Feature

LET'’S TALK MONEY

Maybe you have it; maybe you don’t. Maybe you have less of it than you did a year ago. Whatever your situation, the advice from financial experts could help.

A PENNY FOR HER THOUGHTS

Local financial advisor shares nearly 25 years of investing insights to explain 2020 volatility and help Bendites maximize 2021 futures

By K.M. Collins

Did 2020 take you to the cleaners? Don’t go it alone recovering in 2021. For a highlight reel of 2020 and to help you get your savings train back on the tracks in 2021, local Registered Principal and Registered Investment Advisor Representative Linda Zivney, with Raymond James Financial Services, Inc., has some insights to offer.

Operating with a team of three women, Zivney personally manages investment accounts for families, retirees and those close to retirement. The comprehensive planning she oversees incorporates attorney and estate planning as well as accounting and taxes. Zivney also leads quarterly “women and investing” meetings.

Overall 2020 market recap

At the risk of stating the obvious, the 2020 market was volatile—with a correction, or lowest drop of the year, on March 23. The S&P 500 finished up at 16% in the black, with the biggest returns in large technology stocks. However, diversified individuals with lower risk investments may not have seen that full return in tech.

“From my standpoint, my job is always risk management,” notes Zivney, who manages accumulative assets north of $200 million.

“Last year I was in constant communication with clients discussing individual levels of risk and how markets were reacting… If my clients weren’t sleeping at night, we reduced their level of risk. Overall, we stayed with a fairly conservative bias for retirees and pre retirees—which is the phase of life for the majority of my clients.”

Getting back on track

Zivney’s top tip for newbies to investing or those working to recover is, “Figure out a way to auto-save from every paycheck, no matter how small. Have automatic forced savings. This is the best starting point for newcomers or anyone. From a retirement account standpoint, maximize your company’s retirement

Workers are advised to auto-save an amount from every paycheck, no matter how small.

K.M. Collins

“Volatility should be a little less than last year. We shouldn’t revisit a low like we saw on March 23, 2020. Stock markets are looking to recover in the second half of the year. Earnings will improve as the economy reopens, all predicated on the continued rollout of the vaccine.”

—Linda Zivney plan offerings, especially if there is a contribution match option. Or, open your own Roth IRA, or traditional IRA,” advises Zivney. April 15, 2021 is the tax filing deadline for 2020. People can contribute to a retirement fund up until this date.

As for personal investing apps like Robinhood, Zivney isn’t a fan. “At the moment, active investment management is more critical than ever,” explains Zivney. For apps that help households with savings and spending, Zivney gives a thumbs up. flying. She’s been on conference calls with investment managers, strategists and economists to gain consensus knowledge. Her findings so far: “The general theme is equities will do better than fixed income; stocks better than bonds. The Fed will keep interest rates low, so there will be little to no returns there. Volatility should be a little less than last year. We shouldn’t revisit a low like we saw on March 23, 2020. Stock markets are looking to recover in the second half of the year. Earnings will improve as the economy reopens, all predicated on the continued rollout of the vaccine. There’s a pent-up demand for supply in leisure and other industries, which will fuel acceleration of economic growth into the second quarter. Inflation should stay low for the next year or two. Because there’s a variance in returns, you need an investment manager weeding out investments which may underperform.” out-performed traditional counterparts. “A lot of money is filtering into socially based investing. Consensus is that it will continue to perform well into 2021. I’m having more and more conversations with clients about ESG. In the past you may have given up returns if you wanted to invest with your heart. Not anymore. There is already a call for this sort of investing in Bend, given our community’s common love for the outdoors and a propensity for generosity.”

Initial Public Offerings

Did you know there were 460 IPOs that came to market in 2020, the largest year recorded in United States history? Although Airbnb is up over 100% (destination vacations, in alignment with Bend industry), Casper Sleep and McAfee security software are down. “Some IPOs do very well, others do not. And remember, most retail investors don’t have access to the IPO market, therefore the average investor does not have initial access. By the time the shares come on the open market the cost to get in could be much higher.”

GOT INVESTING QUESTIONS? WE’VE GOT ETHICAL ANSWERS

Socially responsible investing lets people live their values

By Ashley Moreno

Most people want to live their values—affecting where people spend their money and, increasingly, where they invest it. Certified Financial Planner Jack Schniepp founded Cascade Financial Strategies in Bend’s Old Mill District, and he’s a member of the United States Sustainable Investment Forum. He spoke with the Source about how average people can think about socially responsible investing, even during these difficult financial times.

The following interview was edited for clarity and length.

Source Weekly: What is socially responsible investing?

Jack Schniepp: Socially responsible investing, just the history of it, is really just any form of putting pressure on businesses to do business in a responsible manner. The first socially responsible investors might have been the Quakers not doing business with businesses that were involved in the slave trade. And then it gained steam during the apartheid years in South Africa. A lot of investment companies started pulling out and not having shares of companies that were doing business with South Africa. It’s really finding investments that promote your values as an investor or that don’t go against your values.

SW: Discuss the acronym the industry uses for the work.

JS: The acronym is ESG, and it stands for environmental, social and governance. They’re the criteria that are used when evaluating a company or an investment to determine if it’s socially responsible. If you have a socially responsible investment mutual fund, when they are looking at a company, they’re going to look at profits and returns and price per earnings and all the normal criteria to evaluate an investment. But they’re going to add three more: the ESG. And they’re going to look at where you stand with environmental issues. And then they’re going to look at the social aspect, like what your supply chain looks like. And then governance would be corporate ethics, for example.

SW: What does SRI look like for median Bend households that make about $50,000-$65,000 a year?

JS: Hopefully, most of those people have gotten to a point where they have plan at their work or just a Roth IRA or a traditional IRA on their own. Typically, smaller investors are going to use mutual plans, and mutual funds are great. They provide diversification. They provide professional management. This investor can choose a mutual fund company that, as part of what they do and

Courtesy of Jack Schniepp

Socially responsible investing means adding investment criteria to find companies that do business in accorsome savings. They have a retirement

dance with your values, while still considering all the normal investment criteria, like profits and returns, according to Jack Schniepp.

who they are, promote socially responsible investing.

So, if you were to purchase a large growth mutual fund, instead of just buying the S&P 500 index, you might choose a Calvert fund, which is one of the best known socially responsible mutual fund companies. When you buy a Calvert large blend, Calvert does the job evaluating the company for you so that you don’t own a company that compromises what you believe in. Or they find companies that are actually promoting the things that you value, like clean energy or whatever your cause is. Continued on p. 13

It’s no secret the pandemic and its economic fallout have wreaked havoc on many people’s finances. According to data released by Pew Research Center in September, one in four adults have experienced trouble paying bills since the advent of the coronavirus. For many, that’s meant taking money from savings or retirement to pay the bills. For others, it’s meant borrowing from family or friends. Source: Pew Research Center

According to a December article in Forbes, nearly half of retirees left the workforce before their target retirement age, according to a 2019 Employee Benefit Research Institute survey. Covid-19 has accelerated that, according to Desmond Henry, a Topeka, Kansas certified financial planner. “That strongly suggests that workers in their 50s and 60s should start making contingency retirement plans,” Forbes contributor Bob Sullivan wrote. Source: Forbes

Saving in 2021:

Set aside your “fun money.” In 2018, Americans on average spent about 12% of their income on personal care, entertainment and restaurants, according to the Consumer Expenditure Survey from the U.S. Bureau of Labor Statistics. Since there are fewer entertainment options at the moment, parsing that part of your salary into a savings account could help you get a jump on savings. Source: U.S. Bureau of Labor Statistics

SW: What does SRI look like for people who may predominantly save money through tools like 401Ks, Roth IRAs and IRAs?

JS: If it’s their own IRA or Roth IRA, most of the time they have all the investment options out there. So, they can find the SRI funds that they want. If it’s an employer plan, the employer usually choses one company to be the administrator to provide the investment choices—so you might have a Fidelity or a Vanguard or something like that. Put pressure on or at least bring up with the human resources department that as an employee you want ESG investment options in your plan. Enough investors now have years in South Africa.” put on pressure that you’re going to find the Fidelitys of the world, the Vanguards of the world offering ESG options. It’s a little harder with 401K. You might not be able to be 100% in ESG, but you can get a lot closer now than you could five years ago. In fact, the latest reports are showing that nearly $1 in every $5 in U.S. investments have been invested according to some sort of ESG criteria.

around Bend’s median income of about $50,000-$65,000 a year?

JS: That’s a really tough question. We have financial planning software that we plug in, you know, how much you’re saving now and how many years until retirement. What your life expectancy is and Social Security. Future inheritance. There are so many different variables that you can’t just tell somebody all you need is $1,000,000 by age 50. I would say that on average, depending on your income, if you can put 10% of your savings into a retirement plan, you’re probably doing great. And if a person has an employer-sponsored plan with a match, doing the amount up to the match would be the mini-

“The first socially responsible investors might have been the Quakers not doing business with businesses that were involved in the slave trade. And then it gained steam during the apartheid — JACK SCHNIEPP

mum I’d recommend.

SW: Ideally but realistically, how much should people save for long-term retirement—specifically households

SW: Due to COVID-19, a lot of folks are experiencing reduced and lost wages. In what priority should people place savings tools?

JS: If you are still able to put some into a retirement account, but you’re nervous that your pay is decreased or your job might not be around next month, a Roth IRA or even the Roth 401K, which a lot of companies now allow, gives you some access to funds. An individual can put money into a Roth IRA and because you don’t get a tax break for the initial

Crunching numbers: Those who can put 10% of savings into a retirement plan are on the right path.

contribution—all the tax benefits are later on—the IRS [Internal Revenue Service] allows you to withdraw what you put in without penalty. You can’t take the growth, but if I put $1,000 into a Roth today, six months from now I can pull the $1,000 out, and there’s not going to be a penalty. So that’s a way you’re still investing for retirement longer term, but you do have access.

SW: What would be your advice for a median-income person in Bend who would like to work with a financial advisor? What sort of qualifications and certifications should they have?

JS: I have the CFP, Certified Financial Planner, designation, and it’s still considered the highest designation for financial planning. I think that should be the minimum a person looks for in an advisor, and it’s a lot more common now. And then I think it’s extremely valuable to be with a fee-only advisor, which means they’re only paid an annual fee for their services, for their management and for their financial planning. So, they don’t get paid on one product more than another product. Both the CFP and fee-only designations automatically put the advisor in the position as fiduciary. (Editor’s note: a “fiduciary” must act in the client’s or investor’s best interest.)

And then I’ll mention one more: In the SRI world, there’s only one organization that an advisor can belong to, and that is the United States Sustainable Investment Forum, or the U.S. SIF.

Even among those who have not lost their jobs or taken a pay cut, people reported trouble paying bills. But among those who took a pay cut or lost a job, the impact was much worse. Some 46% of people who lost jobs or experienced pay cuts had trouble paying bills. Source: Pew Research Center

More savings tips for 2021

According to Maurie Beckman of the financial site The Motley Fool, there are four things people should do to set up a budget (and maybe actually save money) in 2021. • Track your expenses so you know what you actually spend—not what you think you spend. • Set a savings goal so you know how much you need to trim from your budget to make it there. • Account for non-monthly expenses, like annual memberships. If your subscription for computer software costs $120 a year, budget $10 into each month to account or it. • Don’t get down to your last dime. Factor in those unforeseen expenses so you don’t stress yourself out when you’ve paid bills and see your bank account balance go to zero. Source: Motley Fool via Nasdaq