Shotwell Rutter Baer

By Shotwell Rutter BaerBusiness News Education News Commentary Investing How To

Shotwell Rutter Baer episodes

April 17, 2023 Ep 115: Review of 2nd Quarter 2023
2nd Quarter 2023 Economic Update and Market Review
The first quarter of 2023 was largely positive for the markets, but not positive enough to make up for the frustrating previous 12 months. While inflation still appears to be slowing, there is plenty of uncertainty around interest rates and the Federal Reserve’s ability to slow the economy just enough but not too much.
As always, our partners at East Bay Investment Solutions have provided a balanced approach to the positive and negative signals out there right now:
Download the text of their full presentation here.
Watch a video of their quarterly presentation here: East Bay Webinar
About Shotwell Rutter Baer
Shotwell Rutter Baer is proud to be an independent, fee-only registered investment advisory firm. This means that we are only compensated by our clients for our knowledge and guidance — not from commissions by selling financial products. Our only motivation is to help you achieve financial freedom and peace of mind. By structuring our business this way we believe that many of the conflicts of interest that plague the financial services industry are eliminated. We work for our clients, period.
Click here to learn about the Strategic Reliable Blueprint, our financial plan process for your future.
Call us at 517-321-4832 for financial and retirement investing advice.
27 min
April 10, 2023Ep 114: Retirement Planning Case Study for an MSU Employee
In today’s episode, Dave and Nick have an interesting case study of a couple of MSU professors. Join us as we take a look at some of the common scenarios that come up in a case like this when we’re helping people create their financial plans.
This is a composite of several clients we’ve met with over the last couple of years to help people get a general feel for how we look at things and how we string a plan together.
A lot of these questions come up quite often and even though we like we say, “There are no firm answers of exactly what you should do in these scenarios,” there are certainly some common ways to think about these things that will hopefully help guide our listeners if they have similar questions in their own personal scenarios.
The MSU Employee Case Study
Their financial Scenario:
Married Professors, both MSU faculty
Dr. John Doe: 45 years old
Dr. Jane Doe: 43 years old
Two kids
Jimmy, age 15
Suzy, age 12
Concerns:
Know they should be balancing college savings with retirement savings but don’t feel like they’re doing a good job of either one.
John would like to work until a “normal” retirement age, but Jane may want more flexibility sooner/younger. They worry about what this might look like and whether they could afford for Jane to stop work sooner than John.
Would like to pay for an in-state education for both of their kids
They own their own home in East Lansing and re-financed just a few years ago. John really wants to have the debt retired before retirement and is doubling up payments.
Worried about insurance coverage if something were to happen to one of them
Feel like they should have more money/savings than they do but always seem to spend what they have
Facts:
Each saving 5% into the MSU retirement plan
Contributing $200 / month each for Jimmy and Suzy into a 529 Plan
The mortgage was done in 2020 @ 3%, $300,000 original balance with a payment of $1246. Currently paying an extra, $2500 / month
Approach:
Work through Life Planning to sort out retirement target dates and priorities
Also the college goal!
Run Monte Carlo projection to see if they are saving enough for retirement and education
College funding: delve into the goal and look at alternatives.
Flexible funding that can be used for college OR retirement?
Run an insurance analysis
Need a large amount of insurance early on, but not much need in retirement
Look at increasing group options through the MSU plan, but also consider private additional insurance
Mortgage: understand the desire to pay off the mortgage before retirement, but doubling mortgage payments right now might not be the best use of funds.
Re-deploy a portion of the double payment to augment college funding and retirement savings
Investments: risk tolerance and portfolio recommendations
Begin tracking budget and cash flow
See where money is going
Review after three or four months to look at priorities
This will help identify money to redeploy as well as give us a better idea of what spending might look like in retirement.
Listen to the entire episode to learn how we put the pieces together to have the conversation about retirement, target dates, and priorities.
If our listeners have questions or other topics you’d like to hear, please feel free to shoot us an email at [email protected].
About Shotwell Rutter Baer
Shotwell Rutter Baer is proud to be an independent, fee-only registered investment advisory firm. This means that we are only compensated by our clients for our knowledge and guidance — not from commissions by selling financial products. Our only motivation is to help you achieve financial freedom and peace of mind. By structuring our business this way we believe that many of the conflicts of interest that plague the financial services industry are eliminated. We work for our clients, period.
Click here to learn about the Strategic Reliable Blueprint, our financial plan process for your future.
Call us at 517-321-4832 for financial and retirement investing advice.
28 min
April 06, 2023 Ep 113: Rent or Buy – Move or Stay
How to make housing decisions in a rising rate environment.
We’ve been getting a lot of questions about the housing market. We’ve seen the Fed basically increase interest rates at an accelerated pace over the last year. And they are looking to still continue to do a couple more rate increases. So what do you think about that and how do you think about the different housing choices knowing that we’re in this rising interest rate environment?
And we don’t really know how long rates are going to stay high. To make it more interesting, the rising interest rate environment is on the back of a very fast-moving real estate market since 2020.
So we’ve got a double whammy of housing prices going way up and then interest rates going way up. It’s really changed the math of home buying lately. Despite this, there are not a lot of houses on the market but there are still a lot of people looking to buy houses.
Too few homes for too many buyers right now.
The pandemic and all the supply chain issues that we’ve talked about on this podcast before have not helped the situation.
Join us, Dave and Nick, as we delve further into this issue and offer financial tips for those who are thinking about buying and or selling a home in the current financial environment we find ourselves in.
About Shotwell Rutter Baer
Shotwell Rutter Baer is proud to be an independent, fee-only registered investment advisory firm. This means that we are only compensated by our clients for our knowledge and guidance — not from commissions by selling financial products. Our only motivation is to help you achieve financial freedom and peace of mind. By structuring our business this way we believe that many of the conflicts of interest that plague the financial services industry are eliminated. We work for our clients, period.
Click here to learn about the Strategic Reliable Blueprint, our financial plan process for your future.
Call us at 517-321-4832 for financial and retirement investing advice.
27 min
March 16, 2023Ep 112: Thoughts on the Silicon Valley Bank Failure
Last Week Silicon Valley Bank collapsed. Nuveen’s asset managers noted it was the fastest bank failure in history, the result of management missteps, a challenging interest rate environment, a narrow client base whose businesses were also sensitive to the interest rate environment, and customers who talk amongst themselves. While none of this is great, the good news is that none of this seems to spell a bigger threat to the American banking industry.
There has been a lot written already by folks smarter than me offering an autopsy of exactly what happened at SVB, but in a nutshell here are the highlights.
The bank’s customers were mostly tech companies and start-ups, and the venture capital companies that those companies work with. As the tech sector boomed during 2020 and 2021, those companies had extra cash to deposit and SVB grew. The bank invested its excess reserves in things like long-term treasury bonds, which are perfectly safe if held to maturity. However, when interest rates rise, as they did in 2022, those long-term bonds go down in value and aren’t worth what they will eventually be worth when they mature.
At the same time, SVB’s customer businesses are also very interest rate sensitive. When rates go up startups and tech companies can’t borrow easily and need to call on the reserves of cash they had stockpiled, withdrawing their funds. This meant that SVB needed to liquidate a portion of its portfolio to cover those withdrawals at a loss. This made the bank’s balance sheet look… not good. When word got out among some of their clients that they were liquidating bonds at loss to cover withdrawals, those clients in turn withdrew their money, forcing more sales. A downward spiral and a classic bank run. That’s when the FDIC stepped in and shut the bank down.
What does the SVB collapse mean for the bigger picture?
Probably not much. The issues that caused SVB to fail are not the same issues we saw in the financial crisis, where the culprit was widespread over-borrowing in the housing market. While there has already been one other small bank with a similar balance sheet that has failed, these issues are not likely to hurt the regional and national banks meaningfully. However, as of this morning there is renewed scrutiny of some major banks such as Credit Suisse, so we will continue to monitor this situation.
The main issue was that the SVB was using long-term assets to cover short-term liabilities. Most of the time, they would have gotten away with it, but the quick rise in interest rates last year changed that equation. Banks and regulators will probably not look at their bond portfolios the same way going forward and will take “duration risk” into account as well as other risks.
What does the SVB collapse mean for everyday investors?
For our portfolios, not much. Our models are extremely diversified and the failure of SVB alone is a non-event. Bank stocks were very volatile over the last week as investors worried about the trouble spreading, and these fears may continue for a while until investors are reassured. We would expect it won’t take long for the market to get back to watching the Fed and inflation data and not worrying so much about the banking sector.
Be mindful of the FDIC insurance limits on your bank holdings. The current limit is $250,000 per account holder per bank. While the risks, in general, are low, if you are over the limit in one bank consider moving the excess to a different institution. If you are unsure of your limits, here’s a link to a handy FDIC Insurance Calculator: https://edie.fdic.gov/calculator.html
One concern we shared regarding SVB was that it might affect brokerage money market funds, as that happened in 2009 when Lehman Brothers failed. While every investor was eventually paid, some money market funds were frozen for a few months. This appears to be a non-issue with SVB, but to avoid any similar risks investors should stick with either a treasury-backed money market or an FDIC-insured money market (our default for client accounts is TD Ameritrade’s FDIC-insured money market).
For clients who are significantly over the FDIC limits at their bank, we can purchase FDIC-insured certificates of deposit inside investment accounts. We can have multiple bank issues in one investment account, and as long as we are below the limit for any individual bank we can get FDIC insurance on large amounts in one convenient account.
About Shotwell Rutter Baer
Shotwell Rutter Baer is proud to be an independent, fee-only registered investment advisory firm. This means that we are only compensated by our clients for our knowledge and guidance — not from commissions by selling financial products. Our only motivation is to help you achieve financial freedom and peace of mind. By structuring our business this way we believe that many of the conflicts of interest that plague the financial services industry are eliminated. We work for our clients, period.
Click here to learn about the Strategic Reliable Blueprint, our financial plan process for your future.
Call us at 517-321-4832 for financial and retirement investing advice.
28 min
March 13, 2023 What you need to know about Secure Act 2.0
Join Dave and Nick as they discuss Secure Act 2.0 and how it make affect you personally.
We cherry-picked the most important points that we felt would impact our listeners the most.
Background on Secure Act 2.0
Secure Act 2.0 stands for Job Security. Secure Act One made changes to the American retirement system overall. It move the required minimum distribution age out from seventy and a half to 72 for people that hadn’t reached that age yet. It made some adjustments to inherited IRAs to make up for it where the taxes weren’t quite as lenient.
Secure Act 2.0 was finally enacted at the end of 2022. One of the main things is that it moves the required minimum distribution dates
out again. If you were born between 1951 and 1959.
“So we just keep kicking the can on the whole requirement of a distribution deal right?” Nick asks.

Your required minimum distribution age will be 73 if you were born in 1960 or later. You don’t have to start taking distributions from your Ira at 70 until 75.
Pre-tax retirement accounts
If you put money in a 401K or money in a traditional IRA it has been growing tax-deferred. The IRS requires you to begin taking distributions from it at these ages. The formula is based on your age and the account value every year. So it changes a little bit every year. It’s usually a much smaller amount than most people expect, but it’s also just a minimum.
So, these delays pushing the date out really only apply if you’re fortunate enough in your late 60s or early 70s to not need your retirement money to be able to keep delaying it.

For folks that have some non-retirement assets and some IRA assets, it gives us a couple more years to be strategic about how we deal with those for tax purposes.
We don’t want to speak for why Congress does things the way that they do but our guess is that they wanted to give people a couple of extra
years so that they would have more money later on. In a sense, securing their retirement by not forcing them to take distributions when they maybe didn’t want to.
Taking Distributions
The more money you have in your accounts, the higher your distributions will be. This may cause tax issues later on in life too.
So, this is certainly something you want to think about from a planning standpoint.
One school of thought is you should never pay taxes before you have to. However, another school of thought is you want to keep your
average tax rate lower rather than all of a sudden paying a whole bunch of taxes all at once.
Employer matching contributions.

This is where some planning and maneuverability come in. If you are lucky enough to work for an employer who offers a match on your retirement plan and also has a Roth 401K option, and the plan will allow for it – you should consider whether electing to have those
matching contributions come in the form of Roth (meaning it’s taxable as income now but it is not taxed later). Depending on your tax situation, that might be a benefit to you in the long run.
Listen to the full episode to hear examples from Dave and Nick on how this could work for your retirement investments.
Here is the chart discussed in this episode:
What-Important-Issues-Should-I-Consider-Regarding-Changes-Made-By-The-SECURE-Act-2.0-2023
About Shotwell Rutter Baer
Shotwell Rutter Baer is proud to be an independent, fee-only registered investment advisory firm. This means that we are only compensated by our clients for our knowledge and guidance — not from commissions by selling financial products. Our only motivation is to help you achieve financial freedom and peace of mind. By structuring our business this way we believe that many of the conflicts of interest that plague the financial services industry are eliminated. We work for our clients, period.
Click here to learn about the Strategic Reliable Blueprint, our financial plan process for your future.
Call us at 517-321-4832 for financial and retirement investing advice.
24 min
March 06, 2023 Why Ashley Sajor Became a Financial Planner
We have a very special episode for your today. Join us as Nick interviews Ashley Sajor and discover out why she became a financial planner.
Ashley is one of the newest members of our team and started off as an intern while she was still attending MSU. Besides starring in our podcast from time to time, Ashley has also started writing blogs for our website.
Michigan First-Time Home Buyer Savings Accounts (article)
A Quick View on Student Loans
About Ashely
Ashley graduated from Michigan State University in 2022 with a degree in Finance. She began her career as an intern at Shotwell Rutter Baer in the summer of 2021. This internship solidified Ashley’s aspirations of working in a profession where she can help people achieve their dreams. What she loves most about a career in Financial Planning is being able to make a positive difference in people’s lives. She hopes to help people achieve their life goals and enable them to live the lives they want to live stress-free. She is currently working towards getting the CFP certification as an Associate Advisor. Ashley was born in Michigan but lived in Key West, Florida for 7 years. When not at work, she enjoys spending time with family and friends, cooking, building custom computers, and gaming.
About Shotwell Rutter Baer
Shotwell Rutter Baer is proud to be an independent, fee-only registered investment advisory firm. This means that we are only compensated by our clients for our knowledge and guidance — not from commissions by selling financial products. Our only motivation is to help you achieve financial freedom and peace of mind. By structuring our business this way we believe that many of the conflicts of interest that plague the financial services industry are eliminated. We work for our clients, period.
Click here to learn about the Strategic Reliable Blueprint, our financial plan process for your future.
Call us at 517-321-4832 for financial and retirement investing advice.
15 min
February 27, 2023 What is Your Investment Risk Tolerance?
Investor Profile Quiz
Take OUR QUIZ to assess your own risk tolerance.
What is your Investment Risk Tolerance?
Join Dave and Nick as they discuss the all-important risk tolerance.
This is a big subject and comes up all the time when we’re working with clients. How much of a risk do you feel comfortable taking in your investment strategy?
When you look at a statement or look at your account online and call me up and say, “I can’t take this anymore. We have to do something
different.”

That’s my everyday working definition of a client’s risk tolerance. It’s interesting because it can be a moving target. There’s a lot that goes into risk tolerance. right? If things are going well and everything seems great, people tend to have a higher risk tolerance than when the market’s been down. So trying to get at their real risk tolerance can sometimes be tricky.
How you feel about the markets and how it affects you emotionally can trigger you to make poor investment decisions.
How Do You Measure Risk Tolerance?
We show people different combinations of results and ask if they would prefer this slow and steady where it doesn’t add up to as much over time but doesn’t cause you as much angst in the meantime. Or, are you okay with lots of ups and downs if the end result is likely to be higher?
If your risk tolerance is lower you can do things to mitigate your anxiety. Such as setting a schedule to check your stocks and try not to obsess about your portfolio returns. For a lot of people, this means looking at it less. Also, turning off the news especially when the economic news is bad, and reminding yourself that it is a long game.

You can also take a look at the past in times of market volatility and focus on market recovery. Concentrate on the term and don’t obsess and worry over what’s happening right now and how bad things seem. It’s helpful to take a big-picture approach when you’re trying to improve your volatility composure.
Types of Risk Personalities
We also consider someone’s risk personality. For instance, are you a Risk Seeker or are you a Stability Seeker?

Your Risk Personality relates to how you think about investing and whether you’re a default conservative or a default risky person. Having an understanding of this really helps when we’re putting together Portfolios. There is a pendulum with this too.
For example, a client could buy a stock with 2% of his million-dollar IRA or go all in on a stock all in on this stock. That’s a whole different conversation and our job is to help people make decisions that fit their risk capacity.
It definitely flows both ways. There are people who are over-excessive and those who are too conservative. So we make sure we understand who you are so we can give you a good understanding of some of the things that you need to focus on to get the results you are looking for.
Long Term Investors
Often we will see with long-time investors that they score pretty low, in general, on their risk tolerance, but it is not uncommon for their investing confidence to raise their risk preference. They know that while they’re conservative by nature they need to take a moderate risk in their portfolio to get the results they want and they’re comfortable with that.
This is one of the strong points of this particular system.
As far as improving or thinking about your risk personality, you could spend about 30 minutes a month taking a look at your investments and making sure you’re strategically invested versus speculatively invested. Touch on strategic versus specific.
About Shotwell Rutter Baer
Shotwell Rutter Baer is proud to be an independent, fee-only registered investment advisory firm. This means that we are only compensated by our clients for our knowledge and guidance — not from commissions by selling financial products. Our only motivation is to help you achieve financial freedom and peace of mind. By structuring our business this way we believe that many of the conflicts of interest that plague the financial services industry are eliminated. We work for our clients, period.
Click here to learn about the Strategic Reliable Blueprint, our financial plan process for your future.
Call us at 517-321-4832 for financial and retirement investing advice.
28 min
February 20, 2023 Michigan 1st Time Homebuyers’ Savings Account
Dave and Nick are joined by Ashley Sajor, Associate Financial Planner here at Shotwell Rutter Baer. Ashley started her career at SRB as an intern and after graduating from MSU became a full-time employee.
Check out Ashley’s previous visit to our show in the episode titled, Helping Your College Student Budget.
Today, we are exploring the concept of a first-time home buyer savings account for the state of Michigan. Which actually was passed into law around June of 2022, so we’re a little over six months into this new home buyer savings account.
Ashley and Nick have been working on researching it so they can provide the details in this episode. Their information includes some strategies you might consider.
What is a First Time Homebuyer’s Savings Account?
The first-time homebuyer savings account is a tax incentive savings account dedicated towards the purchase of a first home in Michigan. A first-time home buyer is anybody who has not owned a principal residence in the past three years. So you could rent but as long as you haven’t owned your own home in the past three years you can count towards this savings account can. It can be in your own name or in the name of your beneficiary. As long as the beneficiary is the person who qualifies for the credits and has not owned their residence in
the past three years. The savings account must be at an institution that’s eligible to do business in Michigan.
You can claim an annual tax deduction on your yearly contributions and tax-free growth on any gains in the account. As long as it is intended for, or used purchase of the first -time home.
Twelve other states also have this but Michigan is one of the best so far for tax benefits. It’s similar to the 34 Michigan education savings plans for this account.
Listen to the entire episode as they talk about strategies and go over some of the elements of how these first-time homebuyers’ savings
accounts work.
If you are interested in setting up one of these accounts or would like more information, please contact us at 517-321-4832 or email us at [email protected].
About Shotwell Rutter Baer
Shotwell Rutter Baer is proud to be an independent, fee-only registered investment advisory firm. This means that we are only compensated by our clients for our knowledge and guidance — not from commissions by selling financial products. Our only motivation is to help you achieve financial freedom and peace of mind. By structuring our business this way we believe that many of the conflicts of interest that plague the financial services industry are eliminated. We work for our clients, period.
Click here to learn about the Strategic Reliable Blueprint, our financial plan process for your future.
Call us at 517-321-4832 for financial and retirement investing advice.
22 min
February 13, 2023 Why Dave Shotwell Became a Financial Planner
Join Nick and Dave as Nick interviews Dave as to the “why” and the “how” of his journey to becoming a financial planner.
Dave, “I started basically looking for a job and did not have a true career path. I happened to meet the right people at the right time who were in the industry and needed help. They told me I was pretty much a nerd and I should be a nerd about this stuff.”
Listen as Dave reveals his love for Excel and spreadsheets and the evolution of the financial planning industry itself.
About Shotwell Rutter Baer
Shotwell Rutter Baer is proud to be an independent, fee-only registered investment advisory firm. This means that we are only compensated by our clients for our knowledge and guidance — not from commissions by selling financial products. Our only motivation is to help you achieve financial freedom and peace of mind. By structuring our business this way we believe that many of the conflicts of interest that plague the financial services industry are eliminated. We work for our clients, period.
Click here to learn about the Strategic Reliable Blueprint, our financial plan process for your future.
Call us at 517-321-4832 for financial and retirement investing advice.
18 min
February 08, 2023 Setting and Keeping your Financial Goals in 2023
Nick and Dave discuss the difference between, “I want to be financially responsible” versus “I’m going to try to keep a budget this year.”
If you’re starting from the standpoint of already being a financially responsible person, then budgeting is just part of that. Or you are becoming that person and you may not be that person yet.
There’s a lot of pressure in the world to spend money. Friends ask you to go out to dinner at an expensive restaurant so you feel like
you have to go there and you have to spend a bunch of money. However, if you’re a financially responsible person or sticking to some goals, your response can be, “That’s not part of my budget right now.”

Good habits require sacrifice now with a payoff in the future right?
This usually comes into play in debt spending, using credit cards, and borrowing. Going out for dinner tonight’s going to mean putting that on a credit. If you are more cash-based, you can only spend what’s in your pocket. This helps change that equation.
Saving for Retirement
We talk about the cash flow but another big thing is saving for retirement. If you start putting money away when you are younger and create a habit, easier it is as you get older.
The more compound interest you have the less percentage wise that you have to save. But asking a 20-year-old to put away money for a future 65-year-old self can be a hard pill to swallow for a lot of young people.
Atomic Habits
Dave and Nick discuss how the book, Atomic Habits, by James Clear, has helped them create better habits.
The author lays out 4 rules for behavior change to give you a framework.
Rule # 1: Make it Obvious
Whatever habit you’re trying to create make it obvious with cues and context. For example, every time I do this then you know that’s my cue to go for a run or read some pages, or whatever your goal is. Put your running shoes by the front door. Lay your clothes out the night before. Things like that.
Rule #2: Habit Stacking
David shares, “So every morning I get up and the first thing I do is I make a pot of coffee. There’s about a 10-minute stretch then between making the pot of coffee and the coffee being ready. Usually, I would just sit there and stare at the coffee pot. So taking the book’s strategy of what he calls habit stacking, as soon as I finish grinding the beans and putting them in there I sit down with my book and I do the thing that I committed to doing which I actually really enjoy. And so by stacking 1 habit with the other and then when I’m done with it I can get up and have that first cup of coffee, which is pretty important to me.”
Rule #3: Bundling
Bundling something that you enjoy doing but maybe is a waste of time or does not have a good payoff.
“I love to watch football and hockey. That’s usually wasted time but I’m trying to get more steps in. So now my thing is I can watch football or a hockey game but I walk around the living room while I’m doing it. It sounds silly but that’s how I’m crushing my family at our steps competition and I’m still getting to do the thing that I want to do.
Rule #4: Make it Satisfying
Your goal or your habits should have some kind of tangible goal so that you know you’re becoming the person you want to be. As humans, we’re too hard on ourselves and we tend to look outward instead of inward. We fail to recognize even small gains. For example, you’re saving money and following your budget. So budget for a celebration dinner or something else when you successfully make it through three months or six months or whatever your goal is. Celebrating small gains can have a huge long-term impact on sticking to your goals.
Conclusion
We’re always thinking about the financial planning implication of goals, the economy, or philosophy. Goal setting and habit of forming are huge parts of that and the sooner you can do those things the better off you’re going to be in the long term.
About Shotwell Rutter Baer
Shotwell Rutter Baer is proud to be an independent, fee-only registered investment advisory firm. This means that we are only compensated by our clients for our knowledge and guidance — not from commissions by selling financial products. Our only motivation is to help you achieve financial freedom and peace of mind. By structuring our business this way we believe that many of the conflicts of interest that plague the financial services industry are eliminated. We work for our clients, period.
Click here to learn about the Strategic Reliable Blueprint, our financial plan process for your future.
Call us at 517-321-4832 for financial and retirement investing advice.
24 min

Share Shotwell Rutter Baer

Sign up to save your podcasts

Shotwell Rutter Baer

Shotwell Rutter Baer episodes