Client Axiom | Vol 265
Market Reacts To Delta Variant
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Meet The Axiom®’s Guest Editor: Trevor Nargis
Hi, I’m Trevor Nargis and I’m on Annex’s Investment Management Team.
I’m involved with the day-to-day management and monitoring of the firm’s model investment strategies.
I was born and raised in Milwaukee and am an avid fan of all things Wisconsin sports (big shoutout to the Bucks for bringing home the 2021 NBA title!) In my free time, I enjoy playing soccer and exploring the area with my girlfriend, Ingrid, and my dog, Hank.
I really enjoy the Axiom because it showcases the great talent we have at Annex and is filled with thoughtful insights on a wide array of topics. It provides a great recap of things we’ve been watching and what we’re paying attention to going forward.
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Market Reacts To Delta Variant
Markets are driven by three things: liquidity, sentiment, and earnings – and the current market checks most of those boxes. Annex Wealth Management’s Dave Spano and Derek Felske discuss.
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Space. The Final Frontier. These are the voyages of…the supremely wealthy?
With all the current attention on space flight, let’s take a minute to remember who paved the way, and what they’ve done for us in the process.
Lots of eyes have been on “space” this week. At least, the outer edges of the Earth’s atmosphere.
If we have learned anything these past few weeks, it’s that we better start saving our pennies now if we want to experience a few minutes of weightlessness sometime in the future, when the industry of space travel becomes a seemingly inevitable reality.
Some people love space, the era of intense space travel and discovery, and all the technology that has come along with it. Some people really don’t put much thought into any of it. And somehow, the recent events and attention around these flights may have missed piquing the enthusiasm, or even interest, of both groups of people.
There was a time when the space race, the rapid technological advancements, and the mystery of what lay beyond the atmosphere captured the attention of most of the country. Granted, that may have been in the 1960s, and again with the Space Shuttle, but the idea of men and women sitting on top of a rocket that would be lit and sent hurtling towards the sky was foreign and exciting, and our country did it. We tested and pushed and worked until we succeeded, and some amazing things have come of it.
Before the world looks to the future of what the space travel industry holds for those who can afford tickets to the stars, we thought we’d take you back to the not-so-distant past and remind you of some of the amazing things that have made their way from space into our everyday lives through the innovation of the engineers at good old NASA.
Memory Foam
Initially, NASA wanted to create customized seats for each astronaut in flight to help reduce the effects of G-forces on the body during takeoff and landing. After noting that even during training, an astronaut’s body could change enough to warrant a new seat construction, engineers decided that they needed a more efficient and cost-effective solution.[1] The material developed to pad their seats had the ability to form to an astronaut’s body and then return to a “resting” state when not in use – hence the term “memory” foam. The technology was released for public use in the early 1980s, and is now used in mattresses, football helmet lining, and many other products today.
Jaws of Life
Most of us have seen harrowing rescue videos involving the use of the Jaws of Life. The sheer power of the device allows for the ability to cut through heavy metal and other materials to provide access for a rescue. Extraordinarily, the Jaws of Life do not need to be hooked up to external power or air hoses, as the tool uses miniature explosive charges to pry open the cutter little by little. That same explosive technology was used on a larger scale to separate the solid rocket boosters from the Space Shuttle during flight and was passed on from NASA to create the power for the Jaws of Life, saving countless lives because of it.[2]
Scratch-Resistant Lenses
In 1972, the FDA began requiring that all glasses be shatterproof, which meant out with glass lenses. This led to the production of plastic lenses, which were a softer material and prone to scratch easily. NASA had already invented a scratch-resistant coating for astronaut helmets and plastic aerospace equipment and in 1983, awarded a license to Foster-Grant to continue developing glasses lenses using the anti-abrasion coating.[3] If you are reading this with glasses, you are looking through NASA technology, as it has been adapted for the use in both regular and sunglasses.
Dustbusters
The very original concept for the DustBuster was developed by NASA and was intended to be used for a portable, lightweight, and internally powered drill that could be used to extract samples from the surface of the moon. Black & Decker partnered with NASA to create the drill and then used the same concept and blueprint design to create various handheld tools, including the infamous DustBuster, which was released in 1979 and quickly became a household staple, earning itself a place in the Smithsonian National Museum of American History.[4]
Baby Formula
Found in many baby formulas today, NASA created an algae-based vegetable oil, now known as Formulaid, that has been proven to be highly beneficial to mental and visual development in babies. The original intent was to create a recycling agent that could be used for long-duration space travel, and research was further pursued until Formulaid was created. It contains two important fatty acids that are not naturally produced by the body and though they are found in human milk, thanks to NASA, they are now also added to many enriched baby foods for added benefits.[5]
Grooved Pavement
Many of us have driven on busy highways or seen airport runways that appear to have been gone over with a comb before the concrete set. This is done on purpose to greatly minimize the chance of hydroplaning and is thanks to extensive research by engineers at NASA. An important part of the Space Shuttle mission was the ability to land on a long runway at high speeds successfully. Grooves in the pavement channel water away, reducing the risk of hydroplaning and significantly decreasing the risk of accidents for astronauts and drivers alike.[6]
Camera Phones
Back in the 1990s, NASA’s Jet Propulsion Lab invented a lightweight, miniature imagine system using metal-oxide-semiconductors that required little energy to take high quality pictures from space.[7] Not only do have a vast array of great pictures from space, but now the same technology has been used to create the small cameras that still take great pictures on cell phone and computer cameras.
There are so many more interesting things we could have added to this list, including infrared ear thermometers, water and air purifying systems, and CAT scans! NASA had to solve for problems they didn’t even know existed, and invented new technology as they went, which we still benefit from today. A pinnacle of scientific excellence and determination, NASA may now be looked on as the father of space flight; they paved the way for new space players to follow.
Whatever your view of past or present space flight may be, we can thank NASA for the great strides they’ve made both on the moon and in our daily lives, and for the foundation of space travel that they so diligently set for a future where space can be accessible to the masses.
[1] https://interestingengineering.com/15-space-age-inventions-and-technologies-we-use-everyday
[2] https://www.mentalfloss.com/article/60607/10-everyday-technologies-we-owe-nasa
[3] https://interestingengineering.com/15-space-age-inventions-and-technologies-we-use-everyday
[4] https://www.mentalfloss.com/article/60607/10-everyday-technologies-we-owe-nasa
[5] https://interestingengineering.com/15-space-age-inventions-and-technologies-we-use-everyday
[6] https://www.usatoday.com/story/money/2019/07/08/space-race-inventions-we-use-every-day-were-created-for-space-exploration/39580591/
[7] https://interestingengineering.com/15-space-age-inventions-and-technologies-we-use-everyday
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Poll Recap: How Many Of These Myths Do You Agree With?
In a recent radio segment, Annex Wealth Management’s Brandon Lehman, CFP®️ helps separate fact from fiction when it comes to millionaires.
Myth #1: If you have a high salary, you’re set for life.
You would certainly think that if you make a lot of money, you’re going to have a lot of money. Unfortunately, that’s not always the case. The truth is, if you save a lot of money, you’re going to have a lot of money. Millionaires are good savers.
Fact: On average, 31% of millionaire salaries go to savings.
Myth #2: It’s all luck.
This couldn’t be farther from the truth. The majority of millionaires made their millions as a result of hard work and sacrifices – including blood, sweat, tears, long hours, and time away from family.
Fact: 82% of millionaires are self-made.
Myth #3: You have to make all your money before you retire.
Actually, many millionaires didn’t have a million in the bank before retirement. How is this possible? They continue to grow their money by staying invested and saving, while avoiding over-spending by carefully watching where their dollars are going.
Myth #4: You must have a fancy college degree.
While it does help to have a degree from Harvard or Yale, the vast majority of millionaires do not. They’re self-made who have capitalized on an opportunity or niche, and strived hard in order to reach millionaire status.
Myth #5: They work for big banks, law firms & tech companies.
Well, some of them do, but certainly not all. Whether it’s owning a paper printing company, clothing store, or even a farm – millionaires come in all forms. What they have in common – a willingness to put in the work, which sometimes takes years and a lot of patience.
Fact: 66% of millionaires own their own business.
Myth #6: Success comes easily & early.
Remember the saying – nothing worth having comes easy? We’re seeing the age of millionaires rise, because people are working harder for longer. Not only that, millionaires are getting smarter and diversifying their income streams. They not only own the business – they own the building, and the business pays them rent.
Myth #7: They don’t have anything to worry about.
Everyone has the same thing to worry about – health. Many millionaires have put all their attention into growing a business, while their personal health takes a back seat. For some, retirement is finally the time to focus on self-care.
Millionaires also have a unique set of worries when it comes to leaving money behind. They’ve built a legacy and they want to make sure their family can benefit from it when they’re gone.
Myth #8: They’ve got their future all figured out.
Here’s where Annex comes in. Millionaires are experts at what they do, however there will always be areas where they need help – often times that includes creating a financial plan and roadmap for retirement. Luckily, Annex has experts on every level – estate planning, investment planning, taxes, and retirement. They don’t have to worry about having it all figured out because our team of experts has got their back.
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401(k) Rollover Mistakes to Avoid
401(k)s are a great investment tool. Knowing more about how they work can help save time, money, and headaches.
At Annex, we are constantly looking for ways to make sure your financial plan stays on track, and if you are ready to check in on which 401(k) option is best for you, we encourage you to talk to your advisor today. Knowing where you stand can help avoid any of the pitfalls mentioned by Tom, and we invite you to tap into our vast knowledge to find the best way to make your plan work for you.
Listen in on a conversation with Tom Parks, AIF, CRPS; our resident 401(k) guru at Annex to learn more about how we can help make your 401(k) work for you, how we can help you keep track of your accounts, and things to consider with these plans.
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“Ask Annex is great because the questions are always relevant to what’s happening in the world around us. Our team does a great job of answering Ask Annex questions in a straightforward fashion. It’s also another cool way for us to gain insight into what our readers are paying attention to/thinking about.”
– Guest Editor:
Trevor Nargis | Investment Management Specialist
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This week’s Ask Annex comes from Sue, who asks:
“Real Rate of Return vs. Total Returns in my financial plan?”
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We asked Annex Wealth Management’s Jack Hauser, CFP®:
Total Return is the absolute return on an investment over a period of time that includes interest, dividends, and capital gains. This measure of performance combines both an asset’s appreciation and income production. For instance, if you buy a stock at $100, receive a dividend of $4, and then sell it at $103, you made $7 or 7%.
The Real Rate of Return takes into account inflation. So if you assume in the prior example, that inflation was 3%. Your 7% return is now 4%.
This Real Rate of Return is extremely important when it comes to your financial plan. You not only need your assets to grow over time in order to fund your retirement nest egg, but you also need them to grow faster than inflation in order to preserve your purchasing power.
At Annex, our financial plans typically model a rate of return on investment accounts that outpaces inflation by 3% over a longer time horizon. We do this to stress test your financial plan to make sure that you will be able to accomplish your financial goals. If the Real Rate of Return you’re using in your financial plan results in a high risk of outliving your assets, then we wouldn’t suggest increasing the risk of your portfolio to a level outside your risk tolerance in order to chase higher returns. Instead, we would suggest reviewing appropriate other inputs and outputs of your plan such as when you retire, how much you withdrawal from your portfolios, when to take Social Security, when to turn on a pension, and many many more.
When reviewing your financial plan, it’s important to consider how different Real Rates of Return affect your portfolio’s longevity and if your portfolio’s risk is appropriate relative to your risk tolerance and your risk appetite. Annex Wealth Management would be happy to meet and discuss how this applies to your specific situation.
– Jack Hauser, CFP®
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KNOW THE DIFFERENCE MINUTE:
Research Suggests Retirees Spend 130% Preretirement Salary
KNOW THE DIFFERENCE MINUTE:
Prescription Drug Inflation, Higher Healthcare Costs
ASK ANNEX
What Do You Know About The New Tax Cut & How Will It Affect Me?
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