When thinking about pain, we know how the brain processes pain can provoke strong emotional reactions such as fear, anxiety, or, in some cases, even terror, depending on how the person experiencing the pain is processing it. If the brain can cause such strong emotions to the dark side, we also know it can be trained to handle and process pain to dull its effects. Why is a Financial Planner discussing the human body, the brain, and pain? It’s human nature to run away from or try to limit pain’s effects—this is the primary cause of many individuals' poor investment decisions. Many will handle the pain by stopping the pain which comes as a result of selling their investments or no longer putting money into them until the pain (losses) subside. However, as we’ll learn, that is the worst decision one could make toward your future goals. I want to answer this: Should you continue to fund your 401(k) even in a bear market? What’s the argument for consistency despite seeing my balance fall the wrong way? Let’s dig in… Ensure the Basics Are Being Executed Before we can worry about making the wrong decision during a bear market (a decline of 20% or more), we must ensure we’re executing our retirement-saving strategy correctly. We are proponents of the Baby Step methods taught by Dave Ramsey. This means before we encourage anyone even to begin saving for retirement, they must first have all their non-mortgage debt paid to zero and then have built a 3 – 6 month emergency fund to ensure they don’t fall back into debt, should an emergency happen. Once complete, you’re ready to start tackling retirement by allocating 15% of your gross income towards retirement, using your company-provided retirement plan up to the match, and then utilizing the Roth IRA for everything else. You can read this article we posted about a month ago for current Roth IRA limits. Suppose you still need to contribute more dollars to reach 15% after doing your retirement plan to the match and your Roth IRA. In that case, you may consider allocating back to your company retirement plan to round everything out. Here's The Cycle Again, it’s ordinary in every area of your life to try and stop the pain when you’re experiencing it. When you see your 401(k) or Roth IRA balances start to decline, that can invoke pain, no doubt about it. However, one must retrain their brain to remind themselves that when the market goes down, it presents the best buying opportunity for new dollars than you’ve seen in some time. If the market went straight up, almost as it did in 2021, then what you bought in March cost more than it cost in February and January. While on the aggregate, that feels good, you’d much rather prefer this scenario: if you bought for $1 in January, in February you were able to buy for $.80, and then in March for $.70, and by April, everything was back to up to $1.10. Your February contributions made $.30 and your March contributions made $.40 and you're back to even plus some! That is what happens in the market, just over much longer cycles than three months. Based on my Article, Bear Markets: Normal Not Fun, we know that the average bear market takes 330 days to hit bottom with a 30% decline, on average. Then it takes 1.7 years to recover (getting back to where you were) before you start seeing growth again; this means you have almost three years during the average bear market to make contributions at lower prices than before the bear market began. This is how stock markets in countries like Japan, which have seen very little growth, still provide their retirees with a mechanism to obtain better rates than what their banks (with their negative interest rates) can provide. If I have a flat market that is up and down, as long as I’m buying a decent amount when it’s down, I’ll still make money. History Provides the Framework This year (2022), the market hit a negative 25% at its worst. It was not quite the average bear market drop, and it happened a little sooner, but it was pretty close on both accounts. To find another period where we saw the market decline by that amount, we’d have to go back to March 19th, 2020, when we were amid the COVID-19 pandemic. During that market cycle, we got as low as negative 35%. Let’s assume you were faced with the decision at that point to pause your 401(k) and pile up cash (even though you already have an emergency fund) until you felt better about the market, or alternatively you just keep your tortoise mindset and kept your 401(k) contribution to the match and Roth IRA moving forward. Who wins this race? Perhaps the person that stopped their contributions feels better (initially) because they did something. They stopped the pain. They took the brain's pain centers and gave them what they wanted: physical release because an action was taken. However, did they make the best long-term move? Johnny Keeps Saving Johnny kept saving through the pandemic. Using the S&P 500 (our growth and growth & income stocks) as the proxy, you can see that Johnny saw his contribution drop even further after the -25% point (March 19th, 2020). Still, it made a rebound and eventually got back to par, even then surpassing the initial contribution. It’s worth today 64.58% more than he put in. $100 is now $164.58 (as of November 2022). Nice job Johnny! Billy Stops Savings Billy, who, on the other hand, had different plans. Billy needed to satisfy those pain centers in the brain. Billy didn’t contribute until he saw the market fully recovered, and he could ensure that the world would not end. That meant he made his first contribution on July 19th, 2020, which would have been when the S&P 500 fully recovered. Billy started investing and got the pleasure of seeing his investment go straight up right away, not hitting a dip until September, and even then, that was a quick dip, and after he’s making money again. His investment is worth 22.97% more than he started with today (November 2022), so $100 would be worth approx. $122.97. Johnny Wins: Time & Deeper Losses Make Even Strong Arguments We can very clearly see that Johnny was the winner of this exercise. The tortoise always wins – it’s boring, yet it’s beautiful. This is one of the primary reasons why Vanguard wrote a study a few years ago, stating that Financial Advisors add around 3% value to their clients because they help them avoid the mistakes of being too emotional with their investing (along with other tactical financial planning benefits). If you push the exercise out farther and with deeper market drops (not that I’m advocating for one), the argument gets even better. Take a look at this chart, which helps you see if you would have stayed consistent with a $10,000 investment in 2008 (when we saw the market decline well over 40%). That investment today is worth $40,000. In less than 14 years, it doubled and then doubled again, even accounting for this year's losses. Therefore, be like Johnny. If you feel like you need to scratch the pain centers of your brain, read this article, talk to your Financial Advisor, take a cold shower, run a mile or do a myriad of other things that will take your mind off the stock market and onto how you can improve your life today because the investments will help take care of tomorrow.

Guess what everyone!! Ramsey Solutions has a new personality that you may have heard on the air recently or maybe you have seen her on national television and media hits. Her story is pretty remarkable and explains why she is an excellent fit at Ramsey Solutions. “Kristina Ellis is a bestselling author who believes no student should be burdened by student loans. She has helped thousands of students earn a debt-free education by sharing practical wisdom from her personal experience of earning over $500K in college scholarships.” (RamseySolutions.com) At a young age, her father passed away after his battle with a cancerous brain tumor leaving behind Kristina, her mother, and brother. Having lost the head of the household, everyone had to fill the gap that was lost; adding stress and burdens that naturally came with the situation. Unfortunately, Kristina learned to mask those emotions and developed eating disorders and turned to cutting in middle school. She was about to take her final step to reliving herself from pain forever when her aunt randomly called her. The conversation wasn’t anything significant, but the two-hour phone conversation was enough to get her out of the dark mindset she was in and start living life. On the first day of high school, her mother sat Kristina down and explained to her that “you have four years to figure out what you’re going to do with your life because you are on your own financially after graduation. You are not meant to live in poverty your whole life, and I know that if you work hard you can go to a great college and start fresh. The choices you make right now will impact you for the rest of your life.” Taking this to heart, Kristina would map out what her goals were for college. Kristina knew she would have to get scholarships in order to afford college; especially her dream school of Vanderbilt University. She treated the scholarship application process as a part time job in her freshman year of high school. This hard work and dedication translated to success in other fields in her life. She won two Junior Olympics gold medals for gymnastics, raised enough money to travel to Haiti for mission’s work, and became one of the fastest runners in her high school. She was also entered into the Miss Indiana Junior Teen pageant and won. All this during her freshman year! By her Junior year, Kristina continued to apply for scholarships and position herself as scholarship-worthy by putting in over 1,000 hours of community service in high school, building up her gymnastics team to forty-five members and winning a cross country award. Kristina was selected as one of Coca-Cola's National Scholars and awarded a $20,000 scholarship for college. Then she was contacted by the Bill and Melinda Gates Scholarship Foundation. They told her she had been selected as a recipient of their prestigious scholarship which offered a free ride to any school through her PhD. She attended Vanderbilt University for free with the Gates Scholarship and it also funded her master’s degree at Belmont University. All together Kristina was awarded over $500,000 in scholarships for college! In college, Kristina’s spiritual life developed. She joined a non-denominational group where she learned how to develop a personal relationship with the Lord. “I fell in love with the Lord during college,” shares Kristina. This scholarship mentor encourages students to believe in themselves and their potential. Her message inspires students to understand that, even if the odds are stacked against them, they can overcome their circumstances and achieve their dreams! You can check out her many articles on Ramsey Solutions and also her books “Confessions of a Scholarship Winner” and “How to Graduate Debt Free.”

Before we answer this question, ponder to yourself what you think the number one indictor would be for building wealth and having a successful amount in your retirement account(s). There are many answers and logics behind each answer. Is it the rate of return? 4% vs 12% performance. Paying the least amount of expenses? Management and custodial fees. DIY (Doing it yourself)? Personally, researching and investing yourself. Allocating the correct assets in your portfolio? While all these have some impact on building wealth, it is not the number one indicator. Finally ready for the answer? It is something so simple but yet so profound. Ready…? Savings Rate Watch the following video of Dave explaining this concept. 74% of the indication of your ability to retire wealthy is your savings rate! Your income is your most powerful wealth building tool and the more of your income you can save into tax advantaged accounts, the more you’re setting yourself up for a great retirement. The greatest investment strategies in the world, can’t pull you up, if you have a poor savings rate. Think about it this way, a 12% return on $0, is still $0. Therefore, what are ways to increase your savings rate to your retirement accounts? Pay off all non-mortgage debt Proverbs 22:7 – The rich rule over the poor and the borrow is slave to the lender. It’s hard to achieve a respectable retirement savings rate, which we would define as 15% of your income, if you’re having to make payments to Mastercard, Discover and Visa. We’d rather collect a dividend from Visa stock than pay Visa interest each month. Budget, Budget, Budget Almost every time you begin to budget, you begin to find places you’re over spending and therefore creating opportunities to save and invest more for retirement. Using tools such as Dave Ramsey’s Everydollar Budgeting App, make budgeting easy and fun (keep in mind I am a Financial Advisor!) and allow for changes instantaneously, if things come up that were unexpected or unbudgeted. Taxes, Taxes, Taxes, If you’re getting a refund each year, you’re doing it wrong! Giving the government a free loan, each year is not prudent money management. You could be putting that money into your Baby Step 4 and earning stock market type returns on that money, as opposed to letting the government borrow your money for 12 months and paying it back to you once you file your return, with zero interest. Please contact our Tax ELP for tax advice or to ensure you’re withholding at an appropriate level. Increase your income There are currently around 11 million job openings in the US. This is a record for the country, which means the economy is still in pretty good shape (you can’t have that kind of job demand in the midst of a bad economy) and it means employers are willing to pay to get employees in the front door. This may be the opportunity for you to make the career change that will enhance your income and create an opportunity for you to do work that matters! Baby Step 4 Execution Matching your employers’ contributions in your 401k If your employer offers a match on 401k contributions, you should contribute whatever they are matching. Let’s say that XYZ company offers a 3% match. You should put in at least 3% of your pay into your 401k. You are doubling your savings rate by obtaining a match. If you can afford to go higher, then go for it, after you have maxed out your Roth IRA! Consider having your Financial Advisor, help you manage your 401(k) to ensure its properly diversified and not chasing returns, within your plan. According to a recent Aon Hewitt study, having an advisor help you with your plan, increased the return by 3.32% Contribute the maximum amount to a Roth IRA or Traditional IRA If your employer does not offer a retirement account, then it would be in your best interest to open an IRA (Individual Retirement Account). There are two types of IRAs. Traditional and Roth. Both of these vehicles have a contribution limit of $6,000 per year, with an additional $1,000 per year catch-up contribution for those age 50 and older. As a general rule, you have until Tax Day to make IRA contributions for the prior year. In 2022, that means you can contribute toward your 2021 tax year limit of $6,000 until April 15. And as of Jan. 1, 2022, you can also make contributions toward your 2022 tax year limit until tax day in 2023. So how do these differ from each other? Traditional A traditional IRA is a type of individual retirement account in which individuals can make pre-tax contributions and the investments in the account grow tax-deferred. In retirement, the owner pays income tax on withdrawals from a traditional IRA. Roth A Roth IRA is an Individual Retirement Account to which you contribute after-tax dollars. While there are no current-year tax benefits, your contributions and earnings can grow tax-free, and you can withdraw them tax- and penalty-free after age 59½ and once the account has been open for five years. If you can take away one concept from this article, it is that “Building wealth means nothing if you do not put money way!” -Dave Ramsey

Before we start to segregate each of the four funds that Dave Ramsey recommends, we need to review a few important terms. Mutual Fund An investment where people collectively pool their money together to invest in securities such as stocks and bonds. These funds are managed by professional money managers who allocate the funds’ assets and attempt to increase the funds within the investment. Market Capitalization This is the size of the company your mutual fund or you individually might be investing. This size is determined by taking the total number of outstanding shares of stock times the current stock price. For example, if a company had 20 million shares outstanding for $50 per share it would have a market capitalization of $1 billion. The worlds largest company today, in regards to market capitalization is Apple, with a market cap near $3 trillion. Dave’s 4 categories for Investing Growth In the investment world, these are Large Cap Growth Funds. Companies within this type of fund have a market capitalization value of more than $10 Billion. Common characteristics of companies within this type of fund are: 1. Transparency of the company; the financial situation of the company is generally made public and easy to find. 2. Stable; generally, these companies are seen as stable and do not typically offer the same level of growth that smaller companies can potentially provide. 3. These companies usually do not offer Dividends and instead, they reinvest their growth back into the company to help develop and expand the services. A common index benchmark for Large Cap Growth Funds is the Russell 1000 Growth. Growth and Income In the Investment world, Growth and Income are Large Cap Value Funds. These are large stable companies that instead of reinvesting their growth, they will offer investors dividends. These are slow growing companies, who supplement that slower growth with a share of their profits, hence the dividend and whose market capitalization are $10 Billion or more. A common index benchmark for Large Cap Value is the Russell 1000 Value. Aggressive Growth In the investment world, these are Mid and Small Cap Funds. Companies within the Mid Cap Fund have market capitalization of $2-$10 billion. Mid Cap companies usually offer investors greater growth potential than large cap funds, and have less volatility than small cap funds. A common benchmark for companies within the Mid Cap Fund space is the S&P 400. Additionally Mid Cap Funds can be classified into two subcategories. Mid Cap Growth and Mid Cap Value. As discussed above with large cap funds, Mid Cap Growth Funds will be investing in stocks whom are faster growing companies with a market capitalization between $2-$10 billion. Mid Cap Value Funds will be investing in stocks of companies whom are slower growing typically, but are sharing their profits with you the investor through a dividend, in that same market capitalization space of $2-$10 billion. Companies within the Small Cap Fund have market capitalization of $300 million - $2 billion. These funds are looking for young companies or companies that are rapidly growing. Small Cap companies offer investors good growth potential; however, it offers more volatility than mid and large cap companies. A common benchmark for companies within the Small Cap Fund is the Russell 2000. Additionally Small Cap Funds can be classified into two subcategories. Small Cap Growth and Small Cap Value. As discussed above with Large Cap Funds, Small Cap Growth Funds will be investing in stocks whom are faster growing companies with a market capitalization between $300 million - $2 billion. Small Cap Value Funds will be investing in stocks of companies whom are slower growing typically, but are sharing their profits with you the investor through a dividend, in that same market capitalization space of $300 million - $2 billion. International In the investment world, these are companies that are outside of the United States. They can be grouped into two categories; developed markets and emerging markets. Developed Markets: Companies that are located in the developed markets are generally established and highly industrialized (first-world) countries. Common non-U.S.A. developed markets are: UK, Australia, Japan and Germany. Developed markets usually have a more stable political and financial position and have easy access to your investment funds. A common benchmark used to assess the performance for funds within Developed Markets is the MSCI EAFE index. Emerging Markets: Companies located in emerging markets are considered to be between developing and fully developed economies. These markets are usually harder to get money in and out of and can have high political volatility. Countries with emerging markets are India, Brazil, and China. A common index used to measure the performance for funds within Emerging Markets is the MSCI Emerging Markets Index. Global Funds (World Fund): This is a fund that invests in companies locate anywhere in the world, which of course includes the United States. Global funds seek to identify the best investments across the globe. A common index used to measure the performance for funds within the Global Fund is the Vanguard Total World Stock Index Fund. It is important when talking to your advisor, to ask why they would place you in a Global or World Fund vs. an International Fund. “Why is this a problem you ask?” Because these Global funds don’t capitalize, as effectively, on the good years for the international market. Global Funds also reduce the diversity in your portfolio as they can invest approx. 50% of the portfolio into American companies, which is actually what you are already doing in the Growth, Growth & Income and Aggressive Growth categories. If the American market has a rough year, then 87.5% of your investment portfolio is exposed to the American market, because your advisor used a global fund as opposed to a true international fund, compared to 75% as Dave Ramsey recommends. Another misleading practice is when an advisor uses their returns on the Global Fund, and compare it against a true International Fund. They’re two completely different markets offering an unfair comparison. To learn more about investing into the four categories of funds that Dave Ramsey recommends, please contact one of our SmartVestor Pro's today!

Are you new to the term “sinking fund”? If you are, you are not the only one because whenever I mention it, I am usually met with a blank stare. Followed by… “What is that?” Simply put, a sinking fund is a savings that is for a specific purpose. It is NOT your emergency fund. It is a separate fund that you are using to set money aside that will be used for a specific bill or event. What Is The Difference Between A Sinking Fund And An Emergency Fund? There is a difference between a sinking fund and an Emergency Fund. An Emergency fund is for Emergencies only. Meaning, you are not expecting it. This would be things like medical emergencies, car breaks down, pipes burst in the house, those sorts of unexpected expenses. A Sinking Fund is something that you are expecting to spend. This is stuff like your quarterly insurance bill, your annual real estate taxes, a new roof, a new car purchase, a vacation… those sorts of things that you know are coming up! Are there times when you might need to tap into your Emergency Fund to cover something you should pay for with your sinking fund? Sure. Let’s use the example of a leaky rook. If your roof starts to leak and you don’t have enough money in the “new roof sinking fund” to replace it…. you would need to tap into the emergency fund. A leaky roof certainly classifies as an emergency. Once you replace the roof, start a sinking fund for it. That way next time you need a new roof again… you have the money set aside and you won’t need to tap into the emergency fund again! How Does A Sinking Fund Work? The way a sinking fund works is by saving monthly for a large expense that you know is coming up. This means when that large expense comes due, it is not a huge hit to your budget. This includes bills that are due quarterly or annually as well as big purchases that you know you will need to make in the future such as a new car, a new roof, or a vacation. For example, if your property taxes are $1,500 and you pay them annually, you would save $125 every month throughout the year. ($1,500 divided by 12 months before it is due = $125 that you need to save monthly.) Then, when the bill comes due you have $1,500 sitting in an account meant to be used specifically for your property tax bill. Think about how much that would reduce your stress. Getting a $1,500 bill in the mail is stressful! UNLESS you have the money set aside ready to be used specifically for that bill. What Types Of Things Would I Use A Sinking Fund To Save Up For? There are 3 main types of Sinking Funds. Large Expenses/Bills. This would be anything that you pay quarterly or annually. Some examples are things such as taxes, insurance, subscriptions such as Amazon Prime, etc! Anything that you are paying quarterly or annually is usually a larger amount and that means it can be stressful to have to pay for it with one month’s budget. Saving up for it monthly means that when the bill comes in the mail, you are ready to pay it with the money that you have in your sinking fund! Big Purchases. This would be things such as purchasing a new car, replacing a roof, buying a new computer or phone. Things that you know are coming up in the future and will take a significant amount of money to purchase. Saving for this monthly will help reduce the stress when it comes time to make the purchase. Upcoming Events. This is anything from that vacation you want to take to the birthday gifts, Christmas gifts, and shower gifts you need to purchase. Saving for these things every month means that when it comes time to take the trip or buy the gifts, the money is there and it is meant to be used for that specific purpose! How Do I Keep Track Of How Much Is In Each Fund? If you have a lot of things you are saving up for, it can be hard to know how to keep track of it all. How do you know how much you have saved for each fund? I like to have separate accounts set up for each fund… or at least each type of fund! I know that sounds like a lot. But really, it’s not. Having separate accounts means that we don’t have to keep a spreadsheet updated with the amount in each fund. I’m not a spreadsheet gal. I can use them but they definitely don’t excite me. So I would much rather have separate accounts set up for each sinking fund in order to keep track of how much is in each fund! Here is how we set up our separate accounts… We have a separate checking account that is for our large expenses/bills. For us this is stuff such as, propane, taxes, insurance, Amazon prime. We know the amount of those bills and we can easily add them up and divide by 12. Then, that amount is automatically transferred into our separate checking and when the bills come, they are paid from that account. We also have a car repair/replace savings and a house repair savings. We have a savings for vacations or other big things we are saving for at the moment as well. You can also have a gift savings. Or… what we do is just pull that money out in cash every month and save it in an envelope! We have all of these accounts nick-named appropriately on our online banking. That way we don’t have to even think about it or remember what each account is for. We have automatic transfers set up that happen every month without even thinking about it. The transfers go from our main checking out to these separate sinking funds. Then, when it’s time to pay the bill, take the vacation, or buy the gift… the money is there to use for that specific reason. I’d love to hear from you… What are you using a Sinking Fund to save up for?

Is there ever a “smart” loan to take out? According to our friend Dave Ramsey, “Debt is dumb….” This is generally true because “the borrower becomes a slave to the lender” (Proverbs 22:7), paying handsomely for the loan over time in the way of interest payments. Though we do not recommend taking on debt, we will analyze one specific type of loan structure associated with the home mortgage, the amortized loan, and how you can make the most of it. Amortization An amortized loan has scheduled payments applied to the loan’s principal balance and interest. “Amortize” refers to the gradual payoff of a loan (or asset) over a certain period. While we do not recommend taking on debt, the home mortgage is the exception to the rule. Despite being an exception, it’s essential to have a plan to pay down that loan as quickly as possible. That plan is also known as an amortization schedule. An amortized loan front-loads the interest payments in the earlier periods, with the remaining amount devoted to reducing the principal balance. Then, as time passes, the interest payments get smaller, and the principal payment increases. This structure is designed to benefit the lending institution in the early days of a loan, allowing them to capitalize on even the most aggressive borrowers who intend to pay off the debt early – a strategy you should do your best to employ. Being Aggressive While there is little you can do to reduce the initial interest payments on an amortized loan, you can still benefit from an aggressive strategy about paying off your mortgage early. The interest calculation is based on the loan's current balance, so the interest amount decreases incrementally as payments are made. So, when you pay additional principal payments, the calculation changes, and you wind up saving money on interest over the course of the loan. Here is how the calculation works: Multiply your current loan balance by the interest rate (divide the annual rate by 12 for the monthly rate) = Interest due for the current period. Suppose you’re buying a $250,000 home with a 15-year annual fixed-rate rate of 6.5%, and you made a down payment of $50,000 (20%). Here’s an example of how that calculation works: $200,000 (principal balance) x 6.5% (annual interest rate) = $13,000 (annual interest amount) $13,000 (annual interest amount)/ 12 months = $1,083 (current month’s interest amount) $1,742 (monthly principal and interest payment) - $1,083(current month’s interest amount) = $659 (current month’s principal amount) If you pay extra principal during a given period, that amount will be deducted from the loan’s principal balance, affecting the calculation and resulting in a lower interest payment for the next period. If you do this consistently, you will significantly shorten the length of your mortgage term and build equity much faster. As you can see, it is worth looking at your budget and reallocating some spending to additional principal payments. An amortization schedule is another budgeting tool that can set you on the path to financial freedom. Chief Operating Officer, Amanda Sharratt, discussed the benefits to paying off your mortgage early as well as how to accomplish baby steps 4-6 in this Question of the Week video. If you’re interested in tackling baby step 6 and being what Dave Ramsey calls “weird people” (the good kind), talk to a financial advisor or financial coach to see how an early mortgage payoff might impact your financial future.

President and Chief Investment Officer John-Mark Young has been named to AdvisorHub's list of the top Financial Advisors for a second year in a row. Last year he was listed as an Advisor to Watch, and this year he was named as one of the Top 200 Fastest Growing Advisors. The award measures the firm and John-Mark in tangible ways, such as the assets they help clients manage and the level of service they provide, such as their financial planning offering. To be considered for the Fastest Growing award, the Advisor must have year-over-year growth, and finally, AdvisorHub reviews the Advisor for their regulatory record, community service, and team diversity. When asked about the award John-Mark was reminded of Joseph - "It's our job to try and understand what might happen, give guidance, and plan accordingly. Just like Joseph, if God doesn't bless us by putting us in front of the right people (clients), just as Joseph was put in front of Pharoh, then no value is created. However, He has seen fit to bless our efforts; I'm thankful and blessed for that. We have an incredible team at Whitaker-Myers Wealth Managers, from our back office compliance team led by Chief Compliance Officer Kelly Taylor, our Financial Advisor Team led by Amanda Sharratt, our Tax Team led by Kage Rush, and our Financial Coaching Team led by Lindsey Curry. I couldn't be more thankful for a team that makes our service to clients possible. In addition, I've sacrificed so much time with my family to serve our clients, so I'm eternally grateful for my beautiful wife, Megan, who is the definition of a Proverbs 31 woman. She is far more precious than jewels. The heart of her husband trusts in her, and he will have no lack of gain. And of course, I would be remiss if I didn't thank my friend Dave Ramsey and the team at Ramsey Solutions, such as Scott & Ben, who support our efforts as Smartvestor Pros. We serve clients with the heart of a teacher because that's what Dave demands and clients deserve." Chief Operations Officer Amanda Sharrat added, "AdvisorHub is presumably looking at things we do that make us different and unique to create the kind of growth that would lead to admission to this list. Investments we have made in our business, such as our new client portal that allows a client to see their financial plan and projections in real-time every single day, is an example of that commitment they would say leads to continued growth. When clients are better informed, they make better decisions, and when they make better decisions, their assets typically reflect that, and as we always say, our compensation is designed in such a manner that we do better when our clients do better. Our new clients portal helps us live out one of our Core Values of having the Heart of a Teacher." Kevin Hewitt, President and CEO of The Chrisitan Children's Home of Ohio, agrees with AdvisorHub's analysis of both Whitaker-Myers Wealth Managers and John-Mark's commitment to serving their community. "We are beyond thankful for our relationship with Whitaker-Myers Group and John-Mark. Specifically, their desire to make an impact for the Kingdom of Christ through their professional work and individual service to our organization and the families and children we serve at The Christian Children's Home of Ohio is greatly appreciated. Just a few weeks ago, the team at Whitaker-Myers Wealth Managers graciously gave of their time and talents to help us set up for and prepare one of our largest fundraisers of the year, The Great Grill-Off. We're grateful for our relationship and can't wait to serve Christ together for many years to come." John-Mark will accept the award at a ceremony on October 25th, 2023, at The University Club in New York City. You can read more here about all of the AdvisorHub awards given to the Financial Planning community. In addition, you can see the entire list of the Top 200 Fastest Growing Advisors in the country here.

I have received numerous questions from clients recently asking if we were doing any ESG investing for them. Most of them request that they not be invested in ESG funds. Clients often want to be invested in the four categories that Ramsey Solutions’ discusses, and we can do that well. Here are some reasons why clients are asking about ESG and maybe want to avoid those funds. As the world becomes increasingly focused on sustainability and social responsibility, the popularity of Environmental, Social, and Governance (ESG) investing has grown. ESG investing is an investment strategy that takes into account a company’s environmental, social, and governance factors when making investment decisions. While this approach may seem like a responsible and ethical way to invest, there are valid reasons to be skeptical of ESG investing. Too much subjectivity First and foremost, ESG investing can be highly subjective. There is no standardized way of measuring a company’s ESG performance, and the criteria used by ESG rating agencies can vary widely. What one investor considers an acceptable environmental or social responsibility level may differ significantly from another investor’s perspective. As a result, ESG investors may be making investment decisions based on incomplete or inaccurate information. Limit investing opportunities Furthermore, ESG investing can limit investment opportunities and potentially result in lower returns. By excluding companies that do not meet specific ESG criteria, ESG investors are reducing the number of available investment options. This can limit diversification and potentially lead to lower returns over the long term. Additionally, some companies excluded from ESG investment portfolios may be highly profitable, making them attractive investment opportunities. Higher Fees Another concern with ESG investing is that it can lead to higher fees for investors. Many ESG funds charge higher fees than traditional funds, requiring more research and analysis to determine a company’s ESG performance. These higher fees can eat into investment returns, making ESG investing less attractive for investors prioritizing maximizing returns. Greenwashing Finally, ESG investing can be subject to “greenwashing.” This is the practice of making misleading or unsubstantiated claims about a company’s environmental or social responsibility. Companies may tout their ESG credentials to attract ESG investors, even if their actions do not match their claims. ESG investors may be more likely to fall prey to greenwashing because they prioritize environmental and social responsibility, potentially leading to investment decisions based on inaccurate information. The right approach In conclusion, while ESG investing may seem like a responsible and ethical investment strategy, there are valid reasons to be skeptical of this approach. ESG investing can be highly subjective, limit investment opportunities, result in higher fees, and be subject to greenwashing. Investors should carefully consider their investment goals and priorities before deciding whether ESG investing is right for them. If you have questions on this type of investment strategy or want to speak to one of our financial advisors about investing, contact one of our eleven advisors to help answer your questions today.

Charitable giving and tax benefits There are many things to consider when mapping out your tax plan for the year. One thing to take into account is how charitable giving might impact your tax situation both now and in retirement. It is essential to plan your charitable giving because, when done efficiently, that benefits you and the church or organization(s) you intend to bless with your donation. As mentioned in a previous article, a Donor Advised Fund (DAF) is a great way to leverage your giving for tax benefits. This article will discuss why a DAF is helpful and how to utilize it. What Is a DAF, and why should I use one? If you have been blessed with resources and a desire to give out of your excess, then using a DAF is a practical way to do your giving and minimize your tax bill simultaneously. A DAF is separate from your investment accounts and is maintained by a section 501(c)(3) organization, which is known as the “sponsoring organization.” It is important to note that once the money or securities are donated to the sponsoring organization, they have legal control over it. However, the donor or their advisor retains the distribution and investment privileges concerning the donated funds in the account. Because a donation to a DAF is immediately tax-deductible, it allows you to donate while still deciding what organization(s) to support. The DAF houses your contribution and can even grow, depending on how it’s invested while in the DAF, while you decide where those dollars will ultimately end up. In short, a DAF is a tax-advantaged way to support causes you love at a pace that is right for you. How to Use a DAF To get started, you should identify how much you can put into the DAF. It might help to work backward and determine your estimated tax bill, then decide how much of a deduction you need. Remember, the contribution to the DAF only impacts your tax standing in the year of that donation. Donations from the DAF to organizations of your choice do not carry any additional tax advantages. You’ll need to establish a DAF account and determine which appreciated stocks, mutual funds, or cash you want to donate to the DAF. Many large custodians offer DAF’s. Contact your advisor if you need help getting started. When to Use a DAF When you have appreciated stock in a brokerage account or a required minimum distribution from an IRA that could increase your tax liability, donating those securities and/or cash to the DAF will allow you a tax write-off. Sometimes the amount you need to write off exceeds what you might want to give to your favorite charity in a given year, so the DAF allows you to make a large donation all at once, then spread that out to different organizations over time as you see fit. A DAF is a helpful tool but is not necessarily for everyone in every stage of life. Talk to any of our eleven advisors today if you want to utilize a DAF to increase your tax agility and bless those causes closest to your heart.

The recent failure of three U.S. banks has raised concerns over the economy and financial system. The situation is still evolving, and there is plenty of speculation about what might come next. One recent development is that government officials from the Treasury, Federal Reserve, and FDIC have announced that depositors will be made whole in an effort to backstop the system and restore confidence. I'm often one to blame to government quickly, but in this case, I thought they acted decisively and prudently. They didn't bail out the banks. They created a lending mechanism so "Held to Maturity Bonds" (HTM for short, more on these later) could continue to be held, and they ensured no client of these banks was punished through unlimited FDIC coverage. They fired and will hopefully punish the imprudent management of these banks, which were more focused on DEI initiatives than ensuring their job was being fulfilled as stewards and fiduciaries of the bank. This crisis has created hardship for many companies and individuals as payrolls are disrupted and access to cash is halted. However, when it comes to investing, it's more important than ever to stay levelheaded and focus on the big picture. What should long-term investors know about these bank failures, and what do they reveal about the financial system? Bank stocks have struggled due to recent failures The collapse of Silicon Valley Bank (SVB) was the first FDIC-insured bank failure since 2020 and the second largest in history. This was followed two days later by the failure of Signature Bank, the third largest in history. A few weeks earlier, these two publicly traded companies had the 14th and 18th largest market capitalizations among U.S. banks, respectively. Silvergate, a smaller bank active in the crypto industry, also failed the same week but through an orderly liquidation. From a market and economic perspective, the main question is whether there is a wider systemic risk to the financial system. This episode reveals that these particular banks grew too aggressively and with too little risk management as tech valuations rose and crypto prices rallied over the past several years. While this worked well in a bull market, reversing these trends in 2022 made these banks vulnerable to classic bank runs. How do bank runs occur? A simplified description of the classic banking model is that customers – both businesses and individuals - deposit funds for safekeeping. Banks then use these deposits to make loans or to buy high-quality investment securities, which they hope can generate profits. This works well as long as these investment assets maintain or grow in value and customers trust that their deposits are safe. If either is not the case, a bank may not have the liquidity to meet its obligations. With this in mind, these recent failures were due to two related problems. SVB was in a unique situation in that nearly 85% of their deposits were in excess of the FDIC coverage amounts, which currently stands at $250,000 per depositor. This is uncommon in most banks, but when you're serving a single industry almost exclusively, you can see how this can happen, especially one as flush in cash as the tech industry. For example, how many of you have Roku? They currently have $1.9 billion in cash on deposit at different financial institutions. According to a recent SEC filing, nearly $487 million was in SVB. Than means nearly all $487 million was uninsured! Granted, that is a large multinational company, but the point is still valid; SVB was mainly made up of clients like Roku. Banks accumulated unrealized losses on investment securities as rates spiked First, rapidly rising interest rates and Fed rate hikes over the past year created financial stresses on bank balance sheets. Bonds had their worst performance in history in 2022, driving unrealized losses on investment assets, including U.S. Treasuries, as shown in the accompanying chart. Whether banks need to book these losses depends on how these securities are accounted for, Held to Maturity ("HTM") or Available For Sale ("AFS"), on their balance sheet. HTM assets can be held on your balance sheet, and you never need to report the losses because they will be held to maturity and should not bear a loss. AFS, on the other hand, because they are used to meet liquidity needs from the depositors of the bank, should that arise, are "marked to the market," and you'll see the current values reflected on the banks' balance sheet. You might be wondering why they are even given a choice. Bonds are loans that you, an investor, are making to a third party. In the case of most banks, they are forced to buy very high-quality bonds, the largest of which are US Treasuries. US Treasuries are backed by the full faith and credit of the US government; however, the longer-term bond you buy, the more the current value, what you'd get if you sold it today, changes if there is a change in interest rates. For example, you purchase a $10,000 bond today, and it matures in 20 years with a 1.5% interest rate. In 20 years, the US Treasury will pay you back the $10,000, and all the while, you're receiving the interest on that $10,000 at 1.5%. However, if rates were to move higher, as they did last year, that bond would show a current value of something lower, say $9,000, even though it pays its interest on the original value and it's going to mature at the original value of $10,000. The reason for the lower value is a result of the fact that the person buying your bond would need to be compensated for the fact that they're getting 1.5% when new bonds are paying 4.50%, or whatever prevailing interest rates are. The higher rates go, and the longer your bond is for, the more the bond's value will decrease. Going back to my original question, why are they even given a choice? The HTM book is exactly that, held to maturity. It doesn't matter what the current value is because the bank says we'll hold this to maturity and get back what we put into it, plus our interest. However, if one bond is sold from the HTM book, the entire book must be repriced at current values, meaning you'll take a very large loss if rates spike. So as we think about what happened in 2022 and SVBs bond book...... Their bond book got so large because their deposit base nearly tripled, and there was not much loan demand from these tech startups. They put many excess deposits into bonds. The duration of their portfolio (a way of getting an average of the length of bonds) was around six years. Confusingly, they bought longer-term bonds during a period of historically low-interest rates. Then in 2022, interest rates spiked, while SVB continued to see outflows of their deposits base as these tech startups needed to use their cash since liquidity was getting tight for them. When SVB ran out of deposits that were available to them (AFS) then, they were forced to dip into their held-to-maturity book, which had $16 billion or so of losses that they didn't have to account for unless you sold one bond from that HTM book. Since they did dip into that HTM book, the entire bond portfolio needed to be repriced, therefore creating such a loss that the bank was no longer able to operate safely, and the FDIC was asked to come in and take over. Second, SVB’s concentration of tech and startup customers made it vulnerable as conditions deteriorated for that sector, just as Silvergate and Signature Bank were exposed to the slowdown in the crypto industry. SVB tried to plug this gap by raising fresh capital, but this backfired since it highlighted the liquidity and solvency issues it faced. Like shouting "fire" in a crowded theater, once there is the perception of solvency problems, a classic bank run can occur swiftly, which can then become a self-fulfilling prophecy. To a large extent, this played out publicly as many in the startup and VC communities urged companies to move their funds. While government actions are always controversial and subject to political debate, moves by Treasury, the Fed, and the FDIC to backstop customer deposits across these banks will likely help to prevent contagion effects across the system. At the same time, it does not directly address the underlying issue of impaired assets, which depends on the quality of risk and asset/liability management at each bank. However, the risk that unrealized losses become a solvency issue is mitigated for larger, more diversified banks who are less reliant on deposits, have a stronger deposit base, and maintain higher amounts of capital. These bank failures are the largest since 2008 One reason that investors may be concerned is that there have been few bank failures in recent history, especially since banking legislation such as the Dodd-Frank Act was put into place after the 2008 financial crisis. According to the FDIC, there were only eight bank failures from 2019 to 2022, far below the 322 experienced around the global financial crisis or the hundreds that regularly occurred in the 80s and 90s. That said, SVB is an outlier in that it had total deposits of $175 billion, while the eight from 2019 to 2022 had a combined $628 million. Naturally, there are also parallels being drawn to 2008 when the last wave of bank failures threatened the global financial system. It's important to keep in mind that, back then, the problem was not just that all banks held significant amounts of mortgage-backed securities and other housing-sensitive assets that ended up being worth only pennies on the dollar. Rather, significant amounts of leverage coupled with new financial instruments such as collateralized debt obligations allowed a housing crisis to turn into a financial meltdown. While it's unclear exactly how this episode will play out, many banks today are much better capitalized and do not primarily rely on tech or crypto deposits. Additionally, any economic spillover has so far been concentrated in the technology and venture capital industries which were already struggling with layoffs and a slowdown in demand. These developments impact the Fed's upcoming rate decisions since they underscore an unintended consequence of rapid rate hikes. This likely creates a new sense of caution for the Fed as they continue to battle inflation. According to the CME Group, which is the tool I use most frequently to track expected Fed interest rate decisions, there is now a 62% probability that rates will rise 0.25% next week with 1 38% chance there is no rate increase. Then they expect the Fed to hold steady until their July 2023 meeting where the current odds on favorite is a 0.50% rate decrease at that meeting. Interest rates have also fallen, with the 2-year Treasury yield declining over one percentage point to around 4.1%. These rates were nearing 5% only two weeks ago. While these expectations can change rapidly, they show how much sentiment has shifted in the past week. The bottom line? While recent bank failures are problematic, parallels to 2008 are premature. Investors ought to stay diversified as the situation stabilizes while focusing on the big picture rather than minute-by-minute speculation.

Afraid you’ll have corned beef leftover from St. Patrick’s Day and already dreading reheating it and trying to find sides? This St. Patrick’s Day, don’t get stuck in the habit of reheating and eating the same thing again; instead, plan on making something completely different - a Saturday or Sunday morning breakfast hash! The perfect hearty breakfast for the weekend. Breakfast Hash You're in luck if you’ve never made a breakfast hash. It is so simple, yet so delicious and filling. As many of these recipes have discussed – it’s a great way to use your leftovers and save on your grocery budget! The combinations are endless when it comes to a good breakfast hash. Most of the time, the hash base is sweet potatoes or gold potatoes, onions, and peppers, which are excellent sources of nutrients and flavor. Then add whatever breakfast meat you prefer– leftover corned beef (like we’re talking about here), bacon, sausage, or simply eggs. You’ll sauté it all in the same pan for less mess and easy cleanup! Corned Beef Hash Recipe: Serving Size: about 4-5 1 Small Yellow Onion (Chopped) 2-3 Cups Corned Beef (Chopped) 1 Bell Pepper (Chopped) 2-3 Cups Yellow Potatoes (Preboiled and Chopped) Salt & Pepper Heat 2-3 tablespoons of butter on medium heat in a skillet. Add onions and peppers to begin sauteing. Sauté until soft and onions are translucent. Add corned beef and potatoes to the pan and continue sauteing. Stir as needed until crispy. Add salt and pepper for taste. Serve with your eggs of choice. Bon Appetite!

For the love of running…and investing At the start of this year, a friend asked me if I wanted to run a half marathon with him in April. I had not run one in 10 years, which were pre-kid days when I had more time on my hands. I decided to do it because it would be a good way to spend time with my friend, and I needed some accountability to have a consistent exercise routine. We started running 4 miles and have gone up 1 mile every other week. After a few weeks of running, that had me thinking about the fundamental similarities between investing and running. Investing and running may seem like two completely different activities, but they have many similarities. Both require discipline, consistency, and a long-term approach. These principles don’t have to apply to running only but to starting/restarting any new (hopefully good) habit or kicking an old one. Starting The first step, much of the time, is the hardest. Why? Because we as humans are full of habits and routines. It can be hard to break old habits or start new ones. It takes anywhere from about 1 to 8 months to form a habit. For some, it’s mostly mental, more than physical. In my case, I know I can run a half marathon, or at least I still believed I could even if I had put on a few more pounds since I ran my last one ten years prior. So, for me, it was more mental than physical. When it comes to investing your money or paying off debt, you get started by adding up your net income. Start by looking at your pay stub and multiply by the number of paychecks you receive yearly. Next, look at your expenses (this may take a little more work, but it is a good exercise if you have never done so or haven’t for several years). You also add any items you need to save cash for (car replacement, new roof, HVAC, etc.), dividing the total cost by the number of months you’ll need that cash (or your best idea). What’s left over is what you have to invest or pay off debt. If you don’t like where the number ends up, you can either find ways to make more money or find expenses that you can reduce. Discipline Investing and running both require a significant amount of discipline. To succeed, you must commit to a plan and stick to it. Just like a runner needs to follow a training schedule, an investor needs to have an investment plan and stick to it through good times and bad. Both activities require dedication, focus, and the ability to keep going even when things get tough. Consistency Consistency is another crucial factor in both investing and running. Consistency helps to establish good habits and ensures that you are making progress toward your goals. Just as a runner needs to be consistent in their training to improve their performance, an investor needs to be consistent while investing to build wealth over time. Long-term Approach Both investing and running require a long-term approach. A runner cannot expect to improve their performance overnight, and an investor cannot expect to become rich quickly. Both activities require patience and a focus on long-term goals. In both cases, success comes from consistent effort over a long period of time. Risk Management Running and investing both involve a degree of risk management. In running, you need to manage the risk of injury by ensuring you are properly warmed up, wearing the right shoes, and avoiding overtraining. Similarly, in investing, you need to manage the risk of losing money by diversifying your portfolio, avoiding risky investments, and having a well-defined exit strategy. Focus on Performance Finally, both running and investing requires a focus on performance. In running, you track your progress through metrics such as distance, time, and pace. In investing, you track your performance through metrics such as return on investment, portfolio diversification, and risk management. In both cases, monitoring performance helps you identify improvement areas and adjust your strategy accordingly. Running and Investing to the finish line In conclusion, investing and running may seem like two completely different activities, but they share many similarities. Both require steps to get started, discipline, consistency, and a long-term approach. Both involve a degree of risk management and a focus on performance. Ultimately, both activities require hard work, dedication, and a commitment to excellence. By recognizing these similarities, investors can apply the lessons from running to their investment strategy and vice versa. If you feel like you are at the point where you can start to invest, or have questions about investing, contact one of our financial advisors today.