Hello and greetings from Integrity Wealth Advisors. We hope you are enjoying the summer and making time for fun activities while dodging the hail. On June 27th, we hosted our annual charity golf tournament. Once again, it was an extremely successful event thanks to the generosity of our sponsors and players, and thanks to the hard work of the volunteer team. We are grateful that $40,000 was raised for The Arc of the Pikes Peak Region, a great non-profit organization in Colorado Springs. For all of you who participated in any capacity, we are deeply thankful for your efforts and involvement.
One of the summer activities in this great state that many people enjoy, including some of us at Integrity, is climbing fourteeners (“14ers”). If you are not familiar with the term, it refers to a mountain with a peak that is 14,000 – 14,999 feet above sea level. Colorado has 58 of them. For me personally, it has become one of the more gratifying activities in this stage of my life. If you have not had the chance to climb one, it is a unique and rewarding experience. Let us consider the parallels between reaching the peak of a fourteener with reaching the peak of a successful retirement.
Setting Your Sights on the Summit
“Why Am I Doing This?”
There is nothing quite like standing on the top of a mountain soaking in the majestic views, appreciating the challenges it took to get there, and enjoying the feeling of accomplishment and camaraderie with others at the top. Having a mental picture of reaching the summit is like envisioning what a successful retirement looks like. It gives you direction, motivation, and a sense of purpose. There will be times when you question what you are doing. It is during those challenging times that you need to remember why. Just as climbers visualize themselves standing triumphantly on the mountain peak, envisioning the joys of a successful retirement can help keep you moving forward during the ups and downs of life.
Proper Preparation
“How Do I Get There From Here?”
The first view of the mountain peak from the parking lot or somewhere along the trail can be intimidating. In much the same way, trying to get from where you are now to where you want to be can also be intimidating. This applies to all stages of life from the early days of building wealth, to the mid-career as you begin to think about what retirement could look like, to life in retirement as you pursue new purpose(s). How can you get “there” (no matter how you define “there”)? The answer is proper planning and resilience.
Planning for a mountain hike includes among other things thinking through the details of proper clothing and footwear (knowing the weather can change quickly), food and drink, how and when to get to a parking spot (the roads are rough sometimes), and researching the trail. It will take some time and energy, but the thought of preparing should not overcome the enthusiasm for reaching the peak. There are people with the experience, training and tools that are happy to help you get ready.
Preparation for and execution of a successful retirement includes managing the various financial planning items such as investments, estate, tax and insurance among other things. It takes time, energy and a sufficient level of understanding to do it well but the thought of preparation should not overcome the enthusiasm for getting “there”. We believe it is essential to work with someone with the right level of experience and proper tools. Those with the CERTIFIED FINANCIAL PLANNER® (CFP®) and CIMA® credentials are a great resource.
Proper planning makes all the difference in the world for working through the inevitable challenges and arriving at your destination.
The Climb
“What Have I Gotten Myself Into?”
During every climb to the top of the fourteeners I have summited in my time in Colorado, there has come a point when I have asked myself “why am I doing this?”. There are physical and emotional ups and downs on the way to the top that have to be managed. Is there a better analogy for what we experience in the economy and investment markets?
Economy
The economy has been resilient. Despite higher interest rates, there were plenty of good data during the 2nd quarter of 2023.
- We received the revised and final 1st quarter GDP growth number (2%), which was surprisingly strong.
- The Federal Reserve (“the Fed”) raised the Fed Funds rate by .25% in May but then took a “hawkish pause” and did not increase the rate in June.
- The Fed’s “dot plot” predictions suggest two more hikes before the end of the year although the markets disagree.
- Year-over-year CPI inflation decreased from 5.0% in March to 3.0% in June.
- Congress resolved the debt ceiling stalemate in June to avoid a default.
- Another bank failure, this time First Republic Bank on May 1st, could have raised fears again about the banking system but JP Morgan’s agreement to purchase the bank from the FDIC appeared to stem the tide.
- Unemployment remained below 4.0% during the quarter helping support continued strong spending by the American consumer.
During this particular quarter, economic data was more positive than negative.
Markets
The last six quarters have been a shocking experience for investors with a dramatic pullback followed by welcomed relief. The first three quarters of 2022 were challenging for both stock and bond investors due primarily to artificial forces (Federal Reserve) rather than natural market phenomena. The last three quarters have been surprisingly strong as the Fed’s artificial influence has begun to subside and enthusiasm around artificial intelligence has boosted the tech sector. US Large Cap stocks, US Small Cap stocks, International Developed and International Emerging Market stocks are all positive for the year, some strongly so. The bond markets have returned to positive territory this year as well (for those of you that like data, please see the tables at the end of this article). The markets are resilient. Please keep in mind that when it comes to stock and bond investing, anything can happen over short periods. When you review stock and bond returns over longer periods of time, the benefits of disciplined investing become much clearer. More on this topic at the end of the article.
We do not know what will happen over the next few years in regards to the global economy or the investment markets. We do know what history has proven over the long run. Success in investing and retirement will come by keeping the end goal in mind and maintaining the discipline it takes to keep moving forward, one step at a time.
Reaching the Summit
“That Was Worth It”
A surprising part of the fourteener summiting experience is how quickly the challenges of the ascent seem to disappear. I have discussed this with multiple people over the years and it seems to be almost universally true. Within minutes of arriving at the top, the memories of the challenges of the climb (some of which occurred within just the 30 minutes prior to summiting) are forgotten. The majestic views, the feeling of accomplishment, the attainment of the goal, the camaraderie shared with everyone else at the top, all work together to make the entire experience seem worth the cost of goal-setting, preparation, and the hard work of the climb.
All of the advisors at Integrity can tell you how this experience parallels with our clients that have achieved success in their finances and navigation of retirement. It is so rewarding for us to help clients set goals, properly prepare for the journey, and then keep their eyes on the destination as they live through the ups and downs of saving, investing, market volatility, and economic cycles. For those that have stayed disciplined and followed our counsel into retirement, they are enjoying the results, appreciating the challenges experienced along the way and feeling a sense of accomplishment that makes it all seem worthwhile.
For those of you that are clients, thank you for allowing us to serve you. For any of you that are looking for new financial planning, investment management or family office services, we would welcome a conversation.
Thanks and enjoy the rest of your summer!
– Jason Akridge and the Wealth Advisor Team
Data
| US Economic Data Points | |
| Negative | Positive |
| High inflation (although trending the right direction) | Consistently strong US labor market |
| High interest rates (not trending the right direction) | Household balance sheet strength |
| Bank failures (although appears to be stabilizing) | Supply chain bottleneck relief |
| Slowing loan growth from banks | Housing market stabilization |
| Increasing commercial real estate challenges | Debt ceiling resolution |
| Some data pointing to a US economic recession | Avoidance of US economic recession up to this point |
Short Term View vs Long Term View of Investment Markets
PAST PERFORMANCE IS NOT PREDICTIVE OF THE FUTURE
| Key Index Returns as of 6/30/231 | ||||
| Index | Asset Class | Year-To-Date | One-Year | Three-Year2 |
| S&P 500 | US Large Cap Core Stocks | 16.89% | 19.59% | 14.60% |
| Russell 1000 Growth | US Large Cap Growth Stocks | 29.02% | 27.11% | 13.73% |
| Russell 1000 Value | US Large Cap Value Stocks | 5.12% | 11.54% | 14.30% |
| Russell 2000 | US Small Cap Stocks | 8.09% | 12.31% | 10.82% |
| MSCI EAFE | International Large Developed Stocks | 11.67% | 18.77% | 8.93% |
| MSCI EM | Emerging Markets Stocks | 4.89% | 1.75% | 2.32% |
| Bloomberg Aggregate | US Investment-Grade Core Bonds | 2.09% | -0.94% | -3.96% |
| ICE High Yield Index | High Yield Bonds | 5.41% | 8.87% | 3.21% |
PAST PERFORMANCE IS NOT PREDICTIVE OF THE FUTURE
1 Data from Eaton Vance Monthly Market Monitor
2 Return is annualized
