As we finish our 3-part series on metrics, if you haven’t read Part 1, Lagging Indicators, or Part 2, Coincidence Indicators, click on the hyperlinks to read to get caught up. The conclusion of the quest is near… As we continue our quest, we’ve finally reached the final and last part of the series. By now, the hero of our story has navigated their way through a plethora of challenges until finally reaching the Summit (no pun intended, well maybe). Upon reaching the highest point and completing every math equation along the journey, our hero only has one last set of metrics to understand before completing this quest for statistical knowledge.  BRING ON THE LEADING INDICATORS! Leading Indicators Leading indicators, as predicted, are selected due to their potency in predicting economic activity. These include: ·        Average work week, production workers, manufacturing ·        Average weekly initial claims for unemployment insurance ·        Manufacturer’s new orders for consumer goods and materials ·        ISM new orders index ·        Manufactures’ new orders for nondefense capital goods, excluding aircraft ·        Monthly building permits for new private housing ·        Stock prices ·        Leading credit index, M2 money supply prior to 1990 ·        Interest rate spread between 10-year treasury bond and federal funds rate ·        Average consumer expectations for economic conditions A common theme that can be extracted from the list above should be pretty evident from their names. New ‘orders’ or ‘expectations’ look at possible future purchases. These forward-looking metrics provide an outlook of those opportunities that are near-term wins in the pipeline. Some specific components of these measures and definitions may not be obvious, which we’ll hop into next. Keep in mind that the list of indicators may change in the future. Indicators have historically been replaced as the market changes to reflect appropriate reporting and needs. Leading Indicator specifics Average weekly hours worked, production workers, manufacturing A key point in this metric that may not be obvious is productivity. Assuming the number of employees, hours worked, and productivity rate remains the same, the output should remain the same. Any changes in those variables could impact output and future orders. Also, when manufacturers project demand decreasing, they tend to reduce workers' hours before downsizing. Average weekly claims for unemployment To track this metric, follow President and Chief Investment Officer John-Mark Young’s weekly market update. He discusses current activities in detail and provides great insight. ISM new orders index This survey is aggregated with responses from ~300 purchasing managers nationwide.  ‘New orders’ should be self-explanatory, thus the focus on measuring demand. For this metric, remember the number 50. If these metrics report 50% or greater, this indicates increased order growth and is usually a sign of robust economic activity. If less than 50%, this suggests a contracting pace of demand in the economy. Stock prices This metric is measured as the monthly average for the S&P 500. Some economists question its inclusion since it does not reflect economic fundamentals and should not be considered as a gauge of future economic activity. Leading credit index, M2 money supply prior to 1990 This metric measures money circulation and deposits in savings, checking, CD, money market, and other liquid assets.  M1, M2, and M3 are all types of monetary aggregates. The Federal Reserve recognizes these; however, the leading economic index only uses the M2. Average consumer expectations for economic conditions This survey conducted by the University of Michigan Survey Research Center focuses on obtaining responses from consumers about their financial situation, spending trends, overall economic/financial situation, and some current issues/concerns. Fin. Thank you for joining me on this quest to conquer economic indicators and indices. It’s been a wild ride full of calculations, definitions, and aggregations (bonus points for anyone who can tell me how many times I used ‘aggregate’ in the last three posts!) On this journey, we’ve built a foundational understanding of economic indicators, specifically looking at historical, near-real-time, and forecasting metrics. Both lagging and coincident indicators provide valuable information; however, both have improved value when the individual categories are aggregated as indices. Likewise, the leading indicator index (LEI) aggregates the list of leading indicators to provide a single data source. Remember, never depend on one metric or index to make financial decisions. Consider speaking with one of our financial advisors at Whitaker-Myers Wealth Managers to review the holistic picture of market activities and your portfolio.  Or schedule time to learn more about the data. We all enjoy a good, nerdy data session!

A common question new clients ask is, “How often should we meet with you.” The first step in a financial planning journey is reaching out to different advisors and determining who best fits you. However, once clients pick an advisor they resonate with, they want to know if there is a set schedule that they should meet with their advisor. The answer varies from person to person. Many clients enjoy a meeting every few years just to get an “account review” done on their accounts and financial situation. They want to see their earnings in their accounts and their current retirement projections. Believe it or not, meetings can be triggered by something other than a portfolio change and an investment strategy. This article will review some of the different life events that warrant a meeting with your advisor. Change in Employment Changing jobs can result in many different adjustments to a financial plan. The obvious change would be salary. An increase and decrease in salary can change your cash flow, meaning that your saving percentage for retirement may look different. You may get an increase and be over the threshold for a Roth contribution, and by letting your advisor know about this change, they can help you start making backdoor Roth contributions. Employer-sponsored retirement plans would also need to be reevaluated when changing employers. Things like your new employer's match, what to do with your old 401(k), and the new investment options are all things to discuss with your advisor. Taking Social Security Deciding when to take social security is a crucial decision that most people make on a whim. Consulting with your advisor before taking social security is a critical meeting to have. Social Security benefits increase each month you delay taking it after reaching full retirement age. Figuring out when you need to take social security, how to maximize your benefit, and being tax efficient are all reasons to meet with your advisor when approaching the time to claim social security. Marriage & Divorce Both of these highs and lows warrant the advice of your financial advisor. Marriage can result in a name change that must be reflected on your accounts and show your investments under one household. Having a dual income can significantly impact a financial plan, along with the possibility of bringing on any type of debt your spouse may have, like a car loan, personal loan, or student loan. Regarding divorce, a financial advisor can help elevate some of that financial stress that comes with an already stressful and emotional time. Rerunning retirement projections and adjusting the plan to meet someone’s retirement needs can often help settle the nerves that come with that life-changing event. Having Children Having children will bring some more costs to the table, like an increase in daily expenses. However, aside from that, it is important to talk to your financial advisor about planning for your children’s future. Your financial advisor can talk you through 529 plans, UTMAs, and custodial Roth accounts, along with other ways that you can help save and invest for the benefit of your child. Starting this at the child's birth is crucial, as time is your best friend when it comes to investing. Other times to meet with your Advisor Those are just a few examples of life events that would warrant a meeting with your advisor. A good rule of thumb is that if you are unsure about a situation or experiencing any new life event, set up a meeting with your advisor! -        Are you approaching retirement? Set up a meeting with your advisor! -        Moving across the country? Set up a meeting with your advisor! -        Want to work part-time in retirement? Set up a meeting with your advisor! All of these different life events impact your finances, and by talking to your advisor, they may be able to offer guidance in something that you did not even think about. They can also provide reassurance that you are financially able to do something or headed down the right path and that no adjustments currently need to be made. If any of these life events are something happening (or about to happen) in your life, now is the time to schedule a meeting with your advisor. If you do not have an advisor, we have a team of financial advisors at Whitaker-Myers Wealth Managers ready to meet to figure out the best plan for you and this changing season.

As we start Part 2 of our 3-part series on metrics, focusing on lagging, coincident, and leading indicators, if you haven’t read Part 1, Lagging Indicators, click here to read to get caught up. Near Real Time Last week, we jumped into the deep end with historical data and indicators that ‘lag’ the market or show their full impact after the market changes. This week, we’re diving in and looking at coincident indicators. These indicators are measures that provide macroeconomic insight into the state of the economy in near real-time. The closest to real-time data, these indicators depict the business cycle’s activities in the recent past.  Coincident indicators closely track various turning points in the business cycle. For this reason, they are commonly used as benchmarks while assessing the relativity of economic metrics to the business cycle.  The reporting may have a long or short lag, depending on the metric. The coincident indicators, which combine to form the coincidence index, are the number of employees on non-agricultural payrolls, personal income less transfer payments, industrial production index, manufacturing and trade sales. Keep in mind that the list of indicators may change in the future. Indicators have historically been replaced as the market changes to reflect appropriate reporting and needs. Coincidence index: The coincident indicators Number of employees on non-agricultural payrolls The number of employees on non-agricultural payrolls is aggregated by a survey conducted by the Bureau of Labor Statistics (BLS) of ~140,000 businesses within the United States. This metric has consistently paralleled the gross domestic product (GDP). Considering that nearly 67% of the U.S. GDP is consumption-based, intuitively, as more citizens have jobs, they are more likely to spend on the economy. Personal Income less transfer payments This metric has two components: personal income and transfer payments. Personal income consists of all household wages and salaries. Transfer payments are governmental disbursements such as social security, food stamps, and veteran’s benefits. They generally cover rent, food, and basic necessities. Since they essentially net zero, transfer payments tend to have very little or negligible impact on macroeconomic activity. Excluding transfer payments from personal income appropriates this metric to align as an impactful economic indicator. Industrial production index This metric consists of over 300 components that represent mining, manufacturing, and utility industries. This is a weighted metric where weights are assigned based on the value each component adds during the production process. Due to the complexity of this calculation and aggregation lag, this metric is a more timely proxy for quarterly GDP (Gross Domestic Product). Manufacturing and trade sales The coincident index's last major component measures all domestic manufacturing and trade sales. In the 2/3 end In every one of my metrics posts, I always highlight that economic metrics should never be taken in isolation. The indicators we’ve discussed so far are no exception. Though these metrics provide good information on their own, the impact of the aggregate should not be overlooked. For example, combining these coincidence indicators as the coincidence index correlates with a GDP of 0.88 (88%). Look at the graph below from “The Investment Advisor Body of Knowledge,” P230. Though this data doesn’t extend to the present day, it is apparent that the aggregation of these metrics correlates with the GDP. We see this trend play out in more recent metrics, which is why economists have used these metrics to understand the state of the economy. Next week, we’ll explore leading metrics as we wrap up this three-part series. Of course, in the meantime, if you have any questions for our team at Whitaker-Myers Wealth Managers or one of our Financial Advisors, schedule a time with them to discuss these topics and more.

With the quarter ending Thursday, March 28th, 2024, and the S&P 500 returning over 10%, the Russell 2000 coming in around 5%, and the MSCI EAFE (International Stocks) closing the quarter at around 6%, it may be a good time to review your total portfolio allocation. Nothing runs consistently forever, and thus, a diversified portfolio is often the means to weigh out the times when certain stocks or asset classes are not in favor. Recently, stocks have not been the only asset class to provide solid returns, though. Other asset classes have also contributed to portfolio gains in this environment, including gold and Bitcoin, for instance, which have reached new highs in recent weeks, rising above $2,185 and $68,399, respectively. Gold has reached new highs as investors anticipate rate cuts In times like these, it's important for long-term investors to stay diversified and not lose sight of the bigger picture. True financial success is not about timing the market perfectly or going "all-in" on a single investment. Instead, it’s about building and maintaining a portfolio tailored to financial objectives that can perform well across all phases of the market cycle. At the moment, the market believes it's a matter of when, not if, the Fed will begin its first rate cut cycle since 2019. The underlying economic trends are in favor of lower rates but recent economic data have sent mixed signals as to the exact timing. For example, the latest report from the Bureau of Labor Statistics showed that 275,000 new jobs were added in February, well above what economists expected. A strong job market means that the Fed can hold off on cutting rates, since it suggests the economy is doing fine even with tight financial conditions. However, the same report also showed that the prior two months' job numbers were 167,000 lower than originally believed, while unemployment also ticked up to 3.9%. This muddies the picture, leading many investors to adjust their expectations in favor of a first rate cut in June or July. In theory, gold can benefit from rate cuts just as the stock market does. Lower interest rates make bonds and cash relatively less attractive, leading investors to seek alternative ways to preserve wealth. This is especially true when investors are worried about the country's fiscal discipline and geopolitical risks in the Middle East and Ukraine. The accompanying chart shows that gold has gained about 35% since its lowest point in 2022 when the Fed was hiking rates rapidly. Interestingly, the S&P 500 has outperformed gold over this period with a gain of 44% with reinvested dividends. This is partly because gold does not always behave as one might expect or hope. In times of high inflation and economic distress, hard assets such as gold and other commodities are expected to outperform. While gold did rally in early 2022 when inflation was accelerating, gold prices then pulled back and did not recover until the middle of 2023. Gold also provides no income benefits, which makes it less attractive if interest rates remain higher for longer. This may be one primary reasons why I hesitate to include gold in clients' portfolios. With interest rates around 5% and some fixed-income investments yielding over 6%, the risk reward isn't as attractive as an investment that is going to pay the return to me in interest, therefore lowering my sequence of return risk and the chaos theory risk (This is a whole article in and of itself). Thus, while gold has experienced a strong rally and is hovering near all-time highs, it's important to keep its relative performance in perspective. The choppiness of gold prices over the past few years shows that while it can act as both a hedge during inflationary periods and serve as a store of value, this can reverse quickly as conditions change. Like all asset classes, gold is perhaps most valuable as part of a diversified portfolio rather than as a standalone investment or just as a trading investment, considering the recent volatility, but be careful because, as mentioned above, Gold has not quite reacted as expected recently. Bitcoin has jumped sharply for fundamental and technical reasons Like gold, Bitcoin has also rallied sharply in recent weeks. This is not just due to the possibility of Fed rate cuts, which should theoretically benefit cryptocurrencies and other stores of value, but is also related to the approval of spot Bitcoin ETFs in January. According to news reports, tens of billions in new funds have flowed into these ETFs which provide a simpler and more attractive way to invest in digital assets compared to Bitcoin futures or holding a digital wallet. On a technical basis, Bitcoin will also experience a "halving" around April during which the reward for mining will be cut in half. Some investors believe this might help to boost the price of Bitcoin as new supply becomes increasingly scarce. Whether the rallies in Bitcoin and other cryptocurrencies continue is unclear given the uncertain nature of the asset class, especially after the various corporate collapses, scams, and criminal convictions in the ecosystem over the past few years. Still, the rapid recovery from the 2022 crash has no doubt attracted much investor attention. Similar to gold, long-term investors should view digital assets from the perspective of properly diversified portfolios. Unfortunately, cryptocurrencies have not yet proven to be reliable portfolio diversifiers since they are strongly correlated with the stock market and other risk assets, serving to amplify risk. It's no secret that Bitcoin is extremely volatile and price swings have been 5 to 10 times larger than the overall stock market. So, Bitcoin can be thought of as another asset with specific characteristics. The question of whether and how much to invest in this asset should be no different than deciding on any stock, bond, currency, commodity, real estate property, etc. Careful analysis and risk management are needed to understand the potential risks and expected returns relative to other investments. Many sectors have contributed to S&P 500 returns this year When it comes to the stock market itself, large cap tech stocks, including the so-called Magnificent 7, are still the main focus for many investors. However, many other sectors have contributed to broad market returns this year too. The accompanying chart shows that while the Information Technology and Communication Services sectors continue to lead the market, others, such as Financials, Health Care, and Industrials, have increasingly performed well. If you would like to pursue a portfolio that overweight's the sectors of the market that Whitaker-Myers Wealth Managers, through our internal and external research partners, ask your Financial Advisor about our In-House Tactical Model. News headlines tend to focus on the absolute best and worst performers in the market. For investors, how an overall portfolio performs is far more important - not just in terms of returns but its risk profile too. So, while large-cap tech stocks have done well for good reasons, investors should not lose sight of the many other parts of the market that could also benefit from rate cuts, ongoing economic growth, easing inflation, a strong labor market, and more. We currently believe many investors (outside of Whitaker-Myers Wealth Managers) are extremely underweighted to small and mid-cap stocks because of their recent underperformance. However, due to solid valuation reasons and a lowering of interest rates, we believe this sets up small and mid-caps for a nice run throughout the remainder of the year. As a reminder, the small and mid-cap space in our Dave Ramsey vernacular is aggressive growth. The bottom line? The choice to invest in gold, bitcoin, tech stocks, small or mid-caps or any other asset should be viewed in the context of a diversified portfolio rather than as a standalone investment. Doing so can help balance other asset classes, creating a smoother ride toward long-term financial goals when appropriate. Copyright (c) 2024 Clearnomics, Inc. and Whitaker-Myers Wealth Managers, LTD. All rights reserved. The information contained herein has been obtained from sources believed to be reliable, but is not necessarily complete and its accuracy cannot be guaranteed. No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness, or correctness of the information and opinions contained herein. The views and the other information provided are subject to change without notice. All reports posted on or via www.clearnomics.com or any affiliated websites, applications, or services are issued without regard to the specific investment objectives, financial situation, or particular needs of any specific recipient and are not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. Past performance is not necessarily a guide to future results. Company fundamentals and earnings may be mentioned occasionally, but should not be construed as a recommendation to buy, sell, or hold the company's stock. Predictions, forecasts, and estimates for any and all markets should not be construed as recommendations to buy, sell, or hold any security--including mutual funds, futures contracts, and exchange traded funds, or any similar instruments. The text, images, and other materials contained or displayed in this report are proprietary to Clearnomics, Inc. and constitute valuable intellectual property. All unauthorized reproduction or other use of material from Clearnomics, Inc. shall be deemed willful infringement(s) of this copyright and other proprietary and intellectual property rights, including but not limited to, rights of privacy. Clearnomics, Inc. expressly reserves all rights in connection with its intellectual property, including without limitation the right to block the transfer of its products and services and/or to track usage thereof, through electronic tracking technology, and all other lawful means, now known or hereafter devised. Clearnomics, Inc. reserves the right, without further notice, to pursue to the fullest extent allowed by the law any and all criminal and civil remedies for the violation of its rights.

‘Wouldn’t it be nice’ Wouldn’t it be nice to have one metric that we could all turn to in order to see how the economy is doing and whether we should invest more or hold off? (Before we dive deep into that thought, I will apologize in advance to anyone who now has the Beach Boys playing in your head for the rest of the day. Unfortunately, I am humming it as I type. I digress.) One metric, one indicator, one ring to rule them all! Well, maybe not the last one, but I would bet that most economists and consumers would appreciate one indicator that tells us what to do next. As with all complex subjects, the probability of one measurement telling the whole story is quite rare. In medicine, we use a combination of results over a defined period to determine which medication to put the patient on. In finance or economics, we take a similar approach to many metrics that provide hindsight, insight, and foresight (to some extent) into the economy. These are referred to as lagging, coincident, and leading indicators (respectively). Each indicator provides puzzle pieces that start telling the story of the economy. These indicators are all linked to the business cycle, considering the cyclical nature of business with seasonal adjustments. Over the next three weeks, we’ll broadly describe each of these indicators and the metrics within each of the buckets. Let’s start with lagging indicators. Keep in mind that the list of indicators may change in the future. Indicators have historically been replaced as the market changes to reflect appropriate reporting and needs. Lagging Indicators Lagging indicators, as inferred, consist of indicators that provide visibility of what has happened in the past, aggregated to give visibility on historical events that may indicate current or future events. Yes, I know. Say it with me… “Past performance is not indicative of future results.” I agree. However, lagging indicators are very important when we trend the data and combine it with the other indicators to identify patterns. Let’s take a look at some lagging indicators and define them together. Average duration of unemployment Unemployment is calculated as the average number of weeks that someone is out of work. The longer people are out of work, the greater the downstream impact on the economy. Decreases in unemployment rates generally occur after a recovery is already underway. When businesses have recovered or show signs of recovery, they are more willing to hire. On the other hand, unemployment rises after the economic downturn has already started. Ratio of manufacturing and trade inventories to sales This metric calculates how many months, given the current pace of sales, it will take to liquidate inventories entirely.  Associate this metric with supply and demand dynamics and its impact on the economy. Demand for certain goods and services decreases if the economy isn’t doing well. This will directly affect the supply of these goods in the warehouses. An increase in this metric can reflect the decrease in demand for goods across the market. This metric can show what future production may be (based on inventory). However, the inventory rise occurs long after sales growth has halted. Thus, the appropriate categorization as a lagging indicator. Manufacturing labor cost per unit of output This measure tracks productivity. If manufacturing costs increase and output decreases, this is a double whammy for businesses. Since monthly output and manufacturing costs can be volatile, this metric is reported as a percent change over six months. This indicator trend peaks during recessions. Average prime rate As the economy expands or contracts, the Feds utilize monetary policy to ‘normalize’ these changes. The Fed fund rate has historically been the baseline for most financial institutions. Generally speaking, banks add 3% to the Feds fund rates to determine the prime rate. The average prime rate is the rate at which borrowers can lend money from banks or credit unions. Keep in mind that this rate is not for all borrowers. Depending on the borrower's creditworthiness, the rate may be adjusted with additional percentage points. Commercial and industrial loans outstanding This metric looks into the total amount of industry loans outstanding. When diving into this metric, the belief is that as companies take out more loans, they invest back into the economy and focus on capital investments in their business. This indicator tends to peak when the economy is doing very well but hits lows a year after the end of a recession. Ratio of consumer installment credit to personal income Consumers tend to reduce their personal borrowing during a recession or difficult financial times. Also, during this time, banks reduce lending due to non-payment risks. Thus, this metric highlights the pace at which credit utilization occurs in the market. This indicator bottoms out a year or more after a recession. Change in the consumer price index for services You’re likely familiar with the Consumer Price Index (CPI). If not, quickly read Purchasing Power: the highs and lows. In contrast to CPI, this metric focuses only on services and service sector inflation. Service sector inflation tends to increase when an economy is already in a recession and decreases only after the recession has ended. In the 1/3 end Historically, we can’t say one indicator has been the driving force of the economy, but we can look at the trends and deduce some patterns of recognition that may provide guidance. Past performance never indicates future returns, but hopefully, you can see how the lagging indicators provide insight into the economy and trends. Lagging indicators show what has happened in the economy. These indicators show their full impact after recovery and, thus, are lagging. Next week, we’ll explore coincident indicators, which focus on insight data and more near-real-time analytics. As in any great trilogy, the first installment sets the stage and grabs your attention to want to read more. By this time, hopefully, the Beach Boys have exited stage left. Or now that I’ve mentioned it again, they’re returning for an encore. Whichever never-ending tune is stuck in your head, I hope you’ll join me in part 2 of this series next week. Of course, in the meantime, if you have any questions for our team at Whitaker-Myers Wealth Managers or one of our Financial Advisors, schedule some time with them to explore these topics and more.

One of the most common topics I discuss during meetings with financial coaching clients is how to save at the grocery store. Buying groceries is a common denominator for everyone at any stage of their financial journey. And if you have gone to the grocery store (or bought groceries) at all lately, you know the price of groceries is continually increasing. Below are some tips to help you save monthly dollars when buying groceries. Meal Plan If you have heard it once, you have heard it a million times. Meal planning will help you plan meals throughout the week, allowing you to create a grocery list with just those items. Understanding how your week will play out is key to setting yourself up for success. I know personally things come up all the time during the week to derail our plans (parents asking us to come to dinner, unplanned leftovers, etc.), so honestly, I only try to plan for three main meals to make during the week and purchase groceries tailored to those meal needs. I always have on hand spaghetti and sauce, bread to make sandwiches, a head of lettuce, canned or frozen soups, boxed rice, frozen veggies, and chicken that I can make for meals on those “off days” when something doesn’t pop up, and now I need a meal for dinner. Make the Grocery List Making this list will limit the “peer pressure” of impulse buying all the marketing people at the grocery store are hoping you will do without a plan. Aimlessly walking up and down the aisle and grabbing things as you see them leads to overbuying in a hurry. And sometimes duplicate buying. I fell victim to this over the weekend. I ran in quickly to grab a few quick items I knew we needed as my husband drove circles in the parking lot with napping kids, and as I ran past an end cap, I saw parmesan cheese. I knew we were having pasta that weekend, so I grabbed it. Once I was home, I realized we had a full, unopened bottle waiting for me in the pantry. – Make the grocery list! Shop Sale Adds Shopping on certain days of the week can help you save. And no, not because potatoes are cheaper on Tuesday, but because you could hit your store's weekly sales add and save big. In our local store this past week, eggs were on sale for $0.99 a dozen. That is a great savings if you’ve bought eggs lately! We also like to see when they put bell peppers on sale because our 3-year-old would eat a whole one every day, I think (I know, I am fortunate to have a child who loves veggies – mom win!), so shopping the sale adds on produce is sometimes how we tailor our meal plan and shopping list. Store Apps If you haven’t downloaded your store app yet, let this be your gentle reminder to do that now. Some stores have gone to this as their loyalty program, and again, you can save some much-needed dollars here. Depending on the store or item, it could be a discount/certain dollar amount of the item or, at times, a BOGO offer. And being a loyalty program is not the only benefit. If you are really trying to hone in and know exactly what you are spending each grocery haul and trying to stay under a specific number, consider placing a pick-up order. This way, it eliminates the possible impulse buys of avoiding even walking into the store, and you can see in real-time as you hit “add to cart” what your total checkout number will be (give or take a few dollars based on weighted items like produce.) If you aren’t sure you like the idea of a pick-up order because you want to be selective, that is a-okay – use this same method of “adding to cart” in the app as your grocery list! Again, you can see in real-time how much you will be spending on that specific grocery trip and can omit or make edits to your items before getting to the checkout. This is extremely beneficial if you are trying to set a target dollar amount to spend and don’t want to do math as you walk the aisles. Chat GPT And while on the topic of using our phones to help at the grocery store, here is another unique way to save on groceries! As Chief Operating Officer and Financial Advisor Amanda Sharratt shares in a Question of the Week video, she uses Chat GPT to help create menu ideas for budget-friendly meal options, as well as ideas on how to use random items in your fridge for a meal you may never have thought of. She also puts technology to use by asking it to make two meals using the same ingredients to help stretch those groceries for you, saving on your bottom-line budget number. If you are trying to work on a monthly budget and need guidance or help creating one from scratch, we have a financial coach on the team to help you in these areas. She can help create your budget with you, discuss strategies like those noted above in various areas to help you save money, and help keep you accountable during your budgeting journey!

What is Wealth There are countless online articles about being rich and how to define wealth. Even on our own Whitaker-Myers Wealth Managers website, our experts have written many articles on the topic of wealth. Some that come to the top of my mind include: NUMBER ONE INDICATOR OF WEALTH HOW LIFE INSURANCE CREATES GENERATIONAL WEALTH INVESTING AND OUR HABITS The Wealthy Concept: but make it We(a)llthy! Most online articles center around defining wealth or being rich by numbers. Showing that you have $1,000,000 as a net worth, thus equating this value to being wealthy or having a gross income of $200,000 (CNBC Survey) to feel ‘rich’ only tells one part of the story. Indeed, being a net-worth millionaire with no debt is a great place to be (our team recommends following Dave Ramsey’s seven baby steps to get there). Still, we all need to understand wealth is a combination of two variables: financial capital and human capital. Financial Capital vs. Human Capital Financial capital, as suggested, is the aggregation of all assets, including, but not limited to, invested stocks, bonds, cash, insurance, annuities, livestock, land, and more. All assets and liabilities would be used to calculate financial capital. Human capital, on the other hand, is the net present value of future earnings. Essentially, it takes all education, capabilities, capacities, grit, focused intensity (to be discussed later), and all the intangible factors that can impact one's ability to grow assets. Understanding how each variable impacts one's financial future is important at various stages of life. Typical Lifecycle of Human Capital and Financial Capital Image credit: Retirement & SMSF Investment News & Analysis - Morningstar The graph above depicts the typical lifecycle of human and financial capital. The Y-axis of this graph depicts total wealth by the summation of human capital (HC) and financial capital (FC). The highest potential for human capital (green line) is early in the wage-earning years. As students graduate, they have the greatest earning capacity and can potentially take on multiple jobs. However, during this time, their financial capital is usually low compared to later years. Their ability to work is high, but their wages are lower. Financial capital has a nearly opposite story. The traditional investor may start low (blue line), but with consistent smart investing and compound interest, this investor can see their portfolio grow steadily. As the portfolio grows and financial capital continues to rise, human capital starts declining. Our ability to work more may be present, but our bodies may not agree. The intersection of these two lines is the optimal point for our human capital and financial capital. This is where we can maximize the return for the time commitment.  This traditionally happens around the age of 55, approximately ten years before retirement. Lifestyle Investing Understanding where you are on the curve plays out in your investing strategies. Take a moment to point on your screen where you feel you are on this graph. This is very important. Where you feel you are on the graph can determine your risk tolerance and investment selections. *Be sure to discuss this with your financial advisor and ensure they agree. Strategic alignment and your time horizon should align with your goals. For example, a 25-year-old who recently graduated debt-free from college (yes, it is 100% possible; ask our Financial coach) decides to invest. His investment strategy may be more aggressive, with an equity-to-bond ratio of 90:10. On the other hand, the soon-to-retire individual may choose a less risky portfolio with an equity-to-bond ratio of 10:90.  There are many flavors of this ice cream, so make sure to discuss with your financial advisor which blend and mix of asset classes is right for you. I’m a fudge sundae guy; you may like a banana split. Neither of us is wrong; we just have different tastes and wants. If you’re looking for friendly advice and a financial advisor team (or someone to eat ice cream with) with the heart of a teacher, our team of advisors at Whitaker-Myers Wealth Managers is always willing and ready to help. Schedule time with them today!

Not only does March bring green drinks, foul weather, and March Madness, it's also supposed to be the time college acceptances arrive with offers of financial aid. Well this year March madness has extended itself within the college ranks, beyond basketball, because of FASFA changes. So, it's Caitlin Clark and Mrs. Clark, the Director of Financial Aid at Iowa, that might make you jump out of your seat this year. Here is a list of colleges that have already announced delaying the traditional May 1st decision deadline to allow more time to compare offers. Preparing For The Best Due to the disastrous launch of the new FAFSA which will delay admitted student's award letters, parents will have more time to prepare their appeals and negotiating tactics. I'm not an apologist for the Department of Education, but I can make the rationalization that could make parents feel a little better about the delays. The Ivies and elite universities send out their Regular Decision admission and award letters in late March and early April. Now, everyone is in the same boat and there is safety in numbers. Given the difficulties and new complexities of the financial aid process brought on by "simplification", financial aid administrators are being directed to avoid verifying student and parent financial information, unless there is an obvious conflict of information, like showing interest on a tax return without showing an asset on the FAFSA, inconsistent US residency requirements, etc. Otherwise, it is highly unlikely that anything you put down on the FAFSA regarding business, farm, or asset values will be questioned. The same goes for which of the student's parents (separated/divorced) provides the lion's share of financial support. A significant change to the financial aid formula that must be dealt with is the elimination of the discount given to families with multiple students in college at the same time. If a parent has two students in college this year, and the aid packages are significantly different from last years awards, then I would definitely make an appeal. Because colleges are businesses, what would seem to make sense is that everything else being equal, colleges will "grandfather" last year's aid package. But how much good sense will depend on the institution. In my humble opinion changing course in mid-stream isn't good for anyone, especially when new admission applications are down at a majority of colleges. Of course, for current students' parents will have to wait until summer for the packages to arrive. Another change that could substantially reduce the amount of aid a student would have received in 2023-2024 or earlier is the inclusion of a business or a farm. If you have an extraordinary financial situation or circumstance, you will write an appeal letter. Appealing Award Offers I want to caution against a few things. One is to refrain from telling the college how much your student wants to go there. To them it doesn't matter. Don't tell them how great of a scholar your student is, either. They know. It makes no impression. Another is telling them you have better offers from other schools-- at least on the first attempt, as that is better left to negotiate with the admissions department. Provide facts and avoid emotional language. To be frank, your story of woe will not make an impression. There is nothing you can tell them that they haven't heard before. Think of the IRS: do they care about anything other than figures? Financial aid personnel use formulas, follow policies, and answer to the Director of Financial Aid, not to parents. Here are three basic steps in making an effective appeal. The First Step Visiting the college's financial aid website is a great place to start. Here is an example of what you are looking for: Financial Aid: Appeal for Reconsideration. Not all college web sites have specific instructions on how to appeal an award. If that is the case, you'll have to contact the financial aid office and ask what they recommend you do. If instructed to write a letter, you will be asking for what is known in the trade as a Professional Judgement (PJ), which is a review of your circumstances. It's important that you follow their instructions as best you can. The Second Step Keep in mind that because of delays, financial aid staffs will be overwhelmed trying to get award packages out. I suggest acknowledging that reality with a sentence that like: "I understand your problems associated with FAFSA Simplification, and that you could be overwhelmed and short staffed. Whatever I can do to make reconsidering my student's appeal easier please let me know." Then you will want to explain the situation as briefly as possible. You aren't writing War and Peace here. A page and a half is all that anyone will have time for. You are going to write no more than three or four paragraphs that go directly to the heart of the matter: Write exactly WHY you are asking for additional aid. In other words, write exactly what happened. Explain what this MEANS. For example, losing a job means that unemployment insurance and savings will not be enough to cover the cost of college you were prepared to pay. Tell them what you are already doing to IMPROVE your situation. This might be cancelling all your streaming services; eliminating nights out; cancelling planned vacations, etc. until new employment has been secured. Include supporting DOCUMENTS that back up your claim. This could be a termination letter, statement of unemployment benefits, even an income and expense statement. The Third Step Depending on the aid offices process, you will send your appeal letter and documentation. If you have a name to send it to the fastest way is email. Sometimes you will only have "finaid@college.edu" as an address: so, it will be going to whoever opens it up and then that person will forward it to the appropriate person. Be prepared to send a letter via Priority Mail to back it up as well. In either case, if you don't have the name of a specific person, you can find the directory of financial aid personnel and match as best you can the title of the person to the role they are assigned. Sometimes, there is no directory. You can try and call the financial aid office and ask who is the best person to send it to, or just send it to the aid office. However, having a name to follow up with is ideal, so make every effort. When it comes to paying for college and getting the best deal you can, don't be afraid of asking for more aid-- or at least some if none was offered. This mostly only works with private colleges, but you could try using a state school's lower price tag as a bargaining chip with an expensive private school. If you're denied, you've lost nothing. They might just say yes! Negotiating A Better Price The best way I can communicate how to negotiate a better deal on tuition is to compare it to buying a car. Smart shoppers visit multiple dealers to see what makes and models that have the features they want and get a quote. Having several offers in writing from other dealers gives the consumer a position of strength. Not all colleges negotiate. State universities cannot, but many private institutions will do so if pressed. Colleges hate to admit it, but they negotiate all the time. They just don't call it that. They hate to be compared to a "used car". So, parents shouldn't refer to that word either. To increase your chance of negotiating the lowest price, a student should have offers from a few colleges that share similar characteristics, like cost, selectivity, athletic conference, and their histories of awarding aid. Like a car dealership, some colleges just won't offer more without seeing a competitors offer. A successful negotiation includes not showing your cards right away. See what the college will do if you just ask for additional funds to HELP better afford them. Many colleges will increase their award package just by you asking. If they don't respond or turn you down, don't take no for an answer. Now, would be the time to show some cards. One thing to be aware of, is that just like car dealers colleges have quotas to meet. In the months leading up to May 1st, admissions staff are counting the number of enrollment deposits. They are very nervous about not meeting their magic number. So, in many instances are likely to "sweeten the pot" with additional dollars. TRADE SECRET Unlike an appeal which the parent writes, it is the student who contacts the colleges and initiates the negotiation. Even if our staff prepares the communication, it must be written and look like the student wrote it, and it must be sent from the student's email address. Lastly, don't believe the urban legend that if you ask for more money the student will have their offer of admission rescinded. Don't take no for an answer until you've been denied three times! Then that would be the time to consider other options. As you know, the financial aid system is going through a sea change. FAFSA problems are many, and there are millions of students who haven't been able to file yet. For those students who were able to file, the Department of Education hasn't been able to provide colleges with the information they need to create student aid packages. While colleges should have access to FAFSAs by mid-March, it may take more time to get the awards. Colleges normally download FAFSAs periodically so they can work at a sane pace. This year is quite different. Be patient and check each college's web portals for updates. Don't call the colleges. I wouldn't even bother emailing them until after the award is created. Then you can make your appeal or negotiation. Because this is the first time in 45 years anything like this has happened, only common sense can be your guide through the minefield of financial aid.

A Quick Backstory People told me growing up that I needed debt in my life and that debt was good. “I can’t get a mortgage without a credit score,” “I need a good credit score to get a personal loan,” “I can use credit cards for reward points,” and, of course, “I will just pay my card off every month,” are just a few examples that I and many others have used before. I always had a personal credit card to use for gas or small expenses and pay off the entire balance (almost) every month. I also had a rewards card that I would run as many expenses through as I could to rack up airline miles. I had a nice SUV with a monthly payment, but hey, I “owned” it. I felt accomplished as a young professional back then because I had nice stuff…until I met my neighbor. My Neighbor We both moved to the neighborhood around the same time, and it was both of our first homes. We were about the same age and shared many common interests, so we hit it off fast. We would hang out almost every day. Whether helping each other with home projects, playing sports, or hosting barbecues, we spent a lot of time together. We would even joke with our friends that we were going to tunnel through the basements to join the houses together. All the time we spent together was memorable and fun, but there was one day that would set in motion a different path that would change my life. Introduction to Dave Ramsey I was over at my neighbor’s house one afternoon, sitting around watching TV and chatting about random subjects. At one point, we got onto the topic of personal finances. Something I did not give much thought to because I had a steady job, a roof over my head, and a nice SUV…then he said, “Hey, have you ever heard of Dave Ramsey?” At the time, I had not, so he pulled up an hour-long seminar hosted by Dave Ramsey on YouTube. At the time, I was thinking, “Why are we watching this?” But, not too long in, it started to click. After the video was over, my neighbor gave me his extra copy of Dave Ramsey’s book, The Total Money Makeover. The book reiterated much of what Dave talked about in the YouTube video, and I realized, “I’M BROKE!” “We Buy Things We Don’t Need with Money We Don’t Have to Impress People We Don’t Like.” -Dave Ramsey While reading the Total Money Makeover, this quote stuck with me. I started looking around my house at all the crap I had accumulated and started adding up the cost. I would think about everything I could have done with that money if I did not buy all that stuff. I thought, “You could have paid cash for that SUV in the garage,” “You could have something saved for retirement,” “You might not be living paycheck to paycheck,” and so on and so on. There was so much truth in that quote, and it resonated with me so deeply that I felt physically ill thinking about all the financial mistakes I had made. I was sick and tired of being sick and tired, and it was time to make a change. The Baby Steps I started from Baby Step 1 (Save $1,000) and worked through Baby Steps 2 (pay off consumer debt) and 3 (build an emergency fund) fairly efficiently. A 3-month emergency fund for my household makes sense because we have no children, both are employed, and do not have very many expenses, fortunately. Through the first three Baby Steps, there were setbacks. Things around the house break, medical issues arise, and unexpected expenses come up. I learned that doing the Baby Steps in order makes perfect sense. At first, I tried to do multiple steps simultaneously and found myself failing. I kept finding myself stopping one step to try and fix or continue another step. Only when I started doing the steps in order did I begin to see success. Starting at step one, and only baby step one, changed everything. Eventually, I started gaining confidence in the process and never looked back. I am currently working on Baby Step 4 (saving for retirement) and have a long way to go. The first three steps helped me build good money habits that naturally flowed into Baby Step 4. It Can Work for Anybody We all tend to make excuses about why we cannot do something. I am the same way from time to time and certainly was making excuses about money and finances. The fact of the matter is, once you make the conscious decision that you are sick and tired of being sick and tired, you are already winning. It is kind of like losing weight; you must want it to succeed. Getting started is the most challenging part, but the easiest way to do it is starting with Baby Step 1 (save $1,000). There are plenty of motivational success stories out there to get you started outside of mine that you can find with simple Google searches. You can hear them every day just listening to The Ramsey Show. We at Whitaker-Myers Wealth Managers have a team of financial advisors to help you reach your financial goals, but we also have a Dave Ramsey-certified financial coach who can help you on your debt-free journey. I would encourage anyone to follow the Baby Steps journey because experiencing debt freedom is a different feeling that I hope everyone can find in their own lives. Thank you for taking the time to read my short story. If I can help you on your Baby Step journey, please do not hesitate to reach out. I will be your biggest fan. **If you are interested in receiving a copy of Dave Ramsey’s Total Money Makeover book, please email Shelly Sturts and reference this article (and don’t forget your name and mailing address to send it) for your very own copy from Witaker-Myers Wealth Managers!

Purchasing Power With the inflation rate, anything Jerome Powell says, and interest rates at the top of everyone’s news feed lately, deciphering the economic jargon can be monumental. We’ll use this article to dig into inflation so that our readers can have a foundational understanding of these economic indicators. Simply put, financial inflation is the decline of purchasing power in an economy caused by rising prices (Investopedia.com). Economists worldwide look at purchasing by defining the change through several inflationary descriptors. These include inflation, disinflation, deflation, hyperinflation, stagflation, demand-driven inflation, and monetary-driven inflation. These factors can impact the purchasing power of all goods and services. Knowing these terms should help navigate through some of the complex economic discussions. How is inflation calculated/reported? Calculating inflation is quite complex, but a simplified way of understanding the calculation is to compare the price of a good or service today to the price of the same good or service at a previous time. For example, in March of 2023, a bushel of apples cost $20; today, the same bushel is $22. That would be an inflation of 10% ([22-20]/20). As you can imagine, this can get very complex. What you need to know is inflation is reported in many ways, but the values that are important for our readers to track are the consumer price index (CPI), wholesale price index (WPI), and core CPI. The difference between the CPI and core CPI is that core CPI excludes volatile energy and food prices, and CPI includes all components. For extra credit, read about PCE (personal consumption expenditures) the Feds use this as a core metric in rate determinations. We will explore this in full detail in an upcoming post. Inflation as a lever Not inflation levers, but inflation as a lever. While inflation levers are also important to understand, the purpose of this title is to bring some imagery to the article. Think of our economy as a lever completely perpendicular to the wall, sitting at zero. If we move the lever up by 2-3%, we have grown by an inflation rate of 2-3%. If we pull it down slightly to 1%, we are in a state of disinflation compared to our previous state. Lastly, if we move the lever past zero so that the lever is negative, we are in a state of deflation. Simply: Inflation = >0 Disinflation = + value, but decrease from the previous period Deflation = inflation< 0 (also referred to as negative inflation) Hyperinflation and Stagflation These two descriptors are two opposite sides of inflation. Hyperinflation is a disastrous scenario in which inflation exceeds 50% in one month. With the Fed's inflation goal of 2%, when inflation hits 3%, 4%, or even 5%, many news and media outlets bubble up reports of possible hyperinflation. Remember, hyperinflation has happened in the past, though it is very rare. On the other hand, stagflation can also be a destructive economic scenario. Stagflation is defined by slow economic growth, high inflation, and a high unemployment rate. This is incredibly difficult to solve because solutions that arise for one variable tend to impact the other variable negatively. Some debate that in June 2022, the U.S. economy experienced stagflation, though this is not widely accepted. Demand Driven Inflation John Maynard Keynes originally proposed the theory that demand drives inflation (1883-1946). He theorized that aggregate demand, the total amount of demand for all finished products and services (including import/export and government spending), was the primary driver for inflation. As supply changes and demand impact pricing, inflation would rise/fall accordingly. This is defined by the two broad inflationary descriptors known as cost-push inflation and demand-pull inflation. Cost-push inflation starts with the production costs for manufacturers. As production costs increase, companies ‘push’ this cost to the consumer by raising prices. Demand-pull inflation results when demand for a product or service exceeds the supply; thus, the price increases. Money Supply Similar to the supply and demand dynamics of demand-driven inflation, the supply of money can also be a driver of inflation. Those who believe in the supply of money as the driver of inflation believe that the cost of capital and the velocity at which money is exchanged are primary drivers of inflation, even more so than the supply and demand drivers. Key takeaways Inflation can be confusing, and it's no fun when it hurts my pocket. It is important to remember that low/moderate inflation is a good thing. Inflation around 1-3% indicates good economic growth; hyperinflation (>50%) and deflation highlight a troubling economy.  The Feds have various tools in their monetary and fiscal policies to control inflation and track inflation closely based on personal expenditures. Though, as consumers, we have minimal individual direct impact on inflation, there are factors we can control to limit the effects of inflation on our personal finances. Limiting how lifestyle inflation or lifestyle creep influences our decisions requires a solid understanding of our goals and psychological decision-making. Our excellent financial coaches at Whitaker-Myers Wealth Managers can work with you and provide the tools and tips to walk you through budgeting strategies to help you live realistically within your income. To make sure your money value continues to grow ahead of inflation, consider talking to one of our Financial Advisors. They’ll show you how to achieve your financial goals while increasing your money along the way.

Statistics Three statistics metrics that you likely remember from school are mean, median, and mode. Mean is the average value amongst the sample, median is the middle value, and mode shows the most repeating value. These are some of the most basic statical measures we’ve learned about and are still used in financial calculations today. Most frequently, we hear of mean or average values when measuring the returns of a portfolio, but has your advisor discussed the geometric mean with you? In today’s article, we’ll discuss how both measures are used to calculate your investment returns and which is most appropriate when looking at your data. Mean and Geometric Mean I feel the best way to explain these two metrics is to look at an example. Consider the following table, which showcases a hypothetical investor’s portfolio starting with a $100,000 investment. Portfolio value = Dollar value at the end of the year YoY return = Year over Year return This portfolio assumes no cashflows in or out Simply looking at the starting and ending balance, deducing a loss of $1,000 would be easy. However, when you take the arithmetic mean of these values, the number may surprise you. The arithmetic mean of the returns above is calculated by adding the returns and dividing by the number of years (periods or n – which you will see as you read on). The calculation would be as follows: (494+[-36.06]+[-48.95]+[-48.97]) 4 The calculated arithmetic mean shows a return of 90.01% during this 4-year period. It sounds counterintuitive that a portfolio with a 90.01% average return over four years has an ending balance that is less than what was invested. Odd, but this is precisely why we recommend working with your advisor to understand these metrics and when they should be used. Though arithmetic mean is an important statistical measure, let’s look at how geometric mean calculates return and why this metric is important to understand. Geometric Mean The geometric mean reports the returns as an average of the sample. However, this metric also considers the compounding occurring within the portfolio. We all want our investments to compound every year, and the geometric mean provides visibility as to what the net compounding of the returns looks like. To calculate the geometric mean, we use the formula: Source: www.financeformulas.net As shown in the image above from Financeformulas.net, the calculation for geometric mean seems much more complicated. Let’s calculate this together: [((1+4.94)(1-.3603)(1-0.4895)(1-.4897))1/4 ] -1 = -0.25% A quarter of a percent loss in the four years is much more palatable and accurate when looking at the data. Key Takeaways The calculated geometric mean will be lower than the arithmetic mean when the number of periods is more than two and returns from each period differ. In the examples above, we assume an initial investment without further contributions or withdrawals. Most investors will likely add or take funds out of their accounts over time. We use the dollar-weighted return or internal rate of return (IRR) metric to calculate accurate returns while accounting for cash flow. We’ll save that metric for another discussion so we can dive deeper into the associated metrics and calculations. Financial metrics can get complicated, and as mentioned in previous posts, it isn’t best to only focus on one metric when making decisions. As you learn more, keep in mind that our team of expert financial advisors at Whitaker-Myers Wealth Managers is available to discuss any financial planning needs or questions you may have. Schedule a time to meet with them and help answer your questions!

Did I make the right decision? In our day-to-day world, when we’re faced with decisions, there are two primary methods that our minds utilize to process the information to take the next steps. The first is where situational awareness or familiarity yields a decision that is usually quick and may be associated with a habit. In medicine, we refer to these mental shortcuts as heuristics or, simply put, ‘going with your gut’ or intuition. The second process is when faced with unfamiliar or complex situations, where a more analytical approach to try and weigh out the pros and cons tends to guide our decisions. As you can imagine, making quick and sometimes rash decisions can lead to more errors. These quick decisions may also be influenced by unconscious bias that can lead us astray. When we spend the time to make an informed decision, we expose ourselves to new information and processing.  This may delay the decision-making process and outcomes, but it can provide the necessary input to make the right decision. A question one may ask themselves after making a decision is, “Did I make the right decisions? Or what would have been the outcome if I chose the alternative?” Opportunity costs As mentioned above, you consider several factors or resources when making any decision. With a finite number of resources (time and assets specifically), we can only make the decision that we feel best fit given the circumstances and the information we have. Academics across domains observe the rationale around decisions and the opportunity cost of the alternatives. Opportunity cost is the physical, emotional, financial (any asset), and time-associated cost of a specific decision compared to the alternative options. These are calculated utilizing subjective and objective measures and can be quite complicated, but we’ll focus on measuring the objective component in today's discussion. Let’s look at examples that highlight opportunity cost from two different viewpoints. Q3 or Q5 Imagine you walk into a new car dealership, and they have two vehicles on the showroom floor that have caught your eye. Car 1: Picture Credit – www.Caranddriver.com; Car 2: Example credit: Gal Zauberman Both vehicles are brand new and check all the boxes. Great mileage, technologically advanced, can fit one or two car seats (if necessary for your life), comfort, sporty and stylish. Now comes the time when you sit down with the sales manager and discuss the price. On the left, the Audi Q3 is listed for (not actual numbers) $35,000; on the right, the Audi Q5 is listed for $42,000. On the surface, the cost difference may sway the decision, but what if that sales manager had another proposition? The sales manager says that if you buy the Q3, he’ll include three years of gas, complete maintenance, and washes, essentially bringing the car's value to $42,000.  So, which car would you choose? Most would pick the Q3 over the Q5 with this decision and incentives included. This is one way we look at opportunity costs. What else can I do with the money, or what could I gain/lose with this decision? Talking about gains and losses, let’s look at a more analytical view of opportunity costs. Compound interest and compound loss Investor A heard from a close friend that he needs to invest. Let’s say Investor A makes $50,000 coming out of college at 22, and he worked with our financial coaches to come out of university debt-free (woo, who!!!). Now he can save for his emergency fund, then retirement, and his new future home! Let’s dig more into his baby step 4, investing 15% of his income. To simplify the math, let’s assume there is no wage increase, and Investor A sticks to investing 15% of his income for the next eight years in the four categories we recommend (growth, growth and income, aggressive growth, and international). We’ll also apply a conservative 6% annualized growth rate, though realistically, this should be higher. By the time Investor A is 30, he would have $74,231.01, with nearly $15,000 of just growth! www.Investor.gov/financial-tools-calculators Then life happens. Job loss, medical emergency, family emergency, or any combination of factors that can shake the tree. In the hypothetical emergency, Investor A takes $45,000 out of his retirement account to support necessities.  If the remaining $30,000 (rounded up) stays in the account for the next 35 years and grows without any future contributions, this account would equal $230,582.60! Yes, without any additional contribution! What about the $45,000 that was taken out? This is where opportunity cost needs to be discussed. What was the opportunity cost of taking out the $45,000? A whopping $345,873.91! Instead of having $576,402.41 in the account, Investor A only has $230,582.60. This is precisely why our team never recommends taking out of your retirement unless it is absolutely necessary to cover your four walls (shelter utilities, transportation, food). The compound interest impact on the investments and the opportunity cost are too significant. To ice cream or not If I waited in line at my favorite gelato place (Copa Gelato, if you’re from Columbus, OH) for over an hour because they had a sign for free gelato, could I have done something more productive with my time? Though I may justify the time, opportunity, and wait in line for that first bite, was it really ‘free’? Our resources are finite. Time and money are two of our most important resources and directly influence our decisions. Making decisions is an amalgamation of our habitual/intuitive and rational thinking. The question is, “How do we make good decisions?” and, more so, “How do I avoid bad decisions?” I believe having the right experiences, exposure, and teacher/mentor on your side can significantly mitigate the risk of making bad decisions. At Whitaker-Myers Wealth Managers, our team approaches every interaction with the heart of a teacher. This means we enter each conversation with kindness, empathy, and compassion, intending to build a long-term, meaningful relationship. If you’re interested in a partner to join your journey, contact one of our financial advisors and schedule some time to discuss your questions. If you’d like to submit a question for me to answer, please use this link and fill out the quick survey.