Use a 529 to fund education expenses for a future (unborn) child

1. No Kid, No Problem - Have you ever considered opening a 529 account for a child who hasn't arrived yet? It might sound unconventional, but it's a smart move for forward-thinking parents and grandparents. By starting a 529 for an unborn child, you can get your money growing tax-free today. You become both the owner and beneficiary of the account initially, allowing you to make contributions early on when you have fewer financial responsibilities. This can be a game-changer down the road in two ways:
   1. Pass it On: When your child is born or a grandchild comes along, you can simply change the beneficiary of the 529 account to the new addition. The compounding works in their favor to fund their education
   2. Fund Your Roth IRA: Fast forward 15 years when you might have more expenses and a higher income. The money in the 529 account can serve as a source to "contribute" to your Roth IRA. This is a creative way to maximize your retirement savings within the annual Roth IRA contribution limit while enjoying the tax benefits.
   
   

Dynasty Trust: Use a 529 for future generations

1. Dynasty (The Trust, not the Soap Opera) - A Dynasty Trust can be an excellent option for families with substantial wealth looking to create a lasting financial legacy. While it's a powerful strategy, it comes with some complexities, including potential gift tax and Generation-Skipping Transfer Tax (GSTT) implications, maximum contribution limits, and state-specific rules. For an in-depth look at this financial tool, check out this Kitces Article.
   1. Long-Term Wealth Preservation: Dynasty Trusts are designed to ensure that wealth remains within a family for multiple generations. You can establish a 529 account within a Dynasty Trust to fund educational expenses for your descendants.
   2. Tax Implications: It's crucial to work closely with a financial advisor or estate planning expert to navigate the potential tax implications of a Dynasty Trust. This strategy is best suited for high-net-worth individuals.
   3. Not without Risk: Keep in mind that while Dynasty Trusts offer incredible benefits, they come with some risks. Future changes in 529 plan transfer rules, shifts in government policies, or unforeseen events may impact the effectiveness of this strategy.
   
   

How to use a 529 to fund your Roth IRA

1. The Escape Hatch: As mentioned above, 529 accounts can now serve as a source of funds to contribute to your Roth IRA. This strategy is particularly beneficial when you're younger, have fewer expenses, and can generate "extra" savings. Here's how it works:
   1. Me, Myself and I: Open a 529 account in your name, with yourself as both the owner and beneficiary. Fill it up with your extra cash while you have it (i.e. before kids).
   2. No money, no problem: Down the road, when you have more financial responsibilities (mortgage, cars, children [and the separate 529 accounts to go along with them], aging parents, etc.), you can use the funds in your529 account to "contribute" to your Roth IRA. This allows you to maximize your retirement savings while staying within the annual Roth IRA contribution limit.
   3. No Income Limits: Unlike traditional Roth IRA contributions, this strategy has no income limits, making it accessible to a wider range of individuals. Check out this article from the AARP on Traditional and Roth IRA contribution limits.
   
   

We’ve done a number of episodes on 529’s. In episode 55, we talk about how to pay for education expenses. Then we do a deeper dive into education savings in episode 83 and round it all out with an All About 529’s breakdown in episode 84. Check those out if you haven’t already, because today we will be talking about 529’s as a potential savings vehicle for retirement. 

First things first, 529s in brief: A 529 account is a tax-advantaged savings plan designed to encourage saving for future education costs. These accounts are sponsored by states, state agencies, or educational institutions and come in two primary types: prepaid tuition plans and education savings plans.

529 Use Cases

Initially, 529 accounts were created to cover qualified higher education expenses such as tuition, fees, books, and computers. However, their utility has expanded significantly over the years.

1. Qualified education expenses (for more, see the US News Article from 2021):
2. Traditional 4-year college costs, 2-year colleges, graduate schools, and trade schools
3. Books and computers 
4. Here's a significant development: off-campus housing and rentals are now qualified up to the cost of room and board on campus, along with food expenses
5. K-12 Education: The Tax Cuts and Jobs Act (TCJA, 2018) expanded the use of 529 plans to include covering up to $10,000 per student in tuition for public, private, or religious elementary or secondary schools.
6. Paying Off Student Loan Debt: The Secure Act 2.0 (2022) introduced a provision allowing individuals to use 529 funds to pay off up to $10,000 in student loan debt.
7. Funding Roth IRAs: Yes, you read that correctly! Perhaps the most exciting development is the ability to transfer $35,000 (total) from a 529 account to a Roth IRA belonging to the 529's beneficiary. This can serve as an "escape hatch" option to fund a Roth IRA thanks to an update to the Secure Act 2.0 which will go into effect in 2024.
8. To execute this transfer, the 529 account must have been open for at least 15 years.
9. Only funds that have been in the 529 for at least 5 years are eligible for the transfer.
10. The transfer must be a direct conversion from one institution to another.
11. The annual Roth IRA contribution limit and eligible earnings will apply, but there are no income limits.

Maximizing the 529

1. A “poor man’s Dynasty Trust”:
2. For those with the means, opening a 529 account today with a $15,000 contribution can potentially grow to $35,000 in fifteen years, assuming a growth rate of 7%. This can be a smart strategy for wealthy families to fund Roth IRAs for their children or grandchildren. 
3.  Personal Roth IRA:
4. Consider opening a 529 account for yourself when you're younger and have fewer expenses. You can be both the owner and beneficiary.
5. In 15 years, when you might have more expenses and a higher income, you can use the funds in the 529 account to "contribute" to your Roth IRA.

Leftover 529s

If you find yourself with leftover funds in your 529 account, you have options. You can use the money for yourself, pass it on to another beneficiary, or withdraw the money. If you choose to withdraw funds, you'll typically pay taxes on the earnings, plus a 10% penalty on those earnings.

529 accounts have evolved into a versatile financial planning tool that goes beyond college savings. They now offer flexibility for covering various educational expenses, paying off student loan debt, and even funding Roth IRAs. Understanding these expanded uses can help you make the most of your 529 account and secure a brighter financial future for yourself and your loved ones.

Checking the Block

It's easy to fall into the trap of the "checklist mentality." We set goals for ourselves: get the job, earn the salary, buy the house, find the perfect partner, have kids, and acquire material possessions like cars, houses, vacations, etc. While these goals are not inherently wrong, they often prioritize external achievements over internal happiness and well-being.

This check-the-block approach can leave us feeling unfulfilled and disconnected from our true selves. It's essential to recognize that life is more than a series of boxes to tick off; it's about finding meaning, purpose, and joy in each moment.

Pay Attention - Don’t Be Asleep at the Wheel

In a world where we're bombarded with distractions and demands on our time, it's crucial to pay attention to where we're directing our energy and focus. Often, we give away our time and attention without realizing it, leaving us feeling like we're "asleep at the wheel."

Our brains are wired to protect us, and sometimes they create narratives and beliefs that push us to chase external accomplishments, thinking they will keep us safe. To break free from this pattern, we must become more aware of our thought patterns and redirect our attention to what truly matters.

Get into The Flow: Attention, Emotion, Behavior, Results

Understanding the flow of attention, emotion, behavior, and results can help us gain clarity and make positive changes in our lives. Work from the top, down:

1. Pay Attention: What we focus on at the top of the triangle determines our entire life experience. Pay attention to your thoughts, beliefs, and where you direct your energy.
2. Identify Emotion: Your attention influences your emotions. Are you feeling energized and joyful, or drained and frustrated? These emotions are often linked to where you're placing your focus.
3. Tune in to your behaviors: Are you asleep at the wheel? Emotions drive behavior. Are your actions aligned with your true desires and values, or are you simply reacting to external pressures and expectations?
4. Check your results: Your behavior leads to outcomes. Are you achieving the results you desire in life, or do you feel stuck and unfulfilled?

To begin your journey towards a more fulfilling life, start by paying attention to what energizes you and what depletes you. How? It’s as easy as 1, 2, 3:

1. Take out a sheet of paper and create two columns: "Energizes Me" and "Depletes Me." Throughout your day, note down activities, people, and experiences that either bring you energy or drain it.
2. Reflect on your list and see if any patterns emerge. What common themes or activities appear in the "Energizes Me" column?
3. Begin incorporating more of what energizes you into your daily life and gradually reduce activities that deplete you.

By following your energy and making intentional choices to focus on what truly matters to you, you can shift your life towards greater fulfillment and happiness. In the words of younger but wiser country/pop icon Miley Cyrus: “Ain’t about how fast I get there, ain’t about what’s waiting on the other side, it’s the climb.”

Life is too short to live on autopilot, following a checklist that doesn't align with your true desires. Embrace the power of attention and start prioritizing what energizes you today. Your path to a more fulfilling life begins with mindful awareness and intentional choices.

By the Numbers

Let’s start with the basics. From a strictly mathematical perspective, it usually doesn’t make sense to put extra cash into your mortgage. Why? Well, start by comparing your mortgage interest rate to the potential return on investments. If your mortgage rate is low (e.g., 3-4%) and you can potentially earn a higher return by investing your money elsewhere (e.g., 5-10% in a high yield savings account or the stock market depending on your timeline), it makes sense to keep your mortgage and invest your extra cash.

Sleep at Night

So we should just stop there, right? If we were robots, sure. But we are human, and humans have emotions which play a significant role in our decision making. If having a mortgage creates anxiety or discomfort for you, paying it off may provide a sense of freedom and autonomy. Some people prefer the peace of mind that comes with owning their home outright, even if the math suggests otherwise.

Money Relationship

Maybe you aren’t anxious about your mortgage, which is great, but there is another factor to consider from the human side of decision making. Your financial decisions might be influenced by your upbringing, cultural norms, or peer groups. Sometimes people follow a particular financial path simply because "that's what you're supposed to do" or because they've seen others do it. If you have a strong belief system with regard to debt, it is a consideration worth noting.

Life Events

Finally, the decision to pay down your mortgage early could also be motivated by significant life events, like retirement or sending kids to college, which can blend rational and emotional considerations. If you only have 15 years until retirement but refinanced to take advantage of the super low interest rates of 2020/2021 with a 30 year mortgage, you may want to pay that off by the time you retire from the workforce. 

Ultimately, you need to consider both the mathematical and emotional aspects of paying down your mortgage and make a decision that aligns with your unique circumstances and goals.

Some of the ideas discussed in this podcast come from the fantastic article by Karen Kreider Yoder and Stephen Kreider Yoder at the Wall Street Journal. Their article entitled "We're Retired and Healthy. But How Do We Plan for Our Decline?" has a lot of great information and quotes. I'm always trying to learn from those slightly ahead of me (in life), and I highly recommend the retirement series that they are writing.

In this episode, Matt and I discuss:

• The spending smile 
• Realistic goal planning
• Reframing your perspective from what you have to do to what you get to do

Don't let the icy grips of death scare you. Instead, view retirement planning as an opportunity, not an obligation. By thinking ahead and preparing now, you empower yourself to make the most of your time. Embrace change, seize the present, and shape a future that's not just secure but also filled with the adventures and experiences you've always dreamed of.

Are you ready to create your ideal lifestyle? Let’s Connect.

Learn more about Mike and my services at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/

Over a 40-year period, historical data shows that investing $10,000 in the U.S. stock market could grow to an impressive $650,000, assuming an average annual return of 11%. Even in the worst-case scenario over the past century, where returns were just under 9%, that $10,000 investment would still grow to a substantial $300,000. 

In contrast, conservative investments like bonds would only see your initial $10k grow to around $50k over the same time frame. This stark contrast illustrates the potential rewards of being more aggressive with your investments.

But, what about Target Date Funds?

Many people rely on target date funds to simplify their investment decisions. These funds automatically adjust your asset allocation based on your expected retirement date. While target date funds are a solid starting point, they tend to include up to 10% bond allocations even when you have decades until retirement.

But, what if the stock market tanks?

One of the main reasons people shy away from aggressive investing is loss aversion, a psychological bias that makes us fear losses more than we desire gains. It's a natural instinct, but it can hinder your financial progress if you're overly cautious.

To overcome this bias, it's essential to evaluate your investments rationally. Consider the worst-case scenario when it came to that $10k investment discussed earlier. Even at the lowest returns, it is still almost 83% more than the return on bonds.

In summary, being aggressive with your long-term investments can significantly enhance your financial success. While caution has its place, don't let fear hold you back from embracing an aggressive investment strategy. Consider your long-term goals, evaluate your risk tolerance, and explore opportunities for higher returns. With the right approach, you can harness the power of aggressive investing to secure a brighter financial future.

Are you ready to create your ideal lifestyle? Let’s Connect.

Learn more about Mike and my services at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/

What does time have to do with investments? Quite a bit, actually. We are currently in a period in which our savings are generating some income. We are seeing a return on CDs, bonds, and even checking and savings accounts. You might find yourself in a situation where you have some extra cash (yay!) but don’t know what to do with it. The most effective financial planning requires aligning your investment choices with your anticipated expenses. 

Consider the following:

1. Short-Term Needs: Emergency Savings and Upcoming Expenses
2. Maintain an accessible emergency fund (Cash, CDs or Money Market Funds) for unforeseen financial setbacks.
3. Allocate cash for immediate needs or short-term expenses like a down payment on a house or a new car and keep those funds in appropriate safe options like cash, CDs, individual bonds or Money Market Funds.
4.  Medium-Term Goals: Two to Five Years
5. Consider bonds and bond funds as a way to preserve capital and earn moderate returns.
6. Evaluate investment options to counteract the effects of inflation on your money by getting some interest payments plus potential upside returns.
7.  Long-Term Investment: Over a Decade or More
8. Stocks are the wisest choice for long-term growth.
9. Companies adjust prices to account for inflation, offering an effective hedge against its impact.
10. Real estate investments also present opportunities for long-term financial growth.

Inflation can indeed be a drag on financial stability, but with careful planning, it can also serve as a catalyst for creating a resilient investment strategy. By understanding the relationship between timeframes and investment options, you can take steps to navigate inflation's impact on your finances.

What are Job Logistics?

The term "logistics" here encompasses various aspects of a job beyond the actual tasks performed, including the daily routines, commuting, office setup, and the energy derived from the work itself. How enjoyable are the tasks you have to complete on a day-to-day basis? Do you use the time spent sitting in traffic to listen to audiobooks or tap your fingers on the wheel, becoming more impatient with each passing minute? Do you work next to someone who reheats fish every day for lunch or in the corner of your dark basement with kids running overhead? These logistics can significantly impact your job satisfaction and overall well-being.

Become your own country, so to speak

Job logistics intertwine with family life in a number of ways and it is important to navigate these dynamics as a team. One way to address job logistics in terms of quality of life is to think of your household as its own country. Together, you produce a household GDP (gross domestic product) in the form of daily life. These products include money earned (to sustain the household), time spent (on shuffling kids, homework, etc), tasks completed (housework, yard work, etc.) and social interactions (managing the familys’ social obligations and desires).  Each partner contributes different strengths and responsibilities and not all contributions are financially quantifiable.

Have an honest conversation with your partner about your strengths and preferences in tasks. If you spend all day eyeballs deep in spreadsheets, perhaps you prefer to spend your weekends in the yard or driving kids to various activities. If you work in a hospital, perhaps you prefer the solitude and relative quiet of housework at home. Use the logistics of your job to create a balanced life at home.

The ongoing COVID-19 pandemic has brought the concept of job logistics into sharp focus. The shift to remote work has made people more attuned to the details of their work arrangements, including the frequency of office visits and the value of in-person interaction. Job seekers and employees alike are now paying closer attention to how these logistical factors align with their personal and family needs.

While salary and job responsibilities are undeniably important, consider the broader context of job logistics when evaluating your career options. Crafting a work life that aligns with your personal preferences, or a home life that balances work obligations can lead to greater overall satisfaction on and off the job.

Join Matt Robison and I this week as we discuss the various labels you should be paying attention to in the stock market. One of the first label mishaps is not knowing the difference between mutual funds and exchange-traded funds (ETFs). These investment wrappers may contain similar assets but have distinct characteristics such as tax treatment and use in investment strategies.

In case you aren’t completely confused yet, let’s jump into another sticky subject that even has Wall Street scratching its head. You’ve likely explored the concept of value and growth companies, which are commonly used labels to categorize stocks. Growth companies are expected to expand and generate higher future profits, while value companies tend to have stable earnings and lower growth prospects. Understanding these distinctions when choosing investments is key as different funds may focus on either value or growth stocks.

Speaking of funds and Wall Street’s “whoops,” a popular value index fund, the iShares S&P 500 Value ETF (ticker IVE) includes Microsoft which is typically a growth company. Here is where knowing the ingredients of the fund is crucial. 

While it may seem laborious, it is essential to gain insight into the underlying assets and strategies employed by the fund. This knowledge enables you to make informed decisions based on your preferences and risk tolerance.

Stick to the Basics

Would you prefer to  avoid the intricacies of analyzing individual funds altogether? You would do well to stick to three broad categories of funds: 

1. Total US stock market
2. Total international market
3. Total bond market

By investing in these diversified options, you can bypass the need to decipher specific ingredients and still achieve a well-rounded portfolio. (hint: use low-cost index funds that track the above)

In the world of investing, understanding the ingredients of investment funds is crucial for making informed decisions. While the complexities and nuances can be overwhelming, you have the option to either dive deep into analyzing funds or simplify your approach by focusing on broader categories. Whichever path you choose, the key takeaway is to be mindful of what you are investing in and align your choices with your financial goals and risk tolerance.

By acknowledging that our actions have minimal impact on the universe, we can prioritize our personal passions and goals.

Why is that prioritization important? Simply put, it's how happiness is derived. By embracing the idea that what we accumulate materially doesn’t define us, we can experience a sense of liberation and contentment.

What does this have to do with finance? Well, until you understand what brings you true joy and fulfillment, how can you possibly know how to prioritize your spending and saving? 

Our lives are ultimately finite, and the only resource we can truly control is our time. 

Focusing on experiences and connections rather than material possessions can help align your financial goals which leads to happiness.

Are you ready to create your ideal lifestyle? Let’s Connect.

Learn more about Mike and my services at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/

Rich: A Mirage of Security 

Fancy cars, luxurious vacations…keeping up with the Joneses could actually cost you your wealth! A false sense of security can prevail among those who consider themselves rich. The allure of an opulent lifestyle can lead to excessive spending, squandering wealth and leaving individuals financially vulnerable. Thus, being rich does not necessarily equate to financial stability.

Wealthy: A Lifestyle of Freedom

On the other hand, being wealthy signifies more than just financial abundance. It encompasses the concepts of financial independence and stability. Being wealthy allows individuals to have the freedom to make independent decisions about their lives, including what they choose to do and when they choose to do it. True wealth is not measured by a specific dollar amount but by the ability to generate income without actively working for it. It grants individuals the liberty to pursue their passions and interests, thereby living life on their own terms.

The roadmap to Wealth

Achieving financial wealth requires a deliberate and strategic approach. Here are a few steps to consider:

1. Increase your income and prioritize saving: Look for opportunities to enhance your earning potential, whether through career advancement, side businesses, or additional education. As that additional income rolls in, SAVE IT! Continue living life as you had before the financial bump and sock that extra away. Too much to ask? Ok, put a percentage into savings and spend the rest on riches.
2. Diversify your assets: Invest in a diverse range of assets such as stocks, bonds, real estate, and businesses. This diversification mitigates risks and offers the potential for long-term wealth accumulation.
3. Plan for the life you want: Develop a comprehensive financial plan that aligns with your goals and aspirations. This plan should incorporate saving, investing, and minimizing debt to ensure a secure and prosperous future.

Remember, becoming wealthy is not solely about the numbers; it is about embracing a mindset and lifestyle that prioritizes long-term financial security and personal fulfillment.

“The rich have money. The wealthy have time."

When deciding upon a trustee to oversee the management of your financial and logistical life plans, it is important to think about the following four W’s:

Who: Choosing a trustee - This is almost like choosing a life partner. The person you choose to be trustee of your estate is someone you intend to have a long-term relationship with. As such, consider the following:

• Does this person want the job and everything that comes along with it? It’s a long-term commitment so be sure they are willing and available to fulfill trustee responsibilities.
• Is this person qualified? Be sure to assess the potential trustee's financial know-how and ability to handle complex duties such as investing trust funds and managing various assets.

What: Co-Trusteeship- Sometimes two heads are better than one. If one of your trustees lacks experience, you might consider adding a co-trustee to combine expertise and relationship dynamics. Some advantages of co-trustees include:

• Achieving checks and balances for proper administration and accountability.
• The role of an impartial trustee or trust protector in overseeing trustee actions.

Why: Professional Trustees - Choosing a professional trustee can aid in ensuring continuity and harmony. Why consider a professional?:

• The long-term nature of estate planning lends itself to professional management since a company can outlive any humans assigned to the task. 
• Conflicts of interest are commonplace among surviving spouses and ultimate beneficiaries. This can be alleviated by a professional, unbiased third party handling distributions.

How: Selecting the Right Professional Trustee - There are many factors to consider when evaluating professional trustees such as:

• There are different options for different sized trusts. Look at banks for large trusts and trust companies for mid-sized estates.
• Cost will inevitably be a concern. Be sure to appraise administrative and investment fees and keep in mind that this expense will be incurred posthumously. 
• Customer service should also be examined. Choose a firm with a solid reputation, experience, accessibility, responsiveness and ability to collaborate with beneficiaries.

Don't miss this informative episode, offering actionable advice on selecting the ideal trustee for your estate. Subscribe now to our podcast and embark on your journey to successful estate planning.

Are you ready to create your ideal lifestyle? Let’s Connect.

Learn more about Mike and my services at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/

1) Accounts and Investments are not one in the same

You might have a backpack for hiking, but it's what’s inside that counts. One prevalent misconception is that the type of account you have determines the success of your investments. However, the truth is that the account is merely a vehicle for holding investments and has no direct impact on their performance. It is crucial to recognize that the key to growing your wealth lies in investing wisely, rather than solely relying on the type of account.

2) Index Funds: They aren’t all the ‘safe’ option

Index funds are often considered a reliable investment option due to their built-in diversification and lower expenses compared to actively managed funds. While they can provide stability and consistent returns over the long term, it's essential to remember that all investments carry some degree of risk. Educate yourself on market dynamics and timing to make informed decisions.

3) Make sure you are truly diversified

You may eat at a different restaurant every night, but if they are McDonalds, Burger King and Wendy’s, then you aren’t really eating a diverse diet. The same holds true for investments. Diversifying your portfolio across different asset classes and industries can help mitigate risk and potentially enhance returns.

4) Roth IRA Contributions: Know the Income Limits

Contributing to a Roth IRA can be an excellent strategy for retirement savings, as it offers tax-free growth potential. However, it's important to be aware of the income limits. For single individuals, the maximum income threshold is $138,000, and for married couples filing jointly, it is $218,000. Understanding these limits ensures you avoid any potential tax penalties.

5) Backdoor Roth IRA - Get Professional Help

The backdoor Roth IRA strategy involves converting traditional IRA contributions into a Roth IRA to take advantage of potential tax benefits. However, executing this strategy correctly can be complicated. Stay in your lane.

6) Taxation on Bonuses: It’s not as clear cut as it seems

Receiving a bonus at work is always a cause for celebration. However, it's crucial to understand the tax implications. While tax is paid when the bonus is received, that money is also considered income so you will owe the difference between what you paid upon receipt and your income tax obligations at the end of the year.

7) DIY is not for taxes at this stage in your life

While filing your taxes yourself may have sufficed in simpler financial times, as your wealth and financial situation grow, so does the complexity of your tax obligations. Engaging the services of a certified public accountant (CPA) or a qualified tax professional can help ensure accurate reporting, maximize deductions, and minimize the risk of errors that could trigger an audit.

8) Pay Your Taxes - Filing an extension does not apply to paying your obligation

Extending the deadline to file your tax return does not mean you can delay your tax payment. Regardless of when you file your taxes, failing to pay your tax liability by April 15 can result in late-payment penalties and accrued interest on the amount owed. Make sure to budget for your tax obligations and submit your payment promptly.

Conclusion:

Avoiding financial misunderstandings requires a proactive approach and a commitment to ongoing education. By recognizing that investment success depends on wise decision-making rather than the type of account, understanding the importance of diversification across all holdings, and seeking professional guidance when necessary, you can set yourself up for financial prosperity. Similarly, staying mindful of tax implications, adhering to deadlines, and leveraging the expertise of a CPA when needed will contribute to a more successful and stress-free tax season. Remember, financial management is an ongoing journey, and by arming yourself with knowledge and sound strategies, you can make the most of your financial resources and achieve your long-term goals.

This episode has information from my great friend Meg Bartelt. You can find the original blog post here.

Are you ready to create your ideal lifestyle? Let’s Connect.

Low-cost index funds can help you beat the stock market by providing diversification and low fees. Index funds are designed to replicate the performance of a particular index, such as the S&P 500, by investing in all the stocks in that index. This means you get exposure to the market as a whole, which can help reduce risk and increase returns over the long term.

In addition, low-cost index funds have lower fees than actively managed funds, which means you get to keep more of your money. Over time, these fees can add up to significant savings, which can boost your returns and help you achieve your financial goals. So, if you want to beat the stock market, low-cost index funds are a great way to start!

2) Does this approach really beat individual investors?

Low-cost index funds can outperform individual investors by providing broad exposure to the market and minimizing the impact of emotional decision-making.

Individual investors may make decisions based on emotions like fear or greed, which can lead them to buy and sell stocks at the wrong time and result in lower returns. On the other hand, low-cost index funds follow a predetermined strategy that removes emotional biases and is based on market trends and data. They also offer broad diversification, which minimizes the risk of putting all your eggs in one basket.

Additionally, low-cost index funds have lower fees than actively managed funds, which means you get to keep more of your money. Over time, these savings can add up to a significant advantage over individual investors who are paying higher fees for actively managed funds.

Overall, low-cost index funds are a great option for investors who want to beat the market without taking on the risk and emotional biases associated with individual stock picking.

3) Still want to try your hand at individually beating the market? Here’s how:

If you are looking to beat the market, there is no one-size-fits-all strategy that will work for everyone. That being said, there are some general principles that many successful investors follow.

One strategy is to focus on value investing, which involves looking for stocks that are undervalued by the market. This requires doing your own research and analysis to identify companies with strong fundamentals and good growth potential that are currently trading at a discount to their intrinsic value.

Another strategy is to focus on growth investing, which involves looking for companies that are poised for above-average growth. This often involves investing in innovative companies that are disrupting their industries or creating new markets.

A third strategy is to use a momentum-based approach, which involves investing in stocks that have been performing well in recent months or years. This approach relies on the idea that stocks that are doing well will continue to do well in the future.

Ultimately, the best strategy will depend on your individual goals, risk tolerance, and investment philosophy. It's important to do your own research and consult with a financial advisor before making any investment decisions.

Learn more about Mike and my services at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/

Are you ready to create your ideal lifestyle?  Let’s Connect.

1. What: What is a Health Savings account? It is an employee benefit intended to offset health care costs of high deductible insurance plans. Once opened, employees and employers can contribute to this account (more on this below). The money can be used now to pay for out of pocket medical expenses such as co-pays, prescriptions and even certain over-the-counter items such as sunscreen OR it can be saved to pay for medical expenses incurred in the future and to reimburse for expenses paid during the eligible period.
2. Why: Why open an HSA? It’s simple: Contributions made to the account are tax free. Eligible withdrawals are tax free. And all money earned in the account incurs no tax burden. That is the triple tax benefit!
3. How: How do you open an HSA? Have a chat with your company’s HR department. Evaluate your options. Choosing an insurance plan for your family that works for your current needs is the priority. If your employer offers a high deductible plan with an HSA and you have the means to cover your health care expenses, open the account. Contribute the maximum per year (often employers will contribute to these accounts as well so be sure to take advantage of FREE MONEY). Invest the money in the account in a low cost index fund. Let the money grow while you collect receipts for your eligible medical expenses. In 10-20 years, use all that cash to buy yourself a new knee or hip or reimburse yourself for all those kids’ urgent care bills and pay NOTHING to Uncle Sam.
4. Who: Who can take advantage of this amazing benefit? Anyone working for an employer that offers an HSA. Check with your HR department today!

Tune in to hear more details about this savvy retirement savings strategy.

Learn more about Mike and my services at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/

Are you ready to create your ideal lifestyle? Let’s Connect.

Many of my clients see the income limit for contributing to a Roth IRA ($150k/year single; $228k/year married) and give up on this wholly beneficial retirement account. 

This year, the contribution limit is $6,500 for an individual. Since a Roth IRA grows tax free and is 100% yours, it is an account everyone should take advantage of. Unfortunately the income limits leave many to believe it is not an option. I am here to show you exactly how to get in that back door, cleanly.

1. In order for this to work, you must not have money in any other IRA accounts: traditional, rollover, SEP or SIMPLE. This does not include other types of employer accounts like 401(k), 403(b), etc.
2. Open a traditional IRA account and contribute $6,500 for 2023 (if under age 50 - $7,500 if older)
3. Wait for a few weeks/months and open a Roth IRA and transfer the money from the traditional to the Roth account. Then invest your cash into a low cost index fund and get excited about your extra $10k of tax-savings.

That’s it. Clean and simple. So what are you waiting for?

Learn more about Mike and my services at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/

Are you ready to create your ideal lifestyle? Let’s Connect.

Matt and I discuss how parents trying to lower estate taxes can take advantage of the rules and start giving money to their adult children and even grandchildren. The benefit of doling out some inheritance before death is two-fold: lower tax responsibility and the ability to watch your loved ones use the money to better their lives.

In this podcast, we cover the following:

1. Gifting Rules: DId you know that every person can gift $17k to another person with no tax ramifications? So, if both your parents are living and are so inclined, each could give $17k to every member in YOUR family. For a family of five, that could be $170k per year in tax-free gifts.
2. Education and Medical Expenses: Your parents can also pay your family’s education and medical bills directly to the institutions, tax-free. 

Not everyone is fortunate enough to have parents with millions looking for ways to pay the least in Federal and State Estate taxes but it is also something to think about with regard to your own portfolio as you get closer to retirement age. Even if your parents can’t do it for you, you might be able to take care of the next generations while you are still alive to enjoy watching the money being spent.

Learn more about Mike and my services at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/

Are you ready to create your ideal lifestyle?  Let’s Connect.

When time is on your side, you can afford to take on the risk of market volatility in order to reap large rewards (in the form of compounding interest) in the future. Want to know how?

It's as easy as 1,2,3…

1. Open an account - You can do this at your current brokerage, via any robo-advisor or even with your own robo-advisor at M1 Finance. Name it “Kids Outer Space Fund” or anything you’d like to remind you it's for the next generation.
2. Set up automatic monthly transfers to fund the account in whatever amount you deem appropriate
3. Invest 100% of the money in the stock market. There is no specific goal here except to swing for the fences. Use a low cost index fund in the total US stock market or the small cap value. Why? Because historically speaking, over the course of 40 years, the total US Stock Market average return was 10%-11% and the Small Cap Value return was 15%-16%

That’s it. So what are you waiting for? Tune in to hear all the gory details or just go open your account today.

Learn more about Mike and my services at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/

Are you ready to create your ideal lifestyle?  Let’s Connect.

5. Health Savings Accounts - How you can enjoy triple tax benefits by using my favorite all-time account

4. ETF vs. Mutual Funds - This was a hot topic last year when many people were hit with an unexpected capital gains tax bill on their mutual funds. In this episode we talk about the difference between the two “wrappers,” which is best for your portfolio and the nuances and work-arounds to ensure you are getting the most from your money.

3. SEP IRA vs. Solo 401K - Another head-to-head battle, this one for small businesses. Spoiler alert: Solo 401K is the way to go! 

2. Maximizing Employer Benefits - Want to learn how to launder your money, legally and with the most benefit to you? Listen up for a strategy to use more of your paycheck to take advantage of benefits such as after-tax 401K contributions and employee stock purchase plans while spending from your brokerage account to cover your usual monthly expenses.

1. ROTH IRAs for Minors - It turns out my listeners really want to set their kids up for success. In this episode you will learn how to turn your young child’s $3k in earned income (chores) into $50 million for their retirement courtesy of compounding interest. 

Didn’t see a topic that resonates with you? That’s ok. Check out my podcast page for 94 more episodes bringing you the knowledge you need to make the best decisions for your financial success. 

Learn more about Mike and my services at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/

Are you ready to create your ideal lifestyle? Let’s Connect.

Many of my clients are in the tech space and thus affected (at least emotionally) by SVB’s failure in early March. On this week’s podcast I will give you the wisdom gleaned from the downfall of the bank that was not too big to fail. 

I break it down into three parts:

1. What does the collapse of SVB mean for me? 
2. First, single stocks are very risky. Use low cost index funds to reduce the risk of having all your eggs in one basket.
3. Second, go government. Don’t leave your cash sitting in a bank. Invest the cash you don’t use on the regular in a government money market fund. Why? Because it is fully backed by the United States Treasury. 
4. Lasty, be aware of who you are doing business with. Who is the producer of the financial products you use? Are they credible? What risk is associated with their brand?
5. Why did SVB fail? 

Banks are a business. They offer products to consumers, in the form of accounts and returns. SVB used its clients' deposits to invest in other businesses and the market at large, resulting in profits for both the bank and its depositors. Until those investments took a dive. Suddenly, clients want their money back but the bank doesn’t have it to return.

1. Long-term bonds: The Golden Egg

When you buy a bond you get two things over a set period of time: an interest payment each year and the return of your principal at the end of the time period. So, here is an example of how bonds lose value:

1. Say that you buy a 10-year golden egg for $10k that pays you $100 per year in interest for 10 years, then you get your $10k back.
2. Three years later, the government raises interest rates, and a new platinum egg is released. That egg will pay you $400 in interest over ten years. Suddenly your golden egg is now only worth $9k because everyone would rather have the platinum egg.

This is what happened to the 2019 10-year US Bond that SVB bought 3 years ago. It is still paying 1% ($100 per year) but is only worth $9k today. So, if SVB is forced to sell that bond today to pay back a customer, it only has $9k to give back to the customer!

Tune in to hear more about the lessons that should be learned from SVB’s collapse. And if you were affected by the bank’s demise and have questions or just want to chat, reach out!

Learn more about Mike and my services at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/

Are you ready to create your ideal lifestyle? Let’s Connect.

Join Matt and I this week to learn how you can take the 5-minute approach to giving a small, but meaningful, boost to your kids. The bottom line is: don’t over-complicate the saving. 

1. Open an additional brokerage account wherever you do your investing. 
2. Name the account something flashy like “For the Kids” or “Kids’ Savings.” 
3. Auto-transfer $20/$50 (whatever amount you want) to the account monthly. 
4. Let it grow (next week I’ll tell you how to invest it).

This is a great way to give a little extra (if that’s your thing) toward college, a down payment on a house, backpacking in Europe… or something that will make a big difference to a young person.

The account is in your name so there are no additional tax ramifications or extra hoops to jump through (vs. setting up IRA’s in your child’s name). Keeping it simple makes it easy to give a potentially life changing gift to your kids in the future.

Learn more about Mike and my services at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/

Are you ready to create your ideal lifestyle? Let’s Connect.

Car dealers may be able to entice you with lower rate financing options than you could get at your bank of choice, but when looking at 4%-7% interest over five to seven years, it makes sense to evaluate other options.

Join Matt Robison and I as we discuss other financing options for new vehicles. For instance, HELOC’s could be a great way to get that electric vehicle in your driveway. In the end, it’s all a numbers game so tune in to learn how to save yourself the most money on a new vehicle.

Learn more about Mike and my services at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/

Are you ready to create your ideal lifestyle? Let’s Connect.

Join Matt Robison and I this week as I walk through some of the changes and sprint through others to give you an overview of how this monumental piece of legislation impacts your bottom line.

1. Required Minimum Distribution (RMD) age changes - If you were born after 1960, you don’t need to worry about that until you are 75 (it used to be 70.5, this year it changes to 72 and in the next couple of years it will reach 75. Not something you need to worry about now, but it is a benefit.)
2. ROTH 401k Employer Contributions - Without getting into the weeds of the laws, the big change in the Secure Act 2.0 allows employers to contribute to an employees ROTH 401k as opposed to being restricted to only matching funds in a traditional 401K account. This strategy requires employees to pay the tax on the match up front, and allows that employer contribution to grow tax-free forever which could add up to a lot of money. 
3. 529 to Roth IRA - You can now do a one-time rollover of “extra” 529 money into your Roth IRA.  Plenty of caveats abound, but it’s a great new use of found money.
4. Honorable Mentions to be aware of in the coming months/years:

a. 401k contributions and catch-ups are increasing. As you're planning your 401K contributions, be aware of the 2023 limits, they will be increasing over time.

b. Starter 401ks for small businesses will be getting easier to implement. 

c. Student loan payments often keep people from being able to contribute to a 401k. The new law allows matching employer contributions to the 401K for folks paying down student debt. 

d. Auto enrollment for 401Ks has been expanded.

The bottom line is there are no changes that you need to make today but be aware of the Secure Act 2.0 in order to get the most out of your retirement plan.

Learn more about Mike and my services at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/

Are you ready to create your ideal lifestyle?  Let’s Connect.

Resolving to make some significant change in your life can feel overwhelming, not to mention is often unsustainable. Planning to lose weight by cutting out sugar? How long did that last? Vowing to save more money but then your power went out for days, pipes froze and you fulfilled the plumber's savings resolution instead?

There is an old adage about eating an elephant, and how the only way to accomplish the monumental task is one bite at a time. That’s where my one thing comes into play.

Think about the last time you felt great in your job. Or a moment with family that made a lasting positive impression. Or a financial decision that led to a small (or large) success. Break those moments down into feelings and actions. What parts of the moment, specifically, made you feel happy? Can you replicate any of those small actions that led to happiness? For instance, let’s say a funny car ride with your kids was a highlight of your recent time spent with them. What were you laughing about? Why was everyone in a good mood? Did someone win a sports game? Had you just wrapped up a work project freeing your mind for some family time? How can you recreate that moment in small ways? Is there one thing you can do to help make funny car rides a more regular thing? It could be something as simple as having silly trivia websites bookmarked on your phone or grabbing everyone a treat from a coffee shop before your journey. 

Tune in to learn more about how one thing can make a momentous improvement in your life this year. 

Learn more about Mike and my services at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/

Are you ready to create your ideal lifestyle?  Let’s Connect.

So how can you feel better about making that investment? Using a strategy called dollar cost averaging (DCA). Let’s say you have $10k in cash and want to invest but you’re feeling skittish based on the current state of the market. Mathematically, it makes the most sense to go ahead and put all that money right into a low cost index fund but math doesn’t help everyone sleep at night. If you know that watching the market will create stress for you, you can invest that $10k at $1k per month over the next year. 

What are the pros to this strategy? First, if you put $1k in and the market goes up, you make money and you are happy. If it goes down, you now get to invest the next $1k while the market is on sale (i.e. the cost is down). It is a win-win, emotionally.

The best way to ensure your financial future is to make sound decisions that feel good. Listen to this week’s podcast to learn more about DCA and whether it is right for your portfolio management.

Learn more about Mike and my services at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/

Are you ready to create your ideal lifestyle? Let’s Connect.

Public vs. Private 

1. Location: Where you live is likely a deciding factor when choosing whether public or private schools are the right choice for your family
2. Location: How far are you willing to drive?
3. Location: How will your choice affect the relationships you’ve built in your community?

Funding Considerations

1. Where will the tuition money come from?
2. Should you use a 529 for early education?

Maybe your child needs more than the public school has to offer in the form of greater challenges or additional resources. Perhaps social and emotional factors weigh in on your decision to choose private over public schools. There are so many factors to consider and Matt and I understand that first-hand. Listen Up to hear more.

Learn more about Mike and my services at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/

Are you ready to create your ideal lifestyle? Let’s Connect.

Matt Robison and I sit down to talk about the ramifications of the doubled federal interest rate on this week’s podcast. In a nutshell, the rate increases impact your financial planning in a few negative and positive ways:

• Mortgage Rates - Now is not the time to buy a home
• Home Equity / Construction Loans - You might want to think twice about borrowing for renovation projects
• Savings - You will FINALLY earn some interest on your cash
• CD’s - Some brokerage products are offering 3%-4% interest, something we haven’t seen in almost 20 years
• Stocks - It’s like Black Friday: with the 25% market decline now is the time to buy stocks

Tune in to hear more about the interest rate impact on your financial future.

Learn more about Mike and my services at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/

Are you ready to create your ideal lifestyle? Let’s Connect.

• Enabling failure (say what?)
• Chores and Allowances
• Apps - making life easier or harder?
• Investing, Saving and Giving

The common thread between this week and last week, and all the topics we covered in both, is conversation. If you don’t talk to your kids about money, they won’t know what to do with it - how to use it effectively and safely - much in the same way we have to talk to them about their bodies. They aren’t teaching financial values in school, that is up to you, and I hope I’ve helped you start the conversation for lifelong financial success.

Learn more about Mike and my services at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/

Are you ready to create your ideal lifestyle? Let’s Connect.

Kids rarely have filters. As uncomfortable as it can be to answer questions about human sexuality, we also feel a degree of that discomfort when it comes to answering their questions about money.

This week, Matt Robison and I tackle this discussion in part I of a two part series on talking to kids about money. There is no one-size-fits-all, as you will hear in our exchange. But you will learn more about such topics as:

• When and how to include numbers in the answers to kids’ inquiries
• What brings your child joy based on how they choose to spend money 
• Family values in spending
• Conveying your financial message without the underscore of fear or guilt

You’ve probably asked – or received, if you didn’t think to ask – your pediatrician for advice regarding talking to kids about their bodies. Gaining some tips from a financial professional as well as fellow parent (i.e. me) will hopefully help you pass on your wisdom in a productive and loving manner.

Learn more about Mike and my services at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/

Are you ready to create your ideal lifestyle? Let’s Connect.

Join Matt Robison and I this week as we discuss the basics of taxes. Get a crash course on:

1. Income: Wages (W2 or other), interest income capital gains and qualified dividends 
2. Adjusted Gross Income (AGI): Wages - above-the-line deductions

What are above-the-line deductions?: Contributions from HSA, contributions to traditional IRA, student loan interest (unless your income is too high), self-Employment costs (such as health insurance, retirement plan contributions, 50% of self-employment taxes), alimony, and certain education expenses 

3. Taxable Income = AGI - standard or itemized deductions

• Standard deduction ($12,950 Single, $25,900 Married, Filing Jointly (MFJ)

Itemized Deductions:

• State, Local, Other Taxes
• Mortgage and Investment Interest Expense
• Charitable Giving
• Medical Expenses (above a limit)
• More….

4. Total Tax = Taxes on Taxable Income

• Taxes: Income tax, capital gains tax, AMT, NIIT, Medicare Surcharge, etc

5. Payment or Refund: Total Tax - Credits - Taxes Paid

• Credits: Child Care Credit, Dependent Care Credit, Lifetime Learning Credit, etc
• Taxes Paid: From your paycheck or estimated tax payments

Well, that’s as simple as I can make it in just 5 steps!

AGI (step 2) is very important because that number gives you your tax bracket. But did you know that we have marginal tax brackets? 

If you’re like a lot of people, you probably think marginal means that if you are MFJ and your AGI is $150,000, you owe 22% in Federal Income Taxes, ($33,000) right? WRONG! 

• The “marginal” means that for the first $20,550, you owe 10% in taxes. [$2,055]
• You then owe 12% on the next $63,000 (the next tax bracket) [$7,560]
• Then, 22% on the next $66,450 (the bracket you are in) [$14,619]
• That’s a total of: $2,055+$7,560+$14,619 = $24,234. Not $30,000 !
• It means a difference of almost $6,000 in your favor

So now you have your tax bill. Using the same example as above, you owe $24,234 in federal taxes. This is your total tax. Now come the credits (hopefully!). Credits differ from deductions in one major way, they are dollar for dollar. Deductions reduce your total tax bill by reducing your Taxable Income. Credits, on the other hand, come straight off your total tax bill. Some credits include the Child Tax Credit, Child & Dependent Care Credit, or the Lifetime Learning or American Opportunity Credit.

Obviously credits are the way to go! Once you’ve deducted your credits, you then subtract any payments you’ve already made (withholdings or direct payments) and this will determine what you owe or are owed in the form of a refund. 

Learn more about Mike and my services at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/

Are you ready to create your ideal lifestyle? Let’s Connect.

What will you learn from this episode?

1. Who is eligible: For the 2020 or 2021 tax years, individuals who make less than $125k in income, taxpayers who are married and file jointly and have less than $250k in income and current dependent college students using parents income with the above income eligibility qualify for student loan forgiveness.
2. What is eligible: All federal college loans are eligible as long as they are issued no later than June 30th, 2022 to include Direct Subsidized and Unsubsidized Loans, Direct Grad PLUS Loan, Direct Parent PLUS Loan, Direct Consolidation Loans and Some Federal Family Education Loans (FFEL) are eligible (these loans were discontinued in 2010 but if there is a balance and the loan is not held commercially, it is eligible)
3. How: The Department of Education says it’s going to work “quickly” and “efficiently” to set up a simple application process for borrowers to claim debt relief. As of publication, USA Today says the application will be available early this month. That said, nearly eight million borrowers may be eligible to receive relief without filing an application because their relevant income data is already available in the federal system.
4. What if you have multiple loans? No matter how many types of federal loans that an individual possesses, there will only be one payment for either $10,000 or $20,000 or less if the loan balance is lower.
5. $20,000? How do I qualify for that? Only borrowers with a Pell Grant will have $20k discharged, which represents about 60% of student borrowers. Not sure if that’s you? Sign into studentaid.gov and click “My Aid” to find out.
6. Can I get a refund if I made payments during the time the loans were federally deferred? You bet! Contact your loan servicer and request a refund. Borrowers should obtain proof of loan payments that they made during the pandemic starting from March 13, 2020. Once you’ve got that, request a payment refund from your loan servicer.

Learn all this and more on this week’s podcast. It could save you $10,000 or more off your student loan debt.

Learn more about Mike and my services at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/

Are you ready to create your ideal lifestyle? Let’s Connect.

Join Matt Robison and I on this week’s podcast to learn why your odds of beating the market are slim. In particular, we explore:

1. Market Efficiency - It all balances out in the end meaning there will be winners and losers. If you want to be a winner, there are fees that come with having an active fund manager looking for ways to get you that extra return, which usually leads to a net zero.
2. Differentiation - Still want to try and outperform the market? You have to have a different strategy that is also better than everyone else’s. 

There is a simple strategy to winning - don’t try. Invest in low cost index funds and let the market do its job and make you money. 

Don’t just take my word for it, check out this piece from Howard Marks.

Learn more about Mike and my services at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/

Are you ready to create your ideal lifestyle? Let’s Connect.

Home Equity Lines of Credit (HELOC) are popular lending options for homeowners with a decent financial stake in their property. Earlier this year, it was estimated that 17% of Americans currently have a HELOC. And why not? With interest rates in the 2-3% range, a HELOC made a great option for getting cash to fund projects like home improvements. 

Did you spot the past tense? As federal interest rates rise, so do mortgage rates and, you guessed it, HELOC rates. The average HELOC rate for borrowers is currently 6.51%. 

It made sense for me to take a HELOC a few years ago to cover some education expenses and home improvement projects. Rather than pulling money from my portfolio, where it was making roughly 8% in interest (given historical context and what we know about the market), I borrowed against the equity in my home since I was only paying 2% interest. 

Now, however, the interest rate has risen to the point where it no longer makes financial sense for me to keep that balance outstanding. Will I close the line of credit? Absolutely not. Why? Because if the market takes a downturn and I want to buy-in while everything is essentially “on sale,” I can use the HELOC to get cash easily. It can also be used as an emergency fund, should that become necessary.

Learn more about Mike and my services at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/

Are you ready to create your ideal lifestyle? Let’s Connect.

The bottom line is to use 529 plans. Sure, you could funnel money into your brokerage accounts and earmark it for education, but then you miss out on the substantial tax benefits that accompany 529 plans (similar to 401K’s and HSA’s). Any contributions you make to a 529 account grow tax-free, meaning that the capital gains interest in dividends you earn from growth is all tax free. Then, when you make withdrawals to spend on qualified education expenses, those are also tax-free. So once you put the money in, it's all tax free when you use it for qualified education expenses. 

Listen in to hear Matt Robison and I talk all about the in’s and out’s of 529’s. 

1. Beneficiary Flexibility: 529’s offer the option to change beneficiaries at any time. You can set up an account now for an unborn child, grandchild, niece, nephew, etc. If one beneficiary doesn’t need the funds or use the entire balance of the account, you can switch the account holder to another child or to yourself. 
2. Multiple Accounts: While 529’s provide flexibility in beneficiaries, you will still want to establish multiple plans for multiple children as they may overlap in spending plus there are contribution limits per beneficiary, per year.
3. Do Your Homework: Each state offers a different 529 plan with different benefits. Start with your own state and begin by assessing tax deductions. If they aren’t great, look at other states’ plans for things like low cost funds, better investment options, account fees, portfolio management fees, program manager fees, state fees and the fund fees. Spoiler alert: Illinois and Utah have two of my favorite funds.
4. Set-it-and-forget-it: Invest in low cost index funds or age based index funds during your initial set-up so that all future contributions go directly into that fund. 
5. Spending from your 529: Sure, you can spend money from the fund on things like tuition and fees, books, computer technology etc. But did you know you can also use it for Kindergarten through high school? Distributions are capped at $10,000 a year, but you can use the account as a pass through for tax deductions (put money in then take it right back out to pay for education). It can also be used for student loan repayment up to $10,000.
6. Leftovers: There are many ways to spend the money in the 529 but if you find yourself with leftover funds, you can pass that on to related family members, or use it on yourself! Have no one left in your life with qualified education expenses? You can still access that money and use it on non-qualified expenses. You'll pay a 10% penalty on any of the growth and you'll have to pay taxes. No one I know has ever complained about extra money leftover.

Hopefully after last week’s episode and this week’s breakdown of 529’s, you are feeling more confident about your education savings plan.

Learn more about Mike and my services at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/

Are you ready to create your ideal lifestyle? Let’s Connect.

The 2022-2023 academic year tuition and fee rates for some popular (and less popular) schools are as follows:

Boston College: $80,296

UCLA: $68,474

University of Illinois, Chicago: $59,556

Morehouse College in Atlanta, GA: $49,799

Let’s say your precocious 8-year old has her heart set on Boston College. By the time she is ready to attend, you are staring down the barrel of a $107,000+ yearly tuition bill.

Don’t panic. Instead, join Matt Robison and I on this week’s podcast to learn the best strategies for saving for education expenses. We cover such topics as:

• Saving for education vs. retirement - no one will loan you money to retire but they will loan you money for education
• Sticker shock and the reality of what education will actually cost you after discounts
• How to’s:
• Roth IRA’s
• 529’s
• Checking/Saving/Brokerage Accounts

The bottom line is this: saving something is better than saving nothing. Planning for future education, even if that means calculating the scary inflation rates, will help you plan for the worst case scenario before you are hit with the bill.

Learn more about Mike and my services at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/

Are you ready to create your ideal lifestyle? Let’s Connect.

I’ve talked about this story before…Warren Buffet is worth about $80 billion dollars. $70 million of that was earned after he was eligible for Social Security benefits. The key to his success goes back eight decades. Yes, eighty years. Buffet began investing when he was 10-years old. And all that money he put away 80, 70, 60 years ago began compounding in his later years and led to him being one of the wealthiest men on earth.

Join Matt Robison and I on this week’s podcast for some quick and easy ways to get your teenager invested now in order to secure their future wealth. We discuss these simple steps:

1. Open a Roth IRA and deposit earned income
2. Consider investing in the Total US Stock Market for set-it-and-forget-it fund management
3. Add monetary gifts from grandparents, aunts, uncles, etc to the fund
4. Sit back and watch your 40+ year return of 9.5%-12%

Investing 15-20 years earlier than their peers will pay off significantly in retirement. Learn from Buffet: start investing now for your pre-teen/teenager.

Learn more about Mike and my services at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/

Are you ready to create your ideal lifestyle? Let’s Connect.

Megan’s last theme for us involves some great advice for spending less. In particular, we talk about setting up spending alerts, performing an intentional review of those alerts, becoming conscious of your spending (especially the things that you are paying for automatically and on a regular basis), establishing a price book to make sure that frequent expenditures aren’t costing you more than they should, buying in bulk/wholesale/secondhand and finally returning things that don’t live up to your expectations. Let’s explore each tip in more detail:

Spending Alerts

Set up automatic alerts with your financial institution. This could be your credit card or bank card, whichever you most often use to pay for things. On your settings page, you can choose to be alerted to any purchase that exceeds $1. You read that correctly, one dollar. Worried about your inbox being inundated with spending alert emails? That’s the point. 

Intentional Review

Every spending alert email you receive will have a dollar amount included. Now it’s time to review all of those purchases. Did you realize you have the habit of ordering lunch every Wednesday? Maybe you find that you frequent the local coffee shop multiple times every weekend. You get charged every month for Netflix, Disney+, ESPN and Hulu. Did you even know that your entertainment spending was so high?

Conscious Spending

Now it’s time to think about your core values. Does grabbing a coffee on the weekends bring you joy? If the answer is yes, great. Keep doing that! Is lunch on Wednesdays simply because Tuesday evenings is your carpool night for kids’ basketball? Maybe you can start prepping two lunches on Monday night. Do you really watch programs on all those streaming services? Enough to warrant the $1k price tag for a year’s worth of subscriptions? 

Price Book

Now that you are conscious of your spending, are you sure it is consistent? Have you ever noticed that the same pack of diapers you buy every week is sometimes $12 and other times $18? You would if you kept a price book or use a free service like camelcamelcamel to track prices on Amazon. Next time those diapers are $12, buy more than one pack, which leads us to Megan’s next tip…

Buy in Bulk

This one is a well known way to spend less on items you use all the time that don’t have a short shelf life. Check the unit price on items. A bottle of 200 ibuprofen tablets might cost $15 and the bottle of 500 is $30 and you think “that’s double the price!” But the exact same pills will cost you $.09/each in the small bottle and $.06 in the larger container.

Return

Did you finally buy that headset you had your eye on? You waited a week, you watched the pricing, you did research beyond the ad you saw on social media and now it has arrived but it pinches your ear. Return it. It didn’t meet your expectations. Send it back, get your $75 refund and start over again. Don’t let the $75 collect dust next to your computer.

Spending less is all about awareness. Use these tips to avoid that dreaded question “where did all my money go?”

Learn more about Mike and my services at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/

Are you ready to create your ideal lifestyle? Let’s Connect.

“A common mistake that people make when trying to design something completely foolproof is to underestimate the ingenuity of complete fools.” - Douglas Adams, from The Hitchhiker's Guide to the Galaxy #5

So why hire a financial planner? Maybe you don’t, because the set it and forget it model works perfectly fine for you right now. However, the greatest value a financial planner can provide is helping you with all the things you didn’t know you wanted to know.

What does that mean? Matt Robison and I discuss the value of a financial planner in this week’s podcast. In particular, we explore:

• The difference between Financial Planning and Wealth Management
• Building confidence in your path to financial success
• What is a fiduciary and how will the responsibilities of that title help you with your financial plan?

The bottom line is that a financial planner knows the right questions to ask in order to provide you with the best strategy to fulfill your individual wealth goals. Beginning with goal identification and working through all the steps that you need to build a comprehensive financial portfolio, a financial planner has the knowledge, expertise and network to insure your financial freedom.

Learn more about Mike and my services at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/

Are you ready to create your ideal lifestyle? Let’s Connect.

I’ve spoken to a couple of clients recently who expressed their desire to have more unhurried time. What does that mean, exactly? 

That’s the driving conversation in this episode. Unhurried time can mean different things to different people but the underlying value of it comes down to a simple phrase: scheduled, unscheduled time.

Imagine having two hours every Friday afternoon from 4:00-6:00pm. That time is scheduled as “free time.” What will you do with those two hours? Maybe you have a long to-do list and your goal for that time is to pick an item and get it done. Perhaps you want to spend more quality time with your kids so your goal is to do something together. 

Unhurried time is yours to do with as you please. There is no compulsion to get something specific accomplished. You aren’t scheduling two hours to get that bathroom re-grouted so your spouse stops needling you to complete the task. That’s not to say that during your unhurried time you can’t choose to get the grout job done. You aren’t scheduling a hike with your kids. But that’s not to say you can’t grab some granola and hit the trails when the time comes. 

Booking yourself some unbooked time is a great way to get the most value from your time. We live in a world in which capacity is almost always filled. Take Robert Moses’ construction of the NYC freeways, for example. He believed that by expanding the Long Island Expressway from three to four lanes would increase capacity by 33%. After years of construction and expense, the LIE went from three lanes of gridlock traffic, to four lanes of gridlock traffic. We are conditioned to fill to capacity. Our wallets, our homes, our time…

Use your unhurried time to live in the moment. What do you need when the clock stops ticking?

Learn more about Mike and my services at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/

Are you ready to create your ideal lifestyle? Let’s Connect.

In this episode, Megan and I discuss ways to get the most value from the things you’ve already spent money to acquire. In particular, we talk about using what you already own, squeezing out the last bits of value from items that no longer bring you joy, taking care of the things that you buy in line with your core budgeting and finally, making all the strategies above a team effort for your family.

First, we explore using what you already own. This is where the notion of good to the last drop, or in Megan’s case, sucking all the fun out of something (in a good way) comes into play. We’ve all found ourselves in a situation in which we need a particular item. Instead of buying said item, take a minute to think about two things: 

1. Do you already own the item you need? 

2. Could your need be fulfilled by something you already own? 

Have a pile of books on the floor? Do you have a bookshelf that can be cleared off? What about another piece of furniture you could stack the books on or store them inside? Don’t rush to buy something new when you might be able to get more value from something you already have lying in wait. 

If some of the things you own are no longer bringing you joy, consider if they are worth passing along to others that might find value in the items. Selling stuff that still has life left via garage sales, local social media avenues such as NextDoor or Facebook Marketplace, and even eBay can spread the wealth by giving you some money back on what you purchased. If the money isn’t worth the effort in some cases, pass the items along for free. Bringing someone else joy is just as valuable as recouping some cash on prior purchases.

Next we explore the notion of taking care of what you own. This seems like common sense but all too often, tools are discarded in random places, toys are left out in the rain, shoes are left where the dog can chew on them…

Get into the habit of keeping track of the things that you use most often that bring you joy. For instance, I use my woodworking shop when I have the time. I also love to run. Whenever I head into the workshop, I know where everything is because I have taken the time to organize my tools and keep my work area clean. I also keep a box where all my running accessories are stored. These two hobbies are part of my core values and it shows in the way I maintain my “stuff” for each.

Getting kids to take care of what you own is another challenge. Megan gives great tips on creating scarcity and allowing kids to feel the pain of loss. If you have four soccer balls, it's not likely the kids will care if they kick one into the woods. They won’t chase after it knowing there are three more in the garage. What if you only have one soccer ball? They will need to keep track of it, put it away when they are finished playing otherwise they won’t have a ball next time they want to kick one around. Have an older child with expensive electronics? If something breaks, consider learning how to repair the item together. Lost their phone? Have them mow the lawn or shovel the driveway to earn back the money you spend to replace the item.

The best way to get the most value from what you already own is to surround yourself with like-minded people. Buying into all these money saving tips as a family will help you be far more successful than trying to do it on your own. Share your knowledge from these podcasts with friends. Frugality is contagious. 

Learn more about Mike and my services at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/

Are you ready to create your ideal lifestyle? Let’s Connect.

I get asked the question often: “I have extra cash, should I put it toward paying down my mortgage?”

The short answer is sure, but no. Confused? Don’t be. The answer inevitably lies with your goals and feelings about money.

Typically, we steer clear from emotions when making a financial plan but some decisions can be made with your peace of mind at the forefront of your decisions making. One of those financial forks in the road is where to put extra cash within your portfolio. 

Should you put “extra” money towards paying down your mortgage? There are two main avenues to consider when making this decision. First, does it make fiscal sense? That answer depends on a few factors:

• What is your current interest rate? If you have a low rate mortgage, as most people do right now, you are paying around 4% interest or less.
• Do you have additional debt with higher interest rates? These should be paid down first.
• How much time do you have? Are you nearing retirement? Still 20-30 years from the end of your career? This makes a difference. 
• Do you have an emergency savings fund established and funded should you need to change jobs, move, etc.?
• Are you saving for retirement, education and other goals?

If you have a low interest mortgage, no debt with higher interest rates, are still far from retirement age, have an emergency fund and retirement savings, then you truly have extra cash. Congratulations! This is where the quote above, “most people have one mortgage, the rich have two” comes into play. Financial stability allows for the freedom of borrowing at a lower interest rate in order to invest at a higher rate of return.

Let’s start by looking at some crude numbers to demonstrate the financial ramifications of real estate investment (in your home) vs. market investment:  

• A house bought outright in 1995 for $73k and sold in 2015 for $460k made 6.3x return.
• In that same 20-year time, $1k invested in the stock market in 1995 yielded a 6.5x return.

A slight difference, until you factor in that the house cost money to maintain. There were taxes to pay, insurance, and upkeep. So was it really a 6.3x return? Very likely, not. Whereas, the money in the stock market just sat there, ignored for years and still managed to make 6.5x return.

So the long-term math argument to invest in the market vs. paying down your mortgage is sound. That’s not to say it is the right decision. Here are a few reasons why paying down your mortgage could be an excellent choice for you:

1. If you pay down your mortgage, you get a guaranteed return (whatever the rate of interest you are paying).
2. You have flexibility. You can stop and start extra payments anytime you want (instead of waiting to pull cash out of brokerage accounts).
3. It feels good. This one can’t be discounted. A lot of people sleep better at night knowing their money is going into something they eat, sleep and live in day-to-day. 

What you choose to do with extra money is completely up to you, just don’t hold it in cash. Make your money work for you. 

Learn more about Mike and my services at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/

Are you ready to create your ideal lifestyle?  Let’s Connect.

Obviously, the answer would vary greatly based on your age and how much savings you’ve managed to achieve. So, let’s do a quick breakdown. If you are 30 years old, you should have 1x your salary banked for retirement. This includes 401k’s, IRA’s, 403b’s, etc. (listen to my Account Funding Priority podcast for more on where the money should be invested). So, if you make $50k/year when you’re 30, you should have $50k in retirement savings. As you age, here are the multiples of your salary you should have saved:

• Age 35: 2x 
• Age 40: 4x 
• Age 45: 6x 
• Age 50: 9x 
• Age 55: 12x 
• Age 60: 17x
• Age 65: 23x

Panicking because you just did some quick math and realized that if you are making $150k by the time you are 60, you should have $2.5 million saved? Relax, your money will be working hard for you at that point.

You’ve heard of Warren Buffet, right? His net worth is over $102 billion. Did you know that 99.7% of his wealth was earned after his 52nd birthday? That’s because compounding works wonders for your retirement savings in those later years.

Here’s how you can make sure you live comfortably in retirement and take advantage of compounding interest:

1. First, look at what you’ve saved and check the age chart above to see if you are where you need to be. 
2. Start saving now. Just as Google suggested, put away 15% of your pre-tax income. Are you behind where you need to be? You have options:
3. Save more - Put a higher amount into your retirement accounts than the recommended 15%.
4. Spend less - Need help trimming the fat from your budget? Listen to Wait a Week for tips on not spending.
5. Work longer - No one said you have to retire at 65. There are many benefits to delaying retirement, including significantly increased Social Security payments.
6. Automate your savings so you live off what is left in your paycheck AFTER you’ve saved. Listen to my two-part series on automation.

It’s never too early or too late to begin planning for retirement (ok, it might be too late if you are already 65!). Check out the resources below for more information on saving for your future.

• https://www.marottaonmoney.com/how-much-should-i-have-saved-toward-retirement/
• https://mortonfinancialadvice.com/captivate-podcast/which-account-do-i-use-first/
• https://mortonfinancialadvice.com/captivate-podcast/set-up-automatic-savings/
• https://www.cnbc.com/2020/09/08/billionaire-warren-buffett-most-overlooked-fact-about-how-he-got-so-rich.html

Learn more about Mike and my services at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/

This bear market may be short or it could be long. It might go down further, or hover at this level. The past has shown a variety of types of markets - and you need to be ready for whatever is going to come next. Is your portfolio prepared? How about your spending? Your job? Make sure you exercise control over the things in your control - because the Bear itself is outside of your control.

A few things to consider:

• Delay taking social security
• Stay in your job an extra year, or take a part-time job
• Continue to add to your savings + retirement accounts by buying stocks while they are on sale
• Adjust your spending to ensure your savings stay high or your portfolio lasts longer

Learn more about Mike and my services at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/

Are you ready to create your ideal lifestyle? Let’s Connect.

You’re not alone. Forty seven percent of Americans identify as being addicted to their cell phones. So how do we quit the habit?

Think about your time as currency. You are paying Facebook, Instagram, Twitter…whatever your guilty pleasures might be, with your time. That’s not all you’re spending. You are also paying them with your information which is fed to advertisers. Billions of dollars are spent and received keeping your eyeballs glued to your screen.

How can you spend less? Be intentional. 

• Organize your tech habits - make reading lists in your browser or folders in your email that you store articles or other materials you’d like to read at some point. Schedule “reading” time to go back and choose what you actually want to spend time reading.
• Set a curfew for your screens and put them away (out of sight, out of mind) during downtime.
• Make a schedule and stick to it. Give yourself a prescribed amount of time for scrolling, tweeting, reading…whatever it is you enjoy but set a timer and stick to it. 

The overall question you should ask yourself is “am I getting value from this activity?” Or, in other words, is it worth your time? Be intentional with your attention.

What can you do? STOP, think about if this time on your phone is really benefitting you, or if it's just a time killer exercise. The chances are you don't need to be on your phone 24/7.

You will struggle! Phones are addicting, you won't be perfect, but just realizing the time you are missing out on can change your entire perspective for the better. Accept your mistakes, learn from them, and move on!

Learn more about Mike and my services at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/

This week I am joined on my podcast by David Feakes, founder and owner of The Parents Estate Planning Law Firm, PC. David works with families to make a comprehensive plan should something catastrophic happen, such as the death of parents with minor children. David and I talk about estate planning in terms of drawing a map. First, you figure out where you are. Then you decide where you want to go. Lastly, you make a plan for how to get to your destination. With regard to estate planning, there are three major legalities to cover:

1. Guardianship - You might have an idea as to who you would like to raise your children in the event of your untimely death, but you need to be sure that your desires are spelled out in a legal form. Additionally, you must consider short-term guardianship. Do you know who will take care of your kids until your long-term guardian assumes duties? Especially now, when travel is more complicated, short-term guardians, or people within a 15-20 minute radius of your home, are a necessity.
2. Assets - Who will have access to your assets? How will they be delivered to your heirs? Who will manage the money and until what age? How do you protect what you’ve earned and saved to ensure it all goes to your intended recipients?
3. Incapacity - If you are unable to make decisions, it is important you name someone to take over management of your affairs should you become incapacitated.

All of the above-mentioned affairs can be “mapped” in two different ways: a will or a revocable trust. A Personal Family Lawyer® is a great resource in helping you draw that map to lead your loved ones down the path you intend. 

David Feakes is the founder and owner of The Parents Estate Planning Law Firm, PC. His practice focuses on estate planning, wealth transfer, and asset protection. He develops lifelong relationships with his clients, serving as a trusted advisor to them and to their families. David has the distinct honor of being one of only a few Personal Family Lawyers® (PFL®) in Massachusetts. Most importantly, David is a husband and a dad and in his free time enjoys hiking, biking, and traveling.

Learn more about Mike and my services at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/

There are many items that we want, need, and enjoy purchasing. Almost exclusively none of these are absolutely necessary within a week - so do yourself a favor and utilize wish lists to hone your spending on those items that will truly bring you the most value.

Most of what we purchase has fleeting utility. You really want something so you click buy. The money is gone and the enjoyment of the pursuit is fulfilled. However, that enjoyment fades quickly until we click buy again. Instead, try waiting a week and if you still really want that item, then go for it.

Other strategies for having the enjoyment AND keeping money in your pocket:

• Take a picture instead. When traveling and you see a great item for yourself or a friend? Pull out your phone and snap a pic.
• You can afford anything but not everything. Learn to do without (and what you want to live WITH)
• Use shared wish lists to create greater value for yourself and others. This allows better purchasing (more enjoyment!) for both buyer and receiver.

• Feel CONFIDENT about your financial future.
• Decision fatigue on two levels:

1. Consistently remembering to save.
2. Deciding what to purchase or what to do.

• Make the decision once!
• Future flexibility!

What should you do?

• Decide how much to start with.
• Set up automatic transfers.
• Invest: You can do this every 3 or 6 months, or even once a year!

• Feel CONFIDENT about your financial future.
• Decision fatigue on two levels:

1. Consistently remembering to save.
2. Deciding what to purchase or what to do.

• Make the decision once!
• Future flexibility!

What should you do?

• Decide how much to start with.
• Set up automatic transfers.
• Invest: You can do this every 3 or 6 months, or even once a year!

A client recently asked, “What should we do with my portfolio and when will we do it?” Remember that market declines are normal: it goes down 10% every 2 years, on average. So it’s important to plan ahead and understand what to do and when to do it.

Options for your plan include:

1. Do Nothing. You can let your portfolio decline and ride the return on the other side. That’s a viable plan, as long as it’s an actual plan (not sticking your head in the sand!)
2. Rebalance. You can purchase more stocks while they are on sale.
3. Tax Loss Harvest. You can sell stocks or funds that have lost value to make lemonade out of lemons.

The important thing is to have a plan, write it down and stick to it.

Find out more about Mike at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/

Are you ready to create your ideal lifestyle? Let’s Connect.

In this episode we discuss:

• Allowing freedom for kids to spend their own money
• Don’t couple chores with allowance: allow children to be a part of the family duties
• When and how to talk to teenagers about college expenses

Find out more about Mike at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/

First, avoid as much advertising as possible. Use ad blockers, skip commercials, call your credit card company to stop mailings, and unsubscribe from newsletters. This will help reduce the number of ads you see each day.

Second, understand when you are being advertised and build awareness at the moment. The more you recognize an ad and interact with it, the more likely you are to avoid its traps. Advertisers know that you aren’t paying much attention - and so they prey on your subconscious and feelings. Be alert and interact with the ad in front of you and its power will quickly fade.

Is that great a product if you have to advertise it?

Megan Rusell of Marotta on Money joins me once again!

Find out more about Mike at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/

Your human capital, or the amount of money that you make over your lifetime is one of the biggest factors in your financial success. (Hint: the other is your expenses). No matter where you are in your life journey, it’s worth thinking about that trajectory. How steep is the income potential in your current career? Can you pivot to another career that has a steeper path? What is the job that you really want after your next job?

And how much did you think about your current work team and boss? Finding people that you enjoy working with and will invest in you makes a tremendous difference. Ask anyone who works with the best team: it’s a joy going to the office every day (or the zoom room ;)

Matt and I discuss all these topics and more!

Find out more about Mike at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/

Of course, we all want to live with more joy. In the companion article (Core Values Budgeting) and today’s episode, Megan and Mike discuss how to actually do that.  

Remember that there is only ever spending: either now (expenses) or in the future (savings). These are the core of financial planning. Expenses are required to live with joy now and savings are required to meet your long-term goals. Every dollar you spend, you don't save.

In this episode, we discuss an exercise that helps you understand what spending brings you the most joy. Cliff notes version:

• Write down every type of thing you or your family spends money on.
• Imagine that in one category you won’t be allowed to spend money ever again.
• Cross it off and number it with a 1. This is the first item to go.
• Repeat the process again and again with 2, 3, 4, etc. until you just can't cut anything.
• What is left is at the core of what supports your specific life and joy?
• Protect your core spending and be ruthless at cutting the rest.

"You can afford anything, just not everything."

Resources:

• Crazy Rich Asians Series: What We Can Learn From The Millionaire Lifestyle of Astrid Leong - One of the wealthiest women in Singapore shopping for groceries at the supermarket with super-saver coupons while trying to purchase art for over a hundred million dollars.
• How To Spend: Learn To Do Without - You can either live rich or you can be rich. Almost no matter how much money you make each year, there is someone spending every penny of a salary five times as great and someone saving more than you on a salary half as much. It takes diligence to keep spending low and saving high. I heard it suggested once, that if you want to develop a rich mindset, put a $100 bill in your wallet, take out your credit cards, and then practice not spending it.

"I want you to spend like you are the richest person in the world, a person who has so much happiness and balance in your life that you can’t imagine anything you could buy that would make you any happier."

Megan Russell has worked in finance most of her life and is the Chief Operating Officer for Marotta Wealth Management. She has written over 700 financial articles and can be found at MarottaOnMoney.com.

Find more about Mike at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/

1. Feeling more Organized: By transferring your old 401k accounts into a Rollover IRA, you might feel better about your financial organization. Feeling better is great!
2. Portfolio: You may not be invested in a way that makes the most sense for your current life. It can be hard to coordinate across so many accounts.
3. Check on Fees: Some old 401k accounts have pretty “bad” choices inside of them. Definitely check on the fees of funds inside your account. If there are no great choices, you might want to transfer the balance to an IRA.
4. Careful of “Clean” Back Door Roth: If you end up with a larger balance in your Rollover IRA, that could have an impact on Roth conversions, so be aware of the larger plan before implementing.

You can consolidate accounts by transferring 401k accounts to a Rollover IRA to help simplify. I recommend doing a trustee-to-trustee (direct) transfer where you never actually hold the money yourself.

Find out more about Mike at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/

A listener asks ”What apps or tech do you use to help manage your finances?”

In part 1 of this two-part show we spoke about budgeting and expenses. In part 2, II talk about:

• How I use a spreadsheet to track my Investments
• What is important to track when it comes to investments
• PersonalCapital: A tool to aggregate investment accounts.
• Fidelity / Schwab / Vanguard / Other: How free tools from these companies can help but also their limitations.
• What to do with Credit Cards
• Why a password manager is important

Find out more about Mike at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/

A listener asks ”What apps or tech do you use to help manage your finances?”

In part 1 of this two-part show I talk about:

• Why it’s important to build awareness about your expenses
• Banktivity: I use this app for tracking my expenses
• Mint.com: A classic app for budgeting and expenses
• YNAB: An envelope system for tracking your budget - which really appeals to some people
• Simplifi and Trubill: Another couple of budgeting apps that clients have recommended to me.

Don’t forget to tune into Part 2 where I talk more about investments, credit cards and financial planning.

Find out more about Mike at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/

When it comes to your personal investments, you should be personally invested. What I mean: know what you are investing into, understand the risks and rewards and be comfortable with the potential outcomes. Any single investment can be very volatile or go to zero. Diversification can help save your dollars from catastrophic losses. Even a country or sector is not immune to drastic fluctuations.

You may also want to consider your moral judgments when it comes to investing: do you want to invest in this country or that one? The major indexes are made up of many countries, so do a little research to understand where your investment dollars are flowing, what they are supporting.

Resources:

• FRDM Fund
• Freedom Investing

Find out more about Mike at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/

Both a SEP-IRA and Solo 401k are employer retirement plans where the employer (and potentially and employee) get to contribute dollars in a tax-advantaged way. You definitely want to consider opening the right plan for you to take advantage of these tax savings! The solo 401k generally beats the SEP-IRA because the contribution limits are much higher, allowing you to save more in taxes. 

You can read Megan's thoughts on her blog post about this post topic and tune in to hear all the details and why Megan believes the 401k wins. 

Find out more about Mike at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/

Tune in as we discuss:

• Why some investors were hit with a big tax bill for holding a mutual fund!
• Why you should invest in ETFs in your brokerage accounts.
• What are A, B, and C class shares of mutual funds?
• What is an index fund?
• The difference between an active and passive fund.
• Why are mutual funds and ETFs taxed differently?
• Can you exchange a mutual fund for an equivalent ETF?

Find out more about Mike at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/

Tune in as we discuss:

• Why some investors were hit with a big tax bill for holding a mutual fund!
• Why you should invest in ETFs in your brokerage accounts.
• What are A, B, and C class shares of mutual funds?
• What is an index fund?
• The difference between an active and passive fund.
• Why are mutual funds and ETFs taxed differently?
• Can you exchange a mutual fund for an equivalent ETF?

Find out more about Mike at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/