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Why Should I Leave a Legacy Letter?

October 14, 2021 by Hans Blake, CFA, CPA

Reading Time: 2 minutes

On today’s Intelligent Money Minute, we’ll interview Kathleen Rehl on why you should leave a legacy letter. It’s wise to have your final will and testament in order, but your possessions aren’t the most valuable gift for family and friends. Kathleen says, “you can give loved ones a far more precious treasure that’s a legacy of who you are.” During this episode, Kathleen talks about the priceless value of leaving your family and friends a legacy letter.

Your family will likely read and re-read a legacy letter should something happen to you. As Kathleen said, your family will likely pull out and look at a legacy letter that you have written more often then they will pull out your final will and testament. We also talked about our core values which spell out the word, CLIENT. If you’d like to know more about Intelligent Investing’s core values, please visit here.

Please be sure to subscribe to our podcasts as we will be interviewing Kathleen on an upcoming podcast where she explains how to simply write a legacy letter to your family and friends. You will not want to miss it. You can purchase Kathleen’s book 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.

Sticking to the Plan & Avoiding Behavioral Finance Mistakes

April 29, 2021 by Hans Blake, CFA, CPA

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Reading Time: 2 minutes

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 3 Solutions to the Biggest Financial Problems HENRYs Face

April 7, 2021 by Hans Blake, CFA, CPA

Reading Time: 3 minutes

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

April 1, 2021 by Hans Blake, CFA, CPA

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Reading Time: 2 minutes

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

The Risks of Cryptocurrency & Bitcoin

February 10, 2021 by Hans Blake, CFA, CPA

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Reading Time: 2 minutes

On this episode of Intelligent Money Minute, we interview Matt Hougan, Chairman of Inside ETFs on the risks of cryptocurrency and bitcoin. From bitcoin to dogecoin to chainlink, cryptocurrency is a reigning hot topic in the financial realm. That being said, there’s an influx of information and “success” stories making it hard to learn the benefits and or risks of this new age of finance. Matt Hougan is optimistic about the potential future of cryptocurrency, but there are significant risks as well. First, there’s massive behavioral risk in cryptocurrency. For example, Bitcoin has been highly volatile despite its high returns causing people to chase returns or to panic at the bottom. Second, there are potential future legislation concerns or a lack of proper controls on cryptocurrency.

As Matt mentioned, there are a number of risks out there, and always be something to fear. At Intelligent Investing, one of our wealth management principles is Faith in the future.
We want to maintain a positive outlook on life, even when things appear dark or grim. We also believe in Diversification– the spreading of risk and reward across various factors and asset classes. If you never own enough of any one thing to make a killing in it, then you shouldn’t have to worry about owning so much of that thing, that you get killed by it.

Matt Hougan Bio

The Four Biggest Financial Problems a HENRY Faces

January 28, 2021 by Hans Blake, CFA, CPA

Reading Time: 2 minutes

People make money in many ways, but often don’t know what to do with it after they’ve made it. Some of the biggest financial problems a HENRY faces: The 4 Ds

The 4 Ds- Debt, Direction, Discipline, and Digital Dangers

First, they have insurmountable Debt–

The Federal Reserve estimates that Americans owe more than $1.7 trillion in student loans. In addition to student loans, HENRYs face ridiculous rents, or are living with their parents, as they have a hard time saving up enough for a down payment on a home. In addition, they can’t afford enough insurance for a health or disability event.

Second, they lack Direction–

63% of Americans are living paycheck to paycheck, and if faced with a $500 emergency, 8 out of 10 couldn’t cover the cost. As a result, HENRYs haven’t created an Emergency Fund, a Budget, or retirement plan.

Third, they lack Discipline–

They often are unsure where to get sound financial advice and they are too busy developing their own career. They don’t have time, nor the accountability they need to keep them on the right path.
Instead of talking about their latest hot stocks at the water cooler as in prior generations, they are in Reddit chatrooms or Social media feeds convincing each other they know more about a company’s stock than anyone. This overconfidence bias will eventually get them into trouble.

Fourth, They face Digital Dangers–

We live in a digital world that is instantaneous. HENRYs prefer paying by digital wallets, and are comfortable throwing money at cryptocurrencies like Bitcoin. They like the recent high returns of Bitcoin, and they think they are a long way off from retirement so they can afford to take some risks. They remember their parents complaining about the 2008 housing crisis which was the result of bankers and brokers playing fast and loose with “safe investments like stocks and houses.”
We are now seeing a repeat of those behavioral mistakes. By eliminating transaction fees, HENRYs are on the Robinhood app convinced that their stock, Bitcoin, or options purchases can only go up.
In the short run, they may be right as they gamble, but in the long-run, the house always wins.
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.

Cryptocurrency & How It Works

January 27, 2021 by Hans Blake, CFA, CPA

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Reading Time: 2 minutes

On this episode of Intelligent Money Minute, we interview Matt Hougan, Chairman of Inside ETFs on cryptocurrency and how it works. During this episode, Matt pulls back the curtain and sheds light on the nuances of cryptocurrency. According to Matt, cryptocurrency is the first native way that money can move over the internet. For example, if you go online today and pay your internet bill, it could take multiple days for that money to transfer. Contrast that with a Bitcoin transaction. Matt gives an example of a billion-dollar transaction that settled in less than 10 minutes with a fee of .0007%. There are many misconceptions regarding cryptocurrency. Simply put, it’s a new rail for the modern transfer of money.

I recently read a quote, “Knowledge acquired by reason will dispel ignorance and thus destroy the greatest evil—fear.” As Matt points out, when you hear of something new, it is best to do some research in order to gain knowledge and a better understanding. We think the same holds true of cryptocurrency, blockchain, and alternative asset classes. Just because something is new, doesn’t make it wrong. At the same time, just because it is new, doesn’t mean it’s better. To learn more about our philosophies, go to our philosophy page.

Matt Hougan Bio

The Dangers of Commission-Free ETF Trading

January 14, 2021 by Hans Blake, CFA, CPA

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Reading Time: < 1 minute

On this episode of Intelligent Money Minute, we interview Matt Hougan, Chairman of Inside ETFs on the dangers of commission-free ETF trading. Recently, custodians have been offering commission-free trading on ETFs, but many believe this can encourage misbehaving. Matt lays out the big picture in regards to the market and the opportunity. During this episode, he highlights the benefit and the behavioral risk of commission-free trading. The benefit is that those paying commissions will experience a leveling of the playing field. On the flip side, the behavioral risk is resisting the temptation to trade more frequently. Just because you can trade something doesn’t mean you should.

The adage, “There’s no free lunch” continues to ring true today. Custodians will make money somehow, and it is important for you to understand that. Investors should be grateful for the recent drop in commissions, but there is a behavioral risk that is attached to commission-free trading. You can learn more about these dangers and the need for having an investor behavioral coach by visiting our philosophy page.