In this episode of THE FINANCIAL COMMUTE, host Chris invited Meghan Pinchuk, Morton Wealth’s Chief Investment Officer, to discuss the potential ramifications of the recent collapse of Silicon Valley Bank and Signature Bank. They cover:

• How these bank closures are different and likely not as problematic as the collapse of Washington Mutual and other banking issues the country faced in 2008.

• Details on how the Federal Reserve is protecting depositors at these two banks and other banks that may face similar challenges.

• FDIC insurance limits and recommend clients take action if they exceed these dollar limits at their bank.

• The contrast of Charles Schwab’s and Fidelity’s business models to traditional banks, highlighting that these institutions are designed to be more resilient.

At Morton, we are continuing to monitor this closely and will update you as the story develops. 

Disclosure: 

Information presented herein is for discussion and illustrative purposes only. The views and opinions expressed by the speakers are as of the date of the recording and are subject to change. These views are not intended as a recommendation to buy or sell any securities, and should not be relied on as financial, tax or legal advice. You should consult with your financial, legal, and tax professionals before implementing any transactions and/or strategies concerning your finances.

Why have natural gas prices soared so high in California? On today’s episode of THE FINANCIAL COMMUTE, host Chris Galeski invites Managing Director of Investments Sasan Faiz to answer this question so many Californians are concerned about. 

This winter has been colder than usual in California, causing the demand for natural gas to increase. California gets most of its natural gas from other states like Texas, and supplies have been constrained there due to pipeline maintenance. High demand and low supply generally cause prices to skyrocket. 

Will prices continue to increase? Sasan expects energy prices to swell going forward as China opens up and uses more energy. There have also been less investments in new rigs for oil and gas, causing decreased capital expenditure and limited supply. Heightened prices may not be exclusive to natural gas, as Sasan says inflation in general will continue to climb due to deglobalization and the transition from traditional to renewable energy. There will be more demand for industrial metals than before, leading to higher commodity prices and an inflationary regime. 

To invest against this environment of high inflation, Sasan advises investors to consider focusing on private credit with floating interest rates and natural resources/industrial metals.

Disclosure: Information presented herein is for discussion and illustrative purposes only. The views and opinions expressed by the speakers are as of the date of the recording and are subject to change. These views are not intended as a recommendation to buy or sell any securities, and should not be relied on as financial, tax or legal advice. You should consult with your financial, legal, and tax professionals before implementing any transactions and/or strategies concerning your finances.

On today’s The Financial Commute episode, Chris Galeski welcomes Wealth Advisor Bruce Tyson to discuss valuations and asset bubbles. In the past, some institutions issued fiat currencies, or notes, which were not backed by physical assets. Similarly, today, there are companies that Bruce refers to as “zombie” companies that we should be cautious about investing in because their shares are not backed by real assets or earnings. These companies are called zombie companies because their earnings are not sufficient to cover their interest obligations.

Furthermore, Bruce discusses asset bubbles, which are when assets rise in price without fundamentals to justify the price spike. For example, there was a tulip bubble in the 1600s in Holland where people would pay thousands of florins for a tulip bulb. However, one day, the tulip bubble burst as consumers stopped paying increasingly inflated prices. Earnings are what give value to stocks; without earnings, the stock might be a bubble. 

Finally, Bruce and Chris say that because interest rates have now increased, bonds are now paying a higher interest rate. Thus, Bruce encourages listeners to consider investing in bonds, as they may also carry less risk than stocks because asset bubbles can be a more prominent factor in stocks than bonds. 

General Disclosure: 

Information presented herein is for discussion and illustrative purposes only. 

The views and opinions expressed by the speakers are as of the date of the recording and are subject to change.

These views are not intended as a recommendation to buy or sell any securities, and should not be relied on as financial, tax or legal advice. 

You should consult with your financial, legal, and tax professionals before implementing any transactions and/or strategies concerning your finances.

On this episode of The Financial Commute, host Chris Galeski invites Wealth Advisor Priscilla Brehm to discuss how lessons from her past have informed her investment strategies. 

Priscilla grew up on a family farm in Iowa. When she was nine years old, a hailstorm destroyed her family’s crops. However, their milk cows, beef cows, hogs, and hens offered different streams of income and therefore sheltered them from an otherwise financially devastating situation. Priscilla says although investors cannot control external circumstances, they can control the allocation of their investments and the amount of diversification in their portfolio to hopefully mitigate risks. 

Disclosure: Information presented herein is for discussion and illustrative purposes only. The views and opinions expressed by the speakers are as of the date of the recording and are subject to change. These views are not intended as a recommendation to buy or sell any securities, and should not be relied on as financial, tax or legal advice. You should consult with your financial, legal, and tax professionals before implementing any transactions and/or strategies concerning your finances.

On today’s The Financial Commute episode, Chris Galeski welcomes Wealth Advisor Eric Selter to discuss legacy planning. Eric says he generally finds his own clients falling into one of three categories when it comes to this topic: some want to spend all their money while they’re alive; others would like to help their kids along the way and have a considerable amount of money left over for them after they pass; and some clients are a mix of the two, ensuring they themselves are taken care of while leaving some money for their children. Therefore, Eric says legacy planning is a very personal decision and can vary from person to person.

So how does Eric advise his clients? He says it is important for financial advisors to be facilitators in these situations, encouraging open, intentional conversations among family members about when would be best for the child to receive a portion of their assets if their parents pass away. Chris and Eric agree that, generally, choosing a later age (30 or later) may be wiser, as this allows the child to reach maturity before having to be responsible for such a large sum of money. You can always change the age if you think that child may become more mature earlier or later in life. 

Furthermore, Eric suggests that as a child ages and becomes more trustworthy, it is important for the parent to give them at least a general idea of how much money they have, what will happen to their assets after they pass and what the child should expect to be responsible for; otherwise, it may be a shocking and overwhelming experience for the child if they are kept in the dark before their parents’ deaths.  

Finally, Chris and Eric agree that regardless of how much or when they decide to give assets to their loved ones, listeners must develop a trust and will sooner rather than later. While legacy planning may be uncomfortable or daunting to think about, it is extremely important to ensure your money makes the impact you want it to make after you pass.  

Disclosure: Information presented herein is for discussion and illustrative purposes only. The views and opinions expressed by the speakers are as of the date of the recording and are subject to change. These views are not intended as a recommendation to buy or sell any securities, and should not be relied on as financial, tax or legal advice.  You should consult with your financial, legal, and tax professionals before implementing any transactions and/or strategies concerning your finances.

On today’s episode of The Financial Commute, host Chris Galeski welcomes Wealth Advisor Sarah Ellis to discuss taxes. 

If you’re a California resident, listen up! Due to the heavy California rain in January, there is tax relief available to those affected by storms, and 41 counties are eligible to extend their tax deadline from April 18 to May 15 without filing an extension. 

Chris and Sarah also discuss the taxes that come with alternative investments and limited partnerships. These tax-reporting documents can be delayed past April, causing investors to have to file an extension. Chris says although this can be tedious, these investments may create more diversified and resilient portfolios with better cash flow.

Furthermore, Sarah says CPAs usually think of tax-advantaged strategies in the present lens, aiming to minimize taxes now by investing in things like municipal bonds; however, it is important to consider the possibility that some other investments with “high” taxes may have an even more beneficial net after-tax return. 

Finally, Chris reminds listeners that if they fail to max out their contributions to retirement or health savings accounts by the end of the previous year, they still have until the tax filing deadline to make a contribution for the prior year. This is a great way to reduce your income tax. 

Disclosures:

Information presented herein is for discussion and illustrative purposes only. The views and opinions expressed by the speakers are as of the date of the recording and do not represent the views and opinions held by Morton Wealth. These views are not intended as a recommendation to buy or sell any securities, and should not be relied on as financial, tax or legal advice. You should consult with your attorney, finance professional or accountant before implementing any transactions and/or strategies concerning your finances.

On today’s episode of The Financial Commute, Chris Galeski welcomes Wealth Advisor Kevin Rex. They discuss the importance of educating children about money and increasing their financial literacy.

Kevin says that many children tend to model their mindset around money after their parents’. Therefore, it is crucial to have constructive conversations about money and set healthy examples for young kids as early as possible. 

For instance, Kevin suggests setting up three jars for your children or using these jars as hypothetical illustrations: money they want to save, spend, and give away. Any time they receive a larger amount of money for a birthday or holiday, ask them to consider how they would like to divide their money. Teach them to compare their options: they could buy a new toy now or save up for an even better toy in the future. 

Finally, Kevin encourages parents to add their children as authorized users to their credit cards to help them build credit from a young age. When they are 18, they may be able to rent an apartment without a cosigner or qualify for a car loan with lower interest. Having a credit card statement to review together may also help children evaluate their habits on a monthly or yearly basis. 


Disclosures: 

This information is presented for educational purposes only and should not be treated as legal advice. Morton Wealth makes no representation that the strategies described are suitable or appropriate for any person. You should consult with your legal professional to thoroughly review all information and consider all ramifications before implementing any transactions and/or strategies. Although the information contained in this report is from sources deemed to be reliable, Morton makes no representation as to the adequacy, accuracy or completeness of such information and it has accepted the information without further verification. No warranty is given as to the accuracy or completeness of such information.

On this episode of The Financial Commute, Chris Galeski is joined by Wealth Planner and estate attorney Brian Standing to discuss Secure Act 2.0. 

For those who are 64 to 72 as of 2023, the age to start taking RMDs (required minimum distributions) will increase to 73 in 2023 and 75 in 2033. The penalty for failing to take an RMD has been reduced from 50% to 25%; if it was not intentional and is corrected in a timely manner, the penalty decreases to 10%. 

The Act also included changes to education funding: if the beneficiary of a 529 plan does not use the money in their plan for school, a certain amount of those assets may be rolled over to their Roth IRA. However, this policy does not start until 2024, the rollover amount has an aggregate lifetime limit of $35,000, the 529 account must have existed for at least 15 years, and the rollover money must have been in the 529 for at least 5 years to permit the transfer. Therefore, Brian encourages listeners to consider opening a 529 account for their children as soon as possible, even if they may not need the money for school.

Furthermore, people who have been contributing to the Roth option of their employer-sponsored 401(k) or 403(b) are no longer required to roll that money to an IRA to avoid RMDs (starting in 2024). Employer-match contributions can also go into a Roth IRA. The benefit of Roth accounts is that taxes are paid today so that the money is not taxed when it is later taken out for retirement. 

Brian highlights another part of Secure Act 2.0 that helps employees who may not be able to afford retirement contributions because they are paying off student loans. The provision allows employers to make matching contributions to an employee's retirement plan based on their student loan payments beginning in 2024. 

Chris and Brian encourage listeners to schedule time with an advisor to discuss how Secure Act 2.0 may impact them if they inherit a retirement plan from a deceased spouse, as there are new options and details may be more complicated based on one’s individual situation.

Disclosures:

Information presented herein is for discussion and illustrative purposes only. The views and opinions expressed by the speakers are as of the date of the recording and do not represent the views and opinions held by Morton Wealth. These views are not intended as a recommendation to buy or sell any securities, and should not be relied on as financial, tax or legal advice. You should consult with your attorney, finance professional or accountant before implementing any transactions and/or strategies concerning your finances.

On today’s episode of The Financial Commute, we welcome Rajeev Das, a manager of SPACs (special purpose acquisition companies). A SPAC’s sole purpose is to facilitate a merger or a business combination between the SPAC and a privately owned enterprise to help that enterprise go public. 

SPACs do this by issuing units to the public. Proceeds are placed in a trust account and invested in short-term U.S. Treasury bonds. Then, the SPACs team looks for a business combination within 18–24 months. If they are unsuccessful, the cash is returned to the investor with interest. If they are successful, the investors have the right to vote on the combination and request their money back if they disagree with the combination. 

There are two ways to invest in SPACs: the pre-merger phase and the post-merger phase. Raj focuses on the pre-merger phase because investing in a company once it has gone public carries more risks. Raj says there is ample time to sell one’s shares if it is a well-received deal and there is no reason to stay past the post-merger phase.

Raj says the opportunity cost to investing in SPACs (rather than another investment) has decreased because we are no longer in a zero-interest-rate environment. An investor who pulls their money out from a pre-merger can now get their money back with 4% interest.

According to Raj, many people focus on how stocks of companies that were made public by a SPAC have done; however, this has been a rough year for the market in general, and SPACs may be worth examining for their safety and optionality.

DISCLOSURES: 

Information presented herein is for discussion and illustrative purposes only. The views and opinions expressed by the speakers are as of the date of the recording and do not represent the views and opinions held by Morton Wealth. These views are not intended as a recommendation to buy or sell any securities, and should not be relied on as financial, tax or legal advice. You should consult with your attorney, finance professional or accountant before implementing any transactions and/or strategies concerning your finances.

On this week’s episode of The Financial Commute, host Chris Galeski welcomes Todd Williams, Chief Investment Officer at Grubb Properties. Grubb focuses on investing in multi-family real estate and has $2 billion in assets. 

Bob Grubb, founder of Grubb Properties, provided not-for-profit financing to people who were affected by redlining, a discriminatory practice in which services (financial or otherwise) are withheld from certain residents based on race. Since then, Grubb has evolved into a multi-family real estate manager and developer. 

Grubb is now focusing on the segment of moderately priced multi-family housing for millennials and Gen Z. These younger renters usually don’t need as much space and want to be in urban locations near major amenities and job bases at a certain price point that puts them in a range of income qualification between 60% and 140% of AMI (area median income). 

Grubb only has six types of floor plans, all of which remove inefficiencies like awkward corners to give their residents more space and amenities. Having fewer floor plans speeds up approval processes and makes it easier for management teams to understand and lease these units.

Over the pandemic, Grubb offered a discount to residents who prepaid their rent and provided a cap on rental increases to long-term residents. This bolstered loyalty with residents and lowered turnover costs. Grubb also had a temporary flight of residents and capital toward the growth markets in the South. However, because they knew urban areas would eventually bounce back, they started building in the Bay Area, L.A. and Denver and were able to secure discounts and subsidies. 

DISCLOSURES: 

Information presented herein is for discussion and illustrative purposes only. The views and opinions expressed by the speakers are as of the date of the recording and do not represent the views and opinions held by Morton Wealth. These views are not intended as a recommendation to buy or sell any securities, and should not be relied on as financial, tax or legal advice. You should consult with your attorney, finance professional or accountant before implementing any transactions and/or strategies concerning your finances.