Financial fraud has grown more sophisticated alongside advances in artificial intelligence and digital technology. Criminals are increasingly using tools like voice cloning, realistic phishing messages, and social engineering tactics to pressure families into transferring money quickly. Sound financial planning isn’t only about growing your investments—it’s also about protecting what you’ve already earned. The steps below can help reduce risk and strengthen your family’s financial safeguards. Monitor account activity regularly Reviewing your financial accounts frequently is one of the simplest and most effective ways to detect suspicious activity. Set up alerts for: Deposits and withdrawals Large transactions Password or profile changes These real-time notifications allow you to respond quickly if something looks unusual. Use two-factor authentication Two-factor authentication (2FA) adds a critical second layer of protection beyond your password. With 2FA enabled: A login requires both your password and a one-time code or verification Even if a password is compromised, unauthorized access is far less likely Apply this protection to banking, investment, and email accounts whenever possible. Add a trusted contact to financial accounts Many financial institutions allow you to designate a trusted contact person. This individual cannot make transactions but can be contacted if unusual activity occurs or if there are concerns about potential fraud or cognitive decline. This added safeguard can help prevent unauthorized transfers and ensure someone you trust is informed if issues arise. Establish a Financial Power of Attorney A financial power of attorney (POA) authorizes someone you trust to make financial decisions on your behalf if you become unable to do so. This is especially important for: Individuals approaching or in retirement Families supporting aging parents Situations involving illness or cognitive decline A properly structured POA can help stop fraudulent transactions and provide oversight when it’s needed most. Review beneficiaries and key documents annually Legacy planning plays a major role in protecting your family. Each year, review: Beneficiary designations Wills and estate documents Property records and account information Dave Ramsey and the Ramsey Solutions Team often emphasize having an annual “death talk” with family—an open conversation about accounts, documents, and where important information is stored. These discussions can reduce confusion, prevent lost assets, and ensure your wishes are carried out. As a SmartVestor Pro firm, Whitaker-Myers Wealth Managers regularly sees how proactive planning helps families avoid costly mistakes and financial harm. Final Thoughts Protecting your finances requires the same intentionality as growing them. Fraud threats will continue evolving, but consistent monitoring, clear documentation, and trusted relationships can dramatically reduce your vulnerability. If you haven’t reviewed your protections recently, consider scheduling a financial checkup to ensure your accounts, estate plans, and risk safeguards are aligned with your goals and your family’s needs.

Valentine’s Day may be top of mind this time of year, but while hearts, cards, and chocolates get all the attention, college planning rarely does. Still, early-year planning can be one of the smartest ways families show a little love to their future finances. Starting the college conversation now gives parents and students time to explore options, understand true costs, and make thoughtful, strategic decisions, long before deadlines, pressure, and tuition bills arrive.   College Planning Starts Earlier Than You Think College planning is often thought of as a senior-year task, but in reality, it’s the very first step, especially for families with younger students. Starting early opens the door to more options and greater flexibility, allowing families to explore a wider range of schools, understand how costs add up, and take advantage of opportunities that can improve affordability over time. With fewer time constraints, decisions are more thoughtful and less reactive, helping families avoid last-minute choices driven by deadlines rather than long-term value.   Early planning also allows families to think strategically about college selection. The best college fit isn’t just about academics; it’s about finding the right balance between academic, financial, and social fit. Equally important is having the “Money Talk” sooner rather than later. When parents clearly communicate what they can afford before applications are submitted, students can focus on colleges that align with those realities. Skipping that conversation often leads to unnecessary stress when acceptance letters arrive, and costs don’t match expectations. Starting early helps set clear expectations and creates a smoother, more confident path forward.   The Love Language of Financial Aid Understanding financial aid is a critical part of the college planning process, and timing plays a much bigger role than many families realize. Admissions decisions and merit scholarship notifications often arrive weeks (or even months) before full financial aid packages, which are typically released in March. This gap can create a false sense of affordability or excitement around an offer that hasn’t yet been fully explained. In some cases, private colleges may send preliminary or partial aid information earlier as they work to secure enrollment, adding another layer of complexity. Without understanding how these timelines work, families may feel pressured to make decisions before they have all the facts. Being prepared to interpret early offers, and knowing what information is still pending helps families stay grounded and avoid costly assumptions.   Adding to the challenge, financial aid letters are far from standardized. Each college presents its offer differently, which makes side-by-side comparisons difficult. Some schools provide a detailed breakdown of tuition, fees, housing, and indirect costs such as books, travel, and personal expenses. Others highlight scholarships and grants while downplaying the total cost or including loans and work-study as “aid,” which can make an offer appear more generous than it actually is. This is why families must focus on the full cost of attendance, not just the amount of free money offered. Understanding what must be paid out of pocket or borrowed, each year, is essential to making an informed decision.   It’s also important for families to recognize that merit aid is not awarded based solely on financial need. Colleges often allocate their most generous scholarships to students they are most eager to enroll, using academic metrics as a guide. A student’s GPA, the rigor of their coursework, and their class rank can significantly influence both merit and need-based aid offers. Two students with similar financial profiles may receive very different packages depending on how they compare academically within a school’s applicant pool. When evaluating offers, families should take an “apples to apples” approach, comparing total costs across schools rather than focusing on scholarship size alone. A smaller award from a lower-cost institution may ultimately be the better financial decision than a larger scholarship attached to a much higher price tag.   The Best Valentine’s Gift Is a Plan Valentine’s Day is often about thoughtful gestures, but some of the most meaningful acts of care happen behind the scenes. Starting the college planning process early, having honest conversations, understanding financial aid, and making strategic choices can be one of the most impactful ways families show love and support. While chocolates and cards may fade, a well-considered college plan lasts far longer, helping students step confidently into their future without unnecessary financial stress.

Inflation has had a noticeable impact on many households in recent years, raising an important question: How can I better prepare myself financially? For much of modern history, inflation was not a major concern for most Americans. After peaking in the early 1980s, inflation remained largely below 3% from 1990 onward. Even when it briefly exceeded that level, it typically declined quickly and had minimal impact on household budgets. The 2020s, however, have told a different story. Inflation reached 4.7% in 2021, surged to 8.0% in 2022, remained elevated at 4.1% in 2023, and has stayed above 3% so far in 2024. While the rate of inflation has moderated, prices have not declined. As a result, the overall cost of living has increased by approximately 20% since 2021. This new reality naturally raises concerns about budgeting and investing. While both are important, this article focuses primarily on investment strategies, beginning with a brief overview of immediate budget adjustments that may help offset inflation’s impact. Immediate Budget Adjustments to Offset Inflation The most effective budget changes begin with engagement, honesty, and discipline—particularly when evaluating fixed and discretionary expenses. Review Fixed Expenses Fixed expenses are mandatory costs that typically cannot be eliminated, but they can sometimes be reduced. For example, reviewing insurance policies and increasing deductibles—if your emergency fund can absorb the additional risk—may lower premiums and free up monthly cash flow. Mortgage costs are another key area to review. While many homeowners are locked into existing rates, the prospect of declining interest rates may make refinancing attractive for some, potentially reducing monthly payments. Energy and utilities also warrant attention. Switching providers, renegotiating contracts, or locking in favorable rates may yield savings. Promotional cell phone plans, bundled services, or gas card incentives can also provide immediate relief. Reevaluate “Semi-Fixed” Expenses Some expenses that appear fixed—such as food and gasoline—often include discretionary elements. Food, in particular, presents opportunities for cost savings without sacrificing quality. Using coupons, purchasing generic brands, adjusting meal planning, reducing meat consumption, or limiting alcohol purchases can meaningfully improve monthly cash flow. It is important, however, not to reduce food costs at the expense of long-term health. Payroll deductions such as HSAs, FSAs, supplemental insurance, and charitable contributions should also be reviewed periodically. Because these are withheld automatically, they are often overlooked. Temporarily adjusting or pausing certain deductions may provide short-term budget relief when appropriate. Trim Discretionary Spending Discretionary expenses—entertainment, dining out, streaming services, travel, non-essential clothing, and hobbies—often offer the most flexibility. While these reductions can be uncomfortable, honest evaluation of non-essential spending can significantly reduce financial pressure during inflationary periods. Investment Strategies to Combat Inflation Emphasize Long-Term Growth Assets For intermediate- and long-term goals with a time horizon of five years or more, allocating approximately 80%–100% of investment portfolios (brokerage accounts, IRAs, and 401(k)s) to stocks, stock mutual funds, or stock ETFs is often appropriate. Historically, stocks have been the most effective asset class for preserving and increasing purchasing power. Over the past 30 years, stocks have averaged annual returns of approximately 10.15%, compared to 4.41% for bonds and 2.29% for cash. In real terms, cash has lost purchasing power, bonds have largely preserved it, and stocks have meaningfully increased it. For short-term goals—particularly those under one year—reducing risk remains prudent. However, even conservative assets should be optimized by seeking higher-yielding money market funds, Treasury securities, efficient bond funds, structured notes, or preferred stocks. Maximizing yields on cash reserves and emergency funds can meaningfully offset inflation’s impact without taking undue risk. Incorporating Real Estate as an Inflation Hedge Real estate has long been used to reduce portfolio volatility and hedge against inflation. While direct ownership is not appealing to everyone, there are multiple ways to gain exposure without becoming a landlord or real estate expert. Private real estate investments—on both the ownership and credit side—can provide diversification and inflation protection without the operational burden of property management. These options are often accessible through vetted investment vehicles with professional oversight. For those interested in direct ownership without traditional rental challenges, alternatives include raw land, farmland, or vacation properties. These investments may offer personal enjoyment alongside long-term appreciation. A vacation property, for example, may generate rental income, provide personal use, and ultimately become a retirement residence. Many real estate investments also offer tax advantages, further enhancing their appeal as an inflation hedge. Summary Inflation presents real challenges, but it also creates opportunities for thoughtful financial planning. Reducing debt, improving efficiency, optimizing cash yields, and ensuring proper diversification are foundational strategies during inflationary periods. By taking deliberate steps across budgeting and investing, households can reduce financial vulnerability and make inflation’s impact far more manageable. If you would like to talk about financial planning or monthly budgeting, reach out to our team of financial advisors and financial coaches today to start your financial journey.

How We View Social Security: Most people understand the basics of social security and why/how it is used, and we also understand that it has been a critical systematic financial instrument for millions of Americans for decades. The positive side of social security is that, if it was completely wiped out today, millions of Americans would have no where to go for income in retirement. It has also been a long-term way to almost “force” people to save for retirement, which should be thought of beneficially in the sense that many receiving SS today would not have planned accordingly themselves. The more negative side is that the average modern-day American should not be hoping or forecasting to eclipse his/her lifetime of contributions with the benefits that will be received, and that social security can generally and simply be thought of as a “bad deal.” Also, especially with younger adults, no aspect of social security today should be thought of as “guaranteed” for the future, especially with a recent history of pushing back what is thought of as retirement age, the impact of baby boomers, and continually increasing life expectancies. The objective here is not to host a roast towards social security or to argue whether it should exist or be treated the same in the future, but rather be dually educational and hopefully persuasive. While most understand the basics of SS, we believe that most do not have the right attitude towards it or even relationship with it, and growing in this area will be critical when thinking about social security’s tax implications. Social Security can be Taxable: What Does this Mean for You? Whether you as the reader are an existing client, a potential client, or just someone who has any sort of retirement goal/plan, we are stressing that a healthy attitude towards social security is an attitude of non-dependence that coincides with proper retirement planning. The average monthly SS benefit in 2020 is just above $1,500 a month, which equates to $18,000 in annual income. With relying on SS alone, it is very possible to put in 40 years of hard work and make an honest living, just to live paycheck to paycheck and lack financial freedom in retirement. The great thing about us and other fiduciary-based investment advisors is that we are in the business of helping YOU create and control your income and assets in retirement with your best interest always coming first. So many aspects of the investment world and finance industry are situational, and that is especially true when thinking about clients in general. It should go without saying that no two clients are exactly alike, and that all situations, goals, constraints, etc. are never going to be the same across the board. However, the nature and execution of our business is directed at producing a result opposite to relying on social security in retirement. For all of our clients, we want SS to be nothing more than a small “cherry on top” when comparing to other income-producing instruments and retirement assets. When considering this, and the fact that social security CAN be taxable on the federal level, it’s easier to understand why we actually hope and believe that all of our clients will have to pay federal taxes on social security. Next, you will see the guidelines/income brackets for the federal taxation of SS and why ‘tax’ can be thought of as an unusual positive in this sense. Tax and Income Guidelines: A portion of social security benefits may be taxable, and here are the current guidelines to follow: *For all of these situations, consider one half or 50% of annual social security for each individual and add it to other income which can include wages, pension, interest, dividends, and capital gains. Up to 50% of SS benefits may be taxable if: Annual income is $25,000-$34,000 for filing as single, head of household, or qualifying widow/widower Annual income is $25,000-$34,000 for married filing separately (have to live separately for entire preceding year) Annual income is $32,000-$44,000 for married filing jointly (consider one half of annual social security income from each spouse) Up to 85% of SS benefits may be taxable if: Annual income is more than $34,000 for filing as single, head of household, or qualifying widow/widower Annual income is more than $34,000 for married filing separately (have to live separately) Anyone for married filing separately that lived with their spouse for any amount of time in the preceding year Annual income is more than $44,000 for married filing jointly Key Points: With proper retirement planning, you can expect to pay some portion of tax on social security benefits when considering the combined income of SS and portfolio distributions (interest, capital gains, dividends) and/or pension income Again, this is a rare case when you actually want to pay taxes, because if you weren’t, it would obviously be due to your retirement income being lower than the limits A typical client is forecasted to live on a comfortable and satisfying retirement income that considers the client’s desires and wishes and the reasonability, suitability, and tradeoffs behind them that will easily surpass these limits while still allowing average portfolio growth to exceed distributions

Having read the title of this article, it will inform you that my goal is to explain the main benefits of using a dollar-cost averaging investing strategy. However, first, it is important to understand what a dollar-cost averaging strategy entails, and there is a great chance that you as the reader may already be committing to this strategy without even realizing it! To put it briefly, let’s say you are putting 5% of your income into mutual funds in your 401(k), then you would be using a dollar-cost averaging strategy regardless of the specific frequency of those retirement contributions as long as they are consistent (weekly, biweekly, monthly, etc.) This strategy simply involves investing the same amount of money at these set intervals into stock mutual funds and/or other applicable investments, regardless of price-per-share of those mutual funds. Therefore, by investing with a consistent dollar basis, instead of on a per-share basis, you will buy more shares when the mutual fund(s) is “cheaper”. (Think when the market is “down”.) You will buy less shares when the mutual fund(s) is “more expensive.” (Think when the market is “up”.) Initially, many advisors and investment firms turn their heads to potential clients that don’t have large sums of money to invest. They try to discourage dollar-cost-averaging knowing that it is a beneficial and proven investing strategy for a vast array of people that significantly reduces market timing risk. This can mean less assets up front to take an initial investment management fee or a commission check. (P.S. As a friendly reminder, watch out for commission-based compensation structures.) I say this because we, at Whitaker-Myers, do not operate that way. There are two main things, among many more, that our advisors and company take pride in: working with and providing great advice, service, and strategies to our clients with THEIR best interest in mind and having the heart of a teacher. If you, the reader, are not an existing client and/or don’t know much or anything about our company, I hope the latter point shows through with this information. What Are the Benefits? I would like to dive into the benefits of implementing and using this strategy. I have also included a picture, with credit to Franklin Templeton, that shows a hypothetical illustration or case scenario of using this strategy with results in better investment returns then investing the same amount of dollars, on day one, with a lump-sum. However, the argument for dollar-cost averaging is not completely or even mostly mathematical or return-based in nature. In fact, when you think about the history of the stock market and the fact that it has provided substantial returns with ups and downs along the way, you will generally have a better chance of more substantial returns with an initial lump sum vs. spreading out that same lump into twelve monthly contributions in a one-year period. Although this is not an exact or concrete statistic, we are on par with Dave Ramsey when he says that finances, investing and underlying decisions are about 80% emotional or psychological and about 20% head knowledge. We would also argue that a perfect world or place to be for an investor would be the use of 100% head knowledge, but this is unrealistic with money, and we understand that. While most of us inherently know that buying low and selling high is a general benefit, many end up committing to the opposite. For the majority of people, the immediate thought when they see their investments decline, in the short-term, is to sell because of the uncontrollable fear of “How much more can I lose?”. Also, for the majority of people, the immediate thought when they see their investments appreciate in the short-term is “How much more can I make before selling?”. Dollar-cost-averaging is especially made to be a long-term buying strategy and a behavioral or psychological benefit: Dollar-cost-averaging lets you take on the position of timing the market by purchasing more shares of said investment when cheap and less shares are more expensive. This is in the most modest and least-risk inducing way. The majority of people are not in the position to invest in large lump sums in the first place. It’s beneficial for the overwhelming majority of investors to commit to a simple and disciplined investing habit or plan. Pinpoint market timing is nearly impossible, even for professional investors. • Regret and negative results WILL occur with poorly timed lump-sum investing. If committed to the strategy, you are committing to using bear markets, automatically, as a buying opportunity. Those who try to time the market completely have a historically better chance of failing than succeeding. Overall, this strategy allows those who use it to aim for great returns over a long period of time. This allows them to take on a much lesser risk that essentially equates to a more positive, emotional and psychological result.

The word of the day is VOLATILITY, and in the investment world, this word can leave a bad taste in your mouth. Is it avoidable? The answer is certainly not. As an advisor, investor, or both, we all know that volatility is a natural aspect of the stock market or any individual investment. We all wish the stock market appreciated in a perfectly straight line, but then again, it would be too easy and it would not really work the way it has for its 100+ year history if that were the case. With a long-term investing horizon in which natural volatility of the market can be handled, we do make the argument that the stock market is the best place to be for general investing or retirement investing if you are investing intentionally and intelligently. A short-term need for regular income or withdrawal of investable assets tells us that a 100% stock market strategy should almost never be in place due to the natural volatility of the market. However, it does not mean that you cannot aim for great returns while attempting to minimize volatility to the best of your ability, and that is one of the many small aspects of our work that we help clients not only understand but attempt to achieve over a long period of time. In the investment world, we like to have fancy terms, and two additional terms to focus on today are systematic risk and unsystematic risk. Let’s think of these two definitions in a simpler sense: systematic risk is simply the natural risk of the stock market as a whole, and that heavily involves the concept of VOLATILITY. Unsystematic risk involves the risk of investing in only one company, one industry or sector of the economy, one country or geographical area, etc. Long story short, systematic risk is the risk that we essentially cannot do anything about, with understanding that the market does not go up in a perfectly straight line. Unsystematic risk is diversifiable, meaning that with an intelligent or successful strategy, it can be mostly diversified away. As an advising firm that works in the best interest of our clients first, we care about the appropriateness to a particular situation, merit, and long-term track record of a mutual fund or alternative investment. However, that does not mean we chase returns, or necessarily care only about the long-term return of an individual investment. We certainly utilize Dave Ramsey’s general investment strategy of investing in four different types of mutual funds or in more broad terms, four different categories or “sectors” of the stock market as a whole: Growth, Growth & Income, Aggressive Growth, and International. * See the chart ... data is from 10+ years ago but overall concept is the furthest thing from being outdated (: As a company, we are huge Dave Ramsey fans, but we don’t just take his word on this strategy. More so, this strategy aims to minimize that unsystematic risk and the volatility of returns as much as possible. Please don’t let anyone tell you that you should either just invest in the Amazons, Googles, and Facebooks of today or in the smaller companies that could be the next Amazon, Google, or Facebook. Notice the discrepancy in returns for those small growth stocks (aggressive growth) between the years 2002 and 2003, or the difference in returns of large growth stocks from 1999 to 2000. This is volatility that you should not want to be subject to by being too concentrated in one specific area of the market, and I am going to make this argument with a mix of statements and calculations: The vast majority of investors fail at timing the market constantly and with chasing short-term returns Not only beating the market when the market does well is important, but losing less than the market when the market is down is just as if not more important Often times but not always, when 2 or 3 of these categories are doing really well, 1 or 2 categories are not doing so well and vice versa Example: Recent tax increases concern many investors that the market will see a pullback at some point. This may or may not be a valid argument in the short-term, however, these companies will do their absolute best to push the cost of tax increase to another party, whether it involves conducting more business overseas to deal with lower foreign taxes, outsourcing cheaper labor or more aggressively, or passing cost off to the customer. Regardless, this is just one small and specific example of why we believe allocating roughly 25% of stock investments internationally. When you simply look at the arithmetic average of returns over a long period of time, volatility has a directly correlated relationship with average annual (or another time period) return. More volatility = more negative affect on the long-term growth of an investment. Let’s look at an initial investment of $100. If you achieve 0% return in year 1 and 0% return in year 2, it should be obvious what you end with: $100. The average return for these two years on an annual basis is 0%. Let’s look at the same initial investment of $100. If you achieve 50% return in year 1 and -50% loss in year 2, you might think you end with $100. When in reality, you would actually end with $75, a 25% loss overall. The average annual return in a purely arithmetic sense in this scenario is still 0%. The same result is seen with -50% loss in year 1 and 50% return in year 2: -25% loss overall… or a $100 investment turning into $75 after 2 years. Another example: A $100 investment into small growth stocks as a whole at the beginning of 2002 leaves you with only $103.59 after 2 years (3.59% overall return) even though your average return between the 2 years was roughly 9% (-30.26% + 48.54%/2). A $100 investment into the overall bond market at the beginning of 2003 leaves you with just under $109 after 2 years (just under 9% overall return for the 2-year period) even though the average annual return between the 2 years was just over 4%. Takeaway: When you are looking simply at average mathematical returns, the only thing that volatility does is hurt you, and it is ultra-important to have a strategy that attempts to minimize volatility. If you are an existing client of ours and have questions regarding this concept, please don’t hesitate to contact your advisor. If you are not, hopefully this was a great initial learning piece as a new reader!

Compounding interest is a concept that many people are familiar with, especially in the investing world, and it can most simply be thought of as “interest that you have already earned that is earning interest on itself.” Not only is this a valuable phenomenon when achieved with long-term investing, but can be extremely detrimental when the lender is earning compounded interest on you. (Yes, to no surprise, we are talking about debt!) Albert Einstein and Dave Ramsey do have this loose connection. We not only argue that long-term and disciplined investing is a key to retirement success, but also that avoiding debt to the nth degree is also a key, not only for financial success, but also psychological and emotional success. Albert Einstein called compounding interest “the 8th wonder of the world”, and also once said “he who understands, earns it… he who doesn’t… pays it.” To throw a little bit of high school-related math on the reader that might not be as familiar with the concept of compounding interest, understand that this is an exponential or parabolic concept not a linear one. Also reference this simple, and hypothetical example, that you may have heard of before as well. You have two choices... being handed one million dollars today OR receiving a “magical penny” that doubles in value everyday for 30 days… Which scenario are your taking? To put it briefly, that “magical penny” will be worth over five million dollars on day 30. On day 20, you are looking at only a hair over five thousand dollars. What does this tell you? Good investments, a good plan, and discipline are all secondary keys to achieving compounding interest, whereas TIME is the most valuable asset of all. So, if you are telling yourself that you will put aside money for tomorrow, or when you “get to that priority”, instead of today (disclosure: being debt-free outside of a mortgage is still a key here in our minds), you are putting yourself at a huge disadvantage. Here is a list of ten summarized and simplified reasons why compounding interest is so valuable: 1. It is the great equalizer – it does not discriminate and anyone can achieve this. 2. Momentum is utilized, and this can be psychologically and emotionally beneficial as well. 3. It can and does create Everyday Millionaires (EDMs). 4. Patience is taught – and you know that cliché about it being a virtue overall. 5. It lets you sleep good at night. (Just like a healthy emergency fund.) 6. It is your friend even if your income is statistically average or below-average. 7. It teaches and rewards discipline. 8. It separates those who are savers from those who do not save. 9. Allows for the creation of generational wealth. 10. It is not rocket science! Sources: https://www.clearwealthasset.com/einsteins-8th-wonder-of-the-world/ https://einvestingforbeginners.com/compounding-interest/

Disclosure: This article will most likely apply to high-income earners or those that are financially healthy and extremely aggressive savers. Let me just start off with mentioning that if you are maxing out your Roth IRA & 401(k) year in and year out, this is a great choice for your future as long as other financial factors allow you to do so. A quick reminder on current (2021) contribution limits for these two accounts are as follows: Roth IRA - $6,000/year (under age 50), $7,000/year (age 50 or older) 401(k) Pre-Tax/Roth - $19,500/year (under age 50), $26,000 (age 50 or older) Despite this generally being thought of as a great move, if you’re able, you could be making a huge mistake if you are TOO eager to max out your 401(k) in any given year. This is assuming that you will receive a specific kind of employer match. Note: The following information will not apply to someone who, for example, gets a “50 cents-on-the-dollar match” up to the annual limit from his/her employer. No matter how quickly into any given year you hit the annual limit of $19,500 (< 50 years old) or $26,000 (> 50 years old), you should see the full match potential regardless from your employer. Disregarding this possibility, let’s look at a hypothetical example below: David, age 51, earns a salary of $216,600/year (or $18,055/month). He has no debt. He has access to a 401(k) at his place of employment. David gets a full dollar-for-dollar match on the first 3% of his income that he contributes, and 50 cents-on-the-dollar for the next 2% of income he contributes. Therefore, if he just simply contributes 5% of income to his 401(k) plan, the employer will match 4% of David’s annual salary, of $216,600, into the plan on his behalf. Free money! Being goal-oriented, David simply decides that he wants to max out his 401(k) half-way through the year. He is will contribute 24% of his annual income. Since he maxed out the IRS annual limit of $26,000 by the end of June, he won’t be able to contribute for the 2nd half of the year. Consequently, he will be leaving FREE MONEY on the table. This is a rare example of how being goal-oriented can hurt you. Key TakeAways: If 24% of his income is contributed, the total employer match for the year will be roughly $4,333, only 2% of David’s income. (Full match potential is 4%.) In a 2nd scenario, if 12% of his income is contributed, the total employer match for the year will be roughly $8,666. (Full match potential.) Source: High Earners: Maximize Your 401(k) Match

I would like to start off with a basic introduction to retirement-based target date and lifecycle mutual funds : Larger mutual fund companies and similar entities create these particular funds and the composition of this type of investment universally is the following: Layer 1: “Umbrella” Mutual Fund – Let’s use the Vanguard Target Retirement 2050 Fund that is simply just a placeholder for underlying mutual funds (Layer 2) Layer 2: Multiple underlying mutual funds created by same company/entity where your original investment dollar is allocated to varying percentages Layer 3: Hundreds/Thousands of underlying stocks, bonds, or alternative investments within all mutual funds in Layer 2 Here is a real-life example. The Vanguard Target Date 2050 Fund whose ticker symbol is VFIFX would be an example of Layer 1. Inside of the Vanguard 2050 are four mutual funds which are: Vanguard Total Stock Market Index (53.40%), Vanguard Total International Stock Index (36.06%), Vanguard Total Bond Market (6.26%), Vanguard Total International Bond Market (2.86%). All four of these funds are an example of Layer 2. Inside of each of those funds are 11,796 individual stocks and 21,911 individual bonds which is an example of Layer 3. Let’s transition into a quick real-life application to establish potential relevance to you as the reader: Likely, the easiest strategy available in most 401(k) and likewise retirement plans involve using these funds. The commonly recommended concept is to choose the fund that “contains” the year closest to your retirement year, whether that be an educated guess or specific knowledge in your specific situation. Regardless of source, these funds typically exist in 5-year increments. Example: If Company A has a Lifecycle/Target Date funds 2025, 2030, 2035, and so on… and I expect to retire somewhere between 2041-2042, then a common recommendation would consist of choosing to invest solely in the Company A 2040 Fund. I would argue that these types of funds have can have benefits. In the right situation and with the absence of investment knowledge and/or access to good advice, these funds can be the simplest and most effortless way to create a retirement investing decision you could feel good about. Retirement goals aren’t universal, but these funds aim to do what makes sense for a lot of people, in a general sense: being more aggressive in investment strategy earlier in a working career and gradually shifting a larger portion of the retirement account dollars to investments with historically less volatility/risk. This is completed with changes and adjustments in ‘Layer 2.’ ‘Simplest’ and ‘effortless’ do not necessarily equate to best available strategy and this brings me to my main purpose in writing today’s article, being just one specific downfall in utilizing this widely-available option in many retirement plans. I am going to focus on what can happen not when you invest, but rather when you sell out and take withdrawals, most prominently in retirement, after age 59 ½. The U.S. stock market (U.S. equity) has experienced average annual return of roughly 10% over the past 30 years, but there are, of course, ups and downs and periods of high volatility historically and expected in the future again and again. Of the many 2020 & 2025 target date funds, one 2025 fund in particular is composed of roughly 28% U.S. equity while the similar 2020 fund is composed of roughly 15% U.S. equity. The concept I previously mentioned is showing true: less allocation towards higher-volatility investments as you shift into retirement. The problem with withdrawing money in retirement in certain situations is being revealed: when you sell out and withdraw money from a lifecycle/target date fund, you get your investment dollar back from ‘Layer 1,’ right back from where that investment dollar started when you were working and investing income. When you sell out of Layer 1, everything in Layer 2 is sold evenly based on current allocation to each fund. You cannot pick only 1 or 2 funds or any possible incomplete list from Layer 2 to sell from, using recent performance and forward-looking metrics as a basis for a potentially informed decision that saves/creates wealth that you could accomplish otherwise. Being invested in the right target date fund has some pros in some situations, but selling out of these funds at any level does not allow you to take into account current market environments whatsoever. There is not intelligent withdrawal strategy available even though ‘Layer 2’ contains funds of varying strategies, objectives, performance/return characteristics, and so on, because nothing is catered to you and you get no choice. A better strategy is available with the help of a knowledgeable advisor and a portfolio of funds of varying risks and strategies not contained in the lifecycle/target date outer layer. Whether you have 15%, 28% or a different percentage of your nest egg/retirement account(s) in the stock market, it is subjectively not smart to sell out of this bucket when the underlying market is performing poorly in the short-term. The U.S. stock market experienced 37% loss in 2008. More recently, when COVID first hit, the market was down roughly 30% in a few short months. If you are taking regular income from a fund like this in a retirement or non-retirement account, you are essentially guaranteeing the future repetition of selling out of the stock market at inopportune times as inopportune times are inevitable. In-Service Rollovers - 59 1/2 One way to prepare for retirement, with a strategy that is customized to your specific needs and withdrawal requirements, is to have your funds transferred to your IRA or Roth IRA, before you actually retire through an in-service rollover. Investopedia says that, "an in-service rollover allows a current employee the ability to move some or all of the assets in their employer-sponsored 401(k) plan into an IRA without taking the money as a distribution but rather as a rollover." That's right! If you're over the age of 59.5 you can typically move your retirement money while stilled employed. This allows you to ensure your future distribution strategy is not ineffectively selling assets at their low point, like a Target Date Fund could do. Contact one of our Financial Advisors today to discuss your ability to do an in-service rollover.

If you are a fan of Dave Ramsey, you are likely aware with the concept of spreading out risk with long-term retirement investing by utilizing 4 categories of mutual funds and ETFs that include Growth, Growth & Income, Aggressive Growth, & International funds. One of our very own advisors, Logan Doup, explains the basics of these 4 categories in-depth in a previous article. You can read that article here to indulge yourself with building a simple foundation of knowledge for the concepts I eagerly dive into below. It is important to note that we are convicted in the potential value of this strategy involving spreading out roughly 25% of stock market investments (whether stock market investments comprise of all or only a part of your comprehensive investment portfolio) to these respective 4 categories through mutual funds and/or ETFs, regardless of fellowship or lack thereof with Dave Ramsey. Whether this strategy makes sense for you could very well be a question worth investigation of goals, understanding, fit on a case-by-case basis, etc. However, what is less arguable, is that falling into the trap of recency bias has historically been harmful regardless of the specific underlying strategy. For the sake of these case studies, let’s stick with it. In all examples, let’s assume you are sitting with a portfolio that is 25% allocated to the entire Growth segment of the market, 25% to Growth & Income, 25% to Aggressive Growth, and 25% Internationally as of ‘YEAR 1. Case Study 1 YEAR 1 – 1995 Investments made into account at 25% Growth, 25% Growth & Income, 25% Aggressive Growth & 25% International Allocation. YEAR 12 – 2006 Out of the 4 categories, Growth was the best performing 4 years in a row from 1995-1998. It was the 2nd best performing category out of the 4 possible in 1999. Consequently, it was the 2nd worst from 2000-2002 and the absolute worst 2003-2006. Let’s establish an informal definition of recency bias with this first example à HYPOTHETICAL: You would have had recency bias in 1999/2000 by assuming that the Growth category would continue to outperform the overall market simply because of a previous 5-year trend of that being the case. A PROBLEM: Not re-balancing My goal is to drive home these two common and potential problems with investing in relation to just this 1st case study, BUT the concept should continue to make sense in the following examples even without specific illustration from me. Re-balancing would consist of “chopping gains” off of out-performing categories (or respective specific funds) and re-allocating these gains to recently under-performing categories at some point in time. This is one of the simplest ways to “buy low, sell high” which is commonly regarded as intelligent investment behavior, in a general sense. With the assumptions of no re-balancing from 1995-1999 and starting off with 25% allocation to the 4 categories in YEAR 1, you are left with this basic breakdown at the end of 1999: 37.69% allocated to Growth 24.83% allocated to Growth & Income 21.09% allocated to Aggressive Growth 16.40% allocated Internationally Consequently, you head into the 21st century significantly over-funded to the Growth category in which you experience the 3 following years of that being the 2nd worst category and 4 additional following years of Growth being the worst place to be. Experiencing these 7 years (2000-2006) with somewhere close to 25% in Growth to start would have meant a world of difference in comparison to almost 38% with no re-balancing at any point. Inversely, International out-performed U.S. Growth in 6 of those 7 years. Heading into this time period with only 16.40% allocation instead of somewhere close to 25% would have also been a mistake, essentially creating a double-edged sword. Note: Growth & Income and Aggressive Growth also generally out-performed Growth from 2000-2006, for 7 out of the 7 years and 5 out of the 7 years, respectively. AN EVEN BIGGER PROBLEM: Speculation Never re-balancing would have been less drastic of a mistake in comparison to using recency bias to further fund the Growth category, sometime around the turn of the century. This bias would have told you to sell Growth & Income, Aggressive Growth, or International investments (or any combination of the 3) to invest additionally in Growth, due to the fact that these 3 significantly under-performed relative to Growth for a number of years. Since we can now look back in time, it’s easy to see how much of a mistake falling into this common trap as an undisciplined investor would have been. Case Study 2 YEAR 1 – 1999 Investments made into account at 25% Growth, 25% Growth & Income, 25% Aggressive Growth & 25% International Allocation. YEAR 5 – 2003 The Aggressive Growth category was highly volatile during this 5-year window (let’s define more intrinsically as ‘small growth stocks’ for this example). 1999 – 43.09% return, best of 4 categories 2000 – 22.43% loss, worst of 4 2001 – 9.23% loss, best of 4 2002 – 30.26% loss, worst of 4 2003 – 48.54% return, best of 4 For 5 straight years, the only definition of consistency here involves this category going from either “best place to be” to “worst place to be” or vice versa, throughout. Any decision that reasonably involved recency bias during this time period and with this category in particular would have likely resulted in a significant mistake! Case Study 3 YEAR 1 – 2017 Investments made into account at 25% Growth, 25% Growth & Income, 25% Aggressive Growth & 25% International Allocation. YEAR 6 – 2022 Growth was the best performing category for 5 straight years, from 2017 to the end of 2021. The market has struggled thus far in 2022 in a general sense, although some recovery being experienced in the past few weeks as of 03/29/2022. Out of the 4 most commonly used U.S. market indexes/indices, the NASDAQ Composite Index best represents the Growth category. For the majority of 2022, this index has been hit the hardest, sitting at nearly 15,833 on Jan. 3 all the way down to roughly 12,581 on March 14 (over 20% loss for this time period). As of mid-afternoon 03/29/2022, we are looking at significant recovery with this index alone, currently sitting in 14,550-14,560 range. With a harder initial downfall, on the reverse this specific recovery has been more drastic than with the other indexes/indices for the past few weeks. Concluding thought à with the market being as widespread, large, and available as it is, combined with the advance of technology… it may be reasonable to conclude that these market shifts and cycles will continue to become more drastic in frequency and the level of loss or gain per whatever time period you are looking at, but less drastic with how long these shifts last… all the more reason to not speculate and potentially get burned by recency bias or some other investment-related negative behavior with something as important as saving for retirement or other goals over the long-term. If you have any questions, please don’t hesitate to reach out to your personal Financial Advisor. If you are not currently a client of Whitaker-Myers Wealth Managers, we are always open to questions. You can use the chat feature on our site or reach out by phone/email to any of our advisors. DISCLOSURE: Past performance does not guarantee and is not indicative of future results. There are limitations to using historical data and calculations, and trends in general are not implied to neither continue nor change. You can view the information used for these illustrations from the Prudential Periodic Table of Investment Returns here . See website disclosure for more information.

Even though it’s the demand for negativity in the first place that drives the bulk of the news and information we see all the time, my goal in this quick piece is to give you what is hopefully a nice, quick breather from the typical top headlines and narratives. Inflation is a word that can, and especially now, leave a bad taste in your mouth. Let’s touch on this inflation topic a little bit for the month of April but also point to some other facts: As of end of April ’22, the overall PCE deflator (“consumer prices” – the Fed’s preferred measure for inflation) was up 0.2% from March ’22 However, average gross personal income rose 0.4% month-over-month as well as disposable (or after-tax income) at a rise of 0.3% from March to April, both outpacing the 0.2% inflation number The 0.2% increase from March to April is not necessarily optimal but much improved from the previous month-over-month result, where the increase for the same measure was +0.9% from February to March The 0.2% jump in April brings us to a 6.3% annual increase in the PCE deflator (or inflation) looking from April ’21 to ‘22 Although lagging the 6.3% number, personal income rose 2.6% for the average working American for this same time period Using data manipulation transparently, if you take governmental transfer payments out of the equation (exclude stimulus checks and unemployment benefits as a result of the pandemic from meeting the definition of personal income for this 365 days), then the hypothetical rise in personal income is actually 8.4% and specifically 12.7% for the private sector, both significantly outpacing inflation for the past year From April ’21 to April ’22, spending on goods is up 6.4% and 10.8% for services year-over-year With modern technology, the pandemic originally put a much bigger damper on demand for services in comparison to goods – with these numbers above and even just a simple eye test, it’s easy to be economically optimistic especially regarding service-heavy industries such as Healthcare, Utilities, Energy, etc. It is easy to get caught up in negativity and that’s not to say that we would pretend to look at high inflation, for example, as a positive in and of itself. But, we also and certainly do not want to ignore positive signs, either! High inflation obviously causes more money to come out of your pocket for an average purchase/expense, however, these numbers show that on average, there should be more money in the same pocket in the first place (in terms of income). More specifically, we are truly looking at a much more positive short-term trend. While personal income rose 0.5% from Feb. to March, the inflation number was higher at 0.9%, a loss for the average American. While inflation rose 0.2% from March to April, personal income rose at double the rate at 0.4%, arguably a short-term WIN for the average American more recently. Lastly, even though my point about stimulus payments and unemployment uses data manipulation, we think it’s arguable that the concept behind it was and still is the #1 driver of this inflationary environment. This inflated influx of cash into our money supply as a result of the pandemic and certain policies that came with it should not be a normal, sustainable, and recurring event moving forward that we are currently battling with and CAN fully recover from. Source Material To view, Click Here Article: April Personal Income and Consumption Entity: Data Watch – First Trust Advisors L.P. Authors: Brian S. Wesbury Robert Stein, CFA Strider Elass Andrew Opdyke, CFA

What happens when I sell a stock or bond that has increased in value? Have you been eyeing a new vehicle, rental property, or any mid-to-large expense but haven’t pulled the trigger because you aren’t quite sure what the tax consequences will be? If your plan is to purchase an item with cash or check then you don’t have to worry about tax consequences; but if your plan is to purchase an item using money out of your brokerage account, then you might want to read this article. What is a Capital Gain? According to Investopedia , a capital gain refers to the increase in the value of a capital asset when it is sold. Put in layman’s terms, a capital gain is when you sell something for more than what you purchased it for. So, if you bought a used car for $5,000 in 2019 and then sold it for $8,000 in 2021, you would technically have a $3,000 capital gain. This is the same in the investment world. If you bought into a mutual fund, stock, bond, ETF, etc. for $10/share in 2019 and then sold it for $15/share in 2021, you would have $5/share in capital gains that you would be responsible to pay. How are Capital Gains Taxed? In the example we used above, you held the asset for more than one year, so you would be responsible to pay long-term capital gains on the sale of the asset. See the charts below for 2022 and 2023 long-term capital gains rates based on filing status and taxable income. What if I sell an asset within a year of owning it? Keeping with the same example we used above, what would happen if you bought the asset in 2019 and then sold the asset in 2019? Great question! Since you held the asset for less than one year, you would be responsible to pay short-term capital gains. Short-term capital gains are taxed as ordinary income. See the chart below for short-term capital gains rates based on filing status and taxable income for 2022. Short-term Capital Gains Tax Rates for 2023 35% for incomes over $231,250 ($462,500 for married couples filing jointly) 32% for incomes over $182,100 ($364,200 for married couples filing jointly) 24% for incomes over $95,375 ($190,750 for married couples filing jointly) 22% for incomes over $44,725 ($89,450 for married couples filing jointly) 12% for incomes over $11,000 ($22,000 for married couples filing jointly) The lowest rate is 10% for the incomes of single individuals with incomes of $11,000 or less ($22,000 for married couples filing jointly). This article is not intended to be used as tax advice but rather more for educational purposes. If you have any specific questions about the taxation of capital gains or are looking for tax advice, please reach out to your local SmartVestor Pro or contact our CPA at Whitaker-Myers, Kage Rush.