Annual Returns Are Almost Never Average; Volatility Is A Normal Part Of Investing

by

   

Going back over the last 50 years, the average return of the S&P 500 has been about 10%. However, the annual total return has only fallen inside of a range of +/- 2% of the average (8-12%) three times. When looking at bonds, which are typically thought of as a more reliable return stream, annual returns only came within the +/-2% range of the average 12 times. There were a handful of times when both came close to the annual averages in the same year, but there was only one year when stocks and bonds were both in the +/-2% range.

Source: FactSet as of 12-31-22. Past performance is not indicative of future results.

As the Fed continues to battle inflation aggressively and the full impact of the rate hikes is still working through the economy, we believe it is important for investors to remember that there will always be bumps along the road of investing. This applies to bull and bear markets and whether we are in a recession or in an expansion. The market is always looking ahead, and it is natural that the market will therefore have more volatility because daily, weekly, and monthly up and down moves are tied to whether economic or market data met or did not meet investors’ expectations at a certain point in time. The markets are rarely a reflection of what is happening today but are more often a reflection of what investors believe about tomorrow, next month, next quarter, and even next year. We believe the best path along that road is to create and follow a financial plan that can allow investors to keep perspective during those inevitable bumps, and to take advantage of opportunities as they present themselves over time.

One of the most important factors leading to achieving long-term returns is time in the market. An investor must be invested for the long term to achieve long-term results – that seems obvious, but it is a key lesson that many investors forget as they try to time the market to only experience the good years! As shown in the prior chart, investors rarely achieve the average returns in any given year. The chart below illustrates that the market is much more volatile when looking at shorter time periods (red dots represent intra-year declines and gray bars are full year returns). Even in the short term, market corrections and negative periods do not always equal negative years for the U.S. stock market by the time the year is over.

Source: FactSet as of 11-4-22. Past performance is not indicative of future results.

Trying to successfully time the market means investors must make two correct decisions: when to get out of the market and when to get back in, or vice versa. It is often “easier” to get out than it is to get back in, as markets tend to start recovering long before economic or psychological conditions make investors comfortable getting back into the market. History tells us that missing out on the market’s best days has been shown to reduce performance over time.

Although returns are never guaranteed, history indicates that by staying invested longer investors can receive better returns. In looking at 1-year, 5-year, 10-year, and 20-year S&P 500 historical rolling returns, the market teaches us that anything can happen in one year (there are more red bars in the first row), but as we extend our investment horizon from the short term to the longer term, the odds of better outcomes and positive returns are increased over time as shown in the 10-year and 20-year rolling periods.

Source: FactSet as of 12-31-22. Past performance is not indicative of future results.

Overall, we believe time in the market is more important than timing the market, and we believe that building a portfolio strategy that helps you stay invested is key to achieving success. Building good habits and creating a financial plan that sets boundaries to remove some of our natural emotional responses that may derail our best intentions is crucial for investors’ long-term performance.

If you have any questions or would like to discuss further, please reach out to your client service team or call 404.264.1400.    

Download this article here.

Important Disclosures

This article may not be copied, reproduced, or distributed without Homrich Berg’s prior written consent.

The information reflects Homrich Berg’s views, opinions, and analyses as of April 30, 2023. Past performance is not a guarantee or indicator of future results. Inherent in any investment is the potential for loss. This commentary is for informational purposes only and should not be considered legal, tax, accounting, or investment advice. Views and opinions expressed herein are as of the date posted unless indicated otherwise, with no obligation to update. Certain information herein has been obtained from third party sources believed to be reliable but has not been independently verified. Discussions pertaining to potential future events and their impact on the markets are based on current expectations and analysis. Actual results may vary.

©2023 Homrich Berg

Help Your Kids March Towards Financial Security – Part 1

by

As parents, we all want to raise kids to be independent and competent adults. We work hard to build their self-esteem, their confidence, and guide them through life’s many choices. However, we don’t always do a lot to build their financial skills. Sometimes this is because it’s difficult or uncomfortable to talk about money. Sometimes it’s because we don’t feel very confident in our own financial prowess and are concerned about questions that we may not know how to answer ourselves.

Regardless of the reasons, if we want our kids to be financially stable and secure, it is up to us to start teaching them about money basics. One easy way to do that is to teach them about saving once they get their first job or their first dollar of gift money, chore money, or allowance.

Before the paycheck comes, discuss these questions with your kids:

  • Does your family believe in tithing or making charitable contributions with those first dollars?
  • What percentage of income goes to “emergency” savings? (We recommend at least 10% for those with bills to pay but perhaps much higher for a teen.)
  • What percentage of income goes to long-term financial security? (We recommend at least 10% for those with bills to pay but perhaps much higher for a teen.)
  • Do you expect your child to contribute toward college expenses? What percentage should be saved for that expense?
  • How about buying or maintaining a car? Do they have responsibilities toward that or for gas and insurance? It’s important to learn that those things get expensive!
  • Do they need to start paying for their cell phone or clothing?
  • How much should be free to spend on “want to have,” fun, and entertainment?

If teens get a check and are free to spend it all on anything they want, they go down a spending path. Their wants can get bigger and bigger, and they can become less and less discerning about how they spend their money. When it is time to pay their own bills, it is a brutal shift in their reality! Most of the money goes to taxes and living expenses. Where’s the fun stuff? (We know, parents feel the pain every payday.)

However, if they learn that funds should be allocated to financial security first, to basic needs next, and then to “fun stuff,” they learn how life really works for adults. They are building up their own resources and starting to create financial security for themselves separate from their parents. We all hope this creates a feeling of pride and independence for them and puts them on a path to self-sufficiency and financial confidence.

We recommend that parents have these discussions with kids of all ages but especially with teens, whether or not they currently have a job, and share their own beliefs and practices around saving. It’s ok to admit to not knowing all the answers but offering to work together to find good answers is key. It’s also important to admit to your own financial mistakes and regrets. No one has been perfect with their money, and there is always much to be learned from mistakes. It is great to teach our kids the power of learning from successes and failures. Henry Ford said it best, “The only real mistake is the one from which we learn nothing.” You bet.

In future posts, we’ll continue to help our kids March Toward Financial Security by discussing the benefits of opening and funding checking and savings accounts, starting Roth IRA accounts, and using other tools to help them improve their financial skills.

To learn more or get help talking to your kids about money basics, please email me at gildea@homrichberg.com.

Download a copy of this article here.

Important Disclosures

This article may not be copied, reproduced, or distributed without Homrich Berg’s prior written consent.

All information is as of date above unless otherwise disclosed.  The information is provided for informational purposes only and should not be considered a recommendation to purchase or sell any financial instrument, product or service sponsored by Homrich Berg or its affiliates or agents. The information does not represent legal, tax, accounting, or investment advice; recipients should consult their respective advisors regarding such matters. This material may not be suitable for all investors. Neither Homrich Berg, nor any affiliates, make any representation or warranty as to the accuracy or merit of this analysis for individual use. Information contained herein has been obtained from sources believed to be reliable but are not guaranteed. Investors are advised to consult with their investment professional about their specific financial needs and goals before making any investment decision.

©2023 Homrich Berg.

Homrich Berg Expands Investment Team, Adds Sarah Hauptman as Director of Real Estate

by

$11B Atlanta-based RIA responds to investor interest in real estate investments, enhances suite of private investment offerings.

ATLANTA —April 21, 2022 — In response to continued client demand for private real estate investments, Homrich Berg (HB) has added real estate industry expert Sarah Hauptman as Director of Real Estate. She joins current HB Principal Ross Bramwell on the real estate sourcing and due diligence team.  HB has invested directly in individual real estate properties for over 25 years in HB client portfolios, and has committed over $300 million to direct real estate investments for HB clients during the past five years alone.

With over 15 years of experience in commercial, multifamily and other real estate sectors across industries like industrial and hospitality, Hauptman brings next-level expertise to the dedicated HB investment team. Hauptman’s background working with institutional investors in the private real estate space provides a deep network and knowledge that will benefit HB clients looking for private real estate investments. “I’m eager to leverage my experience in a new way to help expand Homrich Berg’s private investments platform,” explains Hauptman. “I’ve worked in the Sunbelt region over the last several years, and I’m excited to help clients capitalize on the potentially lucrative opportunities in this growing region.”

Additionally, HB’s expanded private markets offerings will provide clients an option for potentially hedging against rising inflation. Thomas Carroll, President of Homrich Berg, explains how this mindset — and the growing popularity of private investments — confirmed the need for adding another real estate expert like Hauptman to the team.

“Real estate is an easy to understand, tangible asset, which makes it an attractive alternative investment option to consider, especially down here in the Sunbelt region,” explains Carroll. “We’re excited to have Hauptman join our real estate team and bring her network and skills in the real estate investing space, working hand in hand with our already extensive bench of private investments experts.”

Hauptman, an Atlanta native, recently moved back to the region after spending time in Dallas working with E2M Partners, Compatriot Capital and most recently Banner Oak Capital Partners, where she managed industrial assets across the Southeast region.

About Homrich Berg

Founded in 1989, Atlanta-based Homrich Berg is a national independent wealth management firm that provides fiduciary, fee-only investment management, and financial planning services, serving as the leader of the financial team for our clients, including high-net-worth individuals, families, and not-for-profits. Homrich Berg manages over $10 billion for more than 2,000 family relationships nationwide.

Andy Berg Named to Barron’s Hall of Fame

by

Congratulations to Andy Berg for being apart of Barron’s Hall of Fame for Financial Advisors. This is an award honoring a group of advisors who exemplify long-term success and commitment to their clients. Each member of the Hall of Fame has appeared in 10 or more of Barron’s annual Top 100 Advisor rankings, and their long-looking commitment to excellence is a hopeful example for the industry to follow.

Homrich Berg Welcomes Evan Byers As Senior Associate

by

ATLANTA – August 12, 2019- Homrich Berg is pleased to announce the appointment of Evan Byers, CFA, CFP®, CAIA as a new senior associate for the firm. “Evan has extensive wealth management expertise and will be an invaluable asset to HB,” said Andy Berg, co-founder and CEO of Homrich Berg. “ My partners and I are proud to welcome him to HB.”

Evan offers clients more than 8 years of comprehensive wealth management experience, serving as an advisor to high net worth individuals, including multi-generational family offices, corporate executives and entrepreneurs. Evan began his investment career at Fifth Third Bank in Cincinnati, where he managed portfolios for High Net Worth clients, Institutional clients and 401k plans. In addition, Evan maintained research and trading responsibilities for a U.S. Large Cap Equity strategy that was utilized by private wealth clients across the greater Fifth Third footprint. More recently, Evan was an Investment Strategist with SunTrust Private Wealth Management.

Evan holds a bachelor’s degree in Finance and Marketing from the University of Kentucky and a master’s degree from Xavier University. He is also a holder of the Chartered Financial Analyst designation, the Chartered Alternative Investment Analyst designation and has earned the Certified Financial Planner™ designation.

Evan maintains a volunteer position with InheritGA – The Georgia Trust for Historical Preservation and enjoys spending time participating in various financial literacy initiatives sponsored by the ASFIP Foundation. He lives with his wife Paige, and their two dogs in Buckhead.

Andy Berg Named Finalist For National RIA CEO Of The Year Award

by

Andy-Berg

ATLANTA –August 8, 2019- Homrich Berg is proud to announce that CEO Andy Berg is one of nine finalists nationwide for the WealthManagement.com Industry Awards in the category RIA CEO of the Year. The ranking celebrates companies, individuals, and organizations that demonstrate outstanding achievement in support of financial advisor success. The full list is available at https://events.wealthmanagement.com/2019-finalists/

Mr. Berg is the co-founder and Chief Executive Officer of Homrich Berg, a fee-only wealth management firm. Andy is currently a member of the Financial Planning Association, the Georgia Planned Giving Council, the Atlanta Estate Planning Council, the Atlanta Police Foundation Board, and the North Atlanta Tax Council.

Andy also serves on the board of directors for the Andrade Faxon Charities for Children, the board of the “I Have A Dream” Foundation, the board of the Atlanta Police Foundation, the Corporate Advisory Board for the Georgia Goal Scholarship Program, Inc., the Atlanta Tipoff Club, the Atlanta Opera, the Buckhead Coalition, and the American Diabetes Association. He graduated cum laude with a BS in Management Accounting from Purdue University.

The winners will be announced at the awards ceremony, which will be held at The Ziegfeld Ballroom in New York City on September 12, 2019.

Homrich Berg Named to 2019 FA Magazine’s Top 50 Registered Investment Advisors

by

Homrich Berg is pleased to announce it has been named to the 2019 edition of the Financial Advisor’s Top 50 Registered Investment Advisors. The list recognizes top independent RIA firms from across the U.S.

This is Homrich Berg’s 9th consecutive year on the list and is based on Assets Under Management. View the entire list here: https://www.fa-mag.com/userfiles/0000002019_IMAGES_ALL/FA_ISSUES_2019/07_FA_JULY_2019/RIA_Ranking_Online_2019.pdf

Homrich Berg Named to 2019 Financial Times 300 Top Registered Invesment Advisers

by

June 27, 2019 – Homrich Berg is pleased to announce it has been named to the 2019 edition of the Financial Times 300 Top Registered Investment Advisers. The list recognizes top independent RIA firms from across the U.S.

This is the sixth annual FT 300 list, produced independently by the Financial Times in collaboration with Ignites Research, a subsidiary of the FT that provides business intelligence on the investment management industry.

RIA firms applied for consideration, having met a minimum set of criteria. Applicants were then graded on six factors: assets under management (AUM); AUM growth rate; years in existence; advanced industry credentials of the firm’s advisers; online accessibility; and compliance records. There are no fees or other considerations required of RIAs that apply for the FT 300. The final list includes advisers from 37 U.S. states.

The final FT 300 represents an impressive cohort of established RIA firms, as the “average” practice in this year’s list has been in existence for over 22 years and manages $4.6 billion in assets. The FT 300 Top RIAs hail from 37 states.

This information reflects Homrich Berg’s views, opinions and analyses as of 07/02/2019 unless otherwise indicated, with no obligation to update. The information is provided for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any investment product. The information does not represent legal, tax, accounting or investment advice; recipients should consult their respective advisors regarding such matters. Rankings are not necessarily indicative of future performance.

 

HB Invests in UGA Charles Schwab Financial Planning Center

by

ATLANTA – April 11, 2019 – Homrich Berg is excited to announce the opening of the Charles Schwab Financial Planning Center at the University of Georgia (UGA). The newly renovated building includes three client interview rooms, a state-of-the-art observation lab for students to conduct and record financial planning and tax filing sessions in, and additional office space for faculty and graduate students. This investment dramatically expands the space available for UGA’s financial planning program and will help students enhance their financial counseling skills.

“Homrich Berg knows the importance of hiring and developing experts in financial planning and investments to provide clients with the best possible advice,” said Andy Berg, co-founder and CEO. “My partners and I are thrilled to be able to invest in the next generation of advisors at UGA’s top ranked financial program.”

In February 1918, the UGA Division of Home Economics, later to become the College of Family and Consumer Sciences (FACS), was established. The college’s mission is to advance the well-being of individuals and families over their life span and strengthen communities through the generation and dissemination of knowledge, education of professionals, and provision of research-based programs.

“I could not be prouder of our faculty,” FACS Dean Linda Kirk Fox said. “They have remained steadfast in their commitment to creating a better world through financial literacy, service to community and sending out highly-skilled professionals for a growing industry. This collaboration with Schwab and our partner firms only strengthens that commitment.”