January 2020 | Posted By Buddy Reisinger

It’s that time of year—investors are eager for advice and herds of “thought leaders” are competing for your attention to tell you what to do during the new year. Instead of adding to the cacophony of 2020 to-do lists, we’re switching it up by telling you what to ignore.

We’re big fans of the author and celebrated podcast host Tim Ferriss’ Not-To-Do-List, so we decided to put our own twist on his concept.

“Not-to-do lists are often more effective than to-do lists for upgrading performance,” says Ferriss. “The reason is simple: what you don’t do determines what you can do.”

Below are four types of financial information that, at best, waste time and, at worst, create stress and anxiety. It’s our hope that you’ll ignore them so you can stay focused and productive, and live richly.

Any Variation of the Headline: “X Stocks to Buy”

The 4+ billion Google results for “stocks to buy in 2020” aren’t just risky—they’re almost certainly doomed to flop.

“The track record of expert forecasters is as dismal as ever,” says David Epstein, author of Range. “In business, esteemed forecasters routinely are wildly wrong in their predictions of everything from the next stock-market correction to the next housing boom.”

As our co-founder Rick Hill says, “Stop trying to find the needle in the haystack—just buy the haystack,” which is what our clients do.

Stock Market News and Notifications

Just like watching what you eat keeps you fit and healthy, a low information diet can keep you calm and focused, especially when it comes to your personal finances. As important as the latest headlines might seem, it’s important to remember: The media’s job isn’t to keep you informed, it’s to keep you tuned in 24/7/365 so they can sell advertising. We stay tuned in to what matters over the long term, so that you can focus on what matters today. That’s the kind of tradeoff we like.

Your Short-Term Portfolio Performance

It’s nice to have our sleek app that puts your entire investment portfolio in your pocket, but that doesn’t mean you should monitor it incessantly. Redefine how you measure success – we suggest measuring your performance against your goals in terms of decades and generations rather than 24-hour news cycles.

Financial Advice from Anybody Without a Fiduciary Standard

As Matt Hall covered in his book, Odds On, most big-name brokerage firms prize sales quotas and their compensation over client care and education. In any industry, a convergence of greed and incompetence is dangerous. In wealth management, the consequences can be life-shattering for you and your family. 

Before considering any financial advice, always ask: Is our relationship a fiduciary? If the answer is anything besides, “Yes, always” or if the written version is accompanied by an asterisk and a bunch of legalese, ignore it.

It’s great to pick up new productive habits, but sometimes the best way to improve your life is by subtracting, not adding. You might surprise yourself with how much you accomplish with the extra breathing room.

January 2020 | Posted By Nell Schiffer

We work for our clients. It’s that simple. We value the work of our partner firms (mutual fund companies and custodians), but we never forget who we serve and our fiduciary duty to them. To that end, you should know we routinely ask our partners for better options and lower fees – when and where appropriate. Hill Investment Group is pleased to announce significant fee reductions related to 14 funds in our recommended portfolios. The largest reduction is a 20% drop in fund expenses and the smallest change is 3.6% in one of our fixed-income solutions. Big or small alterations, it’s good news and savings for clients. We will not list individual funds here, but look forward to sharing the details with you during your next review. For now, we end this post with a quote from Dimensional Co CEO Gerard O’Reilly:

“We expect to do better than benchmarks and peers, after fees, so we fight for every basis point. We continue to gain insights from research and innovate across all aspects of our process.” 

January 2020 | Posted By Henry Bragg

 

We have a lot of planning-obsessed people on staff at HIG and hope it gives you comfort knowing that we are thinking about things on your behalf – even when you aren’t. It’s a huge part of what makes Hill Investment Group different. Don’t be surprised if you hear us talking a lot more in the coming year about the value our planning process adds to our investment management approach. We normally don’t share our client quarterly letters with everyone, but enjoy an exclusive peak this time!

Enjoy our client quarterly report letter.

January 2020 | Posted By Matt Luzecky

Behavioral and emotional aspects of our planning are important to us. When we better understand ourselves, we get closer to breaking our old patterns. For more inspiration, we point you to a recent WSJ article “For the New Year, Say No to Negativity”.

What we love about the article is that it acknowledges the truth found in the research – bad stuff impacts us more than good stuff – but the article and corresponding book offer practical ways to turn the corner towards a clear focus on health and wealth in 2020. And you know we are suckers for anyone who uses our motto “take the long view” to help readers/investors shift their outlook to a prosperous lens.

“By rationally looking at long-term trends instead of viscerally reacting to the horror story of the day, you’ll see that there’s much more to celebrate than to mourn.”

January 2020 | Posted By John Reagan

We just had to repost this gem of a blog post from marketing legend – Seth Godin.

Long-term vs short-term

By Seth Godin

There’s always someone who is more willing to play the short-term game than you are.

Someone who is willing to cut more corners, send a more urgent text, borrow against the future, ignore the side effects, abuse trust and corrupt the system–somehow justifying that short-term hustle with a rationalization (usually a selfish one) about how urgent it is.

On the other hand…

There’s plenty of room to win as someone who takes a longer view than the others.

January 2020 | Posted By Hill Investment Group

Dimensional Founder and Executive Chairman, David Booth, discusses the lessons from 2019 investors can apply to 2020.

I have worked in finance for over 50 years, and it seems that every January the same thing happens. Lots of folks look back at last year’s performance to draw conclusions they can use to predict what markets will do in the year to come. I don’t make predictions, but I do think it’s worth answering this question: What are the lessons from 2019 that we can apply to 2020?

Let’s go back to where we were this time last year. The words running across CNBC’s home page were, “US stocks post worst year in a decade as the S&P 500 falls more than 6% in 2018.” The Wall Street Journal summarized the state of market affairs with this headline: “U.S. Indexes Close with Worst Yearly Losses Since 2008.” Amidst gloomy predictions for 2019, I posted a video on the limitations of forecasting.

Things felt ominous. We started the year with a lot of anxious people. Some decided to get out of the market and wait for prices to go down. They thought that after 11 years, the bull market was finally on its way out. They decided to time the market.

We all know what happened. Global equity markets finished the year up more than 25% and fixed income gained more than 8%.

Missing out on big growth has as much impact on a portfolio as losing that amount. How long does it take to make that kind of loss back? And how is someone who got out supposed to know when to get back in?

The lesson from 2019 is: The market has no memory. Don’t time the market in 2020. Don’t try to figure out when to get in and when to get out—you’d have to be right twice. Instead, figure out how much of your portfolio you’re comfortable investing in equities over the long-term so you can capture the ups and ride out the downs. A trusted professional can help you make this determination, as well as prepare you to stay invested during times of uncertainty.

Not enough “experts” subscribe to this point of view. They’re still trying to predict the future. You’ve probably heard the saying, “The definition of insanity is doing the same thing over and over again and expecting a different result.” I’ve been seeing people make this same mistake for 50 years.

We’ll never know when the best time to get into the market is because we can’t predict the future. And if you think about it, that makes sense. If the market’s doing its job, prices ought to be set at a level where you experience anxiety. It’s unrealistic to think the market would ever offer an obvious time to “get in.” If it did, there would be no risk and no reward.

So what should you do in 2020? Keep in mind 2019’s most important lesson (which is the same lesson from every year before): Stay a long-term investor in a broadly diversified portfolio. Reduce your anxiety by accepting the market’s inevitable ups and downs. Make sure the people advising you align with your perspective. Stop trying to time the markets, and you’ll find you have more time to do the stuff you love to do.

David Booth

Executive Chairman and Founder

Dimensional Fund Advisors

January 2020 | Posted By PJ McDaniel

In my experience, most people are reluctant to speak to a new advisor. Often, the hesitation is rooted in logistics: the obligatory transition process involving opening accounts and selling their assets sounds daunting. As part of our Hillfolio service level, we’ve built out a sweet start-to-finish process of setting up an account, approving asset transfers, and, most importantly, setting up a monthly contribution. It generally takes about 25 minutes – less time than it takes to watch an episode of your favorite Netflix show. You can set up your account securely and seamlessly from your phone or with a couple clicks of your computer mouse. We are always here to make this process feel effortless for you, every step of the way.

The process boils down to these 4 simple steps

  1. Answer a few straightforward questions so we can understand your current situation and future goals,
  2. Choose the account(s) you want to open,
  3. Electronically sign a form that gives us permission to transfer your assets into a low cost globally diversified portfolio of nearly 13,000 companies,
  4. Set up a monthly contribution that aligns with your budget and goals,

No paper. No 800 numbers. No sales gibberish. No hidden fees. We’ll also set you up with our app so you’ll get a notification when we rebalance your portfolio (at no extra charge). 

Ready to talk? Just pick a time on this calendar.

December 2019 | Posted By John Reagan

Need a push to give to the next generation sooner rather than later? In many cases it makes sense to give your loved ones part of their inheritance when they may value it the most – while you are still here to give it to them. Giving the annual exclusion can move significant amounts of money from inside your estate to your beneficiaries outside your estate. Below is a crude example showing the power of this simple planning idea: 

John & Jane have 3 married children and 9 grandchildren:

Gifts to children/spouses per year: $180,000 ($15,000/person * 2 (John & Jane) * 2 (child and spouse) * 3 sets of children)

Gifts to grandchildren: $270,000 ($15,000/person * 2 (John & Jane)

Over 20 years, assuming no change in the annual exclusion amounts, this moves $9,000,000 from inside John & Jane’s estate to outside their estate. Assuming estate taxes are 40%, this saves $3,600,000 in taxes. It also gives children/grandchildren funds much earlier, allowing the gifts to be acknowledged, discussed, and put to use during one’s lifetime.

For more information on gift taxes, visit the IRS page here or connect with a member of our Hill Investment Group team to discuss.