Refresher Course on Rounding (for Non-Math Types)

The demise of the penny gave us all a refresher course on rounding.

Most of us know that one to four rounds down and five to nine rounds up, but there can be some surprising pitfalls when dealing with the kinds of numbers that are common in financial services marketing, especially in commentaries and reports.

Let’s get to the bottom of this.

How to round

A common rounding task is to express large monetary units in words instead of numerals. For example, \$1,000,000 is often written as \$1 million (or \$1.0 million, depending on your style) in tables and copy. Depending on the context, you may want to highlight that the figure is approximate.

The key to rounding is to do it once only – looking only to the number just to the right of the last desired digit to determine whether/what rounding is needed.

If your style calls for numbers rounded to one decimal place (\$x.x), then you would round the following amounts as follows:

• \$7,576,000 becomes \$7.6 million – 7 rounds up to 6. Don’t be tempted to keep going and round again to \$8.0 million.
• \$1,986,000 becomes \$2.0 million – 8 rounds 9 up to 10, causing 1 to become 2. This is the only situation in which rounding affects a second column.
• \$4,746,000 becomes \$4.7 million – 4 leaves 7 rounded down to 7. If you start rounding too early, with 6 rounding up 4, then you’ll arrive at \$4.8, which is incorrect.

Another rounding rule to watch for

You cannot “unround” figures.

If you have a return of 7.6%, but your style calls for two decimal places, then you need to go back to the source, rather than simply adding a zero to the end (7.60% might be incorrect). In this example, the correct figure could be anything from 7.55% to 7.64%.

That concludes our rounding lesson for non-math types. Hope you enjoyed it!

Marketing

Andrew Broadhead is Communications Manager at Ext. Marketing Inc., where he creates content that helps financial services firms engage their customers and prospects. Andrew’ ... Click for full bio

What's an Investor to Do When History Doesn't Repeat Itself?

We’re in an era of extremes. It seems a day doesn’t go by without the word “historical” popping up in the financial news.

The equities market and consumer debt are at historical highs. Interest rates and high-yield credit spreads are at historical lows. We haven’t seen even a 5% pull-back in the market this year—for the first time since 1995—and the DJIA is exhibiting its narrowest trading range in history. These are indeed historical times. And whether this fact has you filled with extreme optimism or extreme pessimism, you have some important decisions to make going forward.

There are theories about how we landed in this particular era of extremes, and most are rooted in the significant changes that have impacted both how we live and how we invest. At the top of the list are globalization, automation, and the largest aging population in history (yet another “historical” to add to the list). It’s said that the most dangerous words in investing are, “it’s different this time,” yet one has to wonder if, in fact, it really is different this time. Not just because of the historical market highs. After all, there always has been and always will be a new market high waiting around the corner. What’s different today is the sheer number and confluence of these extreme highs and lows—and their duration. It’s a situation no investor has experienced before, which can make these waters feel pretty daunting. History repeats itself, and investment strategies are largely built on that conviction. But what do we do when it doesn’t? When history fails to repeat itself, how can investors plan for tomorrow with confidence that they are positioned to protect their assets and gain a reasonable level of yield?

The first step is to recognize that, at least in many ways, the investment landscape really is different this time around. All you have to do is look at the numbers to be sure of that fact. And the catalysts I mentioned before—globalization, automation, and the aging population—aren’t going anywhere. If anything, the impact of each will only grow as time moves on. What that means is that there’s no way to predict what’s coming next. The only thing we know for certain is that predictability is a thing of the past (if it ever really existed at all). The result: you need to approach your portfolio differently than you ever have before.

Your goal, of course, is to find return given a risk tolerance. Current yield is an important part of total return and getting it is an elusive proposition in today’s market. If, like many people, you’re less than confident that the four major sectors that currently drive the equities market—healthcare, discretionary, tech, and financial—are poised to continue to rise at even close to recent rates, it may be wise to seek out alternatives to help drive yield without adding more risk to the equation.

But if alternatives are the wise path forward, which alternatives are the best options?

Real Estate Investment Trusts (REITs), Business Development Companies (BDCs), and energy stocks, traditionally the favored “non-correlated alternatives,” defied expectations when the stock market crashed in 2008, inconveniently revealing high correlations just as the equities market began its freefall. Anyone who was invested in these alternatives at the time knows all too well the devastating impact “non-correlated investments” can have on a portfolio, especially when they fail to do their job when it matters most.

Luckily, there is one alternative that can be counted on to remain uncorrelated to the traditional financial markets and, ultimately, deliver that precious yield: life insurance-based investments. And because this asset is literally built on one of the irreversible catalysts of change, the aging Baby Boomer population, owning life insurance may in fact be the ideal alternative to help investors generate non-correlated returns, regardless of where the market turns next. Even better, these investments typically deliver those returns with very low volatility.

Related: 3 Reasons Alternative Investments May Be Your New Key to Success in Changing Times

What makes life insurance different is that, unlike typical alternative vehicles, secondary life insurance returns aren’t based on the economy. Instead, they are inherently non-correlated because returns are based solely on the longevity of the individual insureds.

As much as we would all love for the bull market to continue on its merry way, one thing history does tell us even today is that a bear market will come. It’s only a matter of when. As you strive to hedge your portfolios and prepare for the inevitable, life insurance-based investments are one tool that can help you achieve the three things you need most: diversification, low volatility, and yield.

Investing in Life

Bill Acheson is the Chief Financial Officer of GWG Holdings, Inc. Mr. Acheson has over 25 years of sophisticated financial services expertise. Mr. Acheson has extensive experi ... Click for full bio