Shotwell Rutter Baer

Join Dave and Nick as they chat with Kim Barber, owner of Globetrotter Travel, about traveling during a Pandemic.

What does travel look like now? What to prepare for. Learn from a world traveler.

https://youtu.be/JBpjX-qQ9EU

Today’s Guest: Kim Barber, world traveler, and owner of Globetrotter Travel.

Kim is a travel enthusiast, recovering over-packer, and owner of Globetrotter Travel. She’s always loved exploring new destinations, but was a bit HARD by the travel bug after her first international trip to Europe and has been passionate about travel ever since.

Kim’s last year of college was spent living in New Zealand and Australia, working for tourism companies, and traveling as much as possible and the experience was life-changing. She returned to Michigan and began working at a travel agency.

Kim truly loves helping others plan their dream trips, so Globetrotter Travel was born in April of 2015 and she’s never looked back!

Since that time, Kim has been fortunate to travel to some amazing destinations. She also enjoys passing her own travel experiences on to her travelers and being able to recommend the best activities and accommodations for each individual trip.

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.

Join Nick and Dave as they interview John Douglas, a realtor and head 0f  The Mitten Team at Keller Williams.

They discuss the big questions surrounding real estate today and selling a house in the Lansing area. There can be a lot of emotions wrapped up in the decisions surrounding buying and selling a home. Experienced realtors can help homeowners navigate the entire process.

“Should I sell my house?”

“How do I sell my house?”

John says, “There couldn’t be a crazier time in real estate right now!”

The market is hot and it is definitely a seller’s market.

Tune and get insider tips from a top real estate expert in the Lansing area.

After nearly 15 years in residential and commercial construction, John moved to mid-Michigan in 2014, with his family, as his wife Sarah took a new position with Michigan State University. John loves people, and their stories, from all walks of life, and with a desire to leverage his previous experience and love of homes and building, John dove into a career in real estate here in Michigan. Leveraging past experience as a business owner, builder, and investor, John’s top priority is serving clients with exceptional care and individualized service that utilizes his past experience.

In 2019 John and Brooks Warner formally joined their businesses and resources under the Mitten Home Team flag and are now growing a real estate team in the Greater Lansing area with sights on expansion across the state in future years. In addition to the goal of creating the BEST real estate experience for their clients, John and Brooks are now providing career opportunities in real estate to other professionals seeking a real estate team to call their business home.

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.

Clients often ask us how to help their children or grandchildren get started in managing their own financial affairs. For some people this comes naturally, but not for everyone. The American education system doesn’t necessarily do a good job filling in the gaps. Furthermore, discussing money with family members can lead to difficult conversations, filled with emotion and potential strain.

Here are the important themes to consider when getting started financially. You can download and use our handy checklist to make sure you hit everything.

First, what is your level of financial literacy? To understand your finances, you need to know the language. Learn the differences between assets and liabilities, and how to calculate your net worth. Look at a cash flow statement and how to categorize income and expenses, and learn the factors used in financial modeling such as inflation, growth, yield, and basic time value of money calculations.

Along with basic financial literacy, begin sorting out your financial goals, short–term and long–term. Make those goals “SMART” goals: Specific, measurable, attainable, relevant, and time-based. Consider how you can match your finances to your goals. For example, if you want to.

Cash flow issues can be very important when you’re starting your financial life. Income is lower at the beginning of a career, most folks haven’t had time to build any cash savings, and often student debt makes it difficult to get started.

Now is the time to create a budget and learn to watch your spending and live within your means – habits that will serve you well throughout the rest of your life. There are numerous online resources for learning to budget, including our article on Steps for Starting a Budget. Now is also the time to begin building an emergency fund and of between three and six months of expenses to avoid debt issues in the future.

Taxes are a fact of life and though most people just getting started with their finances have a relatively simple tax situation the system can be very confusing. Learn the basics and pay attention to your income, your tax withholding, and any other factors, such as property or investments, that may require tax reporting. Don’t be afraid to seek help from a professional.

Getting started financially also often means opening bank accounts or investment accounts. Our general advice regarding a banking relationship is to have a checking account at a bank that is convenient and accessible. Savings accounts can be at the same bank, but often online options offer better rates and can be easily linked to a checking account, and these are fine so long as they are safe and insured through FDIC insurance (their website will tell you).

If cash flow and short-term savings are squared away, starting to invest for the long-term may be an option. There are lots of options for getting started today via apps and online programs – some are good, and some are questionable. Obviously, we have our biases, but we recommend meeting with a professional and discussing the best way to get launched. Use our Investment Philosophy for a foundation and a starting point for discussing options with an investment advisor.

Insurance and risk management can be a difficult subject for young adults – after all, a sense of invulnerability goes with the territory. Here’s a rule of thumb: insure the things that you couldn’t pay for out of your savings if something went wrong. That includes your health, your apartment or house, your car, and your life if others are depending on your income. It does not necessarily include your iPhone or your refrigerator. If those die, you should be able to cover them with savings and the cost of the insurance probably is more than the risk that it covers.

Basic estate planning is another financial life chore that young people often ignore. While nobody likes to think about estate planning, there are basics, such as a will that everyone should consider regardless of age. You can watch our webinar with estate planning attorney Molly Petitjean to get her opinion and expertise on estate planning for different life stages.

The big thing is to not hesitate to ask for help when you need it. Find a professional and ask questions. For help, we recommend our fellow planners at the XY Planning Network, an organization of fee-only planners dedicated to working with younger clients. You can search here for members that may fit your needs.

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.

How are you budgeting for vacation? 

It’s early summer in Michigan, and for a lot of families that means road trips to up north destinations, cottage rentals on lakes, and, sometimes, too much fudge and ice cream. Vacation season can also mean budget troubles: nobody likes to be cheap when on vacation, and these unknown, non-regular expenses can be difficult to plan around.

There are some strategies you can use to cope with non-recurring, one-time events to keep the expenses under control:

Ok, so it’s June and I’m writing about budgeting for a trip that is almost here. What do you do if the trip is planned but you haven’t budgeted?

Note that while we are focusing on vacation planning with this article, these same concepts apply to any “event” for which you need to budget – whether it is Christmas, spring break, or a remodeling project. Have fun this summer. Get out there and enjoy the sunshine but try to remain fiscally responsible at the same time.

Need help with budgeting? As always, if you have any questions about your specific budget, reach out and we can discuss your situation. Call us at 517-321-4832.

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.

Stock market data is everywhere we turn these days. The evening news will tell us whether the market was up, or the market was down. Most major news websites portray the market with a series of numbers in green for good days and red for bad days. But what are these numbers really measure? And what does it all mean for the average investor?

There are a few common measures of market performance, and each one is unique in what it measures and how to apply it to your own portfolio. Here’s a rundown of the major market indices and how they work:

The most common market index is the Dow Jones Industrial Average. It was started 125 years ago by Charles Dow, the editor of the Wall Street Journal. The Dow measures the performance of 30 stocks by adding their prices together and dividing by a formula. The formula adjusts a little when the stocks in the index go through spinoffs. Because it is only 30 companies, it does not work well as a broad measure of the market, which includes thousands of publicly traded companies. Furthermore, because of the way it is structured, stocks with higher prices have a larger impact on the index than stocks with lower prices – and price doesn’t tell us much about the relative value of a company or its importance. Most stocks in the general market can be down on a particular day, while a few high–priced Dow stocks cause the index to be positive.

The second most common market index is the Standard and Poors 500. This index measures the stock market movement of the 500 largest American companies. This broader inclusion makes it a better measure than the Dow, but it still is only a slice of the market. The index is weighted by market capitalization, which means bigger companies have a larger impact on the index than smaller companies, which is better than the Dow’s price-weighted formula but still can lead to distortions since the top 50 companies account for more than 50% of the index’ value. The S&P 500 is widely used in the investment industry as a benchmark for comparing mutual funds and investment managers.

The broadest of the well–known indices is the NASDAQ Composite Index. It measures the price movements of the 3000 companies that trade on the NASDAQ exchange. It includes several smaller and more middle-sized companies, and over 50% of its members are tech companies. While it is still not a perfect fit for comparing most investor portfolios, it may do a better job of telling you how the overall market is performing.

There are many other important indices, and though they aren’t broadcast on most websites or the nightly news they may be more important. For example, Russell 3000 covers most of the American market without the tech bias present in the NASDAQ. There are also indexes available for all international markets, bonds, and just about every economic sector you can think of.

When you hear about market performance on the news, keep in mind that what you are hearing does not necessarily represent how your portfolio performed. Most investors, particularly those working with advisors, are diversified far beyond the three indexes discussed in the news – with large and small companies, international companies, and bonds in the mix. If you are interested in learning an appropriate index to watch for your particular portfolio, let us know – but always keep in mind that the most important benchmark is reaching your goals, not your performance against some made-up index.

As always, if you have any questions about your specific portfolio and the stock market, reach out and we can discuss your situation. Call us at 517-321-4832

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.

Inflation has dominated the financial headlines over the last few weeks. We’ve seen some of the fastest price increases in decades for some everyday goods and services and commodities. Inflation can impact the financial markets, and we know it has been on the minds of many of our clients.

CPI is a popular measure of inflation

It’s important to think through the different aspects of inflation and sort out what is meaningful for a long–term investor.

Base Effect. Some of the recent increases are the result of what economists call the “base effect.” For some commodities, such as oil, prices dropped drastically last year as the economy came to a screeching halt. When prices are coming up from an extremely low bottom, or base, we can expect those increases to be fast. This type of inflation doesn’t mean much in the long term as the economy returns to normal.

Supply and demand imbalances. Other aspects of inflation are due to supply and demand imbalances brought on by the pandemic. This applies to semiconductors, housing construction, agriculture, gasoline, and many other areas where we feel a direct impact. Mines, mills, and factories were shut down last year or operated at reduced capacity, while at the same time demand increased unexpectedly for certain items as we found.

Monetary inflation. The third type of inflation, monetary inflation, is a broad increase in prices based on monetary and fiscal stimulus. Unlike supply shocks, like what we’ve seen from the pandemic, this type of inflation is more theoretical and harder to see. It is caused by too many people spending too much money too quickly. This drives prices up as output struggles to keep up. With all the recent money put into the hands of consumers, monetary inflation is more of a long–term concern. Unchecked, this type of inflation can lead to recessions.  Sharp price increases mean consumers can’t afford goods, which forces producers to cut staff and stop production, creating a downward cycle.

Monetary inflation is not as big a concern for economists as it once was. While loose monetary policy led to inflation in the 1970s and 1980s, stimulus after the 2008 financial crisis did not result in inflation. Additionally, there have been strong deflationary forces over the past several decades as prices have generally fallen due to globalization, technology, and other trends.

The Federal Reserve uses interest rates to control inflation. When they raise interest rates to slow the economy down, this can cause volatility in the financial markets as traders re-evaluate their holdings.

For long–term investors, the key to coping with inflation is making sure you have enough inflation-fighting assets in your portfolio to maintain your buying power and consistent long–term growth. We have already seen some of our model managers implement inflation–combating strategies in their allocations over the last few months.

Things to consider:

Keep in mind that inflation risk is just one of the risks involved in portfolio construction and that our diversified portfolios are built with the idea that inflation is always a concern. We will continue to monitor the long–term developments. As always, if you have any questions about your specific portfolio and inflation, reach out and we can discuss your situation. Call us at 517-321-4832

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.

Investment Real Estate and Rental Properties – Is it a good idea or not?

Join Dave and Nick as they talk about the pros and cons of real estate as an investment strategy. Hear Dave’s opinion on why he decided it wasn’t for him.

There’s an adage when it comes to investing in real estate: they’re not making more of it, so the property should go up in value over time. And that’s true, to a certain extent. Although, as the last twenty years have shown, the ride can be bumpy along the way.

We often have financial planning clients ask us about real estate investments. Many times, they have seen or read that they should own rental real estate to earn passive income and avoid the financial markets. While investment real estate and a rental business may be a good investment in the right circumstances, there are a lot of considerations, and they are not for everyone.

Investment real estate and rental properties can be a good investment, but they are not for everyone. If you choose to add them to your portfolio, make sure you’ve considered the downside as well as the upside, treat the investment like a business, and recognize it has risks like any other investment.

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.

Often in financial planning, we face questions where the right answer is based on weighing a choice’s pros and cons and understanding the tradeoffs.

Pension choices are one of those questions.

If you are covered by an employer pension, you will face choices at retirement that can have long-lasting financial impacts. However, because we don’t know how long you are going to live, or how long your spouse is going to live, the mathematical correct answer is unknowable. These choices are often very subjective.

Here are the big ones, along with the factors to consider when trying to decide:

Not all pensions allow for lump-sum distribution. Some allow you to take a lump sum, usually as a rollover into an IRA. Then you invest the funds and withdrawal them as needed rather than have a set, monthly lifetime payment.

Lump-Sum PROS: Taking the lump sum can be good if your income needs are low relative to your overall portfolio, allowing you to be certain you can make your investments last. It can also be a good choice if leaving the money to your beneficiaries is more important than your spending needs.

Lifetime Payment PROS: If you are concerned about making your money last, and concerned about longevity, then taking lifetime pension payments may be the better option. A pension also takes the investment responsibility out of your hands and puts it in the hands of professionals.

Some pensions allow you flexibility as to when they begin payments, with the payments growing by delaying their start. There are three factors to consider for this question.

For married pension participants, there is usually a choice of covering just your own life or covering your life as well as your spouse with all or a portion of your pension. If you choose the single life, the payments will be larger, but they will end when you pass away. Covering your spouse means smaller payments, but the payments would continue if you passed away first.

Spending. The first consideration is to look at your overall plan and determine how important the pension income is as a component of overall spending. If both spouses would need the pension income, then spousal coverage probably makes sense.

Expected relative longevity. This is another factor and very tricky to judge. Wives tend to outlive husbands, so if the husband has the pension, then often spousal coverage looks good. Age differences and health are also factors to consider. Life insurance can be used in place of spousal coverage, providing a lump sum to the spouse if the pension holder passes away. However, the cost of life insurance may likely outweigh the difference in pension amounts.

Health benefits. Some companies that offer retiree health benefits tie those benefits to pension choices. If a spouse isn’t covered by a pension, they may lose health benefits if the pension holder passes away. This may not be a common issue but is a consideration. Check the plan for details.

Like so many financial planning questions, you won’t know if you made the mathematically correct choices with your pension until many years after you must make them. The secret is to make informed and logical choices based on your specific scenario and make sure you are comfortable with the range of possible outcomes.

The financial advisors at Shotwell Rutter Baer work with many clients to maximize their investments and pension plans.

Check out our Strategic Reliable Blueprint process here. 

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.

Cryptocurrency, and Bitcoin, in particular, have been a hot topic of conversation in the world of finance. Since we get a lot of questions on the topic, we thought we should address them in this week’s podcast.

It’s important to understand what a cryptocurrency is – and is not – before you consider buying one. As this handout from Vanguard explains, a cryptocurrency is a digital means to facilitate peer-to-peer transactions. They are based on blockchain technology, which is a complex, multi-computer network.

Not really, or at least not yet. A currency is usually thought of as a universally accepted medium of exchange, with a reasonably stable price. Cryptocurrencies are not universally accepted at this point. Their price volatility means it is difficult to predict from one day to the next what you would be able to buy with one. Currencies are usually tied to the authority of a central government. The US dollar is backed by “the full faith and credit of the US government,” but cryptocurrencies, at this point, are not backed by any authority.

Despite Bitcoin’s astounding rise in price over the last few years, it is difficult to call them an investment. To be considered an investment, we would seek some underlying value that should provide an expected return.

For example, a stock is based on a company’s expected earnings. The value of the stock fluctuates based on the risks to those expectations. A cryptocurrency has no inherent value on which to base growth expectations. They may go up, but at this point, they are not an investment, but speculation.

We don’t recommend speculating unless you are doing it for fun and with no expectation of reward.

The financial advisors at Shotwell Rutter Baer work with many clients to maximize their investments and benefit plans.

Check out our Strategic Reliable Blueprint process here. 

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.

Tune in to listen to Dave and Nick’s review of First Quarter 2021. If you have any questions or would like a review of your portfolio and financial plan, contact our advisors by calling or emailing us at 517-321-4832 or [email protected].

The first quarter of 2021 was another strong quarter for stock markets around the globe. The broad measure of the US markets was up 6.35% and international stocks were up 4.04%. Emerging markets rose 2.29% and global real estate rose 6.22%.

Bonds, on the other hand, had a lousy start to the year which tempered first-quarter returns for diversified portfolios. Yields rose on intermediate-term and long-term bonds, pushing bond prices down. The broad US bond market dropped 3.37% and international bonds were down 1.90%.

In light of all the challenges our economy has faced over the last year, people we talk to find it hard to believe that the markets have remained so strong.

The markets may seem irrational, but there are definite positive points to consider:

There are still reasons for concern as well. The market’s rise has been built around the scenario that the virus is contained and that economic life returns to normal later this year. Threats to that scenario would cause a market backlash. Inflation is also a concern: with record stimulus and government spending. With the economy returning to normal, inflation could rise sharply and cut off economic growth. The Federal Reserve may need to reverse its policy of low short-term rates to head off this issue. That could lead to tough stock and bond market conditions.

As always, we can’t say what will happen in the short run. The economic positives indicate the bull market can keep running. However, we know there will be corrections and setbacks along the way.

Longer-term, our expectations are overall returns will probably be lower than in recent history. Long-term averages stay stable, so a prolonged period of outperformance will usually be followed by a period of underperformance.

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The financial advisors at Shotwell Rutter Baer work with many clients to maximize their retirement plan benefits and abilities. If you would like to find if there is more you can do with your plan, give us a call at 517-321-4832.

Check out our Strategic Reliable Blueprint process here. 

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.