22Sep
Investing Tips from Warren Buffett
Investing

Warren Buffett is arguably one of the best investors of all times.  Here are three investing tips from the “Oracle of Omaha”.

  1. “Never lose money.”

    While even the legendary Buffett has suffered stock market losses, one key to his success is that the losses are small and infrequent compared with his larger long-lasting positions.(Please do not take this direct quote literally.  There are no guarantees in investing and there is always the potential to lose money.)

  2. “Be an investor, not a speculator.”

    Speculators tend to bet on price without paying much attention to earnings or dividends.  Speculators tend to be short term technical traders.  On the other hand, investors tend to take the long view and expect to be paid continuously for owning an asset.  This could be in the form of interest or dividends.

  3. “Diversify, diversify, diversify.”

    This advice includes owning both U.S. and International positions, stocks and bonds, multiple sectors, and non-correlated asset classes.

While we understand that each client’s investment strategy and risk tolerances are unique, I hope that these general investing tips are both of interest and value to you.

I also look forward to sharing a conversation with you, to discuss these concepts further and explore how they could apply to your investment goals and objectives.

(Credit for some of this information goes to Steve Jurich, IQ Wealth Management September 2017.)


Barbara A. Culver

CFP®, ChFC®, CLU, AEP®
Resonate, Inc.
(513) 605-2500

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19Sep
Your Children and Athletic Scholarships
College Planning

The new school year has begun!  Besides a new school year, fall also rings in another sports season for many families.  I have an 8-year old son, and for the first time, he will be playing tackle football.  I still don’t know how I feel about that!

He also plays fall soccer for a club team, winter basketball for his school, spring baseball with his school, and another round of club soccer in the spring.  He plays these sports out of passion for the game and being a “Energizer” bunny full of athleticism.

While he may play a lot of sports, I always instill that school comes first and if he starts to struggle in school, the sports schedule will be fiercely re-evaluated.

I tell you all of this because at 8 years old, I am already hearing other parents and coaches tell me that he could be a candidate for athletic scholarships for college.  First, I am by no means taking any of that to heart.  He is 8 years old and has many moons before college.  Second, it triggered this blog post, because I had an article from Wealthmanagement.com magazine titled “How to Get an Athletic Scholarship”, written by Lynn O’Shaughnessy.

I found the article very interesting because as financial planners, we do a lot of education projections and creating strategies for families to afford not only college, but in some cases, elementary and high school educations.  Through our experience with the education planning, we run across parents who are “counting on” athletic scholarships to pave the financial way for their children to attend college.

The reality may be different from what many parents anticipate.

The article pointed out that the odds of receiving an athletic scholarship are very small; “2% of high school athletes receive a sports scholarship at a National Collegiate Athletic Association (NCAA) school”.  The article further points out that the scholarships tend to be less generous than the financial aid or merit scholarships that students can receive.

It was an interesting read and pointed out a couple of other college funding options for athletes – focus on merit scholarships and financial aid.  If you have a student who wants to get noticed by college coaches, have them utilize an online recruiting service (Next College Student Athlete (NCSA) or BeRecruited).  The students can also reach out to college coaches to introduce themselves and follow up with the coaches.  Another resource for students and parents would be the ScholarshipStats.com website.  This site is a source for athletic scholarship statistics to research specific sports and individual schools.

When it comes to financial planning for your children’s education, putting too many hopes onto an athletic scholarship is not advisable.  Let’s talk through all the options that your children will have for college and beyond.

Erin Savage-Weaver
CFP®
Resonate, Inc.
(513) 605-2500

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24Aug
Who Will Be the Next Chair of the Federal Reserve?
uncategorized

While only the president knows this answer for sure, odds are that Janet Yellen’s term will not be extended.

In the July 28 issue of The Kiplinger Letter, we read:

“The best bet to replace Yellen is Gary Cohn.”

Cohn is a former president of Goldman Sachs and currently serves as the director of the White House’s National Economic Council.

If Cohn is appointed, what might we expect?

Again, Kiplinger suggests that Cohn would not be likely to deviate from present policy of gradually increasing interest rates while also watching carefully for any signs of a slowing economy.

Stay tuned as Janet Yellen’s term expires in February, 2018.

Barbara A. Culver
CFP®, ChFC®, CLU, AEP®
Resonate, Inc.
(513) 605-2500

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16Aug
How Resonate Provides Value
Economy
Richness of LifeIn case you have not read the first blog in this short series, I invite you to do so.

Since completing it, I have given thought to which of the many client stories I wanted to share with you.

The first story is that of a recent widow who was referred to us.  When I met with Alice, (not her real name, of course), I found her to be very clear and communicative in spite of the recent and sudden passing of her husband.

The stories she told me about her experiences in the financial services world both angered and saddened me.  Assumptions were made that, of course, she would not be able to “handle her own affairs nor make thoughtful decisions” primarily because she was a woman.  On several occasions, male advisors from different companies assured her that “they knew what was best” and even provided “solutions” without bothering to understand the client and her life.

In contrast, I discovered, that when given the opportunity, this woman was quite amazing in how quickly she was adjusting to new life and found her thought process to be remarkably clear.

This included her clarity of thought that the “solutions” provided probably benefited the advisor more than they would benefit her.  Upon discussion and review of the various recommendations, I supported her thinking.

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04Aug
Client Fees & Value
Economy
It seems that everywhere we turn today, the media is emphasizing advisory and product fees.

Common questions are:

“Are you paying too much?”

“Do you know what you are paying for?”

I consider this type question to be one-dimensional and shortsighted.  For example, if one wants to “stay on the numbers’ side”, then where is the question:

 “Are you receiving value for your fees?”

The interesting thing that happens when we insert the word “value” is that we add the possibility for an intangible answer in addition to the one-dimensional tangible answer.

Here are two recent examples of how we have added both tangible and intangible value for our clients:

Example One:

Clients recently came in for their conversation with us, which includes portfolio review. They brought a folder with them and asked: “Will you please look over these estimates for us to pre-pay our funerals?”

This led to a conference call with the clients and the director of the funeral home.  At the end of the conversation in which I asked many questions, the clients said, “Thank you so much.  We understand this now, and are very pleased with the decisions we have made.  Mostly, we feel wonderful that we have taken this burden off of our family.”

Tangible Results: the clients ended up saving $1100 from the original quote.

Resonate Time: 90 minutes

Resonate Fee for this work: $0 

 

Intangible Value Received by the Client: Relief; peace of mind.

Intangible Value Received by Resonate: Knowing we did the “right thing” for aging clients.

 

Another Example…

A client called recently and said: “I’m not sure if these new legal documents prepared by an attorney match our objectives discussed with you.”

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18Jul
IRS on Your Mind? – Here Is What NOT To Try!
Taxes

The subject of taxation is not normally a welcomed topic – here are some “fun” court cases provided by Kiplinger’s.

“A Little Peace and Quiet”

A busy tax preparer ran her business from her home.  During tax season, she felt so harassed from clients calling her at all hours of the day and night that she occasionally booked a room at a local hotel for some peace and quiet.  On her own return, she deducted the cost of this rest and relaxation as a business expense.  Unfortunately for her, the Tax Court ruled that the cost of her good night’s sleep was a nondeductible personal expense.

 

“Billing Mommy”

A wife was sent to jail for killing her husband.  Although she was named as the primary beneficiary of his 401(k) plan, state law barred her from receiving any of the funds because of her crime.  The account was paid to their son instead as the secondary beneficiary.  He claimed that his mother should be taxed on the payout as the intended beneficiary.  An Appeals Court gave him an A for effort but an F in taxation, ruling that he owes tax on the distribution.

 

“Wrecking a Rental Car”

An airline employee needed to get to New Orleans but was stranded by heavy fog.  He worked out a great deal with a rental car company where he paid nothing for a car that the company needed driven to New Orleans.  Unfortunately, he wrecked the auto in Mississippi and had to pay for the damages.  He tried to deduct the payment as a casualty loss, but the Tax Court denied his write-off because he wasn’t the owner of the vehicle.

Now here’s a little good news:

Kiplinger’s recently a report on “The LEAST Tax Friendly States in the U.S. for 2016”.

The good news is that Ohio, Kentucky, Florida, and Indiana are NOT on the list.

Here are the factors that were considered to create the list: income, property, gas and sales tax.

In order from the LEAST tax friendly, here are the top states. (Before reading further, it might be fun for you to see how many of them you could guess.)….  California, Hawaii, Connecticut, New York, New Jersey, Minnesota, Maine, Vermont, Illinois, and Rhode Island!

From our Blogs page, simply search for “tax” to find additional articles of interest.

Please note that, while we are not accountants and cannot provide tax advice, we do work cooperatively with very qualified accountants.  The information that we will share is available to the general public and should not be construed as giving income tax advice.

Barbara A. Culver
CFP®, ChFC®, CLU, AEP®
Resonate, Inc.
(513) 605-2500

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11Jul
Are You Paying Too Much In Income Taxes?
Taxes

While we are not accountants and cannot render tax advice, we are very much aware of taxes as we work with our clients.

Based on the information in the Income Level Risks chart, here are some of the questions we review before we make recommendations from where to take income:

  1. What types of investment accounts do you have to work with?  For example, Roth IRA’s offer a tax-free option, taxable accounts, tax-loss harvesting and the opportunity to create capital gain income as opposed to ordinary income.
  2. For clients under the age of 70.5, does it make sense to consider a Roth Conversion?
  3. Will you benefit from holding equities in taxable accounts (due to the possibility of creating capital gain income) and holding fixed income securities in IRA’s?  (Interest from fixed income securities is taxed as ordinary income. Since all income from a traditional IRA is taxed as ordinary income, you may save on taxes by holding equities in taxable accounts and creating capital gain income.)
  4. Are tax-deferral annuities an option?
  5. Do municipal bonds make sense?
  6. Is there is benefit to accelerating charitable deductions?
  7. Can we get your income below the higher Medicare Part B premium threshold?
  8. Can we work to avoid the 3.8% surtax on net investment income?

I am clear that the content of this blog is very technical and complicated.

As always, we welcome a conversation with you and/or your tax advisor.

Barbara A. Culver
CFP®, ChFC®, CLU, AEP®
Resonate, Inc.
(513) 605-2500

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05Jul
Bull Market – Is It Time to Get Out of Stocks?
Economy

The U.S. and International equities markets have just given us yet another great quarter end.

How much longer can this continue?

In spite of the fact that this Bull Market is getting to be very long, it’s important to remember that Bull Markets don’t end just because of time.

One of the indicators that a Bull Market is about to end is that the country is entering into a recession.

What are the signs of a recession?

Sam Stovall, chief investment strategist at investment research firm CFRA, looks at four indicators:

  1. Every recession since 1960 has been preceded by a year-over-year decline in housing starts, says Stovall.  The dips have ranged from a 10% decline to a drop of 37%, and they have averaged 25%.  The most recent report on housing starts showed a decline of less than 3%. “So we’re on yellow alert, not red,” says Stovall.
  2. Consumer sentiment is another signpost. Before a recession kicks in, you’ll typically see an average decline of 9% in the University of Michigan’s monthly sentiment index compared with the previous year, says Stovall.  Current reading: up 2.4%.
  3. A drop over a six-month period in the Conference Board’s Index of Leading Economic Indicators means trouble, too, with declines of 3%, on average, registering ahead of an economic downturn. Latest six-month change: up 3%.
  4.  Finally, when yields on 10-year bonds dip below the yields on one-year notes – known as an inverted yield curve – look out, says Stovall. Ominously, long-term rates recently have been under pressure while the Federal Reserve pushes short-term rates higher. “We’re getting a flatter yield curve, but nowhere near an inversion,” says Stovall.  His conclusion: No recession is in sight.

Sometimes people exit a Bull Market too early.

(Source: Kiplinger “When Will the Bull Market End?” by Anne Kates Smith, Senior Editor, June 26, 2017)

Your Resonate advisory team is cautious and continues to follow these important indicators.

If anyone would like to have your current portfolio reviewed or has any questions, we’d welcome a conversation with you.

Barbara A. Culver
CFP®, ChFC®, CLU, AEP®
Resonate, Inc.
(513) 605-2500

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03Jul
What We’re Thinking About the Rest of the Year – Part 3 of 3
Economy
VIX is the ticker symbol for the Chicago Board Options Exchange (CBOE) Volatility Index.  This shows the market’s expectation of 30-day volatility as conveyed by S&P 500 stock index options prices. (www.cboe.com/products/vix=index-volatility/vix-options  and…/vix-index)

As the chart below depicts, the volatility index is currently very low.

Yet, compared to earnings, sales, and other corporate performance measures, stock prices are very high.

The current S&P 500 price-earnings ratio is 25.70 –  above the five-year average P/E of 15 and the 10-year average P/E of 14. (Source: www.multpl.com/  6/2/17)

Based on the chart above, consumers are shaking this off and focused on other factors.

Your Resonate team thinks this could be an example of what is called “home country bias”.  It means that investors’ natural tendency is to be most comfortable with investments in their home country,

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30Jun
What We’re Thinking About the Rest of the Year – Part 2 of 3
Economy
In January, Kiplinger had predicted that the S&P 500 could yield a 6% return in 2017.  In just the first four months of the year, it exceeded that prediction by delivering 7.2%.

Kiplinger’s is now foreseeing a 9% to 11% return for the year—including a 2% dividend yield.  The considerable gains during the first half of the year may foreshadow subpar results for the second half of the year.

According to Burt White, chief investment officer of LPL Financial Research, investors should think beyond a portfolio of U.S. stocks and bonds.  Investors could score big in this market by venturing overseas.  Your Resonate team agrees with this and have been increasing our international exposure in investment models since third quarter of 2016.  Before making international investments, please have a conversation with us regarding risks and strategies that would be suitable for you.

It appears that investors can benefit from this rare, synchronized, economic expansion across the globe.  For the first time, all three major global regions (the U.S., Europe, and Asia) are all growing at the same time.[i]  The International Monetary Fund forecasts world economic growth at 3.5% in 2017, the highest growth rate in five years and up from 3.1% in 2016.[ii]   With consumer confidence at a decade high, consumer spending makes up for about 70% of the U.S. economy.[iii]

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