dsmWealth February 4, 2021

The chaos of 2020 may be in our rearview mirror, but roadblocks to prosperity lie ahead – trade friction, continuing tumult with the pandemic and its economic disruption, and a view from some quarters that the market is due a pullback.

So how can we wade through 2021 and beyond? For guidance, we turned to six Greater Des Moines financial planners – wealth builders whose job it is to assess the market and the economy that drives it. We asked them all the same question: “What is the one piece of advice you have for managing your portfolio in 2021, given the uncertainty of the pandemic and the economy?”

An expanded version of this story first appeared in the current issue of dsm; read it here.

Deniz Franke, private wealth adviser, Franke Miller Group: The key in building a portfolio is to focus on risk-adjusted returns. There are great performing stocks and funds; however, you have to assess the level of risk you’re taking in order to achieve that return.

Kent Kramer, chief investment officer, Foster Group: Always understand the purpose, and therefore your time horizon, for every investment. Time horizon is so crucial because if you know you’ll need liquidity for certain goals or expenses in the next month or in six months, those dollars need to be held in very low-risk investments. Money that is meant to grow for the next 10 to 20 years in preparation for retirement does not need the liquidity of short-term investments.

Stoy Hall, founder and CEO, Black Mammoth: We believe [2021] will see a huge rebound in the travel market, real estate investment trusts (REITs), and the energy sector. Opportunities we will be investing in will be the commercial real estate and Vrbo-type properties and stocks as people will travel and shy away from crowded hotels.

Clinton Akerberg, managing partner, the Wealth Consulting Group: Stay invested, and buy the dips! Despite a positive outlook, market dips are inevitable and can provide incredible buying opportunities. Americans currently have three times more savings sitting on the sidelines than historical averages.

Chris Cook, chief investment strategist, Gilbert & Cook Inc.: I am not going to tell you to “stay the course.” I am going to advise that you chart the course under the calmest mindset that you can conjure up amid COVID. Periods of stress change our thinking. Humans change their minds, second-guess, feel regret and feel blame. So, on a Sunday afternoon, set a 10-year course you can stay true to. Balance your 10-plus-year optimism (you should have some) with your near-term needs.

Dennis Markway, certified financial planner, Iron Horse Wealth Management LLC: The risks we see and feel today are transitory, so focus on what will endure. And what will endure are your goals, so make sure that every day, week, month and year you are making incremental steps on that path.

Millennials Put a Twist on Prenuptial Agreements

BY STEVE DINNEN

Sorry about that marriage that didn’t last. So now that you have to divvy up assets, what about Mister Mittens? Who gets the cat?

Turns out there is a solution to that – a prenuptial agreement. Millennials, it seems, have put a bit of a twist on these legal documents that expands their application. And it isn’t necessarily confined to the traditional use of a prenuptial agreement, which was to protect assets of the husband, or the wife, when there was a disparity of income and assets. (Prenuptial agreements also have been more common with second marriages, when the spouses typically are older and have built up asset bases of their own that they don’t wish to commingle.)

So pets can be, and are, subjected to prenups. The Wall Street Journal recently reported that embryo ownership now can fall under the governance of a prenup. Ditto for social media use, and even for student debt (although debt you acquired before you got married is not, in a state such as Iowa, a legal responsibility of a new spouse).

The Journal said that experts note that many millennials are children of divorced parents and have seen what can happen financially when a marriage ends. They’ve learned by example to plan ahead. And claim dibs on Mister Mittens.

What Can You Actually Buy With Bitcoin?

BY JACOB BERNSTEIN FOR THE NEW YORK TIMES

In the last 12 months, the value of a single unit of Bitcoin has risen from less than $10,000 to more than $30,000. Companies including Square and IBM are using blockchain, the technology behind the currency, to design and improve digital payments methods.

But what can you actually buy with Bitcoin?

As it turns out, an awful lot. But it won't always be easy.

“Bitcoin is just not the most efficient currency yet,” said Henry Elder, the head of wealth management at Wave Financial, a digital assets firm in Los Angeles.

For example, one can purchase goods from Amazon with Bitcoin, using a third party service called Purse. READ MORE.

Why Buying Life Insurance is a Bargain Right Now

BY MARTHA C. WHITE FOR MONEY.COM

Amid a pandemic that’s claimed 400,000 American lives and counting, you might expect life insurance rates to have risen. It hasn’t happened yet, but experts warn the respite may end soon.

As life insurance expert Chris Huntley wrote last September in Money, life insurance premiums actually fell during 2020, continuing a multiyear trend. For example, a 10-year term policy for a 40-year-old, nonsmoking female in average health with $500,000 of coverage was priced as low as $27 per month in the fall. Only five years earlier, that same policy cost a whopping 50% more — $41 per month.

An academic paper released in December further confirmed the surprisingly limited effects of the pandemic for life insurance buyers in 2020. The analysis, by researchers at Illinois State University and the University of Kentucky, concluded that “despite the increase in mortality risk and significant uncertainty ... there was “limited evidence that life insurance companies increased premiums or decreased policy offerings due to COVID-19.” READ MORE.