Dickmeyer Boyce Financial Management - Wisconsin

Dickmeyer Boyce Financial Management - Wisconsin Dickmeyer Boyce Financial Management, Inc. is an independent, Fee-Only Financial Planning firm.

07/11/2024

Seeking investment diversity? Be mindful of today's S&P 500 (and associated index funds).......

This past Monday (July 8th), the published a revealing article regarding today's S&P 500: "The S&P 500 Isn’t as Diverse as It Used to Be. Here’s Why that Matters".

The article highlights and compares several important facets of 2024’s S&P 500 index to that of the 1970s 🕺: concentration, interest rate sensitivity, dividend yield, valuation and global correlation.

Consider these findings…..

1970s S&P 500

➡️ Concentration: Industrials & Materials sector made up 26% of the index.

➡️ Dividend yield: 4.11%

➡️ Global correlation: 0.24

➡️ Shiller CAPE: 13.5 (CAPE = Stock price divided by 10-yr average inflation adjusted earnings)

2024 S&P 500

➡️ Concentration: Information Technology & Financials make up 42% of the index w/ tech representing 29 percentage points of that figure.

➡️ Dividend yield: 1.45%

➡️ Global correlation: 0.70(ie, much higher correlation to global indices)

➡️ Shiller CAPE: 30+

THE MESSAGE?

⚠️ The S&P 500 isn’t providing the same amount and type of diversification it once did (re: global correlation, concentration).

⚠️ The S&P 500 is much more interest rate sensitive than it used to be (Financials and Information Technology are interest rate sensitive sectors).

⚠️ Investors are paying a steep price to buy the S&P 500 index (re: Shiller CAPE) at a time the index is much more sensitive to rates.

⚠️ The index has lost a significant amount of its buffer to market volatility with its much lower dividend yield (dividends lower the volatility of stocks by mitigating capital losses).

How well is your portfolio mitigating these risks?

Can you “spot” 🔎 the differences?……..It can be difficult to distinguish between financial advisory compensation models, ...
02/06/2024

Can you “spot” 🔎 the differences?……..

It can be difficult to distinguish between financial advisory compensation models, and we don’t always make it easy to do so. Certainly, each model has its own set of advantages & disadvantages to consider.

Understanding these considerations and their impact can make a BIG difference in the management of your wealth.

How well do you understand these differences and how they might affect your financial outcomes?

Not all business posts should be “all business”, but all business should start with the proper greeting…….......Come and...
01/30/2024

Not all business posts should be “all business”, but all business should start with the proper greeting……
.......Come and get yourself properly greeted at Dickmeyer Boyce Financial Management.

Paradigm Shift……A concept in the philosophy of science introduced by Thomas Kuhn; American physicist and philosopher. K...
12/12/2023

Paradigm Shift……

A concept in the philosophy of science introduced by Thomas Kuhn; American physicist and philosopher. Kuhn used the famous duck 🦆- rabbit 🐇 optical illusion to show how a shift in perspective could result in seeing things in a new, different way.

Among the many challenges the transition to preferment (aka, retirement) presents, is the likely need to change the way we view 🔎 our retirement investments and the role they play.

It seems simple enough……I’ve retired and now I need to replace my work income with some combination of investment income and secure income (Social Security, pension, supplemental income, etc).

Here’s one ideal outcome for you:

Investment Income + Social Security + Pension + etc > retirement living expenses.

If so, no need to touch investment principal until the government says so: Required Minimum Distributions (RMDs).

WHY THE CHALLENGE?

We’ve been conditioned our entire working 💼 life (40+ years for some) to focus primarily on growing our wealth. Our benchmarks for evaluating results? The S&P 500, Nasdaq, current out-performers like Nvidia (up 219% YTD), Meta (+170%), Amazon (+64%), and of course the neighbors, co-workers and other peers.

We’ve also lived a life that has conditioned many of us to strive for more, better, bigger, greater, etc.

Once we retire though??

For most of us though, the game changes and a PARADIGM SHIFT is necessary. We’re now relying on all that we saved and grew over our working life to fund our retirement life.

Generally, we need to generate income & protect principal. And in years like 2023 where we’ve seen strong investment returns concentrated among a relatively small number of stocks, that paradigm shift is even more challenging.

So, what do you see……..a rabbit or a duck?

It’s one of the most commonly asked questions at this most wonderful time 🎅🏼 of the year……..Should I do a Roth conversio...
11/28/2023

It’s one of the most commonly asked questions at this most wonderful time 🎅🏼 of the year……..

Should I do a Roth conversion?

With 23 trading days left in 🗓️ 2023, time is wearing thin to get a Roth conversion completed.

What is a Roth conversion?

In a simple sense, it is converting money that you have saved on a pre-tax basis (i.e., Rollover IRA, traditional IRA, 401k) to an after-tax Roth-IRA account. You pay ordinary income taxes on the converted amount for the benefit of those converted funds becoming tax exempt (no taxes paid for qualified distributions).

What are the factors to consider? There are many and they vary for each individual…….

🎁 What are your legacy objectives? Roth-IRA’s are among the most efficient
and effective ways to leave an inheritance.

🎁 What is your expected income? Lean income years can be a great time to
convert as the cost to do so (income taxes) is lower.

🎁 Where are you in your career? Younger professionals who anticipate a
growing income (and therefore, taxes) might be well served taking advantage
of these conversions now.

🎁 Payback. You might be surprised at the payback period for a Roth
conversion. This payback may or may not justify your decision.

🎁 Retirement income flexibility. How much diversification do you have in
account type (i.e., brokerage, 401k, IRA) and could more tax-exempt savings
(Roth) help to lower expenses in retirement (Medicare premiums, income tax,
Social Security taxes).

Before you take advantage of this potential stocking stuffer 🧦 strategy, please do your homework to assure that it makes sense for you!

To which mentality do you subscribe........Your lifestyle 👨‍👩‍👧 objectives drive your financial needs.ORYour financial m...
11/07/2023

To which mentality do you subscribe........

Your lifestyle 👨‍👩‍👧 objectives drive your financial needs.

OR

Your financial means 💰 dictate your lifestyle.

Feel like you’re missing out on 2023 market returns? You might need to peel back the onion…….One of the most watched st...
10/24/2023

Feel like you’re missing out on 2023 market returns? You might need to peel back the onion…….

One of the most watched stock indices is the S&P 500. This market-cap weighted index tracks the price performance of the 500 largest publicly traded companies. Through Friday October 20th, it is up 11.47% 📈 on a total return basis (factoring in dividend payouts). That’s a great return!

BUT, if you peel the onion back, specifically 7 layers, a different story unfolds. If we were to remove “The Magnificent 7” from the S&P 500’s total return calculation, it would be up just 0.6%. Who are these “Magnificent 7” stocks:

Google’s parent company, Alphabet

Amazon

🍎

Facebook parent, Meta

Microsoft

NVIDIA

Tesla 🚗

Together these 7 companies make up 30% of the S&P 500 and an ever more outsized portion of its return so far.

These concentrated returns tell a much deeper story. If you’re an investor who values broad diversification, you might not be missing out as bad as headline indices like the S&P 500 would have you believe.

We are already in the 4th Quarter 🗓️ of 2023……This is a very important time of the year, and for more reasons than needi...
10/17/2023

We are already in the 4th Quarter 🗓️ of 2023……

This is a very important time of the year, and for more reasons than needing to figure out your Halloween 🧛🏿 costume and Holiday travel plans. But, please work on those too.

October is a great month to get started on taking advantage of key year-end tax planning strategies, like:

🎃 Maximizing your contribution to a 529 College Savings Plan and taking advantage of any state tax deductions or credits in doing so.

🎃 Deferring income by maximizing your tax deferred contributions to a 401(k), 457(b) or 403(b) plan.

🎃 Completing Roth Conversions (by 12/31/2023) and planning for the funding of any Roth-IRA, Traditional-IRA and Health Savings Account (HSA) contributions (by 4/15/2024).

🎃 Taking advantage having met your health insurance deductible by scheduling any medical appointments or procedures

🎃 Using all of your Flexible Spending Account funds. Remember, these funds expire at the end of the year

🎃 Tax loss harvesting. Take advantage of any losses in your taxable investment accounts (i.e., brokerage) by using them to offset any large capital gains.

Get a jump start on your year-end tax planning! Message me for a checklist.

“The only value of market forecasters is to make fortune-tellers 🔮 look good” (Warren Buffet).The temptation to time ⏲️ ...
09/12/2023

“The only value of market forecasters is to make fortune-tellers 🔮 look good” (Warren Buffet).

The temptation to time ⏲️ your investments in the stock market is very real, and at the same time, very dangerous. If we’re honest, us Financial Advisors, with all of our supposed knowledge and experience, are tempted by it as well.

There has been talk of recession since the Fed began increasing rates back in March of 2022. Most economists got the timing of that wrong. While we are absolutely one day closer to the next recession, some macroeconomic indicators show that it does not appear to be imminent. Fear of recession often fans the flames 🔥 of market timing.

But consider these stats for the 10-year S&P 500 bull market run from 03/10/2009 to 03/08/2019 (MFS.com):

🤔 16.5%: Average annual rate of return

🤔 2,517: Number of trading days over those 10 years

🤔 8.6%: Average annual rate of return if you missed the 20 best days on a basis
of % gain

🤔 0.80%: The percentage (20 divided by 2,517) of trading days over this period
which, if missed, would reduce your return by almost 50%

Could you have timed those 20 trading days? If so, you’re in the wrong profession……you should be a Fortune Teller .

40% of Americans 65 and older rely on this source for 50% or more of their income……..What is Social Security.Why is Soci...
08/22/2023

40% of Americans 65 and older rely on this source for 50% or more of their income……..

What is Social Security.

Why is Social Security so important and why should we be paying attention?

For many of us, Social Security will be the only source of retirement income designed to keep pace with inflation 📈. This year beneficiaries received an 8.7% increase. In 2024, this increase is expected to be around 3%.

It has an estimated INSOLVENCY date of 2034.

Should congress 🏛️ not act to shore us this entitlement program, beneficiaries could expect to receive 80% of their scheduled benefits at that point.

That would potentially have a major impact for many of us.

Are you factoring this potential change into your retirement income plan? How?

What’s the best advice 🗣️ you have ever given and received?Me……..Given: Have some patience. Received: Have some patienc...
08/08/2023

What’s the best advice 🗣️ you have ever given and received?

Me……..

Given: Have some patience.

Received: Have some patience.

I’ve received that advice much more than I’ve given it. And as a Financial Advisor, we’re often emphasizing patience.

What about you?

And that's clearly a Rolex with a Hermès band.

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2505 North Mayfair Road Suite 215
Milwaukee, WI
53226

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