Make Positive Changes to Increase Happiness

Created on Monday, 09 June 2014 12:47

by Dan Solin

Dan Solin is a New York Times best-selling author of the Smartest series of books. The following excerpt from his latest book, The Smartest Sales Book You'll Ever Read, shows how you have the power to increase your level of happiness.

Do you really have the power to increase your happiness? Experts say yes. Sonja Lyubomirsky, a social psychologist and author of The How of Happiness: A Scientific Approach to Getting the Life You Want, believes all of us were born with a “genetic set point” that determines 50 percent of your happiness level. In other words, to some extent you tend to be happier or unhappier than other people simply by your nature. An additional 10 percent of your happiness level is imposed by circumstances like health, economic status and marital status. The encouraging finding is that you are in total control of the balance of 40 percent.

No matter who you are and what circumstances you find yourself in, you can also boost your happiness by adopting some simple habits and practices in your daily life.

Prioritize Happiness

According to Shawn Achor, author of The Happiness Advantage, happiness is a choice well within your power to make. He believes the brain can initially scan for positive or negative meanings in the input it receives. The problem arises when your brain is programmed (by you) to scan for the negative. Achor believes the brain can be trained to first scan for the positive. He suggests some simple practices to help you retrain your brain. One is to exercise for at least 10 minutes a day. Another is meditating. He also recommends making it a daily practice to write down things that make you happy, things for which you are grateful, or one positive experience you have over the last 24 hours.

Make Emotional Connections

Emotional connections are an essential component of your level of happiness. There is ample evidence that we are happier when we are with other people than we are alone. Happiness makes us more pleasant, helpful and sociable. We have social interactions every day. As you go through your day, try to make as many emotional connections as you can.

Practice Empathy

When you demonstrate empathy, life becomes more meaningful. There is evidence that empathetic people have more successful marriages and more substantive social relationships. CEOs who demonstrate empathy are more successful. Teachers who are emphatic have students who test better. Empathetic doctors have healthier patients. Empathetic people tend to live longer. No wonder having empathy makes people happier. You have ample opportunities in your business and personal life to express empathy.

Become a Genuine Listener

There are many benefits of practicing genuine, or reflective, listening, but the primary one is conveying to others that you sincerely care about them. Remember to let others speak for as long as they wish without interruption, to listen intently, and to respond in a way that demonstrates both your understanding of what is being said and the emotions the speaker is expressing.

Feel the Power of Giving

An article in The Christian Science Monitor referenced 500 studies demonstrating the power of unselfish love. One study looked at 100 communities in England, ranging from inner cities to rural villages. Communities with the highest levels of volunteerism had less crime, better schools, and happier, healthier residents. These effects apply with equal force to countries all over the world.

The opportunities for giving are many: donating to charities, volunteering at a hospital or nursing home, delivering meals to those who are homebound, building homes with organizations like Habitat for Humanity, taking a meal to a sick neighbor, calling a relative just to find out how they’re doing.

Pursue Your Passions

We each have a passion for something. You feel better when you pursue this activity. I have a friend who loves nothing more than to camp out and hike in our beautiful national parks. Another colleague spends much of his leisure time recording music that is unlikely to be heard by anyone other than himself and his friends. I am a lifelong tennis player. Once a week I take a lesson from a wonderful teacher. I will never be recognized as a great tennis player, but I eagerly look forward to each lesson.

It doesn’t matter if your passion is gardening, fishing, hunting or painting. What is important is that you allocate time to pursue your passion. Doing so will contribute to your happiness.

Add Play

One study measured “playfulness” in adults and found that playfulness relates positively to an overall feeling of well-being and quality of life, among other benefits.

How can you be more playful? Loosen up. Joke around. Make fun of yourself. Engage in spontaneous behavior. Be unpredictable. Don’t take yourself or others so seriously. It’s good for you.

I am not suggesting that you quit work and spend all your time playing. But you can cut yourself some slack, relax, appreciate what really matters and have some fun. The collateral benefits are significant.

Look After Your Health

Poor health correlates highly with unhappiness. While some health issues may be beyond your control, many are not. There is ample evidence that heart disease, diabetes, colon cancer, hip fractures, and high blood pressure, among other chronic illnesses, can be prevented or improved through diet and exercise. Up to 60 percent of cancer cases are related to poor diet. If you want to be happy, take responsibility for remaining in good health.

It’s Up to You

You can choose to be happy, with all of the benefits of happiness: less stress, a feeling of contentment and fulfillment, a sense of well-being. And here’s the kicker: the happier you are, the more likely you are to achieve success. You can appreciate every day of your life for the wonderful gift that it is.

You have the power to increase your level of happiness.

Dan Solin is the director of investor advocacy for the BAM Alliance. He consults with corporations and advisory firms on ways to improve their sales. The Smartest Sales Book You'll Ever Read was published in December 2013.

Quick Take on Fixed Income

Created on Tuesday, 27 May 2014 10:32

Q: What are the benefits of buying higher coupon bonds?

A: A higher coupon or “premium” bond has a higher coupon rate than the current market interest rate and will trade above par. These bonds sell for more than 100 percent of their par value, so the dollar value is greater than the normal $1,000. These are the reasons we generally recommend higher coupon bonds for our clients:

• They reduce duration risk and market volatility. All else being equal, if interest rates rise, bond prices will fall and vice versa. The longer a bond’s duration, the more sensitive it is to rate changes. Premium bonds, however, help guard against possible rate increases and price decreases. The higher coupon provides a cushion against price declines because the price has further to fall before it becomes a discount bond. Premium bond prices tend to change less compared with bonds of similar maturities, reducing the price sensitivity of the fixed income portfolio. For an example, let’s look at two New York City municipal bonds:

Bond 2, the premium bond, has a lower duration, making it less sensitive to interest rate changes.

• When interest rates are rising, higher coupon bonds generate more coupon cash flow than lower coupon bonds. This means investors can reinvest more in bonds that will pay even higher yields.

• They can help avoid onerous tax implications. The term de minimis essentially states that investors must pay capital gains taxes for any bond bought at a discount to face value (original issue discount excluded) in excess of a quarter point per year to maturity. This can significantly reduce the bond’s after-tax yield. This concern also exists in low coupon bonds that aren’t subject to this tax at time of purchase. If the owner wants to sell the bond and rates are higher at the time of sale, the market will treat the bond as de minimis, and the client’s bid price will be significantly lower than for the same bond with a higher coupon not in de minimis territory. Many investors are unaware of this situation, but we take strong measures to avoid it.

• Their availability is often better. Most trust companies have strict buying parameters that limit what they can buy, with prices ranging between $98 and $102. Also, many retail brokers put their clients in these same types of par-priced bonds. These two types of buyers help create a strong market demand for low coupon/low dollar bonds. It’s Economics 101: A strong demand for a limited product means costs will go up (and yields will go down). With higher coupon bonds, investors can pick up incremental yield over similar bonds with lower coupons, while getting access to the largest number of issuers.

Copyright © 2014, The BAM ALLIANCE. This material and any opinions contained are derived from sources believed to be reliable, but its accuracy and the opinions based thereon are not guaranteed. The content of this publication is for general information only and is not intended to serve as specific financial, accounting or tax advice. To be distributed only by a Registered Investment Advisor firm. Information regarding references to third-party sites: Referenced third-party sites are not under our control, and we are not responsible for the contents of any linked site or any link contained in a linked site, or any changes or updates to such sites. Any link provided to you is only as a convenience, and the inclusion of any link does not imply our endorsement of the site.

What are the benefits of buying higher coupon bonds?

Created on Tuesday, 27 May 2014 10:32

Q: What are the benefits of buying higher coupon bonds?

A: A higher coupon or “premium” bond has a higher coupon rate than the current market interest rate and will trade above par. These bonds sell for more than 100 percent of their par value, so the dollar value is greater than the normal $1,000. These are the reasons we generally recommend higher coupon bonds for our clients:

• They reduce duration risk and market volatility. All else being equal, if interest rates rise, bond prices will fall and vice versa. The longer a bond’s duration, the more sensitive it is to rate changes. Premium bonds, however, help guard against possible rate increases and price decreases. The higher coupon provides a cushion against price declines because the price has further to fall before it becomes a discount bond. Premium bond prices tend to change less compared with bonds of similar maturities, reducing the price sensitivity of the fixed income portfolio. For an example, let’s look at two New York City municipal bonds:

Bond 2, the premium bond, has a lower duration, making it less sensitive to interest rate changes.

• When interest rates are rising, higher coupon bonds generate more coupon cash flow than lower coupon bonds. This means investors can reinvest more in bonds that will pay even higher yields.

• They can help avoid onerous tax implications. The term de minimis essentially states that investors must pay capital gains taxes for any bond bought at a discount to face value (original issue discount excluded) in excess of a quarter point per year to maturity. This can significantly reduce the bond’s after-tax yield. This concern also exists in low coupon bonds that aren’t subject to this tax at time of purchase. If the owner wants to sell the bond and rates are higher at the time of sale, the market will treat the bond as de minimis, and the client’s bid price will be significantly lower than for the same bond with a higher coupon not in de minimis territory. Many investors are unaware of this situation, but we take strong measures to avoid it.

• Their availability is often better. Most trust companies have strict buying parameters that limit what they can buy, with prices ranging between $98 and $102. Also, many retail brokers put their clients in these same types of par-priced bonds. These two types of buyers help create a strong market demand for low coupon/low dollar bonds. It’s Economics 101: A strong demand for a limited product means costs will go up (and yields will go down). With higher coupon bonds, investors can pick up incremental yield over similar bonds with lower coupons, while getting access to the largest number of issuers.

Copyright © 2014, The BAM ALLIANCE. This material and any opinions contained are derived from sources believed to be reliable, but its accuracy and the opinions based thereon are not guaranteed. The content of this publication is for general information only and is not intended to serve as specific financial, accounting or tax advice. To be distributed only by a Registered Investment Advisor firm. Information regarding references to third-party sites: Referenced third-party sites are not under our control, and we are not responsible for the contents of any linked site or any link contained in a linked site, or any changes or updates to such sites. Any link provided to you is only as a convenience, and the inclusion of any link does not imply our endorsement of the site.