Hans Blake, CFA, CPA

How Diversification is Like Taking a U.S. Road Trip

January 22, 2020 by Hans Blake, CFA, CPA

Reading Time: 2 minutes

On today’s Intelligent Money Minute, we’ll interview Larry Swedroe on how diversification is like a U.S. road trip. Larry begins by stating that in a world of uncertainty, diversification is the only prudent strategy. No one can know the future; therefore, it is wise to diversify across various sources of risks and returns. Larry continues by making the comparison of diversification to a U.S. road trip from New York to San Francisco. Imagine that in each leg of your trip you only travel half of the remaining distance. You are getting closer to, but not completely arriving at your destination. Each leg adds less distance.

Diversification works in the same way. The most important diversification is the addition of the right amount of fixed income to dampen the risk of the overall portfolio. This gets you halfway across the country. From here, each “leg” adds less value, but you’ve already gone almost the whole distance. Larry notes that typically 8-10 mutual funds are, at most, all you will need.

At Intelligent Investing, we strongly believe in diversification. We believe that it may not be best to own one thing to make a killing in it. However, by doing so, this may prevent you from not owning enough of any one thing to be able to get killed by it.

We’ll be interviewing Larry on several podcasts regarding markets, passive investing, and diversification, so be sure to subscribe to our Intelligent Money Minute podcasts.

Larry was among the first authors to publish a book that explained the science of investing in layman’s terms, “The Only Guide to a Winning Investment Strategy You’ll Ever Need.” He has since authored seven more books.

Larry Swedroe Bio

Since joining the Buckingham Strategic Wealth in 1996, Chief Research Officer Larry Swedroe has spent his time and energy educating investors on the benefits of evidence-based investing.

In his role as chief research officer and as a member of the firm’s Investment Policy Committee and Board of Directors, Larry regularly reviews the findings published in dozens of peer-reviewed financial journals, evaluates the outcomes and uses the result to inform the firm’s formal investment strategy recommendations.

Larry’s dedication to helping others has made him a sought-after national speaker. He has made appearances on national television shows airing on NBC, CNBC, CNN and Bloomberg Personal Finance. Larry is a prolific writer, contributing regularly to multiple outlets, including Advisor Perspectives and ETF.com.

Before joining Buckingham, Larry was vice chairman of Prudential Home Mortgage and senior vice president at Citicorp.

Larry holds an MBA in finance and investment from NYU, and a bachelor’s degree in finance from Baruch College.

Three Key Elements To Being An Index Investor

January 15, 2020 by Hans Blake, CFA, CPA

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On today’s Intelligent Money Minute, we’ll interview Rick Ferri on three key elements to be an index investor. During this episode, Rick continues his summary of his e-book, “The Education of an Index Investor.” He lists out three keys to becoming an index investor and explains how they fit together seamlessly. Similarly, at Intelligent Investing we strongly believe in behavioral coaching our clients. All successful long-term investing is goal-oriented and therefore planning-driven. Learn more here.

Check out our previous podcasts with Rick on The Journey of an Index Investor and Financial Heroes.

Rick Ferri is a fellow CFA Charterholder, Marine veteran, author, and owner of Ferri Investment Solutions. He continues to write books and articles, provide educational webinars, and teach financial lectures.

Rick Ferri Bio

Rick Ferri earned a B.S. in Business Administration and an M.S. in Finance. He also holds a Chartered Financial Analyst (CFA) charter through the CFA Institute. After college, Rick served as a U.S. Marine Corps officer and fighter pilot for 20 years of active duty and reserve service.

Rick’s investment career spans three decades and offers a history of empowering people to achieve their goals. He landed in the brokerage industry in 1989 where he learned the wrong way to invest. As a result of 10 frustrating years, Rick founded one of the country’s first low-fee investment advisory firms. Rick’s firm grew to a sizable business over the next two decades due to the explosion of interest in low-fee investing. This growth provided good-paying jobs to dozens of people and allowed Rick to take on business partners with whom he generously shared his equity.

Ferri Investment Solutions is Rick’s new firm. This modern concept provides even greater value to investors by “unbundling” adviser services whereby clients pay only for the time it takes to assist them. In addition, Rick’s industry consulting firm helps other advisers build their investment practices, and he has launched Core-4 Portfolios to provide simple model portfolios for use by a wide variety of investors.

What is a Donor-Advised Fund?

January 8, 2020 by Hans Blake, CFA, CPA

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On today’s Intelligent Money Minute, we’ll interview John Putnam on what is a donor-advised fund. John begins by giving us a simple definition. A donor-advised fund is a low-cost flexible account for charitable giving. Due to some of the similarities, you can think of a donor-advised fund as a “charitable checking account.” Rather than giving directly or creating a private foundation, a donor can choose to open a donor-advised fund instead. The 501(c)(3) public charity is the holder of the account instead of a bank. Unlike a checking account, however, the donor makes “irrevocable gifts” than cannot be retracted. John recommends a donor-advised fund for a donor giving to a greater number of charities. A note-worthy advantage of a donor-advised fund is the ability of the donor to remain anonymous. A donor-advised fund is a wonderful opportunity for the donor seeking to keep things simple.

At Intelligent Investing, we can help you know whether a donor advised fund makes sense, and can help you with creating one. If you are interested in having a 15 minute complimentary call to discuss this or other financial topics, click here.

More From John

We’ll be interviewing John Putnam on future podcasts on creative ways to give charitably, how to use a donor-advised fund, and charitable giving with Young Children, so be sure to subscribe.

John Putnam Bio

John is an author, speaker, Kingdom entrepreneur and non-profit leader of NCF Carolinas. He grew up on a cattle farm in Cherryville, NC (that’s ‘Churvul’ for you locals ☺), and attended college at N.C. State. Above all, John is married to his wife Anne and the father of three children.

John led a thriving financial services practice for over 20 years. Following his passion for stewardship, he launched a Charlotte, NC affiliate of National Christian Foundation. On January 1, 2018, the office merged with NCF Raleigh to become NCF Carolinas. To His glory alone, God has used the NCF Carolinas team to help mobilize hundreds of millions of dollars for Kingdom impact. John’s professional background is as a former Certified Financial Planner, a trained Life Planner through The Paterson Center and a graduate of Charlotte Leadership Forum. He has worked alongside the Halftime organization, a two-time graduate of The Masters Program and a past Strategic Coach participant. He enjoys sharing through media, workshops and his website at JohnPutnam.com.

How to Help a New Widow

January 1, 2020 by Hans Blake, CFA, CPA

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On today’s Intelligent Money Minute, we’ll interview Kathleen Rehl on how to help a new widow, and things not to say. Kathleen initially gives the advice to simply listen to a widow. Such a simple gesture may sound easy, but it is often more difficult than expected. Let her recall memories, remembering her husband, and even letting her cry. This simple act of kindness, listening, goes further than one might imagine. Next, Kathleen gives advice on what not to say to a widow. Phrases such as “I’m so sorry for your loss,” or “at least you still have your children, etc.” are not helpful. Instead, these phrases can be more self-focused than thoughtful. A more insightful phrase may be, “I can’t begin to understand your loss, but I’m going to be here with you.” Lastly, Kathleen mentions how much more beneficial specific questions or gestures may be. Asking “How are you eating/sleeping?” or offering to come over for a visit may be greatly appreciated.

Talking about spouses that have passed away can be difficult, but part of the healing process for a widow. Consider removing cliché phrases such as “At least…., and I’m sorry.” and replacing them with heartfelt questions such as “How are you eating? How are you sleeping.” Let the widow know you are going to be there for them in the days and weeks ahead and consider scheduling a coffee or tea to spend genuine time listening to their grief. For more information on widows, visit our website page for widows by going to investedwithyou.com.

On upcoming podcasts, Kathleen will talk about the three stages of widowhood- Grief, Growth, and Grace, so be sure to subscribe by clicking here.

Kathleen Rehl Bio

Kathleen M. Rehl, Ph.D., CFP®, CeFT® wrote the multi-award-winning book, Moving Forward on Your Own: A Financial Guidebook for Widows. Experiencing widowhood herself, Dr. Rehl empowers widows financially™ and inspires their advisors. Her work has been featured in the New York Times, Wall Street Journal, AARP Bulletin, CNBC, USA Today, U.S. News & World Report, Journal of Financial Service Professionals, Journal of Financial Planning, and other publications. Rehl owned a financial planning firm for 17 years before retiring to her “encore” career. She walks an hour daily, practices yoga, enjoys art and music festivals, writes poetry and makes art, loves her grandsons . . . and continues to evolve on her journey.

Hope and Opportunities for the Retail Investor

December 25, 2019 by Hans Blake, CFA, CPA

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On today’s Intelligent Money Minute, we’ll interview Larry Swedroe on hope for the retail investor. Because retail investors tend to struggle to outperform, we want to ask Larry what opportunities are available for them. Larry believes there are great opportunities for retail investors. Academics have converted Alpha into data that allows retail investors to invest “like Warren Buffet.” This is due to academics basing their investment philosophy on research, a.k.a. factor-based investing. Typically, there are extra or unique risks (independent factors) present with factor-based investing. Therefore, these investments have delivered above-average returns. Between 300-600 factors have been identified (as mentioned in Larry’s book). However, we tend to only think that there is a handful worth investing in.

If you are an Intelligent Investor who wants to explore Factor-based investing, go to our blog page. Also, you can check out Larry Swedroe’s book Your Complete Guide to Factor-Based Investing here.

We’ll be interviewing Larry on several podcasts regarding markets, passive investing, and diversification, so be sure to subscribe to our Intelligent Money Minute podcasts.

Larry Swedroe Bio

Since joining the Buckingham Strategic Wealth in 1996, Chief Research Officer Larry Swedroe has spent his time and energy educating investors on the benefits of evidence-based investing.

Before joining Buckingham, Larry was vice chairman of Prudential Home Mortgage and senior vice president at Citicorp.

Larry holds an MBA in finance and investment from NYU, and a bachelor’s degree in finance from Baruch College.

What Does the New SECURE Act Mean for Me?

December 23, 2019 by Hans Blake, CFA, CPA

Reading Time: 3 minutes

The full House passed by a 297-120 vote on December 17, 2019 the year-end spending bill, which includes the Setting Every Community Up for Retirement Enhancement (SECURE) Act.

The SECURE Act, HR 1994, is being billed as the most comprehensive retirement security legislation in more than a decade. The Senate voted 71 to 23 to approve the legislation. The president signed it into law on December 21st.

What does the SECURE Act accomplish?

The SECURE Act:

simplifies the 401(k) safe harbor rules;
expands portability of lifetime income options;
allows long-term part-time workers to participate in 401(k) plans;
allows plans adopting by the filing due date to be treated as in effect as of the close of the year;
provides a fiduciary safe harbor for selection of a lifetime income provider;
modifies the treatment of custodial accounts on termination of 403(b) plans;
extends the current required minimum distribution requirements to age 72;
requires disclosures regarding lifetime income; and
modifies the nondiscrimination rules to protect longer-service participants.

How the SECURE Act Affects…

Retirees

Current law requires that participants start withdrawing from their retirement savings accounts at 70.5. The new bill raises that minimum age to 72. The law also changes the maximum age for contributing to a traditional IRA, also currently set at 70.5. This is good for retirees because it delays the time when they have to take their required minimum distributions which are taxed at ordinary tax rates.

Beneficiaries

The SECURE Act would make significant changes to inherited retirement plans like 401(k)s, traditional IRAs, and Roth IRAs. In the past, beneficiaries of these accounts could typically spread the distributions or “stretch” them over their own life expectancy (which could be a long time if the beneficiary was a grandchild for example). However, under the SECURE Act, the “stretch” provision has been removed and the new bill requires most beneficiaries to distribute the account over a 10-year period. This change would accelerate the depletion of inherited accounts for many large IRAs and retirement plans.

Students

The SECURE Act would also expand the uses for 529 accounts, an investment vehicle that helps individuals save for college and certain education costs. Currently, taxpayers who use 529 plan money for anything other than qualified education expenses are subject to a 10% federal tax penalty. However, the new bill allows individuals to use 529 funds for qualified student loan repayments of up to $10,000. This is great for HENRYs and millennials who have large student loans.

Parents

The bill would allow new parents to withdraw up to $5,000 from their retirement accounts to cover qualified costs associated with a new birth or adoption. Since Compassion is one of our Core Values, we are excited about this provision as it may encourage more adoptions.

Employees

Current laws allow employers to exclude their part-time employees from eligibility for a 401(k) plan. However, under the SECURE Act, your employer must allow you to participate in its defined contribution plan if you work at least 500 hours a year and have been at the firm for at least three consecutive years.

The bill also requires defined contributions plans to deliver a lifetime income disclosure to participants. This disclosure would essentially show how much income the lump sum balance in the retirement account may generate–in hopes of encouraging saving.

Employers

The SECURE Act would essentially allow small employers to come together and offer 401(k) plans with less fiduciary liability concern and less cost. The goal is to try to expand small employers’ capability to offer some form of retirement savings to employees.

The Act also offers a new tax credit of $500 to help some smaller employers encourage automatic enrollment into their retirement plan. This small credit could help offset some of the costs of operating a plan at the beginning. According to behavioral finance which is one of our three pillars of financial thought, automatic enrollment has seen great success in increasing plan participation by employees.

Last Thoughts…

The SECURE Act has sweeping and broad implications for financial, tax, and retirement planning. If you aren’t working with a fee-only fiduciary advisor, we’d love to introduce ourselves. If you would like to consider outsourcing your financial stress, please consider giving us a call. We’d be happy to have a short conversation with you to see if we can serve you and your family. Click here to learn more about our firm, or click the link below to schedule an anxiety-free call or meeting.

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Practical Tips for Lump Sum Recipients

December 18, 2019 by Hans Blake, CFA, CPA

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On today’s Intelligent Money Minute, we’ll interview Rick Ferri on practical tips for lump sum recipients. During this episode, Rick divides lump sums into two different types and explains practical ways to handle both situations. He spends time on the emotional considerations that come with lump sums because there can be regret. Intelligent Investing believes we all have purposes in life and have been given money to help accomplish these purposes while building relationships along the way. We’d love to share the different wealth management options available to you. Read more here.

Check out our previous podcasts with Rick on Practical Tips for Pre-Retirees and Three Military Discipline Investing Values. We’ll be interviewing Rick on several podcasts regarding index investing, behavioral finance, and practical tips for retirees, so be sure to subscribe to our Intelligent Money Minute podcasts.

Rick Ferri Bio

How to Integrate Charitable Giving

December 11, 2019 by Hans Blake, CFA, CPA

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On today’s Intelligent Money Minute, we’ll interview John Putnam on how to integrate charitable giving. John discusses ideas on how to encourage charitable giving within your family. First, John states that communication is key for families deciding on how to give. He encourages families to talk about their passions and concerns. Specifically, he encourages family members to talk among themselves. For example, a husband and wife or mom and dad communicating about charitable giving is a great start. These conversations can be the light to shine on a passion or a concern another family member may find important. Second, John discusses charitable projects. Giving an example, he suggests a group effort from individual family members. Each family member may contribute to what he or she has discovered about an organization.

We’d love to help your family explore different charitable options. we’ve included resources and a link to the National Christian Foundation which you can check out by going here.

More From John

We’ll be interviewing John Putnam on future podcasts on creative ways to give charitably, how to use a donor-advised fund, and charitable giving with Young Children, so be sure to subscribe.