Living Small

Living large has been the mantra for many over the years. However, I don’t know if you’ve noticed, but there is growing interest in living tiny. And by tiny, I mean 84 square feet of living space tiny. There are books and blogs and magazines dedicated to this burgeoning movement. In fact, Charlotte recently hosted the Tiny House Conference geared to help educate and train people interested in building their own Lilliputian domain. The conference sold out in short order.

So what’s so appealing about living in a home smaller than 500 square feet? In her book “The Big Tiny: A Built-it-Myself Memoir,” Dee Williams details her journey from a Craftsman-style bungalow to a 95-square foot home on wheels. Williams had been diagnosed with congestive heart failure in her 30’s and after suffering a heart attack at 40, she realized cleaning gutters and tending to the mundane chores that go with home ownership were no longer important. So she sold the Craftsman, built her tiny house and parked it in the yard of her good friends where she has lived happier and much longer than the doctors predicted.

Tiny House enthusiasts have multiple and varied reasons for going small. Some want to live sustainably, others want to be self-sufficient and off the grid, while others are just looking for a way to simplify their lives and focus on the things that matter to them most. That was Dee Williams’ motivation. She realized that it wasn’t stuff that made her happy, but spending time being with friends and doing the stuff she loved that mattered most.

While I don’t think my husband and I and our two cats would be very happy in 95-sqaure feet of living space, I do think we could be quite happy in 1000 square feet. When I look at these tiny houses, I think about how much less there is to clean, and to heat and air-condition. That means more time and money to do the things I like to do, and that equates to more happiness.

But, after living in the same house for more than 20 years, we have accumulated a lot of stuff. Some of that stuff has not seen the light of day in years. In order to move into a 1000 square foot home, I am going to get rid of about 1000 square feet of stuff. And I, like a lot of people, have a hard time doing just that. Never mind that I haven’t used those brown-and-white transfer ware platters in years, or that my Princess Dianna style wedding gown will never fit my much more petite daughter. And what about the drawer of fabric my mother-in-law gave me when she downsized? I don’t even own a sewing machine!

And yet, I know it is time for me to start on this goal. The kids are on the opposite side of the country (and they’re not moving back in!). I love my garden, but I am really beginning to hate maintaining a 50+ year-old house. And someday, making it up those stairs will not be as easy.

I think those platters are heading to the consignment shop this weekend.

Tracy Allen, CFP®
Financial Advisor

Market Update Through 4/15/2014

as of April 15, 2014
Total Return
Index 12 months YTD QTD MTD
Stocks
Russell 3000 22.03% -0.02% -1.96% -1.96%
S&P 500 21.25% 0.29% -1.49% -1.49%
DJ Industrial Average 14.10% -1.27% -1.12% -1.12%
Nasdaq Composite 27.05% -3.10% -3.89% -3.89%
Russell 2000 25.03% -3.46% -4.53% -4.53%
EAFE Index 11.56% -2.21% -2.04% -2.04%
Bonds
Barclays US Aggregate -0.22% 2.58% 0.73% 0.73%
Barclays Intermediate US Gov/Credit -0.08% 1.51% 0.50% 0.50%
Barclays Municipal 0.65% 4.32% 0.97% 0.97%
Current Prior
Commodity/Currency Level Level
Crude Oil $103.75 $101.58
Natural Gas $4.57 $4.37
Gold $1,300.30 $1,283.80
Euro $1.38 $1.37

Mark A. Lewis

Director of Operations

Market Update Through 3/31/2014

as of March 31, 2014
                                                              Total Return
Index 12 months YTD QTD March
Stocks
Russell 3000 22.61% 1.97% 1.97% 0.53%
S&P 500 21.86% 1.81% 1.81% 0.84%
DJ Industrial Average 15.66% -0.15% -0.15% 0.93%
Nasdaq Composite 30.18% 0.83% 0.83% -2.45%
Russell 2000 24.90% 1.12% 1.12% -0.68%
EAFE Index 15.88% -0.18% -0.18% -0.43%
 
Bonds
Barclays US Aggregate -0.10% 1.84% 1.84% -0.17%
Barclays Intermediate US Gov/Credit -0.13% 1.00% 1.00% -0.30%
Barclays Municipal 0.39% 3.32% 3.32% 0.17%
 
  Current Prior
Commodity/Currency Level Level
 
Crude Oil $101.58 $98.89
Natural Gas $4.37 $4.43
Gold $1,283.80 $1,379.00
Euro $1.37 $1.39

Mark A. Lewis

Director of Operations

Financial Decisions in an Information-Overload World

info overwhelm

Let’s face it. We live in an age and a culture where information, expert advice, and countless opinions bombard us daily. Within minutes of picking up an iPad or Android we can easily become confused, scattered, and totally overwhelmed on a subject we were feeling pretty confident about just yesterday. This seems to be particularly true when making a financial decision. It starts with the well-intended notion that we ought to first do our research, we should certainly read articles from all the smartest experts, and maybe it’s a good idea to consult with Uncle Jim and Cousin Marge too. And then we’ll have the answer. Only somewhere along our data-finding, information-overload excursion, we lose ourselves and the initial shreds of any real clarity we had to begin with. Now what?

I think there’s a better way and it involves both doing your homework and making decisions from a clear, calm, anxiety-free place. A short case study might help shed some light on the matter. I recently sold my home in Atlanta, relocated to Asheville, and am currently in the market for a new home. But wait, the Wall Street Journal says home prices have jumped significantly in the past year. Should I wait until that cools off? Bond experts say the time to buy is now because mortgage rates are only going higher. Oh no. My dad thinks I should keep renting. What?! You get the idea.

So what’s the solution? How do we use the right information in the right doses all without losing sight of ourselves? After many years of sometimes easy but oftentimes painful lessons, I’ve discovered a few principles that seem to work without fail. Here they are:

Principle #1, stay focused on your “business”. By your “business” I mean things that you can control. Things like doing thorough research (of homes, financial advisors, stocks, etc…), creating and sticking to a budget, improving your knowledge base, etc… It also means staying out of areas that are not your business, i.e. outcomes. In my experience, outcomes are pretty much nobodies’ business and trying to wrestle out a certain result typically leads to stress and anxiety. More on that in Principle #3. Thus, I find it’s best to focus on activities within your control. An important point is to undertake your “business” with gentleness and kindness. If you’re feeling run down or more confused, it’s time to take a break. On the whole, when you stick to your business and enjoy the process, there’s less stress and more clarity – a great place from which to make any decision.

Which leads me to Principle #2: avoid making decisions from a place of anxiety, fear, or urgency. This can be difficult because sometimes we face important and potentially life-changing decisions that seem to go hand-in-hand with stress and anxiety. Although we may believe big decisions are inherently stressful, I’ve found that it’s usually the expectations we put on ourselves to produce a perfect outcome that kicks up all the anxiety. We hold onto the misguided belief that we have to make the best or perfect decision. That we’re not allowed to change our minds if something doesn’t work out, or that we can’t adjust our course as we go. That fact is no one can know how things will turnout, even with the best research and intentions. In that case, big decisions don’t have to be so scary. When we take this perspective it’s much easier to make a decision from a clear, calm place. A place that paradoxically is much more likely to lead to a good outcome.

Finally, principle #3, let go of the outcome. This is hard. Probably the hardest part of the whole darn decision-making process. We want what we want. We are certain that we know that this or that particular result would seriously be the best possible outcome. As much as we genuinely believe our vision of the way things ought to go is the best possible way things could go, attaching to a specific outcome only kicks-up anxiety, fear, and usually a whole lot of stress. I’ve found that in the few instances when I’ve actually let go of the outcome (typically against my will), things turned out better than I could have imagined.

So there you have it, three easy principles to help you make better financial decisions. Use them (or not) as they make sense for your circumstances. But above all, experiment, have fun, and enjoy the process.

Consumers Ride to the Rescue Again

Despite recurring unpleasant experiences with ice, sleet, snow, exceptionally low temperatures, wind and rain so far in 2014, consumers have kept on spending. On March 13, the Census Bureau gave us our first look at retail and food services sales for February.

The chart shows this story. After a 0.6 percent decline in January from December, total retail and food services sales posted a 0.3 percent increase in February from January. The total of $427.2 billion is the best February ever and 1.5 percent above February 2013.

untitledhttps://research.stlouisfed.org/fred2/series/RSAFS

It is the fourth-best month ever, behind only October, November and December (in descending order) of 2013. In what is undoubtedly at least partially due to the unusually bad weather endured by so many parts of the nation, by far the best increase (6.3 percent) above February 2013 was racked up by nonstore retailers. So long as people had electricity they could order over the Internet or by telephone.

The second biggest increase was posted by “Health and personal care stores,” where sales rose by 5.5 percent above a year before. “Building materials and garden equipment supplies dealers” were next with a 3.2 percent year-over-year rise.

Gasoline stations had sales 4.6 percent lower than a year earlier. That was the result of slightly lower crude oil prices and less demand.

No matter the weather, people kept eating. Sales at “Food and beverage stores” were up 2.8 percent from a year earlier with the grocery stores part up 2.4 percent. “Food services and drinking places” (aka bars and restaurants) saw sales rise by 2.6 percent.

Consumers remain reasonably optimistic about the economic future for good reasons. The demand for labor is rising, which means that jobs are easier to find while wages and salaries are also growing.

With rising incomes, consumers have more money to spend on goods and services. This causes increases in retail sales and new orders from retailers to restock shelves keep industrial production growing. That in turn leads to more employment and more income. Economists call this lovely situation a virtuous cycle.

While the period since the end of the recession in June 2009 is still the weakest expansion in over 100 years in the US, we are finally entering a virtuous cycle. This year should be the first year with real GDP growth above 3.0 percent since 2005. That would be very good news indeed. The weather will improve and most of the output lost in the first quarter will be made up in April, May and June.

There will be some impact on the monthly profile of retail sales in 2014 because Easter is several weeks later this year than last. This year it will be on April 20 and last year it fell on March 31. Thus, we may have to wait for May to get a clear picture of exactly how robust retail sales are.

The Census Bureau will release revised data on retail and food services sales for the period from January 2012-March 2014 on April 30. Those data may change our understanding of consumer spending patterns somewhat. They will undoubtedly reaffirm the vital contribution of consumer spending to US economic growth.

Dr. James F. Smith
Chief Economist

 

How much is that Doggie in the Window?

According to a recent announcement from the American Pet Products Association, Americans spent $55.7 billion last year on their pets. That’s billion, not million. An article at Time.com (http://time.com/#23451/pets-dogs-cats-spending-americans/) cleverly noted that the figure is $10 billion more than Germany spends on its defense budget.

I admit I am one of these people. My little rescue dog hit the lottery when she came to live with me. She has seven dog beds, if you include her car seat (yes, car seat). She owns more jackets than I do, although they are all for function, not fashion. She has multiple, color-coordinated harnesses, collars, and leashes so that she need never feel ashamed about how she looks. When we go on vacation, she has as much luggage as I do. Yes, she is spoiled rotten.

I am not alone. Bill Geist of the “CBS Sunday Morning” program tells a hilarious story about his “free” rescue dog: http://www.cbsnews.com/news/even-cat-people-fall-in-puppy-love/.  Sometimes, the unexpected costs can really add up.

In our industry, I see a number of fees that some people pay for investments: high commission rates for certain products, either on the front or back end of the transaction; frequent, unnecessary trade costs from a practice called “churning;” and expensive investment counsel fees. Before long, that simple purchase of 100 shares of ABC Widget Works has cost a fortune in added fees.

When you are evaluating an investment advisor, consider how the person earns his or her money. Does he receive a commission for his or her investment recommendations? Is he or she directly affiliated with a broker? Does he or she charge an additional investment counsel fee? While he or she may promise a great gross return on investment, the net return after all of those fees may be no better than what you would find with a simple savings account.

At Parsec, we do not receive commissions for any of the investment products we recommend – no commission from the trade, no commission for recommending a certain security, nothing. In addition, when we recommend mutual funds, we look for funds that do not carry significant internal fees.

We are not beholden to a particular broker. We have four brokers who we like to recommend, based upon client needs.

We do charge an investment counsel fee that we think is reasonable to industry standards. When you sign a service agreement, you see upfront what your fee schedule will be. On a quarterly basis, you receive a reports package that includes information about net-of-fee investment performance, current holdings, et cetera. We are also here to help with planning – everything from college savings to retirement to estate. We like to think service goes beyond placing a trade. Our clients pay us to act as a partner in planning their future.

Everything in life – from owning a home to adopting a rescue dog – has the potential for unexpected costs. How you invest your money, though, should be a little more straightforward. With a little research in advance, you can evaluate whether or not fees charged for service are reasonable and affordable.

Now, if you will excuse me, I need to order organic food for my doggie. And maybe I will pick up a bottle of shampoo. She told me she is tired of smelling like a bowl of oatmeal.

Cristy Freeman, AAMS
Senior Operations Associate

Market Update Through 3/14/2014

as of March 14, 2014        
  Total Return
Index 12 months YTD QTD MTD
Stocks        
Russell 3000 21.45% 0.57% 0.57% -0.85%
S&P 500 20.28% 0.07% 0.07% -0.88%
DJ Industrial Average 13.21% -2.53% -2.53% -1.47%
Nasdaq Composite 31.98% 1.90% 1.90% -1.41%
Russell 2000 25.60% 1.75% 1.75% -0.06%
EAFE Index 10.26% -3.54% -3.54% -3.78%
         
Bonds        
Barclays US Aggregate 0.56% 2.01% 2.01% -0.01%
Barclays Intermediate US Gov/Credit 0.60% 1.31% 1.31% 0.00%
Barclays Municipal  0.76% 3.34% 3.34% 0.19%
         
    Current   Prior
Commodity/Currency   Level   Level
         
Crude Oil    $98.89    $102.59
Natural Gas    $4.43    $4.61
Gold    $1,379.00    $1,321.60
Euro    $1.39    $1.38

Mark A. Lewis

Director of Operations