Monthly Archives: June 2016

Join Us in Congratulating Jason Mishaw Obtaining a Masters in Finance

We are honored to congratulate Jason Mishaw, who recently completed his Masters of Finance from the Bauer College of Business at the University of Houston. Most impressive is the fact that Jason completed his degree, while working full-time. It comes as no surprise then, that Jason came to us by way of a recommendation from one of his graduate professors who had high regard for Jason’s character, intellect, and work ethic.

Jason began his career in asset management as an intern with Merrill Lynch, after receiving his Bachelor of Science in Biochemistry and Bachelor of Arts in Economics from Rice University. Although he comes from a family of doctors, Jason took a different path and developed a keen passion in following the financial markets, as he enjoys helping people reach their long-term wealth-building goals.

Outside of the financial world, Jason enjoys kayaking along the Brazos River, hiking various trails in Texas State Parks, and playing chess.

Willis Johnson, CFP®

President and CEO

At Willis Johnson & Associates, we take the time to understand you by combining employee benefits expertise and financial planning wisdom with the emotional elements of your life.

When To Take Social Security Benefits

Are you making the right decisions when it comes to Social Security income?

By Amanda Muse

Did you know that if you are born 1943 or later, the Social Security income benefit increases by 8% each year past the full retirement age that you postpone taking the benefit up to age 70? Oppositely, if you are born after 1960, your income benefit decreases by 6% for each year that you take the benefit early.

It is important to consider life expectancy when deciding whether or not to delay benefits or to take them early. For a married a couple with both spouses at the age of 65 today, there is a 47% chance that at least one spouse will live to age 90. In addition, when one spouse passes away, the surviving spouse can only keep one income benefit. This makes it even more important to take life expectancy into account when making decisions regarding Social Security income.

The answer for when to take Social Security income benefit is different for every person and we recommend speaking with a professional to get advice on what choice is best for you.

Sources: www.ssa.gov, JP Morgan Asset Management Retirement Insights Guide to Retirement 2016 Edition

Financial Fact 2.1

 

 

 

 

 

 

Financial Fact 2.2

Amanda Muse

Amanda Muse is a paraplanner at Willis Johnson & Associates. This position gives her the opportunity to help clients reach their financial goals while working for a firm that gives independent, comprehensive, client-centered advice. Amanda enjoys building relationships with clients, and helping them navigate through life’s challenges.

As a recent graduate of the Rice University CFP® Certification Education Program, Amanda will be sitting for the exam in July of 2016.

We take the time to understand you by combining employee benefits expertise and financial planning wisdom with the emotional elements of your life.

What Nick’s Reading | A Portfolio Rebalancing Strategy That May Add Value to Your Investment Portfolio

Why you should consider active rebalancing in your portfolio versus calendar rebalancing

Questions to ask when rebalancing your portfolio to maintain your target allocation

By Nick Johnson, June 2016

Recently, I found myself speaking with clients about the benefits of a strategy we call active rebalancing, also known as opportunistic rebalancing, and how it can potentially add value to portfolio returns versus the more simplistic strategy of calendar rebalancing. We believe this is an appropriate strategy for the current market environment, which is why this is one of the many tools we employ in order to enhance our investment management style.

 

What is active rebalancing? As a matter of fact, what is calendar rebalancing? Why is it important to me? Before we answer these questions, let’s discuss portfolio drift. The term portfolio drift is a fancy way of explaining how the current weighting of a portfolio shifts away from its intended target due to market movement.

 

As an example, let’s say you have an account with the target allocation of 65% equities and 35% fixed income. Then let’s say the equity markets headed north and your initial allocation to equities morphs into 72% of your total portfolio instead of the 65%. You are now overweight in equities and unintentionally taking more risk than you prefer.

 

Calendar rebalancing is a simplistic methodology used to correct this phenomenon. At a set time, for instance, once a year or every quarter, you will rebalance your portfolio to the optimal allocation. This also ensures that the 72% equities do not keep growing to become 85% equities. Calendar rebalancing has the potential to increase returns in a portfolio over time since there is a tendency to sell assets that run up in value, also referred to as trimming the winners, and buy assets that lose value, also known as adding to the losers. As Warren Buffet once said, “I prefer to buy when others are fearful, and sell when they are greedy.”

 

Why do we prefer active or opportunistic rebalancing better? When using this strategy, trades are placed to rebalance the portfolio as soon as the portfolio gets far enough away from its target allocation. To correct the above example using this strategy, you may rebalance your portfolio as soon as it hits 75% equities, which would be 10% away from the ideal allocation of the 65% equities.

 

Over time, you are more likely to sell the winners and trim the losers at a better price when using the active rebalancing strategy compared to calendar rebalancing because active rebalancing does not force the portfolio far enough away from the target allocation. Therefore, the timing of placing trades in calendar rebalancing is more likely to be suboptimal since the portfolio is only reviewed at predetermined intervals. Opportunistic Rebalancing remedies this situation by waiting until the portfolio allocation is stretched far enough away from the ideal allocation to necessitate a rebalance.

 

For further reading regarding opportunistic rebalancing, click here to read an article by Gobind Daryanani’s, CFP®, PH.D. that appeared in the Journal of Financial Planning.

 

Why do we believe active rebalancing make sense right now? Over and above the standard returns benefits Daryanani modeled, we believe this strategy will add additional value to returns during periods of increased volatility. Since we currently see ourselves in a slow grind up in this current volatile market period, we believe opportunistic rebalancing is an appropriate strategy. This is because since there are more highs and lows in a market there are more opportunities to buy low and sell high.

 

The information provided is not intended to be a substitute for specific individualized tax, legal or estate planning advice. Individual situations will vary. We can assist you in making informed decisions. No single solution meets all investor’s needs. Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

What Nick's Reading Portrait

Nick Johnson, CFA®, CFP®

 

Nick Johnson believes that financial planning is more than numbers on a balance sheet and a standardized process. People are unique and should be treated as such.

 

As Vice President and a Wealth Manager at Willis Johnson & Associates, his goal is to really get to know his clients, all the while providing a proactive approach to comprehensive wealth management.

 


The Markets (as of market close May 31, 2016)

Market Update 2016Following an up-and-down path similar to what occurred in April, the indexes listed here ultimately closed the month of May higher (except for the Global Dow). The month started with a run of positive returns, only to see much of the month’s gains given back by the end of May. Information from the Fed that interest rates could be raised as early as June could be interpreted as both a positive (improving economy) and a negative (higher lending rates), which seemed to flummox investors a bit. Several economic indicators picked up the pace in May as employment remained steady, the housing market gained some momentum heading into the summer months, and consumer prices increased along with mounting oil prices.

Long-term bond yields fluctuated during the month, ultimately closing at essentially the same yield as April’s closing return. The price of gold (COMEX) decreased by month’s end, selling at $1,217.50–about $77 below April’s end-of-month price of $1,294.90.

Click for the Full Update

The information provided is not intended to be a substitute for specific individualized tax, legal or estate planning advice. Individual situations will vary. We can assist you in making informed decisions. No single solution meets all investor’s needs. Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

Congratulations to Willis Johnson & Associates

Thank You for Making it Possible

2016top2We would like to take the time today to share a proud moment honoring Willis Johnson & Associates. The Houston Business Journal recognized Willis Johnson & Associates as a Top Wealth Management Firm earlier this Spring. Our firm is excited to be listed as #13, but our firm’s goal is to be #1 to our clients.

We want to take this moment to thank our clients for allowing us to enter your lives. Thank you for taking us on this journey with you and letting us help you throughout the different stages of your life. We truly appreciate the trust that you put into the firm and we are continuously striving to help make your dreams a reality. We also want to acknowledge our team at Willis Johnson & Associates for their outstanding work and dedication. Thank you for making this accomplishment possible.

Sincerely,

Willis Johnson, CFP®

President and CEO

P.S. The list was gathered by responses from surveys completed by firm/practice representatives, SEC filings, and HBJ research. Firms are ranked by assets per local client. Click here to view the list.

Third-party rankings are not a guarantee of future investment success and do not ensure that a client or prospective client will experience a higher level of performance or results. These ratings should not be construed as an endorsement of the advisor by any client nor are they representative of any one client’s evaluation.

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