clients have chosen a low cost plan that has future increase options, which would max out at $400,000 of life insurance in their future.

The cost (or “Value”) for that option: for a girl age 0 to 10 is $42 per year, or $48 for a boy of the same ages. This option has an initial death benefit of $25,000 and we can begin this policy as late as age 25.

The real question should be, “Why wouldn’t we buy life insurance for our kids?”

Please call Kristi or me, if we can assist you or someone you know!

Best Regards,

Ed Burnett
262-551-8900

The material contained herein has been prepared from sources and data we believe to be reliable but make no guarantees as to its accuracy or completeness. This material is published solely for informational purposes and is not an offer to buy or sell a security or investment product. Opinions and estimates are of a certain date and subject to change without notice.

Ed Burnett is a Registered Representative with The Schaeffer Group, LLC, where he implements a team approach to provide financial solutions for his clients. A life-long resident of Southeast WI, Ed is married with three terrific kids, is active in his church and community, and enjoys woodworking and running. Please contact Ed for a free financial consultation at 262-551-8900 or Ed@TheSchaefferGroupLLC.com