Jacob Sensiba, Author at The Free Financial Advisor

Jacob Sensible is a financial advisor with decades of experience in the financial planning industry. His journey into finance began out of necessity, stepping up to support his grandfather during a health crisis. This period not only grounded him in the essentials of stock analysis, investment strategies, and the critical roles of insurance and trusts in asset preservation but also instilled a comprehensive understanding of financial markets and wealth management. Jacob can be reached at: jake.sensiba@mygfpartner.com.

Debt Collectors With Attitude

November 20, 2019 by Jacob Sensiba Leave a Comment

Debt collectors and debt collection agencies are a real pain! They’re persistent, and sometimes, they can be downright mean.

However, there are still laws that govern them. If you come in contact with an aggressive debt collector, here’s what you have to know.

Also, if you want to pay off your debt but you are financially broke, you can consider getting a personal loan.

Fair Debt Collection Practices Act

The Fair Debt Collection Practices Act (FDCPA) is the law that governs what third-party debt collectors can and can’t do.

Things they can’t do include calling before 8 am and after 9 pm based on your time zone, call you at work, harass, oppress, or abuse you, lie to you, threaten you with jail time, conceal their identity, disregarding a written request from you to cease contact or dispute a debt.

Debt collectors also can’t reveal any personal information about your debt to people, except your spouse or your guardian (if you’re a minor).

Mail correspondence can’t show that the mailer is from a debt collector. Also, if you hire an attorney and the collector has your attorney’s contact information, they must correspond with your legal counsel, not you.

If the aggressive debt collector violates any of the parameters set by the FDCPA, you have one year from the date of the violation to file a complaint. You can do that by using the online form, here, or by calling (855) 411-2372.

Take notes

If it ever gets to the point where you file a complaint or sue the aggressive debt collector, copious notes will help you make your case.

Get as many details as possible. Time, date, name of the collector, the agency they work for, the debt they are calling about, etc.

Hang up or don’t answer

If the call is from a number you don’t recognize, don’t answer. If the call was important, they’ll leave a message.

Typically, debt collectors are dialing for dollars (calling A LOT), so they typically won’t leave messages. If they do, listen to it and do your research to confirm if it’s legit or not.

In a lot of cases, consumers don’t know what they’re rights are. Even though collectors must abide by the laws set forth in the FDCPA, they might not if they think they’re speaking with an uninformed individual.

If they start badgering you, use aggressive language, or violate the law in any other manner, just hang up the phone.

Write a letter

You can write a letter to a debt collector for two reasons.

One, asking them to stop. They HAVE to stop if you put it in writing. Two, dispute the debt. If you believe that the debt they are trying to collect is fraudulent or not yours, write a letter to dispute it.

Cool heads prevail

Debt collectors are ruthless. Their objective is to get as much out of you as possible before they sell the remaining portion of your debt to the next collector in line.

It’s human nature to get worked up or downright pissed off in this situation, but getting angry won’t help you.

Collectors have been conditioned to withstand a verbal thrashing from consumers. Staying calm will keep your blood pressure down and help you think straight.

Client Experiences

November 13, 2019 by Jacob Sensiba Leave a Comment

Over the years, I’ve heard a lot of stories and I’ve seen client after client make mistakes that set them back. Today, I want to share some of those with you in hopes that you will learn from them.

Obviously, I won’t use the actual names of people in order to protect their identities.

Can’t stop using credit cards

I have a client (Bob) that had a lot of credit card debt. Unfortunately, this debt was accumulated prior to him becoming a customer of mine.

Anyway, he had over $20,000 in credit card debt. One day, he decided to take out a home equity line of credit (HELOC) to pay off that debt, as well as finance some home repairs.

Taking out the HELOC was a good choice for paying off that debt, but the home repairs weren’t necessary. They were wanted and should’ve waited.

Not long after he got the HELOC, he started accumulating more credit card debt. It got to the point where he was back over $20,000 and had to take out another loan to pay that debt off. The most recent loan he took out while a client – and he still is my client. We will see if he can restrain himself enough to not use his credit cards.

There are two things I want you to take away from this.

One, if you take out a loan to pay off credit card debt, you better be darn sure you won’t accumulate any more. Paying off high-interest debt is great, but only if you stop buying with your card.

Two, had he not racked up all that debt in the beginning, he could’ve saved up for those home repairs. That’s the biggest advantage of having a rainy day fund, it’s there when you need it.

Bad financial advisor

I have a client couple, John and Jane, that became a client of mine several years ago. Before me, they had another advisor.

They had an extremely bad experience with this advisor, and it’s because of him my profession gets a bad rap.

This advisor (George), acquired John and Jane’s assets and helped them establish a retirement account. George charged them a fee of 1 percent annually to manage their accounts.

Once the paperwork was signed and the account was set up, George, seemingly, didn’t do another thing for John and Jane.

He let their account sit and collected his 1 percent per year fee. Obviously, John and Jane were upset and lost a lot of money.

Two takeaways here.

One, this is your retirement savings at stake. When hiring an advisor, you really need to do your homework. Have multiple meetings with him/her. Get an idea of their character and what’s important to them. You owe yourself to be picky.

Two, fees will crush you. Every. Single. Time. A trusted advisor should be transparent with their fees, and the fee that they charge should correspond with the services they provide.

If they’re full service, 1 percent is justified. If they only perform a select number of services, then their fee should be less.

Risk-averse client

Barbara has only been a client of mine for a few years. When we first met, she had all of her money in a savings account. All of it!

She was fully invested when the Great Financial Crisis (GFC) took place, and she lost a significant amount of money. So she pulled it all and stuck it in a bank account.

You know as well as I do that had she kept the money invested and rode through the GFC, she would’ve come out so much farther ahead, but the brain doesn’t work that way.

Her psyche was damaged from experiencing those losses to the point where she was no longer willing to take risks.

Thankfully, she’s slowly investing her money and hopefully, will continue to do so.

Making up for lost time

This last story, unfortunately, is all too common. Rick is in his fifties. He hasn’t had the best saving habits, so his retirement account is underfunded.

He still has time to save more and beef up his account, but he’s worried and rightfully so. Everything is expensive, and if you’re not able to work, the money has to come from somewhere.

Along with increasing his savings rate, Rick decides he wants to be more aggressive. Someone in their fifties should have a 50/50 stock/bond allocation. This is a general recommendation, actual allocations will vary by risk tolerance and time horizon.

Rick wants an 80/20 allocation. In my professional opinion, it’s far too risky. I do my best to nudge him back the other way, but he’s insistent and at the end of the day, it’s his money.

In this situation, I’ll have the client sign a consent form stating that they are choosing to not take my advice and that I won’t be held accountable for excessive losses if they occur.

Conclusion

Mistakes happen all of the time. Unfortunately, some happen much more often than others. Part of my job is to recognize those mistakes and correct them before they do too much damage.

Learn before you commit the same errors.

Holiday Saving & Spending

October 30, 2019 by Jacob Sensiba Leave a Comment

With the holidays quickly approaching, I think it’s time we discuss proper spending and saving for this time of year.

The holiday season is a special time of year that brings together family and friends to share a special day with one another.

That said, it also brings along expenses. Buying gifts, food, and for some, plane tickets. What can you do to help save money during this time of year? Let’s find out.

Save!

Your holiday spending plan should start on January 1st. Set up a recurring transfer from your checking to your savings account.

Start with an amount that’s realistic. Personally, I do a weekly transfer. $10 per week. Multiply by 52 and we get $510 (technically) for holiday spending.

Another way to boost your savings is to start with one dollar amount, say $5, and increase it incrementally throughout the year.

There are a ton of savings challenges out there. Check this one out!

Start early

When buying gifts, a lot of people wait to buy big items on Black Friday or Cyber Monday. Regularly marked down items are priced relatively similar to those items that go on sale after Thanksgiving.

Save yourself the hassle and stress, and buy items throughout the year.

Make a list

Create a list of the people you want to buy gifts for. After that, assign a dollar amount to that person. This is how much you will spend on each person.

Here’s an idea for next year. Make that list right away and add it up. Whatever the total is, that’s how much you need to save for your holiday budget.

Another point I’d like to make. If your list is long and the total $ spent is high, you might want to consider removing some people from your list.

I know this might sound harsh, but you don’t have to buy them something. Maybe bake some cookies for those you won’t buy gifts for.

Use tech to your advantage

There are so many apps and programs out there that can help you save money. A few of my favorites are Coupons.com and Gas Buddy.

For online shopping, there are browser extensions and apps like RetailmeNot and Honey that find coupon codes for you.

The link below is an article about 7 different apps that can help save you money during the holidays.

7 Best Apps for Holiday Shopping

Track your spending

There’s no better way to gauge outgoing cash flow than tracking your spending. When you track your spending, you not only figure out how much your spending, but on what.

Better yet, use that list you created earlier and record what you spent on them. It keeps you honest and gives you a “checklist” so you don’t buy for someone more than once.

Make gifts

Handmade gifts are so much less expensive than store-bought gifts (most of the time). Also, in my experience, they are more appreciated than purchased ones.

Take a skill or craft you enjoy and make something special for someone.

Holiday party alternatives

There’s a large number of things you can do instead of your normal holiday party. For one thing, if you do have a party, make it a potluck! Everyone brings a dish so the financial burden of preparation doesn’t fall on one person.

Take the family sledding. Start a Secret Santa. Go for a walk/drive through a neighborhood and admire all of the Christmas lights.

One thing I found when researching for this article that moved me was volunteering at your local food pantry. Serve and set up a meal for those in need.

Treat yourself

There’s one other person I want you to put on that list. Yourself. We bust our backs trying to make a living, and often, we think about treating everyone else, but not ourselves.

This year, do something for yourself. Buy that thing you’ve wanted or take yourself to dinner. Whatever #treatyourself looks like, do it. You deserve it.

Can You Afford Not To Use Index Funds?

October 23, 2019 by Jacob Sensiba Leave a Comment

One of the most popular investment vehicles in use today is the index fund. Recently, the assets under management in the index fund category surpassed that of which is managed in active mutual funds.

That said, what is an index fund? How did it come about? What are the characteristics of an index fund?

What is an index fund?

In its simplest form, an index fund is a passively managed mutual fund that tracks an index. It started out by tracking the S&P 500 and for a long time, that’s all these funds tracked.

Now, there are index funds for anything. The DJIA, biotech sector, micro-cap stocks, the list goes on and on.

In terms of stock market history, index funds aren’t old. The first index fund was created by Vanguard in 1975.

Through the late seventies and into the eighties, the index fund failed to catch on. It seems that only in the last decade or two, index funds were recognized as compounding machines and grew in popularity.

So what’s the big deal? Why are these investments so popular? What are the advantages and disadvantages?

Pros

Low maintenance – Similar to a target-date fund, in the sense that you can invest a percentage of your portfolio in a single index, and leave it for an extended period of time. However, these funds won’t reallocate and shift from stocks to bonds, that’s on you.
Low cost – Most index funds are low cost. I’m talking about the general funds that track large indexes. It also makes a big difference if the fund is with a big fund family or not. The big fund companies have more capital and more products, so they can offer for less. Also, as a general rule, the more specific an index gets, the higher the expense ratio.
Participation in the broad market – you have the chance to grow your principal (original investment) by participating in the potential growth of the stock market

Cons

Concentrated index – most index funds are market cap-weighted, which means the larger companies make up a greater portion of the index. That provides you less exposure to smaller companies AND can leave you concentrated in one industry. Four of the top five companies by market cap are tech companies.
You ride the index up, and down. When the stock market tanks, there’s no protection if you invest in an index. For example, during the Great Financial Crisis, the S&P 500 lost 55%. The Vanguard S&P 500 index (VFINX) lost 55% from peak to trough.

Commonalities with active funds

Active mutual funds and passive index funds do have similar characteristics.

Potential growth – Each of these has the chance to grow and compound over time. History shows that passive has a leg up in this category, but a portfolio manager of an active fund could outperform the index
Target date funds – I briefly mentioned these before, but you pick a date in which you plan to retire. For example, 2040. You would then pick a 2040 target-date fund. At this point in time, the fund would probably be allocated 80/20, stocks/bonds. As we get closer to 2040, the fund will progressively shift its allocation more towards bonds.

What I think about index funds

I’m a big fan of index funds, especially for the general public. Fees, over the long-term, are really good at eating into your returns. Selecting low-cost index funds reduces your fee exposure.

That said, I’m also a believer in active management. When the economy is booming like it has the last 10 years, index funds will win almost every time. However, when the market finally turns over, that’s where an active manager can set themselves apart.

Related reading:

The Pros and Cons of Index Investing

Jacob Sensiba

mygfpartner.com/jacob-sensiba-wisconsin-financial-advisor/

Anxiety, Depression, and Money

October 16, 2019 by Jacob Sensiba Leave a Comment

Levels of anxiety and depression seemingly climb every day. This week, we are covering a different subject. It’s incredibly important, personal, and relevant.

I want to go over my personal struggle with mental illness, the things that I use/do to help, and how I figure out when I need help. Towards the end, I’ll tie in some instances of how your finances can impact your mental health.

My diagnosis

I have anxiety and depression. I was diagnosed earlier this year. Once you can put a name to how you’re feeling, your eyes open.

When I was diagnosed, it forced me to look back on my life and I realized that I’ve had this for a long time. Mannerisms, behaviors, etc. all made sense.

With the diagnosis, however, came a new challenge. How do I treat this? How do I cope?

How I feel

At the time of writing, not great. I call these, funks. A funk means I’m depressed. Reluctant to hang out with friends and family. Reluctant to talk to anyone. I just want to be alone.

That said, the funks don’t usually last long. My current one is going on for four days.

The question I often ask myself when I’m in these funks is, is this the depression or my current situation that’s causing this? The answer is both, but is one playing a bigger role than the other? That question will never have an answer because there is no way of knowing.

What I do

There are a few things that I’ve started to help cope with anxiety and depression.

Exercise – You have to. In my opinion, this is the most important thing you can do for your mental health.
Talk to someone – I go to therapy every three weeks. When I started, I was going every other week, but I got to the point where I felt good enough to wait one more week. It’s also a good idea to have a “person” you can go and vent to. Get it off of your chest.
Journal – Before I go to sleep, I review the day to see how I felt throughout and try to figure out why I was feeling a certain way. I also list a few specific things I was grateful for.
Medication – I’m on an anti-depressant, which has helped, but I also think I need to change this up. Talk to your therapist and/or psychiatrist to get this figured out.
Meditation – I don’t have a formal mindfulness practice. Mine is centered around movement and breathing. Specifically, I do Tai-Chi every morning. It has helped tremendously.

When to get help

I have a very obvious line in the sand for when I need to get more help.

When I’m depressed and in a funk, I know it’s only temporary and will get better, but if I ever think that it won’t get better, that’s the sign.

That’s when the thought of suicide can become more prevalent.

Finances

There are a few examples when your finances can hurt your mental state.

Too much debt – If you are in a hole and can’t see a light at the end of the tunnel.
Feeling like you aren’t where you thought you’d be.
Making just enough to pay your bills, with very little, if any, leftover.
Investments – having an emotional attachment to your portfolio is never good. In this case, I usually recommend people ask themselves two questions.
- What type of portfolio allocation will help me meet my goals?
- What type of portfolio allocation will help me sleep at night?
- The right allocation is usually somewhere in the middle, but it’s a good idea to backtest the allocation to see what you are really comfortable with.

Related reading: The Questions You Need To Ask Yourself

My pledge to you

Whether it’s finance-related or not, I’m here if any of you need to talk.

Mental illness is a big problem in this country and around the world. If you or anyone you know is struggling, utilize the resources below!

Suicide Prevention Resources

Finding Help

Remember, you are never alone. There is always, ALWAYS, someone that wants to help.

Jacob Sensiba

mygfpartner.com/jacob-sensiba-wisconsin-financial-advisor/

New Social Security Legislation

October 9, 2019 by Jacob Sensiba Leave a Comment

We finally have a little movement on Social Security reform! Sometime this fall, the House will introduce legislation and hold a vote in order to keep the Social Security Trust Fund solvent through this century.

What is Social Security?

Social Security is a benefit program introduced during FDR’s presidency. You pay into the program via payroll taxes, commonly referred to as FICA, and then receive a specified amount during retirement.

Social Security also provides disability payments for those who can’t work, as well as spousal benefits for widows/widowers.

The calculation that determines your monthly benefit takes into account your 30 highest-earning years, with at least 10 years, or 40 quarters, needed to qualify.

If you are short a quarter, a year, or more, SSA uses $0 for that period of time, which can drastically reduce your monthly benefit.

That’s enough about the nuts and bolts, let’s dive into the current program, followed by the new legislation.

How healthy is the current program?

It depends on how you define healthy. Currently, the Social Security Administration is paying out more than it’s taking in.

Social Security has a reserve fund that they go to in order to make good on payments. That reserve fund is set to run out in 2035. Now that does not mean that Social Security is doomed!

If nothing is done, the reserve will run out and then benefits will have to get cut. Most calculations are saying a 15%-25% reduction.

The current set up for Social Security is like this:

People born before 1946 – Full-retirement age (FRA) is 65.
People born between 1945 and 1965 will see a 2-month increase in their FRA each year with the cap at 67.
Anyone born after 1964 – FRA is 67.
Current FICA taxes are 6.2% for employees and 6.2% for employers.
Maximum taxable earnings – $132,900 – Anyone who makes more than that does not pay FICA taxes.

Full retirement age (FRA) is the age you must attain in order to receive your full benefit. If you apply early, your benefits are reduced, and if you put off receiving those benefits, you’ll get more.

With that said, let’s get into the new legislation.

Proposed legislation

There are four parts to this new law, which is called the Social Security 2100 Act.

First change – FICA is going up to 7.4% for employees and 7.4% for employers
Second – Maximum taxable income is going up to $400,000
Third – Benefits will see a 2% increase
Four – SSA will use a new index to adjust benefits for the cost of living

My thoughts

This has been a long time coming. The Federal Government desperately needed to act in order to ensure Social Security would be here for the coming generations.

While I like the changes that have been proposed, I have two things I want to gripe about.

One, the 2% bump in benefits was not necessary. Though the Cost of Living Adjustment (COLA) has been minimal in the last few years, it still exists. Benefit recipients will continue to see an increase in benefits.

Two, they did not address the retirement age. As I mentioned, the current FRA is 67. With current life expectancy nearing 80 and improvements in medicine coming every day, this should have been increased, as well as the age cap for collecting benefits.

You have to take benefits when you turn 70, whether you want to or not. If we are living longer, FRA and the age cap should go up. Either way, I’m glad we’re starting to see movement on this front.

Here are some sources and some related reading:

Social Security 2100 Act

Social Security History

Future Financial Status of the Social Security Benefit Program

Tips for Avoiding Social Security Disability Denial

Jacob Sensiba

mygfpartner.com/jacob-sensiba-wisconsin-financial-advisor/

Impeachment And The Stock Market

October 2, 2019 by Jacob Sensiba Leave a Comment

The talk of impeachment is flooding the headlines, so we’re going to explore it, how impeachment proceedings took place in the past, what happened to the market with each instance, and what you should do with your money/investments while these events transpire.

What’s the process?

The first step in any impeachment proceeding begins with a formal inquiry. This is done by the House of Representatives, and that’s where we are at this point in time.

During the inquiry, the evidence is gathered by the house to help make their case. Once they’ve gathered everything they needed, they take a vote.

If that vote passes, it goes to the Senate. They, like the House, review the evidence and take a vote. If the Senate’s vote doesn’t pass, then the President may be acquitted, and things end there.

What history tells us

There have been three impeachment inquiries, with only one actual impeachment.

The first was Andrew Johnson in 1868. The second was Richard Nixon in 1973. The third was Bill Clinton in 1998.

Which one was impeached? Bill Clinton. However, the Senate acquitted him and he was not removed from office.

When Andrew Johnson went through the impeachment process, the stock market (yes there was a stock market back then) really didn’t do anything, finishing that year up 1.5%.

During the impeachment proceedings with Nixon, the United States was in the middle of a recession. From the initial inquiry to the day he resigned from office, the S&P 500 fell about 30%.

With Clinton, however, the economy and the stock market were in the middle of an expansion. From beginning to end, the S&P 500 gained about 28% during his impeachment process.

What history tells us is that the period surrounding the impeachment will lead to greater volatility, but the long-term direction of the market is determined by fundamentals.

Be mindful of the headlines

The current impeachment inquiry with President Trump is dramatically different from the other three.

The internet makes updating the public instantaneous
Algorithmic trading can be programmed to execute orders when publications mention Trump, impeachment, etc.
We’re in the middle of a trade war with China, so uncertainty at home (U.S.) puts Trump in a weaker position to negotiate. What’s more, if impeachment looks more and more likely, Trump may be inclined to make a deal to help his case…even if it’s a bad one.

What should you do?

That depends. If you have 15+ years until you need to access your investments, I would tell you to do nothing. If you’re in retirement or it’s right around the corner, however, I would think about being a little more conservative.

When you grow more reliant on your retirement savings, your primary objective must move from capital appreciation to capital preservation.

I’ll link to several resources that should give you more guidance about retirement planning by age, investing in volatility, and more information about what’s been discussed here.

Our New Low(er) Interest Rate Environment

September 25, 2019 by Jacob Sensiba

With the talk of interest rates and recession in the headlines, I figured it was a good time to check-in, and give a little update on interest rates and how lowering them can impact the economy, issuers, and investors.

Why is the FED cutting?

Basically, the FED is cutting to extend the current economic expansion we are in.

The fundamental reason behind that is lower interest rates encourage corporations and consumers to spend more.

For two reasons.

One, they get paid very little, in interest, to put their money in the bank. And two, they are able to borrow money at lower rates.

Current income needs

People who need income, retirees, for example, invest their money in income-producing securities. Often times, those securities are fixed income instruments, like bonds.

Bonds pay interest on a semi-annual basis. The higher the credit quality of the issuer (company or government entity) the lower the payout. The inverse is true for a low credit quality issuer.

It’s the ever-present adage in investing, more risk equals more potential for reward.

When interest rates continue to creep lower, then those people start to make different choices.

What people are doing now

People are getting paid less, in interest, to invest in high-quality debt issuers, so they’re getting riskier. Meaning, they are investing that money with low credit quality companies and/or government entities.

Their risk of not receiving interest payments and getting their principal (the initial investment) back goes up.

The FEDs tool kit

I’ve touched on this point a few times in the past, but I’m going to hammer it home.

The Federal Reserve, essentially, has two tools. Lowering interest rates and buying Treasuries. Lowering interest rates promotes spending and buying Treasuries provides liquidity.

Because they are lowering interest rates during an expansion (whether we are still in one or not is debatable, but let’s say we are for the sake of argument), they are, effectively, removing the number of tools they have available.

When the next recession comes, my fear is they won’t be able to do enough to help us out of it.

Corporate debt

Currently, the amount of corporate debt in the market is the largest in history. Additionally, the amount of debt that’s rated BBB is also the highest in history.

BBB is the last rung on the investment-grade scale. Investment grade is anything BBB and above.

That’s a problem for basically one reason. When a BBB rated issuer gets downgraded (to BB) they are classified as junk (high-yield). When that happens, they need to tighten up their debt and improve their balance sheet. This means less borrowing and less spending.

It’s a dynamic that feeds itself. The issuer is downgraded, they spend less, GDP gets weaker, more corporations follow suit, and here comes the recession.

Investors

Once the corporate (high-yield) debt pops, issuers of debt will have trouble meeting their obligations. They’ll start to default, and their investors will be left high and dry.

Conclusion

This post is not intended to scare people, it’s to inform.

One last point. Because interest rates have been so low for so long, there are economists/academics that think the lowering of interest rates won’t actually help.

How Does Trade Policy Affect Me?

September 4, 2019 by Jacob Sensiba

With talks of trade and tariffs filling headlines, I thought it fitting to explain what these terms actually mean and how they affect our economy.

Trade

In its most basic form, trade is the exchange of goods and services. What we’re talking about, however, and why this article is so relevant, is global trade.

The current “trade war” between the U.S. and China is about “unfair” trade (so President Trump says). Now I’m not debating as to whether trade between our two countries is fair or if I agree with his use of tariffs, I’m going to explain why this all matters.

China and the U.S. are complete opposites when it comes to trade. China is a net exporter and the U.S. is a net importer. China exports more than it imports and the U.S. is the reverse of that.

China is able to produce goods at a much lower cost because their cost for labor is so low. The U.S., on the other hand, is more costly to employ workers.

Tariffs

President Trump is utilizing tariffs to do two things. One, he’s trying to keep people employed domestically, instead of companies shipping jobs overseas.

A tariff increases the overall price of a good. By doing this, it gives employers an incentive to keep jobs in the U.S. because the money they save by shipping jobs abroad is reduced or taken away.

Two, he wants to reduce our trade deficit. Remember the U.S. is a net importer. By slapping tariffs on Chinese goods, it encourages U.S. consumers to buy products from U.S. manufacturers. Thus, fewer imports from China.

Theory vs. Practice

In theory, this sounds like a great plan, but in practice, however, it’s the consumer that pays the price.

When a tariff is used, the exporting country doesn’t see any taxes or penalties. The end result is an increased cost for each product.

For example, if you bought a pair of headphones for $100 and the electronics that make up those headphones are the recipient of a 15% tariff, those same pair of headphones now cost $115.

Now here’s where things get a little more complicated.

China’s Response

China has retaliated with tariffs of their own, but what they’ve also done is manipulate their currency.

You may have seen that in the news a few weeks ago when President Trump labeled them a currency manipulator.

When Trump put tariffs on Chinese goods, China reduced the value of its currency compared to the USD (U.S. Dollar).

This counteracts the effect those tariffs have.

Why It Matters

One, the markets hate uncertainty, so the more this is dragged out, the less likely we are to see an agreement between the two countries. Uncertainty leads to volatility, volatility leads to selling, and selling leads to declines.

Two, through the use of technology and more efficient supply chains, our planet has become very interconnected.

Global trade is a great thing. Each country has its strengths and weaknesses. When countries can focus on their strengths, we can produce more of something for less cost, and then trade with each other. Everyone wins.

Protectionism

This trade war does the opposite. It’s reducing everyone’s willingness to work together by creating a protectionist environment.

A protectionist mentality favors home country and doing business only in your home country. That restricts global trade and the exchange of goods.

The goal here is creating a fair trade agreement that benefits the global economy and (now) minimizes damage to individual economies.

What You Can Do

The most challenging part about this whole situation is we don’t know what’s going to happen. If a deal gets done, the market will like that, but if a deal doesn’t get done, I see a stock market decline in our future.

How do you prepare then? My best advice is the same as the advice I usually give, allocate according to your risk tolerance and time horizon. Those two things should dictate your investment strategy and whether or not you should be concerned with the outcome of this trade war.

Inexpensive Fall Activities

August 28, 2019 by Jacob Sensiba Leave a Comment

With Fall quickly approaching I thought it’s fitting to write an article about the (inexpensive) activities you can partake in that won’t break the bank.

Below you’ll find a large number of fun things you can do when the leaves start to change.

Go for a hike – Depending on where you go, this can be free! If the hike takes place in a state park, there might be a small fee. Regardless, a hike is a great way to spend time, get exercise, and experience nature.
Pick pumpkins – This is an autumn staple! Go to your local pumpkin patch and pick out your favorite pumpkin. Then figure out what design, pattern, or face you’ll carve into it and go to town!
Have a picnic – Ingredients for sandwiches, potato salad, chips, and a dessert item. What else could you need? Through in an item from below (scenic drive) and a nice spot to set up, and you’re good to go! Inexpensive and relaxing.
Apple orchard – Go apple picking! Gives you a great excuse to go outside, walk, and hand-pick some healthy food for yourself. A typical orchard operation will charge you $1.25-$2.00 per pound.
Local festivals – Most of these are free or cheap to attend, with most of the cost coming from the games and events you participate.
Maze – Many of the fall festivals will have a maze. These are typically made from hay bales. Additionally, farms that have pumpkins to be picked sometimes have a corn maze and/or hayrides. I have one of those near me and it was a ton of fun, and cheap too.
Football games – Local high school games are really exciting to watch. They’re inexpensive to go to, they usually have good food, and you get to show off some hometown pride. Added bonus, you could have a promising player on your team or one on a visiting team to watch. I don’t know about you, but watching a special talent is…well..special!
Haunted house – I’m partial to the scary stuff because I’m into things that frighten me, but haunted houses are awesome. Yes, some are quite lame, but when they’re done right, it’s exhilarating!
Sit around the campfire – This is an incredibly relaxing activity. Sitting around a fire with your family and/or friends, roasting marshmallows, and making smores – can’t get much better. Costs nothing more than marshmallows, graham crackers, and chocolate!
Scenic drive – For me, there aren’t many things that can beat a scenic car ride (the previous item does). Especially in the fall. Trees change colors, there’s a slight nip in the air, and it just smells like autumn.
Scary movie marathon – I understand that scary movies aren’t for everyone, but if you have a few and invite people over that bring additional movies, you can make a long and scary evening out of it. If you don’t have scary movies, go to your local library and check some out. It’s free!
Make collages with leaves – This could be a nice, little craft you can do as a family. Especially if you have young kids. They love getting messy and creating with their hands. They can also have a ton of fun jumping in leaf piles before you pick the leaves out for your collage.
Ghost hunting – Seriously. In doing research for this post, this actually came up, and it surprisingly checks out. There are a number of apps available.

All-in-all, autumn is my favorite time of year. I love the weather, the leaves changing, and all of the fun things you can do. I recommend doing at least one of these activities in the next few months!

Jacob Sensiba

mygfpartner.com/jacob-sensiba-wisconsin-financial-advisor/