Central Penn Business Journal


Rise of the Machines

Written by Michael Sadowski, with special contribution from Tim Decker, AIF®. Posted in Central Penn Business Journal


Feared on first sight, robo-advisers win fans

Fear struck the wealth management industry when robo-advisers--automated, online financial planners--first came on the scene a few years ago. "It was like Godzilla," said Thomas J. Terhaar, an investment consultant with Conrad Siegel Investment Advisors Inc. in Susquehanna Township, Dauphin County. "It would gobble us up and we'd all be out of the business."

Flash forward, and a tool poised to take the investment world by storm still might, but not in the way it was once feared.

Wealth management advisers now see robo-advisers as a useful tool—to an extent—and some firms have embraced the technology by integrating it into their work. A robo-adviser is a web-based tool that relies on a computer algorithm to decide how to invest a client's money without any input from a financial manager.


Rules and Principles for Honest Investing

Written by Tim Decker, AIF®. Posted in Central Penn Business Journal

pushing-ball-uphill 2If you own a business, you probably run it according to a set of principles that you've developed over the years. Though these principles may not be set in stone, you try to abide by them, making exceptions only where justified.

Adhering to certain principles — and rules based on them — is also wise when it comes to investing. But the financial markets are so intricate, vast and, at times, counter-intuitive that there are few hard-and-fast rules you can go by.

But there are some rules and principles that almost always apply, without exception.


Four Points to Keep in Mind in a Down Stock Market

Written by Tim Decker, AIF®. Posted in Central Penn Business Journal

mountainAfter more or less a flat year in 2015, the broad U.S. stock market is down, as of mid-March in 2016. But that's no reason to throw up your hands in despair. Instead, this is a time to remember that disciplined investing is what matters most.

It's easy to stay invested when the market's going great guns. What takes discipline is staying the course when things get rough—instead of making rash moves that may actually cut into your long-term investment returns.

Here are some tips to help you weather the storm:

  1. Stick to your plan. If you don't have a financial plan, develop a sound one that protects you against unnecessary risk, the bogeyman of long-term average returns. However, if you have a solid plan, remain committed to it. Don't let a down market change what you're doing. A sound plan can help protect you against the risk of substantial loss in a down market by expecting these inevitable downturns and spreading your portfolio over different types of assets to avoid too much damage in any one of them. If the current market tempts you to invest in ways that are at odds with this plan, you will be thwarting the intent of the plan you set up. A good way to bolster your discipline to stick to your plan is to keep in mind the investing goals you used in setting it up and think about how acting rashly could throw a monkey wrench into your odds of success in the long term.
  2. Depending on your personal situation, tax bracket and expectations of future use of taxable investments, consider taking what the IRS gives you by realizing losses when selling certain investments. By doing this, you can help offset taxable gains on other investments, and thus defer taxes into the future. If you have taxable investments that you anticipate passing on to your heirs, this is a strategy that may be worth considering.
  3. Rebalance your portfolio. When you set up a portfolio, you want exposure to different asset classes in different amounts in keeping with your goals, risk tolerance and time horizon. Over time, these proportions drift outside their target ranges as some asset classes increase in value and others decrease. If you started out with 60 percent of the dollar value of your stock portfolio in large companies and 40 percent in small ones, in a year or two you could find those percentages reversed if large companies do poorly and small companies do better than large ones during that period. So the idea is to rebalance your portfolio to restore it to the original 60-40 allocation of large company stocks to small. You want to consider doing this no matter how well or poorly the market is performing. The whole idea of a balanced portfolio is to reduce risk. To stay in balance, you have to rebalance.
  4. Spend wisely. The wisest spending move is not to spend too much. Sure, you want to spend money on experiences that make you happy, but be wise when spending. For retirees living off investments, this is all the more important in a down market, when returns are lower. Do you really need that new car you're thinking about buying or could that wait another year or two? Is it really important that you remodel your kitchen this year instead of waiting? These are the kinds of decisions that can make a huge difference in your spending and, when you invest this money wisely, significantly increase the likelihood that you won't outlive your money.

By keeping these important points in mind and acting accordingly, you can make it through inevitable, temporary declines without damaging your portfolio. And, unlike the day-to-day movements of the markets, these all are actions you can control.


This content is based upon information believed to be accurate by ISI Financial Group, Inc. However, it should not be relied upon for legal or accounting purposes. You should always use the custodian's brokerage statements as an accurate reflection of your portfolio. Past performance is not indicative of future performance. Investments involve risk, including the possible loss of principal. Always seek professional advice before making any financial or legal decisions.


Remain Calm When Riding Out the Market Storm

Written by Tim Decker, AIF®. Posted in Central Penn Business Journal


Last fall, the stock market was highly volatile, with share prices shooting up and down. This year, this volatility turned into consistent loss, and the market was down substantially as of mid-February: Indeed, the Dow Jones Industrial Average was down nearly 13 percent from its record in May of last year.

Some pundits see this as a prelude to a bear market (defined as a 20 percent drop) while others say the overall decline will go no further than a correction (defined as a decline of at least 10 percent). As of Feb. 10, the S&P 500 was down for the year by 9 percent.


Don't Fall Into the Trap of Sunk Costs on Investments

Written by Tim Decker, AIF®. Posted in Central Penn Business Journal

Unhealthy Attachment

Have you ever developed an unhealthy attachment to something, clinging to it even though you knew it might be hurting you financially?

Most of us have. Eventually, you probably realized that you had hung on too long. In one way or another, everyone has done this because it's only human. One reason we hang on is because we've invested so much time, effort, money or all three.
With investing, this is all too common. Wanting to believe that we were justified in making an investment, we stay with it, even though the prospects of profit may now be dim.

In business and finance, this is referred to as "sunk costs" — those that you may never recover. Clinging to something solely because you've invested in it makes no sense. But this happens all the time. Behavioral economists call this the sunk-cost fallacy: Just because people have invested so much time or money, their faulty reasoning goes, they hang on to the investment no matter what.

Of course, this is often a recipe for loss — and it's a major factor affecting success in investing. Investors initially form a view of a stock's prospects based on something they've heard or read, and resist re-evaluating this move because they cling to the belief that they were right in the first place. Simply admitting they were wrong is difficult for many.

On the Air

newsradio-WHP-webTim Decker hosts the weekly radio show “Financial Freedom” on WHP 580 AM Harrisburg every Saturday at 10:00 am Eastern.

He brings his extensive knowledge and over 28 years of experience to the discussion of current financial and wealth management topics. Each show also includes a Q&A session when Tim provides straightforward, unbiased answers to questions from callers. This is the program that represents your best interests, not Wall Street's.

Get the PodcastListen Here

The Sleep-Well-at-Night Investor


ISI Financial Group helps clients take all necessary steps to properly develop and implement a comprehensive financial plan using evidence-based, , time-tested strategies centered around  financial science. In his book, “The Sleep-Well-At-Night Investor,” Tim Decker shows readers how misinformation from the mutual fund industry has created widespread harm amongst  investors. The book also discusses the temptation to think of investing like gambling, and the tragedy of gambling away savings and security under the guise of investing.

Buy the Book!