Illumination Wealth December 2013: Do you have WINter vACaTION Plans?

December 2, 2013
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We hope you had a wonderful Thanksgiving weekend with your family.

Over the weekend a friend shared with me something about being grateful that I would like to share with you: “ Gratitude is simply a choice to become aware of the good things that are already true in any given situation and become consciously thankful for them.”

With that said,  I am truly appreciative of the relationships I have developed with all of you – physically and virtually and appreciate you taking some time from your day to read this.

This past month the Illumination Wealth family had some relationship building as we  volunteered  at Feeding America. Feeding America is an amazing organization and serves over 73,000 meals per week in San Diego. We we’re a part of a team that helped prepare about 2,000 of those meals. It was a very special day and we wanted to share a bit of that with you here.

Now that we have our goals down, it’s time to set up the structures and systems so we can take it from an idea to action.  Here’s what we cover this month to help you on your journey:

· The Market Scoreboard for November 2013

· Illuminating Insights: Your Financial Future Step 3: Actions for Achievement

· Readings of Illumination: Curated Articles for Your Enlightenment


Market Scoreboard

 Here is the market scoreboard for November 30,  2013:

Data as of November 2013


Nov.  %

Standard & Poor’s 500 (Domestic Stocks)



MSCI World Index ex US (Foreign Stocks)



10-year Treasury Note (Yield Only)


Gold (per ounce)



Reuters/Jefferies Commodity Index (CRB)



Dow Jones REIT Index



Notes: S&P 500, MSCI World Index ex US, Gold, DJ-UBS Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; the DJ Equity All REIT TR Index does include reinvested dividends; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.

Sources: Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.

Large-cap US stocks extended their streak of weekly gains to eight, thanks to good economic news and some hopeful signs for the holiday shopping season. For the month, the S&P 500 rose 2.8% for in November. Last Tuesday, the NASDAQ was the latest benchmark to cross an arbitrary numerical threshold, breaching the 4,000 mark for the first time since the days of the tech bubble in 1999-2000. As a reminder that the market isn’t always a one way street (which is most often forgotten after a prolonged rally), the NASDAQ remains about 22% or 1,000 points below its all-time high set in March 2000.

International equities didn’t fare as well as their US brethren with world stocks rising only ~.4% for the month. Emerging markets fared the worst of the international components falling .25% in November. Emerging markets appear to be poor performers of late, but the reality is that they have returned the exact same as U.S. stocks throughout the summer and fall despite the continued bearishness and looking are cheaper on a valuation basis.

In a recent post from Portfolio Manager Mebane Faber, he noted that “out of 44 developed and emerging markets in the world, the US stock market is the most expensive on a 10 Year PE ratio basis with a value of 25 (CAPE).  If you include frontier markets, the US is the most expensive out of 55 markets with the one exception of Sri Lanka. Now, the US isn’t in a bubble, nor does this mean it must crash or even go down.  What it does mean, is that the rest of the world is much cheaper and US returns should be muted for the next 5-10 years.  AND it means the biggest weighting in all of the global market cap portfolios (50%) is the most expensive market.”

Valuation measures may have little effect on returns over short time periods but they certainly do from an investment standpoint and looking towards retirement security. There is no crystal ball and the future is never exactly like the past. However, the research is clear that valuation really matters when it comes to estimating how much money you need to retire. A study done by Michael Kitces on the CAPE or PE 10 and Safe Withdrawal Rates (e.g. the amount of money expressed in the percentage of your portfolio that you can safely withdraw from a portfolio in retirement without running out of money) found that the average safe withdrawal rate varies by 3% from the lowest P/E 10 quintile to highest PE 10 quintile (From 8.1% to 5.1%). That may not sound like a whole lot in percentage terms but it will increase the amount of money one can safely spend in retirement each month by 60% or more…that makes valuation a very big deal.

As far as the other building block of a portfolio -the fixed income world saw treasury yields rise again for the month as the 10 year treasury yield near 2.75%. In late November, long-term yields jumped after minutes from the Fed’s October policy meeting showed that it may begin tapering its asset purchase program “in coming months,” raising speculation that the Fed may start winding down its stimulus measures as early as December. Key economic indicators next month include the next U.S. jobs report scheduled for December 6, followed by the Fed’s next policy meeting on December 17-18.

The “stimulus” or QE has distorted many markets over the past few years. Despite the Fed’s herculean attempts, it has yet to create any inflation or extraordinary economic growth. The effect of the “taper talk” has confounded normal stock market environments during the markets recent deflationary echos. In what has been a outlier environment, stocks have risen against this backdrop where historically it has proven to be a period marked by extreme vulnerability for equities. Despite that, December is typically a seasonally strong month for stocks and we hope that you to have a wonderful December irrespective of which ever way the market fluctuates.


Illumination’s Insights: Your Financial Future Step 3: Actions for Achievement

“Nothing happens until something moves”- Albert Einstein.

So how did the goal setting process go for you? Are you excited by your goals? Are you committed to reaching them? If so, now is the time to set up systems and structures so you can get in to action and achieve them.

1. Create a Timeline For the Year

Break your big goals for the year down into smaller goals so you can clearly see what needs to be done each quarter, month or even week. A timeline will remove the uncertainty about what you should be doing each month into clearly defined actions you can take to reach your goal.

This is akin to “reverse engineering” where you start with the whole plan and keep breaking the goal down until you have daily actions / tasks that will take you to your goal. Reverse engineering can be  a very good systems for savings goals, business revenue goals or the like as it breaks big things down into chewable pieces that makes it easy to grasp each step along the way.

2. Schedule it

Whatever you have time-lined above, needs to be calendarized. What are you going to do and  when are you going to do it. Either the day runs you or your run the day. Is there a better way to run the day other than by filling it up with exactly what you want to create and accomplish? Start each week decided what is most important and plan your week ahead of time. What you do each day and week should be bringing your closer to reaching your gaols.

As my business coach Aaron Keith says, “If it’s important to you, it should be in your schedule”. If you have a goal to take a vacation with your family or friends, schedule it now. Schedule all of your time off now so you can be prepared ahead of time to take that action (vacation) when that time comes.

3. Automate It

If possible, take the actual time and physical chore out of the equation by automation. Sometimes it’s hard to completely rely on motivation alone to get things done. Automation can help you make those choices without much effort. Think about a retirement savings goal you may have of say, $12,000 per year. Well that is $1,000 per month or $500 2x per month which matches up with your payroll periods. Instead of you actually doing the transfer, set up an automatic transfer to have you checking account debited for $500 twice per month. After setting it up, there is no more thought involved. Automating your finances this way makes things easier financially as it is difficult to miss what you never had in your account in the first place.

4. Take the Next Step

For some goals, there may be too much of an unknown or the process is too big to get your whole head around at this point. Simply take the next logical step and complete it. That will help get the momentum going. Once you have completed that step, then you can think about the next step. Trust that by taking action will lead you towards your goal. This gets you started right now and can realistically happen for any goal.

5. Review Your Goals

Every day or every week you must bring your attention back to your goals. Tape them to your computer, set them as the wallpaper on your iPhone, put them in your wallet, put them in your bathroom. They should be highly visible and make your goal review a habit. Perhaps you review your goals after you brush your teeth at night so your mind can subconsciously go to work on them as you sleep. Doing this will help you maintain focus throughout the “noise” of every day life.

6. Find an Accountability Partner

Yes you can achieve your goals on your own. But having a support system to hold you accountable and keep you on track for whatever your goal may be is KEY. Hire a business coach, get in a mastermind group, find a Gym buddy, hire a financial advisor or even have a friend be there to share your ups, keep you going when you may feel like giving up or share their experience or expertise is invaluable.

7. Persevere

Now that you have your goal and plan of action you just have to keep moving forward and don’t let anything stop you. There is no losing, it’s only learning. Each time you complete an action item you are one step closer to your goal. As John D. Rockefeller said: “I do not think that there is any other quality so essential to success of any kind as the quality of perseverance. It overcomes almost everything, even nature.”

There you have it. Seven structures for taking a goal to action and achievement. Set up these structures in December so they can be in place and working for you in 2014.


Readings of Illumination

Here’s our monthly compilation of interesting articles and videos designed to keep you informed and engaged in the areas of personal fiance, the economy and life. We hope you enjoy this month’s edition. Please send us your thoughts on this month’s articles and suggestions for future posts.

Personal Finances

The Wall Street Journal: Separate Assets, Joint Problems

USA Today: Investors, these mistakes can really cost you

Economy & Business

StarTribune: Mackay- Swim with the sharks without being eaten alive

John C. Maxwell: The 15 Invaluable Laws of Growth


Los Angeles Times: New book explores how Jony Ive created Apple’s greatest products

StarTribune: University of Minnesota professor looks into how timing affects decision making

Great TED Talks & Videos

David Steindl-Rast: Want to be happy? Be grateful

Apollo Robbins: The art of misdirection


“Action is the real measure of intelligence.” – Napoleon Hill

December is a critical month for success oriented individuals. It’s a month that has two very distinct and deliberate activities. The first part is laying the final groundwork for next years action plan and goal achievement. The second part involves inaction and rest. You need to clear the plate and recharge the batteries to give your best effort for what is to come in the new year. Spend your time and life wisely this month. We have created Illumination Wealth to add accountability, support and additional insight in to not only setting financial-life goals but also following through long enough to actually achieve them. Please Let us know how we can help.

All the Best,

Matt & The Illumination Wealth Team

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The opinions and forecasts expressed are those of Matt Rinkey, President of Illumination Wealth Management (IWM) and may not actually come to pass. Mr. Rinkey’s opinions and viewpoints regarding the future of the markets should not be construed as recommendations of any specific security or Illumination Wealth services. No part of this material is intended as an investment recommendation. Neither the information nor any opinion expressed constitutes a solicitation to purchase or sell securities or any of IWM’s services. Do NOT ever purchase any security without doing sufficient research. There is no guarantee that investment objectives outlined will actually come to pass. Investors should consult an Investment Professional before investing in any investment program. Neither Mr. Rinkey or Illumination Wealth nor any of their employees shall have any liability for any loss sustained by anyone who has relied on the information contained herein. Entities including, but not limited to IWM, its officers, directors, employees, customers and affiliates may have a position, long or short, in the securities referred to herein, and/or other related securities, and may increase or decrease such position or take a contra position. The analysis contained is based on both technical and fundamental research. Although the information contain is derived from sources which are believed to be reliable, they cannot be guaranteed. Past performance is never a guarantee of future results.