President and Chief Investment Officer John-Mark Young has been named to AdvisorHub's list of the top Financial Advisors for a third year. Two years ago, he was listed as an Advisor to Watch, and last year, he was named one of the Top 200 Fastest Growing Advisors. In contrast, this year, he was awarded a top two hundred RIA (Registered Investment Advisory), specifically earning a ranking of 96. The award measures the firm and John-Mark in tangible ways, such as the assets they help clients manage and the level of service they provide, such as their financial planning offering. To be considered for the top two hundred RIA award, the Advisor must have year-over-year growth, and finally, AdvisorHub reviews the Advisor for their regulatory record, community service, and team diversity. When asked about the award, John-Mark was reminded of Joseph - "It's our job to try and understand what might happen, give guidance, and plan accordingly. Just like Joseph, if God doesn't bless us by putting us in front of the right people (clients), just as Joseph was put in front of Pharoh, then no value is created. However, He has seen fit to bless our efforts; I'm thankful and blessed for that. We have an incredible team at Whitaker-Myers Wealth Managers, from our back-office compliance team led by Chief Compliance Officer Kelly Taylor, our Financial Advisor Team, our Tax Team led by Kage Rush, and our Financial Coaching Team led by Lindsey Curry. I couldn't be more thankful for a team that makes our service to clients possible. In addition, I've sacrificed so much time with my family to serve our clients, so I'm eternally grateful for my beautiful wife, Megan, who is the definition of a Proverbs 31 woman. She is far more precious than jewels. The heart of her husband trusts in her, and he will have no lack of gain. And of course, I would be remiss if I didn't thank my friend Dave Ramsey and the team at Ramsey Solutions, such as Scott & Ben, who support our efforts as Smartvestor Pros. We serve clients with the heart of a teacher because that's what Dave demands and clients deserve." CEO Emeritus at the Whitaker-Myers Group, Scott Allen, added, "AdvisorHub is presumably looking at things we do that make us different and unique to create the kind of growth that would lead to admission to this list. Investments we have made in our business, such as our new client portal that allows a client to see their financial plan and projections in real-time every single day, is an example of that commitment they would say leads to continued growth. When clients are better informed, they make better decisions, and when they make better decisions, their assets typically reflect that, and as we always say, our compensation is designed in such a manner that we do better when our clients do better. Our new client's portal helps us live out one of our Core Values of having the Heart of a Teacher." Kevin Hewitt, President and CEO of The Chrisitan Children's Home of Ohio, agrees with AdvisorHub's analysis of both Whitaker-Myers Wealth Managers and John-Mark's commitment to serving their community. "We are beyond thankful for our relationship with Whitaker-Myers Group and John-Mark. Specifically, their desire to make an impact for the Kingdom of Christ through their professional work and individual service to our organization and the families and children we serve at The Christian Children's Home of Ohio is greatly appreciated. Just a few weeks ago, the team at Whitaker-Myers Wealth Managers graciously gave of their time and talents to help us set up for and prepare one of our largest fundraisers of the year, The Great Grill-Off. We're grateful for our relationship and can't wait to serve Christ together for many years to come." John-Mark will accept the award at a ceremony on October 10th, 2024, at The University Club in New York City. You can read more here about the AdvisorHub awards given to the Financial Planning community. In addition, you can see the entire list of the Top 200 Registered Investment Advisory Firms in the country here.

I don’t think I’ve ever met anyone who enjoys paying their taxes. However, there is probably someone out there that does. From my experience, most individuals try to limit their tax liabilities. When investing, they create strategies that allow for the most efficient net returns (less taxes, fees, and any additional costs). I discussed this in a previous post about Asset Location vs. Asset Allocation.  Asset location strategies allow for tax-efficient placement (types of accounts) of your investments, and asset allocation focuses on the types of investments. For more information about these strategies and how they could fit your goals, consult one of our advisors. In today’s discussion, we’ll explore two strategies that expand on asset location to mitigate the tax liability within an investor’s portfolio. Tax Loss Harvesting For this section, I’ll direct you to a blog post by John-Mark Young.  In this article, he breaks down tax loss harvesting and provides a great example of how this can impact investors. Take a few minutes to read here and take notes on Suzie’s steps to accomplish this task: BEAR MARKET STRATEGY: TAX LOSS HARVESTING (whitakerwealth.com) Tax Gain Harvesting On the other hand, tax gain harvesting is another tactical tool investors can employ to limit the tax liabilities from gains. Tax-gain harvesting occurs when an asset is sold, but the sale is specifically for tax purposes. The question is, how is this different from the sale of any asset? The focus here is when the asset is being sold to limit potential higher tax implications in the future. Factors to consider when conducting tax gain harvesting: Harvest during ‘lean years’  Years where the investor is between jobs or a smaller bonus, essentially when the investor is in a lower income tax bracket Long-term capital gains vs short-term capital gains  Understanding what category the investment lands in impacts the amount of tax paid Net Investment Income Tax (NIIT) Depending on filing status and adjusted income, the investor may be charged an additional 3.8% in tax Reset the basis by rebuying the same security This option is not available when you’re harvesting losses - Wash rule (see John-Mark’s blog post above) Only on taxable accounts Does not include pre-tax retirement accounts To harvest or not, it’s not always a farming question! At the end of the day, managing your tax liabilities efficiently needs to be a part of your wealth-building and investment planning. Our team of financial advisors at Whitaker-Myers Wealth Managers has the tools needed to align your strategic goals with your desired outcome. If you don’t have a financial advisor, reach out to ask questions and schedule a meeting today.

Tis the Season! BBQs, pool parties, camping, lightning bugs, and running through the sprinkler are all classic signs that Christmas is upon us, right? Maybe I have mixed up my seasons, but I promise my thought process is spot on. In this article, I hope to show you how thinking about Christmas in July can save you money for Christmas in December and avoid the Christmas Debt. Holiday Prep This means more than writing out the menu and blocking off a Saturday morning to wrap presents. This means sitting down with pen and paper (or the Notes section of your phone) and listing everyone you need/want to purchase holiday gifts for this coming year. Think through family, friends, co-workers, holiday parties, or your kid’s classroom (possible) needs. After you have the list of who, pencil out a dollar amount associated with each person next to the name you wish to spend on them, total that number up, and either cry because it’s larger than you anticipated or smile because you have set yourself up to have a Very Merry Christmas with your family and friends, but also feel accomplished for being so proactive and comfortable with your goal number for the holidays. If you are crying because the number is more significant than you anticipated, you may need to adjust the numbers associated with each person to get the desired total number you have written down. Or, do some quick math and divide the total number by the year's remaining months (6 months, counting July through December). This new number is the amount you need to save each month to cover the costs for those anticipated gifts. Hmmm…that sounds a bit like a sinking fund to me! Define the plan of attack You can take two routes with this now. Spread out the spending You can take the allotted amount each month and start to tackle your shopping list now, a little at a time. Find items that may be on sale, bargain end-of-season deals, or just take advantage of having more time and focus on a few people each month to shop for instead of all at once. One large shopping spree Or you can take the all-at-once approach. Whether you love to shop on Black Friday or seek the thrill of shopping up to the last minute before the holidays, you can shop worry-free, knowing you have previously saved for this shopping spree. Whatever direction you take, make sure you spend the dollar amount you have planned and saved for, and don’t go overboard to blow your Christmas Budget. Avoiding Christmas Debt If you have found you tend to overspend on the holidays, are always shocked at the amount left in the bank account after you total up all your holiday spending, and feel overwhelmed with the thoughts of spending money during the holidays, reach out to our financial coach to discuss setting up a sinking fund, and what a realistic budget could be for you.

As a prelude to this discussion, I wrote about intrinsic and market value last week in the Investment Corner. This is a rare instance, so I recommend reading this post on fundamental and technical analyses and then further exploring intrinsic and market value with this post (Intrinsic vs. Market Price/Value). Whatever path you’ve taken to understand security evaluation, hopefully, you will walk away with more information to guide your investment decisions. Fundamental Analyses vs. Technical Analysis Fundamental analyses evaluate a security by attempting to measure the intrinsic value (see the above post for more detail on intrinsic value). On the other hand, technical analysis focuses on statistical trends to find pattern recognition against moving day averages (time series dependent). Both analyses are valuable tools professional data nerds—I mean, investment professionals—use to determine investment selection. Our research team at Whitaker-Myers Wealth Managers spends countless hours conducting the necessary research to provide our clients with the best portfolio options. To understand these methodologies further, let’s explore each one at a high level. Fundamental Analyses Fundamental Analyses are the primary tools business owners use to determine what a company is worth. This is where accountants and finance leaders review the organization's books with a fine-toothed comb. Reviewing balance sheets, statements of cash flows, and many other documents provide the necessary detail to determine ‘value.’ Value is a broad classification, but those combing through this data traditionally look for these key metrics (we’ll explore each of these in detail in future posts): Price to earnings ratio (P/E) Earnings per share (EPS) Projected growth rate (PEGR) or Projected growth (PEG) Free Cash flow (FCF) Price to book ratio (P/B) Dividend Payout ratio (DPR) Price to sales (P/S) Debt to equity ratio (D/E) Return on equity (ROE) Return on Assets (ROA) Qualitative metrics Macroeconomic and microeconomic variable Company sentiment (influenced by news as well) You may be familiar with many of these, but some you may not be familiar with. Don’t worry; we’ll have deep dives into each of these soon.  As you can imagine, in our current technologically connected lives, there are components of the fundamental analysis metrics that have value but do not appear in the abovementioned metrics. Think about a business with goodwill or intellectual property; how do we value those? Goodwill and Intellectual property are difficult to quantify since they are intangible in terms of assets or liabilities. However, these are essential variables when considering the value of a company. Technical Analysis A technical analysis uses mathematical calculations against time variables and other factors to create averages and trends. If you’ve ever heard an advisor talk about day-moving averages, this is part of a technical analysis. Different technical analysis components include historical data to support pricing trends and patterns, volume analyses, momentum tracking, support and resistance analysis, defined relative strength, and many other stratified calculations providing varying levels of granularity. This is an in-depth analysis looking at the correlation between historical events and security price fluctuations. This data is used to predict where the security may move in the near future. Many complicated mathematical and graphical models are combined to create these charts. The traditional ‘candle stick’ graph (shown below in Figure 1) is frequently used in these analyses. These analysts use various candle stick patterns as they formulate their projections. Figure 1 Source: Investopedia.com What is right for you? Depending on where you are in your baby steps or investment journey, your financial advisor may recommend utilizing some of these tools to align your strategic goals. Our team at Whitaker-Myers Wealth Managers has the tools and knowledge to walk with you on your journey.

You just bought a home, congratulations! With most people, buying a home means having a mortgage. And for homeowners who didn’t put down a down payment of generally 20% on a conventional loan, you will need to pay what’s called Private Mortgage Insurance or PMI.  However, some lenders may offer options to avoid PMI with a smaller down payment, such as lender-paid mortgage insurance (LPMI) or piggyback loans. FHA (Federal Housing Administration) loans, which are more common for 1st time homeowners, only need a down payment of at least 3.5% of the purchase price. However, FHA loans require mortgage insurance premiums (MIP) regardless of the down payment amount. For conventional loans, you typically need to have a 20% equity or loan-to-value (LTV) ratio falling below 80% of the original or appraised value at the time of purchase.  For example, a home worth $300,000 would need to have a mortgage value at or below $240,000. Eligibility to remove PMI If you’ve made improvements to your home or property values have increased as they have in the last several years, you should contact your lender/mortgage servicer to find out if they will remove PMI. You should also see if they require an appraisal or if they have another method of reviewing the value. For example, let’s say you purchase your home for $300,000, but you only put 15% down, or $45,000. You’ve lived in the house for three years, and $10,000 of your payments have gone towards the principal, while your property has appreciated 3% to $309,000. That would make your mortgage balance $245,000, or 82% of the original value and 79% of the increased value. Either way, I would call the servicer for an evaluation. How PMI is removed Your PMI will automatically be removed when you hit loan-to-value (LTV) of 78% of the original value (22% equity).  You must not have any secondary liens (2nd mortgage, unpaid property taxes, federal taxes, or unpaid contract work).  Some services may require a minimum payment history of 1 or 2 years before it will be removed. You may be required to have an appraisal done to prove the update/increase property value.  You may 1st ask your loan servicer if they can do a free analysis with any market data they can access.  If they can’t, you can have an appraisal done that could cost between $400-$600 (depending on where you live).   You will want to consider how close you are to the 80% and what your savings would be.  If your monthly PMI is $40 and your appraisal would cost $500, you wouldn’t want to have an appraisal done if you hit 80% LTV in the next 12 months. If you have any questions about your mortgage, paying it down early, or whether to remove PMI or pay it off completely, you should discuss a strategy discussing them with your financial advisor at Whitaker-Myers Wealth Managers. Also, take a look at a recent video from our President and Chief Investment Officer, John-Mark Young, where he talks about how to remove PMI from your mortgage.

Taxes can be a frustrating and challenging topic to keep straight. Knowing what taxes come into play in various situations, with such a wide variety of taxes that most Americans encounter, can confuse investors. In this article, we will discuss Capital Gains. So, let’s begin with what a Capital Gains tax is, which is simply paying a tax on the increase in value of an investment. Although this applies to any investment type, most people encounter this tax through investing in stocks and real estate. Most people will sell at least one home they own during their lifetime, so it may sound “unfair” to some to pay a hefty tax on a move from their home. However, some good news on this topic is that a single person can exclude $250,000 of capital gains and a married couple $500,000 of gains on the sale of their home. The only qualification on this exemption is that it must be your personal residence for at least 2 out of the last 5 years. Does everyone pay the same rate on capital gains? The answer is no, but it is less complicated than income taxes. Capital gains taxes have only three brackets versus 7 for income tax. Generally, most Americans will pay at a 15% rate, lower-income taxpayers may not pay any capital gains, and the top 3-4% of earners will pay 20%. The chart below lays out this year’s rate. In addition, for any capital gains on investments paid at these rates, single filers making over $200,000 and joint filers making over $250,000 will pay an additional net investment income tax (NIIT) of 3.8%. The chart shows long-term capital gains, which are the most common with investment gains. In some instances, investors may be forced into selling in less than one year, or an unexpected huge jump in value almost forces investors to sell and pay short-term capital gains. So, any investment held for less than one year is paid at the taxpayer's income bracket. Regardless of what income level you pay tax at, the long-term rate will always be lower than the short-term level, so if you are close to the 12-month period and don’t have to sell, waiting a month or so usually will make sense to pay less tax. A few examples where paying short-term rates is inevitable and may make sense is a day trader of stocks purposely looking for very short-term stock gains or a house flipper that wants to buy and sell within a few months. Can I avoid paying any capital gains on my investment? In some instances, yes. The IRS doesn’t want to make this too easy, but some smart ways exist to realize gains and avoid capital gains tax. In real estate, you can sell a house for a gain, and as long as you close on another form of real estate investment (they don’t have to be the same form of real estate) within 180 days, then all of your gains get rolled into the new property, and you owe no tax. This is called a 1031 exchange. A similar but much more accessible form of exchange is an annuity with an increased value you want to trade in for something better without triggering a tax, called a 1035 exchange. A hybrid approach between real estate and paper investments is to sell a physical property, do a 1031 into a Delaware Statutory Trust (DST), and pay no capital gains tax. Then, you would own a passive investment that pays you real income and not have to physically do any time-consuming and specialized work required to be a real estate owner. One way to avoid paying capital gains is to do all your investment trading inside an IRA or a qualified account. This may seem obvious, but step back and look at properly structuring what you buy in what account. If you are going to do a lot of trading, then qualified accounts will make sense as you only pay income tax whenever you withdraw, or in the case of a Roth account, all of your gains are tax-free. Sometimes, size or access in various accounts may force someone to do stock trading in a brokerage or taxable account, so let’s explore making that the most tax-efficient. Another way to avoid capital gains tax is to hang onto that investment property or huge stock gain until you die. The reason to never sell is that your heirs, usually your children, will receive a step up in basis, meaning that all the gains realized by the decedent are reset at the value as of the original owner’s death date. This can be a win/win for an owner and their beneficiaries and allow them to retain more of their wealth. How can I be the most tax-efficient if I can’t entirely avoid capital gains? Investors with brokerage accounts that make sense to trade investments in can use a few strategies that may dampen the capital gains hit. If the investor is going to hold primarily mutual funds and not individual stocks, then utilizing Exchange Traded Funds or ETFs makes more sense, as they are still diversified in holdings, sectors, and strategies, like mutual funds. Still, they trade like stocks, which do not trigger capital gains unless you sell. In most years, mutual funds will pass on capital gains tax, whether you sell any of your holdings or not, so you likely will end up paying more in gains over the fund's life. Regardless of what investment you hold, selling early in the year rather than at year-end, you can defer satisfying the tax for up to 16 months or more if you file an extension. Back to the short or long-term gain differences, especially if it is a mutual fund or an ETF, wait until you have passed the 12-month threshold before you sell to reduce your taxes. Again, for stocks that can be more volatile, you may be further ahead to lock in a high gain and pay the higher rate, but waiting a month or 2 in a diversified investment vehicle likely won’t dramatically affect your gain. Tax Loss Harvesting Strategies This falls under the idea of being more tax efficient, but more specifically, offsetting your gains with losses is a way to take a bite out of the tax bill you are dreading paying your winners. The IRS will only let you take a tax deduction of up to $3,000 in losses; however, if you have $20,000 of capital gains and $23,000 in losses, then you will not only not owe capital gains taxes but actually be able to receive a tax deduction for the additional $3,000 of losses that exceeded your gains. Using the same example, if your losses happened to be $27,500 in the same calendar year as the $20,000 gains, then you could only write off the maximum of $3,000 of losses this year but would have to wait to take the rest of your deductions over the next two calendar years. This strategy should be used to sell the stocks or ETFs/funds that make sense to get in and out of. So, selling a stock that is likely to keep running higher or one that you are down in but would seem likely to turn around, then missing the market gains, could be a more considerable detriment than getting to write-off losses or offset gains. On the other hand, being mindful of the tax loss harvesting strategy can motivate you to lock in strong gains and be willing to cut your losses before they fall further. Let’s Summarize Capital gains can be a love/hate topic because, if you are realizing them, it is because you have made a good investment that has increased in value. On the other hand, it can lessen the excitement of your “smart move” when you use already taxed money, then spend a fair amount of effort and take risks, and the IRS wants a cut. In most cases, investors still clear 85% of your gains (if in the 15% bracket). This makes the time and risk worth it in many cases, but much more of an increase will reduce total investments, as it may not be worth the risk for more investors. Also, remember the entire sale of stock, real estate, ETF, etc., is not taxed; only the gain is. If you are thoughtful and do your homework, you can reduce and sometimes eliminate capital gains tax. If you have questions about capital gains taxes or anything related to saving for your future, contact one of the Financial Advisors at Whitaker-Myers Wealth Managers.

We did this to start the year; therefore, it seems applicable to think about the five things we should consider as we enter the second half of 2024. As we enter the second half of the year, it’s important for long-term investors to maintain perspective on the major events that have driven markets. Despite ongoing economic uncertainty, the stock market has experienced a strong rally as investors anticipate the first Fed rate cut, and the rally in artificial intelligence stocks continues. During the first six months of the year, the S&P 500 gained 15.3% with dividends, and in our Dave Ramsey language, this is your growth stock category and growth & income category combined. Additionally, the Russell 2000, which tracks small and mid-sized companies or aggressive growth in our Dave Ramsey vernacular, gained 1.6%, the worst of the four Ramsey categories. The 10-year Treasury yield declined from its April peak of 4.7% to 4.4%, allowing the overall bond market to be roughly flat on the year. International stocks have also performed better, with developed markets generating 5.7% and emerging markets 7.7%. Emerging markets are getting a strong boost thanks to an expanding Indian economy. The MSCI India gained 17.10% to start the first half of the year, even outpacing the US stock market gains. This strong performance may have caught some investors off guard, while others may not have been properly positioned to take advantage of the upswing across many asset classes. This is because market sentiment can often turn on a dime, especially when there is so much investor and media focus on short-term events. For example, the recession that was anticipated at the beginning of the year has not yet occurred and there are signs that inflation, which ran hotter than expected for a few months, is beginning to improve. Of course, the market’s focus will now shift toward major events in the second half of the year. Perhaps the most notable is the upcoming presidential election. As investors prepare to cast their ballots in November, they will also wonder what each political party could mean for their portfolios and financial plans. Investors will also watch the timing and number of Fed rate cuts closely since lower rates are generally positive for both stocks and bonds. While the outcome of these events is uncertain and introduces new risks, the first half of the year is a reminder that overreacting to day-to-day headlines, at the expense of long-term underlying trends, can often result in poor investment decisions. History shows that it’s important to separate our personal feelings around politics from our financial decisions in order to stay invested, diversified, and disciplined. Below are five key facts all investors should keep in mind to stay levelheaded through the rest of 2024 and beyond. And of course to follow the markets and economy, join our weekly video series, "What We Learned in the Markets" 1. The market continues to reach new all-time highs On its way to a 15.3% gain in the first half of the year, the S&P 500 has achieved over 30 new all-time highs. While this is positive, it can also make many investors nervous. When the market is in uncharted territory, it’s easy to worry that it may be “due for a pullback.” The reality is that price swings are an unavoidable part of investing and the market will certainly pull back at some point. However, the timing of these declines is difficult if not impossible to predict. At the same time, major stock market indices will naturally spend a significant amount of time near record levels during bull markets, as shown in the accompanying chart. Trying to time the market tends to be counterproductive for this reason. Another thing I should note is that the S&P 500 is only half of the equity allocation within a Dave Ramsey listener's allocation (growth and growth & income). The Russell 2000 and the MSCI EAFE, which are the other half of the Ramsey (and quite frankly, almost every diversified equity investor) portfolio, are still not trading at all-time highs. The Russell 2000 (small and mid-sized companies) started to crack at the end of 2021 and have never gotten back to those values, and the MSCI EAFE, while closer than the Russell 2000, is still trading below their all-time highs. This year, artificial intelligence stocks – particularly Nvidia – have contributed greatly to market returns with the Information Technology and Communication Services sectors gaining 28.2% and 26.7%, respectively. However, other sectors have more recently begun to benefit as well with Energy, Financials, Utilities, and Consumer Staples all experiencing rallies of around 10%. All told, 10 of the 11 sectors are positive on the year. While it’s unclear where large-cap technology stocks may go from here, staying diversified allows investors to benefit from a wide variety of sectors. 2. With inflation cooling, the Fed is on track to cut rates later this year Investors have been anticipating the first rate cut of the cycle since the beginning of the year. This has not only driven returns, but is one reason markets have swung so much when new economic data has caused expectations to shift. The accompanying chart shows the possible path of the federal funds rate based on the Fed’s latest projections. At its last meeting, the Fed cited strong job gains and low unemployment as indicators of solid economic activity but emphasized that “inflation has eased over the past year but remains elevated.” Fortunately, the latest inflation data in May showed a significant deceleration that has preserved the possibility of a rate cut this year. The CME Group's FedWatch Tool is currently projecting (as of 7/5) a 0.25% reduction in interest rates at the September 18th meeting and the current probabilities favor another 0.25% rate cut at the December 18th meeting. These numbers do fluctuate qutie a bit as economic data is released so it's important to check in on these numbers regularly. Many of the additional rate cuts that investors previously expected have simply been pushed into next year and will depend on the economic data over the next six months. Regardless of the exact timing and path of Fed rate cuts, these projections represent a reversal of the emergency monetary policy actions that began in early 2022. 3. Steadier rates support the bond market The path of interest rates has been highly uncertain over the past few years due to inflation, economic growth, and the Fed. Higher rates have defied the expectations of investors and economists, creating a challenging environment for the bond market, since rising rates push down bond prices. After hotter-than-expected readings in the first quarter of the year, the latest Consumer Price Index data showed no change in overall prices in May for the first time in almost two years. Core CPI rose 0.2% in May, or 3.4% year-over-year, a healthy deceleration from the previous month’s 3.6% pace. Other data, such as the Personal Consumption Expenditures index that the Fed favors, and the Producer Price Index, have shown similar patterns. These developments, along with new Fed guidance, have pushed rates lower in recent days, supporting bond prices. The Bloomberg U.S. Aggregate Bond Index, a measure of the overall bond market, is nearly flat on the year after declining as much as 4% in April. This is in sharp contrast to 2022 when bonds fell into a bear market during the historic jump in interest rates, before stabilizing and rebounding in 2023. According to the Wall Street Journal, bonds experienced their worst year in 2022, since 1842. In mid to late 2022, Whitaker-Myers Wealth Managers Investment Committee advised a potential allocation to US Treasury Bonds with maturities in the 3 months to 24-month range, which all currently pay in the 4.60% - 5.30% range, with no interest rate, credit, or market risk, if held to maturity. 4. Many investors remain on the sidelines in cash In times of market uncertainty, investors often seek the safety of cash. This has been true over the past several years as markets have swung due to the pandemic, geopolitical events, Fed rate hikes, inflation, gridlock in Washington, technology trends, and more. Additionally, interest rates on cash are at their highest levels in decades, making it appear that there are attractive “risk-free” returns. While cash is important, it can become problematic when investors hold too much cash. This is because cash is not truly risk-free for two important reasons. First, inflation quietly erodes the purchasing power of cash over time. So even if yields appear to be high, the real value of your money could decline. Second, the prospects for cash will only worsen if and when the Fed does begin to cut rates. Investors would be forced to reinvest their cash either at lower interest rates or in stocks and bonds whose prices would most likely have already risen. 5. The presidential election is heating up Coverage of the presidential election is heating up. While elections are an essential way for Americans to help shape the direction of the country as citizens, voters and taxpayers, it’s important to vote at the ballot box and not with investment portfolios. History shows that markets can perform well under both major political parties. As the accompanying chart shows, the economy and stock market have grown over decades regardless of who was in the White House. What mattered more across these periods were the ups and downs of the business cycle. Of course, politics can impact taxes, trade, industrial activity, regulations, and more. However, not only do policy changes tend to be incremental, but also the exact timing and effects are often overestimated. Thus, it’s important to focus less on day-to-day election poll results and more on the long-term economic and market trends. Ideally, investors concerned about the impact of specific policies on their financial plans should speak with a trusted financial advisor. The bottom line? Investors should keep these five factors in mind as we head into summer. As always, it’s important to maintain a long-term perspective to achieve investing goals. Working with a trusted financial advisor can help you navigate through an uncertain future and be prepared for changes in the economy and stock market through the rest of 2024. Should you need to speak with a Financial Advisor or Planner on the Whitaker-Myers Wealth Managers Team, please click here.

Intrinsic and market value or the price of a stock are important distinctions that investors should understand as they develop their investment portfolios. The intrinsic value or price of a stock is the fundamental value of the stock. Fundamental value takes a variety of near-real-time business metrics to define. On the other hand, market value/price takes fundamental value and pricing based on market dynamics into play. Market value equates to what you would pay for the stock in the public market.  Market factors such as momentum, popularity, and others continue to define the ‘value’ of a stock and, thus, the market price.  Let’s look at both intrinsic and market value more closely. Intrinsic Value/Price As mentioned above, intrinsic value is a key component of a company's actual valuation. It is part of the fundamental analysis conducted and is usually expressed as a capitalization value. This can vary based on the analysis completed, as no single source defines how to calculate intrinsic value. Some analysts use Torbin’s Q ratio (market value of the replacement of assets), book value (assets-liabilities), liquidation value, and other calculations that essentially put a ‘value’ on the business. The difficulty with intrinsic valuation is not only the calculations used and access to this information but also evaluating companies with a lot of Intellectual property (IP). Traditional (fundamental) analyses don’t have appropriate calculations to integrate IP or other intangible assets. Example – what would Apple/Google/Nvidia/Microsoft’s valuation be without their proprietary technology and patents? The key takeaway is that intrinsic value is the best calculation (or estimate) of the company's actual value. However, this is not what any of us pay for stock in the company. That is where Market Value comes into the picture. Market Value The ‘market’ in this discussion refers to the stock market. Given our financial discussion, this is fairly obvious, but it is important to make it clear. So, if intrinsic value is the most accurate representation of the value of a company, why is the stock selling so much higher than the capitalization of the company? Think supply and demand. When higher demand for a product or service and supply stays constant, prices increase. When supply exceeds the demand for a product or service, prices decrease. This is the tale of the stock market. The stock market reports a company's market valuation based on all market participants. If we all buy the same stock, the stock for that company will go up. Also, if we all sell the same stock, the price will come down. Obviously, there are more factors moving the market, but from a simplistic lens, this is the movement we see. As investors participate in the market, the supply and demand responses impact pricing changes. Other vital components we mentioned above are related to popularity and momentum. As a stock gains popularity (think any big technology stock right now related to AI) or momentum (Nvidia, Apple, Google, Microsoft), we see market shifts as well. Market sentiment is another factor to consider when trying to understand a stock's market value. Market value tends to be much higher than intrinsic value, but investors must be cautious about valuation metrics. Due to many of the factors we mentioned in this article, concerns around overvaluation should always be considered. In the end The market is tricky. There are unlimited metrics and analyses to consider when creating your portfolio. As always, it’s better to have an expert with the heart of a teacher at your side to walk you through the complexity. Our team at Whitaker-Myers Wealth Managers is trained and ready to walk with you on this path. If you need help getting out of debt or understanding the best path to financial freedom, consider talking to our incredible Financial Coaches. Ask them about the 7 baby steps to financial peace and anything else on your mind. If you would like to talk more about investing or have questions about your portfolio, talk to one of our Financial Advisors today.

Navigating the complex landscape of real estate investment often requires a keen understanding of various financial strategies and tax advantages. One such strategy that stands out for savvy investors is the Section 1031 exchange, particularly regarding rental properties. Section 1031 of the Internal Revenue Code offers a unique opportunity to defer capital gains taxes by reinvesting the proceeds from a sold property into a like-kind property. This article delves into the intricacies of Section 1031 exchanges, exploring how they can be leveraged to optimize rental property investments. From understanding the eligibility criteria to the step-by-step process and potential pitfalls, we provide a comprehensive guide to help investors make informed decisions and maximize their returns through strategic property exchanges. We've written about converting actively managed rental properties to passive real estate strategies before using the Delaware Statutory Trust (DST) option, and you can read more about that here. However, the attached flow chart can be a starting point to help you determine if you could qualify for a 1031 Exchange with your rental property. Should you be interested in pursuing this option, please contact our in-house CPA, Kage Rush or a Financial Advisor Team Member.

When living in the greatest country in the world, often when someone informs you, “You have to protect yourself,” you may not think they are talking about insurance and making sure you have proper coverage for three vulnerable areas of your life. In this week’s article, I will review three kinds of insurance coverage we feel benefit you and your financial health. Term Life Insurance Term Life Insurance is one of the most important types of insurance a person can acquire when they are married or if they have someone who is a dependent. The function of Term Life Insurance is to help replace income if you die before becoming financially independent. The Ramsey Solutions Team’s general rule of thumb is that you need coverage that is ten times your annual income.  The reasoning is that if the market has an average of 10% a year, you can pull the interest earned and use that without touching the principal.  In certain situations, some people need more, and some need less. The goal of Life insurance is not to get rich; it is to protect you in case something happens to you. Car Insurance If you have a car… you need car insurance! A long and sad question... What do you do when someone hits you, and they don’t have car insurance? Answer – sue them so they can cover the cost. What happens when they file for bankruptcy? Answer – if you don’t have car insurance, you are stuck trying to cover the bill. Within car insurance, there are six different parts: Part A: Liability Coverage This is for any person using your car with permission Part B: Medical Payments Covers people inside your car Exclusions: Racing, public livery, and some people using your car without permission Part C: Uninsured Motorists Pays what an “Under-insured” or uninsured driver would have to pay if they were at fault Exclusions: Public livery, auto use without permission, regular use of a non-owned vehicle, auto-used in insured’s business Part D: Coverage for Damage to Your Auto Provides direct coverage on your covered vehicle and any non-owned vehicle (rental or borrowed car); the insurance company can choose to pay for the repairs or provide you with the value of the vehicle if the car was “Totaled” Types: Collision: This type of coverage helps if you collide with another vehicle or object, such as when running off the road Comprehensive: This coverage helps you with damages that do not result from a “Collison,” for instance, vandalism, theft, and… “oh no, DEER!!!” Exclusions: Public livery, radar detectors, most electronic equipment, nuclear damage, auto-used without permission, auto-used in insured ‘s business Part E: Duties of insured after an accident or loss Notify the insurer (insurance company) File a proof of loss Cooperate File a police report (although it is dependent on the situation) If you hit another car, always, always, always file a police report! Worst case scenario: a person hits you, and you agree to move ways, and no one files.  Only to have the police arrive at your house and find out that the other person had reported a hit-and-run.  And yes… this happens! Part F: General Provisions Most car insurance is only good in the United States, Puerto Rico, and Canada Home Owners Insurance There are three general coverage forms: Basic Named Perils Events covered in this are: fire, lightning, windstorm, hail, riot, aircraft, vehicles, smoke, vandalism, explosion, theft, and volcano Broad Named Perils Events covered in this area include events noted in the Basic Named Perils along with: falling objects, the weight of ice, snow, and sleet, accidental overflow of water, sudden bursting of appliances, freezing of a system or appliance, and Damage from an electrical current Open Perils (All Risks) Covers all perils except specifically excluded perils Typical exclusions: Neglect (termite damage or a dead tree that falls on the house) Movement of ground (earthquake or landslide) Damage from rising water (floods, water from underground and sewer backup) Ordinance or law (loss resulting from regulation regarding construction or demolition) War or nuclear hazard (includes nuclear power plant) Power failure (power plan failure) Intentional act (burning your own house down) Types of Home Owners Coverage: Part A: Dwelling Covers repair or replacement of house or attached structures Insured who have an amount equal to the replacement cost Must carry at least 80% of the replacement cost Part B: Other Structures Includes detached garage, storage building, and other structures Other structures not covered if used for business purposes Part C: Personal Property Furniture, electronics, clothing, paintings, etc. Limits are placed on certain personal property losses Schedule high-value items, such as a wedding ring Part D: Loss of use Provides reimbursement for expenses related to additional living expenses Losses resulting from living in a hotel because the residence is damaged or being repaired The insured must suffer a financial loss (I.e., If you have damage from a hurricane and you stay with a family member for free, you cannot collect) Part E: Personal Liability Protects the insured allegations of bodily injury or property damage (for example: your neighbor slips and falls on the sidewalk in front of your house) Cover both damages and costs of defense of claim or suit Part F: Medical payments to others Covers medical payments for injuries that arise even if the insured was not liable for the injury Does not apply to the insured or members of the insured’s household Does not cover thieves or trespassers A Good Foundation These are not the only three areas in which to have insurance. However, it’s a great place to start. It is essential to take your time to understand each area and how that coverage works for you. Insurance is a product that helps protect you from significant expenses. Yes, it’s good to find the best deal, but it is also important to make sure you are not stepping over dollars to pick up pennies. The Whitaker-Myers Group has a division that helps with the various areas of insurance, as mentioned above. If you have questions about any of these, reach out to your advisor today who can help connect you with someone to help.

Recap Last week, we dove into defining the difference between asset location and asset allocation. As a quick refresher, asset location focuses on the ‘where’ question of your investments. Where should I invest my money to align with my goals in a tax-efficient plan? On the other hand, asset allocation is the selection of the securities, assets, or “beanie-baby” investments in your portfolio. The allocation component focuses on the ‘what’ aspect of your investments.  If you’d like a bit more than a refresher, here is the link to the article from last week, Asset Location vs Asset Allocation (whitakerwealth.com). To rebalance or not to rebalance, that is today’s question In a previously written article, our Whitaker-Myers Wealth Managers (WMWM) team discusses the importance of rebalancing. Rebalancing an investor’s portfolio is an excellent strategic decision that keeps their account within the appropriate allocation percentages. For example, imagine that you’ve created a portfolio with the intent to reach a specified goal with 70% in equities and 30% in bonds/fixed income. However, when you log in this morning, you notice 50% in equities and 50% in bonds. Well, that is a pretty significant deviation from the goal allocations. In this scenario, timing-dependent, you may consider rebalancing the portfolio to stay within your goal and allocation requirements. Our team at Whitaker-Myers Wealth Managers pays close attention to tolerance levels and has the tools at our disposal to manage any rebalancing procedures as necessary and efficiently. To rebalance or not to rebalance doesn’t seem like much of a question anymore, does it? However, depending on the account type you or your advisor have selected, you may not want to rebalance. Let’s keep swimming into the deeper ends of this ocean of knowledge. Types of Allocation Accounts Buy and Hold This account is self-explanatory. In a buy-and-hold account, the investor never rebalances. The investor buys a security and holds it. Earlier this week, a colleague shared with us that if we invested in NIVIDA 10 years ago for $1000, that same account would be >$300,000 today with no additional investment. Hindsight is 20/20, and the reality is that most of us would have sold before hitting the 300k mark.  Key takeaway: Buy-and-hold investors do not rebalance; they buy and then hold until sold. “Hold until sold” – the next hit song on the WMWM album. Tactical Asset Allocation (TAA) Some may consider the buy-and-hold strategy part of the tactical asset allocation umbrella, but I believe they are quite different. The key distinction is that tactical asset allocation will not be the hit track on the WMWM album. All jokes aside, the TAA portfolio differs from the buy-and-hold portfolio by selling securities more regularly and thus ‘rebalancing’ without traditional allocation percentages. Some of the key benefits of the TAA are: More active investment approach Buying and selling securities (many times individual stocks) based on market trends/analysis/gut feeling Allows investors to make ‘tactical,’ short-term decisions Much more flexibility and risk management (debatable) Strategic short-term changes based on micro and macroeconomic influences (we’ll have a very detailed post about this in the future) For those who prefer individual stocks, this is a great investment style to consider. However, the disadvantages are important to consider as well: tax liability, increased risk with single stock exposure, diversification risk, and individual security risk (based on security type). Strategic Asset Allocation (SAA) This strategy is the strategy most investors are familiar with. Your 401k and other retirement accounts are likely invested using the strategic asset allocation strategy or something very similar. This strategy defines allocation percentages to the asset classes in which the investor wants to invest. As shared in the earlier example, a 70% equity and 30% bond/fixed income portfolio is a type of SAA portfolio. This portfolio rebalances based on the investor/advisor's discretion; however, rebalancing this type of account is more commonly dependent on tolerance/ranges determined by the account managers (individual or organization investment committee). Benefits of the SAA style include: Period-based rebalancing to stay aligned with goals and projections Diversification benefits, based on low correlation and multi-asset class allocations Most common type of long-term investment, short-term benefits are present as well (allocation and time horizon dependent) Can fit almost any investor profile based on their investment philosophies and goals I believe there are very few disadvantages. However, when analyzing returns specifically, this strategy works best with a long-term horizon. Other types of accounts include Dynamic Asset Allocation, Core and satellite, and absolute return allocations.  We’ll spend some time exploring these next week as we continue our exploration. To summarize The account type you select, what is within the account, the strategy you deploy, AND who manages your account all need to align to get you to your goals. A savvy investor may be able to do 3 out of 4, but it is difficult to reach the end goal without the skills and knowledge of the experts. Our team of Financial Advisors at Whitaker-Myers Wealth Managers have the expertise you need to succeed, and we always come with the heart of a teacher to guide you to success. Schedule some time with one of our advisors or coaches today!

If you are anything like me, you have probably registered for hundreds, and what feels like maybe even thousands, of accounts online that require a username and password. Even if you are trying to buy a pair of pants online, now it asks you to register for an account. Because of this, one of two scenarios typically plays out. Either you reuse your “go to” password and username, which can cause a security threat if, for some reason, those login details were to be breached, or you can try to create a unique username and password combination for each profile or new account. This requires you to remember countless usernames and passwords and hope you get the right one before you are locked out of your account by accidentally putting in a different password. Neither is ideal, and both pose problems for you in this online world. Identity Theft Identity Theft is a very real concern for personal information that is frequently used online every day. If your sensitive personal information is compromised, you could spend several weeks or months trying to straighten things out with the various accounts. In the worst-case scenario, your bank account is impacted. Is there a solution? One solution I have recently implemented is using a password manager. This option gives you the best of both worlds, as it allows you to create and generate thousands of unique and complex passwords without having to remember them all while still protecting your individual password for the overall account. A password manager app allows you to log in to one secure web browser and then securely stores all of your passwords to autogenerate when you go to a site to log in. It may also have a feature to “auto-generate” a unique password with upper- and lower-case numbers and special characters, which is much more secure than using your favorite pet name(s). Once you log in, you can import all of your current passwords. Some password manager apps give you a security score on each one, and you can go to each website to autogenerate a new, much more complex password to use moving forward. The service costs money, but it is a small price to pay for the security it offers. Estate Planning This can also be a valuable tool for estate planning. By giving loved ones the ability to see and locate important login information all in one place, you can save them time and headaches rather than trying to find all the required information for your accounts if something prevents you from giving them access. There are many different options for services, and I am sure there are some free options as well, but it is worth the time to try and centralize things and provide more security for your most sensitive information. At Whitaker-Myers Wealth Managers, we take financial security very seriously as part of your overall financial health. If you have other questions about retirement or saving for your future, contact one of our financial advisors.