Is the 4th of July the new “Back to School” time of year? For many, the 4th of July seems like halfway through summer. And if you have visited a store recently, it evidently also means the start of fall. Between the “end of summer sales” and the fall/Halloween decorations starting to come out, many have a hard time believing that school starting is just around the corner. In the never-ending search to try and save money in what seems to be an ever-increasing economy, thinking “Back to School” in July may have some benefits if you plan ahead. Planning Ahead in July As I tell many of my coaching clients, one of the critical tools in being successful with budgeting is being proactive rather than reactive. Especially if you have an upcoming known cost, why wait to plan on back-to-school costs until right before you head out the door to go shopping? Start now to put yourself and your wallet in a better space. Before hitting the stores for back-to-school shopping, below are some actions you can take. Inventory your house This means look around and see what was used last year that is still good, wasn’t used at all, or you have extra. This goes from classroom supplies to backpacks, lunch boxes, clothes, and shoes. There is no reason to buy new simply because it is “a new school year.” By simply inventorying your home/closet before you head to the store, you could save a lot of money by taking the extra time. Make a list – and check it twice Santa shouldn’t be the only one making a list and double-checking things this “back-to-school season.” Again, to be proactive is to know precisely what you need vs. “having an idea” and being tempted with impulse buying while at the store(s). This step can easily coincide with inventorying your “goods” tip mentioned above. Setting your Game Plan Outside of planning ahead, setting up your game plan is critical in cost saving. Once you know what you need, finding the most cost-efficient ways to purchase the items is the next step. Cost Shop This step is another piece of homework before heading to the stores (or clicking the purchase button for online shopping). Do some research between stores and online sites to make sure you are getting the best price. Most stores have their sale prices listed for all items, which makes it easy to compare one site to the next on multiple tabs when trying to find the best pricing. You may have to do some piecemealing when purchasing items, but if it saves you more in the long run, the multiple stops (or online carts) may be the better option. Buy bulk and split I know buying in bulk may not be the option for just your family, but there are cost savings when you purchase large quantities at one time. Find a friend or another family needing the same items and cost-share the things with them. It’ll be a win-win for both (or multiple) families! Shop Tax-Free Lastly, don’t forget to shop your Tax-Free Weekend! Most states recognize that school supplies and back-to-school clothing shopping can burden families and have a tax-free weekend. Be aware that every state is different, so check out your specific state’s dates (and fine print) on what is tax-free. Check out this article to see when your State’s Tax-Free Weekend for 2023 is. *Bonus Tip – Start a Sinking Fund!* This may not help you this year regarding back-to-school shopping; however, it can help prepare you for next year’s shopping. Not familiar with what a sinking fund is? Check out this article explaining the basics of a sinking fund and how to set one up to help you be proactive with budgeting for known expenses throughout the year. Want more tips? Read Eliminate Back-to-School Blues with these Money-Saving Tips, also found on the Whitaker-Myers Wealth Managers blog page by our Chief Financial Coaching Officer, Lindsey Curry. Schedule a meeting today if you need help discussing how to properly set up a sinking fund or budget!

Vacation planning means budget planning As summer starts, if you’re like me, you’re already looking forward to that vacation that’s been booked since it was cold and windy earlier in the year. The kids are out of school, there is more pressure to entertain, and the kids' activities are kicking into high gear. Many people decide to go on a trip in the summer for a fun, action-packed, memory-inducing experience for everyone. Some fly to the Bahamas, some drive down the east coast, and some even decide to hit the slopes (all California and Florida people). In this article, we explore how to vacation within your budget correctly and still affordably create those lasting memories. Vacation Fund One of the best ways to budget for a vacation is to set up a vacation sinking fund. Many times, and more recently, people have been setting up a brokerage account for their various sinking fund needs. A brokerage account is an investment savings account or a non-retirement investment account. For those with short-term goals – like going on vacation, there is no better time to set this up. Interest rates are astronomical, which means that the Schwab Money Market is paying 4.93% (as of the writing of this article on 6/28/2023). The Schwab Money Market pays dividends monthly, which means you would get free money on the 15th of every month. To learn more about a money market fund and how it differs from a money market account, check out this video from our Chief Operating Officer. If you are like many other families who go on vacation annually, it is a good idea to set up a recurring transfer every week or every month into the account. That way, you will prioritize saving for it, and it will be out of sight and out of mind. Once this money starts to be saved rather than spent, it becomes much easier to have the funds available for family experiences. It takes personal spending discipline out of the equation and deposits it into your vacation fund. Vacation funds are an excellent way to save for this and the following years’ vacations. It allows you to be personally responsible for all the money you will spend on a vacation. It also personifies how hard you worked to earn this bucket of money that is allowing you to take this vacation in the first place. Daily Cash Limit Once you’re on vacation, another challenge begins. For example, you are in a beach town, and next to the hotel/condo/Apartment/home you are staying in, there is a pizza shop, ice cream shop, or souvenir shop within walking distance. At the same time, your kids are 1 inch from your ear shouting, “Let’s go get some ice cream!” (Or pizza, or knick-knacks, etc.). Introducing a daily spending limit is the best way to avoid overspending your vacation money, going into debt, or spending money you don’t have. Not only have you spent a few thousand dollars to get to your vacation location, but now that you’re there, more money will be spent daily on food, dessert, activities, etc. Planning your activities and daily spending limits ahead of time will make for smooth sailing on vacation (pun intended for some vacationers). Conclusion It is essential to understand that vacations are meant for relaxing and good times, so one should never feel the need to hold back or count every nickel spent. I am advising those who plan to travel to be mindful of what they have and intend to spend to be in the same financial place they were before they went on vacation. The power of speaking with your advisor As mentioned, everyone has different goals and timelines with their money, so it is important to speak to a Financial Advisor about your specific needs and goals. Please get in touch with one of the Financial Advisors here at Whitaker-Myers Wealth Managers; we would be happy to help you!

The word “sinking” can be a little intimidating when you associate it with your money, but in reality, a sinking fund can be a way to help you better prepare and project how to spend your money. So, what is a sinking a fund? Simply put, a sinking fund is a way to allocate the money you are saving, with a specific purpose in mind. Now some of you are maybe thinking to yourself, isn’t that called a savings account? Yes, but remember the part about “with a specific purpose in mind”. Sometimes to pay off a one-time thing. A sinking fund is a great way to plan for a future expense(s) that we know are coming down the pike. What are some ways I will use a sinking fund? Sinking funds are broken down into three main mind sets of how they are used: Big Purchases: Thinking of purchasing a new car? How about upgrading your cell phone? I know, you’re finally putting in that backyard pool you’ve been dreaming about. All of these can be huge hits to your bank accounts, but planning and knowing this is something you will be purchasing in the coming months to year, you can help put large amounts aside, specifically for those items. Large Bills/Expenses: Do you have an Amazon Prime membership? What about your car insurance, do you pay that as quarterly or yearly payments? Streaming services are huge now too, meaning Netflix or Hulu, any of these something you buy a yearlong subscription of? Think of items that you pay in a one big, lump payment once or twice a year. If you put money aside for them each month for this one large year end payment, wouldn’t it be nicer to know the money is already allotted for, vs. adjusting that month’s budget to fit that large expense? Upcoming Events: This category can cover things in a wide variety. You know Christmas falls every December 25th, so why not start putting money into the sinking fund today, so as you buy gifts, your eyes don’t glaze over every time you see your bank account decrease. You can also create a sinking fund for a nice relaxing vacation. Want a cabana by the pool while you’re there, or can’t wait to do an excursion? Budget that into your monthly savings so you can enjoy all the little extras on vacation guilt free. Or you can think even bigger…. like a wedding! You’re going to be getting quotes and prices ahead of time from all of your different vendors, so you’ll know the majority of your final costs will be when the day comes to pay your final deposits. Rather than dreading those days they are due, be proactive and slowly start stock piling that cash for your dream day. How do I start saving for a sinking fund? There are a couple of ways you can go about creating sinking funds, it’s a matter of how detailed you want to be. Some people put everything in their savings accounts, but as they create their monthly budgets, detail out how much is going into the account with specific line items. You have to keep very good paper records with this method as you will have just one large lump sum in your account, with no way to differentiate what dollars go where, besides your own personal key. Others will use the envelope trick. They will put that specific monthly amount of cash allotted for that item in a specific envelope labeled with what it is they are saving for, so when they time comes, they just pull the money directly from the envelope to make their payments. If your sinking fund is for a longer-term purchase, we typically recommend you allocate those dollars into a Schwab Brokerage Account with the help of your SmartVestor Pro. Longer term purchases you are building a sinking fund can be things like your new (used) car purchase, home upgrade, once in a lifetime family vacation or just undefined savings, which most likely means it’ll be there for a while. Lastly some will set up specific savings accounts with their bank or brokerage account with their investment firm, and even name that specific account the item they are saving for so they know every transaction is going directly to that fund. They can arrange to have set dollar amounts be transferred into these various accounts each month, or they will manually move money into the various accounts. How do I create a sinking fund? As I said earlier, normally the money you are putting aside for a sinking fund, you are aware of the dollar amount you’re a targeting for. If you know your yearly car insurance payment is $1,200 due in January, then you know each month you must set aside $100 into your car insurance sinking fund starting every January through the end of the year. If you roughly spend $800 on Christmas each year, and it’s May, you need to take $800 and divide it by 8 months (months left until December). Then for each month, set aside $100 so come December, you have that $800 readily available for you. Is a sinking fund different than my emergency fund? 100% different. An emergency fund is only to be used for emergencies…meaning an unplanned/unexpected expense. Please don’t confuse the two. These two need to be kept separate, and you should never dip from your emergency fund to put money in one of your sinking funds. Your emergency fund is supposed to be used for unexpected medical expenses, an unfortune accident (personally, to your car, house, etc.); anything that has a cost associated with it, that you were NOT expecting, and would cause instant panic and stress if this emergency fund did not exist. Can a sinking fund cause harm? Yes, if done incorrectly. Sinking funds can be a great budgeting tool, but remember to take care of your necessities first, before putting money aside for your wants. Don’t be starting a vacation sinking fund because you heard it can help you budget for a fun getaway. You must first make sure you are putting your money into the categories it NEEDS to be put into to pay off bills, pay debts, or even building your emergency fund first. Don’t make your sinking fund unrealistic with the money you have coming in, and the dollars you know that need to go out each month.

If you’re not getting better, you’re falling behind. Technology makes this statement even more true. In the last week of May and the first week of June 2023, we experienced this more than ever with stocks such as Nvidia, which is a leader in artificial intelligence semiconductor chips and Tesla, the next-generation car manufacturer, having tremendous gains! My friend Dave Ramsey and his team at Ramsey Solutions are also constantly putting their foot on the petal regarding their tech stack. Think about how much easier and convenient it is to budget with the EveryDollar Budgeting App (did you know you get the plus version for free for one year from Whitaker-Myers – ask your Advisor how) or how about the Ramsey Network App, which has all your favorite Ramsey shows and podcasts in one convenient app. Why this monologue? We have made a significant investment in the online portal that you, as a client, access to view your Schwab, Betterment, or 401(k) managed through our third-party technology. If we help you manage a portion of your net worth in one of the ways mentioned above, you’ll soon get an online client experience that we are over the moon excited about. First, let’s discuss what’s not changing. If you view your account directly through Schwab.com or Betterment.com, please know that your login, password, and experience are not changing since the custodians run those platforms. However, if you use our Emoney or Morningstar Portal, your view will get quite a bit better in about two weeks. Those online portals will shut down in favor of our consolidated Whitaker-Myers Wealth Managers Client Portal. What’s even more exciting!?!? Around July of 2023, the portal will have a fully functioning mobile app in the Apple App Store and Google Play Store. Search Whitaker-Myers Wealth Managers or Smartvestor Pro, and you’ll find this one-of-a-kind, handy-dandy app. Let’s talk about what you’ll see on this new portal: Client Overview Tab This will be your landing tab when you initially log into the portal. The page will allow you to quickly and easily see some of the most important parts of your financial story, including your net worth, transactions (assuming you have linked your bank accounts to the system through PLAID), and progress on your financial plan. Ever wonder how a bad day in the markets affected your long-term financial plan? My guess is not much, but now you can log right in and quantify that question from the results of this screen. Your net worth and liabilities are tracked month to month to see the progress you’re making on paying down debt and building wealth. This is particularly helpful in a year like 2022 when the stock market dropped 20% (and growth stocks dipped nearly 35%), yet your personal real estate took a major step forward, yielding a neutral net worth. The beauty of diversification! Newsfeed All the content that the team at Whitaker-Myers Wealth Managers and Tax Advisors creates will be uploaded to this newsfeed portal so you’ll have one convenient location to watch our “What We Learned in the Markets This Week” video series or read about Qualified Charitable Distributions or any other financial planning topic, from one of our Financial Planners. You will have customized, easy-to-read statements created for you once a quarter that very simply show you your starting balance, ending balance, and gain/loss for that period and since inception. These statements will be posted right on the newsfeed. Finally, any custom videos your advisor does specifically for you will be uploaded to the newsfeed section of the web portal. Personal Finances Summary Remember how Dave says there is a nerd and a free spirit in every relationship? This page will allow you to dive deeper and further understand what you have from an investment perspective and how it's performing. You can check out information for various time frames, including your returns, market value, and allocations. We are also working with the team that built this portal for us to categorize your funds into the Growth, Growth & Income, Aggressive Growth, and International Allocations, so you know precisely which fund falls into which Ramsey Solutions category. In addition, this page will allow you to link an outside institution or add an account manually to the portal. For example, if you’d like your 401(K) balance to update daily, you can enter your login credentials for that plan. It’ll update daily (Note that those clients that use Whitaker-Myers Wealth Managers to help manage their 401(k) through our third-party technology will be able to see daily updates to their 401(k) without having to enter credentials). Reports Ever wonder what your cash flow will look like ten years later? How about what your balance sheet should look like based on executing your Baby Step 4? Click here to see a sample of this page. The Reports page lets you access even more information about your goals and finances. You’ll be able to toggle between reviewing projected cash flows and values of individual assets and liabilities and even see action steps your advisor will give you for achieving your goals. Document Vault In the document vault, you can store and share documents securely with your advisor. Files uploaded into the vault are encrypted in transit and at rest to provide end-to-end security and protection. Many users upload tax statements, wills, insurance policies, and more for safekeeping. This will become your digital LEGACY DRAWER, which Dave Ramsey and Ramsey Solutions so adamantly recommend you keep. This is also where each month we’ll upload your Schwab custodian statement. Remember, Schwab statements are some of the hardest to read (as any custodian statement is), so we’ll create our own version to help you better understand what happened in your account. Goal Results Lastly, the goal results page will give you a high-level summary of your financial planning goals and drill into detailed information on individual goals. You’ll know if each goal is funded or not, and you can then click on each goal to view more details, including projections, action steps, and suggestions. You can also complete a new goal workflow and add that to your plan. Examples of goals you can add are: Retirement Savings, College Savings, Debt Management, Home Purchase, Emergency Funds, and many more. In addition, should you have questions about linking your outside accounts to this portal, you can learn more by clicking here. This software uses Plaid to link your bank, 401(k), or other outside accounts, which is one of the premier data encryption services in the world. We are very excited about releasing this new and exciting way to view your finances. Investments and enhancements like this are why the Ramsey Solutions team continues to trust our firm, Whitaker-Myers Wealth Managers, to serve fans and listeners all over the country to live and give like no one else. You should receive your client portal login instructions in the next few weeks; however, if you’d like to receive yours today, please click here to email our Client Relations Manager, Shelly Sturts, who will be happy to send you your login today.

Hopefully, you'll excuse my two-week hiatus from "What We Learned in the Markets." I'll be back next week and better than ever when I bring the four things I learned in the market while spending time with my family. But to whet your appetite, let's talk about what the last two weeks' strong inflation data and employment info have meant to the Fed's soft landing hopes. Ten dollar words to describe two-dollar concepts. That's how I feel about the term soft landing. If you listen to business news or even office chatter, you have heard the term soft landing, thrown around and shaken your head like you fully understood the term and concept. Essentially, it's this: a controlled landing of a plane, spacecraft, or other flying object without serious damage. That it's my friends, minus the airplane. The Fed is trying to slow down the economy to kill inflation without doing serious damage to the economy. The same can not be said about the markets. You can tell by your 2022 401(k), IRA, or other investment statements. However, the Fed is concerned about the totality of the economy. Market and economic expectations have shifted 180 degrees since the start of the year when many investors expected a recession and prolonged bear market. Ongoing economic growth, low unemployment, improving price pressures, and slowing Fed rate hikes have spurred a strong market rally, especially across sectors that struggled last year. While the economic situation is far from perfect and investors should always be prepared for uncertainty, it's also important to recognize the positive trends that are raising the odds of a "soft landing." What factors are driving these changes in investor expectations? Inflation is improving across many measures Perhaps the most important are the many signs that inflation is improving. Recent data for both consumer and producer prices show meaningful signs of deceleration toward Fed targets. The Consumer Price Index (CPI) has slowed from a peak year-over-year rate of 9.1% a year ago to only 3% today. Similarly, the monthly rate of 0.2% for headline inflation represents an annualized rate of 2.2% - very close to the Fed's 2% target. Core inflation remains elevated at 4.8% when comparing prices this year to last year. However, the monthly pace slowed in June to only a 1.9% annualized pace. These are all positive signs and suggest that while prices could remain high, there is already far less upward pressure. Producer prices show even greater improvements. Headline Producer Price Index figures (for "final demand") show a year-over-year change of only 0.1% in June. Core PPI rose 2.4% compared to last year, but only grew 0.1% month-over-month. Other measures showed sharper improvements and even deflationary trends, especially among "intermediate demand" which represents industries buying the inputs they need. These data suggest that prices are declining throughout the supply chain, creating additional hope that these gains will eventually be passed on to consumers. Of course, there are always caveats. On a technical basis, the year-over-year comparisons will likely worsen next month. This is because the peak rate of inflation occurred exactly a year ago so future comparisons will become more difficult. This means that, going forward, it will be more important to focus on the current pace of inflation rather than how prices compare to last year. Additionally, many of the headline improvements have been in volatile areas like energy, which can always fluctuate. Finally, shelter prices (rent and "owners' equivalent rent") declined in June but the pace of improvement has been quite slow so far, and it's difficult to know whether this will be sustained. The Fed expects to raise rates again after pausing For the Fed, which has been grappling with the largest inflation shock since the 1970s and early 1980s, these data could not have come at a better time. The Fed decided to skip a rate hike in June in order to "allow them more time to assess the economy's progress toward the Committee's goals of maximum employment and price stability," according to the latest FOMC meeting minutes. In other words, the Fed had already decided to slow the pace of rate hikes from 25 basis points every meeting to perhaps every other meeting. The accompanying chart shows that Fed officials expected to raise rates two more times later this year (i.e., an additional 0.5%). At the moment, markets are anticipating only one additional hike. This disconnect between the Fed and markets has driven volatility over the past year, with the Fed staying firm and markets adjusting to meet monetary policy. In general, a slower pace of rate hikes, if justified by the economic data, has been cheered by markets as this year's S&P 500 return of 17% shows. Wage growth is still strong despite improving inflation? The Fed's challenge since they began raising rates in March 2022 has been to strike a balance between beating inflation and preventing a recession, i.e., achieving a so-called "soft landing." The absence of a recession so far, alongside these inflation data, is positive and a big reason for this year's market rally. Current consensus forecasts by economists still call for flat GDP growth in the third quarter and slightly negative growth in the fourth before rebounding next year. Over the past twelve months, these forecasts have been revised upward with recession forecasts continually pushed back. What has helped is the strength of the labor market. The latest report from the Bureau of Labor Statistics shows that 209,000 net new jobs were added in June, a slower but still very healthy number. Unemployment continues to hover around 3.6%, near historic lows. Wage growth is strong with average hourly earnings rising 4.7% on a year-over-year basis. Despite earlier layoffs in tech, there are still 9.8 million job openings, or about 1.6 openings per unemployed person, which suggests that many businesses would like to hire if only they could find qualified workers. Theoretically, higher wages should make inflation stickier as consumers spend more and the cost of doing business rises. Thus, higher wages in a disinflationary environment are somewhat surprising given that economic theory typically assumes that there is a tradeoff between inflation and jobs. Additionally, perhaps an even bigger fear investors faced last year was around the possibility of stagflation - a period of poor growth in which inflation remains stubbornly high. While it's too early to declare victory, updated expectations by investors and economists suggest that these scenarios are now less likely. The bottom line? The current economic environment is far from perfect but is still significantly better than what many had feared only six months ago. This is a reminder that consensus views are not always correct and can change rapidly as conditions shift. That said, with markets having priced in a return to normalcy already, it will be important to stay balanced as the inflation, Fed, and economic situations evolve.

Activate Baby Step 5. Your mission, should you choose to accept it is to create financial independence for yourself by saving 15% of your income into retirement, putting money away for your child(s) college using tax-advantaged accounts such as a 529 Plan, Educational Savings Account (ESA) or UTMA (my personal favorite) and paying off your home early. For many of us, Baby Step 5 and 6 will end technically before Baby Step 4 is (should I be so bold as to ask Dave to reorder the steps? Ha! Never). Baby Step 6 will create a joyous memory that your family will never forget. The grass will feel different, and the bank gets no more of your monthly cash flow. However, ending Baby Step 5 is much less happy, in my opinion. It means parting with a lot of hard-earned money and watching your child gain a lot more independence, ready or not. However, if planned correctly, there need not be financial stress to compound the other stresses you'll inevitably face. It's no secret that college costs have risen much faster than inflation over the past 40 years, increasing the financial burden on families as they set money aside and on graduates once they enter the workforce. And yet, there are numerous professional and personal benefits to pursuing higher education for those who wish to do so. Weighing the costs against the benefits while considering personal priorities and the broader economic picture makes college planning a complex topic. There are many economic benefits to attaining higher levels of education This is why saving for college is a core component of any financial plan alongside other major goals such as retirement or buying a home. With all of the market and economic uncertainty of the past decade, customizing a financial plan to each individual or household's needs, ideally with the guidance of a trusted advisor, has never been more important. What should those planning for college consider today? The rapid increase in the cost of education has led many to question whether college is still worth the investment. An important reason tuitions have risen so rapidly is that the economic benefits of college and advanced degrees have grown even faster. According to the Bureau of Labor Statistics, job prospects improve as educational attainment increases. For example, the accompanying chart shows that unemployment rates were 6.2% for high school graduates but only 3.5% for those with 4-year bachelor's degrees. Similarly, the median annual earnings of those with high school diplomas was $40,450 compared to $66,700 for college graduates. Not surprisingly, these patterns continue for advanced degrees as well. Of course, these statistics are averages that don't consider individual circumstances or differences within each education level. Pursuing college and advanced degrees may not be for everyone, and there are many personal factors that must be considered. For instance, today's very low unemployment rates may make the opportunity costs of attending a 4-year college less attractive to some, including those who attend trade schools or benefit from on-the-job training. In contrast, poor economic periods, such as during the global financial crisis, may make the benefits of college more pronounced. Dave Ramsey's friend Mike Rowe does incredible work around the wealth that can be created in the trades, not to mention the savings to be had from not having to attend a four-year college. You can read more about Mike Rowe and the path to success in the trades here. Additionally, these particular statistics don't consider the choice of college major or type of employment. Clearly, those studying highly employable subjects, such as those related to engineering and financial services, will likely have greater job prospects. Please don't let your child study left-handed puppetry. If your child goes for the generic majors of psychology or sociology, we need to have an economic conversation with them about their plan to generate an ROI from those degrees (some people obviously do, but many work in unrelated fields). Regardless, the broad data make it clear that higher education has many economic benefits if done correctly. The cost of a college education has risen much faster than inflation The other side of the equation is that the sticker price of a college education has increased 800% over the past 40 years. Even after adjusting for inflation, the cost of college has increased dramatically across all types of institutions, as shown in the accompanying figure. The real, inflation-adjusted cost of a private 4-year college degree rose 176% from 1981 to 2021, while public universities saw prices climb 252%. The cost of 2-year degrees has increased more modestly but has still easily exceeded inflation in most years. Unfortunately, these inflation rates for education have also outpaced wage gains. Thus, those saving for college will need to save earlier, save more, take advantage of investment returns, and borrow. Certain investment vehicles with tax benefits, such as 529 plans, have been created to encourage earlier college savings in order to take advantage of compound returns over time. Recent data by Sallie Mae suggest that the average household pays for 43% of the total cost of college with the parents' income/savings, 11% through the student's income/savings, 29% via scholarships, grants and relatives, and 18% through borrowing. Thus, how families and students decide to pay for and finance the cost of college requires a thorough understanding of their particular circumstances. Student loans are a major burden on consumers Unfortunately, borrowing for college often results in high levels of student loan debt upon graduation. At the individual level, this burden on graduates must be factored into every financial and career decision. In the worst case, it may mean that graduates are unable to take as many risks or pursue their true passions if it means they are unable to generate the steady income needed to repay their loans. Proverbs 22:7 says, "The rich rules over the poor, and the borrower is the slave of the lender (ESV)." Student loans have ballooned over the past 20 years to $1.6 trillion at the aggregate level across the economy, outpacing other non-mortgage consumer debt. This has led to macroeconomic concerns, with some comparing the size of student loan debt to the subprime crisis prior to 2008. While it's difficult to say exactly how this will impact the economy, there are important differences to subprime loans such as grace periods, forbearance, parent cosigners, and more. Still, it's possible that high levels of student debt could act as a drag on the economy due to its influence on career decisions, reduced consumer spending, and more. Of course, the student debt crisis has become a key political issue. The current administration recently sought to cancel up to $20,000 in federal student loans for qualified borrowers. However, the Supreme Court has ruled that this is an overstep of the executive branch and invalidated the action. Politics aside, this has resulted in uncertainty for those with student loan bills coming due. The bottom line? Higher education continues to be extremely valuable from a financial and economic perspective. Deciding how to pay for college is an important component of any financial plan. Saving early, making appropriate investments, and using attractive vehicles, ideally with a trusted advisor's guidance, can help increase the odds of financial success. At Whitaker-Myers Wealth Managers, we have been talking about college savings a lot lately. That's because we have launched a new service through our Financial Coaching Team called "Debt Free College Savings Plan," where we will not only have a Financial Advisor help you determine the appropriate amount to save each month but also walk you through the tactical and business decisions that must be made for college. A great way to introduce your soon-to-be newly minted adult into the beautiful world of finances.

A few highlights to hit before we dig into "market stuff" over the following few paragraphs. This last Friday, the Whitaker-Myers Wealth Managers Team traveled from near and far to enjoy an evening of BBQ, swimming, and awards to celebrate our success over the last year. Despite the tough market cycle of 2022, the Lord has blessed our firm, and we wanted to celebrate that and thank Him! To that end, we make sure everyone gets a fun Whittie Award (to play off the Dundies from the popular TV show The Office) but receiving special recognition this year were Kelly Kranstuber, Andrew Young, and Shelly Sturts, along with Sandy Whittlesey, who won our award dedicated to kindness and caring, named after her late husband, Jim Whittlesey. Here are a few of your favorite Advisors receiving their Whittie Awards: The past few years are proof that market sentiment can turn on a dime. This year's strong market rally, with the S&P 500 rising 13% and the Nasdaq gaining 29%, has been driven by technology stocks, improving inflation, and the absence of a recession. While it may be too early to tell, some investors believe we are in the midst of a new bull market. However, with the Fed and other central banks signaling further rate hikes to return inflation to 2%, others are questioning the sustainability of this year's rally. For long-term investors, who should be less concerned by day-to-day market swings, what matters more than what we call this market period is the level of valuations and interest rates. What are these factors signaling about achieving financial goals in the coming years? Valuations are no longer cheap after this year's rally It's important to start by discussing why valuation measures matter to long-term investors. Simply put, valuations are the best tools that investors have to gauge the attractiveness of the stock market over years and decades. This contrasts with much shorter time frames during which global headlines, industry news, and company-specific events can dominate market movements. These concerns eventually settle and fade, leaving only traces of their impacts on asset prices, underlying fundamentals, or both. In this way, valuations are not market timing tools for making all-or-nothing investment decisions. Instead, valuation levels are an important input in determining appropriate asset allocations based on financial goals. Unlike stock prices on their own, valuations don't just tell you how much something costs, but what you get for your money in terms of earnings, book value, cash flow, dividends, and other measures. After all, holding shares of a company means you are entitled to a portion of its profitability, so paying an appropriate price can improve the odds of future growth. Valuations are correlated with long-term portfolio returns for this reason - i.e., buying when the market is cheap can improve the chances of success, and buying when the market is relatively expensive can reduce future returns. To a large extent, the reason this pattern exists is exactly because it is difficult to stay invested when markets fall and valuations are the most attractive. Just think about how most investors felt at the start of this year, or back in March 2020, or during 2008. When it comes down to it, staying patient is much easier said than done. What do valuations tell us today? On the surface, broad stock market valuations are above both their recent lows and historic averages. The price-to-earnings ratio for the S&P 500 (based on next-twelve-month earnings) is 18.9x, well above the average of 15.6x since the mid-1980s. This metric only briefly fell to 15.3x during last year's bear market crash before rebounding immediately. These numbers are highly dependent on the market and economic cycle and can therefore fluctuate over time. For example, the average over the past decade has been considerably higher at 17.6x, making it more difficult to interpret these valuation metrics. Tom Lee at Fundstrat, one of my favorite buy side analysts recently pointed out the worn out agruement that valuations are too high at 18.9x is foolish because when removing FAANG from the calculation, where you land is a 16.4x valuation, not horribly higher than long term averages. And one must consider, if these FAANG names do infact deserve higher valuations. They've proven a repeatable model to drive higher than average earnings, hence the dominance of large cap growth over the last six years. Earnings growth has flatlined but is expected to pick up A related question many investors may be facing is around the impact of higher interest rates on the market, since there are many ways in which rates and stocks are linked. Higher interest rates tend to slow the economy which then impacts company sales and profitability. Higher rates also reduce the value of cash flows far into the future, making highly uncertain businesses or those reliant on future growth less valuable, at least in theory. Interest rates also impact stock prices directly through financial markets and investor preferences. When rates are higher, bonds become more attractive relative to stocks since they can generate more income. The resulting headwind on stocks can be interpreted as investors shifting their portfolios toward bonds, or equivalently that stock prices should adjust so that their "yields" rise to new levels. The first chart above highlights this relationship by focusing on the earnings yield of the S&P 500, which is just the inverse of the P/E ratio. This measure tells us how much in corporate earnings an investor is "yielding" for every dollar they invest, allowing us to think of stocks in a bond-like way. Specifically, the S&P 500 has an earnings yield of 5.3% compared to 10-year Treasury bonds yielding 3.7%. The gap between these two measures - a gauge of the relative attractiveness of stocks over bonds, has fallen as interest rates have risen. This difference is now 1.5% compared to a historical average of 1.9%. Of course, stocks are not like bonds in that earnings are not guaranteed, but this comparison is still helpful. On the surface, these measures suggest the market is no longer cheap, which is to be expected after this year's significant rallies. However, there are big caveats to the preceding discussion. One reason this may be harder to interpret today is that the market's earnings yield has worsened not only because stock prices have risen, but also because earnings expectations have been flat. However, if the economy does avoid a recession and begins to accelerate, corporate earnings could also recover. This would boost earnings yields, making stocks more attractive again. Given that even the most negative economic forecasts expect only a shallow and short-lived recession, it may be important to not focus too much on near-term earnings outlooks when interpreting valuation measures. Also, longer-term interest rates have been more stable this year despite the possibility of further Fed rate hikes. This could improve the comparison between stocks and bonds over time as well. Many sectors are more attractive than the broader market Additionally, valuations are only expensive when considering the broad market and certain sectors. Many parts of the market still look quite attractive, especially if earnings do rebound over the next year. The accompanying chart highlights both the forward-looking P/E ratios across sectors in addition to consensus earnings growth projections. It's easy to see that there are significant differences beneath the surface of the market. Diversifying across many of these sectors, with an eye toward growth and valuations, could be increasingly important as economic uncertainty continues. The bottom line? While valuations are not short-term market timing tools, they are among the most important metrics for constructing long run portfolios that include both stocks and bonds. This is especially true as earnings growth recovers and interest rates stabilize. Investors should focus more on valuations than day-to-day headlines in order to stay focused on their financial goals.

That's right! For those of you with kids that are nearing college or college planning has been in your mind lately - it's a two-for July! Two timely updates as you get ready to send your child for their Sophomore, Junior, or Senior year of high school and need the best planning advice possible. Remember to check out all the articles our team and the folks at Collegiate Funding Solutions have put together for you! No More Pencils, No More Books, No More Teacher's Dirty Looks! July is the month of picnics, fireworks, lazy days at the beach-- and definitely not school. While it may be challenging to motivate your college-bound student to find the right college at the right price, some time can undoubtedly be devoted to thinking about essays and researching schools of interest. What Are You Really Paying For? Over the past decade, there have been shifts in the way that students study. More important is the length of time they spend on their studies. According to an American Interest article, College Students Are Studying Less Than You Think, students today are studying 40% less than they did 50 years ago. Even more surprisingly, they study less than they did as high school students! This begs the question, "If students aren't learning as much, what am I as a parent paying for?" For the majority of college students, they want to go to college for just four things: A line on their resume Job stability Career satisfaction Success/status outside the workplace And if you are under the impression that it really matters where your student goes to college, do some research. In all but a few cases where the student wants to get accepted into a law, med, vet, dental, or other graduate schools; or wants to work on Wall Street-- public vs private really doesn't matter. But it can make a significant difference, especially if your student possesses the majority of these qualities: Intellectually curious Has a growth mindset Expects to work hard Doesn't give up Believes in themselves Isn't afraid to seek help Is resourceful Takes time to think about things Listens Is inspired Takes risks A self-starter Involved A student who demonstrates these traits is probably going to succeed anywhere. But if they go to a college where they are surrounded with students like themselves, they will truly flourish. That kind of student's education may be worth any dollar amount you can afford. Practical Matters Colleges require up-to-date immunizations in addition to annual physical documentation. Some colleges won't give students their dorm room key on move-in day until these items are taken care of! Check the college website for their policy. If you're still debating between schools, be sure to ask the college about their policy on immunizations to ensure your personal and informed beliefs are consistent with the school's policy on such matters. Prescription Medication Does your student take prescription medication? If so, you'll want to either stock up before they head out for school or locate in-network pharmacies near them. Maybe you can take advantage of one of the convenient online order services, which would be one less thing to worry about. This is important to consider since many colleges don't allow freshmen to have cars on-campus unless they're commuting from home. The Student Health Center Most colleges have health centers, but what they offer can vary. Some are able to diagnose and treat many illnesses, while others are more basic, and will refer your student elsewhere depending on the severity of the condition. Of course, if your student is experiencing shortness of breath, severe bleeding, or head trauma, they should head to the nearest emergency room as soon as possible. Both you and your student need to familiarize yourselves with the health services the college offers as soon as you set foot on campus. Power of Attorney: Durable, Financial & Healthcare Your job of caring and guiding your child is not done when they leave for college; actually, it's probably never done! However, from a legal perspective (keep in mind Whitaker-Myers Wealth Managers, LTD. is not a law firm and does not give legal advice) your 18-year-old is a legal adult, which means you can no longer make decisions on their behalf. This can become a problem if your child has a medical emergency at school. The medical power of attorney gives one adult the right to make specific healthcare decisions for another adult, should they no longer be able to make those decisions for themselves. If this isn't done, a doctor who doesn't know your family or child could end up making those decisions for you. The durable power of attorney is more general and allows you to do things such as possibly putting restrictions on care for the student around your religious convictions (say the immunizations) should your child not be able to make them on your own. In addition, the financial power of attorney can allow you to help manage your child's financial affairs if they cannot do so themselves. Talk to your Financial Advisor today about establishing the POWERS PLAN through our partner Encore Estate Planning. They'll be happy to ensure your power of attorney situation is wrapped up before your child leaves for college. Mental Health And Substance Abuse Resources Let's face it: college is tough. It's also when signs of depression or mental illness can begin to show-- even if your student never had symptoms previously. And, if we're still being honest, it's when students may start drinking or experimenting with drugs. No one likes to think about these possibilities, but ignoring mental health can be disastrous. According to the National Alliance on Mental Illness, anxiety is the top presenting concern among college students (41.6 percent), followed by depression (36.4 percent), and relationship problems (35.8 percent). Seven percent of college students have "seriously considered suicide" during the past year. Sadly, suicide is the third leading cause of death on college campuses. If you have any indication that something is wrong, please tend to it before your student goes off to campus. The influx of students with these issues to colleges is growing beyond the ability to serve their needs. Colleges are not in the business of providing physical health and mental health care. While the schools recognize the need to provide ample services, this is often done somewhat grudgingly and often after a crisis - such as a campus suicide. Of course, stress is a normal part of college and life. Students should certainly work toward mitigating the effects of stress by taking advantage of their school's free fitness center, and focusing on healthy eating habits. Drinking plenty of water, and (trying) to get a full night's sleep never hurts either. Tips On Indirect Expenses Officially, these are referred to as Indirect Costs. You may recall seeing them listed on your student's financial aid package. Because these expenses are not directly billed, you often have more control over how much you spend on them. Look at non-billed expenses as an opportunity to cut costs, so you have more funds left over for paying the college bill. Books - every college student will have to buy books at some point. While the campus bookstore may be convenient, it's also usually the most expensive option. It's almost always better to find them used, or even look online for websites that rent textbooks. Digital versions for their e-reader is another popular and cheaper option. Dorm Needs - for students living on-campus, you will need to acquire furniture and supplies to outfit their dorm. Most dorms come with only the bare minimum-- a bed, dresser, and a desk. Students typically need to provide their own bedding, TV, appliances, and any sort of decoration. If they have roommates, your student should try to coordinate with them before move-in day to avoid ending up with multiples of the same item. Laptop - a laptop can often be one of the priciest non-billed expenses. Check for college student discounts, as some companies, such as Apple and Microsoft, offer them. Travel - this cost can vary significantly depending on how far away your college is AND how often they go home. If the school is within driving distance, a bus is usually a financially wise option. Or even better, your student can check the bulletin boards in the student union or even ride-sharing apps to see if they can find a ride from another student going in the same direction. If your student must fly to get home, try to plan your visits in advance. Plane tickets are usually much cheaper when bought months ahead. Parking Fees - if you plan on having your student bring a car to campus, expect to pay, as on-campus parking permits can cost hundreds of dollars each semester! Car insurance can also increase, depending on the school's location. Consider leaving the car at home while living at school. They'll still have access to it on breaks and over the summer. Contact our friends and advisors at Whitaker-Myers Insurance Agency, a sister company to us, to have them quote your child's car insurance as an independent agent, just as Dave Ramsey recommends. Food and Beverages - although most colleges require students to have a meal plan if they live on-campus, students will still typically spend money on food outside of the dining halls. Late-night pizza, a coffee from Starbucks in the morning, or lunch at a restaurant with friends can all quickly add up. Students can save money here by viewing dining off-campus as a unique experience rather than an everyday activity. They can save the Starbucks lattes for the weekends and stick to coffee from the dining hall on weekdays. Off-campus activities - Last but not least are off-campus social activities, like weekend ski trips. If your student has friends whose parents are financially comfortable while you're stretching it to pay the direct costs, now is the time to have a discussion about what kind of off-campus treats you can subsidize. Each month, we provide you with tips on the best ways to pay for college regardless of your financial situation. Some people wouldn't dream of going grocery shopping without their coupons. Most people don't buy a car without shopping around first. Lots of us use online booking sites to find the lowest fare on a flight or a hotel room. Don't wait too long to figure out the best way to pay for college. Doing that is like waiting to buy fire insurance when your garage is in fire. It's just too late. If you've thought about contacting us but haven't, this is a really good time of year because summer is relatively quiet. Depending what grade your student is in, there may be a lot we can do to help you save on the cost of college. The longer you delay will mean less you can do to save a year or two in college costs. We have the capability, expertise, and professional relationships to help you ensure that your student attends the RIGHT college for the RIGHT reasons and the RIGHT price! Give us a call at 330-345-5000 or email us at lcurry@whitakerwealth.com. Don't wait and lose tens of thousands of dollars of income, savings and possibly go into debt because you procrastinated. If you do things "old school" pick up the phone and call me or send an email! Until next month...

The months of June and July are primarily known for: Weddings The First Day of Summer Vacations Graduations By now, for those students who have been placed on wait lists, it's a good idea to send a final transcript to those schools as well. While there's no guarantee that submitting a final transcript will boost their chances, it doesn't hurt to try. Students by should have completed their roommate preference surveys, submitted housing and health forms, and taken whatever subject placement tests their college require. They should also have submitted a copy of their final transcripts. If the student is a D1 or D2 athlete, the NCAA also needs a copy of their final high school transcript. A Parent's Right To Know What's Going On Is Not Automatic When students reach 18, they are considered adults and thus have certain rights of privacy. Parents should know that the college won't automatically give you the right to access your student's educational and financial records. Because of the Family Educational Rights and Privacy Act (FERPA), the student will have to sign a form explicitly allowing parents to access certain information. Even if a student fails classes or does not have enough funds to pay for classes, neither the dean, their professors, nor the administration can notify parents of their student's situation because FERPA binds them. Even if you think you already signed a waiver, make sure you sign one for academics and one for financial records. To give you an idea of what's required, here is a sample from Yale University on how to get Proxy Access and Authorization from your student. Please check with your college on how to gain access to your student's accounts. HS Juniors: A Look Ahead Because the number of college applications has declined so much, the smaller regional colleges are at risk of merging with other institutions or closing their doors altogether. Even though the number of applicants are no longer in free fall (for the time being), there are consequences to the towns these campuses inhabit-- especially those in rural spaces. If the college your student is considering is seeing a shrinking student body, the town can suffer in ways that may negatively impact the college experience. An example is the town of Montgomery, West Virginia. When West Virginia University decided to move West Virginia Tech to Beckley, a bigger city an hour away, Montgomery effectively became a ghost town. Even the pizza parlor was forced to shut down. The smallest group of college applicants in years hasn't dented the number of students applying to name-brand colleges. In fact, quite the opposite has occurred. More students than ever applied to the more competitive schools, causing the lowest acceptance rates in history. To help your student increase their odds, make sure to do the following: Cast a wide net. Look at colleges that fit your student's academic profile and personal preferences, such as size and price, but maybe farther from home. Find colleges where your student is likely to be in the top 10% of their applicants. Be realistic. Many target schools are now reach schools, and reach schools are even more out of range for most applicants. Your student should plan to take the SAT or ACT since data suggests that the top colleges-- even those that are test-optional, do favor those who submit test scores. Expect the top colleges to see record numbers of applications and admit rates to drop, particularly Regular Decision (RD) rates. To increase your chances of being offered admission, consider applying to a dozen or more schools, as this is becoming the norm. Historically, we've discouraged students from applying Early Decision (ED), because if admitted, you won't have the advantage to leverage a better award package. But if you won't have any financial need at the colleges that don't offer merit scholarships, then ED can make sense. Real Estate, Business Values, and Farms Are Now Being Counted Against You We have clients who receive income from real estate rentals. These parents mistakenly believed that their real estate was a business and wouldn't be counted in the financial aid formula. Sadly, rental real estate is considered an investment. For real estate rentals to qualify as an excludable business, services such as food or laundry must be made available. This is not likely to happen. However, there is another option: instead of filing a Schedule E, discuss with your CPA or accountant or Kage Rush of Whitaker-Myers Tax Advisors, the creation of a U.S. Corporation, and file IRS form 1120. The income you take is ordinary W-2 income, and a portion of the rent can be taken as a loan. Yes, the income is taxable, but you can reduce your tax liability in any number of ways. Until now, family businesses were excluded from the financial aid formula. Businesses with hard assets and inventories are now being assessed and could reduce or eliminate any need-based financial aid that would have been available prior to the 2024-2025 school year. To avoid being assessed, the only type of business that is excluded are 1120 US Corporations. Also, family farms were previously excluded from the aid formula. Now, the equity, acreage, and the equipment will be counted against a family living on a farm. There is no way around this, short of Congress repealing this or persuading the college to use its Professional Judgement to exclude it. Lastly, beginning in the Fall of 2024, parents with two or more students going to college at the same time will lose their discount for multiple students. Families with Adjusted Gross Incomes of $80,000 or more will suffer the consequences the most. Given these changes, which will make college affordability an even more daunting issue for business owners, farm owners, and families with multiple children in college at the same time, I urge you to reach out to me and schedule a college-planning consultation through our new College Planning Service offered by our Financial Coaching Team. There ARE ways to mitigate the impact of these changes, and it is going to require advance planning! Contact us at 330-345-5000 or lcurry@whitakerwealth.com to get the process rolling. It could mean the difference between saving substantial amounts on your college expenses and taking on crushing student loan debt or sacrificing your retirement savings goals!

Major stock market indices made significant gains in the first half of the year due to improving inflation, slowing Fed rate hikes, the absence of a recession, a more stable banking sector, and a strong rally in tech stocks. The S&P 500 has climbed 16.9% with reinvested dividends this year, while the Nasdaq and Dow have returned 32.3% and 4.9%, respectively. Markets have recovered much of their losses from last year with the S&P 500 now 7% from its all-time high. Interest rates have also been steady after their sharp jump last year with the 10-year Treasury yield hovering around 3.8%, helping bond prices to recover as well. How can investors keep this recent market performance in perspective as we enter the second half of the year? Given this strong year-to-date performance, many investors may be wondering whether this is truly the beginning of a new bull market or is instead a "bear market rally." This is a shift from the concerns investors and economists faced at the start of the year when bear markets and recessions were top-of-mind. There are a few reasons why the past six months only further underscore the investment principles that long-term investors should follow in order to achieve their financial goals. First, this year's market performance is more evidence that investor sentiment can turn on a dime. The history of bear markets and short-term corrections shows that markets can turn around when it's least expected, especially when investors are most pessimistic. This was true at the start of the year when few believed markets would ever recover, just as it was in April 2020, mid-2011, March 2009, October 1987, and so on. Each market downturn was driven by a real event such as a surge in inflation, the pandemic, the U.S. debt downgrade, the global financial crisis, or even Black Monday. However, in every case, investors expected these events to continue to worsen, even as fundamentals and valuations quietly improved. This is why it is often better for everyday investors to simply stick to their well-crafted financial plans. By the time investors agree that a recovery has begun, significant gains have often been missed. This is not to say that downturns aren't painful or that markets only go up. Rather, history shows that it's often better to simply stay invested in an appropriately-constructed portfolio of growth, growth & income, aggressive growth and international stocks. In the worst case, investors who try to time the market and focus too much on short-term events completely miss the subsequent market recoveries. Second, just as it's difficult to predict the direction of the market, it's difficult to know whether a particular rally is sustainable as it is occurring. This is why it's often better for long-term investors to focus on the underlying fundamentals driving the rally. Even though markets can swing in either direction over the course of days, weeks, and months, steady economic growth and improving corporate profitability tend to drive markets higher over the course of quarters, years, and decades. If you have watched any of my What We Learned in the Markets This Week video series, you'll remember that as of today, Wall Street expects earnings to return to record levels by the fourth quarter of this year, albeit driven by a few very profitable companies in the tech sector. Thus, the importance of the economy remaining strong cannot be overstated. Only a year ago, the prospect of the Fed achieving a "soft landing," i.e. that inflation would improve without a recession, seemed far-fetched to many. While core inflation remains a problem, the fact that overall consumer prices have shown improvement at a time when unemployment remains at historic lows is positive for markets. If and when corporate earnings begin to pick up, market valuations could become more attractive over time. Finally, there are always reasons to see the glass as half empty, especially with many uncertainties still looming. Today, despite more stability in the financial system, there continue to be challenges in the wake of the bank failures earlier this year, most notably in commercial real estate. Upcoming refinancing activity could test the stability of the system as rates remain high and lending activity tightens. As a reminder, the real estate portfolio recommended by Whitaker-Myers Wealth Managers has a less than 2% allocation to office buildings and less than 2% allocation to retail buildings, two sectors we worry the most about. Additionally, while a debt ceiling crisis was averted, the can has only been kicked down the road to the beginning of 2025. In the meantime, geopolitics continue to be problematic as U.S. relations with China and Russia remain strained. Next year's presidential election will also soon be at the forefront as markets assess all of these risks. However, experienced investors with a broad perspective on markets know that there are always risks that must be balanced against long-term returns. These risks often feel insurmountable as they are occurring. Once they are in the rear-view mirror, investor concerns often shift to whether the recoveries are sustainable. These back-and-forth swings in investor sentiment are a normal and natural part of markets, and are why long-term investors can increase their odds of success by focusing instead on underlying trends. To that end, below are seven important insights from the first half of the year that will likely be just as relevant in the second half. 1. Strong returns over the past three quarters have surprised many investors The S&P 500 has now notched three consecutive quarters of strong returns, beginning with the fourth quarter of 2022. This is a 180-degree shift from the bear market returns experienced during the first three quarters of last year, and is happening at a time when sentiment is still negative. While there is no guarantee that markets will continue on this strong trajectory, it underscores the idea that markets can change direction without notice. 2. Market breadth has been low as mega-caps have led the rally While the market rally has benefited most investors, not all stocks have participated equally. Under the surface, mega-cap stocks have led the way. The accompanying chart shows that the largest stocks in the S&P 500 have outpaced the broader index this year. What's more, an equal-weighted index (i.e., an index that gives more weight to smaller stocks than the market-weighted index), has lagged even more. 3. Sector returns have differed across the market and compared to last year Thus, one investor concern is whether this year's returns have been "distorted" by tech returns. Unfortunately, it is a fact that the largest stocks have only grown in importance over the past decade. This is due to the increasing economies of scale due to technology across the economy. More recently, enthusiasm for artificial intelligence has driven greater gains in these sectors. However, this year's gains in these areas are not only due to these trends. The returns among these companies also represent a rebound from last year when these were the hardest-hit stocks as rates were rising and the future looked increasingly bleak. Taking the last two years together, returns are still outsized but look much more reasonable. 4. Inflation is improving even as core measures remain sticky One reason for the reversal from last year is that inflation has shown signs of improvement. The headline Consumer Price Index has decelerated from a peak of 9.1% a year ago to 4% today. This is primarily due to deflation in energy prices and other categories such as used cars. However, core inflation remains sticky due to shelter prices. The Fed and other economists believe that these prices will improve as rent prices stabilize and new leases are signed. Investors should also maintain perspective on further inflation improvements. At best, both headline and core inflation will likely remain high through much of 2024. In the meantime, it's possible that year-over-year inflation figures will worsen due to comparisons to last year's levels. 5. The Fed has slowed its pace of rate hikes Improving inflation alongside a strong economy allows the Fed to slow its pace of rate hikes. The Fed has raised rates 10 consecutive times from zero to 5%. The size of each increase has decelerated over the past year from a peak of 75 basis points (0.75%) every meeting to perhaps 25 basis points every other meeting. The Fed has made it clear that they are committed to returning inflation to their 2% target by keeping rates higher for longer. Market-based expectations have shifted this year from believing the Fed will cut rates later this year to agreeing that rates could rise further. 6. Rate-sensitive areas such as commercial real estate face challenges Of all of the areas impacted by rising rates and financial instability, commercial real estate is seen as the biggest source of risk among investors. This is not only because CRE has struggled with post-pandemic shifts in office usage and occupancy, but because trillions of dollars in loans will need to be refinanced in the coming years. Higher interest rates and tighter lending standards may make this more difficult, creating both liquidity and solvency issues among CRE companies. So far, greater stability in the banking system over the past few months, along with Fed and government support have helped to reduce some of these risks. Market participants will continue to watch this sector closely in the months to come. 7. Financial planning is especially important in times of uncertainty Many investors may wonder what market uncertainty means for their portfolios, especially for those approaching retirement. The classic 4% rule specifies a "safe" withdrawal rate in retirement based on the historical performance of a hypothetical 60/40 stock/bond portfolio, as shown in the accompanying chart. This includes both good and bad market periods since 1900. However, this chart also shows that safe withdrawal rates can fluctuate significantly, with the average being closer to 7%. So, while investors need to minimize the risk of running out of funds, they also need to make the most of their retirements, especially as life expectancies increase. Rather than just following a rule of thumb, it's important for investors to understand their unique circumstances to better project their safe withdrawal rates. Doing so can help long-term investors to better achieve their financial goals, especially during uncertain market periods like the present. The bottom line? Markets rebounded in the first half of the year, catching many investors off guard. While markets never move up in a straight line, investors who focus on long run fundamentals and avoid trying to time the markets will likely be in a better position to take advantage of market opportunities in the second half of the year.

Things like a savings rate for retirement seem so trivial in the grand scheme of life, right? I’m reminded of that as I watched my youngest daughter, Landrie, get baptized today. My primary goal in life is Glorify God and enjoy him supremely, and I want that for my children as well, which is why today is such a special day, as it probably was for you when you think back to your child’s moment of accepting Christ or making their public proclamation of faith and obedience towards Christ with baptism. But alas, there are those pesky verses in Proverbs that remind me, “Precious treasure and oil are in a wise man’s dwelling, but a foolish man devours it” (Proverbs 21:20) or how about, “In the house of the righteous there is much treasure, but trouble befalls the income of the wicked” (Proverbs 15:6). The point is when I lack discipline in any area of my life, it’ll most likely spell trouble. This is why Whitaker-Myers Wealth Managers is here! To ensure your financial house is in order and to ensure that you are enjoying God fully through your wealth (we could spend days on that topic right there). This is why we are so connected and convicted with the teachings of Ramsey Solutions. It’s common sense, practical and Biblical wisdom around your money. As you’re most likely aware, if you’re reading this, Baby Step 4 is when you begin saving and investing for retirement. My friends at Ramsey Solutions have done many great articles on this topic, but let me spend some time on the question of whether the 15% I’m budgeting towards retirement should be considered with my employer match or after it. Meaning if my company gives me a 5% match, can I get away with only contributing to 10% to reach my 15% number? Well, let’s try and answer that question below. Dave’s Answer My friend, Dave Ramsey, would tell you that it needs to be 15% of your income before considering your match. This shouldn’t be a hard number to hit for the person that has followed his plan. Why? You’ve worked hard to budget your money, so you’ve got great control over the cash flow coming into and out of your household. You’ve paid off all your debt, other than your home, which is many causes, was much more than 15% of your income. For example, when I spent the early part of my career in a large bank’s Private Banking office, it was acceptable for someone to have 45% of their income going towards debt. To be fair, that was the upper end of the bracket, but it still was acceptable. So if you were even half of that, meaning you were paying the bank 22.5% of your income, you were still giving much more than 15% to the bank. Now we’re telling you to put 15% towards your future retirement. Less than you were most likely paying in household consumer debt! However, on the other end of the spectrum, I’ve heard many CFP professionals recommend something less than 15%, and I’ve seen those plans come out ok, so it begs the question, who is right? The 15% Example – Landrie In honor of my daughter's baptism today, let’s start our analysis with her and her hypothetical future husband as an example. She gets out of college and is ready to start working and saving at age 25. Let’s say her husband makes $50,000, and she makes $40,000. Therefore a total household income of $90,000. For them collectively to be saving 15% they need to put away $13,500 this year. In addition, if they lived in the state of Ohio, they’d be paying $17,119 (approx.) in Federal, State, Local, Social Security, and Medicare-based income taxes. That leaves $59,381 for them to spend discretionarily or nearly $5,000 / month. Can we then assume that because my daughter, hopefully being brought up under the Ramsey Solutions teachings, will live within her means and will not go into debt? Thus their lifestyle is built around that $5,000 / month, just inflated over time. I’ll assume they never get promotional raises, just cost of living raises, and that they retire at the age of 65, which would be 2062 (if they’re 25 today). They would have roughly $4.9 million by the time they reached retirement, at a 7.22% rate of return. You can see the sample I created and check my math here. Using the 4% rule, she’d be able to take around $196,000 / year without hitting the principal, and the estimated growth of her $5,000 / month lifestyle ($60,000 / year) has been inflated to $129,882 (2% inflation rate) by the time she reaches retirement. Since we assumed she saved in a Roth 401(k) and Roth IRA for her 15%, there should be no tax liability thrust upon her, so they can take their $129,882 and still have $66,000 leftover under the 4% rule. And this doesn’t account for any Social Security they’ll be getting at 67 or later – in my estimation, because of reforms that will come down the pike in the future, Social Security will probably come to them around 70 to 75. In addition, perhaps my daughter wants to retire before the age 65. Then the question is at what point, saving 15% of her income on top of the match, does she get to an asset base where she has saved enough to retire, using the 4% rule (taking out only 4% of the portfolio each year to give it a high probability of lasting through her life). By the time she reaches age 59 ½, when you’re able to take from your retirement without a penalty, she would have approx—$ 3.1 million. Using the same 4% rule, that comes to $124,137, and her inflated living expenses of $5,000 / month are now looking like $120,261 in that year. This means because she followed the Baby Steps, in their written and verbal form, she is able to retire earlier than most of her peers with around $3,000,000 in retirement assets, many of which are highly favored towards Roth. Excellent job, Landrie! The 10% Example – Arthur Example Now let’s dive into Arthur. Poor Arthur – he would always get picked on in Dave Ramsey’s Ben & Arthur example in Financial Peace University. Now here he is again, getting beat up in this article, as the simpleton that won’t listen to Dave’s advice. So Arthur and his wife make the same amount of income as Landrie and her husband did. $50,000 and $40,000, respectively. They decide that they need more free cash flow to have fun and live life now, so they’ll save 10% of their income towards retirement and have their employer chip in the remainder, since they get a 5% match. Here are Arthur and his wife's numbers. When reviewing their assets at age 65, you’ll notice it’s estimated they’ll have $3.5 million by retirement, so roughly $1.4 million less. Using our 4% rule, that gives us $140,000 a year, which Arthur and his wife could take out without worrying about running out of assets. Because they lived on more of their income (remember they only saved 10%), their lifestyle is built around $64,000 / year (as opposed to Landrie, who lived on $60,000 or $5,000 / month), and thus their inflated lifestyle number by retirement is around $141,000. So in the case of Arthur, the fact that he and his wife only saved 10%, they barely made it to retirement with enough income, when using the 4% rule, to meet their lifestyle expenses – sans the $1,000, which we’ll consider is a rounding error for purposes of this excise. And suffice to say that since they just saved enough, using their 4% rule to cover their expenses, they’ll most likely not be in a good position to retire early. I should note in both of these cases, we did not give weight to assumptions around health insurance, Social Security, travel expenses and a myriad of other things you might consider in a fully-encompassed retirement plan. The point of this excise was to give credit to Dave’s recommendation that you should strive to save 15% of your income. Conclusion Wow! What a ton of numbers and math. If you got through that whole conversation without having to reread any of it, you should probably contact our office to apply to become an Associate Advisor because you’ve got a great brain and comprehension for this stuff. The bottom line of this scenario we saw was the person saving a full 15% of their income did two things that will make them more comfortable in retirement – it gave them margin, and it gave them the ability to make decisions around when to retire, they weren’t forced to continue to work until age 65. The person saving 10% was still able to retire, right? Absolutely! They just didn’t have the same flexibility that our first couple had. During discussions with hundreds upon hundreds of retirees over my career, I've learned that sometimes you’re at the peak of your career, and you don’t want to retire even at 65, and sometimes you can’t wait to ring that retirement bell. Saving 15% of your income today gives you the opportunity to make those decisions. Nothing is guaranteed, but as we saw with Landrie and her husband, they were better positioned to make retirement decisions on their timeline. As Dave always says, Dave-ish is a wish, and as the writer of Proverbs says, The way of a fool is right in his own eyes, but a wise man listens to advice. If you would like to start running retirement projections for your individual situation, we have this great tool that can be found here.

Rules for Investing Investing in the stock market can be profitable, but it also comes with several complexities and rules that investors must know. The rule we are writing about today is the wash sale rule. The wash sale rule can significantly impact an investor's taxes and investment strategy. What is the “Wash Sale” Rule The wash sale rule prohibits investors from claiming a loss on the sale of a security if they purchase or acquire a substantially identical security within 30 days of the sale. Essentially, if an investor sells a security at a loss and then buys the same security or a similar one within 30 days, they cannot use the loss to offset gains in the current tax year. Instead, the loss gets added to the cost basis of the newly purchased security. How does it affect me? The purpose of the wash sale rule is to prevent investors from manipulating their taxes by artificially creating losses. For example, an investor could sell a security at a loss to offset gains in the current tax year and then immediately repurchase the same security to maintain their position in the market. Doing so would allow the investor to avoid paying taxes on the gains while still holding the security they want. While the wash sale rule may seem straightforward, there are some nuances that investors need to be aware of. For one, the rule applies not only to identical securities but also to substantially similar securities. If an investor sells a stock in one company and then purchases a stock in a similar company within 30 days, the wash sale rule may still apply. Additionally, the wash sale rule only applies to losses, not gains. An investor can sell a security at a gain and immediately repurchase the same security without triggering the rule. However, the investor will still be responsible for paying taxes on the gains. It is important to note that the wash sale rule applies to individual and institutional investors, including mutual funds. Mutual fund investors need to be aware of the rule when buying and selling shares of the fund, as the fund may be buying and selling securities on their behalf. Strategy, Strategy, Strategy Selling at a loss in your Brokerage Account (aka Bridge Account) may allow you to claim that loss on your taxes, but making a mistake and triggering a wash sale can ruin that, so it is essential to know the appropriate actions. What are the appropriate actions to take to avoid a wash sale? One strategy is to wait at least 31 days before repurchasing a security sold at a loss. This allows you to claim the loss on your taxes while maintaining your market position. Another option is to purchase a similar but not substantially identical security. It can be tricky to know what a similar but not substantially identical security is, so having a Financial Advisor help you with this strategy is important. The Advisors at Whitaker-Myers Wealth Managers are familiar with this rule and its nuances, so feel free to contact one of them for help.