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Charlie High Income Pilots Retirement Mistakes

Trust Your Instruments, Not Your Gut, When it Comes to Flying AND Investing!

​As a brand-new pilot, one of the first things you learn is how to mitigate the risk of the potentially deadly physiological phenomenon known as spatial disorientation or spatial-D. In pilot speak, spatial-D is when your body is telling you one thing and your flight instruments (and airplane) are telling you something completely different. Sadly, spatial-D has claimed the lives of many pilots.

In this video, one of our newest Leading Edge team members and previous Marine F/A-18 fighter pilot, Mark Covell discusses just one example of spatial-D.  Mark shares how carrier pilots tend to feel like they are pitching up as they are launched off the carrier at night due to the massive acceleration from the catapult. During daytime, VFR conditions this is probably a non-issue. However, in weather, or at night, this type of spatial-D is potentially deadly.

What does spatial-D have to do with investing and retirement planning? Personally, I feel like all of 2020 could be compared to being catapulted off a carrier at night and not knowing what is up or what is down.

During the heat of the battle from February until the markets settled a bit in early April, investor emotions were all over the place. Years of stock market gains evaporated in days, even hours. Furthermore, many people thought, and the news media quickly suggested we were headed for the second Great Depression. And don’t get me wrong, anything was (and is) possible. Sometimes, the unknown can be truly scary.

One slightly humorous example of investor spatial-D was early in the pandemic when the shares of ticker symbol ZOOM shot up due to investors buying up shares as quickly as possible. Zoom Technologies, a so-called penny stock had risen more than 240% in the span of a month before the SEC suspended trading. Unfortunately, the traders failed to realize the ticker symbol ZOOM did not represent the Cloud Video Conferencing company Zoom they thought they were purchasing – Ticker symbol ZM.

Here is the headline from MarketWatch.com dated February 27, 2020.

In the airplane, pilots must fight spatial-D by cross-checking and TRUSTING their instruments. If, as an investor, you did not trust your instruments during 2020, it may have been very costly.

So, it’s a dark night and the weather is terrible.  What are the instruments you trust?  What is your primary and backup instrument? Here are four instruments that I think can save your investments as well as your financial sanity during uncertain times…

1. Cash reserves – Emergency Funds.

    • Having extra cash can prevent withdrawals from retirement accounts or excessive credit card debt in emergencies.  Studies also show having cash in a bank account makes people happy. In an article posted on PYMNTS.com,  “Can Cash Really Make You Happier”, Joe Gladstone, research associate at the University of Cambridge in the U.K. and co-author of two recent studies about money and happiness said,

“We find a very interesting effect: that the amount of money you have in your bank account right now is a better predictor of happiness than your aggregate wealth,” Gladstone explained. “Having more money in their bank account makes people feel more financially secure, which leads to an increase in happiness.”

2. Have a working knowledge of financial history.

    • You don’t have to be an expert or financial historian, but I believe being familiar with financial history is akin to training before you go on a flying mission.  Pilots call this chair flying.  Athletes and musicians use a technique called visualization that helps them prepare for uncertainty and reduce anxiety for a sporting event or concert.

3. Admit that times are scary, and you do not know what’s going to happen.

    • This may sound silly, but I’ve seen many people get themselves into a “square corner” because they assumed that something was going to happen when in fact there was no indication or possible way of knowing what the future may hold.  We have heard investors say “my gut tells me…” many times.
      • Some of the best investors in the world invest with the mindset of preparing to be wrong. That’s why diversification is not popular or “sexy” because it’s like admitting you don’t know what’s going to happen in the future, so you must prepare for multiple scenarios.  However, diversification can feel disappointing but prove to be a profitable strategy over the long term.

BlackRock Investment Management Company posted the graphic below on their investor education website about diversification and “S&P Envy” over the last 20 years.

4. Prepare and Plan by having a clear vision of your goals and priorities.

    • If you don’t understand the “why” behind your investments as well as why you’re investing and saving in the first place, you will most likely bail-out of your plan during difficult and uncertain times.  Changing your investment plan mid-crisis creates a very high likelihood that your investment returns will be significantly lower.
    • Simon Sinek started a movement by encouraging businesses to “Start with Why.” It’s a powerful mindset that leads to trust, inspiration and success.  I believe the same applies to your financial and investment game plan.

5. Remember that you are invested in companies – not politics.

    • Sometimes our politics clouds the investment and retirement planning picture.  This rule falls under the axiom; “control the controllable.”  If you’re allowing your politics to affect your investment game plan than you may want to see rule number 2 above.

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk and there can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this video will be profitable, equal any corresponding indicated historical performance level(s), or be suitable for your portfolio. Moreover, you should not assume that any information or any corresponding discussions serves as the receipt of, or as a substitute for, personalized investment advice from Leading Edge Financial Planning personnel. The opinions expressed are those of Leading Edge Financial Planning as of 12/09/2020 and are subject to change at any time due to the changes in market or economic conditions.

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Charlie Education Kevin Pilots

Southwest Airlines Voluntary Pilot Reduction Options: VSP and ExTO

 

Southwest Airlines, in an effort to reduce its workforce, has just offered pilots Voluntary Separation Pay (VSP) and Extended Emergency Time Off (ExTO). Both are generous packages (in our opinion) and an excellent option for some pilots. How do you know if it’s right for you? In this video, Kevin & Charlie discuss what is in each package, how it may affect your overall financial picture, if you can afford to take one of them, and ultimately how to decide if you should be part of the voluntary reduction.

Not only are we financial planners but Charlie is a fellow SWA pilot (senior FO out of ATL). We understand what it’s like to walk in your shoes and we want to be a resource for you when it comes to making this difficult decision. Give us a chance to run your financial situation through our simulations to determine if VSP or ExTO is the right answer for you. Call us at 865-240-2292.

 

(Please pardon our hazy image quality. We wanted to get this important message out to you quickly and used our laptop to film it, instead of our standard video equipment. Thanks for your understanding!)

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk and there can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this video will be profitable, equal any corresponding indicated historical performance level(s), or be suitable for your portfolio. Moreover, you should not assume that any information or any corresponding discussions serves as the receipt of, or as a substitute for, personalized investment advice from Leading Edge Financial Planning personnel. The opinions expressed are those of Leading Edge Financial Planning as of 06/04/2020 and are subject to change at any time due to the changes in market or economic conditions.

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Charlie Education Kevin Pilots

Warren Buffet Hates Airlines… So What?!

Berkshire Hathaway recently sold its entire stake in Delta, Southwest, American, and United Airlines and stock prices fell after the announcement.  What is interesting is all but one out of the four of the airline’s stock prices have gone higher since the low on May 4th when Warren Buffett’s sale was made public.

Stock pricing adjusts daily to numerous events.  The decision of one investor, albeit a highly successful and world-renowned investor, should not be your only guiding principle of how to handle your investments.  Mr. Buffett has had biases against investing in airlines.  Here is one of his famous quotes from the 2007 Berkshire Hathaway Annual Letter:

“The worst sort of business is one that grows rapidly, requires significant capital to engender the growth, and then earns little or no money. Think airlines. Here a durable competitive advantage has proven elusive ever since the days of the Wright Brothers. Indeed, if a farsighted capitalist had been present at Kitty Hawk, he would have done his successors a huge favor by shooting Orville down.”

— Warren Buffett, in the 2007 Berkshire Hathaway shareholder letter

Even Warren Buffet isn’t exempt from making the occasional mistake. Time will tell if his decision to sell was the right one or not.   Individual stocks and market prices are set by the collective knowledge of all investors.  In this video, Kevin discusses how to take advantage of this collective knowledge rather than follow the few outliers who are trying to outsmart the system.

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk and there can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this video will be profitable, equal any corresponding indicated historical performance level(s), or be suitable for your portfolio. Moreover, you should not assume that any information or any corresponding discussions serves as the receipt of, or as a substitute for, personalized investment advice from Leading Edge Financial Planning personnel. The opinions expressed are those of Leading Edge Financial Planning as of 05/21/2020 and are subject to change at any time due to the changes in market or economic conditions.

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Charlie Education Kevin Pilots

When Should an Airline Pilot Begin Taking Social Security?

As an airline pilot, you may be eligible to start drawing your Social Security as soon as you retire from the airlines, but should you? As with so many things in finance, it depends. Optimizing your social security benefit is complicated and it can be confusing trying to grasp all of the moving parts. Plus, what about…

 

✈︎  When is your government-defined Full Retirement Age?

✈︎  Will your spouse receive any benefits?

✈︎  Do you anticipate retirement income from other sources?

✈︎  And,… will Social Security even be around by the time I retire? (Spoiler alert: yes, we think it will.)

 

Kevin and Charlie discuss how the answers to these questions correlate and share their 3 RECOMMENDATIONS on how to decide when is right for you to begin your benefit.

We love hearing from you! Please don’t hesitate to call or email if we can help you, 865-240-2292.

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk and there can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this video will be profitable, equal any corresponding indicated historical performance level(s), or be suitable for your portfolio. Moreover, you should not assume that any information or any corresponding discussions serves as the receipt of, or as a substitute for, personalized investment advice from Leading Edge Financial Planning personnel. The opinions expressed are those of Leading Edge Financial Planning as of 02/10/2020 and are subject to change at any time due to the changes in market or economic conditions.

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Charlie Education Kevin Pilots Video

Mandatory Pilot Retirement Age Coming Fast? Get a Plan from a Pilot Specialist

Whether retirement is 5 years away or 15, it’s time to plan NOW.

Are you nearing the end of your aviation career? You may not be ready to take off your epaulettes quite so soon, but the FAA currently mandates all airline pilots retire at the age of 65. Are you financially ready to make the transition?

We are airline pilot specialists!

The planners at Leading Edge have years of experience helping pilots from all of the major U.S. airlines grow and protect wealth so they can have as much fun in retirement as they did flying airplanes! In this video, Charlie Mattingly, Principal, CFP®, MBA and fellow airline pilot describes the value Leading Edge can bring to your financial plan.

Want to skip ahead in the video?

Here are the topics broken down by time marker:

00:04  How does Leading Edge Financial Planning help people execute on plans?
00:36  Why is it a good time to invest TODAY vs waiting?
01:12  Leading Edge helps determine if a second business or real estate is a good idea.
02:33  How can Leading Edge help lessen financial emotion?
03:46  Why should a pilot choose Leading Edge?
04:59  Worst and best financial analogies with flying. (Just for fun!)

Click HERE to book a free one-hour consultation.  Or call us at 865-240-2292.

More reading:
International Civil Aviation Organization (ICAO)
Fair Treatment for Experienced Pilots Act

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk and there can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this video will be profitable, equal any corresponding indicated historical performance level(s), or be suitable for your portfolio. Moreover, you should not assume that any information or any corresponding discussions serves as the receipt of, or as a substitute for, personalized investment advice from Leading Edge Financial Planning personnel. The opinions expressed are those of Leading Edge Financial Planning as of 01/27/20 and are subject to change at any time due to the changes in market or economic conditions.

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Charlie Education Kevin Pilots Video

How Financial Markets are Affected in Election Years

We have all heard the stories about the lottery winner who lost it all. How can this possibly happen?

 

In this video, Kevin dives into the reasons that some lottery winners don’t succeed financially. He shares the financial lessons learned from these scenarios and explains how high-income families can apply those lessons to their lives to achieve better financial outcomes and have less stress.

 

We love hearing from you! Please don’t hesitate to call or email if we can help you.

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk and there can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this video will be profitable, equal any corresponding indicated historical performance level(s), or be suitable for your portfolio. Moreover, you should not assume that any information or any corresponding discussions serves as the receipt of, or as a substitute for, personalized investment advice from Leading Edge Financial Planning personnel. The opinions expressed are those of Leading Edge Financial Planning as of 12/20/2019 and are subject to change at any time due to the changes in market or economic conditions.

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Charlie Education Kevin Pilots

No Regrets: Plan for Tomorrow so you can Live in the Moment TODAY

In the last few days I learned about three fellow pilots that have lost or are losing their battles with cancer.

A good friend of mine from the Air Force will be put on hospice care soon to make his last days here on earth as comfortable as possible.  His doctors recently determined he cannot handle any more chemo treatments.  It’s been four years, around 90 rounds of chemo, radiation and several surgeries.

Another UPS pilot I know is battling a rare form of cancer called esthesioneuroblastoma and the stark reality of this cancer is that he will likely lose his vision entirely within 6-12 months.  Furthermore, his life expectancy is perhaps two to three more years barring a miracle.

Just recently, a pilot I know passed away from cancer.  A friend of mine was by his bedside during the last moments of his life.  Fortunately, he died in peace knowing that he did all he could to make sure his family was taken care of after he was gone.  He was happy and had no regrets my friend said to me.

I didn’t write all of this to depress or upset anyone.  These situations are difficult to comprehend and it’s hard to know what we can do for our friends and loved ones in these difficult moments.  I wrote this article because I know there are things our friends would want us to learn from their terrible circumstances.

For starters, (and I am preaching to myself here) I think they would want us to slow down a little, spend a little more time trying to create special moments, maybe spend a little less time working and striving.  I’m very much a planner in everything I do and sometimes I struggle with being “in the moment.”  I have a fear of possibly missing out on that next achievement, the next goal, and sadly, maybe even the next dollar.  Maybe I should trade in my next three-day trip for a lesser paying “two-day” so I can see my daughter’s homecoming festivities at her school.  What is it worth in dollar numbers to see my daughter during this special moment?  Which is more valuable to her?  I’m pretty sure I know how my friends battling cancer would answer that question.

Of course, there are other practical things we must do now in order to make sure that if we were in similar circumstances we could also leave this world with no regrets:

1. Work to create special moments and great memories.
Many people believe the quality of their relationships and memories created are a better measure of wealth than their money. I tend to agree. No one on their death bed ever wished they would have spent more time working!
2. Get the appropriate amount and the right type of life insurance for your circumstances.
I think it’s a safe generalization to say that most people do not have enough life insurance.  The amount of life insurance depends on several variables; your net worth, family dynamics, age, etc.  Additionally, there is rarely a need for any other type of life insurance than term life.  Do the math on the amount of life insurance you need and consult someone you can trust to help you determine what type of life insurance is right for you.
3. Make sure your Last Will and Testament and your beneficiaries are up to date.
A new client mentioned to me the other day, “Every time I get in the car with my wife for date night, I wonder what would happen to our kids if we died in a car accident.”  This is a terrible feeling.  Let’s not wonder anymore and make sure we clearly articulate in our will what needs to happen in case of our untimely deaths.And yes, we do know of someone that died and their ex-wife was the beneficiary on their life insurance.  “We’ll never know if that was intentional or not,” said one of the family members.
4. Get a financial plan.
We end almost every article we write with this advice.  The reason I think this is an important step in this context is that almost every family, including my own, struggles with the following question; “How do we balance preparing for the future and still enjoy our time now while our kids are young and we’re healthy?”Financial planning will help clarify the answer to this question.  Planning will help bring balance and confidence to our daily lives because we’ll know that we are doing our best to enjoy our time now, staying in the moment, while still giving ourselves the best chance at achieving our financial goals for the future.

Finally, I am going to give up my three day trip for a two-day in order to go to my daughter’s school homecoming festivities.  It’s the right thing to do and when my time on this earth has come to an end, I want to be able to say, “I don’t have any regrets”.

 

All the best,
Charlie

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk and there can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this article will be profitable, equal any corresponding indicated historical performance level(s), or be suitable for your portfolio. Moreover, you should not assume that any information or any corresponding discussions serves as the receipt of, or as a substitute for, personalized investment advice from Leading Edge Financial Planning personnel. The opinions expressed are those of Leading Edge Financial Planning as of 11/25/2019 and are subject to change at any time due to the changes in market or economic conditions.