Over the course of my thirty-year career in the financial services industry I have seen and continue to hear many investment theses. Some brilliant, some not so much so.  I have also witnessed a number of changes that in retrospect were obvious and inevitable. The personal computer revolution was one of the first. I recall there were many would be winners that vanished into dust, but some of the early players like Intel, Microsoft, and Cisco became the next generation of mega-cap companies. Likewise, with the internet boom. Companies came and went, but some like Amazon and Google became behemoths. Cell phones were the stuff of dreams in my youth, but the ability to access people and information, no matter where you are, was inevitable and although early participants like Nokia and Motorola have become footnotes, Apple and Samsung have had explosive growth and rewarded investors many times over.

Recognizing inevitable change is only half of the battle for successfully profiting in new industries and market opportunities. Diversification and patience are more important long-term ingredients to financial success.  If you put all your eggs in the Commodore computers basket you were a loser. The same for eToys.com or Lycos, or Palm Inc.  Even if you recognized the inevitable, it was still much too easy to lose all or most of your investment.
Perhaps, though you were bright enough or lucky enough to pick the winners. On 3/24/1980 you could have bought Intel for just $0.32 adjusted for splits. By 10/20/1980 it had already soared 56% to $0.50. A year later, the price had fallen about 48% to just $0.26 per share. Would you have held on? Would you still have faith that this was inevitable? It wasn’t until the second quarter of 1983 that Intel reached that $0.50 peak again. Today, no one gets very excited about Intel, but the stock price has reached $51 per share netting those long-term patient investors $100,000 for every $1,000 they invested nearly 40 years ago.

So, although you can find inevitable investment opportunities, today the rush of the quick pop in price per share will not always be there. Sometimes, it is just waiting, and waiting, and waiting.
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With those words of warning, we will share with you four inevitable investment opportunities we feel all investors should be considering right now.

​In January of 2012, marijuana became legal for medicinal and recreational use in Colorado. In 2018, it became legal for the entire country of Canada. Around the world attitudes toward “pot” are changing rapidly. We are now witnessing the birth of an entirely new industry. We believe the opportunity is akin to the liquor industry at the end of prohibition, and we are not alone. On November 1, 2018, Constellations Brands (STZ) closed a $5 billion investment in Canadian cannabis producer Canopy Growth (CGC). On August 1, 2018, Molson-Coors (TAP) announced a joint venture with Canadian cannabis company HEXO Corp. (HEXO) to develop non-alcoholic cannabis infused beverages. Additionally, in December of 2018, Philip Morris (PM) invested $2.4 billion in the Canadian cannabis company Cronos (CRON). What do these large multi-national companies see in the future of the cannabis market?
Take a look at some of the numbers.

In four and a half years, total sales of cannabis have more than doubled in the state of Colorado, jumping from $683 million to over $1.5 billion. Colorado ranks 21st in the US by population with about 5.7 million residents. That works out to sales of about $263 per year per person.

There are now ten states in the US where cannabis is legal for both medicinal and recreational use. This includes California, ranked number 1 by population and Michigan ranked number 10. These states in aggregate have a population of about 80 million. Throw in New Jersey and New York who are likely to follow suit and that means about one third of American’s live in states where cannabis is legal.
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Even if Colorado is an outlier and sales in other states are only say 70% as high (haha) or $184 per person that works out to a market of $14 billion. Maybe Constellation Brands and Molson-Coors envision a day when you stop by your local pub for a cannabis infused drink rather than a beer. For comparison, the US market for beer topped $35 billion in 2018. Like the acceptance of the lottery, there will be many states reluctant to join the party for moral reasons, but sooner or later acceptance is inevitable.

​No, you don’t have to be a tree hugger to realize that renewable energy is inevitable. Take a look at this chart from Yahoo Finance showing the fastest growing jobs in every state.

In eight states, the fastest growing job is solar panel installer. In four states, the fastest growing job is wind turbine service technician.
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Climate change concerns aside, it is obvious renewable energy is becoming a much bigger deal both in the US and abroad. Although, starting from a low base the following chart from the Yale School of Forestry illustrates the beginnings of an explosive growth in solar energy production worldwide.

Much like the tipping point in software adoption, we believe solar installation will reach a critical mass that will one day lead to a distributed production model for energy use. With a large installed base of photovoltaic solar panels, today’s electric utility could evolve into a sort of common carrier like the Telcos, moving electricity from areas of high production to areas of high consumption. Your rooftop solar array and the arrays across the nation would provide power for homes and factories across the country. Rather than spending most of their capital on new power generation assets, they might spend more on upgrading and improving the efficiency of our electric grid instead.
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Both utility scale solar and wind systems currently provide the lowest power costs available. As photovoltaic systems improve, and manufacturing systems evolve, the price will head only one way – down, as illustrated in this chart from Lazard on levelized energy costs.

You have likely heard about the Tesla (TSLA) cars with autopilot, or maybe Google’s Waymo division. The first generation of self-driving vehicles is nearly here, and it means big change for the entire transportation industry. It will change the way automobiles are used, change the ways roads are built, and change the way freight is shipped.
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Like most people in America, you own a car that sits parked in your garage or at your place of employment 90% of the time. Cars are expensive. There was a time when the average family could buy a vehicle and pay for that vehicle with three-year financing. Today dealers are stretching that financing out to six or even seven years to make ownership possible.

Imagine getting up in the morning and using a smartphone app, you summon your ride to work. On the way you are free to check your email, read the news, or even just nap because you are not driving the vehicle - it is driving itself. In 2018, the average payment for a new car in the US was $523 per month. That doesn’t include insurance, fuel, or maintenance. It is easy to guess that the total cost of car ownership to be around $700 per month. With autonomous vehicles, you would pay only for the time you are using the vehicle and various companies would own fleets of vehicles around the country. They would pay for the maintenance and insurance, you would just rent a ride. Again, once critical mass is reached with autonomous vehicle adoption, our roads would become safer, parking garages would go the way of payphones, and travel becomes less frustrating. How many traffic jams would be eliminated if crashes were rare and rubbernecking were eliminated?

Shipping freight will change radically as well. Without the need for human drivers, shipping companies would program their trucks for fuel efficiency rather than speed. Trucks would travel the highways 24/7.  If you have ever been on an interstate highway in the wee hours of the morning, you know there is almost no one using the highway. This becomes prime time for shippers, resulting in less congested roads and decreased need for new road construction.
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For all these reasons and more, we see autonomous vehicles as an inevitable change.

Yep, it’s as simple as that. History has shown that investing is common stocks for the long run inevitably creates wealth. Markets go down but they do not stay down. You don’t have to be a genius or a prognosticator to participate and profit from the inevitable growth generated by a group of great American companies.
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Back to our question about Intel. Did you buy it? Did you hold it? The Wilshire Index did. Same for Apple, Netflix, Tesla, and many other great and not so great companies. Some companies that were in the index disappeared, but the growth of market value marched on anyway.

​The Wilshire 5000 Index is a market cap weighted index of all the actively traded stock on all the US exchanges. Originally named the 5000 because when the index was first constructed in 1977, there were about 5,000 companies actively traded in the US. As of June 30, 2018, there were 3,486 companies in the index. You will find the components of all the inevitable trends we covered here, and some that we may not be aware of included in the index. If new companies come to market in the future, they will be added too. The companies in the index are updated monthly to include IPOs and corporate spinoffs and also to remove companies that move to the pink sheets or cease to trade actively.

Volatility

Wow! 2018 went out with a huge rise in volatility as stocks swung from a small gain for the year to nearly reaching bear market territory, before rebounding yet again to end the year down 4.38% as measured by the S&P 500 index

​For 2019, you should expect volatility to remain high. Markets will continue to gyrate as we face increasing political uncertainty. The government shutdown will likely become an extended event, as neither side is likely to move much, and negotiating with the executive branch is like trying to eat Jell-O with chopsticks; it wiggles all over the place. While some may find these tactics a refreshing change to the way our government usually works, the markets are likely to be confused by the new normal and react with wild swings based on the latest news cycle. The unpredictability of the current administration will continue to promote volatility as markets react to a constant barrage of headlines and unconventional political tactics.

Interest Rates
The Federal Reserve raised rates 4 times in 2018, moving the benchmark short-term rate from 1.25% to 2.25%. This resulted in a difficult year for bond investors as fixed income indices fell for the first time since 2013.

There is also concern about the yield curve. While the yield curve has not inverted yet, it is dangerously close to doing so. The chart below shows the 10-year treasury yield minus the 2-year treasury yield, going back to the 1970s. The shaded areas represent recessions. Historically, an inverted yield curve has presaged recessions and Fed economist David Andolfatto recently argued that an inverted yield curve could actually cause recessions. Regardless of whether an inverted yield curve is a leading indicator or a contributing factor to recessions, being on the cliff’s edge as we are now adds to the uncertainty surrounding markets going into 2019.

​With worries about a possible recession on investors minds, credit quality spreads are finally normalizing after years of compression following the credit crunch of 2008-2009.

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​2019 may be the year we finally find some value in high-yield bonds after nearly a decade of tightened credit quality spreads.

​Rising interest rates also leads to a stronger dollar. This makes US produced goods more expensive for foreign buyers and can dampen the earnings of US exporters.

Equity Markets

After a fast start in early 2018, the equity markets fell hard in the 4th quarter of the year. Nearly every subcategory of the market ended 2018 in the red.

​But compared to one year ago, equity valuations have fallen, based on many metrics.

​Have equity valuations fallen enough to make stocks a compelling value? No one knows for sure, but investors should keep in mind that their default position should always be to remain fully invested. Remember, the price of the long-term gains historically inherent in the equity markets is the short-term pain caused by corrections along the way.
Investor sentiment remains muted, offering more good news for contrarian investors.

​Earnings among the companies in the S&P 500 continues to grow at a torrid pace. Lower corporate tax rates have fueled stock buyback programs that allow corporate earnings per share to grow faster than the economic growth generated by normal business operations. I would expect to see a slowdown in the rate of earnings growth later in 2019, as year over year comparisons get tougher, and interest rate increases continue to take a toll on earnings growth. That does not mean we expect earnings to fall, just that the rate of growth will moderate as 2019 progresses.

​2018 was also something of a dud for foreign stock investors. Developed markets produced even lower returns for US investors than did the domestic market.

​And emerging markets were equally as disappointing.

​For 2019, we expect both trends to continue. Higher interest rates will generally lead to a stronger dollar and a stronger headwind for non-dollar denominated investments. In 2018, the dollar rose by about 3.5% versus the Euro and about 5% versus the Chinese Yuan. That means investors in the Eurozone needed a 3.5% gain to remain even when they convert their Euro based investments back to US dollars and investors in Chinese companies had a 5% hurdle to clear.

Conclusions

At this point we believe investors should focus on US based companies and remain fully invested. Bond durations should remain short, at least for the first half of 2019, as Fed policy is still unclear. If the yield curve does invert, we would take that as a sign to lengthen bond maturities and perhaps reduce our equity holding a bit. You should expect volatility to remain elevated and look at dips as an opportunity.

Important: This is not intended as investment advice. We share this so that our clients and prospective clients can understand some of the factors we consider as we implement their investment strategy. Any predictions of future events should be viewed with a skeptical eye.

​Just in time for Halloween the stock market has pulled back from its all-time highs and volatility has returned in the form of daily changes of more than 1%.  After being up nearly 10% this year, the market- as measured by the S&P 500 index, is flat to slightly down as you read this.

​Accompanied by a spike in the VIX Index

​Pullbacks in the stock market are common with a linear regression best fit of about 7.5% each year.

​Looking back to 1980, even in years where the market has ended down it has rebounded from the lowest point of the year before year end.  With just two months to complete 2018, it is possible that we have already seen the lows for this year. So, despite the recent pullback in stock prices this may well be a lower risk entry point for new investments. If we have in fact seen the intra-year low of -10% (with the market currently down about 1% YTD) downside risk from this point could be minimal.

Investor sentiment is tilted slightly to the bearish side, indicating to contrarians that things may not really be so bad. It is unusual for markets to enter bear market territory when investors are negative.  It is when you find exuberance for stocks that most of the danger lies.
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With that said, the earnings of S&P 500 companies have been rising at a torrid pace that is likely not sustainable. The slope of the earnings curve is steep by historical standards, the impact of lower corporate income tax rates will soon be apparent in year-over-year reporting, and rising interest rates tend to act as a brake on economic expansion.

Look for S&P 500 earnings growth to continue, but for the pace to slow.  

We will likely enter a period when good economic news is interpreted as bad for the stock market-- as unemployment continues to fall, wages finally begin to rise, and federal reserve interest rate increases put pressure on mortgage rates and in turn the housing market.
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Bonds will continue to be a dangerous place to invest your money as rising rates cause bond prices to fall, and marginal borrowers have trouble issuing new debt at sustainable levels.

So, as we enter the final two months of the year there are plenty of reasons to worry, but as usual, the long-term prognosis for US equities remains positive.
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Like a scary movie you have seen before, conditions will look dire for the hero, but ultimately things will work out in the end.

Imagine its October of 2007. You have spent the last 30-plus years of your life working and saving for this day, the day you retire. You have watched the S&P 500 Index rise steadily over the past five years, climbing from 837.37 to 1561.80, gaining over 12% a year on average. You have watched your 401k grow steadily and feel your nest egg and social security should provide you with a comfortable if not extravagant lifestyle. You work out the numbers and believe withdrawals of about 5% a year should see you through your lifetime.

Then your November statement arrives, and your stock portfolio has dropped 3%. No biggie, we all know stocks fall from time to time. Now its December and your investments shrink another 3%. Okay, you don’t like it, but you have a long time horizon, and know the markets will recover. The January statement arrives, and your nest egg has shrunk another 10%. You are sweating now; a 20% drop means bear market territory. You know you shouldn’t try to time the market, but jeez! February brings another statement that shows another big drop 12%. OMG! What now?

By the end of the great recession bear market in March of 2009 your stock investments have fallen a whopping 56%. Within 18 months of retiring your nest egg is already depleted by nearly 60% when you factor in distributions.

Welcome to the world of sequence of return risk.

Negative market events that can wreck your retirement happen more often than you might think. August 2000 to September 2002 saw the S&P 500 drop 54% over 25 months. January of 1973 to October of 1974 produced a drop of 52% over a 21 month span. December 1968 to June 1970 set you back 33% in 18 months. The greatest market crash of all began October 29, 1929 and lasted an agonizing 38 months. Stock lost 80% of their value and left the US economy in shambles.

Yes, the markets recovered from all of these setbacks and went on to reach new record highs, but for those unlucky enough to retire at just the wrong moment, recovery could be forever out of their reach. The math of losses works against you. A 25% drop in market value requires a 33% gain to get back to even. A drop of 33% needs a 50% recovery to reach even, and a 50% drop in value means you need a 100% gain to be even.  We all know those kinds of gains take a long time to accumulate.

The risk that big market losses occur at the beginning of a withdrawal strategy is called sequence of return risk.  If you experience a market return sequence of -10%, -25%, +10%, +25% the net result is you have lost over 7%, the communicative rule of multiplication gives you the same result if the returns are reversed. But! Factor in withdrawals and the picture can change dramatically. Your systematic withdrawals work like dollar cost averaging in reverse. You sell more and more shares to fund your spending at low and lower prices.

So how can you protect yourself from such disasters? While there is no strategy that can protect stock investments from going down on occasion, there are some steps you can take to minimize the damage to your long term plan. The first step to avoiding irreparable harm to reaching your long-term goals is to remember that stocks go down, but they don’t stay down.
 
Diversification

Having money invested in different asset classes helps.  Although the equity portion of your portfolio would have dropped precipitously, owning bonds and holding some cash would reduce the severity of sudden market corrections. Having less exposure to equities will also reduce your returns over time. Still, if you can match an asset allocation to your need for long term returns you might find a ratio that allows you to sleep at night, fund your retirement income, and let you avoid the big mistake of selling at the very bottom of the market.
 
A Separate Bucket for Income Withdrawals- the solution to poor sequence returns

Ideally you have planned well for retirement, so instead of having all your retirement nest egg invested for the long term, you have left yourself a cash cushion to fund your anticipated portfolio withdrawal needs for 36 to 48 months, allowing an extra year as a recovery period. Using this strategy your first year withdrawal needs would remain in a money market account and your spending for that first year would come from this account. Your second year of withdrawal needs would invested in one year treasuries or certificates of deposit. So, the second year rolls around and you still don’t have to sweat a bear market, Finally, the third year of anticipated spending is funded with two year treasuries or CDs and the fourth year would be invested in securities maturing in four years. This separate ‘spending bucket’ is what you use for your spending needs.

This strategy would necessitate a cash allocation of 3X or 4X your estimated withdrawal rate. If you believe a 5% withdrawal rate will be safe, then 15% to 20% of your portfolio would be allocated to the ‘spending bucket’. If you believe a 4% withdrawal rate is more appropriate, then that implies a 12% to 16% allocation to the ‘spending bucket’.
Using this strategy, you could have the confidence to withstand most historical bear markets and corrections. Knowing you do not have to sell stocks when markets a low could give you the edge you need to keep the remainder of your investments intact and allow your portfolio time to rebound. It could also allow the remaining portion of your portfolio to be invested more aggressively, improving the likelihood of higher long-term returns.
 
Don’t Wait Until You Retire
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For those nearing retirement you should ideally begin implementing and funding this ‘withdrawal bucket’ well before the day you retire. It would be frustrating to see the stock market drop in the year before you plan to retire. Much better if you would begin shifting some of your investment, 401k, 403b, or IRA investments into a safe ‘spending bucket’ three to four years before your targeted retirement date. Four years before retirement you would move one year’s expected spending into a money market or GIC (guaranteed investment contract). Three years before retirement you move another year’s expected spending, and so forth. Then no matter what happens in the market you should be able to retire when you want and have all your withdrawal needs set aside for the four years following retirement and you could invest the remaining balance of your investment or retirement accounts in equities for long term appreciation. This seems to us a better strategy than selecting a target date fund that arbitrarily moves money out of stocks as you approach retirement age.

​The popular press is fond of pointing out how old the bull market for stocks is.  After bottoming in 2009 we have seen stocks march upward for for nearly a decade. Many of today’s younger investors, say those in their thirties, have seen the stock market fall, but never felt the pain in their own portfolio.

​Yet for another class of investor, those who have invested in bonds, the bull market run has been even longer. Going back to the days of President Jimmy Carter in 1981, bond yields have fallen, year after year. Because bond prices move inversely to interest rates, bond prices have been rising for the last 36 years. That means someone who entered the workforce in the early eighties, bond prices have always gone up.

​For some perspective the Certified Financial Planner Board of Standards was formed in 1985.  As a group, CFP®  practitioners have never experienced a true bear market in fixed income securities.  Although the credit freeze that coincided with the great recession bear market for stocks, had a short, sharp panic in the fixed income markets; a long drawn out bear market for fixed income has been an experience the profession will for the most part find alien.
 
The closest thing to the pain of a bear market in bonds experienced by this group was the 2004 to 2006 Chinese water torture of the Greenspan/Bernanke Fed. During the thirteen months that spanned June of 2005 to July of 2006, the Federal Reserve raised rates 25 basis points every time they met. Although the aggregate bond index only fell in price by about 5%, the constant barrage of interest rate increases was hard to live through.

That pain was nothing compared to the Burns/Miller/Volker era where we saw the Fed raise rates from 4.75% in November of 1976 to the 20% Fed Funds rate of May 1981. That was the last true bear market for fixed income products in the United States. Although your grandfather might wistfully talk about getting 18% on his CDs, the path that led to those astronomical rates was littered with bond investors who saw the value of longer term bonds fall by 50% or more.

When I hear today’s press ask what will happen if the 10-year Treasury bond breaches 4% I am astonished. It is not a question of if,  but a question of when.

If we can avoid creating a trade war with the rest of the world, there are some very expansive monetary policies recently enacted by congress and the Trump administration investors can benefit from.  The tax overhaul will provide a good measure of impetus to the economy, and the budget bill recently signed into law gets us away from the restrictive spending of the sequestration agreement and into a more expansive government spending era.
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Yet, the Federal Reserve must walk a fine line between economic growth and containing inflation.  GDP growth has entered a more normal territory.

​Inflation, while still subdued, has shown signs of rebounding. The uptick in inflation is related to a small increase in wage growth, which is in turn related to the continued implosion of our unemployment rate. You also will note a similar uptick in mortgage rates.

As investors search for yield in a low rate world, we have seen a compression in the interest rate spreads between high quality bonds and low quality (junk) bonds.  With rates as low as they are today and with the economy growing it is inevitable that interest rates will rise. The end of the 36-year bond bull market is likely upon us.
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A flattish yield curve where the difference in a two-year treasury and a ten-year treasury is a mere 52 basis points, puts bond investors in a peculiar spot where an interest rate increase of just 1% could potentially wipe out three to five years of interest income.

​The take away from all this is bonds are a minefield for investors today. A small misstep can be very costly and the rewards for investment are very small. Many advisors are ill-prepared for a world of falling bond prices.  

Unless you or your advisor are true experts with fixed income investments, your best option in today's environment is to keep your maturities very short. That means you should be selling any bonds or bond mutual funds that have long durations. You should direct those allocations to short term treasuries, certificates of deposit, and bonds in the 1 to 3 year maturity range. Hopefully you will ladder those investments so you have new money available to invest at progressively higher rates throughout this interest rate cycle.

For those of you who need to squeeze every last drop of return out of your fixed income investments, I recommend you read an article I had selected for publication in the "Journal of Financial Planning" in July of 2011.  In this article I explain how thinking about the life of a bond as it moves toward maturity can produce positive returns even when interest rates are moving up.

Over the last 80 years the stock market has advanced an average of 10% each year, but average is not normal when it comes to the stock market. The table pictured on the left shows the actual returns for the S&P 500 each year since 1975.
How many of those returns were 10%? How many fell between 9% an 11%? Not many were even close to average.

You will likely experience something like this.

Bob Clark, a columnist for Investment Advisor magazine, recently said, "...the role of advisors is to protect their clients from the financial services industry". Many times the products pushed by the large financial service firms do more harm to investors than good. The "hot" product du jour is currently the Equity Index Annuity.
While the equity index Annuity itself is not an evil thing, the way they are presented to investors is many times misleading, and they are often pushed to be a much larger part of a portfolio than prudence would justify. 

In brief, an equity index annuity, provides returns that a related to some stock market index. As such they can be viewed as an equity derivative (remember those?). Investors typically receive a return that is some portion of the return of an index like the S&P 500 (for example 90% of the point to point return of the price increase of the index, not including dividends), the average monthly return of the index over a predetermined period (again not including dividends), or the monthly gain of the index with a predetermined cap (often 2-3% per month cap). The big draw is that you receive a guarantee that your account will not have a negative return over some period of time. Often touted as "heads you win, tails you don't loose". On the face that sounds enticing. It is only if you kick the tires that problems become apparent.

First, like most annuities there is a long period of time where you a charged a surrender charge if you want or need to withdraw more funds than allowed in the contract (I have even seen instances where the surrender charge is applied to any withdrawal except in the case of annuitization).

Second, any gain from annuities is considered to be distributed first, and taxed as ordinary income (you do not get favorable dividend of capital gain rate when you file your taxes), and any distribution before age 59 1/2 could be subject to a 10% premature distribution tax penalty.

Worst of all the returns investors receive will likely not measure up to expectations.  The pitfalls of monthly caps and averaging returns requires some contemplation to understand. Let's say you are credited with any market gains up to 2% each month. That means if the index you participate in goes up by 2% you are credited with the full 2%, if the index goes up 3%, sorry, you are still only credited with 2%.  Okay, you say, that's not so bad, I can still earn a whopping 24% in a year! In theory yes, in practice, no.  See sometimes, even in a very good year, markets will fall back some months. And you equity indexed annuity lets you participate fully in the monthly market drops, as long as the account moves no further than 0% in a year.  If the index you participate in rises by 3% one month, the 1% the next month, but falls by 3% the following month, your account earns zero, nada, zilch. You were credited with 2% the first month, then 1% the second month, but got dinged for the full minus 3% in the third month.

​It's all very confusing, and people hear what they want to hear. That is what the insurance companies and agents who sell equity index annuities are counting on. Heads the insurance company wins, tails, you lose.

Individuals with special needs and families that seek to help, have long been hamstrung by the Catch 22 of public assistance. If a family provides too much financial assistance, the beneficiary loses access to government assistance. If the family does not help the individual may suffer from lack of access to housing and education. For special needs individuals to receive an inheritance they needed a special needs trust or the inheritance was quickly depleted until the special needs individual once again attained poverty level to qualify for public assistance.

In 2014 congress passed the ABLE act to allow special needs beneficiaries’ families to establish a savings vehicle funded with up to $14,000 per year (adjusted for inflation) to supplement public assistance.  The account may be used to pay for needs such as housing, education, transportation, and other expenses that improve the quality of life for those with disabilities. 
Similar to 529 college saving plans, ABLE accounts are established by the states, but you can participate in the plan of a state other than your home state if you choose. The account may not hold more than $100,000 of assets without running afoul of the Supplemental Security Income rules, but still this is an improvement over the expense and complexity of using a special needs trust.  For many families this account will prove invaluable.

To qualify for an account, the individual must have significant disabilities and the age at onset of the disability must be prior to attaining age 26. At the death the state where the beneficiary resides may be able to claim any balance remaining in the account under the Medicare payback rules.

Currently ABLE plans have been established by Florida, Nebraska, Ohio, and Tennessee. If you are not a resident of one of these states non-residents are allowed to establish accounts in Nebraska, Ohio, and Tennessee. For more information, you can visit the ABLE National Resource Center online.

As the Summer Olympics in Rio kicked offed this past weekend, it is time again for us to marvel at the prowess of the best athletes in the world. They deserve all the awe we can muster, training that hard for that long- many of them all their lives- to finally compete for their respective countries in front of millions and millions across the globe. The process is truly amazing, and the reward of just competing on that big a stage is just as memorable.

Whether you’re a veterinarian, bus driver, CPA or welder- everyone can be their own champion when it comes to their finances. If you practice determination, discipline and hard work in your financial planning you too can achieve a level of awe in yourself.

The level of achievement will be different for each circumstance, but the feeling of being in control of your retirement planning, college savings for your children, investments or debt management, can be just as remarkable as the Olympians we’ll be watching over the next month.

So challenge yourself to start, or continue, a healthy routine with your finances. This may require speaking with a financial advisor, reviewing your current financial plan, or simply saving an extra $10 each week. However, with enough tenacity and hard work, you too can bask in the glory that is being financially comfortable and prepared for the many obstacles everyday life will throw your way.