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.

Overwhelmed, but you're not alone To say a lot is going on in the world right now seems like an understatement, doesn’t it? Unfortunately, many people have a lot of fear and anxiety regarding their finances. The stats below from a recent Ramsey Solutions study confirm how many feel about these situations. Most Americans feel similar about their finances After a recent study by Ramsey Solutions, results showed it was common for many Americans to have similar feelings about the world around them and how it affected their bank account(s). 80% of Americans are worried about the economy 3.98MM people/month quit their job in 2021 4MM people/month quit their job in 2022 Inflation is at its highest in 40 years 37% of Americans are struggling or in crisis with their finances 25% of Americans say they’re relying on credit cards more to make ends meet Nearly 4 in 10 Americans have $0 in savings Half of Americans say finances have had a negative impact on their mental health 4 in 10 people have cried or had a panic attack over their money in the last year 82% of Americans are somewhat or extremely worried about their student loan payments restarting There is HOPE While all of these issues exist, there is hope. There is no shortcut or secret. However, we believe the basic principles that Ramsey Solutions teaches work exceptionally well. They are tried and true, straight from God and Grandma. They work 100% of the time. Dave Ramsey calls them the Baby Steps. It doesn’t matter where you are in life; you can begin anywhere and anytime. For those who are serious about getting their financial situation under control, Dave and his team put together a course called Financial Peace University which is a nine-lesson course that teaches you how to save for emergencies, pay off debt fast, spend wisely, invest for your future, and build wealth. If you become a client with us, you will have access to Ramsey+; this membership of Ramsey+ includes access to Financial Peace University so that you can take this course at your leisure. If you want to learn more about the 7 Baby Steps, this article on our website outlines them well. The baby steps are a proven step-by-step plan to help you achieve your financial goals. A common question is, “how long will it take me to pay off debt or build savings?” While everyone’s situation is unique, we have listed the average time frames for people to complete the 7 baby steps below. Again, these are averages, so if you have more debt than the average or make more than an average income, your time frames will likely vary accordingly. Baby Step 1 – Build a $1,000 Emergency Fund - 30 days Baby Step 2 – Get out of consumer debt - 18-24 months Baby Step 3 – Build a 3–6-month Emergency Fund - 6 months Baby Steps 4,5,6 – Intentional until retirement Baby Steps 7 – Live and Give like no one else for the rest of your life If you are feeling stressed and overwhelmed with your finances, we hope this article has let you know that you are not alone but that there is HOPE! Please contact a Financial Advisor or Financial Coach who will help you take the next step in your financial journey. We would be happy to help!

What is a Fiduciary, and Why are they important? Investing can be an intimidating venture, especially when you have no experience. That’s why finding an investment advisor with your best interest in mind is so important – and believe it or not, every firm is not the same in their approach. In this article, we will explore the idea of Fiduciary Duty and what to look for in an advisor. What is a Fiduciary? Simply put, a fiduciary is an advisor who always operates in the client's best interest. You might be thinking, “isn’t that assumed?” Unfortunately, no. There are various approaches to account service and fee structure, and it is important to know the difference. A fiduciary operates with a fee-based approach to their services, communicating in advance what that fee will be and working by the agreed-upon client goals and objectives, and with the client’s risk tolerance and time horizon in mind. A fee-based advisor can structure their fees in various ways, including a flat fee, a monthly retainer, or an hourly rate, to name a few. Of course, in addition to fee-based advisory services, there is also the non-fee-based method. Commission-Based vs. Fee-Based When an advisor is commission-based, there is considerable reason for caution on the client's part. A commission-based advisor doesn’t generally charge a fee to the client; instead, they are paid a commission that comes from accounts opened or financial products they sell, also known as “proprietary products.” When an advisor is paid based on the product they’re selling, it opens up the possibility that they are not selling you the best product for your portfolio. Even if the funds are top-notch, if the funds are from your advisor’s employer, a perceived conflict of interest is inherent. Why is a Fiduciary Important? The bottom line is that if you’re entrusting your money to someone, they should have your best interest in mind. Do you want to be invested in a fund with a good performance track record or a fund that benefits your advisor, regardless of performance? A fiduciary is obligated and bound by their fiduciary duty to operate in your best interest. A fee-based structure allows them to manage this way without being swayed by hefty commissions or other incentives. At Whitaker-Myers Wealth Managers, we believe you should feel confident that your advisor is working for you and your objectives, not against them. Our Chief investment officer, John-Mark Young, expounds on this topic in a recent video from our blog. Our fee-based advisory services come with transparency and an open line of communication so that you can be confident that your money is being taken care of properly. If you want to talk to one of our fiduciary advisors, contact and schedule a meeting with one of our eleven team members today! Wealth Managers has presented information in a fair and balanced manner.

2022 was a challenging year for investors. Markets fell into bear market territory and experienced the worst annual performance since 2008. The S&P 500 (Growth / Growth & Income), Russell 2000 (Aggressive Growth) and Nasdaq (Growth) declined 19.4%, 21.6% and 33.1%, respectively, last year. Interest rates swung wildly, with the 10-year Treasury yield jumping from 1.51% at the start of the year to a high of 4.24%, before ending at 3.88%. This mirrored inflation as the Consumer Price Index climbed to a 40-year high of 9.1% in June. As a result, the Fed hiked rates seven consecutive times from 0% last March to 4.25% in December. Along the way, a myriad of other events impacted markets, from the war in Ukraine to China's zero-Covid policy, affecting everything from oil prices to the U.S. dollar. Probably the most event-driven year I can remember since 2008 and 2009. These market swings can cause whiplash for even the most experienced investors. Much of what drove markets last year was the result of the pandemic and its rapid recovery over the past three years. Like an earthquake that then causes a tsunami, the sudden drop and resurgence in business and consumer demand, fiscal and monetary stimulus, and global supply chain capacity created shock waves across the financial system. While they do cause immediate damage, even the largest shocks eventually settle. Despite these historical shifts in the economy and markets over the past year, the principles of long-term investing haven't changed. Dave Ramsey and our team still recommend Aesops Fable, "The Tortoise and the Hare," when mimicking your investment strategy. Have a plan (the seven baby steps) and stick with it. Proverbs 21:5 reminds us that having a plan and sticking with it, is Biblical and wise, "The plans of the diligent lead surely to abundance, but everyone who is hasty comes only to want". Keeping one's footing as markets rock back and forth is still the best way to achieve financial goals. Below, we review five thoughts on what drove the markets from this past year that can help investors to maintain a proper long-term perspective in 2023. 1. The historic surge in interest rates impacted both stocks and bonds Beneath all of the headlines and day-to-day market noise, one key factor drove markets: the surge in interest rates broke their 40-year declining trend. Since the late 1980s, falling rates have helped to boost both stock and bond prices. Over the past year, the jump in inflation pushed nominal rates higher and forced the Fed to hike policy rates. This led to declines across asset classes at the same time. While this has created challenges for diversification, there is also reason for optimism. Most inflation measures are showing signs of easing, even if they are still elevated. This has allowed interest rates to settle back down in recent months even as the Fed continues to hike rates. While still highly uncertain, most economists expect inflation and rates to stabilize over the next year rather than repeat the patterns of 2022. 2. The Fed raised rates at a historically fast pace The Fed hiked rates across seven consecutive meetings in 2022 including four 75 basis point hikes in a row. At a range of 4.25% to 4.50%, the fed funds rate is now the highest since the housing bubble prior to 2008. In its communication, the Fed has remained committed to raising rates further and keeping them higher for longer in order to fight inflation. If you've watched my weekly What We Learned in the Markets This Week videos, you've heard me discuss the CME Groups FedWatch Tool. This gives us real-time probabilities of what the Fed will do to their rates. As of the writing of this article (January 31st, 2023) they currently predict the Fed will move rates up 0.50% tomorrow (97% probability) and an 81% probability they'll move them up 0.25% in March. Then the highest probabilities are them staying put until November 2023 when CME Group gives more of a chance of a rate cut than any additional increases. Much could happen in between tomorrow's meeting and year end, which is why you should subscribe to our weekly video's if you don't already. Last year when the markets felt like the Fed could start to ease on rates we started to rally, only to be disappointed. The market rallied from June to August and again in October and November when investors believed the Fed might begin loosening policy. When these hopes were dashed, markets promptly reversed, causing several back-and-forth swings during the year. These episodes show that good news supported by data can be priced in quickly but that investors should not get ahead of themselves. 3. Inflation reached 40-year highs but has improved While inflation has not been "transitory," it may still be "episodic." This is because the factors that drove these financial shocks were, for the most part, one-time events. Many of these are already fading as supply chains have improved, energy prices have fallen, and rents have eased. Still, the labor market remains extremely tight and wage pressures could fuel prices that remain higher for longer. At this point, the direction of inflation may matter to markets more than the level. Investors have been eager to see signs of improvement across both headline and core inflation measures, and good news has been priced in rapidly. There are reasons to expect better inflation numbers over the course of 2023. 4. The rallies in tech, growth and pandemic-era stocks have reversed The past year also experienced a reversal of the rallies in 2020 and 2021 that were concentrated in the tech sector, Growth style, and pandemic-era stocks. For the first time in years, Growth & Income Stocks outperformed Growth as former high-flying parts of the market crashed back to Earth as the economy slowed and interest rates jumped. As you know, at Whitaker-Myers Wealth Managers we believe in a diversified approach to investing, just as the team at Ramsey Solutions recommends. This includes different size categories (large companies like those funds in growth and growth & income funds and smaller companies like those found in aggressive growth funds), styles (Growth & Income and Growth), geographies (U.S. vs. International), sectors, and more. It's also a reminder that rallies can extend for long periods, during which investors experience FOMO and pile in with little thought to risk management. Staying disciplined during these periods, which occur periodically, is important to achieving long-term success. Last year, a client called the Ramsey Show to shout out his Financial Advisor, Jake Buckwalter. Jake, just as you would expect an Advisor with the heart of a teacher to do, spelled out very clearly that there are times when International investments outperform US-based investments. The client appreciated this thorough education because he, in his mind, couldn't justify investing in the international market because of its recent underperformance to US stocks. Well, guess what we've seen through the first month of 2023? International stocks are up 7.66%, while the S&P is up a cool 6.18%. 5. History shows that bear markets eventually recover when it's least expected While 2022 was challenging, history shows that markets can turn around when investors least expect it. While it can take two years for the average bear market to fully recover, it's difficult if not impossible to predict when the inflection point will occur. Last year I wrote an article called Bear Markets - Normal Not Fun, where I spell out how long each bear market has taken to recover. Many investors have wished that they could go back to mid-2020 or 2008 and jumped back into the market. If research and history tell us anything, it's that it's better and easier to simply stay invested than to try to time the market. This could be true again in 2023, just as it was during previous bear market cycles. The bottom line? While the past year was difficult, those investors who can stay disciplined, diversified and focused on the long run will be on a better path to achieving their financial goals in 2023 and beyond.

Defining the Debt Ceiling With the debt ceiling coming up, I decided it would be a good time to revisit this subject since it pops up from time to time, steals all the headlines for a number of days/weeks/months, and then disappears just as fast. The debt ceiling is the legal limit on the total amount of federal debt that the government can accrue. The limit applies to the federal debt held by the public, mainly comprised of treasury bills and notes, which corporations, local and state governments, banks, and foreign entities can hold. The limit also applies to money the government owes itself from borrowing from accounts like Social Security and Medicare trusts. How high is the debt ceiling? This amount currently sits at….. $31.381 Trillion. $24.5 Trillion is held publicly, and $6.9 Trillion is government borrowing. While the government hit the debt ceiling on January 19th, the Secretary of the Treasury, Janet Yellen, sent a letter to congress and used “extraordinary measures” to keep the government from shutting down. The most notable of these extraordinary measures is the suspension of reinvestment of government securities in the G fund, which can be found in government employees’ Thrift Savings plan. After the debt ceiling impasse, the G fund will be made whole. I will let my G fund participants pass judgment on that action. What does it take to shut down? 2018 was the last time there was an extended government shutdown when the government was shut down for 35 days. The point of contention was the funding for Trump’s border wall. Trump wanted $5.7 billion for border wall construction, but congress did not, and after pushback from the press and a change of leadership in the house from republican to democrat, the funding package went through without Trump’s wall funding. As with many things in the media, the spin is often in the name. The “Government Shutdown” doesn’t mean that every government employee stops showing up without pay. A government shutdown furloughs nonessential government employees while keeping essential parts of the government open and functional. When a funding bill is passed, the government employees receive backpay and resume regular operation. However, I have sympathy for government employees, the negotiation piece that congress uses to push its agenda. Benefits of Living the “Ramsey way” The larger question should be, how have we gotten to a point where we must borrow from the Social Security fund and the G fund to meet our government obligations? I’ll be honest; the government needs to take a trip down to Nashville, stop in the PODS Moving & Storage studio, and take the verbal beating that Dave Ramsey so lovingly hands out to his callers. He is speaking the truth in love. If you feel like the government, with spending out of control and liabilities coming due, reach out to us then we can start to formulate a plan. The government’s benefit is that they have no retirement date, so in theory, it can indefinitely continue to service the debt as a line item on its budget. If you dream of retiring one day, you don’t have this luxury. Schedule a meeting with a financial advisor or financial coach today!

Investing in a 529 There were many changes to investing laws in the omnibus spending bill passed on December 29, 2022, that included the Secure Act 2.0. One of the most significant changes to educational investment accounts was passed for 529 accounts. Starting in 2024, account holders who have had a 529 with leftover or unused funds can roll over funds from their 529 to a Roth IRA. Qualifications and Considerations If you’re asking yourself if this is something to pursue when investing in a 529 for your children, below outlines the areas to review to help you feel more confident. The account must be set up for at least 15 years before you can utilize this feature. If you’re looking at setting up an account for your kids and you don’t do it until ten years old or later, the child will not be able to take advantage of this until their mid-to-late 20s. It has not been determined if you change the beneficiary of the 529 if that resets the 15-year clock. There is a lifetime cap of $35,000 per person/account owner. So intentionally overfunding a 529 is limited. If there are leftover funds after overfunding, you can always transfer the account to another family member. The 529 beneficiary must have earned income to be eligible to roll over funds from a 529 to a Roth IRA. This is one of several qualifications needing to be clarified in the bill. Rollovers are subject to the annual Roth IRA contribution limits (less if you’ve made direct contributions). Example: You made a $1,000 contribution in 2024. The Roth IRA maximum is $6,500; you would only be able to roll over $5,500, given that you meet the other qualifications. You cannot transfer contributions and earnings made in the last five years. There are no income limits on completing the rollover like there are for Roth IRA contributions. Choosing the right school School choice matters even if you have the funds to cover the total cost of education. Rather than choosing a public school at $25,000 per year for a 4-year undergraduate degree and having to come out of pocket an additional $40,000, a family could consider community college. If community college costs $10,000 annually for four years and you have $60,000 in your 529, you could roll over the remaining $20,000 every year until exhausted into the beneficiary’s IRA. This can put even more importance on the school choice for parents and their children. Whether this is something you should take advantage of depends on your personal situation. If you are looking for guidance around education planning and saving for yourself or your children, set up a meeting today with your Whitaker-Myers advisor to help you achieve your financial goals and objectives.

What is a “Holistic Plan?” It’s not uncommon to hear the term “holistic plan” in the financial planning and services industry. Most companies hold themselves out as experts in creating a “unique plan” for their clients while providing little to no insight into how the desired outcome will ultimately be achieved. This article will outline some things to look for and share why Whitaker-Myers Wealth Managers is a good fit for you. Age and Risk Tolerance What you do with your money today, in many ways, will impact what your life looks like in retirement. We all want the peace of mind that we will have what we need in retirement while simultaneously avoiding the alternative. When you sit down with an advisor, age and risk tolerance are often among the first questions asked. Still, it’s important to consider much more to develop an investment strategy that fits your specific needs. Let’s illustrate it this way: If you are young, with a long-time horizon, it can be said that you want a penthouse view of the ocean. When storms roll in, you’re okay with the risk because the sunrises and crystal-clear days make it worth the price of admission. When you’re in retirement, you want the safety of fixed income, much like the safety of a first-floor beach access unit, with a quick escape if the entire building catches on fire. This illustration can help delineate between equity and fixed-income investing, but it is by no means exhaustive. Simply put, each investor brings more to the table than just their age and risk tolerance. But What Else? There is no doubt that equity and fixed-income investing should be a part of all portfolios at one time or another. Determining specific allocations into each category depends on age and risk tolerance, but many more things must be considered. Alternative investments have a place in certain portfolios. However, the reality is that only some advisory firms have access to and an understanding of how certain alternatives fit into the portfolio mix. Dave Ramsey often talks about the positives of mutual fund investing. He also discusses the benefits of real estate investing, creating a nicely diversified portfolio, and an appropriate portion of investments that aren’t correlated to the stock market. There are alternatives to fixed-income investing that can be right for specific clients, again punctuating the importance of looking critically at each client’s entire portfolio and financial plan. Investing and financial planning are complex topics that deserve time and attention for your sake. At Whitaker-Myers Wealth Managers, we are serious about thinking critically for our clients, giving them options, and ensuring, with the heart of a teacher, that they understand what we’re doing with their investments and why. If you are looking for an advisor or have questions about investing, reach out to our team today.

Follow the Baby Steps in order, and stick with them! It is great when Dave Ramsey shares an exciting social media post about investing $100 a month for 40 years and having over $1,000,000 at the end. I see those posts, and they have some of the highest traffic of replies, likes, and so on, which indicates to me that many people want to follow Dave’s program and really take control of their money. Unfortunately, most people have so much debt, bills, and other expenses that when everything gets divvied out each month, there is barely enough left to buy a pack of gum, or worse! Barely staying afloat, drowning in debt, and losing sleep at night, wondering how to pay the next bill is an awful feeling; I’ve been there, and so have several of my colleagues. That is a significant reason why Whitaker-Myers Wealth Managers was started in the first place. We know what it is like to be sick and tired of being sick and tired, and we love helping people achieve their financial goals through good planning and investments, but we also want to help relieve people from the burden of being slaves to the lender. I am a firm believer and follower of Dave’s 7 Baby Steps, and if you are seeing one of those posts and wondering where you will find $100 leftover in your budget, start here and go in order. Step 1: Save $1,000 as a Starter Emergency Fund This is the beginning of the journey, the first test of your financial fortitude. Your goal in step one is to save $1,000 as fast as possible in a bank savings account. Why as fast as you can? This builds the foundations of being disciplined and intentional with your money which is crucial to find success in steps 2-6. It also provides a small safety net for life’s little whoopsies that will come along. Step 2: Pay Off All Debt (Except the Mortgage) In step two, you want to take all your debts minus the mortgage, put them in order from the smallest to the largest dollar amount, and start knocking them out one by one in that order, regardless of the interest rate. Dave calls this the Debt Snowball Method. I personally used this years ago when I found Dave, and it changed my life. Keep in mind that making minimum payments in this step will not get you to your goal. Sacrifices will be made to beat Baby Step 2. One of Dave’s favorite moments on his show is when he brings people to the stage to do their “Debt Free Scream.” He asks how much they paid off and how fast and sometimes calls them “weird people,” but it is a term of endearment. Being weird is to be hyper-focused or, like Dave says, “gazelle intense” on becoming debt free. Giving up date nights, babysitters, gourmet foods, and streaming services are just some examples of how to focus on your debt-free goal. Step 3: Build a 3-6 Month Emergency Fund After you have been gazelle intense on paying off your consumer debt, you now have plenty of freed-up cash to build a fully funded emergency fund with 3-6 months of living expenses. A common question asked, “Should my emergency fund be three months or six months?” The answer is … it depends. If you are a one-income family, you are self-employed, work on straight commission, or have someone in the family that requires frequent medical needs; then a 6-month emergency fund is better for you. If you are a two-income family or have had a steady job for a long time, then a 3-month emergency fund would be fine. Another important note with the emergency fund is that it should not be commingled with your other checking or savings accounts. One option is to put your emergency fund into a money market savings account where you could earn much better interest than a regular savings account at a bank. Reach out to one of our other advisors or me if you want to know more about that. The difficulty of getting to step three should also have instilled some very strong positive habits about being intentional with your money. This is precisely why you should do the steps in order and not jump around or try to do them all at once. Being financially responsible, just like anything else we excel at in our lives, requires discipline, practice, and effort. Step 4: Save 15% of Your Income Toward Your Retirement Welcome to step four. All those social media posts about becoming a millionaire are right in front of you. This is also where I and our other Smartvestor Pros at Whitaker-Myers come in to help through the rest of the steps. We will help you build a comprehensive financial plan and manage your investment portfolio to help you achieve your goals and keep you on track to retirement and beyond. A good rule is to save at least 15% of your GROSS household income toward your retirement. If you have a 401(k) or another employer-sponsored plan that offers a match, start there and save up to the match. That’s free money, baby. Next, you will want to set up a Roth IRA and start saving there. Roth IRAs are great because you put money in that has already been taxed, it grows tax-free, you get tax-free distributions after age 59.5, and there are no required minimum distributions at age 72. It would be wise to speak to a financial professional at Whitaker-Myers before attempting this on your own. Step 5: Save for Your Children’s Education This step may not apply to everyone, but if you have kids and want them to go to college without student loans, you should start saving as soon as they are born. Every state has at least one 529 plan available that offers tax-free savings on qualified education expenses. Those are pretty good, but if there is doubt, it may be wise to open a UTMA account or even a taxable brokerage account earmarked for education. Your advisor can help you determine how much you need to save and provide investment advice regarding education planning. Step 6: Pay Off Your Mortgage At step six, you should have this whole gazelle intensity down to a science. Making extra payments on your mortgage can potentially save you tens of thousands of dollars of interest payments. For additional motivation, use a loan amortization schedule to figure out exactly how much you will save by paying off your mortgage early. Step 7: Build Wealth and Give I like to say, “The best part about making money is being able to give it away.” I also appreciate Dave’s rationale that one does not reach true financial peace until they are able to give back. Giving should be an essential part of everyone’s life. Many strategies can be implemented to achieve this and continue to grow and protect the assets you have worked hard to save your whole life. We can help build and manage a portfolio to maximize your giving while minimizing your taxes. The steps are designed to help you be intentional with your money and build good habits, but many people need a little extra push to get started, and that is where a financial coach can step in and help. At Whitaker-Myers, we have a financial coach on staff specializing in Baby Steps 1-3 to help you tackle debt, learn budgeting techniques, and help you save for your emergency funds; contact her today if you need help in these areas. If you are in Baby Steps 4-7 and looking for advice, please contact me, Kelly Kranstuber, or any of our other advisors here at Whitaker-Myers Wealth Managers.