Five Minute Finance

By Mike Morton, CFP®, RLP®, ChFC®Business Education Self-Improvement Parenting Kids & Family Investing

Five Minute Finance episodes

April 30, 2024 Don’t Fall for Flashy Headlines: Shiller PE Ratio
In this week's episode, Matt Robison and I delve into the essential lesson from renowned economist Robert Shiller: don't get swept away by stock market hype. Join us as we explore the implications of the Shiller PE ratio, currently standing at a lofty "34," we unpack Shiller's groundbreaking research and its practical applications for investors.
With a focus on the importance of valuation and maintaining a well-diversified portfolio, we emphasize the need for specificity in financial planning, particularly as you approach retirement or set specific financial goals. Shiller's insights remind us to steer clear of short-term hype and instead prioritize long-term fundamentals, ensuring confidence and resilience in navigating market volatility. So, whether you're a seasoned investor or just starting out, remember to stay focused, stay diversified, and stay the course for long-term success.

Are you ready to create your ideal lifestyle? Let’s Connect.

Learn more about Mike and my services at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/
31 min
April 23, 2024 Don’t be Daft, use a DAF: Donor Advised Fund
In this week's podcast, Matt Robison and I, Mike Morton, delve into the world of charitable giving and the benefits of using a Donor Advised Fund (DAF) into your philanthropic strategy. A DAF functions like a personal account where you can deposit various assets, such as cash, stocks, or cryptocurrencies, which then become charitable donations. We explore nine compelling reasons why utilizing a DAF might be advantageous, ranging from tax benefits to flexibility in donation timing and asset growth potential. Moreover, DAFs offer a streamlined approach to philanthropy, allowing for easy management, involvement of family members in giving decisions, and the ability to donate a wide range of assets. As DAFs continue to rise in popularity, they represent a powerful tool for individuals seeking to plan their charitable giving effectively while maximizing tax advantages and leaving a lasting legacy of generosity.

Are you ready to create your ideal lifestyle? Let’s Connect.

Learn more about Mike and my services at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/

34 min
April 16, 2024 The Joker Fund
In today's episode, Mike Morton and Matt Robison introduce a revolutionary solution to alleviate financial anxiety: the Joker Fund. Inspired by the infamous line from The Dark Knight, "Nobody panics when things go according to plan," they emphasize the importance of planning ahead to tackle irregular expenses that often leave individuals feeling financially overwhelmed. With statistics showing that 76% of U.S. adults experience financial anxiety, it's clear people need relief.
The Joker Fund turns unexpected expenses into anticipated by automating savings for things like insurance payments, tuition bills, summer camps and even vacations; things you know you will spend money on but don’t make it into any monthly budget because the timing varies. Get a step-by-step guide on implementing the Joker Fund, from identifying irregular expenses to setting up automatic transfers to a dedicated savings account. By embracing automation, individuals can plan and bid farewell to financial panic.
Are you ready to create your ideal lifestyle? Let’s Connect.
Learn more about Mike and my services at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/
22 min
April 09, 2024 IRA Beneficiaries: It’s all about the Benjamins
In this week’s episode, hosts Mike Morton and Matt Robison discuss IRA Beneficiaries. They delve into the critical decision of choosing a beneficiary for your Individual Retirement Account(s) (IRA) and its financial ramifications. Through a real-life example, you will see how one of Mike’s clients' strategic maneuver saved her family $150k in taxes by spreading the withdrawal of her spouse's $500k IRA over a longer period of time.
They also explore the workings of beneficiaries for IRAs, 401(k)s, and 403(b)s, emphasizing the importance of proper estate planning to avoid tying assets up for long periods in probate court. Use the handy checklist provided by the hosts to review your beneficiary designations. Take proactive steps in securing your financial legacy for your loved ones' benefit, potentially saving them significant tax burdens in the future.
Are you ready to create your ideal lifestyle? Let’s Connect.
Learn more about Mike and my services at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/
26 min
March 26, 2024 Don’t Panic: Overcoming Financial Avoidance
In this week’s episode, Mike Morton is joined by financial coach Adam Koren to discuss strategies for overcoming the stress and shame often associated with managing personal finances. They delve into the emotional aspects of money management, emphasizing the importance of recognizing societal barriers to financial literacy and fostering open dialogue. Adam shares insights on facing fears surrounding bank account balances and past expenses, highlighting the benefits of discussing financial concerns with trusted individuals. The episode also explores the value of structured conversations, such as monthly "financial date nights" with a partner, and emphasizes the role of self-compassion and gratitude in navigating financial challenges. Listeners are encouraged to approach finances with empathy and understanding, utilizing various strategies to empower themselves and achieve peace of mind.
Are you ready to create your ideal lifestyle? Let’s Connect.
Learn more about Mike and my services at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/

26 min
March 12, 2024 Dude, Where's My Money?
Join Matt Robison and I this week as we discuss the various ‘buckets’ your finances are in and if you have the right ratios for your needs. Inspired by a real client’s story, we talk about portfolio holdings such as real estate, brokerage and retirement. Having too much money “locked up” in assets such as your house and your 401k could make it difficult for you to cover unexpected expenses or even planned ones. Tune in to be sure you have your assets in a row.
Are you ready to create your ideal lifestyle? Let’s Connect.
Learn more about Mike and my services at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/

27 min
March 05, 2024 Top Secret Asset Locations
In this week's episode, Matt Robison and I, Mike Morton, delve into the concept of asset location. No, we aren’t revealing CIA operatives' whereabouts but rather discussing the strategic placement of investments, which can significantly impact returns, potentially yielding a $74k difference. Asset location refers to where investments are held, such as 401ks, IRAs, or brokerage accounts, with a focus on optimizing tax savings, particularly by placing bonds in tax-free or tax-deferred accounts. Using a real client example, I illustrate how adjusting asset locations can notably enhance returns over time. We also offer practical tips like reviewing account types and balancing taxable fixed income and equities accordingly. Does this seem overwhelming? Fear not, we also give you the “good enough” strategy that does not include optimizing asset locations: save 15% of your gross income and invest predominantly in low-cost index funds.
Are you ready to create your ideal lifestyle? Let’s Connect.
Learn more about Mike and my services at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/
23 min
February 13, 2024 Anne Lester on Personal Finance
This week I am joined by special guest Anne Lester to discuss the importance of educating young individuals about finances. In particular, we discuss Anne’s latest book titled Your Best Financial Life: Save Smart Now for the Future You Want and its focus on individual financial responsibility. We also talk about the shift towards personal financial management, overcoming behavioral biases in saving and investing, the benefits of automated savings, and the significance of educating young individuals about finances.
Watch on Youtube

Retirement Savings - You’re on your own
Anne and I begin our chat by acknowledging a historical shift in retirement savings. Back in the day (our parents’ generation and even ours, to some extent), companies would take care of their employees with pensions and retirement packages. It was normal for an individual to spend years, decades even, at the same job, or at least employer. The same cannot be said for today’s economy in which most people spend a maximum of five years in any one given position.
Why does this matter? If your job isn’t actively preparing you for retirement, that responsibility now falls on your shoulders. There is a lack of education and an abundance of complication when it comes to personally managing long-term savings. Let’s break those key issues down to their impact on you:

Educating kids and young adults on personal finance
Math in elementary school covers the basics. In high school, it gets more complicated with advanced computations but most public schools do not spend much, if any time on personal finance. It is up to us parents to teach our kids about credit (cards, lending, etc), real estate (purchase, lending), and arguably most important: long-term savings. These concepts are not intuitive and they accompany two significant behavioral biases: loss aversion and present mindset.

Loss Aversion and Investing
We’ve talked about loss aversion in the past on this podcast, in particular in the episode Be More Aggressive. Anne revisits this behavioral bias that is well defined by the Decision Lab as a “cognitive bias that describes why, for individuals, the pain of losing is psychologically twice as powerful as the pleasure of gaining. The loss felt from money, or any other valuable object, can feel worse than gaining that same thing.”
How does this impact investing? It explains why so many people are afraid of the stock market. Even if they know that historically speaking, they will always gain money from investing in stocks, watching the tickers and tuning into the day-to-day market volatility wreaks havoc on the psyche and impacts one’s decision making. Putting money in a savings account feels safer than investing, even if we know that it is a financially detrimental decision. We just talked about this last week!
Anne breaks it down further by running some numbers. Investing $5k in the market today will likely grow to $100k in 40 years. So how do we overcome, or teach our kids to defeat that behavioral bias? Well, first we have to acknowledge that living in the moment isn’t always a good thing.

Present Self vs. Future Self
Have you ever tried telling your young child that if they eat those chocolate-dipped, deep-fried oreos from the fair they probably won’t feel well in an hour or so? You probably then held their hair or rubbed their back as they made a sacrifice to the porcelain throne. 🤢
Trying to explain to a young person the concept of regret in the face of instant gratification is a lot like banging your head against a wall, repeatedly. We all remember the feeling, and likely still indulge (binge-watched any shows into the wee hours of the morning lately? You know you have!). Ane talks about the challenge we all face when it comes to present self vs. future self. Luckily, she also has some tips for overcoming the tendency to prioritize the now over the later.

Tips for teaching/embracing long-term financial planning
What’s the easiest way to help your kids achieve success in retirement planning? Automate. Show them how to take the decision and the tendency toward instant gratification out of their hands. You can’t spend money you don’t have, right? So start by saving off the top. Use those employer benefits to contribute to any and all savings vehicles offered to you including (but not limited to): 401k’s, Health Savings Accounts (HSA’s), 403(b), TSP, etc.
Next, automate transfers to those savings vehicles that don’t come directly from your paycheck. Set up an auto-transfer for the day after you get paid to 529’s, IRAs, Brokerage account and more. Sure, your newly minted adult child might not be able to manage a huge contribution if they want to make rent and eat, but they can plan to set-aside a percentage of their yearly raise to savings goals. You can’t miss what you never had, right? The less they have to think about it, the easier it is to let their money grow overtime. Future selves for the win!

Your Best Financial Life
Anne Lester was a truly delightful guest to have on the Financial Planning podcast. Our conversation shed light on the evolving landscape of personal finance, particularly in terms of retirement savings and the imperative for financial education among young individuals. As we navigate a world where traditional employer-provided pensions are increasingly rare, the responsibility for long-term financial security falls squarely on individuals' shoulders. Anne's insights underscore the importance of equipping the younger generation with the knowledge and tools necessary to navigate complex financial decisions, combatting behavioral biases such as loss aversion and present bias. By emphasizing the benefits of automated savings and instilling the value of long-term financial planning early on, we can empower our kids to take control of their financial futures and strive towards their best financial lives. Anne Lester's expertise serves as a valuable guide in this journey towards financial literacy and security.
38 min
February 06, 2024Risk: Why Timeframe Matters
Risk: It bears Repeating
Anything worth saying is worth repeating. - Humble the Poet
We’ve talked about risk many times in the past. In particular, how you view risk. The reason the conversation bears repeating, other than the fact that I field this topic on the regular, is because it is tied to a strong emotion: anxiety.

Not taking a risk is the biggest risk
Many people “feel” like the safest way to save money is to hide it under a mattress (ok, not really, but savings accounts are today’s mattresses). Why? Watch the news. The stock market ticker runs at the bottom throughout many newscasts. People have market changes pinged directly to their phones. Do you know how often the market fluctuates, daily? If you do, then you know exactly what I am talking about.
Do you view taking a risk as losing money? Then this podcast is for you! Join Matt Robison and I this week as we discuss how you should be looking at risk. Spoiler alert: risk isn’t losing money, it is losing purchasing power.

Risk: How long until retirement?
When deciding how to invest, consider the timeframe - it all depends on when you will need to spend the money.
30+ years until retirement: You are just starting in your career, maybe you have one or two young children at home. Your best option for long-term investments are stocks. Over long periods of time (40+ years), stocks have always outperformed any other type of investment.

10-20 years until retirement: Your kids are (mostly) grown, you’re paying college expenses, etc. The strategy here is almost the same as above: Stocks are still your best bet for 10+ years of investment. However, you need to balance that with anticipated costs for the next couple of years. For instance, the 529 account for your high school junior should be invested more conservatively than your 401(k).

About to retire or retired: Congratulations! Now your main concern is having your money last, being available when you need it, and keeping up with inflation. See below for the Retirement Bucket strategy!

These time frames are important when you look at historical market returns.

Retirement Buckets
Now that you are about to retire, or even better - you have already retired - you need to keep a close eye on your portfolio to ensure it will keep up with your ongoing needs.
Cash: Keep the next 1-2 years of expenses in cash and money market funds. You don’t want to lose that money!

Bonds: The following 2-7 years of expenses can be invested in very safe bonds or bond funds. This will get you some nice return (hopefully!) while not losing value.

Stocks: Any money that you plan to spend in 7+ years from now, you can consider investing in low-cost stock index funds. Stocks tend to ourperform over long periods (10+ years) and you want your retirement portfolio to keep up with inflation

The first two buckets above (1+2) are your war chest: the money you need to have to cover expenses over the next 5-7 years in case the stock market crashes.

Stocks for the Long Run
Need more proof that stocks are your best bet? Let’s pretend that you were around in 1802 and you were rich. You had a crisp $1 to save. Had you put it under your mattress and pulled it out this year, it would be worth a whopping $.04. Yes, you read that correctly. Four cents. Do you see how the dollars don’t make sense? Had you invested that $1 in the stock market, it would now be worth $1,601,184.
Here is where the purchasing power comes into play. That dollar bill in 1802 could probably purchase dinner for the whole family. Uh, not so much in 2024! You can see from the chart that a dollar from 1802 has lost so much purchasing power that it can only buy 4.7 cents worth of goods. Bonds have done better, with a modest return from $1 to $1,746. Obviously, stocks far outpace cash and bonds. That’s why we say “stocks for the long run.”
It is a common mistake to equate risk with volatility. Separating the two can help assuage the stress and anxiety brought on by market fluctuations if you just keep reminding yourself that time and strategy are on your side.
24 min
January 30, 2024Bitcoin ETF
Have you heard the news? There are now Bitcoin Exchange-Traded Funds (ETFs)! I can hear your head scratching from here but don’t worry. Matt and I are here to break down these new trade floor offerings on this week’s episode and give you the information you need to make an informed decision when it comes to investing in this new product.

What is a Bitcoin ETF?
Let’s start by breaking down Bitcoin and ETFs. In a prior episode, we talked about cryptocurrencies in depth and how buying into them is more speculation than investing. At the time, two and a half years ago, cryptocurrencies were dangerous due to their associated risks, including regulatory, security, insurance, fraud, market, and liquidity. That hasn't changed much in the meantime. We also did an episode on ETFs. In it, we discussed how ETFs are wrappers for financial products. So what is a Bitcoin ETF? Essentially, it is an easier way for you to enter the cryptocurrency market.
By purchasing a Bitcoin ETF, you gain exposure to cryptocurrencies without the complexities of directly buying, storing, and managing the actual “coins.”

Features of a Bitcoin ETF
Here's a summary of how they generally work:
Structure: Bitcoin ETFs are traded on traditional stock exchanges rather than cryptocurrency exchanges.

Underlying Asset: The ETF might be backed by actual Bitcoin holdings (physically backed), or it may use derivatives like futures contracts to track Bitcoin's price (futures-based). These new Bitcoin ETFs are set up to hold actual Bitcoin, so you do not have the peculiarities of Future contracts.

Accessibility: Since it's traded like a stock, investors can buy and sell shares of a Bitcoin ETF through regular brokerage accounts. This makes it accessible to a wider range of investors who may not be familiar with or comfortable using cryptocurrency exchanges.

Regulation and Safety: ETFs are regulated financial products, which means they are subject to the oversight of financial authorities. This provides a level of security and legitimacy that direct cryptocurrency investments may lack.
Custodial security: Your ETF is held by a Custodian (i.e. Fidelity) that is regulated by the SEC and has insurance against fraud

Avoidance of technical complexity: Trade it like a stock, and you own Bitcoin. You do not have to create new digital wallets, accounts, cold storage or any of that.

Risk Management: Investors get exposure to Bitcoin's price movements without dealing with the risks associated with holding the cryptocurrency, such as hacking or loss of access to their wallets.

Tax Efficiency: For some investors, particularly in certain jurisdictions, investing in a Bitcoin ETF can be more tax-efficient than holding Bitcoin directly. Basically, the reporting is the same as your other investments - Bitcoin will be represented in the year-end report so you don't have to track the cryptocurrency exchange personally.

Liquidity: ETFs are generally more liquid than holding the cryptocurrency directly, as they can be quickly and easily traded during market hours.

Fees and Costs: Investors should be aware of the fees associated with Bitcoin ETFs, which might include management fees and the potential costs associated with the fund's method of tracking Bitcoin's price.

Now that you know what a Bitcoin ETF is, you can make an informed decision about investing in this new technology.
30 min

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Are you super busy with your career, kids, and life? Discover ways to get organized and enjoy a wonderful life! We cover smart strategies for personal finance, investing, and how to enjoy your time and money. Breakthrough the complicated financial landscape with easy-to-understand information that you can actually follow. I discuss how to become wealthy: tips and habits to change in your life to achieve financial freedom. I dive into topics such as savings, investing, education planning, insurance, tax planning, and more. If it's related to financial planning and financial success, you can be sure we'll cover it.