Understanding the Costs of Daily Operations In recognition of Small Business Month, Whitaker-Myers Wealth Managers is partnering with our CPA and fellow small business owner, Kage Rush, to discuss the thought process and steps needed to open and continue to operate a successful small business or side hustle. Our first article covered things to consider when starting a small business, and our second article covered the different types of entities to consider when creating your small business. This article will discuss how to understand your business from a financial perspective better and how this understanding can help you in the day-to-day operations of your business. Reviewing Your Finances: The Reactive Approach Once the small business is up and running, entrepreneurs can become swamped with day-to-day operations and lose sight of their business’s financial side/health. Most often, entrepreneurs only look at the financials of their business for the following reasons: Filing their personal taxes during tax time Wanting to purchase a significant asset or employee hire Economic downturn has caused a cash flow issue in the business For the above reasons, entrepreneurs usually look at their financials from a reactive approach. This means the entrepreneur is looking at their financials because it’s tax season and there is a large tax due on their return, equipment breaks down in the business and needs to be replaced, or a sudden market change has occurred and caused an unplanned cash flow shortage in the business. The issues with using a reactive approach to the financial side of the business can be the following: We can’t go back in time to fix errors or spend money This approach can stunt the growth of your business You could lose opportunities to grow your business You could face unnecessary economic hardship Reviewing Your Finances: The Proactive Approach Successful entrepreneurs and business owners mostly approach the financial side of their businesses proactively. This means the entrepreneur is looking at their financials to plan for events to occur in the future, anticipate tax bills associated with their business profits, and try to factor current and future market conditions into their day-to-day business operations and long-term planning. The first step to taking a proactive approach to your financials is clearly understanding how your revenue/expenses are generated. Here are some questions to ask yourself about your revenue and expenses: How long does it take to get paid for services provided? For example, if it takes 30 days to receive payment for services provided to a client, you can expect services provided in February to be paid in March. When are my most significant expenses due, and what is the frequency of those expenses? For most owners, this could be payroll to employees paid monthly, bi-weekly, or twice a month. What causes a lag between services provided and payment received for services? How do you request payment for services provided? Do you request payment by just cash or check? Or do you provide ACH and credit card options? Do you bill for your services in advance, as the services are performed, or after the service has been completed? Completing step one is critical to understanding and growing your business because it can guide a small business owner to make decisions to improve their business model to collect payment faster from clients, offer additional methods of payment to improve cash flow, and adequately plan for expenses so you aren’t forced into a situation where cash flow is insufficient to cover the costs. Once you understand your revenue/expenses, you can create financial statements to help analyze your performance and strategize how to grow your business. Tools to use Two common financial statements used in a small business are a balance sheet and an income statement. A balance sheet looks at your assets (cash, accounts receivable, inventory, etc.) and liabilities and equity (accounts payable, loans, mortgages, net income, etc.) at a point in time (ex., May 31, 2023). An income statement reviews your revenue and expenses over a period of time (ex., May 1 to May 31, 2023). Both statements are suitable for evaluating your past performance and can be compared to a prior year, but they do not compare you to your current expectations. A third financial statement that can be used in your small business is a budget vs. actual analysis. An example of a budget vs. actual analysis statement would take your actual performance from May 1 to May 31, 2023, and compare that to what you budgeted for that same period. This can be useful for owners to know if the business is meeting their expectations set at the start of the fiscal year and if future expectations need to be adjusted based on actual performance. The keys to having a reasonable budget are the following: Your budget is reasonable based on market expectations, knowledge of the business, and past experience Your goals for the business are aligned with the expectations for the budget There are clear indicators for your budget that can guide success or failure Your budget is not static and can be adjusted as factors change, whether from external or internal sources Your budget has input from all sources of your company You have created a plan to implement your budget for your staff Small Businesses Impact I wanted to end this article with an interesting fact. According to the US Chamber of Commerce, there are 33.2 million small businesses in America (500 employees or fewer), which accounts for 99.9% of all U.S. businesses. Hopefully, this statistic opens your eyes to how much small businesses impact our economy and inspire you to join in with your own creative business to be successful. My hope with this three-part series is that these articles helped give you ways to understand your business better and valuable insight into starting, growing, and prospering with your own business one day. If you are interested in starting your own small business and have accounting questions or need accounting services, please contact your financial advisor or visit our tax website to schedule an appointment.

The Right Setup In recognition of Small Business Month, Whitaker-Myers Wealth Managers is partnering with our CPA and fellow small business owner, Kage Rush, to discuss the thought process and steps needed to open and continue to operate a successful small business or side hustle. Our first article covered things to consider when starting a small business. This article will discuss the different types of entities to consider when creating your small business, the tax implications and reporting of each entity, and what to consider when choosing an entity. What option is best for you After formulating a business plan to make your small business dream a reality, an owner is now tasked with deciding how to set up their business for legal and tax purposes. This decision can significantly impact your personal tax return and possibly your business partner(s) tax situation. Below is a list of the possible options for setting up your business and the federal tax reporting associated with each. Sole Proprietorship/Single Member LLC This is most often the setup for small businesses/side hustles or independent contractors (also known as Form 1099 employees). This business entity’s activity is most commonly reported on a Form 1040 IRS Schedule C. If the activity is related to rental real estate or royalties, the income could be reported on a Form 1040 IRS Schedule E. The due date is April 15th, which is reported with your personal tax return. A Sole Proprietorship is the default designation for a business with only one owner. You can file the legal forms for an LLC with an attorney, but for tax purposes, it is treated and reported the same. 92.35% of Net Income (Revenue – Allowed Expenses/Deductions) is subject to Self-Employment Tax (SE Tax or FICA Tax) of 15.3% tax (12.4% is for Social Security up to earnings of $160,200 for Tax Year 2023 and 2.9% for Medicare Tax). The Net Income is also subject to standard income tax (W-2 wages). This can lead to unexpected tax bills for new owners who are used to having FICA taxes taken out automatically by their employer. A sole proprietorship is easy to set up but can come with higher tax bills if not the owner is not saving back profits to pay estimated taxes. Partnership/Multi-Member LLC This is when two or more owners have a capital stake in the business. This business entity’s activity is reported on Form 1065 US Partnership Return of Income. The due date for the tax return is March 15th. A partnership does not pay taxes on Form 1065. Instead, each owner is reported their share of the income(loss) of the business on a Schedule K-1, and the tax liability is paid at each respective owner’s tax rate. Owners are unable to pay themselves normal W-2 wages. Instead, payments for work done on behalf of the business can be treated as Guaranteed Payments and are subject to the SE Tax on the owner(s) personal return. A partnership is required to have a signed operating agreement that dictates the breakdown of ownership in the business, how profits/(losses) are split amongst owners, what are the responsibilities of the owners, etc. A partnership can be helpful for owners who want to invest in a business or idea without borrowing from a bank or third party to fund the business. Potential downsides of a partnership could be the higher start-up costs required to start the business and the more complex accounting standards that are required to be followed. S-Corporation This entity can have only one owner but cannot exceed 100 owners in the business. There are also further limitations on who can be an owner in an S-Corporation. This business entity’s activity is reported on Form 1120-S. The due date for the tax return is March 15th. A s-corporation does not pay taxes on the Form 1120-S. Instead, each owner is reported their share of the income(loss) of the business on a Schedule K-1, and the tax liability is paid at each respective owner’s tax rate. Owners that are material participants in the business must pay themselves a reasonable W-2 salary. This is required because earnings reported on the Schedule K-1 from a S-Corporation are not subject to the SE Tax like a sole proprietorship is. S-Corporations are only allowed to have one type of stock. S-Corporations are required to have an operating agreement in place and require income(loss) and distributions to be pro-rata in accordance with the owner’s ownership percentage in the company. Single Member LLCs or Partnership LLCs can elect to be taxed as an S-Corporation by filing Form 2523, Election by a Small Business Corporation, if they meet the qualifications required for an S-corporation. S-Corporations can be great options for the owner(s) that want to pay themselves a salary from their business and can generate some tax savings on their personal return compared to if that entity was a Sole Proprietorship. S-Corporations can also be more strenuous to set up and are subject to more complex accounting standards than a sole proprietorship. C-Corporation This entity is the standard corporation you hear about in the news (Apple, Walmart, etc.) This business entity’s activity is reported on Form 1120 and is due annually by April 15th. A C-Corporation does pay taxes at the Federal level, unlike an S-Corporation. A C-Corporation can face double taxation if income is distributed to its owners as a dividend. Unlike an S-Corp, there is no limit on the number or type of owners that can invest in a C-Corporation. C-Corporations can have multiple levels/types of stock. C- Corporations can be great options if you bring in many different types of owners to crowdfund your business. The possibility of double taxation can be a downfall for C-Corporations and can be a turn-off for owners. Choosing the right option The business entity you decide to form must match your expectations for the business. Each entity has its positives and negatives regarding tax advantages, ease of setup, and accounting standards required to be followed. Our Whitaker-Myers Tax Advisors, Ltd. team can help guide you on the various entities and give you the tools to decide when setting up your small business. I hope this article helped explain the different options available to small business owners when forming your own business. The last article (Part III) in the small business series will focus on the financial side of the day-to-day business and how understanding your business’s finances can help guide you to grow and prosper in good and bad economic times. If you are interested in starting your own small business and have accounting questions or need accounting services, please get in touch with your financial advisor or visit our tax website to schedule an appointment.

The impacts of life insurance A huge part of financial security is life insurance. Although it can often feel like another expense leaving your pocket each month, its impact on families is life-altering. A bad situation can become financial security through vehicles like term life insurance. The purpose of this article is to describe how something as simple as life insurance can impact a family for generations. Generation I Let’s say your parents are the first generation to have life insurance. Your mom and dad were very financially responsible. They each had $500,000 policies on each other, bought in their late forties, for 30-year terms. Your dad made it to 76, and his death benefit was $500,000 to your mom. Your mom invests that $500,000, changes the beneficiary from her husband to you, and makes you her beneficiary for her investment account as well. She dies a couple of years later, with one year before the term expires, and the $500,000 death benefit goes to you - Tax-free. Because she invested the other $500,000 and named you as the beneficiary, that $500,000 grew to $550,000, and with the step-up in basis, there are no taxes that you owe on that, and your basis in the investment account is $550,000 + $500,000 = $1,050,000. Therefore, because your parents bought $500,000 in coverage, and invested it between deaths, the beneficiary, which is you, is now over a millionaire in their 50’s. Generation II You are generation II. Let’s say you took your parent's advice and got life insurance when you were young. It is cheaper, you are healthier, and the payments do not change. You buy $1,500,000 in 30-year coverage for you and your spouse. You are paying very little for a good amount of coverage. This is very common. Towards the end of your and your spouse 30- year terms is when your parents pass away. You are glad to have the money as a nest egg in retirement and hope to be able to do the same for your kids. So, you both buy another round of 30-year terms at the same coverage level since your old term coverage expired. Although far more expensive now, you are in a place where the death benefit is more important for your kids than the money you both have now. You both live long, happy lives, but ultimately, like all of us, eventually, you both die. Not only will your children receive the $1,050,000 that grew for 30 years (not unreasonable to assume close to $4,000,000 now), but they will also receive the $3,000,000 in combined death benefits. In their 50s, each of your kids could now have a nest egg of well over $1,000,000, obviously depending on the number of kids you have. You can see where this is going. Generation III So far, the third generation is the greatest benefactor of their grandparents' and parents' decisions. Because of these decisions, they may start businesses, invest in start-ups, or be extraordinarily charitable. Life insurance was created to open all doors for the future and let them choose the path. With higher net worth people, something to consider is creating a trust from the insurance, otherwise known as an Irrevocable Life Insurance Trust (ILIT). This can help stipulate the terms and conditions of how the money will be available to its heirs. As the third generation, they are responsible for keeping this exponential growth of wealth alive. Not only can wealth be generational, but the only way for it to happen is for advice to be generational. That all starts with speaking with an advisor. The power of speaking with your advisor I would be happy to discuss your questions about life insurance and see what coverage would make sense for your specific situation. Please feel free to reach out to me with any questions. Whitaker-Myers Wealth Managers is an SEC-registered investment adviser firm. The information presented is for educational purposes only and intended for a broad audience. The information does not intend to make an offer or solicitation to sell or purchase any specific securities, investments, or investment strategies. Investments involve risk and are not guaranteed. Whitaker-Myers Wealth Managers reasonably believes that this marketing does not include any false or misleading statements or omissions of facts regarding services, investment, or client experience. Whitaker-Myers Wealth Managers has a reasonable belief that the content will not cause an untrue or misleading implication regarding the adviser’s services, investments, or client experiences. Please refer to the firm’s ADV Part 2A for material risks disclosures. Past performance of specific investment advice should not be relied upon without knowledge of certain circumstances of market events, the nature and timing of the investments, and relevant constraints of the investment. Whitaker-Myers Wealth Managers has presented information in a fair and balanced manner.

Who we are: The Whitaker-Myers Group Thinking about all the services you need to ensure your financial house is in order can be overwhelming. You often hear from us about what you can expect from us at Whitaker-Myers Wealth Managers; however, we wanted to highlight the different divisions within Whitaker-Myers. By doing this, we hope to relieve a little stress for you so you don’t have to make multiple phone calls for these various items. Whitaker-Myers Group is uniquely equipped to help with many areas of your financial life, including Insurance, Benefits, Tax Preparation, Financial Coaching, Estate Planning, and of course, Wealth Management. I usually like to sum this up by saying, “no matter what you are looking for financially, one of our professionals at Whitaker-Myers can likely help!” Financial Coaches at Whitaker-Myers Wealth Managers If you follow Dave Ramsey, you have likely heard of his 7 baby steps. The Wealth Management division of Whitaker-Myers can help you no matter your baby step. Our Financial Coaching team helps clients walk through baby steps 1-3. This includes saving money, paying off debt, building a budget you feel confident in, creating a margin between your income and your expenses, and overall accountability and encouragement along the way. Think about a Financial Coach as you would a Fitness Coach, but one that won’t make you do jumping jacks. I say this because relating a Financial Coach to what a Fitness Coach does usually helps people make the connection if they have not heard of a Financial Coach before. You don’t hire a Fitness Coach to tell you that you should start eating healthy and working out. You already know that those are things you should be doing. But having someone keep you accountable and provide helpful tips along the way is well worth it. The same is true for a Financial Coach; they will guide you in achieving the financial goals that you are working towards. Financial Advisors at Whitaker-Myers Wealth Managers The Financial Advisors at Whitaker-Myers Wealth Managers are here to help you through baby steps 4-7 and beyond. We are a team of Ramsey Solutions’ SmartVestor Pros which means that they will provide you with advice consistent with what you hear on the Ramsey Show. We are one of the few National SmartVestor Pros, which means Dave Ramsey and his team have trusted us to help their fans across the United States. Many ask, “Am I going to be okay in retirement?” or “Am I on track to meet my financial goals?” Our Financial Advisors would be happy to help you discover the answer to those questions by building your financial plan. One thing that makes us unique is that our Advisors have the ability to manage the investments inside of your Employer-sponsored Retirement Plan (IE: 401(k)) while you are still employed. When you work with our Advisors, they will not only help you invest for retirement but will also ask you the appropriate questions to make recommendations that will help you be financially healthy overall. They will help you with baby steps 4-7 and beyond because even though not listed in the baby steps, having life insurance or an estate plan (will or trust) is something we all likely need. These are also areas they can help guide and share information on when making decisions. Whitaker-Myers Tax Advisors Having a CPA on our team means that when your investment questions flow over into tax questions (which happens a lot), we can call on Whitaker-Myers Tax Advisors to help provide you with sound advice and recommendations. Many of our Whitaker-Myers Wealth Managers clients use Whitaker-Myers Tax Advisors to prepare their taxes. It works well since they can pull your tax documents for you in relation to your investment accounts. Whitaker-Myers Insurance Whitaker-Myers Insurance is an Independent Insurance Agency that can help you find the best rate for your home, auto, or commercial lines policy by quoting several different insurance carriers. One of Dave Ramsey’s tips for saving money is to get a quote for your home and auto insurance through an Independent Insurance Agent, especially if it has been a while since you have had a quote done. Insurance can be confusing, so it is nice to have a trusted professional helping you. Whitaker-Myers Benefits The professionals that work on the Benefits side of Whitaker-Myers can help you with Health Insurance, Medicare, and Long-Term Care insurance. If you are self-employed, in between jobs, or need to sign up for Medicare, you will likely find it helpful to talk to someone that can assist you in finding the insurance plan that works best for your specific needs. Mission, Vision, and Core Values Our team at Whitaker-Myers Wealth Managers live and work by our mission, vision, and 7 core values. Having the heart of a teacher is listed as our first core value on purpose because we are passionate about educating our clients and helping them to feel confident about their current and future finances. To better understand who we are and what we value, please see our recent video sharing who we are as a company. If you have a financial question that you have been looking to answer or have had something on the to-do list for a while now, we would love the opportunity to work with you. Feel free to schedule a meeting with one of our Financial Advisors or Financial Coaches today. Whitaker-Myers Wealth Managers is an SEC-registered investment adviser firm. The information presented is for educational purposes only and intended for a broad audience. The information does not intend to make an offer or solicitation to sell or purchase any specific securities, investments, or investment strategies. Investments involve risk and are not guaranteed. Whitaker-Myers Wealth Managers reasonably believes that this marketing does not include any false or misleading statements or omissions of facts regarding services, investment, or client experience. Whitaker-Myers Wealth Managers has a reasonable belief that the content will not cause an untrue or misleading implication regarding the adviser’s services, investments, or client experiences. Please refer to the firm’s ADV Part 2A for material risks disclosures. Past performance of specific investment advice should not be relied upon without knowledge of certain circumstances of market events, the nature and timing of the investments, and relevant constraints of the investment. Whitaker-Myers Wealth Managers has presented information in a fair and balanced manner. Whitaker-Myers Wealth Managers is not giving tax, legal or accounting advice, consult a professional tax or legal representative if needed.

In January of 2023, we say the markets take a positive turn with each of the three major indexes we track and discuss each week on our "What We Learned in the Markets This Week" video series returning 6.18% (S&P 500), 9.00% (MSCI EAFE) and 9.82% (Russell 2000) respectively. Then in February, it was a return to the 2022 narrative as good news equaled bad news, and the same indexes took a tumble of -3.24% (Russell 2000), -3.62% (S&P 500), and -3.93% (MSCI EAFE). Therefore with the February market reaction for investors, it may feel like déjà vu all over again as inflation and the Fed dominate market headlines on a day-to-day basis. After all, the numerous market swings last year were driven by ever-changing expectations around the Fed - both when investors believed the Fed was doing too little, and when they thought the Fed was tightening too much. With markets once again concerned about the direction of the Fed, what do long-term investors need to know about how the story is evolving? Goods inflation has improved but services are still a problem Only a month ago, at the Fed's latest press conference, FOMC Chairman Jay Powell stated that "the disinflationary process has begun." This is undeniably true across many parts of the economy as inflation has eased. However, recent data raise new questions around how quickly inflation is improving and whether the Fed will need to act more forcefully in the coming months. Not surprisingly, this has spooked markets. The challenge facing markets and the Fed is simple: textbook economic theory says that inflation is the result of an overheating economy. Thus, in order to beat inflation, the Fed may need to slow the economy to a crawl or even cause a recession as it did in the early 1980s. While it's unclear whether a recession will occur in 2023, most forecasts suggest that the economy will be flat this year, at best. This is the case despite a historically strong job market with unemployment of only 3.4%. Thus, the conundrum is whether the Fed will need to break the job market to beat inflation. There are many ways economists slice and dice inflation data to best understand the underlying trends. One common way is to compare overall inflation, also known as "headline" inflation, to inflation without food and energy prices, also known as "core" inflation. This is not because food and energy are unimportant to consumers but because these prices tend to bounce around as commodity prices fluctuate, making it difficult to understand the trajectory of inflation. Recent data show that headline inflation has been decelerating - hence, Powell's disinflationary comment - but core inflation remains stubbornly high. However, another useful way to break down prices is to consider goods versus services within core inflation. Goods are physical, tangible items that consumers buy including new and used vehicles, apparel, home appliances, and more. Services are everything else - rent, transportation services, medical care, etc. Goods and services are both important to consumers but can be driven by different factors. Many categories of consumer goods and services have improved In many ways, this breakdown more closely aligns with what consumers have experienced over the past few years. Early in the pandemic, goods prices skyrocketed due to shortages of everything from toilet paper to computer chips. Today, these prices have improved with core goods inflation running at only 1.4% year-over-year. Used vehicles, for instance, have experienced a price decline of 11.6% over the past year, as shown in the accompanying chart. The prices of core services, on the other hand, climbed 7.2% in January compared to the prior year. It's for this reason that economists worry about the red hot labor market, including wages that are increasing 4.3% year-over-year for all workers and 5.1% for hourly workers. Higher wages that translate into more spending on services could create inflationary pressures. Retail sales, for instance, surged in January after slowing late last year. The Fed is now expected to raise rates higher this year This takes us back to the conundrum mentioned above. While headline inflation is easing, core inflation is still far beyond the Fed's target due to the prices of services. Standard economic theory suggests that this is driven largely by a strong labor market. Thus, markets are concerned that the Fed may have to do more. Currently, market-based expectations are for the fed funds rate to rise to 5.25% or higher by mid-year. One item to note, as discussed in this week's video, is the fact that over the last two weeks, the odds of a higher rate hike than anticipated at the March 22nd meeting have risen from 0% to nearly 25%. If a 0.50% rate hike were to happen (current estimates are for only a 0.25% hike), this would be the first time in recent history that the Fed has gone from slowing down increases (or outright stopping them) to ramping them back up. The market's reaction to this, considering its lack of historical precedence, would be interesting to watch. For long-term investors, it's important to maintain perspective in this market environment. After all, the stock market has fluctuated wildly over the past year based on Fed expectations, with swings in both directions as investors and economists evaluate the constant flow of data. Inflation has been difficult to predict accurately, and both sides of the argument have been wrong at one time or another. Throughout all this, the S&P 500 has risen 14% since last October, and the bond market has done better this year as interest rates have been somewhat more stable. The bottom line? Headline inflation has improved since it peaked last June but core inflation, and services in particular, remain a challenge. The Fed will need to walk the line between fighting inflation and maintaining economic growth. Long-term investors should stay the course and not react to the inevitable market swings. Be like the tortoise, be consistent in every area of your life, including investing. Copyright (c) 2023 Clearnomics, Inc. and Whitaker-Myers Wealth Managers. All rights reserved. The information contained herein has been obtained from sources believed to be reliable, but is not necessarily complete and its accuracy cannot be guaranteed. No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness, or correctness of the information and opinions contained herein. The views and the other information provided are subject to change without notice. All reports posted on or via www.clearnomics.com or any affiliated websites, applications, or services are issued without regard to the specific investment objectives, financial situation, or particular needs of any specific recipient and are not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. Past performance is not necessarily a guide to future results. Company fundamentals and earnings may be mentioned occasionally, but should not be construed as a recommendation to buy, sell, or hold the company's stock. Predictions, forecasts, and estimates for any and all markets should not be construed as recommendations to buy, sell, or hold any security--including mutual funds, futures contracts, and exchange traded funds, or any similar instruments. The text, images, and other materials contained or displayed in this report are proprietary to Clearnomics, Inc. and constitute valuable intellectual property. 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As you can imagine, I’ve heard them all. Every story from everyone’s “in the know” uncle or someone who watched a Tucker Carlson special (by the way, I got nothing but love for Tucker other than his sensationalizing he MUST do for ratings) or the horror story from their neighbor. What specific story am I referencing? Stock Market projections. I can bet that at least once a day, I will hear someone tell me why the stock market will crash and never return. Yikes! Imagine my fear, considering mine and those of the 20 members of our team, depends on the growth of stocks over time. The fruit of the spirit is love, joy, peace, forbearance, kindness, goodness, faithfulness, gentleness, self-control, and fear. Whoops, wait a minute, one of those doesn’t belong. Fear or anxiety is often irrational because it’s based on a lack of knowledge; therefore, let’s dig into what the stock market is, how it works, and why it’s been one of the best wealth-building tools the world has ever seen! The stock market is a powerful tool for building wealth, and it has transformed the financial landscape of the world. It allows individuals to invest in companies and participate in their growth, providing an opportunity to increase wealth over time. At its core, the stock market is a platform for buying and selling shares in publicly traded companies. When an individual buys a share of a company, they become a partial owner of that company, and their investment increases or decreases in value based on the performance of the company. If the company performs well, the stock price will increase, and investors will make a profit. Conversely, if the company performs poorly, the stock price will decrease, and investors will lose money. What causes a stock to perform over time? There are four essential components to what causes a stock to go up or down over time. Earnings growth is one of the primary factors that can cause a stock to go up in value. When a company reports higher earnings, investors tend to be more optimistic about the future prospects of the company. This can lead to increased demand for the company's stock, which drives up the price. Well, John-Mark, my uncle said corporate earnings are going to fall off a cliff and stay there forever, shouldn’t I be worried? That has never happened. What is their rationale for that? Usually, it’s something political, and let me remind you, while I most likely adhere to a similar political ideology as you do, considering I have a total Biblical worldview with a belief in the complete inerrancy of scripture, it does the other party no good to crash the economy. Why so that China can be the world’s superpower and the one thing they long for power – they lose! Of course, not; they, as you do, want the economy to grow, and that’s why regardless of the political party, the stock market has delivered similar returns for Democrat and Republican administrations. Take a look at this chart right here – it’ shows the Earnings Per Share growth of the S&P 500 going back to 2007. A few political parties in there, and you’ll notice it has consistently gone up and to the right. Not constant because there is no perfection in this world, but there has been consistency. Wonder why the interest rate increases we saw last year, at a historical breakneck pace, were destructive to the stock market's value last year? If interest rates are low, investors may be more inclined to invest in stocks because they are the only game in town instead of bonds, leading to increased demand for stocks and driving up prices. However, when rates go up and normalize as they have today, you can purchase the Schwab Money Market with a current yield of 4.5%, short-term Treasury Bonds are paying in the high 4%, and brokered bank CDs (which are purchased through Advisors like Whitaker-Myers Wealth Managers) are paying slightly over 5%. Those levels of rates attract money out of stocks for a while, creating less demand for stocks, especially for companies without a compelling growth story. Financial Advisor, Jake Buckwalter just recently wrote an article about what to do with excess cash right now. Investor sentiment can also play a role in the value of a stock. Suppose investors are generally optimistic about the prospects of a company. In that case, they may be more willing to invest in its stock, even if the company's financial performance is not currently strong. This can create a "self-fulfilling prophecy" of sorts, where the positive sentiment leads to increased demand for the stock, driving up its price. Finally, supply and demand dynamics can impact the value of a stock. If a company has a limited number of shares available for purchase, and there is high demand for those shares, the price will increase as investors compete to buy them. History Is on Your Side and This Time ISN’T Different Over time, the stock market has proven to be one of history's most effective wealth-building tools. One of the key advantages of the stock market is its ability to generate long-term returns. Take a look at this chart from Prudential. What you’ll see is that over the last thirty years, which has included some significant drops (2001,2002, 2008, 2020, 2022), we’ve still returned 9.65%, with 80% of the years producing a positive return and an average gain of 18.34% and 20% of the years negative with an average loss of -17.10%. Ever wonder what it does daily? It’s 53% of trading days are positive, and 47% of trading days are negative. While the stock market has provided the necessary growth long term, the daily grind of it can be stressful, hence why a good Advisor will tell their clients not to pay attention to daily, weekly or even monthly movements and invest for their time horizon and risk tolerance. Another advantage of the stock market is its accessibility. Unlike other forms of investing, such as real estate or private equity, the stock market is open to anyone with a brokerage account and some disposable income. This means that individuals of all income levels have the opportunity to invest in the stock market and participate in its growth. 100 years ago, if you wanted to grow your wealth, you had significantly fewer options. Heavens, even 50 years ago, it was so expensive to invest that few people did it. However, this is one reason we appreciate Charles Schwab. If you read his autobiography, as I have, you’ll learn that he was a man on a mission to open investing to everyone. We can proudly say today the mission is accomplished because anyone with the will to improve their lives can seek out a good Advisor like, Whitaker-Myers Wealth Managers, who will help educate them to a blessed and fulfilled future. Additionally, the stock market provides investors with a diverse range of investment opportunities. There are thousands of publicly traded companies to choose from, ranging from small startups to large multinational corporations. This means that investors can diversify their portfolios and spread their risk across a range of different companies and sectors. Our friend Dave Ramsey recommends investors consider investing into four basic categories: Growth, Growth & Income, Aggressive Growth, and International. Financial Advisor Logan Doup, has written our most popular article of all time, Understanding Dave Ramsey's Four Categories, which you can read here. Overall, the stock market is a powerful tool for building wealth and has the potential to provide significant returns over the long term. It has democratized the world of investing, providing individuals of all income levels with the opportunity to participate in the growth of some of the world's most successful companies. However, it is the one thing that you must not allow emotions to control. When there is pain, you must not succumb to the pain and sell your investments. When there is gain, you must not get greedy and invest at the expense of other financial priorities such as paying down your home. That’s why we highly recommend clients turn off the news media and listen to our weekly “What We Learned in the Markets This Week Video” along with Ramsey Solutions suite of podcasts and media available for free wherever you consume content. Whitaker-Myers Wealth Managers is an SEC-registered investment adviser firm. The information presented is for educational purposes only and intended for a broad audience. The information does not intend to make an offer or solicitation to sell or purchase any specific securities, investments, or investment strategies. Investments involve risk and are not guaranteed. Whitaker-Myers Wealth Managers reasonably believes that this marketing does not include any false or misleading statements or omissions of facts regarding services, investment, or client experience. Whitaker-Myers Wealth Managers has a reasonable belief that the content will not cause an untrue or misleading implication regarding the adviser’s services, investments, or client experiences. Please refer to the firm’s ADV Part 2A for material risks disclosures. Past performance of specific investment advice should not be relied upon without knowledge of certain circumstances of market events, the nature and timing of the investments, and relevant constraints of the investment. Whitaker-Myers Wealth Managers has presented information in a fair and balanced manner. Whitaker-Myers Wealth Managers is not giving tax, legal or accounting advice, consult a professional tax or legal representative if needed.

"This part of the crisis is over. Everyone should just take a deep breath." - JP Morgan Chief Executive Jamie Dimon On the morning of May 1, it was announced that First Republic Bank had been taken over by the FDIC and sold to JPMorgan Chase. Eleven major banks had previously infused First Republic with $30 billion in deposits to stabilize the bank after the failures of Silicon Valley Bank, Signature Bank, and Credit Suisse. This process found new urgency over the past week when First Republic revealed that uninsured deposits at the bank fell $100 billion in the first quarter. Thus, this deal has been in the making for several days, with a few large banks bidding on First Republic's deposits and assets. With ongoing banking turmoil creating market and economic uncertainty, how can long-term investors navigate the months ahead? Three FDIC-insured banks have now failed with a total of $368 billion in deposits The orderly sale of First Republic is good news, but its failure mirrors the other bank failures that occurred almost two months prior. These banks grew aggressively by pursuing deposits that proved to be unstable when the economy slowed, the tech sector faltered, and cryptocurrencies plummeted. While this alone would create stress for any bank, rising interest rates also resulted in unrealized losses in their bond portfolios, which normally don't need to be marked-to-market if they are expected to be held until maturity. However, falling deposits forced these banks to sell bonds and realize these losses. Thus, this banking crisis is the result of both a failure of risk management specific to these banks and the broader tightening of financial conditions due in large part to Fed rate hikes. However, banking crises are not new, and many of the biggest market shocks since the late 19th century have been due to tremors in the financial system. The Panic of 1873, for example, occurred when one of the largest banks, Jay Cooke & Company, failed due to bad bets on railroads. Others include the Panic of 1907, the 1929 crash, the Savings and Loan crises throughout the 1980s and 1990s, the 2008 global financial crisis, and many other international crises. What all of these historical episodes have in common is the availability of money, the expansion of credit, and the eventual tightening of financial conditions. Like a sugar rush, a rapid increase in money and credit through the global financial system can drive asset bubbles and risk-taking in a particular market or across a whole country. Sooner or later, however, there is a sugar crash as returns peter out, sentiment shifts, and conditions tighten. The banking crisis has been concentrated in specific regional banks This is sometimes referred to as the "Minsky Model," named after the 20th century economist Hyman Minsky. In short, as credit continues to expand, investors, businesses and individuals are willing to take on more and more risk. During the height of these market manias, investment returns feel easy to come by, leading to overconfidence and a fear of missing out. While this may be prudent at first, successes and gains motivate investors to take on more and more leverage until it becomes unsustainable (think the dot-com and housing bubbles). This ends when there is a "Minsky Moment" whereby some events shake investor confidence, causing it to all come crashing down. While the details naturally differ between episodes, this is what has occurred since mid-2020. More recently, this has ended with the failure of crypto companies, layoffs at large tech companies, and more. Thus, the question today is whether there will be broader economic instability or if the situation is contained. After all, there are many surface-level parallels to 2008 which are raising investor concerns, including JPMorgan Chase's acquisition of Bear Stearns in March 2008. As the nation's largest bank, it's not surprising that it would play a role in any financial crisis. The Fed had also raised rates prior to 2008 and the economy had appeared to be in good shape based on growth figures. However, while the phrase "this time is different" can be dangerous, there are many distinctions between now and the situation fifteen years ago. Perhaps the most important is the amount of leverage in the system. The global financial crisis of 2008 wasn't just about the housing bubble - the main issue was that banks and other institutions held significant leverage in the form of derivatives which magnified the impact of the housing market collapse. This means that even small upticks in default rates and bad loans were enough to cause large financial institutions to fail. If falling bond prices are seen as a parallel to falling home prices, there would need to be layers upon layers of leverage on these bonds to truly mirror 2008. This does not seem to be the case. The economy grew at a slower pace in the first quarter Additionally, interest rates have fallen from their recent peaks which will help shore up bond portfolios. The 5-year Treasury yield, which roughly aligns with the average bond maturity across bank portfolios, has declined from 4% at the end of 2022 to 3.6% today. Ironically, this is in large part because of the banking crisis which was worsened by rising rates. What's more, the Fed is only expected to raise rates once more this cycle, possibly at its May meeting, before pausing and assessing the situation. This is helped by improving headline inflation numbers. Finally, the broader economy continues to be stable, even if it does appear to be slowing. Last week's GDP report showed that the economy grew by 1.1% in the first quarter. This was slower than expected but was primarily due to a decline in inventories among businesses which reduced growth by 2.26 percentage points, a factor that could reverse later this year. Fortunately, this was offset by strong consumption spending which added 2.48 percentage points. Overall, a slowing economy is what the Fed expects to see in a tighter rate environment. To hear our weekly commentary on the markets, economy and so much more, please subscribe to our video series, "What We Learned in the Markets" this week, by clicking here. The bottom line? Long-term investors should continue to maintain perspective in light of the ongoing banking crisis. A combination of company-specific factors as well as the broad macroeconomic environment led to challenging conditions for these particular banks. However, parallels to 2008 and other historical episodes are premature. During times of market uncertainty, the best approach is to stay diversified and not overreact to news headlines. Copyright (c) 2023 Clearnomics, Inc. and Whitaker-Myers Wealth Managers. All rights reserved. The information contained herein has been obtained from sources believed to be reliable, but is not necessarily complete and its accuracy cannot be guaranteed. No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness, or correctness of the information and opinions contained herein. The views and the other information provided are subject to change without notice. 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How do Mutual Funds and ETFs Differ? When it comes to investing in equities, it’s generally most efficient to buy mutual funds or ETFs (Exchange-Traded Funds), which are both “baskets of goods.” You can purchase equity in a variety of companies by simply purchasing shares of funds that spread your assets across those companies. This saves you from buying individual stocks and worrying about when to trade from those positions in favor of other companies. Mutual Funds and ETFs at their core, are similar, and generally serve the same purpose, but they have some distinct differences. In this article, we will look at those differences and highlight some critical features of each. How Are They Managed? A key difference between mutual funds and ETFs is that mutual funds can, and often are, actively managed by a fund manager. The performance of the fund is closely tied to the fund manager. If they have been managing the fund for an extended period, with a good track record, then the performance is a valuable tool for evaluating the fund. However, if the fund manager has left or been replaced, knowing that the fund’s track record should not be counted upon for reliable evaluation is important. On the other hand, ETFs are generally more process-oriented in their management style. They are passively managed and structured to compete with the performance of a particular index. Some mutual funds fit this description as well. How Are They Traded? Another critical difference between these two types of funds is how they are traded. Orders for mutual funds are executed once per day, with the price based on the Net Asset Value (NAV) calculated once daily. Each investor pays the same price as all other investors buying that same fund on that same day. As a result, you don’t see a price fluctuation intraday. ETFs trade like individual stocks. They are bought and sold on an exchange, reflecting lots of price fluctuation throughout the trading day. Because the price fluctuates throughout the day, your cost will likely differ from another investor buying the same fund on the same day. Are there minimum investments? Mutual funds do not have to be purchased in whole shares, making them a good option for people just starting to invest. ETFs do not require a minimum initial investment, though they can only be bought in whole share form at their market price. Because of this, buying ETFs for people who are just beginning to invest from zero can be tricky because you may not have enough capital to buy a full share. What are the costs? Mutual funds can be bought without trading commissions. But, besides their operating costs, they can carry other fees like sales loads or short-term redemption fees. ETFs have a bid/ask price spread and a premium/discount to the NAV. The price you pay for an ETF may differ from the value of the ETFs underlying holdings. ETFs generally have a cheaper expense ratio than mutual funds. These costs are baked into the price you pay for the fund and won’t be tacked on to your management fee. Also, the expense ratio is taken into account when looking at the performance of the fund. Which is right for me? The answer really depends on your situation and what accounts you have. As stated above, each has certain advantages, depending on how much money you’re investing or how long you plan to stay in each fund. Discussing your needs with a financial advisor to help you determine the right fit for your investment portfolio is important. Schedule a meeting with one of our advisors today if you’d like to learn more. Whitaker-Myers Wealth Managers is an SEC-registered investment adviser firm. The information presented is for educational purposes only and intended for a broad audience. The information does not intend to make an offer or solicitation to sell or purchase any specific securities, investments, or investment strategies. Investments involve risk and are not guaranteed. Whitaker-Myers Wealth Managers reasonably believes that this marketing does not include any false or misleading statements or omissions of facts regarding services, investment, or client experience. Whitaker-Myers Wealth Managers has a reasonable belief that the content will not cause an untrue or misleading implication regarding the adviser’s services, investments, or client experiences. Please refer to the firm’s ADV Part 2A for material risks disclosures. Past performance of specific investment advice should not be relied upon without knowledge of certain circumstances of market events, the nature and timing of the investments, and relevant constraints of the investment. Whitaker-Myers Wealth Managers has presented information in a fair and balanced manner. Whitaker-Myers Wealth Managers is not giving tax, legal or accounting advice, consult a professional tax or legal representative if needed.

Dollar Cost Averaging or Lump Sum When funding investment accounts, clients are often aware that they could invest it all at once in a lump sum or over time using the dollar cost average method. Lump Sum /ˌləmp ˈsəm/ noun a single payment made at a particular time, as opposed to a number of smaller payments or installments. According to Charles Schwab, Dollar cost averaging is the practice of regularly investing a fixed dollar amount, regardless of the share price. It's an excellent way to develop a disciplined investing habit, be more efficient in investing, and potentially lower your stress level and your costs. We will evaluate the pros and cons of employing both methods in investing. The Pros and Cons of Dollar Cost Averaging As previously mentioned, dollar cost averaging means putting your money into the stock market over a period of time, most commonly being weekly or monthly intervals. One pro of doing this is to take overthinking out of the equation. Investors and clients often check the market daily to determine if now is a good time to pull out or stay in the market. Additionally, when invested over a long period and regularly making these investments, you will buy when the market is low and high. Over time, your price per share will most likely be favorable. The cons of dollar cost averaging are relatively simple. In my previous article, I speak about “knowing your number,” which has to do with the stock market. How low is low enough to enter the market from its all-time high, and how high is too high to enter the market? It is essential to know your number. From January 2021 to April 2023, the market is still down roughly 13-14% from its all-time high. Through this time, it was anywhere from down 25% back up to only down 11%, continuing down and up repeatedly. To reiterate, the con of dollar cost averaging is missing out on higher gains. Let’s say you have $240,000 to invest and want to split it up into $10,000 invested each month for two years. If you buy when the market is down between 10-15% for a year but then it goes up 10-15% over the following year, then your average share price will be higher, and your return will be lower than if you threw it all in while down 15%. The Pros and Cons of the Lump Sum Method As previously mentioned, the lump sum method involves finding the right time for an investor to put their amount into the market in its entirety all at once. The Pros and Cons of this method surround market timing. The pro to the lump sum method will be if you act on the lump sum method when the market is down 10% and goes back up for an extended period. The con to the lump sum method will be if you act on the lump sum method when the market is down 10% and goes down an additional 10-15% over the next two years. The Future In conclusion, people have yet to know precisely what will happen in the stock market. Generally, when invested long enough and exposed to the stock market, you will see returns depending on how much stock you have weighted in your portfolio. The best way to reduce stress, and not worry about market timing, would be to use the dollar cost average. The best way to know you are buying low is to enter the market at any point when the stock market isn’t at its all-time high. If the market is down 5% and you are comfortable with that, use the lump sum method. If the market is down 10% and you are comfortable with that, use the lump sum method. Even if the market is up 5% from its all-time high, and you think it will go up higher, use the lump sum method if that makes you comfortable. It all comes down to what you can tolerate. In general, dollar cost averaging is a good idea for most people because it builds the habit of saving consistently over time. As our friends at Ramsey Solutions always say, investing is about being the tortoise not the hare – it’s a good idea to make a plan to save on a regular basis and stick to it. The power of speaking with your advisor As mentioned, everyone has different goals and timelines with their money, so it is important to speak to a Financial Advisor about your specific needs and goals. Please contact one of the Financial Advisors here at Whitaker-Myers Wealth Managers; we would be happy to help you! Whitaker-Myers Wealth Managers is an SEC-registered investment adviser firm. The information presented is for educational purposes only and intended for a broad audience. The information does not intend to make an offer or solicitation to sell or purchase any specific securities, investments, or investment strategies. Investments involve risk and are not guaranteed. Whitaker-Myers Wealth Managers reasonably believes that this marketing does not include any false or misleading statements or omissions of facts regarding services, investment, or client experience. Whitaker-Myers Wealth Managers has a reasonable belief that the content will not cause an untrue or misleading implication regarding the adviser’s services, investments, or client experiences. Please refer to the firm’s ADV Part 2A for material risks disclosures. Past performance of specific investment advice should not be relied upon without knowledge of certain circumstances of market events, the nature and timing of the investments, and relevant constraints of the investment. Whitaker-Myers Wealth Managers has presented information in a fair and balanced manner. Whitaker-Myers Wealth Managers is not giving tax, legal or accounting advice, consult a professional tax or legal representative if needed.

Your Savings, Investments, & Taxes TAXES. Love or hate them, if you live in the United States of America, you can participate in our excellent tax system. At Whitaker-Myers Wealth Managers, we strive to provide the best advice and individualized financial plans to help reduce your tax burden and be a good steward of the resources God has given you! As financial advisors, we work closely with our amazing Certified Public Accountant (CPA), Kage Rush. Whether your assets and resources are so numerous that you pay people to protect your properties or you are just trying to figure out the basics of the investing world, we can help. This article will cover three basic investment strategies that can help alleviate your tax burden now or in the future. Hopefully, it will give you a basic understanding of the tax benefits of some of the accounts we set up and manage on behalf of our clients. Individual Retirement Arrangements (IRA) IRAs are savings that can provide fantastic tax advantages for people in the current tax year or retirement age. There are, however, two types of IRAs that savers must be cognizant of; the traditional and the Roth. Traditional IRA This type of account provides an immediate tax advantage. The money is deposited into the account before it is taxed. The benefit of the immediate tax savings comes from this pre-taxed deposit. For example, if your salary is $50,000 annually, and you contribute $5,000 to your IRA annually, you can deduct that $5,000 from your Federal and State income taxes. You would be in the 12% tax bracket, saving about $600 in income tax. Even though this is an immediate tax-saving benefit, the caveat with this situation comes at retirement when you pay taxes on withdrawals from the account. Withdraws from the traditional IRA can typically only be made after 59.5 years old without facing any penalties unless an exception applies. One potential issue with the Traditional IRA distributions is that it increases the chances of your social security income being subject to income tax in retirement. This can lead to a surprise tax bill early in retirement without proper planning. Roth IRA The Roth IRA is similar to the traditional IRA as a retirement savings account, and withdrawals can typically only be made after 59.5; however, this account does not save on taxes immediately. With the Roth IRA, deposits would be made AFTER the money deposited has already been taxed. Although this type of account does not provide any tax advantages to individuals for the current tax year, after the taxed contribution is made, it can grow free from tax to help save for your retirement. For example, if your income is $50,000 annually, and you contribute $5,000, you do not have immediate tax benefits. The benefit comes when you turn 59.5 years old and start withdrawing from that account. Upon the retirement age mentioned above, the taxed money you had previously contributed is now withdrawn from the account, free from tax. Another benefit is that this lessens the impact of your social security being subject to income tax in retirement. Limitations Two limitations to the traditional and Roth IRA are worth mentioning. First, the funds that can be contributed to either type of IRA annually are restricted. The maximum yearly contribution for 2023 is $6,500/year for those under 50 and $7,500/year for those 50 or older. Second, if you withdraw earnings from your accounts before 59.5 years of age, you can owe income taxes and have a 10% penalty. To recap, both the traditional and Roth IRA are great ways to save for retirement that can help with amazing tax saving benefits now or in the future. Where you are in your financial journey would determine which account would be a good fit for you. Remember that these accounts are limited to the max yearly contribution, so often, the IRAs are not the sole retirement savings account. They are used in conjunction with other types of retirement and Brokerage accounts. Brokerage Accounts Another type of account we often assist clients in managing is a Brokerage account, or Bridge account, as Dave Ramsey calls it. In all reality, Dave’s is a much better name because who wants the word BROKE associated with their wealth? With a Brokerage/Bridge account, no immediate tax deductions or tax deferral benefits exist. However, it does offer some intermediate benefits: You have access to the funds whenever you need them You can get market returns rather than having your money sitting in a savings account at a bank, earning a whopping .01% rate of return. Tax loss harvesting. This is when your advisor trades your investments at a loss and waits at least 30 days to buy a similar investment. This loss can be deducted from future Capital Gains or can be deducted at $3,000 a year on your taxes. Also note that Brokerage Accounts create taxable dividends and interest every year depending on the investments chosen in the account. No Capital Gains taxes if your annual income is under $89,250 for Married Filing Jointly, $55,800 for filing Head of Household, and $41,675 for Single or Married Filing Separately. Ultimately, when a person enters retirement, having capital in all three of these investment areas is beneficial to maximize the tax advantages. As of the current tax year (2023), the standard deduction is $27,700. From a tax perspective – The least taxed retirement cash flow to the most taxed retirement cash flow is ranked below: Only claiming Social Security income and taking money out of a Roth IRA or Roth 401(K) Mixing Social Security income with cash from a brokerage account, Traditional IRA distributions, and Roth IRA distributions Claiming Social Security Income and using Traditional IRA distributions. Remember that Traditional IRA distributions are initially tax-free when contributed but are taxed as earned income when withdrawn in retirement, which can make up to 85% of Social Security taxable. If you were to withdraw $100,000 a year, the Federal Tax breakdown would look like this: $50,000 from Traditional IRA - $27,700 is tax-free from the standard deduction, and $22,300 is subject to the 10% tax rate = $2,230 $39,250 from Brokerage Account – Not the full $39,250 is subject to capital gain tax, just the gain, which is the difference between the stock value of $39,250 and when the stock was originally purchased. $10,750 from Roth IRA The tax liability for a couple married filing jointly from the cash flow would come from: the Traditional IRA distributions above the applicable standard deduction claimed, any short-term capital gains recognized and long-term capital gains above the 0% tax rate threshold, any interest and dividends received from the brokerage account, and potentially any taxable income from Social Security because of earned income from the Traditional IRA distributions and size of capital gains recognized. *Taxes may vary from the example depending on your specific tax situation and filing status. We Are Here to Help Investing has many benefits, so knowing how and where to place your money is key. This is why working with a financial advisor is beneficial so that they can help you think through the strategies that would work best for your specific financial goals. Contact any member of our financial advisor team today to help you get started! Whitaker-Myers Wealth Managers is an SEC-registered investment adviser firm. The information presented is for educational purposes only and intended for a broad audience. The information does not intend to make an offer or solicitation to sell or purchase any specific securities, investments, or investment strategies. Investments involve risk and are not guaranteed. Whitaker-Myers Wealth Managers reasonably believes that this marketing does not include any false or misleading statements or omissions of facts regarding services, investment, or client experience. Whitaker-Myers Wealth Managers has a reasonable belief that the content will not cause an untrue or misleading implication regarding the adviser’s services, investments, or client experiences. Please refer to the firm’s ADV Part 2A for material risks disclosures. Past performance of specific investment advice should not be relied upon without knowledge of certain circumstances of market events, the nature and timing of the investments, and relevant constraints of the investment. Whitaker-Myers Wealth Managers has presented information in a fair and balanced manner. Whitaker-Myers Wealth Managers is not giving tax, legal or accounting advice, consult a professional tax or legal representative if needed.

ALL THINGS EMERGENCY FUNDS Let’s start with defining an emergency fund, which is simply money put into a liquid and accessible account to cover unbudgeted and unforeseen expenses. Many call these accounts “rainy-day funds” or “savings accounts,” but they all serve the same purpose. The two broad categories for accessing these funds would be a job loss/large pay cut or significant surprise expense(s). What type of account is the best fit for an Emergency Fund? There can be multiple appropriate answers to this question, but one incorrect answer is your primary checking account. Even if you manage money well or are not a big spender, extra money in your regularly used checking account will dwindle and be used for non-emergency purposes. So having a separate, rarely used account will guard against eroding this vital part of a solid financial plan. Some good examples are money markets, interest-bearing savings accounts, and brokerage accounts. Although you do not want it to be your sole emergency fund option, utilizing a short-term CD or I-bonds could be an option for a portion of your account. The account should be liquid, and no penalties or fees to access the funds, but you purposely don’t want to make the funds too easy to spend. So, if you do a savings account as your emergency fund, doing one at a separate bank apart from your checking account is a good idea. How much should I keep in my Emergency Account? There are two “stepping stones” of Emergency Funds, which come into play as to where you are within the Baby Steps. If you live paycheck to paycheck or have debt(s) to be paid off, try eliminating any discretionary spending until you get to at least $1,000. This is Dave Ramsey’s first step in the seven financial Baby Steps and is an excellent way to develop the mindset of living below your means and establishing an emergency fund that may go up and down occasionally but never totally goes away. Once you have paid off all your debt (outside of your mortgage), establish a 3-6 months emergency fund. This emergency fund should be calculated using expenses versus income to know what is needed to cover mandatory living expenses. We know the difference between three to six months of expenses can be a large number. Determining how much you need is dependent on your specific situation. The rule of thumb is that if it is a dual-income household or both of your jobs appear very stable and are salaried, a little closer to three months should suffice. If you are on a single income, your job(s) is unstable, or you are self-employed with a fluctuating income, you should try to save for up to six months’ expenses. Should I invest my emergency fund? The hope is that you never have to touch your emergency fund. If you purposely set up an account outside of your primary or only checking account, it should allow you to make some return on your money. After an entire decade of savers and emergency account owners being punished with low yields and few good options, solid yields have returned. Charles Schwab’s money market currently pays 4.61% APY; many standard bank savings accounts are 3%-4%. Going back to the 3-6 months expenses, if your monthly expenses are $3,333 a month, then putting $10,000 into an account that takes no risk in the market yet still pays some return makes sense. If you have a stable job and do not mind some risk, invest half of your emergency account into an ETF with some stock exposure and more upside. If you have a less stable income or are more conservative or tend to worry, then sticking to a money market, I-bonds, or some bond mutual funds that are low to intermediate duration and relatively low risk would make some sense that you are less likely to have to access and have the potential to get a 4%-7% return on. Some shorter-term bank notes are also appropriate for that last month or two of expenses in your emergency account. Some treat precious metals, antiques, or collectibles as quasi-emergency funds. However, this is not a good idea because those items can be pretty volatile and are usually somewhat illiquid. When do I use this fund? The answer may seem obvious…an emergency, but what decides “an emergency”? As human nature, we tend to rationalize and confuse ourselves as to what is an “emergency” warranted to use the money in this fund. Dave Ramsey recommends asking three main questions as a safeguard from utilizing our emergency funds too often. Is it unexpected? Is it necessary? Is it urgent? Our team of financial coaches tells you to ask yourself, “Is this a ‘break the glass’ kind of moment.” Meaning there are no other options or no more flexibility in your monthly budget to come up with the money needed. A car accident is unexpected; going over your Christmas shopping budget is not. Having reliable transportation to and from your job is necessary. Upgrading the model, look, or feel of anything you currently have, which is working fine, is unnecessary. Fixing your furnace at the beginning of winter is urgent, but buying something unnecessary because it is “on-sale” is not urgent. Creating the behavior In summary, like many financial planning matters, an effective strategy with an Emergency Fund is 20% knowledge and 80% behavior. Once you understand the basics and establish a low-risk and liquid account, having the discipline to access your emergency fund only when an unexpected true emergency happens is the formula for success. Then after those funds are spent on that necessity, having the discipline to replace those funds is vital because life happens, and none of us will have only one emergency in our adult life. As always, we recommend you speak to your Whitaker-Myers Financial Advisor or contact our financial coach team to establish and maintain a good emergency fund and a disciplined and sensible strategy. Whitaker-Myers Wealth Managers is an SEC-registered investment adviser firm. The information presented is for educational purposes only and intended for a broad audience. The information does not intend to make an offer or solicitation to sell or purchase any specific securities, investments, or investment strategies. Investments involve risk and are not guaranteed. Whitaker-Myers Wealth Managers reasonably believes that this marketing does not include any false or misleading statements or omissions of facts regarding services, investment, or client experience. Whitaker-Myers Wealth Managers has a reasonable belief that the content will not cause an untrue or misleading implication regarding the adviser’s services, investments, or client experiences. Please refer to the firm’s ADV Part 2A for material risks disclosures. Past performance of specific investment advice should not be relied upon without knowledge of certain circumstances of market events, the nature and timing of the investments, and relevant constraints of the investment. Whitaker-Myers Wealth Managers has presented information in a fair and balanced manner. Whitaker-Myers Wealth Managers is not giving tax, legal or accounting advice, consult a professional tax or legal representative if needed.

Equity-Based Benchmarks Investing in the stock market comes with inherent risk. The stock market has highs and lows, but how can you measure your investment portfolio’s success? One job of a financial advisor is to compare their investment strategy to a benchmark. Benchmarks provide some clarity surrounding the success or lack thereof concerning your investments. Investment Portfolios are often designed to either mirror or beat their benchmark outright in terms of performance. Essentially, benchmarks provide a measuring stick for investment strategies – in the article, we will look at a few of the major indexes used as benchmarks for equity investing in the industry and what makes them unique. S&P 500 The Standard and Poor’s 500, also known as the S&P 500, is a stock index composed of the 500 Largest U.S. companies listed on the stock exchange. The S&P 500 has a market capitalization of $33.8 trillion and is composed of growth and value companies. This index helps measure the performance of growth and value-based investment portfolios, or what Dave Ramsey often calls “Growth and Growth & Income” companies. Russell 2000 This index tracks the roughly 2,000 smallest U.S.-based companies. These small companies attract investors with their strong upside potential and fit the bill as “aggressive growth” companies because of their commitment to aggressively reinvest assets into their company’s growth. As you can imagine, investors like the sound of buying low during a company’s infancy and selling high as they reach the top of their respective industries. Russell 2000 investors expect (hope) those companies to have that type of trajectory. MSCI EAFE Unlike the other two indexes, which contain strictly U.S. companies, the MSCI EAFE is an equity index that captures large and mid-sized representation across international companies. This index weeds out emerging markets, which would be highly volatile, and instead focuses on 21 developed countries worldwide. This list does not include the U.S. or Canada and provides a helpful benchmark for internationally-focused investing. As a follower of Dave Ramsey, you might know this as the final piece of his four recommended equity investing categories (Growth, growth and income, aggressive growth, and international). If equity investments are right for your portfolio, benchmarks like these will play a pivotal role in developing your investment strategy. If you’re saving for retirement or another goal that’s down the road, contact our team today to schedule a meeting with one of our advisors. Whitaker-Myers Wealth Managers is an SEC-registered investment adviser firm. The information presented is for educational purposes only and intended for a broad audience. The information does not intend to make an offer or solicitation to sell or purchase any specific securities, investments, or investment strategies. Investments involve risk and are not guaranteed. Whitaker-Myers Wealth Managers reasonably believes that this marketing does not include any false or misleading statements or omissions of facts regarding services, investment, or client experience. Whitaker-Myers Wealth Managers has a reasonable belief that the content will not cause an untrue or misleading implication regarding the adviser’s services, investments, or client experiences. Please refer to the firm’s ADV Part 2A for material risks disclosures. Past performance of specific investment advice should not be relied upon without knowledge of certain circumstances of market events, the nature and timing of the investments, and relevant constraints of the investment. Whitaker-Myers Wealth Managers has presented information in a fair and balanced manner. Whitaker-Myers Wealth Managers is not giving tax, legal or accounting advice, consult a professional tax or legal representative if needed.