Staying Invested THROUGH Your Retirement

For most of us, we manage our investments with the goal of having a nice big nest egg when it's time to retire.  But we need to continue to stay invested throughout our retirement.  Often, investors are more afraid of running out of money than they are actually dying!  Today Alex Cabot and Ed Lambert of Birch Run Financial discuss how to lower that risk.

Ed points out that psychologically, investors experience more anxiety around market changes right before and after retirement.  After all, the move from drawing income from a salary to drawing from investments is one of the biggest changes of your financial life.  

If you retire at 65, your median life expectancy in retirement is 20 years.   And you have a 25% chance of living until age 90.  How do you make your money last? You need a growth component to your portfolio.  And while we plan for long-term market growth, we need to prepare for bumps in the road -things like the tech bubble bursting, the 2008 crisis, the "COVID Crash," and more.   

Moreover, inflation is built into our economy by design.  We've seen a 2.4% core inflation rate over the last 20 years.  If you extrapolate that forward, $10,000/month in living expenses today will be $18,000 in 25 years, or $20,000 in 30 years!  You want to have enough income to live on, and in most cases, have something to pass down to your heirs.

Alex speaks to the importance of diversification.  With the help of Morningstar, he looked at several different theoretical $1,000,000 portfolios over the last 25 years. Assuming a 2.4% rate of inflation, and a $40,000 annual distribution (adjusted for inflation), here's what he found. That million dollar portfolio, counting inflation and distributions, would be worth the following today, 25 years later.

• Stock only: $908k
• Bond only: $360k
• 60% stock 40% bond $1.3M
• T-bills: $0

Alex breaks down these numbers, and explains why the diversified portfolio outperformed anything else on the list.

Here's the article on diversification Alex referenced on his LinkedIn in today's episode: https://www.linkedin.com/pulse/measuring-impact-portfolio-distributions-diversified-asset-cabot/

You can always email Alex and Ed at info@birchrunfinancial.com or give them a call at 484-395-2190.

Or visit them on the web at https://www.birchrunfinancial.com/

Alex and Ed's Book: Mastering The Money Mind: https://www.amazon.com/Mastering-Money-Mind-Thinking-Personal/dp/1544530536

Any opinions are those of Ed Lambert and Alex Cabot and not necessarily those of RJFS or Raymond James. The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. There is no assurance any of the trends mentioned will continue or forecasts will occur. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. The examples throughout this material are for illustrative purposes only. Raymond James does not provide tax or legal services. Please discuss these matters with the appropriate professional. Diversification and asset allocation do not ensure a profit or protect against a loss. Past performance is not indicative of future returns. CDs are insured by the FDIC and offer a fixed rate of return, whereas the return and principal value of investment securities fluctuate with changes in market conditions. Securities offered through Raymond James Financial Services, Inc. Member FINRA/SIPC. Investment advisory services offered through Raymond James Financial Services Advisors, Inc. Birch Run Financial is not a registered broker/dealer and is independent of Raymond James Financial Services. Birch Run Financial is located at 595 E Swedesford Rd, Ste 360, Wayne PA 19087 and can be reached at 484-395-2190.

Any rating is not intended to be an endorsement, or any way indicative of the advisors abilities to provide investment advice or management.  This podcast is intended for informational purposes only.

Each year, we often take a holistic look at our finances.  Today, Alex Cabot and Ed Lambert of Birch Run financial break down what you should be looking at specifically, as we begin 2024.

Alex gives us six ponts to consider:

1. If you have an advisor, review your plan and prepare for the upcoming year.
2. Make sure your asset allocation is balanced for your goals., timeframe, and risk tolerance.
3. Ensure your cash is working for you  - there is yield to be found!
4. Pay down your high interest rate debt, especially unsecured debt.
5. Consider adding to your principal mortgage/debt payments -  or consider paying down certain debts slower!
6. Don't pay ANY attention to market predictions for the year - a good allocation can buffer against market volatility.

Next, Ed tells us how the Birch Run team is approaching this new year.  They are optimistic for the long term, but fairly neutral on 2024 specifically.   They believe technology will continue to drive growth over the next decades (as it has in the last 40 years).  

Also, over the past 50 years, the S&P 500 has had a positive return in 78% of those years.   If this trend holds, you've got roughly a 3 in 4 change of gaining money this year, and a 1 in 4 chance of losing money.    The most important thing is to maintain an even-keeled approach in all types of market fluctuations.   And the benefit of working with a financial advisory team is they can  help keep you honest and take the emotion out of your money.

You can always email Alex and Ed at info@birchrunfinancial.com or give them a call at 484-395-2190.

Or visit them on the web at https://www.birchrunfinancial.com/

Alex and Ed's Book: Mastering The Money Mind: https://www.amazon.com/Mastering-Money-Mind-Thinking-Personal/dp/1544530536

Any opinions are those of Ed Lambert and Alex Cabot and not necessarily those of RJFS or Raymond James. The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. There is no assurance any of the trends mentioned will continue or forecasts will occur. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. The examples throughout this material are for illustrative purposes only. Raymond James does not provide tax or legal services. Please discuss these matters with the appropriate professional. Diversification and asset allocation do not ensure a profit or protect against a loss. Past performance is not indicative of future returns. CDs are insured by the FDIC and offer a fixed rate of return, whereas the return and principal value of investment securities fluctuate with changes in market conditions. Securities offered through Raymond James Financial Services, Inc. Member FINRA/SIPC. Investment advisory services offered through Raymond James Financial Services Advisors, Inc. Birch Run Financial is not a registered broker/dealer and is independent of Raymond James Financial Services. Birch Run Financial is located at 595 E Swedesford Rd, Ste 360, Wayne PA 19087 and can be reached at 484-395-2190.

Any rating is not intended to be an endorsement, or any way indicative of the advisors abilities to provide investment advice or management.  This podcast is intended for informational purposes only.

This month, Alex, Ed, and Jag delve into the financial landscape as 2023 draws to a close. The episode, recorded on December 14, reflects on the unexpected market rally in November and the overall performance of various asset classes throughout the year.

In mid-November, we discussed the possibility of peak interest rates and high portfolio returns in short periods, based on Alex and Ed's experiences over the last 15 years. Surprisingly, our predictions seemed to materialize, as November witnessed a significant market rally. However, Ed clarifies that this was more due to luck than precise prediction. He emphasizes the importance of long-term investment strategies and staying the course during turbulent times, a philosophy we consistently advocate on the podcast.

Ed further explains the concept of "Goldilocks financial data," which contributed to the market's positive performance in November. This term refers to economic conditions that are neither too hot nor too cold, leading to a balanced market scenario. Inflation slowed down, and the job market softened just enough to reduce inflation without triggering fears of an imminent recession. Additionally, the Federal Reserve's dovish statements led many to believe that the interest rate hikes that began in March 2022 might be coming to an end.

Alex then provides a detailed analysis of the performance of various asset classes in November 2023. Remarkably, the returns for that month alone were comparable to what would typically be considered a good annual performance. This includes significant gains in large-cap stocks, international stocks, emerging market stocks, gold, commercial real estate, and aggregated bonds. We highlight the unpredictability of such rapid rebounds and the difficulty in timing the market effectively.

We also touch on the concept of recency bias, where recent market trends can unduly influence investor expectations. Alex and Ed caution against this, advocating for a balanced and diversified investment approach. They discuss the benefits of rebalancing portfolios, which helps in maintaining a consistent asset allocation over time.

In conclusion, prudent asset management, diversification, and staying the course are key to navigating the financial markets.  As always, whether you are a client or not, we invite you to contact the team at Birch Run Financial with any questions you have - financial literacy for all is crucial to our mission.

You can always email Alex and Ed at info@birchrunfinancial.com or give them a call at 484-395-2190.

Or visit them on the web at https://www.birchrunfinancial.com/

Alex and Ed's Book: Mastering The Money Mind: https://www.amazon.com/Mastering-Money-Mind-Thinking-Personal/dp/1544530536

Any opinions are those of Ed Lambert and Alex Cabot and not necessarily those of RJFS or Raymond James. The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. There is no assurance any of the trends mentioned will continue or forecasts will occur. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. The examples throughout this material are for illustrative purposes only. Raymond James does not provide tax or legal services. Please discuss these matters with the appropriate professional. Diversification and asset allocation do not ensure a profit or protect against a loss. Past performance is not indicative of future returns. CDs are insured by the FDIC and offer a fixed rate of return, whereas the return and principal value of investment securities fluctuate with changes in market conditions. Securities offered through Raymond James Financial Services, Inc. Member FINRA/SIPC. Investment advisory services offered through Raymond James Financial Services Advisors, Inc. Birch Run Financial is not a registered broker/dealer and is independent of Raymond James Financial Services. Birch Run Financial is located at 595 E Swedesford Rd, Ste 360, Wayne PA 19087 and can be reached at 484-395-2190.

Any rating is not intended to be an endorsement, or any way indicative of the advisors abilities to provide investment advice or management.  This podcast is intended for informational purposes only.

(All data in today's podcast is courtesy of FactSet).

More economists are suggesting that the FED is done raising interest rates.  While it's important to note that past returns do not indicate future results, today, we look at some historical data to form an opinion of what might happen after interest rates have peaked.  Alex and Ed sent a note out to clients outlining what the performance of the stock and bond markets in the 12 months following the last six rate hike cycles.   They also discussed 4 periods of very high stock returns over the last 15 years that many "market timers" missed.

You can request a copy of this note by emailing Alex and Ed below, and we break it down in today's podcast.

Alex mentions that after 5 of the last 6 rate hike cycles, The S&P 500 generated a positive return, averaging 20.6%. And immediate term bond returns made money in all six of these periods, averaging 14.6%.  Again, this does not guarantee future returns, but it's important to look at historical data.

Ed then covers 4 recent unexpected high stock return periods.  These all occurred in different environments: March 2009 during the Great Recession,  October 2011 amid economic uncertainty overseas, late 2019 after a very bad Christmas Eve, and of course most recently during the pandemic in March 2020.

Why does the market rise in such times of negativity? Ed explains the psychological conditions at play here, that we've seen play out historically.

As always, Alex and Ed preach the values of diversifcation and a long term plan.  And trying to "time the market" can often be catastrophic for your financial future.

You can always email Alex and Ed at info@birchrunfinancial.com or give them a call at 484-395-2190.

Or visit them on the web at https://www.birchrunfinancial.com/

Alex and Ed's Book: Mastering The Money Mind: https://www.amazon.com/Mastering-Money-Mind-Thinking-Personal/dp/1544530536

Any opinions are those of Ed Lambert and Alex Cabot and not necessarily those of RJFS or Raymond James. The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. There is no assurance any of the trends mentioned will continue or forecasts will occur. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. The examples throughout this material are for illustrative purposes only. Raymond James does not provide tax or legal services. Please discuss these matters with the appropriate professional. Diversification and asset allocation do not ensure a profit or protect against a loss. Past performance is not indicative of future returns. CDs are insured by the FDIC and offer a fixed rate of return, whereas the return and principal value of investment securities fluctuate with changes in market conditions. Securities offered through Raymond James Financial Services, Inc. Member FINRA/SIPC. Investment advisory services offered through Raymond James Financial Services Advisors, Inc. Birch Run Financial is not a registered broker/dealer and is independent of Raymond James Financial Services. Birch Run Financial is located at 595 E Swedesford Rd, Ste 360, Wayne PA 19087 and can be reached at 484-395-2190.

You can always email Alex and Ed at info@birchrunfinancial.com or give them a call at 484-395-2190.

Or visit them on the web at https://www.birchrunfinancial.com/

Alex and Ed's Book: Mastering The Money Mind: https://www.amazon.com/Mastering-Money-Mind-Thinking-Personal/dp/1544530536

Any opinions are those of Ed Lambert and Alex Cabot and not necessarily those of RJFS or Raymond James. The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. There is no assurance any of the trends mentioned will continue or forecasts will occur. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. The examples throughout this material are for illustrative purposes only. Raymond James does not provide tax or legal services. Please discuss these matters with the appropriate professional. Diversification and asset allocation do not ensure a profit or protect against a loss. Past performance is not indicative of future returns. CDs are insured by the FDIC and offer a fixed rate of return, whereas the return and principal value of investment securities fluctuate with changes in market conditions. Securities offered through Raymond James Financial Services, Inc. Member FINRA/SIPC. Investment advisory services offered through Raymond James Financial Services Advisors, Inc. Birch Run Financial is not a registered broker/dealer and is independent of Raymond James Financial Services. Birch Run Financial is located at 595 E Swedesford Rd, Ste 360, Wayne PA 19087 and can be reached at 484-395-2190.

Any rating is not intended to be an endorsement, or any way indicative of the advisors abilities to provide investment advice or management.  This podcast is intended for informational purposes only.

(Data in this podcast courtesy of YCharts and FactSet)

Today, Alex Cabot and Ed Lambert of Birch Run Financial dive into the residential real estate market, where interest rates have climbed, but home prices remain high.

Ed begins by giving us some context. From late 2019, to late 2021, prices had risen by 29% to $423,000, and interest rates had dropped to about 3%.

Why haven't home prices dropped significantly despite higher interest rates? Ed explains that a lack of supply plays a significant role. The demand has decreased somewhat, but the supply has decreased just as much, keeping prices high. He uses the example of first-time homebuyers facing a challenging market.

Alex takes the historical perspective, discussing how interest rates have doubled from their 10-year average post-financial crisis. He emphasizes that while today's rates seem high relative to recent years, they are not statistically anomalous in the broader historical context. He also explains the concept of home prices relative to disposable income.

Alex underlines the advantage of a 30-year fixed-rate mortgage, which offers a one-way valve.  You can negotiate it down, but your bank can't negotiate it up. Your payments stay the same, but your income typically rises over time, making the mortgage more affordable in the long run. 

You can always email Alex and Ed at info@birchrunfinancial.com or give them a call at 484-395-2190.

Or visit them on the web at https://www.birchrunfinancial.com/

Alex and Ed's Book: Mastering The Money Mind: https://www.amazon.com/Mastering-Money-Mind-Thinking-Personal/dp/1544530536

Any opinions are those of Ed Lambert and Alex Cabot and not necessarily those of RJFS or Raymond James. The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. There is no assurance any of the trends mentioned will continue or forecasts will occur. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. The examples throughout this material are for illustrative purposes only. Raymond James does not provide tax or legal services. Please discuss these matters with the appropriate professional. Diversification and asset allocation do not ensure a profit or protect against a loss. Past performance is not indicative of future returns. CDs are insured by the FDIC and offer a fixed rate of return, whereas the return and principal value of investment securities fluctuate with changes in market conditions. Securities offered through Raymond James Financial Services, Inc. Member FINRA/SIPC. Investment advisory services offered through Raymond James Financial Services Advisors, Inc. Birch Run Financial is not a registered broker/dealer and is independent of Raymond James Financial Services. Birch Run Financial is located at 595 E Swedesford Rd, Ste 360, Wayne PA 19087 and can be reached at 484-395-2190.

You can always email Alex and Ed at info@birchrunfinancial.com or give them a call at 484-395-2190.

Or visit them on the web at https://www.birchrunfinancial.com/

Alex and Ed's Book: Mastering The Money Mind: https://www.amazon.com/Mastering-Money-Mind-Thinking-Personal/dp/1544530536

Any opinions are those of Ed Lambert and Alex Cabot and not necessarily those of RJFS or Raymond James. The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. There is no assurance any of the trends mentioned will continue or forecasts will occur. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. The examples throughout this material are for illustrative purposes only. Raymond James does not provide tax or legal services. Please discuss these matters with the appropriate professional. Diversification and asset allocation do not ensure a profit or protect against a loss. Past performance is not indicative of future returns. CDs are insured by the FDIC and offer a fixed rate of return, whereas the return and principal value of investment securities fluctuate with changes in market conditions. Securities offered through Raymond James Financial Services, Inc. Member FINRA/SIPC. Investment advisory services offered through Raymond James Financial Services Advisors, Inc. Birch Run Financial is not a registered broker/dealer and is independent of Raymond James Financial Services. Birch Run Financial is located at 595 E Swedesford Rd, Ste 360, Wayne PA 19087 and can be reached at 484-395-2190.

Any rating is not intended to be an endorsement, or any way indicative of the advisors abilities to provide investment advice or management.  This podcast is intended for informational purposes only.

Over the last 18 months, the interest rate environment has changed dramatically.  And despite all the headlines, there are actually pros and cons to higher interest rates.   Alex Cabot and Ed Lambert of Birch Run explain.

First, the downside.  Alex explains how higher interest rates can slow economic growth and strain households.  First,  the impact on borrowing and investment: individuals are less likely to take out loans when interest rates are up, and business may delay or scale back business plans.  This can lead to increased demand and slower economic growth.

Households are also left with less disposable income when more money is going to interest, which can lead to decreased consumer spending.  Further, the housing market is particularly sensitive, with potential homebuyers hesitating jumping into the market.    Finally, small businesses can be affected as well, particularly those who rely on borrowing to finance operations and expansion.

But the news is not all bad - Ed is here to talk about the silver linings of higher rates.   First, higher interest rates will slow inflation, which is good for everyone.   Also, for savers and investors, higher interest rates can be a good thing for fixed income, cash deposits, and CD's.   These rates were previously at or near 0%!  This means that investors now have alternatives to the stock market that weren't feasible just a couple of years ago.

You can always email Alex and Ed at info@birchrunfinancial.com or give them a call at 484-395-2190.

Or visit them on the web at https://www.birchrunfinancial.com/

Alex and Ed's Book: Mastering The Money Mind: https://www.amazon.com/Mastering-Money-Mind-Thinking-Personal/dp/1544530536

Any opinions are those of Ed Lambert and Alex Cabot and not necessarily those of RJFS or Raymond James. The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. There is no assurance any of the trends mentioned will continue or forecasts will occur. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. The examples throughout this material are for illustrative purposes only. Raymond James does not provide tax or legal services. Please discuss these matters with the appropriate professional. Diversification and asset allocation do not ensure a profit or protect against a loss. Past performance is not indicative of future returns. CDs are insured by the FDIC and offer a fixed rate of return, whereas the return and principal value of investment securities fluctuate with changes in market conditions. Securities offered through Raymond James Financial Services, Inc. Member FINRA/SIPC. Investment advisory services offered through Raymond James Financial Services Advisors, Inc. Birch Run Financial is not a registered broker/dealer and is independent of Raymond James Financial Services. Birch Run Financial is located at 595 E Swedesford Rd, Ste 360, Wayne PA 19087 and can be reached at 484-395-2190.

You can always email Alex and Ed at info@birchrunfinancial.com or give them a call at 484-395-2190.

Or visit them on the web at https://www.birchrunfinancial.com/

Alex and Ed's Book: Mastering The Money Mind: https://www.amazon.com/Mastering-Money-Mind-Thinking-Personal/dp/1544530536

Any opinions are those of Ed Lambert and Alex Cabot and not necessarily those of RJFS or Raymond James. The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. There is no assurance any of the trends mentioned will continue or forecasts will occur. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. The examples throughout this material are for illustrative purposes only. Raymond James does not provide tax or legal services. Please discuss these matters with the appropriate professional. Diversification and asset allocation do not ensure a profit or protect against a loss. Past performance is not indicative of future returns. CDs are insured by the FDIC and offer a fixed rate of return, whereas the return and principal value of investment securities fluctuate with changes in market conditions. Securities offered through Raymond James Financial Services, Inc. Member FINRA/SIPC. Investment advisory services offered through Raymond James Financial Services Advisors, Inc. Birch Run Financial is not a registered broker/dealer and is independent of Raymond James Financial Services. Birch Run Financial is located at 595 E Swedesford Rd, Ste 360, Wayne PA 19087 and can be reached at 484-395-2190.

Any rating is not intended to be an endorsement, or any way indicative of the advisors abilities to provide investment advice or management.  This podcast is intended for informational purposes only.

In this episode of "Nurturing Financial Freedom,"  Alex Cabot and Ed Lambert of Birch Run Financial discuss the first half of 2023 and its impact on the economy and markets. Ed highlights the resilience of the economy despite interest rate hikes and the unexpected outperformance of growth stocks, particularly in the technology sector. 

What does this mean moving forward? Alex emphasizes the importance of diversification and caution against relying on predictions and forecasts. We stress the need for a well-designed plan and asset allocation that can weather any market conditions.

All data in today's episode are courtesy of YCharts.At Birch Run Financial, we believe in a time-tested, diversified, long-term approach.  Alex, Ed, and their team are always happy to have a conversation about your investment questions, whether you're a client or not.

You can always email Alex and Ed at info@birchrunfinancial.com or give them a call at 484-395-2190.

Or visit them on the web at https://www.birchrunfinancial.com/

Alex and Ed's Book: Mastering The Money Mind: https://www.amazon.com/Mastering-Money-Mind-Thinking-Personal/dp/1544530536

You can always email Alex and Ed at info@birchrunfinancial.com or give them a call at 484-395-2190.

Or visit them on the web at https://www.birchrunfinancial.com/

Alex and Ed's Book: Mastering The Money Mind: https://www.amazon.com/Mastering-Money-Mind-Thinking-Personal/dp/1544530536

Any opinions are those of Ed Lambert and Alex Cabot and not necessarily those of RJFS or Raymond James. The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. There is no assurance any of the trends mentioned will continue or forecasts will occur. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. The examples throughout this material are for illustrative purposes only. Raymond James does not provide tax or legal services. Please discuss these matters with the appropriate professional. Diversification and asset allocation do not ensure a profit or protect against a loss. Past performance is not indicative of future returns. CDs are insured by the FDIC and offer a fixed rate of return, whereas the return and principal value of investment securities fluctuate with changes in market conditions. Securities offered through Raymond James Financial Services, Inc. Member FINRA/SIPC. Investment advisory services offered through Raymond James Financial Services Advisors, Inc. Birch Run Financial is not a registered broker/dealer and is independent of Raymond James Financial Services. Birch Run Financial is located at 595 E Swedesford Rd, Ste 360, Wayne PA 19087 and can be reached at 484-395-2190.

Any rating is not intended to be an endorsement, or any way indicative of the advisors abilities to provide investment advice or management.  This podcast is intended for informational purposes only.

Money markets, CD's and bonds are paying reasonable interest for the first time in years.  Today, Alex Cabot and Ed Lambert of Birch Run Financial take us on a "crach course" on fixed income and how it works.

Alex starts by explaining bonds - essentially a loan, or contract between a lender and borrower.  He also explains the three main bond categories - government, corporate, and agency.   Additionally, we talk about maturity lengths and tax-equivalent yields. 

Alex runs through an equation that might be easier to read than hear:

For interest rates, to find the taxable equivalent of a tax-free bond: take  the yield and divide by (100 - your effective tax rate).

Example: Your tax rate is 37%, so 100-37 = 63.    For a 4% yield on a tax free bond, take 4 divided by .63 = 6.35.  Your taxable bond would need to be 6.35% to yield the same as a 4% tax free bond.

Like all investments, bonds carry risk - they are just different than the risks associated with the market.  Ed explains credit risk, interest rate risk, and reinvestment risk.   Remember the tradeoff - the higher the interest, the higher the risk.  We also talk about long-term vs short-term bonds, and current rates, as of our recording on June 22, 2023.

All data in today's episode are courtesy of YCharts.At Birch Run Financial, we believe in a time-tested, diversified, long-term approach.  Alex, Ed, and their team are always happy to have a conversation about your investment questions, whether you're a client or not.

You can always email Alex and Ed at info@birchrunfinancial.com or give them a call at 484-395-2190.

Or visit them on the web at https://www.birchrunfinancial.com/

Alex and Ed's Book: Mastering The Money Mind: https://www.amazon.com/Mastering-Money-Mind-Thinking-Personal/dp/1544530536

You can always email Alex and Ed at info@birchrunfinancial.com or give them a call at 484-395-2190.

Or visit them on the web at https://www.birchrunfinancial.com/

Alex and Ed's Book: Mastering The Money Mind: https://www.amazon.com/Mastering-Money-Mind-Thinking-Personal/dp/1544530536

Any opinions are those of Ed Lambert and Alex Cabot and not necessarily those of RJFS or Raymond James. The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. There is no assurance any of the trends mentioned will continue or forecasts will occur. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. The examples throughout this material are for illustrative purposes only. Raymond James does not provide tax or legal services. Please discuss these matters with the appropriate professional. Diversification and asset allocation do not ensure a profit or protect against a loss. Past performance is not indicative of future returns. CDs are insured by the FDIC and offer a fixed rate of return, whereas the return and principal value of investment securities fluctuate with changes in market conditions. Securities offered through Raymond James Financial Services, Inc. Member FINRA/SIPC. Investment advisory services offered through Raymond James Financial Services Advisors, Inc. Birch Run Financial is not a registered broker/dealer and is independent of Raymond James Financial Services. Birch Run Financial is located at 595 E Swedesford Rd, Ste 360, Wayne PA 19087 and can be reached at 484-395-2190.

Any rating is not intended to be an endorsement, or any way indicative of the advisors abilities to provide investment advice or management.  This podcast is intended for informational purposes only.

We have a two-part episode for you today, as we begin our fifth year of the Nurturing Financial Freedom Podcast.

First, the FED raised interest rates by 0.25% on May 3rd.  Are they finally done raising rates?  Ed Lambert of Birch Run Financial wades into that question.  Are more hikes coming, and if so, will they be small or large?   We look at the current state of the economy and where we believe things are going. 

Next, Alex Cabot is here to debunk three market "hacks" that investors sometimes get pulled into.  They are:

1. "Sell in May and Go Away"
2. "The January Effect"
3. "Buy the Rumor, Sell The News"

All data in today's episode are courtesy of YCharts, and Alex walks through the numbers of why these market fallacies don't work. At Birch Run Financial, we believe in a time-tested, diversified, long-term approach.  Alex, Ed, and their team are always happy to have a conversation about your investment questions, whether you're a client or not.

You can always email Alex and Ed at info@birchrunfinancial.com or give them a call at 484-395-2190.

Or visit them on the web at https://www.birchrunfinancial.com/

Alex and Ed's Book: Mastering The Money Mind: https://www.amazon.com/Mastering-Money-Mind-Thinking-Personal/dp/1544530536

You can always email Alex and Ed at info@birchrunfinancial.com or give them a call at 484-395-2190.

Or visit them on the web at https://www.birchrunfinancial.com/

Alex and Ed's Book: Mastering The Money Mind: https://www.amazon.com/Mastering-Money-Mind-Thinking-Personal/dp/1544530536

Any opinions are those of Ed Lambert and Alex Cabot and not necessarily those of RJFS or Raymond James. The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. There is no assurance any of the trends mentioned will continue or forecasts will occur. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. The examples throughout this material are for illustrative purposes only. Raymond James does not provide tax or legal services. Please discuss these matters with the appropriate professional. Diversification and asset allocation do not ensure a profit or protect against a loss. Past performance is not indicative of future returns. CDs are insured by the FDIC and offer a fixed rate of return, whereas the return and principal value of investment securities fluctuate with changes in market conditions. Securities offered through Raymond James Financial Services, Inc. Member FINRA/SIPC. Investment advisory services offered through Raymond James Financial Services Advisors, Inc. Birch Run Financial is not a registered broker/dealer and is independent of Raymond James Financial Services. Birch Run Financial is located at 595 E Swedesford Rd, Ste 360, Wayne PA 19087 and can be reached at 484-395-2190.

Any rating is not intended to be an endorsement, or any way indicative of the advisors abilities to provide investment advice or management.  This podcast is intended for informational purposes only.

We celebrate 4 years of the Nurturing Financial Freedom Podcast with our 48th episode today. Thank you for listening!

As we reflect on the first quarter of 2023, we will do a recap of the markets (data courtesy of YCharts), as well as reflect on some of the headlines and lessons learned so far this year.

Alex starts us off by looking back at the markets, which were largely positive in 2023, as of our recording date of April 20th.  After a stock and bond recap, we spend some time explaining bonds and why they're often a misunderstood asset class.   Also, gold is interesting.   Alex explains why this precious metal is considered both a "panic asset" and an "inflation hedge," perhaps erroneously!

Finally, Alex comes back to one of our favorite principles in this show - diversification.  Why is it such an important concept to both understand and utilize?

In the second half of today's episode, Ed talks about not believing the predictions of market prognosticators.  Two in particular predicted a very bad Q1 in 2023, which as Alex explained, didn't happen.   You simply can't predict the markets.  Ed explains what would have happened to your portfolio had you made a panic move based on what you saw or read.

Next, many investment management firms suggested buying dividend stocks and ignoring growth stocks.  Ed has the numbers to show why that wasn't a good idea!    We also look at the housing market.  While "doom and gloom" were predicted, that didn't come to fruition either!  Yes, interest rates have gone up, but a limited supply has prevented any drastic changes in housing prices.

Finally, Ed breaks down the collapse of Silicon Valley bank, an event that dominated the headlines for a few days last month.  Why did the bank collapse?  Ed walks us through the two biggest reasons.

So what did we learn, or perhaps have reinforced, in the first quarter of this year?  Don't panic, stay diversified, and focus more on the long-term than the short term.  The world is scary right now, but it always has been and always will be.

Alex Cabot and Ed Lambert are always happy to have a conversation with our listeners, whether they are a client or not.  Financial literacy is something they are very passionate about at Birch Run Financial.

You can always email Alex and Ed at info@birchrunfinancial.com or give them a call at 484-395-2190.

Or visit them on the web at https://www.birchrunfinancial.com/

Alex and Ed's Book: Mastering The Money Mind: https://www.amazon.com/Mastering-Money-Mind-Thinking-Personal/dp/1544530536

There are special risks associated with investing with bonds such as interest rate risk, market risk, call risk, prepayment risk, credit risk, reinvestment risk, and unique tax consequences. To learn more about these risks and the suitability of these bonds for you, please contact your financial advisor.

Gold is subject to the special risks associated with investing in precious metals, including but not limited to: price may be subject to wide fluctuation; the market is relatively limited; the sources are concentrated in countries that have the potential for instability; and the market is unregulated.

Investing involves risk and you may incur a profit or loss regardless of strategy selected, including asset allocation and diversification.

Dividends are not guaranteed and must be authorized by the company's board of directors.

There are special risks associated with investing with bonds such as interest rate risk, market risk, call risk, prepayment risk, credit risk, reinvestment risk, and unique tax consequences. To learn more about these risks and the suitability of these bonds for you, please contact your financial advisor.

Gold is subject to the special risks associated with investing in precious metals, including but not limited to: price may be subject to wide fluctuation; the market is relatively limited; the sources are concentrated in countries that have the potential for instability; and the market is unregulated.

Investing involves risk and you may incur a profit or loss regardless of strategy selected, including asset allocation and diversification.

Dividends are not guaranteed and must be authorized by the company's board of directors.

You can always email Alex and Ed at info@birchrunfinancial.com or give them a call at 484-395-2190.

Or visit them on the web at https://www.birchrunfinancial.com/

Alex and Ed's Book: Mastering The Money Mind: https://www.amazon.com/Mastering-Money-Mind-Thinking-Personal/dp/1544530536

Any opinions are those of Ed Lambert and Alex Cabot and not necessarily those of RJFS or Raymond James. The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. There is no assurance any of the trends mentioned will continue or forecasts will occur. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. The examples throughout this material are for illustrative purposes only. Raymond James does not provide tax or legal services. Please discuss these matters with the appropriate professional. Diversification and asset allocation do not ensure a profit or protect against a loss. Past performance is not indicative of future returns. CDs are insured by the FDIC and offer a fixed rate of return, whereas the return and principal value of investment securities fluctuate with changes in market conditions. Securities offered through Raymond James Financial Services, Inc. Member FINRA/SIPC. Investment advisory services offered through Raymond James Financial Services Advisors, Inc. Birch Run Financial is not a registered broker/dealer and is independent of Raymond James Financial Services. Birch Run Financial is located at 595 E Swedesford Rd, Ste 360, Wayne PA 19087 and can be reached at 484-395-2190.

Any rating is not intended to be an endorsement, or any way indicative of the advisors abilities to provide investment advice or management.  This podcast is intended for informational purposes only.