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.

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.

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.

The Smartphone Advantage It is no secret that we hold the most known information ever discovered in the palm of our hand through the innovations of iPhones, Androids, and simply the internet. Because these devices hold so much information and have so many excellent tools at our disposal, it would be a crime not to incorporate them into one's daily life. From Google, to all the apps available to those with our smartphones, being financially savvy has never been as easy as it is now. Here are a few tips we suggest to be financially responsible with the help of your phone. Look at your bank account daily Something that I encourage most people to do is to check their bank accounts daily. People often prefer to avoid accepting the reality of how much something dented their bank account, such as shoes, amazon, or even rent! My bank has an app, so it is all very easy to look at for real-time balances. Seeing how each transaction affects that number is crucial to budgeting your life and saving for the future. It is also important to project out future expenses as you have money coming in. Every two weeks for me are major payments due: Miscellaneous expenses from the month and rent. I know roughly how much each will cost, which lets me know what is left over. Knowing your "leftover" number is also very important, as it can give you an idea of what you want to contribute for retirement each month and what will be used to spend/save up for fun things like vacations or nice clothes. Track your spending through apps As previously mentioned, one of my major expenses comes from my miscellaneous expenses from the month. Through apps like Mint, one can track spending habits. Maybe you bought $400 in clothes for the month, and you had no idea. Or even $500 this month on gasoline alone. Using applications designed to help someone comprehend how much they are spending each month and what they are spending it on can help them manage their financial life for the better. We also suggest that everyone downloads the EveryDollar app. This is the budgeting system the Ramsey Solutions team created to make budgeting effortless and, of course, in the palm of your hand. It is a zero-based budget, meaning it tells you how to spend every dollar in your monthly income to keep you in line with the parameters you set for yourself and to help you track your transactions, so you know you don’t go over what you have in the bank account. You can set goals for savings, paying off your debt (baby step 2), and even link it to your bank account with the premium membership, so you have in-the-moment numbers. Set it and forget it- Automatic Investing Lastly, one can track their investments with their advisor through apps like Fidelity, Vanguard, or Charles Schwab. Whatever one may contribute to these accounts from their "Leftovers" can be easily tracked through these apps on their phone. Often people want to call their advisor and ask how their account is doing or how to track their contributions, etc., which is wonderful. But with the help of your advisor walking you through what you see on the app, you can fully understand the complete picture of your account to view at any time you would like. Using smartphones to our benefit Use these apps on your phone to your benefit. They are designed to help people overwhelmed by the intricacies of the financial world. They are more powerful than we can comprehend, so use them to see how they can help you stay more financially stable. We encourage you to start taking full advantage of these wonderful tools provided by our phones. The power of speaking with your advisor As overwhelming as the stock market, timing, capital losses, and more can become, always feel free to use an advisor you know to ask questions. It is our passion to help people understand these topics. When it comes to the life work of our clients and prospects, no decision is ever taken lightly. No account value is disregarded because all concerns and questions hold such a heavy weight in a time like this. We hope you've learned a great deal from this article and, more importantly, reduced some stress from your life today. Please feel free to use Drew Hodgson to begin asking your questions. There is no too small of a question and no wasted time if you choose to speak with him.

Is it really worth it? $6.75 That is the price I paid for one medium, flavored, double caf coffee last Friday. At the moment, I justified the 7:45 am, 20 minutes in line for the drive-through order. Considering I was on my way back from picking up my computer cord I left at the office with a dying computer at home, my 2-year-old had been up since 3:00 am with a cough and just wanting to be held, and my 4-month-old woke up with goopy, crusty eyes; in my tired mama’s eyes, it was better than going back home, unloading them both, and trying to make a cup of coffee before plunging into the day’s work. But as the (way too cheerful for 7:45 am) barista handed me the coffee, I found myself asking myself, was the convenience of this over-priced coffee actually worth it for that price? Buyer’s Remorse And even though it was technically a guilt-free pleasure because I used a gift card I got from Christmas, I still had buyer’s remorse after pulling out of the now even more crowded parking lot. I kept thinking how at the moment, I was tired and felt like it was warranted. And, yes, I know I was not being frivolous since I had the “cash” from the gift card, but I kept thinking of how if I didn’t, would I still have bought it? Would my tired eyes and arms still lead me through the drive-through line? Is a treat now really a treat in the end? A moment on your lips, forever on your hips Or, in this case, “A moment on your lips, forever out of your bank account.” Again, I realize I had the gift card, so I wasn’t really taking from my budget, but what if I had? Would I have indulged in the convenient coffee had it taken away from my diaper budget? (Because hello, two under two in diapers; let’s just go ahead and start a sinking fund for that now, please) Or, at the price of eggs, did I trade a warm cup of joe for two dozen eggs out of this week's grocery budget line? Can instant gratification lead to instant regret? I know that with coaching, I discuss with clients the importance of setting parameters around their budget items and stress the importance of monitoring their expenses to help regulate their behaviors. But with the world that we live in now, with more convenience due to our fast-paced society, and can literally at the click of a button have what we desire, monitoring your behavior is more challenging than ever. But here’s the lesson… However, despite all the mom guilt I was throwing at myself, I realized something. I had changed my behavior. I have re-wired my brain over the years. And I don’t mean only before kids, but before I started budgeting for myself. Before learning to budget, I wouldn’t have thought twice about ordering that coffee. And even though I had a gift card to pay for the coffee that day, the fact stands that I took a second to pause and think about how, if I had not had the gift card, how that coffee trip would have impacted my budget. I have made the lifestyle changes I talk about with my clients. I know I talk about changing these behaviors and learning these new habits, but it was refreshing to have an “ah-ha moment” and a reminder for myself. So, was it really worth it? $6.75 for a cup of coffee. Here are my thoughts on it: For starters, it brought me a little bit of sanity to an already chaotic morning (remember, have grace on yourself). And the fact that I was using “free money” by paying for it with a gift card, vs. taking it out of my budget, allowed me to have the convenience coffee guilt-free (well, almost). And it was a great reminder to take a step back and see how I had come along these last few years in modifying my behavior. And not to say that I modified it in a way that says I could never have such a treat ever again, but I modified it in a way that I took a second thought on if that was the best way to spend my money. Today I am going to say it was worth it. If you want to learn ways to budget and learn lifestyle changes to help you save, set up a meeting with our financial coach.

With 2023 off to a furious start, we may not soon forget the woes of 2022. In addition to a bear market, those woes include higher-than-normal interest rates that will linger into the new year. In this article, we will look at three (there are more) key ways interest rates impact your budget. Mortgage As fans of Dave Ramsey, we subscribe to the notion that debt is not a good idea. A mortgage can be a good wealth-building tool, but it’s best not to get in over your head. We advise our clients to secure a 15-year mortgage loan that has a fixed interest rate. This ensures that you are not locked into a 30-year agreement and that you’re not subject to the volatility of the current interest rate environment. Budgeting is easier when you know what you’ll be paying. The mistake that some people make is going with an adjustable-rate mortgage, thinking that they could potentially see a decreased rate in time. The reality is that adjustable-rate mortgages are bad; they could leave your mortgage payment subject to a sharp increase when the annual adjustment hits. If you’re considering buying a home, don’t let the interest rate environment hurt you – go with the 15-year fixed-rate mortgage once you’ve paid off all your other debt. Student Loans It is likely that if you have student loan debt, you have been paying a fixed rate since taking the loan initially. That hasn’t changed and won’t change due to the interest rate environment. Like a home loan, the Fed’s policy can’t touch fixed rates, but it will impact loans of future debt. If you’re planning on sending your kids to college, it’s best to start saving for the expense now and pay with cash when the time comes. You can open a 529 plan specifically for education expenses and we were recently granted some flexibility via the Secure Act 2.0, which states that unused 529 funds can be rolled into a retirement account penalty-free. If there weren’t already enough reasons not to lean on loans to pay for school, now you’ve got one more. Car Loans A car is pretty much a necessity these days unless you live in Manhattan. But buying a car on credit that’s worth more than your salary is not. The temptation is real, but the negatives far outweigh the positives when it comes to interest rates. Though car loans are most likely fixed-rate loans as well, any new car loan in this environment is going to bleed you dry. Cars are notoriously bad investments, so why buy a new one, especially on credit? A home goes up in value almost every time, whereas a car loses value the minute you drive it off the lot. Avoid paying interest altogether and buy an affordable used car, that gets you from point A to point B. Then, when you have your ducks in a row and feel the need for speed, buy a car that you really want with cash. A good rule of thumb to follow is this: If you don’t have the cash, you can’t afford it. In today’s instant gratification, mobile-pay environment this might seem like insanity, but in reality, buying something with someone else’s money is a lot crazier. That’s why Dave Ramsey always says, “Cash is king and debt is dumb…” Buying on credit is a craze that’s swept society, we get that. At Whitaker-Myers, we have a team of professionals who want to see you live a debt-free lifestyle and avoid the perils of borrowing your life away. If you struggle with budgeting and feel like you just aren’t making any progress, reach out to our financial coach, or talk to an advisor today. We’d love to help you live like no one else so that later on you can live and give like no one else.

Let me start out by saying if Dave Ramsey would do a solid for his country and run for President, we wouldn't be in this mess. With nearly $31 trillion in debt today, the plush cafeterias in Langley would be stocked with only rice and beans. Kevin McCarthy and Chuck Schumer would be required to hold weekly EveryDollar Budget meetings to ensure they weren't spending too much, and maybe most importantly, we'd have someone in the White House that is independently wealthy, thus not having to enrich themselves by using their governmental authority to "create wealth" for their family. Every Presidential cycle Dave is asked, and every time, he reminds us he'd have to be crazy to want to that job. The federal debt limit is once again in the news as the country rapidly approaches a critical deadline on June 1. Investors are understandably nervous about Washington failing to reach an agreement, a possibility that both sides agree would be a self-inflicted catastrophe. While it's unclear how this will play out in the coming weeks, the fortunate news is that financial markets are mostly taking these events in stride. How can investors maintain the right perspective around political and fiscal uncertainty? Federal borrowing reached the debt ceiling this past January First, it's important to understand what the debt limit is and is not. In simple terms, the federal government borrows money to pay its bills by issuing Treasury securities. This is necessary because the federal government often operates with a deficit whereby spending (on defense, Social Security, emergency pandemic stimulus, and more) exceeds government revenues (which consist primarily of tax revenues). While tax revenues increase as the economy grows (even without raising tax rates), they have been outpaced by spending over time. This borrowing adds to the national debt which hit the $31.4 trillion debt ceiling in January. Since then, the Treasury Department has been employing what it calls "extraordinary measures" to ensure that the country does not default on its obligations. The debt ceiling is a mechanism that requires Congress to approve additional borrowing above these levels. Thus, what makes this discussion confusing is that the debt ceiling is not about government spending per se. That spending has already been authorized through the normal budget process that takes place each year. Thus, the only question around the debt ceiling is whether the government can and should pay its bills. This is akin to signing the papers for a new car then afterwards requesting an increase to your credit limit. For most of us, the decision to buy something can't be separated from whether we will pay for it, even if it's with debt. Unfortunately, the Congressional process for approving a budget by September 30 each year is separate from whether the Treasury can actually pay the bills. Near-term Treasury rates have jumped but longer-term rates are steady Second, the large and ever-growing national debt is a controversial topic that impacts the economy and markets in complex ways. At the moment, Democrats, who control the White House and Senate, and Republicans, who control the House of Representatives, are in a standoff. On April 26, the House passed a debt limit bill by a narrow vote margin of 217 to 215. This would increase the debt limit through March 31, 2024 or until the national debt increases by another $1.5 trillion. However, it also includes provisions such as discretionary spending limits, the repeal of renewable energy tax credits, increased work requirements for benefits programs, and others. While many of these ideas are wonderful and common sense, they are politically fraught and thus unlikely to pass the Senate and be signed into law. As usual, there is plenty of political grandstanding around this issue with each side trying to gain the upper hand. Similar debt ceiling standoffs have occurred over the past decade with the limit suspended and raised in 2013, 2014, 2015, 2017, 2018, 2019 and 2021. According to the Congressional Research Service, the debt ceiling has been raised 102 times since World War II. Fortunately, despite the headlines and investor concerns, these episodes had little long-term impact on markets. The U.S. has never defaulted on its debt, and nearly all economists and policymakers agree that doing so would lead to turmoil in the financial markets and increase borrowing costs for businesses and everyday citizens. This risk is evident in the bond market with a sharp jump in Treasury rates with maturities around the debt ceiling deadline, and much lower rates thereafter. The one exception to markets staying relatively calm occurred in 2011 when a similar standoff led Standard & Poor's, a credit rating agency, to downgrade the U.S. debt. The stock market fell into correction territory, with the S&P 500 declining 19%. Ironically, the prices on Treasury securities increased during the 2011 debt ceiling crisis because, even though these were the exact securities being downgraded, investors still believed they were the safest in the world at a time of heightened uncertainty. The debt ceiling was eventually raised and a new budget was approved, allowing markets to bounce back. Income tax rates are still low by historical standards Third, debt ceiling aside, the national debt at today's level means that it has more than doubled over the past decade and, with very few exceptions, has grown nearly every year over the past century. While everyone generally agrees that the government should not spend more than it generates in tax revenues, the unfortunate reality is that neither party has addressed the problem over the past decade. The last balanced budgets occurred during the Clinton years and the Nixon administration before that. So, deficits are unlikely to go away. Given how heated the topic of government spending can be, it's important for investors to distinguish between their political feelings and how they manage their portfolios. In other words, investors should focus on what they can control in order to differentiate how things work from how they would like them to be. One factor beyond the market and economic effects is that the odds of higher tax rates may increase as the national debt worsens. Today, the highest income tax rates are slightly above their lows after the Reagan tax cuts, but still far below historical peaks. High-earners in the mid-1940s paid rates as high as 94% on their marginal incomes. Even those in the lowest bracket would have paid 20% or more during the 1940s, 50s, and 60s - double today's rates. U.S. corporate tax rates were also among the highest in the world until the 2017 tax cuts. So, while higher tax rates are not guaranteed, engaging in a financial plan that takes advantage of relatively lower rates today can help to protect investors from future tax uncertainty. The point here.... fund your Roth IRA while income tax rates are at lifetime lows for many of us. Dave Ramsey and Rachel Cruze talked about the debt ceiling news cycle last week on the show. You can listen to that conversation here. Dave's reaction was simple yet profound. "Yawn" is how he feels about the debt ceiling showdown. In his 62 years, this happened (as discussed above) many, many times, and even a few times we passed the debt ceiling deadline without a deal, and federal workers were sent home without pay for a few weeks until the politicians were done posturing. His advice is consistent as always, and on point with the team at Whitaker-Myers Wealth Managers, invest in the four categories of mutual funds and use funds that have had a very long track records (at least ten years). Simple, yet profound. The bottom line? The debt ceiling and federal debt must be resolved in the coming weeks. As with many political issues, it's important for investors to separate their concerns and not react with their hard-earned savings and investments. History shows that staying invested is the best approach to navigating drama in Washington.

It’s a rainy Sunday, and there’s not much to do – no swimming, no basketball with my son, and we just enjoyed a wonderful lunch at The Great Grill Off supporting The Christian Children’s Home of Ohio, so I’m doing what I normally do, when there’s not much to do, thinking about retirement! Specifically because of the weather – where to retire! My friends at Ramsey Solutions wrote an article about the top 14 cities to retire in February of this year. Their data was based on things you’d expect them to consider, such as cost of living, quality of life, tax rates, housing costs, quality of healthcare, and climate. Of course, Florida towns dominated the list, which is wonderful. However, the state with the second most cities that were deemed best to retire into was the great state of Texas. Now I have a heart for Texas because my wife was born there and spent part of her youth there. We make the trek back to Texas as a family every few years, and I’m regularly there visiting clients and potential clients since we are a SmartVestor in Dallas, Austin, and San Antonio. Part of our job as Financial Planners and Advisors is to help you make your money last throughout retirement while making the most effective use of those dollars. For some, this may mean relocating once your career has come to completion. For others, because their children have relocated to parts of the west coast, they’re looking for means to create a closer connection with their kids and grandkids. If this is you, Texas may be an appropriate option for you. Nearly 1,000 people are moving to Texas daily, making it an increasingly popular option for seniors looking to spend their golden years in a warm and welcoming environment. With a low cost of living, favorable tax laws, and abundant recreational activities, Texas has much to offer retirees. This article will explore some of the benefits of retiring in Texas. Low Cost of Living A favorite saying of mine is this: “Retirement is the basic math equation of income = expenses.” Therefore, you can continue to save more to be in a position to generate more income or you can reduce expenses therefore putting less stress on the income side of the equation. This is one reason Dave Ramsey and Ramsey Solution’s plan is crucial for the retiree because debt can be a large expense, especially one’s mortgage. To this point, one of the biggest draws of retiring in Texas is the low cost of living. Housing, groceries, and healthcare costs are all below the national average. According to a recent Fidelity study, Texas has a cost of living that is 8.5% below the national average, and the average healthcare costs for a retired couple (two lives) come right in line with the average of around $430,561 during their retired years. Business Insider wrote a 2021 article titled “The 15 Best States to Retire for a Low Cost of Living in Your Golden Years” and ranked Texas as number 5, only behind Florida, Minnesota, Nebraska, and Ohio. They noted that Texas is very popular with retirees and affordable, minus the fact that you’ll need to pay more to purchase your property in the state because of its popularity. Favorable Tax Laws Another advantage of retiring in Texas is the favorable tax laws. The state has no income tax, meaning retirees can keep more of their retirement income. Florida (along with others) is a state known for their lack of income tax and they, like Texas, typically dominate the retirement destination choices, simply because of their wise decision to avoid taxation. Additionally, Texas allows for a Homestead exemption on real estate taxes, as long as the property is your primary residence and you have turned 65 on January 1st of the year you’re applying for the exemption. The exemption allows for as much as a $40,000 reduction in the value of your home. Meaning if my home were appraised at $300,000 and I qualified for a $40,000 exemption, then you will pay school taxes on the home as if it was only worth $260,000. You can learn more here at the Comptroller of Texas’s website. Mild Climate Texas is known for its warm and mild climate, which is perfect for retirees who want to avoid harsh winters. The state has plenty of sunshine, and the weather is generally pleasant throughout the year. This makes it an ideal destination for seniors who want to spend time outdoors and enjoy recreational activities such as golfing, fishing, and hiking. In the book, What The Happiest Retirees Know (ask your Financial Advisor for a free copy today if you’re a client of Whitaker-Myers Wealth Managers and retired or within five years of retirement), the author states that the happiest retirees have around 3.5 core pursuits. The least happy only engage in 1.9 core pursuits. Many of these pursuits involve activity and are outdoors. The problem with many northern states is that your ability to chase those core pursuits is much harder during the brutal months of December, January, and February. Wide Range of Recreational Activities Texas is a large state with diverse recreational activities for seniors to enjoy. Whether you enjoy spending time in nature or prefer cultural activities, Texas has something for everyone. From the beaches of the Gulf Coast to the rolling hills of the Hill Country, there are plenty of opportunities to explore and experience the beauty of Texas. A personal favorite of my family is Canyon Lake which sits in the hill country outside of San Antonio. You’d do yourself a favor to plan some time exploring God’s country up there – beautiful. Excellent Healthcare Facilities Texas has a thriving healthcare industry, with many top-rated hospitals and medical centers throughout the state. This means that retirees have access to high-quality healthcare facilities and services. Additionally, many medical professionals are choosing to relocate to Texas, which ensures that there is a large pool of doctors and specialists available to provide care. According to Newsweek’s, Best Hospitals in the World List for 2022, Texas has what they consider to be three of the best hospitals in the world in Houston Methodist Hospital, Baylor University Hospital and UT Southwestern Medical Center. Other states with as many or more were California, Illinois, Massachusetts, New York, and Ohio. Friendly People Texas is known for its friendly people. It's a state where people are welcoming and hospitable, making it easy for retirees to make new friends and feel at home. Additionally, Texas is a diverse state, meaning retirees can meet people from all walks of life. One needs to look no further than my beautiful wife, who hails from the great state of Texas, as proof that they produce some of the friendliest people in the world. In conclusion, retiring in Texas offers many benefits for seniors. With a low cost of living, favorable tax laws, mild climate, a wide range of recreational activities, and excellent healthcare facilities, it's no wonder that more and more retirees are choosing Texas as their retirement destination. Perhaps you have flexibility in how and where you can retire. If you do, you wouldn’t be unwise to choose a state like Texas. If you're considering retiring in Texas, be sure to explore all the state has to offer and find the perfect place to call home.