Intelligent Investing

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Financial Planning

Getting to Know Morningstar’s Christine Benz

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Christine Benz Profile Pic

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On today’s Intelligent Money Minute, we interview Morningstar’s director of personal finance, Christine Benz. Recently, Christine Benz was named in Barron’s Top 100 Influential Women for her dedication and impact in the financial industry. During this episode, we take a moment to learn more about who Christine is and what she loves to do in her spare time. Often, we can forget that these thought leaders and innovators are people too. Amidst all the prestigious accolades, Christine Benz is a renowned author, avid traveler (pre-covid), and risotto master. 

We hope you enjoy getting to know Christine Benz more on this more casual episode of Intelligent Money Minute. I don’t know about you, but after this episode I was hungry for some risotto. We like to get to know our guests and hope you do as well. Christine has a wealth of financial knowledge and we’ll be sharing more episodes with her in the near future. We also like to get to know our clients on a personal level, and if you are interested in becoming the next intelligent investor, please visit our website, investedwithyou.com and click on “Get Started.”

Schedule a short discovery call or meeting

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

Christine Benz Bio

Christine Benz is Morningstar’s director of personal finance and author of 30-Minute Money Solutions: A Step-by-Step Guide to Managing Your Finances and the Morningstar Guide to Mutual Funds: 5-Star Strategies for Success. She holds a bachelor’s degree in political science and Russian/East European studies from the University of Illinois. Christine lives in the Chicago suburbs with her husband, Greg. She is an avid cook, a political junkie, and a long-suffering Chicago Cubs fan. Follow Christine on Twitter.

The Value of a Written Financial Plan

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The Value of a Written Financial Plan

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On today’s Intelligent Money Minute, we interview Larry Swedroe on the value of having a written financial plan. A written financial plan helps one avoid glaring holes that may not be apparent before writing it down. Also, studies show that those with a written financial plan tend to stick it far more than those who don’t. During this episode, Larry gives multiple examples of how some avoided financial disaster with a written financial plan and some who experienced financial disaster due to not having one.

Many people plan more for their summer vacations and weddings than then do their retirement. Studies have shown that people are more committed to a written financial plan. At Intelligent Investing, we guide our retirees into and through retirement, and one of the ways we do that is through creating a comprehensive written financial plan. We review your retirement concerns and risks, and we dive deep into your spending needs, wants, and wishes. Typically, we review the financial plan annually with you and update it as needed for life events as life changes. If you are interested in having an independent professional guide you in creating a comprehensive written plan, please go to  “Get Started.”

Schedule a short discovery call or meeting

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.

President Biden’s Capital Gains Tax Planning

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In Biden’s first congressional address, President Biden called for massive government spending including $2.3 trillion in infrastructure and $1.8 trillion in family and education programs. Of course, tax hikes follow significant federal spending. During this Intelligent Money Moment, we break down the facts and impact of this new proposal while offering some practical planning ideas in response.

Facts

  • Currently, ordinary income such as wages or business profits is taxed at a top rate of around 41% and capital gains have a top rate of around 24% when you factor in potential payroll or investment taxes.
  • This week, President Biden will meet with Congress to outline a plan to help pay for several social programs
  • Details of the plan are being worked out, but the plan could cost more than $1T with funding for child care, paid leave, universal pre-kindergarten education and tuition-free community college.

Impact

  • The plan may alter a tax provision that lets investors avoid capital-gains taxes on appreciated assets if they hold them until they die. Mr. Biden’s plan is to have gains on appreciated assets be taxed at the date of death (regardless of whether they are actually sold).
  • The plan could increase the top capital gains rates on taxable investors at the top of the income scale.
  • Republicans argue that stock prices and investments could suffer, especially as these changes could come atop corporate tax increases President Biden has proposed to pay for infrastructure spending.
  • With a 50-50 Senate and closely divided House, moderate democrats may have a significant say in the tax proposals.

Planning Ideas

  • If you are a high-net-worth individual in the top tax bracket or approaching, the recent news may impact you the most, and likely to provide tax planning strategies to perhaps spread out some of your long-term-capital gains in years when your low-earning years before Social Security benefits kick in. 
  • If you have a taxable account (revocable trust, or large taxable brokerage account), you may want to consider a gifting strategy depending on your current tax bracket and time horizon and other factors.
  • As a CPA, tax efficiency has been a bedrock of Intelligent Investing and historically has been one of the biggest levers of value creation.
  • If you’d like to learn more, please visit investedwithyou.com and click on the “Get Started” button to become the next Intelligent Investor.

Sticking to the Plan & Avoiding Behavioral Finance Mistakes

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Sticking to the Plan & Avoiding Behavioral Finance Mistakes

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On this episode of Intelligent Money Minute, we interview Matt Hougan, Chairman of Inside ETFs on sticking to the plan in the midst of fear. Despite being the founder of ETFs.com, Matt isn’t unlike other investors in regards to portfolio concerns. Matt says it himself that he worries about the same things that a lot of people worry about. During this episode, he mentions the 4o year-long bond bull market and equity evaluations as personal concerns. Despite these concerns, Matt stresses the importance of sticking to a long-term investment strategy in the midst of fear. One thing will remain, the potential that humans will misbehave. That’s why it’s critical to not be fearful or greedy in finance.

When we meet with prospective clients, one of the first steps we take is to have prospects take a state-of-the-art risk questionnaire. Our approach uses a Risk Number built upon a Nobel Prize-winning framework, and every client receives a unique risk number. The risk number is a way to understand your willingness to take on risk. We also will discuss your ability to take on risk, your need for risk, and explore what your current portfolio risk is. We’d be happy to setup a complimentary call or meeting. You can book a call or meeting by clicking “Get Started.”

Matt Hougan Bio

Matt Hougan is one of the world’s leading experts on crypto, ETFs, and financial technology. He is Global Head of Research for Bitwise Asset Management, creator of the world’s first cryptocurrency index fund. Hougan is also Chairman of Inside ETFs, the world’s largest ETF conference. He was previously CEO of ETF.com, where he helped build the world’s first ETF data and analytics system. Hougan is co-author of the CFA Institute’s Monograph on ETFs. He’s also a crypto columnist for Forbes, and a three-time member of the Barron’s ETF Roundtable. For more resources from Matt Hougan click here.

 

The Hardest Decision a Child Will Have to Make (Part 2)

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The Hardest Decision a Child Has to Make

In our previous post, we talked about how many seniors unrealistically believe they can take care of themselves for the rest of their lives. Unfortunately, this isn’t the case, and we discussed the importance of regular communication and how to deal with stubborn parents. This post is a continuation of that theme…

Make Sure All Siblings Are Unified

It is vital that all siblings and family members are on the same page. It often only takes one disgruntled child who urges the parent to stay in his home to make placement nearly impossible. Sometimes this challenging sibling isn’t even the one taking care of the parent or may live far away without first-hand knowledge of the situation.

Avoid Extraneous “Baggage”

When families get together, there can sometimes be personal “baggage” brought to the table. It is best to avoid unnecessary confrontation or sensitive family subjects, for the good of the parent. Remember, don’t be selfish. It is not about your issue or past grievance, it is about what’s best for your parent.

Power of Attorney

Important items to address include financial issues to pay for the parent’s living expenses, and who will act as the elder’s durable power of attorney for health care. One capable person should be appointed as the elder’s primary advocate. This person, whether a son (or daughter-in-law) or daughter or adult grandchild, should oversee financial decisions and act as the elder’s durable power of attorney for health care.

Dealing with the Guilt

No matter how smoothly the process goes, children often retain guilt about moving elderly parents to a long-term care facility, especially, if they are religious. Regardless of whether you promised to never put a parent in a nursing home, the decision about placement must be based on what’s best for the parent at a given time.

Remember, putting a parent in a nursing home may be the most loving act that a child can do because it may improve the quality of the parent’s life from medical and social perspectives. Nursing homes vary in quality but in general, are places where parents often thrive.

Remember, putting a parent in a nursing home may be the most loving act that a child can do because it may improve the quality of the parent's life from medical and social perspectives. Click To Tweet

Forming a Caregiving Team

Caregiving is a family affair. It is important to gather your siblings, children, uncles and aunts together to address an ailing loved one’s needs. Have a meeting and discuss the problem, without the parent present. Remember to never go it alone.

You may also want to include a financial advisor, home care provider, and elder care attorney on your caregiving team. A financial advisor may be able to help answer financial questions related to placing mom or dad in an assisted living or skilled care home. A wealth manager may help preserve capital for your aging parent and help with determining the best way to fund the assisted living home. The home care provider may be able to “shop around” for the ideal next home for your parent. An elder care attorney can help with legal questions related to your aging parents.

We’d like to be part of your Caregiving Team

Intelligent Investing’s first core value is Compassion. We think that it is important to give generously to those in need, and your parent is now the one in need. We may be able to help you organize your parents’ “financial junk drawers.” We can also manage their remaining assets in a way that helps preserve them to pay for their next place of living. We can be your “financial quarterback” in organizing the key professional players you need input from. We often collaborate with several professionals who deal with issues that may be outside of your wheelhouse. As you face this emotional time in your life, we would be honored to serve with you and help you tackle the toughest decision you may ever face.

The 3 Solutions to the Biggest Financial Problems HENRYs Face

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HENRYs

First of all, nobody likes to be labeled, and there are always exceptions to the rule, but HENRY is an acronym that stands for High Earner Not Rich Yet (coined by Fortune in 2003). HENRYs are young doctors, lawyers, engineers, or other top-earning professionals who have a high salary but don’t have time to manage investments. They are in the process or have finished paying off student loans and are beginning to accumulate a nest egg. They may have a young family and are becoming an expert in their professional field. Essentially HENRYs are young professionals who have a high salary but don’t have time to manage investments.

A couple of quick stats: Many HENRYs are Millennials who like control and technology, and make up the largest generation. They have the highest number of billionaires and are digital do-it-yourselfers. 25% aren’t sure how their retirement savings are invested, and 80% are concerned Social Security won’t be there for them when they retire.

People make money in many ways, but often don’t know what to do with it after they’ve made it. In a prior blog, we wrote about some of the biggest financial problems a HENRY faces: The 4 Ds. To quickly summarize, they are: Debt, Direction, Discipline, and Digital Dangers

  • Sometimes HENRYs fool themselves into thinking they can just “Google” their financial or investment questions. Unfortunately, it’s not that easy. Market conditions and economic forecasts change constantly. Technology can beat humans at computations, but I also believe it is best to receive wisdom from a human who understands investor behavior and who leverages integrated technologies.

So, now that we’ve covered some of the biggest financial problems a HENRY faces, How do we overcome them? Three Ps

 

Have a Plan, Be Patient, and Form a Financial Partnership

First, Have a written plan

  • Only 30% of Americans have a long-term financial plan. “If you don’t have a plan, you’ll be part of someone else’s.” Terrence McKenna
  • Start by writing out your long-term goals (5-10 year). Then, write out the big stepping stones (say, your 1-year goals) that will help you get there. Then write out the action steps to get you to those stepping stones. (breaking it down into quarters, months, and even weeks)
  • Remember, “A goal without a plan is just a wish.”

Second, Be Patient

  • Warren Buffett’s favorite holding period — forever — has few fans these days.
  • The length of time that investors hold shares has been shrinking for decades but the trend has been exacerbated due to COVID-19. People have too much time on their hands, they have been given stimulus checks and told to stay at home. This is a recipe for disaster, and has caused people to become nervous about sitting on investments for too long. The average length of time shares spend in a portfolio hitting record lows this year as investors surf wild market swings for quick gains.

Third, form a financial partnership

  • I often see young professionals partner with an inexperienced or wrong advisor. Perhaps they use a buddy they went to school with who took a 40 hour class that taught them how to sell a certain financial product such as whole life insurance. So, Be sure to check his or her credentials.
  • Be sure to understand the financial advisor’s conflicts of interest. Many times brokers make money based off of transactions, so they are motivated for you to buy and sell, which can cause unnecessary expenses in your portfolio.
  • There are many good financial advisors out there, and our firm, Intelligent Investing is a fee-only independent fiduciary firm. A fiduciary means we must do what is best for our clients at all times and strive to put you into a portfolio that matches your willingness to take on risk. Perhaps look for an advisor who does not sell any financial products such as insurance or annuities, and is incentivized to have your portfolio grow. Fear and Greed are everyone’s two biggest enemies when it comes to money, so ideally, look for a financial partner, who can provide a trustworthy lifelong human relationship and financial accountability.

Many HENRYs and millennials agonize over making decisions–such as choosing a financial advisor. However, they ignore the opportunity cost of our time. For instance, if you spend months thinking about whether to make a career change, you will have lost time that you could have spent actually building your new career. Instead, set a time limit for any decision you face and consider outsourcing to other professionals who are experts in their respective fields. You may enjoy running the numbers, but you need a financial accountability partner as a second pair of eyes to ensure you are on track. 

How to Get Started with Cryptocurrency

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How to Get Started with Cryptocurrency

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We asked Matt how someone new to investing can get started with cryptocurrency. Matt explains that strict guide rails are critical to cryptocurrency. He stresses don’t overdo it because cryptocurrency is a highly volatile investment. Even a small amount of crypto can have a dramatic impact on a portfolio. Second, never put all the proverbial eggs in one basket. Matt suggests that an appropriate crypto index fund or even spreading the investment among the top-performing assets may be right for certain investors. Finally, it matters who you partner with within the crypto space. 

At Intelligent Investing, we believe in Diversification– the spreading of risk and reward across various factors and asset classes. Matt highlighted several risks with investing in cryptocurrency and reasons why it should be a very small minority of your portfolio if you decide to include it in your portfolio. 

This podcast is not a recommendation to buy or not to buy cryptocurrency. Before you ever invest in anything, you should perform lots of due diligence and research, especially if the investment is relatively new. You should also consider how investing impacts your overall risk and financial plan. Remember, if you never own enough of any one thing to make a killing in it, then you probably won’t have to worry about owning so much of that thing, that you get killed by it.

Matt Hougan Bio

Matt Hougan is one of the world’s leading experts on crypto, ETFs, and financial technology. He is Global Head of Research for Bitwise Asset Management, creator of the world’s first cryptocurrency index fund. Hougan is also Chairman of Inside ETFs, the world’s largest ETF conference. He was previously CEO of ETF.com, where he helped build the world’s first ETF data and analytics system. Hougan is co-author of the CFA Institute’s Monograph on ETFs. He’s also a crypto columnist for Forbes, and a three-time member of the Barron’s ETF Roundtable. For more resources from Matt Hougan click here.

 

Faith in the Midst of Tragedy: Losing a Child to Mental Illness

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Faith in the Midst of Tragedy: Losing a Child to Mental Illness

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During this episode, Shelly opens up about the mental illness that ailed her late son Jonathan. Around 19 years old, Jonathan Hamilton took an acne medicine that sent him into a clinical depression. Upon further examination, the doctors diagnosed Jonathan with schizophrenia. After seven years with no solutions, a Christian psychiatrist found a combination of medicine that enabled Jonathan to function. During this period,  Jonathan penned beautiful songs published by Majesty Music and began working again. Fifteen years into his illness, a generic version of his medication became available, which removed the insurance coverage of Jonathan’s specialized medicine. Unknown to Ron and Shelly, Jonathan chose to go off the generic medication and tragically took his own life on Mother’s Day. Losing their son rattled Ron and Shelly’s world. In the midst of their tragedy, they remained strong in the faith believing in God’s providential plan for their life. Jonathan left a lasting legacy and a testimony that has touched the lives of many.

As Shelly pointed out in her life verse, the Just shall live by faith. You may be wondering why this episode is on a financial podcast, and the reason is that death and tragedy are all part of life. Many facing trials and tragedies turn to faith, and we hope this has been an encouragement to those who are facing similar trials including mental illness, suicide, or the death of a child. One of Intelligent Investing’s Core Values is Truth, and we believe that speaking the truth in love is a way to show compassion on others. Sometimes the truth hurts or is hard to say, and we hope this episode has been an encouragement to those facing similar tragedies. Be sure to subscribe to our Intelligent Money Minute podcasts to hear our many interviews with Shelly and her family by going to our podcast page.

If you haven’t subscribed to our podcasts, you can go to our podcast page and choose whichever method you want to download them. While you are there, you can go to our blog page and subscribe so you can get our latest Intelligent Insights directly in your inbox.

Shelly Hamilton Bio

Shelly Hamilton, the daughter of Frank Garlock, married Ron Hamilton aka “Patch the Pirate” in 1975. They have managed Majesty Music and written sacred music for children and adults since they joined the ministry in 1978. Shelly currently ministers at Majesty Music as pianist, composer, arranger, and recording producer. In 2013, their son killed himself after years of struggle with mental health issues. The family’s public struggle and acknowledgement of mental health issues has reached people around the world. Most recently her family faces a new challenge: Ron Hamilton’s early onset of dementia. Her insight and music will encourage anyone facing the challenges of life.

In January 2018 Majesty Music announced their third generation of leadership. After years of waiting for God’s timing, Ron and Shelly transitioned the ministry over to their son-in-law Representative Adam Morgan and his wife, Ron and Shelly’s daughter, Megan.