One For The Money

Tax Advantaged Investment Accounts, Ep #59

It’s April and taxes are on the forefront of everyone’s mind. An essential part of building wealth is to not pay more taxes than you have to. In this episode, I will be getting back to the basics and provide and overview of tax-advantaged investment accounts.  

• Pre-tax account strategies  [4:03]
• After-tax account strategies  [6:11]
• How young adults can benefit from HSA accounts   [12:26]

Taxes can be incredibly confusing regarding how they work and the terminology does not help. Terms such as Gross Income, Adjusted Gross Income, Modified Adjusted Gross Income, above-the-line deductions, below-the-line deductions, tax credits, tax deductions, and Marginal tax rate vs effective tax rate are all important to understand how taxes work and how to implement tax saving strategies. If you want to learn more about these terms consider listening to Episode 8 and Episode 9 of this podcast. 

In this episode, I’ll provide a more basic understanding of tax-advantaged investment accounts and how these accounts can help you save on taxes. More specifically, how different investment accounts are taxed because knowing the differences can help a person decide when it is to their advantage to pay taxes.  This is an important topic because I often see individuals and families paying way more taxes than they need to because they don’t understand the differences between tax-advantaged investment accounts and how they allow tax optimization.

There are 3 different types of tax-advantaged accounts we will discuss each one below.

Pre-tax Accounts - Also known as traditional retirement accounts. Most know these as their 401(k) or IRA. In these accounts, you contribute a portion of your salary before you pay taxes. You will still have to pay taxes on this money but you will pay it later, when you take the money out of the account. These types of accounts make the most sense when you are in your highest earning income years. Deciding to pay taxes on the money put into these accounts during retirement when your income is lower can save you a significant amount of money in taxes. 

After-tax Accounts -After-tax accounts are when you pay taxes on the money before you make contributions to the account. These are commonly recognized as Roth 401k or Roth IRA retirement accounts. 529 accounts are also after-tax accounts. The advantage to these accounts is you never have to pay taxes again on the money contributed if you follow the distribution rules. This type of tax-advantaged account makes a lot of sense in your lowest and lower earning income years. By deciding to pay taxes when your income is lower you can save a significant amount in taxes. 

HSA Accounts -HSA accounts are the only accounts that are considered triple tax-free. With these types of accounts, you don’t pay taxes on the contributions or distributions or anytime in between. The contributions are tax-deductible, and both the growth, and distributions (if used for a qualifying medical expense) are tax-free.  As long as you follow the rules with HSAs you will pay ZERO taxes on them. Only people with a qualifying high-deductible medical plan are eligible to invest in HSAs. Contributions to HSAs are limited to an annual amount. For 2024 the limits are as follows: Individual $4,150, and Family $8,300. For those 55 and older you can contribute an additional $1,000. 

You may use funds in an HSA at any time for medical expenses. If you do not use all of the money inside of an HSA it will essentially become a traditional IRA and be taxed at ordinary income rates. HSAs can be so beneficial because the average retired couple will spend, on average, over $315,000 on medical expenses during retirement. 

Tips, Tricks, and Strategies - Young adults between the ages of 18-26 can benefit strongly from HSAs. Young adults can remain on their parents' health plan until age 26 and if their parents have a high deductible health plan they can contribute to their own HSA account. 

References

How to plan for rising health care costs

Maximizing HSA Tax Benefits With Adult Children

401(k)s Will Be Gone Within a Decade

• https://BetterPlanningBetterLife.com 
• Connect with Jonny on LinkedIn

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Retiring Out of the States - What to Consider, Ep #58

Last episode we discussed the implications of where you choose to retire in the United States. In this episode, we will dive into what to consider when retiring internationally. Retiring outside of the United States is not a simple decision but one we hope to offer guidance on today.

• Top countries for Americans to retire to [03:12]
• Factors to Consider when retiring out of the states  [8:47]
• How to “test drive” international retirement   [10:45]

For those that want to retire internationally, you are not alone.  Global Citizens Solutions is a firm that helps Americans retire abroad. They have listed the top 10 countries to retire by considering criteria such as housing, benefits and low-cost perks, Visas and residency ease, cost of living, cultural assimilation, quality and accessibility of healthcare, development, climate, government stability, and the opportunity to semi-retire.

The number one country to retire to as ranked by the Global Citizens Solutions is Portugal followed by Mexico and Panama. You may be considering retiring out of the States to pursue a happier life and an adventure, you will also be able to take advantage of stretching your funds through a lower cost of living and meeting financial goals that wouldn’t be possible to achieve by staying in the United States.

My practice helps take clients to and through early retirement and retiring in a country with a lower cost of living makes early retirement much more feasible. Take Portugal for example, the number one country for Americans to retire to offering beautiful beaches, a warm climate, and a rich culture. Portugal offers programs to help Americans retire to Portugal.

Most obvious factors to consider when moving to another country in retirement:

Cost of Living - This is a significant factor to consider when choosing to retire abroad. Retiring to a country with a significantly lower cost of living can change lifestyle during retirement.

Climate —It is important to consider what climate you want to retire to. Why make such a massive move to only have to endure winter? 

Healthcare Access and Expenses— This is one of the top considerations with international retirees. The average married couple in America spends over $250k during retirement on healthcare alone. There are countries where your health care dollars can go further and you will be surprised how good the healthcare you receive will be.

Housing— will be a significant factor to consider, for example, some of the houses in Costa Rica are gorgeous but they come at a steep price. You may want to consider the cost of buying a home outside of the States.

Culture— There may be significant cultural differences as well as language barriers to consider.

In short, if you are looking to retire outside of the States some of the factors you will want to consider are Cost of living, Climate, Healthcare Access, Housing, and Culture. There are a host of other factors as well such as tax and legal factors and proximity to family. 

My practice helps take clients to and through early retirement, one strategy to consider is to spend the first few years of retirement in an international location with a lower cost of living.

The idea of living internationally might sound exciting but, you might still have some hesitation. A great way to temporarily test drive a retirement out of the country is doing a home swap. There are websites that provide a platform where you can exchange homes with other international travelers. 

Securities and Advisory services offered through LPL Financial. A registered investment advisor. Member FINRA & SIPC.

• Retiring Overseas: Here's What You Need to Know
• Top 10 Countries for Americans to retire
• Home Exchange
• Robert August

• https://BetterPlanningBetterLife.com 
• Connect with Jonny on LinkedIn

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Retiring Out of State - What to Consider, Ep #57

When it comes to retirement for citizens in the U-S-of-A, you have 50 different states to choose where you would like to spend your retirement. It’s not a decision to take lightly as there are advantages and disadvantages that every state offers. There are a host of factors to consider when retiring to another state and I’ll go over a few of them here.

• United States Retirement Migration trends [03:35]
• Factors to Consider when retiring out of State  [05:47]
• How to save on taxes for those with residences in two states   [12:57]

More than a few Americans decide to relocate to another state. Smart Asset examined U.S. Census Bureau migration data to uncover where retirees are moving. They noted, unsurprisingly, that a lot of seniors are moving out of expensive northeastern cities and into other parts of the country. Here are some of the key findings of their analysis of the census data:

The most popular city for retirees to move to was Mesa, Arizona which topped the list for the nation’s highest net gain of seniors for the third consecutive year. In fact, the influx of retirees more than doubled that of the second place city.

The most popular state is Florida which sees a massive influx of seniors. Florida netted more than 78,000 senior residents from other states in 2021 – three times as many as the second-ranked state. Miami, Jacksonville, St. Petersburg, and Tampa all placed among the top 20 cities gaining the most seniors.

Smart Asset noted that Taxes and climate appear to influence retirees.

The most obvious factors to consider when moving to another state in retirement. 

Proximity to Family - As you get older, you want to cherish your time with family. Obviously, you’ll get more of that when you live closer to one another. Additionally, you may need some assistance as you get older so you will want to have family close to help you. Clearly, being geographically close to family is a compelling reason to retire to another state but maybe not too close to your family, as the comedian George Burns put it “Happiness is having a large, loving, caring, close-knit family in another city”. But it should be noted that he didn’t say in another state.

Cost of Living —The next most important factor when considering retiring in another state is the cost of living. This has more to do with just taxes as things can be significantly more or less expensive. 

Climate — There’s a reason why more retirees are moving to sunnier climes such as Florida, Arizona, Texas and the like. 

Taxes — Are a huge consideration when deciding to retire in another state. Some states tax income at higher rates, some don’t tax income at all. Some tax social security benefits and some don’t at all. Others have no to low income rates but have higher property tax rates to make up for it. Some have high sales tax and a few have none.

In short, if you are looking to retire to another state some of the factors you will want to consider is proximity to family, the climate, the cost of living and of course taxes. Because if you live close to family near the border of two different states, it might make a big difference in which of the fifty nifty United states you decide to retire to. 

There is a tax saving strategy for those who have residences in two different states. We’ll call it the 183 rule. Why that number, because there are 365 days in a year and 183 days is just over half. If a person has residences in two different states, say California and Nevada, they would want to become a resident in Nevada and spend 183 days or more in their Nevada residence. This would ensure that their income would be taxed at Nevada rates and not Californias, because they spent the majority of the time in Nevada.

Securities and Advisory services offered through LPL Financial. A registered investment advisor. Member FINRA & SIPC.

Resources & People Mentioned

• https://www.investopedia.com/articles/personal-finance/110614/overall-tax-burden-state.asp
• https://www.nerdwallet.com/cost-of-living-calculator
• https://www.kitces.com/blog/state-income-tax-retirees-top-marginal-rates-social-security-pension-income-age-exemptions/
• https://smartasset.com/data-studies/where-retirees-are-moving-2023
• https://www.investopedia.com/tax-residency-rules-by-state-5114689

• https://BetterPlanningBetterLife.com 
• Connect with Jonny on LinkedIn

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How to Become a Member of the Two Comma Club, Ep #56

This episode focuses on the behaviors needed to become a member of the two-comma club. What exactly is the two-comma club? Well, it’s just a different way of saying how to become a millionaire, since one million dollars is represented by 7 numbers, the number 1 followed by 6 zeros, consequently there are two commas required to break those numbers up.

• Who Wants to be a Millionaire [01:26]
• USA has a lot of millionaires [03:23]
• The Abundance Mentality [05:49]
• Prerequisites to becoming a Millionaire: The Success Sequence [07:28]
• What you should do [09:20]
• What happens to those that didn’t model the behaviors [14:13]

Years ago there was a hugely popular game show entitled Who Wants to Be a Millionaire. It captivated the American public. The television network ABC first launched the American version of the game show in 1999 and it became the highest-rated television show later that year, and has since had 21 seasons with several different celebrities serving as the game show host.

In 2023 here in the US of A, we have never had more millionaires than we do right now. 

Based on the latest estimates from the Federal Reserve there are around 16 million American households with a net worth of $1 million or more. That’s up from fewer than 10 million millionaire families in 2019.

While saving and investing are important behaviors to cultivate on the path to becoming financially independent (or a millionaire) there are prerequisites behaviors that must be mentioned. In an opinion piece in the WSJ by the wonderful Jason Riley, he emphasized the success sequence. That sequence is often credited to research done by Brookings Institution scholars Isabel Sawhill and Ron Haskins, though others have made similar observations. The success sequence is simply this:

If you finish high school, get a job, and get married before having children, you have a 98% chance of not being in poverty.

Recently Dr. Melissa Kearny, MIT-trained economist wrote a book entitled The Two-Parent Privilege.  In it she shared the story of how declining marriage rates are driving many of the country’s biggest economic problems and how the greatest impacts of marriage are, in fact, economic: when two adults marry, their economic and household lives improve, offering a host of benefits not only for the married adults but for their children. A summary of the book notes that For many, the two-parent home may be an old-fashioned symbol of the idyllic American dream. But The Two-Parent Privilege makes it clear that marriage, for all its challenges and faults, maybe our best path to a more equitable future.

Here are a few additional behaviors I would add:

Not borrowing money when you don’t have to. Just because you are approved for a loan doesn’t mean you can afford the thing you are trying to purchase. Don’t confuse approval with proof that you can afford the car or whatever it is you are trying to buy with borrowed money. If a person has a new luxury car they are wasting money and most who have them don’t have the money to waste. You should only borrow money to buy an house and pay for some college. And even with college there are many reasons not to borrow money to pay for college. See episodes 15 and 16 of this podcast for more information.

Another thing to note, just because a person has a high FICO score it doesn’t necessarily mean they have made smart money choices but simply the fact that they have shown the ability to borrow money and pay it back consistently. One’s personally accrued net worth and the savings rate is a far better determiners of smart money choices.

In the end, it all comes down to discipline. Everything changes financially when you are living on a paycheck from 3 months ago. If a person needs their upcoming paycheck to pay their expenses they don’t have the mindset to be financially free or a millionaire. Instead, they have the mindset to struggle financially. 

That may sound like a harsh thing to say to those who are suffering to make ends meet. But the principles required to lift their self out of their current circumstances can be found in their daily choices.

Securities and Advisory services offered through LPL Financial. A registered investment advisor. Member FINRA & SIPC.

• https://awealthofcommonsense.com/2023/11/how-to-become-a-millionaire/
• https://www.wsj.com/us-news/never-mind-the-1-mini-millionaires-are-where-wealth-is-growing-fastest-b1dd2ee7
• https://press.uchicago.edu/ucp/books/book/chicago/T/bo205550079.html
• https://www.wsj.com/articles/the-biggest-root-cause-of-crime-is-fatherlessness-single-motherhood-5cdfe763
• https://ourworldindata.org/millennium-development-goals

• https://BetterPlanningBetterLife.com 
• Connect with Jonny on LinkedIn

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All That Glitters Isn’t Gold, Ep #55

On my drive to work, I mostly like to listen to podcasts but on occasion, I will listen to the radio. And frequently, I hear advertisements that claim that the economic sky may be falling and that one needs to invest in gold to protect themselves from the oncoming economic apocalypse. Well, the truth regarding investing in gold is a very different story and those that invest in gold may not have fools gold but I’ll share why it could be very foolish to do so.

• Using Fear to Sell [2:54]
• The lies salesmen tell you about Gold [4:10]
• Gold has grossly underperformed for over 40 years [6:26]
• Three Additional Reasons to NOT invest in Gold [10:25]
• Beware When Salesmen Use Fear to Sell [13:13]

This communication regarding a precious metal is limited to a general and educational discussion as an asset class such as an economic or market commentary. This is not a promotion or solicitation for the direct purchase of a hard asset. 

Gold has enamored the mind of mankind for millennia. There are tales of Eldorado, the lost city of gold, or King Midas who had the golden touch, or even a leprechaun that hides a pot of gold at the end of a rainbow. In fact, the very state I reside in, California, owes much of its initial rise to the tens of thousands of people that came out west in hopes of also striking it rich in the gold deposits after gold was first discovered in 1848 at Sutter’s mill. 

Gold holds a certain allure to people and the commercials advertising investing in gold use this perception to peddle an investment theory regarding how gold supposedly has these incredible wealth-preserving capabilities. Now the advertisements I have heard always focus on fear and emotions with references to a teetering economy or references to the stability of the dollar owing to our massive national debt. That they use fear is no surprise as few things motivate people like fear. Greed is a close second, but fear is certainly the most powerful.

Since 1980, Which Investment Has Generated the Best Returns? Stocks bonds or gold?

From January 1980 through January 2023, the S&P 500, with dividends reinvested, returned an annualized 11.4% before inflation. Adjusted for inflation, it was 8.0%. 

As for bonds, the benchmark 10-year Treasury note delivered an annualized total return of 5.6% over the same period. Adjusted for inflation, it was 2.4%.

What were Gold's returns since 1980? Gold had an annualized return of just 3.1% before inflation. After adjusting for inflation, the average annualized return was negative. 0.01%. Meaning you had less money than you started with 44 years later.

Let me repeat that, since 1980, over 44 years, gold has had a negative return when adjusted for inflation. Again, how these people can get away with these lies on the radio and TV is beyond me. 

Now if that’s not enough reason to convince you why you shouldn’t invest in gold let me share 3 additional reasons why all that glitters isn’t gold.

First - Gold pays ZERO income

Gold doesn’t produce income. It’s only worth what someone will buy it from you in the future, whereas stocks pay income via dividends and bonds pay income via interest payments. 

I like Apple products. I own a Macbook Air, a watch, an iPhone, iPad and Airpods, and Apple TV. These are all products Apple makes. They sell these products to consumers for a profit. Some of those profits are shared with stockholders/part owners in the form of dividends. 

Bonds are when you lend money to either the government or a corporation. You lend them money and they pay you interest for the privilege of borrowing your money. That’s income for you.

But what does Gold pay you, absolutely nothing. Nada, Zilch. 

The second reason why solid gold sucks as an “investment” is that it’s not very liquid. If I had a gold bar, how do I sell it? If you are wondering who would buy a gold bar, Costco just sold $100 million in gold bars in the fall of 2023. How do you exchange that for money? 

With stocks and bonds, there are markets where you can sell the shares or bonds easily and get your funds in a matter of a few days all from the convenience of your couch. 

The third reason why gold sucks as an “investment” is taxation. This refers to when people buy physical gold. When you sell that for a gain, you will pay higher taxes because the IRS considers it a collectible and it is taxed at a 28% rate. If you purchased stocks and bonds in a non-retirement account and sold them for a long-term gain, then the rates are dependent upon your income and could be 0, 15, 20%, or 23.5% for really high-income owners. All of which are much lower than what the tax rate would be on solid gold. 

Hopefully, I’ve been able to demonstrate why you shouldn’t listen to some washed-up former politician or washed-up B-list celebrity when they tell you to invest in gold. 

Because when it comes to gold, the best “investment” you can make is the purchase of jewelry for your spouse. My wife’s wedding ring was the best “investment” in gold I ever made.

Securities and Advisory services are offered through LPL Financial. A registered investment advisor. Member FINRA & SIPC.

• Kiplinger - 10 Facts about Gold
• Costco selling gold bars

• https://BetterPlanningBetterLife.com 
• Connect with Jonny on LinkedIn

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For Investors, Elections Do Not Matter - Ep #54

Recently, I read that one of investors' chief concerns is the upcoming presidential election that occurs in November of this year. It seems every year we are told that this is the most important election of our lifetimes only for the next election to be even more important than that. In this episode, I will share why elections do, and do not matter for investors.

• America is the Best Country in the world [02:05]
• Americans have more freedoms [04:04]
• It’s All About the Constitution [6:48]
• Election Outcomes Don’t Matter for Investors [10:14]
• We need to vote [16:51]
• How to have more influence via voting [19:22]

The Inspired Constitution

Our founding fathers understood that power corrupts and absolute power corrupts absolutely and for these reasons, they put tremendous checks on the powers of government to limit their influence on the freedoms of American citizens. In doing so they provided many more freedoms for the citizens of the United States than any other nation where they could go on and pursue their happiness. Allowing us, individually to determine our ultimate destiny.

The freedoms enshrined in the Constitution has enabled America to drive the progress of humanity further than any other nation in history. 

Stock Market Ignores Election Outcomes

U.S. stocks have trended up regardless of whether a Republican or Democrat won the White House.  A $1,000 investment in the S&P 500 Index when FDR became president in 1933 would have been worth over $19 million in 2023. During that time there have been seven Republican and eight Democratic presidents. 

But We Must Vote

Many could complain about the government, media, and academia but if one fails to take action to make the changes by voting not just in the general elections but the primary elections as well. 

How to Have More Influence via Voting

 If you take the initiative to understand the elections and especially the ballot propositions, you can guide multiple other voters on how to vote, magnifying the result. That can have a huge effect. Your endorsement holds WAY more weight than some politician, businessman, or celebrity.

Securities and Advisory services offered through LPL Financial. A registered investment advisor. Member FINRA & SIPC.

• The US Constitution
• Guidetoelections.com

• https://BetterPlanningBetterLife.com 
• Connect with Jonny on LinkedIn

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Another year has passed, which means that many are a year closer to retirement. The most successful retirements are planned many decades in advance. This episode of the One for the Money podcast focuses on what one should do in the last decade of work before retiring. A mistake in these years can ruin the prior decades of work and jeopardize retirement dreams. 

• Better planning [01:22]
• Assessing financial readiness [03:09]
• Health and financial planning [07:36]
• Tax diversification [10:25]
• Estate considerations [13:31]

Few things are looked to with more anticipation than retirement, and sufficient savings to provide the income to fund retirement is at the top of the list of retirement readiness. Fidelity, an investment company, suggests that by age 55, individuals should have approximately seven times their current income saved. However, this is just a general rule and doesn't account for factors such as pensions, life expectancy, and other sources of income. 

Seeking advice from a Certified Financial Planner is crucial to ensure a more thorough assessment of your preparedness for retirement. Certified Financial Planners can also determine if enough or too much is being saved. Considering an individual's unique circumstances, they will also determine whether money should be saved in pre-tax or after-tax accounts. 

People can be set financially for a wonderful and early retirement, but that won't matter if they have poor health. Now is the time to start or increase healthy habits, enabling you to thrive both now and during retirement. Those 50 and older should "invest" an hour a day into their health. Longevity is most impacted by major, modifiable behaviors such as exercise, sleep, nutrition, and emotional health. 

Exercise itself is in a league of its own because of its ability to extend one's life and reduce all-cause mortality. It is the most challenging aspect of people's behavior because of the significant time commitment, but having healthy habits entering retirement will make retirement significantly better. 

An estate plan is a critical part of financial planning and cannot be missed. This estate plan must be communicated to the beneficiaries. The primary reason for an estate plan isn't to avoid probate. Rather, estate planning preserves family unity. When the last parent or grandparent dies, money goes into motion, and some people's love for money can destroy lifelong family relationships. This tragic circumstance happened to my father's family. That's why, every fall, I focus on my clients' estate planning preparedness. I also continue to spend time and money on my own understanding of estate planning.

The last decade before retirement has critical planning considerations to help ensure a better retirement through better planning. It's imperative to take advantage of the next ten years and utilize these points. Tremendous progress towards the best retirement possible because the best retirements don't happen by accident but are planned for years in advance.

Securities and Advisory services offered through LPL Financial. A registered investment advisor. Member FINRA & SIPC.

• How much do I need to retire? | Fidelity
• Congratulations, You Already Have an Estate Plan - BUT YOU DON'T WANT IT!, Ep #21
• Will I Be Able to Retire?, Ep #23
• Can You Retire with Debt?, Ep #27
• One of the Biggest Risks in Retirement, Ep #28
• Healthy, Wealthy, & Wise, Ep #29
• When to Take Social Security - Avoiding a Potential $200,000 Mistake, Ep #41
• The Only Legacy that Matters - Ensuring Family Unity via Estate Planning , Ep #45
• Why a Will Is Not Enough - Estate Planning, Ep #46
• Ensuring You Get to Spend More of Your Hard Earned Money & the Government Gets to Spend Less, Ep #49

• https://BetterPlanningBetterLife.com 
• Connect with Jonny on LinkedIn

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Many feel that the country and the world are on the brink of challenging times, and many investors wonder if they should get out of the market and wait to invest because a better time may come along in the future. In this episode of the One for the Money podcast, I share why this is always the wrong strategy.

• Fear of investing in uncertain times [01:19]
• The relationship between difficult times and stocks [04:30]
• Investment mistakes and the importance of discipline [10:37]
• Don’t let emotions get the best of you [13:18]
• Planning and spending for more experiences [17:16]

When someone is about to make a significant investment, they often wonder if there might be a better time to invest later. This same fear is gripping the hearts of people invested in the stock market, with many wondering if they should be more conservative.

With ongoing conflicts in Europe and the Middle East, there is a growing concern that we are heading towards a period of instability. Despite predictions of an economic downturn, it has yet to materialize. The upcoming presidential election is causing anxiety as both major party candidates have historically low approval ratings. As a result, many individuals are hesitant to invest or stay invested.

Losses are twice as impactful for investors than equivalent gains. Studies have shown that a 10% loss hurts twice as much as a 10% gain. However, being afraid of the future market is a dangerous mindset that will not lead to successful investing. For this reason, one should always invest according to one’s goals and in alignment with time-tested investment principles. 

Since 1926, bonds were negative just 15 times, with an average loss of just 2.4%. Over that same period, stocks were negative just 25 times, with a significantly higher average loss at 13.2%. That’s why bonds are beneficial for short-term goals: fewer years with negative returns, and those negative returns were considerably less than what they were for stocks.

For longer-term goals, we invest in stocks. Since 1926, stocks returned between 8-10%, whereas bonds only returned between 4-6%. Over the past century, the U.S. stock market has been up nearly 75% of the time, and for 60% of the time, those increases were more than 10%. More than 33% of the time, those increases are more than 20%. Historically, you are more likely to have a gain of 20% in your investments than to experience a down year.

Some don’t succumb to the fear of a down market but rather the belief that they can correctly time the markets and know when to sell or buy. But the two most successful investors in history, Jack Bogle and Warren Buffett, said they had never met anyone who could correctly time the markets. The famous investor Peter Lynch explained the fool’s errand of market timing best when he said, “More people lost money waiting for corrections and anticipating corrections than the actual corrections themselves.”

JP Morgan’s Guide to Retirement highlights the perils of trying to time the market and why it doesn’t work. Using data from the S&P 500, the guide shows the performance of $10,000 invested between January 1, 2002 and December 31, 2021. The initial investment would have grown to over $61,000 during that period. But if the best ten days were missed, then the initial investment would have grown to only just over $28,000. That’s missing only ten days out of 5,000 or just 2% of the time invested. If you have long-term investment goals, investing and staying invested is essential. Every investor should have an investment plan that aligns with their goals and can help them navigate challenging market conditions.

Securities and Advisory services offered through LPL Financial. A registered investment advisor. Member FINRA & SIPC.

• The Role of Bonds in your Portfolio – Diversification and Risk Management - Wedbush Securities
• Historical Returns Of Different Stock And Bond Portfolio Weightings
• Keith Fitz-Gerald
• Guide to the Markets | J.P. Morgan Asset Management
• Guide to Retirement | J.P. Morgan Asset Management
• Close to One-Third of Investors Over 65 Moved to Cash

• https://BetterPlanningBetterLife.com 
• Connect with Jonny on LinkedIn

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Giving to others can be an incredibly rewarding experience. Have you ever wondered how you can give better? In this One for the Money podcast episode, I discuss ways to improve our giving and make it more impactful for both others and ourselves. 

• The season of charitable donations [01:12]
• Donor-advised funds [03:39]
• Donating appreciated assets [05:26]
• Giving retirement money [06:33]
• Planning charitable giving [09:32]

For many people, December is the season of giving. While many may think of presents around a Christmas tree, December is also when the most money is given to charitable organizations. According to the Blackbaud Institute, in 2021, over 20% of all donations for the year were received in December. 

Americans gave an astounding $471 billion to charity in 2020, nearly 70% of that coming from individuals. What’s fascinating is that philanthropic giving is highly correlated to the stock market’s strength. The better the stock market performs, the more charitable contributions are made. 

A donor-advised fund is an investment account you set up to hold your donations, allowing you to receive a tax deduction. The great thing is that you don’t have to decide where to donate these funds until later. The money can grow until you find the charity best aligned with your values. Donor-advised funds can accept non-cash assets, as well as stock, mutual funds, bonds, and even S and C corp stock.

While a donor-advised fund can be a potent vehicle for charitable contributions, the fact that they can receive stock provides an introduction to another powerful way to give to either a donor-advised fund directly or to a charity itself. Some may think it’s best to sell appreciated assets and give the money to charity. A better way is not to sell the asset at all and give it directly to the charity. Donating appreciated stock to a charity can be more beneficial than selling it. The charity can receive more without paying taxes, and you can qualify for a larger tax deduction.

What if you want to give some of your retirement money to charity? A qualified charitable distribution(QCD) is a tax-free donation from an IRA to a qualified charity. While a QCD can’t be deducted from your taxes, the savings on your income may make this type of donation beneficial to your taxes. A QCD counts toward satisfying the required minimum distributions. 

QCDs must go directly from the IRA to the charity. Clients can be provided with a checkbook just for their QCDs so they can make direct contributions. While there isn’t a deduction for these contributions, they’re a great way to give unwanted retirement funds to charity.

Securities and Advisory services offered through LPL Financial. A registered investment advisor. Member FINRA & SIPC.

• Overall Giving Trends - Blackbaud Institute
• Trends that Will Shape Philanthropy in 2022 | Giving USA
• 2021 Donor-Advised Fund Report | National Philanthropic Trust
• Who Itemizes Deductions?

In February, I visited the beautiful island of Maui, Hawaii, and trained in helping clients plan for their ideal life. It’s not just the right way to plan but the only way to conduct financial planning for clients. In this episode of the One for the Money podcast, I share details of this type of planning. At the end of the episode, I share a thought-provoking strategy from a book I recently read called Die with Zero.

• Focus on the essentials [01:20]
• The godfather of life planning [02:22]
• Life choices with limited time [06:14]
• Untapped potential [08:32]
• Dying with zero [11:24]

When financial planning, focusing on what is essential for you to have the life you desire is imperative. The worst thing I could do for a client is to immediately start solving their financial problems without an understanding of what they truly want. Financial solutions without the proper context have the potential of putting a ladder on the wrong wall and having clients start climbing. 

The key to discovering what is essential for clients to have an ideal life requires something you may not experience in many investment firms: an investment of time and a lot of listening. After going through this planning myself and taking a number of my clients through the same process, I’ve concluded that it’s not only the best way to plan financially for clients; it’s the only way. 

George Kinder, the godfather of the life planning movement, has been at the forefront of the financial services industry for more than 35 years. He spearheaded the movement to put the lives that clients desire to live at the center of their financial plans. George Kinder has distilled this planning via five unique steps he has termed the EVOKE process: Exploration, Vision, Obstacles, Knowledge, and Execution. As George Kinder describes, “Life planning focuses on the human side of financial planning and puts people, not products, at the center of analysis and advice and helps clients meet unique goals and unlock the greatest meaning in their lives.”

During the exploration phase, clients share everything that would encompass an ideal life for them without any emphasis on prioritization. It’s imperative to understand what is essential for each individual, even with couples. The vision stage prioritizes the elements of one’s ideal life through inspirational writing exercises. This process helps to shape financial plans that aim toward what matters most to the clients. The Obstacles stage involves identifying barriers hindering the realization of clients’ goals and finding solutions to overcome them. 

EVOKE planning’s collaborative process empowers clients to make their dreams feel attainable. The subsequent stages, Knowledge and Execution, involve conducting comprehensive financial analyses and implementing tailored strategies that align with clients’ aspirations, making every financial decision resonate with their passions and purposes.

Securities and Advisory services offered through LPL Financial. A registered investment advisor. Member FINRA & SIPC.

• Kinder Institute of Life Planning
• Die With Zero: Getting All You Can from Your Money and Your Life
• Too Much Money & Too Few Memories, Ep #24

• https://BetterPlanningBetterLife.com 
• Connect with Jonny on LinkedIn

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