A year (and meeting) in review This past week our team traveled to Franklin, TN. It was a quick trip, but one of those trips that fills your (hypothetical) cup. We reflected on the past year, both successes and things to improve upon, and set goals for the upcoming year. Through thought-provoking discussions, we challenged ourselves to do better and brainstormed ideas to achieve this. We talked about ways to help us grow. We laughed and enjoyed each other’s company. We spent time at Ramsey Solutions’ Headquarters with Dave and his team. And we shared our opinions on the superior flavor of cheesecake at our team dinner. All in all, it was a great few days getting out of the office, spending some time together as a team, and reflecting on this past year. And a practice we suggest doing in other facets of your life. The benefits of a yearend recap Personally, I feel like January, February, and March take like 9 months to get through, but once April hits, I blink and it is already the middle of December. And I often feel like I only checked off two of the things that I wanted to accomplish. But taking the time, sitting back, and reminiscing on what actually happened in the last 365 days, helps me put things into perspective. Often times I realize I accomplished more than I thought I did and even things I did not have on my “to-do board” at the beginning of the year (i.e., have a baby as I am now back from maternity leave!). Now all your accomplishments may not be or feel all that life-changing. But even wins like putting in a garden, losing 10 pounds, joining an art class, learning to cook, reading for pleasure again, or committing to starting a budget (my personal favorite suggestion) are things that are good to acknowledge for yourself. These are the things that are good for your soul, and help recharge you for the new year to come. Outside of fueling your fire to take on the coming year, reviewing the last 12 months can help you learn to do things differently. This can be both personal and professional. Maybe when you look back, you wish you would have handled a situation differently, or started (or ended) something sooner rather than waiting. Whatever the case may be, looking back can help you move on and grow for things to come. Looking to the new year As all wise people say, you can’t live in the past. So, take the lessons learned, and accomplishments gained and carry them with you into the next year. But build upon them. Set your goals higher, or modify them to help you become a better version of yourself. A great way to do this is to sit down and give yourself a few minutes to reflect. Write down all the things that made you feel good, feel accomplished, and happy that you did this past year. Ask yourself, am I done with these accomplishments, or can I do better? Then, write down some action points to get you there and make them your goals. As Dave says, “a goal without a plan is just a dream”. Lastly, challenge yourself. Swinging for the fences is the type of energy we want you to have, but make it attainable so you can succeed. Set yourself up with wins (even if small wins) along the way to keep the momentum and excitement going for these goals. (Is it me or does that sound familiar?) And remember to give yourself grace. I think sometimes we all need this reminder. Between trying to keep up with the daily grind, eat healthily, workout, take care of the kids and succeed at work, it can all be a bit overwhelming. Be kind to yourself. Wrapping the year (and meeting) up So as the days start to dwindle down, give yourself a pat on your back. As I said, you probably have accomplished more than you have realized this past year. And then take that energy and move into the new year with excitement. The trip to Tennessee last week was a good trip. I laughed with coworkers I hadn’t seen since I was out for three months and got to meet a new colleague that joined us while I was gone. It was good to reconnect and see how we all wanted to grow ourselves (and the company) in the coming months. It filled my cup. Both figuratively and literally as I sipped on my peppermint mocha latte in the lobby of Ramsey Solutions.

Should I consider expanding my investing beyond stocks and bonds? For most time periods, some combination of stocks and bonds has worked fairly well. In fact, only 3% of the time are stocks and bonds both down in the same year. Meaning 2022, looks like the first time since the 1930’s that we will have that phenomenon take place. So generally speaking, most financial professionals are not abandoning traditional stocks and bonds, but there are several alternative class investments that clients may want to consider, as a tool for further diversification or a hedge against unique market behavior like that of 2022. In this article, we will explore a variety of alternatives that both advisors and investors may consider using in their portfolios for either short or long-term time-horizon. Private Real Estate Although using publicly traded real estate (REIT’s) is common and provides some level of diversification, private real estate has a much lower correlation to stocks and bonds. The main reason for this is that real estate markets react to many economic conditions as all markets do, so those reactions have to be valued daily or even on a minute-by-minute basis with ETF’s. Because of this, publicly traded REIT’s end up moving very similarly to stocks that are reacting to a constant flow of new economic data and thinking. Private real estate appraisals are taken only once per quarter or as infrequently as once a year, so the constant speculation and head fake that REIT’s react to is removed in the private real estate funds and therefore offers a much less volatile investment vehicle that provides some true diversification to the stock and bond markets. Structured Notes These are bonds, with maturities that are usually five years or less, issued by large banks. The moving parts and terms can vary quite a bit, but generally speaking there is some type of downside protection and the return is much more defined and predictable. Banks build these notes using options and zero-coupon bonds, to be able to offer attractive returns to investors, while taking on minimal risk themselves. In a year like 2022, where traditional stocks and bonds are suffering mostly double-digit losses, both downside protection and any return that is positive, have made these notes attractive to investors, this year. Just like with any other investment or asset class, research is necessary and structured notes are no exception as some can entail a high level of risk or offer minimal returns and value. Doing research and working with an advisor that has access to and knowledge of structured notes should offer you lots of value and a well-diversified portfolio. Finding quality structured notes that focus on income, will often outperform most bonds and bond mutual funds. One downside to notes is that although they can usually be sold at any time, you are much more likely to lose out on some principal if, in fact, you don’t hold it to maturity, versus holding to the stated maturity date of the note. Because of their liquidity, it’s still important to maintain a balanced portfolio of traditional stocks, bonds, and money markets in addition to structured notes. Precious Metals Gold has always been the go-to metal when seeking a hedge against inflation or the falling value of the dollar. Silver is also a common choice, although silver does have more industrial uses and technically gold and silver are commodities, they are usually put in a separate class and are purchased and invested in commonly as either a store of value or on speculation of near-term increases. People like gold and silver because of their proven staying power. Gold and silver are referenced in the Bible as a form of money and the desired investment, so people figure if they have a 6,000-year track record as an investment, then those precious metals will never become worthless. Casual investors many times make the mistake of thinking that gold and silver are not volatile and are safer than stocks, but precious metals can in fact fall in value and stay down for long periods of time. Gold was trading at $667 an ounce in September 1980 and it wasn’t until August 2007 that gold exceeded that level. So, you would have waited almost 27 years, just to break even. Stocks have rarely been negative over a 5-year span and have never been negative for any 14-year or greater span. Commodities Commodities are physical assets but can be traded via mutual funds, ETF’s, or options. These assets are generalized into soft commodities, which are food and livestock, and hard commodities that need to be drilled or mined for, like oil, coal, aluminum, and gas. Much like precious metals, commodities have appeal because they are tangible and have longevity in society. Also, like metals, they can be perceived as “safe” but can fall fast and stay down for several years. This year is an example of commodities being a good play and are mostly up and up strong in a year the stock and bond markets are down. So non-correlation is a benefit to investing in commodities, but because stocks are up nearly ¾ of years, commodities are not usually desirable to buy and hold long term. Crypto Although bitcoin has been around for over a decade, it and others like cryptocurrencies have been accepted into the mainstream of investing within the last few years. Just as crypto was starting to be more accepted, FTX (a major crypto exchange) just recently declared bankruptcy and is embroiled in a fraud scandal that is still unfolding, which has resulted in a loss of traction for the crypto world. Cryptocurrencies can be appealing because of their low correlation to the market and lack of dependence on the ebbs and flow of fiat currencies as well as the ease of quickly making transactions in foreign countries. However, the fact that still, such a small percentage of the population has crypto, makes it difficult to view it as a reliable and battle-tested currency. Other investors view crypto as a store of value or “digital gold” but because it cannot be physically seen and is often confusing to some investors, it faces an uphill battle as it aims for wide acceptance. So, what is the answer? Although we covered most of the common alternatives to stocks and bonds, it is not an exhaustive list. Collectibles, rare cars, currencies, options trading, physical real estate, and timeshares are just some of the other alternatives that investors may also consider. We have all heard success stories and big gains in these various alternative asset classes, but none of them is a sure thing and should not be used in place of stocks and bonds anytime soon. There are several variables to weigh with adding alternatives to your investment portfolio, but they are good to consider as a way to diversify or add value under certain circumstances. As a general rule, not going above 5% of your portfolio in any of these classes is usually a good approach to maintain a healthy level of risk, while still achieving some extra diversification. Be careful about attempting to over-diversify into alternatives. An example would be selecting 2-3 alternative assets that make sense at a specific time for a specific reason, keeping investors from taking on more risk than they intend. At Whitaker Myers Wealth Managers we feel that well-managed stock and bond funds should be a core component of most investors’ portfolios, but we do not want clients to miss out on sensible opportunities that could add value to their portfolios, so we will do our homework, aiming for the right time to utilize various alternative investments. In short, you should use alternatives, but they need to be the right ones at the right times, with sensible percentages, which can be a challenging balance to achieve. This is why it’s important that you talk to your financial advisor about these options and what makes sense for you.

With the advent of internet shopping and social media advertising, there has been a boom in small businesses over the last decade. In 2021, 5.4 million new business applications were submitted in the U.S. - more than 20 percent higher than any previous year. If you aspire to be a small business owner, it’s important to be prepared and have a plan before making a financial commitment. In this article, we’ll explore three keys to starting a small business from scratch. Determine what Drives You It goes without saying, but every business starts with an idea. There are plenty of obstacles waiting to impede your path to a profitable business. Do yourself a favor and start with an idea you are passionate about. If you believe in what you’re doing and are passionate about helping people, you are well on your way to providing a service that’s beneficial to society. If you care about something and become really good at providing a service to people, then you can add a ton of value to people’s lives. That is what makes a business successful. Make a Plan Obviously, you can’t start a business without a clearly defined roadmap. Define your mission, vision, and values before getting too granular. This is effectively an offshoot of the first step (above) but allows you to flesh out your “drive” a little more. Once you’re comfortable with what your business is going to be about, start to ask questions like “What is my budget,” “How will I make my services available” (online, brick and mortar etc.), and “What will my policies be?” You may even find it advantageous to use a calendar to plan out your timeline for gathering information, making your plan, and applying for the appropriate business license. Get Granular This is where the real work begins. You’ll need to decide on your business structure, the number of funds needed upfront, and the tax implications of starting and sustaining a business. It is always a bad idea to go into debt in order to start a business. It is wise to pay for your business costs in cash and be committed to growing slowly. If you are on baby step two and have personal debt, take the time to pay it off completely before putting your plan into motion. It’s better to wait until you’re financially independent than to use debt as a safety net and watch your dream business go up in smoke. There is a reason that 1 in 5 small businesses fail. By the time the rubber meets the road, you want to be sure that you’ve thought through every angle of the business in detail. If you have, then going from concept to reality won’t be so daunting. For a more complete checklist, check out the article our friends at Ramsey Solutions wrote on starting a small business. These three steps will have you well on your way to starting your business, but once you’ve thought through the important pieces of the puzzle, you’re ready to do the fun stuff like brand development. The whole process of starting a business takes time, so don’t be discouraged if you can’t start a business by next month. Remember, debt-free is always the best way to go so that you can live a financially independent life and live out your dreams. At Whitaker-Myers, we have a team of professionals that offer diverse skillsets to our clients. With the heart of a teacher, we are ready to help you prepare for your goals. If you are interested in starting a business and need to talk with a tax professional, reach out to us so we can help you put together a plan that makes sense.

In investing, risk tolerance is a phrase used to describe how much an individual is willing to see their account fluctuate, due to the amount of exposure one has in the stock market. As most people know, the stock market is unpredictable and has many ups and downs. Many people react to those ups and downs differently. Therefore, risk tolerance is unique to each person. There is a sliding scale to risk tolerance. One can invest 100% in stocks/mutual funds/Exchange Traded Funds (ETFs), which is the most aggressive form of investing. Next, someone could invest their money in 100% bonds, which is the most conservative form of investing. And lastly, they could also do a moderate approach where there are some stocks and some bonds; this mix and matching could be somewhat aggressive or somewhat conservative, depending on the allocation between stocks, bonds, and held cash. Conservative Investing Conservative investing is for those who have the lowest risk tolerance possible. These are the people who are most reluctant to invest at all and would most likely choose to have their money in their mattress. Money is very emotional for this group, and seeing any drop in the original investment amount is a calamity. Luckily, if you feel as though that is you, there are options out there. When risk tolerance is non-existent, or no risk tolerance, then there are a couple of options. The first is an all-bond portfolio. A company, a municipality, a state, or even the federal government, will agree to pay you back your money plus some extra after a certain amount of time. This grows your account at a slow but reliable pace, although bonds do still fluctuate in value. The other way is to keep it invested in a money market account, such as the Schwab Money Market fund. Money Markets are extremely safe investments; however, when something is safe, the investor loses out on higher potential annualized returns. Middle of the road Investing moderately is another tactic. Many people want some portions of their money safer, and other portions with the potential for higher annualized returns. The level at which people want that depends entirely on their risk tolerance. We have numerous clients all over that sliding scale. When describing this allocation, we say things like 90/10, 50/50, 80/20, etc. The first number represents the percentage of held stock/mutual funds/ETFs in a portfolio, and the second number represents the number of held bonds/money market funds in a portfolio. When it comes to mixing and matching in a moderate portfolio, it is important to understand this concept. For someone with a 90/10 portfolio, we would still generally consider their risk tolerance to be aggressive. As that first number goes to 80, 70, or even 60/40, that is more moderately aggressive, because there are more stocks than bonds. As soon as the number is even, a 50/50 portfolio, is perfectly moderate. As bonds take up more space than stocks in a portfolio, we go to moderately conservative, all the way back down to conservative. Mixing and matching these allocations is a very popular practice in investing for a couple of reasons. First, it keeps a portion of your money safer and always potentially increasing. And secondly, it usually causes greater diversification in a portfolio. Aggressive Investing Aggressive investing is a fantastic way to invest. This is for people who see the stock market as it is and understands it has ups and downs, and in the long run, are exposed to the highest potential annual returns than anyone else. The stock market since its inception has produced around 9-10% annualized returns on average. For those with a high-risk tolerance, being in a heavily-weighted stock/mutual fund/ETF portfolio is the perfect thing. While invested, these people will see account drops of 25-35% in some years, while also reaping the benefits of riding that rollercoaster all the way back to the top with 25-35% gains in some years. Again, this isn’t typical, but as long as your risk appetite logically understands that this could happen, in the long run, an aggressive investor will always have higher returns in their portfolio. Again, the average return of a stock market portfolio is 9-10% each year compounded. Having an advisor walking you through the emotion and logic of the stock market, and how your money could potentially be invested is a very important first step when determining your risk tolerance. Everyone is different, and there is something out there that meets your needs emotionally and logically. 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 just 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.

Financial Coach, who is that? Perhaps a Financial Coach is someone you have never heard of, but someone you never knew that you needed. A Financial Coach is someone who takes the time to sit down with you, review your current finances, and work with you to achieve your goals of saving money and getting out of debt. They mainly do this by helping you customize your budget and have periodic touch points with you for review. They are a person that helps keep you ACCOUNTABLE. One of their main goals for you is to help you feel more comfortable and confident with money management, by showing you ways to spend less and save more. Why work with a financial coach? Like any good coach, you would hire, be it for nutrition, fitness, a specific sport, etc., you want someone that is going to have your best interest at heart. You also want someone who has it as their goal to help keep you accountable and give you the best advice in that specific field. Money is a very emotional thing. And trying to figure out where to save or cut back in certain areas can be hard to do on your own. A Financial Coach can look at your financial situation, and help you tackle one problem at a time so it does not feel overwhelming. Over time they will help you build your confidence as you see changes happening. They will also teach you the tips, tricks, and steps on being able to accomplish your financial freedom on your own. What can you expect from meetings? Each meeting will be tailored to you and your specific needs. However, the majority of the time will be spent reviewing budgets and talking about ways you can adjust your spending from month to month to help you save to put money towards debt or to save for a long-term goal. If needed, a tailored debt snowball is created and is gone over with you, along with discussing best practices to approach your debt. We always suggest meeting with your coach at least once a month, but depending on your package, multiple meetings can be set within the same month, as well as weekly or periodic email check-ins to see how you are doing. At the end of each meeting, goals for the next meeting or check-ins are set, and a follow-up email with details, examples, articles, and outlines is sent your way to give you all the necessary tools in being successful. What are the benefits of working with a Whitaker-Myers Financial coach? When working with the financial coach at Whitaker-Myers, you are getting a coach that has gone through a rigorous online program to receive the designation of Ramsey Solutions Master Financial Coach. Not only are you getting someone who has gone through Dave Ramey’s training, but you are also getting a coach that has a team of 11 financial advisors and SmartVester Pros that they work with daily. Whitaker-Myers also focuses on having the heart of a teacher. We believe in making sure all of our clients know, and understand what they are doing with their money, and feel comfortable making educated decisions for their future. We believe in this philosophy so much; that we have made it one of our core values as a company. Through your coaching services, you will also have access to an online, wealth management system that will give you a retirement projection. This benefit allows you to see when you could potentially start investing once out of debt, and what your potential retirement plans could be for your future. Then once you are out of your debt, have saved for your emergency fund, and are ready to start investing, the team of 11 financial advisors and SmartVestor Pros will be ready to help you grow and build your wealth so you can live and give like no other. You’ll also receive a membership to Ramsey+ (a $129.99 value) for free when using the coaching services with Whitaker-Myers. How do I schedule an appointment with a financial coach? There are multiple ways you can schedule a meeting with our financial coach. You can visit the Whitaker-Myers’ website under the “Schedule a Meeting” section and view the calendar link. This will give you all the times available to meet and review your schedule to see what is best for you. You can also reach out through chat or email to schedule an appointment as well. Coaching options range from one-time specific personal finance scenario(s) with consulting hours/fees, to monthly coaching options. If you choose a monthly package option, you will be prorated for the month starting on the day of your first financial coaching meeting where suggestions and recommendations are made for you. How has working with a financial coach benefited someone? We like to look at all of our clients individually and see where we can help them be most successful with their finances. Each person has a unique situation, which means we as coaches need to look at your goals and current hurdles to find ways that help benefit you. Whether it is helping you tailor your monthly budget to cut out unnecessary expenses and allow you to save, to discussing what is the best banking option for you. We have even worked with clients as they decide to either sell or not sell their home and what is the best overall strategy for them. So far, we have been able to help clients pay off tens to thousands of dollars in current debt, to help them establish long-term emergency funds. The reactions we have heard from clients in these situations are usually how much more at peace they are with their finances (less stress, worry, and anxiety), and how much more confident they feel about making financial decisions.

The Decision to Buy or Rent: There comes a time in life when we all move out of our parent’s house – whether it’s leaving for college, getting a job and seeking independence, or simply being forced to fend for ourselves, we’ve all had that “first place of our own.” Each story is unique, just like everyone’s financial situation uniquely dictates whether they rent or buy their place of residence. There’s no question that owning a home has both its advantages and disadvantages, and the same can be said about renting. In this article we will explain some of the reasoning behind each strategy, and when it makes sense to make the leap from renting to owning a home. Why Should I Rent? While we all know that renting can have its challenges, this one is pretty simple. When you’re just getting started in the workforce and planning for the manual underwriting process, renting is usually your best and only option. It can be advantageous because you aren’t responsible for the maintenance expenses associated with your living space. Renters don’t have the threat of a major appliance replacement, furnace failure, or cracked foundation to deal with. What you pay for is the simplicity of having a place to call your own, without the financial risk associated with home ownership. In fact, if you think you have just enough to purchase a home, but won’t have any margin for those unexpected expenses, then you might want to hold off until your emergency fund can help you in the event of a crisis. Because you can call your landlord when something breaks, renters have the freedom to put cash aside for their eventual home purchase. Our friends at Ramsey Solutions refer to this as a sinking fund. The idea is to set a certain percentage of your income aside each month in order to save for a large purchase such as a car, Christmas presents, or a home. All of these situations would warrant taking advantage of a high-yield savings account or even a brokerage account (possibly using the Schwab Money Market Fund), depending on your specific objectives and timeline. Bottom Line: Renting allows you the legroom to save, save, save. When Should I Buy a House? You may like renting and have no aspiration to buy a home, or you may be itching to get your own space so you can put your own fingerprints on it. Whether you need convincing or your apartment is already boxed up, there is such a thing as good timing in the housing market. If you have been saving for a home purchase and you can afford to put down a minimum of 20% of the purchase price, then you might be ready to start house shopping. It’s also recommended that you secure a 15-year fixed-rate mortgage. Loans are helpful, but they aren’t meant to be a crutch. If you can pay off that house in 15 years, or less, then you will be well on your way to living a financially independent life. Owning a home means building equity. The principal payments are direct investments in your home, unlike rental payments that do little more than keep you off the streets. Know the numbers Right now is not the most favorable time to be securing a mortgage loan. In the current climate of rising interest rates and inflation, there have been better times to make the leap into home ownership. If you’re inclined to wait a little longer, it may be advantageous to buy at a lower interest rate a little further down the road. If you are ready to buy, make sure you can afford to pay upwards of 7% in interest on your loan. Your monthly mortgage payment will be broken down into four categories: Principal (equity) Interest Taxes Insurance premiums The recommendation is that your mortgage payment not exceed 25% of your take-home pay. Don’t just assume that because you’ve been pre-approved for a $300k loan you can afford that payment. Crunch the numbers and see if that payment falls within the 25% mark. It would be wise to pay extra toward your principal payment each month too. This will be a small price to pay which means saving thousands of dollars in interest over the course of the loan and shortening the life of the loan. With roughly 20% of U.S. retirees still paying a mortgage payment, there are steps you can take to both own a home and be mortgage free before reaching retirement. At Whitaker-Myers, we aim to help you achieve your financial goals and to live and give like no one else in retirement. If you plan to be a homeowner and you need help putting together a plan, schedule a meeting with me today.

The new year brings new goals, resolutions, and even the occasional inflation-adjusted retirement contribution limit. Ah, the things we look forward to! Like it or not, when you plan for your future, your annual 401(k) and IRA contributions are important pieces of achieving your retirement goals. When plans are put in place, your annual contribution limits don’t deviate much from year to year, but those changes are still important to be aware of when they do happen – and it’s your financial advisor’s job to keep you up to date on changes to contribution limits like the ones coming in 2023. When the calendar flips and forces our annual new muscle memorization, there are some important changes taking place – in this article, we will take a look at a few of them and examine a few best practices. New Year, New (contribution limits) Elective Deferrals such as 401(k), 403 (b) and 457 plans are jumping from a $20,500 contribution limit in 2022 to $22,500 next year in 2023 with a $1,000 jump in the catch-up contribution, moving from $6,500 to $7,500. IRA Contribution limits will move from $6,000 to $6,500 with the catch-up contribution remaining the same. Of course, with inflation up 7.7% this year, these adjustments are simply a sign of the times. Best Practices 1 . Spousal IRA If you’re maxing out your IRA, then you might be wondering what happens if you’re married and your spouse doesn’t work. Are they allowed to contribute to an IRA? Technically, no. But if a married couple files a joint tax return, then the working spouse is allowed to contribute up to the max for both their own IRA and their spouse’s IRA, on their behalf. Here’s what it could look like: A working husband maxes out his Roth IRA at $6,500, but the wife stopped working to stay home with the kids. The husband is permitted to contribute an additional $6,500 to the wife’s IRA on her behalf. It is important to be aware that you can max out an IRA to the extent that your earned income is at least equal to the amount of that contribution. 2. Catchup Contribution If you’re 50 years old or older and still working, then you are allowed to make extra contributions to your retirement accounts to make up for lost time or to simply increase your retirement savings in short order. As mentioned above, that’s an additional $7,500 toward a qualified plan, and an extra $1,000 to an IRA in 2023. Those specifics are mentioned above. 3. Order of Operations Our friends at Ramsey Solutions recommend contributing 15% of your earned income toward retirement each year. For employer-sponsored plans, we recommend contributing up to the match (if there is one), then funneling money into a Roth IRA, and then going back to your 401(k) to save the remainder, or into a brokerage (or “bridge”) account. In 2023 each working member of a household can contribute $22,500 to a qualified plan, and $6,500 to an IRA. As Dave likes to say, “Match beats Roth beats Traditional.” The match comes first for a few reasons; if you are saving into the pre-tax side of your 401(k), any amount you contribute lowers your taxable income, taking advantage of the company match gives you free money, and if the account is fully vested, then you can take it with you if you ever leave the company by rolling it over into an IRA. Once you’ve reached the match, the Roth contributions allow you to experience tax-free gains over time since those are after-tax contributions. Be careful though – if your modified adjusted gross income exceeds $153,000 (2023) or $144,000 (2022) as a single person or $228,000 (2023) or $214,000 (2022) as a married couple filing jointly, you aren’t eligible to contribute to a Roth IRA. This leaves the traditional IRA as a nice option, though the growth of that money will be taxed upon withdrawal in retirement. With so much to consider regarding your retirement, it’s important that you talk with a financial advisor who can help you navigate the nuances and make suitable recommendations for your retirement goals. I would be happy to help you with any questions you may have so please feel free to schedule a meeting with me today.

Young people have all the time in the world and they’re bulletproof, as a 23-year-old, I would know. Thinking critically about how their retirement income will be sourced is not always top of mind. This demographic has new spending money of their own and with this culture moving towards immediate gratification, naturally, there is a lot less emphasis on saving and investing, but rather enjoying every dollar earned. There is absolutely nothing wrong with spending the money that many have worked so hard to earn, but being informed on slight changes to implement with your savings and investing could have a drastic effect on a future “nest egg” in retirement. Mistake #1: I am not making enough to save Many times, this demographic has new expenses to learn how to balance along with their new and growing income. This can include rent, utilities, credit card(s), student loans, car payments, etc. (Although, if you do have debt payments – we hope you are working to pay them off using the steps our friends at Ramsey Solutions lays out for us.) Maturing and learning how to spend only what you can afford is a big learning curve for some in this demographic. I am asked many times to help my friends and acquaintances with budgeting. For advice, I have two different categories that I, as an advisor for others, like to create when it comes to my expenses each month. At the end of the month, I pay rent and utilities - things that are necessary for me to live. In the middle of the month, I pay for all of my other expenses. The key with discretionary spending is…if you cannot afford it, do not get it. Here is an example of how someone making $2,500 per month after taxes could easily figure out what they can save at the end of each month: $2,500 Net Income - $1,200 Rent & Utilities - $1,000 Other spending/expenses = $300 per month in savings/investments The trick is to simplify everything and keep track of what everything costs. For those with dual income, and more expensive living costs, it is the same calculation, just with bigger numbers. Just separate it into those 2 categories. We understand that budgeting can be a daunting task so if you want someone to help you get started, our Financial Coach would be more than happy to speak with you! Mistake #2: I can do it on my own I hear this all the time. Many young people and plenty of adults still choose to manage their savings and investing on their own. Many are successful but like anything else, you give up a valuable asset - time. On the other hand, many are not successful. Reading articles about the best types of investments, the best types of stocks, bonds, mutual funds, ETFs, etc, can all be very daunting, and many times, people do not choose wisely. One simple mistake can cost someone thousands of dollars in the short term, and even more in the long term, especially when it comes to taxes, potential gains, and timing the market. It may be worth your time to speak with an advisor to organize what you have, check your spending, and find the right way to start investing to set it and forget it. Mistake #3: Set it and … can I make a withdrawal? An important question someone in this demographic should ask is, “What is my timeline for this money?” This question is essential because it can help you decide where to start saving your money, and how much to save into each “bucket”. Many times, this demographic starts to save for a house, a new car, etc. That is all money needed for the short term. That type of money should be put into a separate bucket of investment - like a non-retirement brokerage account. At the same time, there needs to be considerations with retirement. Many times people will use their 401(k) to invest, and that is fine, but 3-5% generally isn’t enough. Dave Ramsey recommends that after your debt is paid off and one has an ample emergency fund (3-6 months of expenses saved and not invested), they should be saving and investing 15% of their annual income. In these retirement buckets, you have different tax-advantaged accounts. The 401(k) takes pre-tax contributions, so you’re putting off your taxes, while a ROTH will be tax-free in retirement. For investing in both accounts, it is crucial to understand that an investor will not touch this money before 59 ½ years of age. Any withdrawals before then will result in penalties. Knowing your timeline is something regularly overlooked by people ages 22-30, and thinking critically about goals and the future could have a tremendously positive effect on your financial life; especially at this young age. 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 just 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.

One thing I’ve been talking about with clients more this year, especially as the year has progressed and interest rates have increased, is high-yield savings accounts. These are savings or money market accounts that are offered by (usually) online banks. However, your Whitaker-Myers Wealth Managers Financial Advisor can help you if you want to consider the Schwab Money Market Fund, which has a current yield of 3.74% as of 11/22/2022. Online banks have a different business model than your bank that has brick-and-mortar branches where they don’t have physical branches that you can visit. To attract deposits, they offer higher interest rates on their account types (e.g.: checking, savings, CDs, money markets). With rising interest rates this year, the opportunity cost to move a portion of your emergency fund into one of these accounts is greater. If you have $20,000 in high-yield savings and are earning the 10th best rate of 3.50% APY as of 11/18/2022 listed on Investopedia you would earn ~$711 over the course of a year, and even more if you used the Schwab Money Market Fund mentioned above. That comes in handy to have a little extra money for those Christmas gifts. Features to Consider in a High-Yield Savings If you’re looking for a high-yield savings account, the things you want to consider are: Interest Rate – the bank that is offering the best rate at any one point in time will always change depending on a bank’s desire to attract deposits. There are several that are usually near the top: UFB Direct, Bread Savings, Bask Bank, and Vio Bank to name a few FDIC Insured – This ensures that your money is safe if the bank goes out of business, up to the Federal Deposit Insurance Corporation (FDIC) limit of $250,000. Signing up to use an online bank may make you nervous, but it shouldn’t as long as the bank has this insurance. Most if not all of these accounts on financial websites like Investopedia will give you FDIC banks. Minimum Account Balance – most banks have some minimum account size. I recommend finding one that has a $0 or $1 limit in case you need to move the funds out of the account for any reason (emergency!) Maintenance fees – ensure that the bank you use does not have any maintenance fees ATM Access – This can be a less valued feature, especially if you have a checking account with a local bank, but may be helpful to some. Keep Your Primary Bank Relationship I recommend keeping your primary checking/banking relationship for many reasons including: Convenience of a close physical branch in case you need an ATM that is close to you to use at no charge, a cashier’s check for a large transaction, or a notary for signing a document Not having to change all your direct deposit, debits, Roth IRA, or brokerage investment recurring transactions every month Link your Checking and Automate Your Savings I also suggest that clients link their high-yield savings to their primary checking so they can move funds from/to their checking when they have a large expense that needs to be paid. You can link from both banks’ websites and apps so regardless of which you’re using you can transfer funds. You may consider keeping a couple of months of expenses in your primary checking and your remaining cash balance in the high-yield savings. You can even automate your direct deposit to have your sinking funds going into your high-yield account every pay. Say you pay your $5,000 property taxes semi-annually, you spend $3,000 on an annual vacation, and your homeowners and auto insurance of $2,000 is paid quarterly. These costs are $10,000 in total and if you wanted to automate this out of your pay which is bi-weekly, or 26 paychecks a year. You would set up your direct deposit to transfer $384.62 out of every paycheck and then transfer the funds to your checking or pay out of your high-yield account when the expense is due. Any interest that is paid out is taxable and you will receive a 1099-INT form each year from the bank. If you have any questions about using a high-yield savings product and how that fits into your financial plan contact one of our Financial Planners.

Investments in the news It’s been tough to turn on any financial news network lately without hearing headlines regarding the saga at FTX and the antics of their founder Sam Bankman-Fried. If you are unfamiliar with the story, I’ll elaborate. Sam Bankman-Fried founded the crypto exchange FTX in May of 2019, just in time for the coming boom in the popularity of crypto trading. At its peak, it was the 3rd largest crypto exchange and had over a million users. Users would deposit money, buy, sell, and hold bitcoin and other digital assets on the platform. The exchange later ran into credit issues and FTX filed for bankruptcy last week. Turns out Bankman-Fried was running a somewhat sketchy organization. FTX did not do the best job at keeping records of client accounts, and how much cash they had, and ultimately had to file for chapter 11 bankruptcy when their own FTT crypto token lost 80% of its value. They still owe depositors 8 billion dollars. Bankman-Fried was the darling of the industry having Tom Brady, Kim Kardashian, and Larry David as advertisers. They also had their name on the Miami Heat arena. In the bankruptcy filings, it was revealed that expenses for business reimbursements were accepted or rejected by a random manager over a group chat with an emoji. FTX did not have a board, or cash management system, and they did not even keep records of their own employees. Attempts to locate certain employees were unsuccessful, leading to the presumption that some were not even real. It might seem like it is so cool, so hip, or so fun to trade digital made-up tokens in the hopes of getting rich but remember that if you have no idea how a company makes money, they probably are not the best investment. I do not say these things to rub salt in the wounds of investors who opened accounts and had their hard-earned money stolen. But I do think there are some valuable lessons to be learned. Most critical… Sometimes things explode! There are more examples of this from the past XIV was the name of a popular investment in 2018, it was a Credit Suisse product that had an incredible run. During an 8-year run, it went from $10 to $130. It was not a stock; it was an exchange-traded product that generated returns based on market volatility. Long story short, it would produce outsized returns as long as no volatility hit the markets. Well, any seasoned investor knows that volatility is part of investing. February 2018 marked the end of XIV’s run. Markets fell almost 10% in a matter of days and XIV was down 80% in a day. It was delisted days later, and lawsuits followed. Mainly because Credit Suisse didn’t make it clear enough that this wasn’t a long-term investment vehicle. The following is found in the XIV prospectus “In almost any potential scenario the Closing Indicative Value (as defined below) of your ETNs is likely to be close to zero after 20 years.” Other examples include Lehman Brothers, Enron, Theranos, and my personal favorite Nikola. Nikola was founded by Trevor Milton. Milton claimed that Nikola had developed a semi-truck that ran on hydrogen. Instead of making a semi-truck that ran on hydrogen, Milton just recorded one of his nonfunctioning, futuristic-looking trucks rolling down a gradual slope and released the footage to the investment world. The stock was worth almost $66 in 2020, now it is worth just $2.53. How do you know what investments are right for you? I do not want to give the impression that the investment universe is full of nothing but con artists. That is not true at all, it is almost exclusively not. Investing is a marathon, not a sprint. Most successful retirees have spent decades being “Boring.” By "boring investing" I am referring to investing consistently, in well-diversified portfolios of stocks that have real business models, that generate real cash flow, and return that cash to shareholders in the form of dividends. It is almost as though the recipe is too simple so we come up with ways to make it more complex. It is common for people to want to try to time the market, put too much into an area that they feel is poised for outsized growth, or decide not to get started because they feel overwhelmed by the task of saving for their future. I encourage everyone, wherever they are on their financial journey, to be "boring", be consistent, and have a long-term plan and path to get to their financial goal. If you would like help creating a financial plan to achieve your retirement goals, feel free to reach out to one of our Financial Advisors and we would be happy to help.

With the Christmas Season rapidly approaching and inflation at an all-time high you may have already thought about your shopping budget. If you haven’t already allocated your Christmas dollars, then stop what you’re doing and open an excel document (or this Budgeting App from our friends at Ramsey Solutions.) How much to spend on Christmas? According to data from National Retail Federation, Americans spend an average of $997.73 on gifts and Holiday items each Christmas season. That figure comes in just under the median pre-tax weekly salary of $1,001. It may not be surprising that the average American spends 25% of their December income on Christmas gifts and decorations, but if you’re honest, it’s probably unplanned overspending that’s got you feeling a little stressed out as the calendar marches on toward December. The recommended maximum for Christmas spending is 1% of your annual salary. Following the above example, if you make about $50,000 a year, then you should spend no more than $500 on Christmas expenses this year. As proponents of Dave Ramsey’s debt-free model of living, we at Whitaker Myers want all our clients to live financially independent lives. An important piece of that is getting through the Christmas season without taking on more consumer debt by setting a budget. Here are a few tips to help you avoid the post-Christmas blues and a big lump of buyer’s remorse. Make a Budget and Stick to it This might seem like an obvious one, but if you haven’t set a budget then you will likely spend more than you want to (or should) on Christmas. If you have a generous heart and enjoy giving gifts to loved ones, then you are even more inclined to overspend, even if it’s out of the kindness of your heart. Start with the dollar amount you’d like to allocate for spending. Once you’ve determined how much you’re comfortable spending, make a list of everyone for whom you plan to buy gifts. Budget a specific amount per person and stick to it. If you don’t like giving nick-nacks then consider gifting experiences or making something that will save you some money, without sacrificing thoughtfulness. Remember the 1% rule when making your budget. This spreadsheet is a great way to make a plan for who you need to shop for and how much you would like to spend on them. Putting a dollar amount next to their name before you even start shopping helps you be more intentional with your holiday spending and shopping. Save all Year It might be too late for this one in 2022, but it’s never too early to start planning for 2023. You’ll be more equipped for staying on a budget if you have the funds already earmarked for Christmas. You can start a separate Christmas savings account which would be considered a sinking fund. We have multiple articles about sinking funds including one that explains what they are and one that discusses if they should be invested. Don’t forget that you can even use a brokerage account for short-term savings goals. One of our financial advisors can help you allocate that money into wise investments for short-term objectives like saving for Christmas (or buying a home, car, appliance, etc.) Don’t Overindulge Those of you who are familiar with Dave Ramsey know that baby step two is all about getting out of debt. He advises people to attack their debt with “Gazelle intensity,” sacrificing in the short term to get rid of debt and live financially independent lives. At the core of this step is the avoidance of overindulgence. This is a major key to saving as well as paying off debt. If you are able to make more meals at home, watch old DVDs instead of paying for that subscription, and wear that old Christmas turtleneck in lieu of springing for a new cardigan, then you will be well on your way to freeing up some cash for your Christmas budget. It’s important to be critical with your spending, always asking yourself, “do I need this?” The answer is probably “no.” If you struggle with budgeting, talking with a financial coach might be the right move for you. At Whitaker-Myers, we strive to help our clients get debt-free and start living their lives financially independently. Among our many services is financial coaching. If you want to talk to a financial coach about your budget, reach out to us today.

Have you thought of asking for or giving a gift card recently? “What would you like for your birthday?” Or how about, “Is there anything you would like for Christmas?” As I have gotten older, I have found these questions to be harder to answer over time. As a working adult, a lot of the time, I either budget when I know I want or need something, or I purchase it for myself because I have the funds and can do so. Gone are the days of the “Wish Book” where you spent hours and maybe even some days flipping through the pages starring, circling, or initialing the various items so your parents, I mean Santa, could bring you these valued treasures. So as an adult, what are some beneficial items to ask for when you are posed with these questions? My answer has quickly become “GIFT CARDS!” Benefits of Gift Cards I have found gift cards to become the guilt-free way to splurge and treat yourself. Especially as a mama, spending money on yourself for a coffee, a new shirt – just because, or even going and getting your hair cut or colored can throw “mom guilt” on you faster than a comment someone made on Facebook. I remember growing up asking my mom what she wanted for her birthday and she always came back with a nail gift card, to get her hair done, etc. And I remember thinking, “Really?”, but as a mom now, I 100% get it. And even not being a mom, if you are trying to stay budget conscious, someone giving you “money” to spend on yourself, when you want to treat yourself, is a great way to stay within budget. They are fast for someone to pick up, and they don’t have to spend hours trying to think of something to get you, or roaming stores looking for something that “looked like you”. Gift cards are also easy to mail! Slip them into a card, add a stamp, and you are good to go! Stigmas that can be associated with gift cards Of course, with every good, there is a bad side to things depending on how you look at it. Some people feel it is the “lazy way” to gift. Or that you did not put much thought or effort into that gift. And I can understand where this thought can come from, however, if it is what the person is asking for, you are actually giving them what they want. And in my opinion, anytime you give someone a gift, there was thought behind it. The fact that you thought enough of that person to go out and get them something, meaning that you spent your own money on them, means you do care about them. As my grandmother used to always say, a gift card spends the same way as if I were to spend it for you. This way I know you are getting something you truly want without putting pressure on you at the moment to think of things. Restaurants, Fast Food, and Shopping cards all help you save on your budget! Again, if you are trying to be budget conscious, and can’t think of anything that you want or need for your birthday/Christmas gift, think of places you like to eat at, grab food for lunch during the work week, roam the store smelling candles, or your favorite coffee place. Those gift cards can let you “treat” yourself to things in your everyday budget without dipping into your budget! I don’t have a coffee line in my budget. And a lot of the time, the only way I get it out and about is when I have a gift card for this exact purpose. Mainly because I don’t want to spend my budgeted money on coffee here and there, I’d rather save that $25 (or whatever you budget for it) for something else and apply that to my budget elsewhere. I have learned to appreciate having a Subway or Jimmy Johns card in my wallet in case I forget to pack a lunch, don’t like the lunch I packed in the morning when I went to go eat it later in the day, or when I am out running errands, I can run into one of those places and not feel guilty for grabbing a quick lunch. I know for some of our coaching clients we have suggested taking cash out to use for things like this so you have a “when I am out of cash for this specific line item, I am out” mentality, and this could be very similar to that philosophy. Think outside of the box for your gift cards Don’t limit yourself to just fast food, restaurants, or shopping places to ask for, or buy gift cards for someone. Personally, I have asked for gift cards to “pamper” myself with for my birthday. So, if I want to go get my nails or a pedicure one day, I don’t feel bad making an appointment. Or I have asked for gift cards to the place I get my hair done. And for the ultimate pampering experience, ask for that massage! I just cashed in on one of my birthday massages I got last year for a prenatal massage about a month before my due date, and I could not have been more excited about that appointment! For my husband, I have gifted him a glass-blowing experience and a session where you make your own pottery mug. Super fun experiences we get to have together, and a memento he/we get to keep after our outing. And in turn, he has gifted me a card to a canvas site where I can download family photos to have printed off to hang in our house. So next time you are asked, “What would you like for….” Answer with a gift card! And if you want to be intentional with what gift card someone gets you, put some thought into it and see what you would truly appreciate. This way you get what you are wanting in the end, and they feel they are getting you something you truly want too. Or if you are getting one for someone else, again, think of how they spend their cash, or how they like to “treat” themselves, and treat them to their next experience!