Setting Up For Success

For What It's Worth -

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Hi there,

The S&P 500 has climbed to its highest level since August, but a lot of the market’s attention this week was on the most important falling Apple since Newton’s. The investor reaction to the tech giant’s new $3,500 augmented reality headset has been less than enthusiastic. Does Apple have yet another revolutionary product on its hands, or will this launch go the same way as Google Glass and Meta’s Metaverse project? Here’s what else we’re watching:

  • Smoky haze: Millions of North Americans are being told to mask up or stay indoors as the air quality deteriorates due to over 400 raging wildfires in Canada. Code Red warnings and quite a few N95 masks could be found across many of the most populated sections of the Eastern seaboard. Of course, Hawaii’s second-biggest volcano chose this moment to erupt to keep us on our toes. Guess we published our deep dive on the impact and opportunities extreme weather can create for investors a week early!?!
  • What recession? Surveys of some Wall Street analysts and US CEOs suggest the economy is now headed for a “soft landing” after the Fed’s interest rate hikes. But as with all such predictions, there are people arguing the opposite side too. As FWIW readers know, experts always remind us that it is important to ignore the noise and stay focused on the long-term success of your portfolio. We have more on setting investment goals below.
  • Energy backlog to clear faster: The bipartisan deal that ended the debt ceiling crisis includes an interesting detail. The approval process for energy projects is being streamlined, which is good news for the many clean energy plans awaiting review in a long queue. Over $150 billion in new investments have been announced since the Inflation Reduction Act was passed. The deal also cleared the way for the controversial and delayed natural gas Mountain Valley Pipeline despite significant environmental concerns, which sent the share price of Equitrans Midstream soaring.
  • CEOs struggling: June is Pride Month, and this year, corporations like Target, Disney, The North Face, Kohl’s, and Bud Light’s brewer Anheuser-Busch are at the heart of the culture war playing out across the country. They seek to celebrate Pride Month (and harness the buying power of the 17 million LGBTQ+ people in the US and those who support them) while curbing criticism from some stakeholders. We’re witnessing backlash, CEOs wrangling with quickly changing dynamics and pressure from multiple constituencies, and boycotts that can have a real impact on stocks. Values-aligned investors are watching closely.

This week also marks World Environment Day, World Ocean Day — and for the cat people in the FWIW community — National Hug Your Cat Day. Check out some of our tips on investing in sustainable seafood and ocean health, and remember, just keep swimming.

News you can use

  • No one tell Homer Simpson, but the first new US nuclear reactor in 40 years comes online this month. The unit at Plant Vogtle in Georgia was designed by Westinghouse (now largely owned by Brookfield Renewable and Cameco) and can power 500,000 homes, but its many delays and big price tag are prompting a shift to the more advanced small modular reactors (SMRs). Besides Westinghouse, other companies working on SMRs are NuScale Power Corp, BWX Technologies, and the Bill Gates-backed Terra Power. In related news, Uranium funds like the Global X Uranium ETF and Sprott Uranium Miners ETF have been surging this week. If you want to learn more about investing in nuclear technology, take a look at our Guide to Cleantech Investing.
  • Tesla shares accelerated after it was confirmed all Model 3 sedans qualify for the full $7,500 federal EV tax credit. Combining the federal tax credit with state incentives and recent price cuts, the cheapest Tesla (Model 3 RWD) can now be bought for less than $30,000 in some markets. In California, it can now cost as little as $22,830! The company is also reaping the benefits of manufacturing in the US. Under Biden’s climate legislation, it will receive billions more in production tax credits than competitors GM and Ford, per Bloomberg.
  • Surprise, surprise: companies with purpose-driven leaders have better earnings, stronger employee experiences, and higher ESG ratings. The Return on Leadership ranking from Fortune and Indiggo, which ranks companies on a variety of factors related to purpose and leadership, found the top 25 companies on its list had an average EBITDA per employee of $155,469, compared to $36,810 for the bottom 25. (P.S. EBITDA = earnings before interest, taxes, depreciation, and amortization.) Top-ranked companies include Microsoft, IBM, Cisco, Thermo Fisher Scientific, and Pfizer.

Asking for a friend….

We know there is a lot to think about these days, and it can sometimes be a bit overwhelming. To help with those nagging questions, and so you have useful resources at your fingertips, here are a few links to resources and past stories relevant in these turbulent times:

Dream, plan, achieve: tips for mastering investment goals

Money may not be the source of all happiness, but financial security can be empowering and provide opportunities for more independence. Whether you want to start your own business, set yourself up to buy a home, or just take the anxiety level down a notch and have more control over your future path — putting money aside can make a huge impact on your life.

Unfortunately, FOMO makes it too easy to splurge on the latest iPhone model or those plane tickets that cost way more than expected rather than investing in the future. That might be why 73% of Gen Z say they would rather have a better quality of life than extra money in the bank (or why we were all vying for Eras tickets… totally worth it).

Setting investment goals can help because it forces you to think about trade-offs, motivates you to set aside cash, and keeps you focused on things you truly value. We’ve rounded up some tips from experts to help you get started.

Tag your goals

Setting goals starts with making a list of the things you want to achieve in your life. Do you want to get an MBA? Take a trip around the world? Buy a condo? Build a nest egg so you’ll have more work and life flexibility? Depending on your age, your list will likely include some things you want to afford within the next couple of years, others within the next five to ten years, and some within two to four decades.

Experts recommend tagging these as short-, medium-, and long-term goals because different time frames require different investment strategies. For example, if you’re saving to put a down payment on a car, buy an e-bike, or take a big vacation within the next two years, experts might suggest opening a high-yield savings account to preserve your money while earning interest. Achieving long-term retirement goals, meanwhile, is typically best served with a specialized account like a 401(k) or IRA, where you can create a diverse portfolio of investments to balance risk and return.

Once you have a general idea of your priorities, it’s time to refine them into goals you can work towards.

Be SMART

Many experts recommend setting “SMART goals,” a term that might sound familiar if you’ve ever had to do an annual goal-setting exercise in a big corporation. Here’s what it means:

  • Specific – define each goal to focus on a clear objective
  • Measurable – decide how you will track progress
  • Achievable – set goals you are confident you can attain
  • Relevant – determine whether your goals are realistic and relate to your values
  • Time-based – assign a timeframe to create urgency

For example, say you dream of buying a house or a condo. Based on some quick research (or maybe not so quick if you fall down the Zillow rabbit hole), you estimate the place of your dreams will cost $400,000. You might set a goal of saving $80,000 for a 20% down payment within five years, which means setting aside roughly $16,000 each year. Based on your current income, you decide this can be accomplished if you cut back on iced lattes, plan fun road trips instead of international vacations, and invest your money wisely to maximize your return.

That goal would meet all the SMART requirements — it’s specific, measurable, achievable, relevant, and time-based. If, however, the exercise made you realize that you won’t be able to save for that down payment and pay off your credit card debt, it might be a good idea to break this down into doable steps, with experts recommending paying down the credit card debt first (but you knew that already 😉).

Get help setting bigger goals

Of all the goals you’ll set, retirement is probably the most complicated. How do you know how much to set aside today when you don’t know how long you’ll live, what return you’ll make on your money, or what the world will look like in a few decades? Depending on your current salary, research shows you might need 50–80% of your pre-retirement income once you hang up your hat. We have a full article on how to calculate your savings goal and what you’ll need to set aside each month to reach it. You might also find these retirement calculators from AARP and CNN to be helpful.

If you’re still overwhelmed, a financial advisor is a great resource to help you set a personalized target and create a plan to get there. (We have some tips on how to get matched with an advisor.) Most importantly, know that it’s OK to start small. If you don’t have much disposable income today, you can start by contributing the minimum amount to your retirement account and build on that over time.

Check progress, share with others, and be flexible

Setting your goals is the first step toward achieving them. Check your account balances often to ensure you’re staying on track, and recommit if you find yourself falling behind. Some experts recommend sharing your goals with others, since research shows people who put their goals in writing and send progress reports to friends have a higher success rate than those who keep their goals to themselves. Which friend? That could be a whole other newsletter…

Remember that even the best-laid plans hit snags. You can’t predict layoffs, health issues, or a market downturn. But don’t let that stop you from preparing for the future. As setbacks happen, re-adjust your goals and plans in response.

A goals-based approach helps you build your savings to achieve the things you value in life. If you can accomplish that while aligning your investments with your broader values, such as taking a gender-lens, faith-based, or sustainable approach, even better.

Before you go -

A new topping is a big dill for pizza fans.

** FWIW team members own shares of Apple, Disney, Ford, IBM, Microsoft, The North Face, and Tesla.

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