Member Blogs

  • ETFs make up a sizable portion of the the market. Are they right for you and your financial situation?
  • Hello! One of my investing commandments is Thou shalt diversify. For the stock portion of your investment portfolio this means buying large company stocks and small company stocks from all over the world. Read on to learn more about the punch that small company stocks can give your portfolio. Best, Michelle Morris, CFP®, EA BRIO Financial Planning I recently reviewed a prospects investment portfolio. She had a lot of different mutual funds in several different accounts. A mutual fund is a convenient way to buy a basket of many stocks or bonds. Because she had a lot of funds in a lot of accounts she thought she was well diversified, but she was not. Nearly all of her holdings were US large cap mutual funds. Large cap means large company. Cap is short for Capitalization which is the dollar value of a companys existing stock shares. Examples of large cap companies are Apple, Microsoft, Google, Johnson & Johnson companies weve all heard of and may or may not love. The definition of small varies, but generally it is a company with value of ≈$300 million to $2 billion. So we are not talking about Bill and Bobs Backyard Widgets. Examples of small company stocks include regional banks such as Bancorp South and the Bank of Hawaii . Companies like Coherent, Inc. the worlds leading supplier of laser solutions in Santa Clara, CA. Or Knight Transportation a truckload motor shipping carrier in Phoenix, Arizona. I recommend that nearly all investors own some small cap or small company shares (in the form of a mutual fund). Why do I recommend this? Well, as Willie Sutton said when asked why he robbed banks because that is where the money is. Over time small cap stocks have out-performed large cap stocks as seen in this graph: (Source: Ibbotson) If you invested one dollar in the S&P 500 in 1926 (the 500 largest US stocks), it would have grown to $6,021 by the end of 2016. Pretty good! But if you invested one dollar in small cap stocks in 1926, it would have grown to $33,212 (!) Small caps are a bumpier ride (meaning they are more volatile). And they dont outperform large caps every year. Which is why I dont recommend you go all in on smalls. In fact, I dont recommend you go all in on anything! Bringing us again to one of my investing commandments Thou shalt diversify. Happy Diversifying!
  • This month I spoke to a woman who was confused about 401(k) transfer rules. She had recently left a job and wanted to roll her prior company 401(k) into her new company 401(k), but thought the transfer limit was $18,000. She had more than $18,000 in the old plan, and wondered what to do with the rest. In fact the there is no $18K transfer limit. $18,000 is the CONTRIBUTION limit, the limit of how much new money you can contribute to a plan. ($24,000 for people age 50 and older).
  • What I Am Reading

    I am currently reading The Geography of Bliss: One Grumps Search for the Happiest Places in the World The author Eric Weiner is a former NPR foreign correspondent and by his own admission not a happy person. Amazon bills this book as Part travel memoir, part humor, and part twisted self-help guide, The Geography of Bliss takes the reader across the globe to investigate not what happiness is, but WHERE it is. Weiner takes us with him on a both funny and serious trot around the globe in search of happiness. Hint: Some money can make you happy, but a lot of money doesnt make you REALLY happy. Im going to give away 2 copies of this book if youd like to enter just shoot me an email at michelle@briofp.com
  • Finance for Females

    Laws have changed during our country’s history to have equal rights for women and men. It’s hard to believe that the right to have birth control became legal during the lifetime of baby boomers. The progress is great, but women still have financial challenges that differ from those for men. Women are still more often the primary parent in two parent families. This can impact the ability to accumulate wealth. One influence on earnings is some time out of the workforce. For a mother who takes even a couple of months maternity leave, this time generally comes during the time in her career when she’s either building her career or possibly during her prime earning years. The lifetime earnings of most individuals are a long term trend. Having an interruption – or more than one interruption – in a career can stunt lifetime earnings growth. Some mothers choose to take off more time away from the workforce while their children are at home. Those women who stay in the workforce while being a primary parent might have a limited ability to have flexible hours and they might miss more work than co-workers who are not primary parents. These issues are compounded if a woman is the primary caregiving for aging parents, which is also common. All these factors can impact a woman’s ability to reach her maximum earning capabilities. Earnings flow directly into the ability to save for emergencies and future goals, like retirement. Basic math will tell you that if someone has reduced her total earnings by 20% to 30% over a lifetime, that will impact how much is available for saving. If a woman is in a two income family, the ability for both incomes available to meet financial goals might be sufficient. What about women who are single? On average, women don’t make as much as men with comparable qualifications and jobs. While this income gap is narrowing, it still exists. Any single income household doesn’t have some of the expense savings of a two income household sharing some of the big expenses. Housing, utilities, groceries, and insurance can have savings for a household with more than one adult. Having lower earnings than a male counterpart can make it difficult for a woman to save. Planning, preferably with some professional advice, can help overcome financial limitations. Have a plan that includes budgeting, proper insurance, home ownership, and staying away from unproductive debt. Saving early puts the power of compounding on your side. Start saving – even if it’s just a little – and keep saving. Get advice that doesn’t have a sales agenda. An advisor paid only through product sales might not be the most objective to help you meet your financial goals. A good advisor will give you advice that’s in your best interest. And if your questions aren’t answered to your satisfaction, get a new advisor.
  • Dow 22K: Now What?

    Last week the Dow hit a record high of 22,000. This record spurred lots of conversation throughout the financial media, and the media here in Nashville was talking about it, as well. Nashville NBC affiliate (WSMV) reached out to me for an interview. You can see the story here . The question is: Dow 22K, now what? To expand on the comments I made on camera, it’s actually quite simple. This barrier of 22k is one of arbitrary importance. While the Dow edged closer to 22k, we continued to stick to our plan. We continued to control the things we can control: how much we spend, how much we save, and how much we pay in taxes. But, once the Dow hit that magic number, the questions started. We must remember that we can not control the stock market. This does not mean we should ignore the stock market or take a hands-off approach to investing. We must maintain balance in our portfolio and manage risks, but hitting an arbitrary number doesn’t mean we should change our plan. It’s not about changing our financial course simply because we crossed some psychological line. Another way to look at is to flip the issue and remember back to 2008-2009. My clients and I stuck to our plan, and we didn’t make any decisions outside of our plan. So, if we were disciplined enough not to change direction when things were tough, why would we want to change direction when things are good? Dow 22k is just a point…not a destination. For some Dow 22k is exciting and for others it may be frightening, but for those who are disciplined it is just a number. It’s more important that we focus on the things we can control, so let’s continue to stay on plan and live our life everyday to the fullest.
  • In addition to the other commotion related to changing jobs, you need to decide what to do with your 401k account.  You have four possible options; leave it with your employer, transfer it to your new employer’s plan (if allowed), transfer it to a Rollover IRA or cash it out.  Unless you’re in a dire situation, avoid withdrawing your 401k
  • The Path to Awesome, Part 2: Don’t Just Park Your Money
  • Charitable Planning

    Many people consider charitable donations as an important part of their regular budgets. These gifts to non-profits are sometimes very spontaneous, with a photo of a sad animal, neglected person, or inspiring social cause resulting in donations of various sizes. But some people approach their charitable giving every year with very specific intention and planning. Giving to causes that you deem worthy can hardly ever seem bad. But there might be some ways to have a greater impact on the issues you see as important. If you’d like to consider a planned approach to charitable giving, here are some steps to consider. Decide how much you are going to give each year. This might be a dollar amount, or it might be a percentage of your income or investments. One concept is tithing, which is giving 10% of income. For many households, this is a workable charity budget since it varies with their family income each year. Another approach might be to take a percentage of investment growth each year to go to non-profits. Or you could take a percentage of your investments each year and donate that amount. A donor advised fund is an account that allows you to fund a large amount at one time or over several years, then have those funds go to specified charities in future years. This is more complex and should probably be done with advice from a financial professional. When planning your charitable giving, put some thought into causes you want to support. Consider writing a mission statement for your giving. It can say what you want to support and why. You may have multiple priorities – feeding hungry children, protecting animals from abuse, supporting military veterans, or whatever else is important to you. State how you’ll prioritize between the causes. Once you’ve done that, do some research on what charities support those causes. Research how much of donations received by the charity goes to the causes they support and how much goes to overhead of the organization.  You want more going to the cause than to paying for the organization’s overhead. You can look for assessments on how well charities accomplish their goals at www.charitywatch.org and www.charitynavigator.org as well as making some calls and reviewing services yourself. If you want your donation to be potentially tax deductible, it must be to an organization that the IRS deems to be a charity. This indicates at least some legitimacy of the organization and how they allocate donations received. While giving to a friend who needs help is very kind, it is probably not a charitable write off. Your charitable priorities might change from year to year. That could be due to your changing view of society’s needs, a specific capital campaign by an organization, or because of what you see these organizations doing. Planning and intention may give your charitable efforts more impact.
  • John Munley and his daughter, Sarah, on their way to Sarah's moving up ceremony. My daughter recently had her moving up ceremony during which she and her class celebrated “graduating” from elementary school and starting their middle school years in the fall. During the ceremony, the principal addressed the parents and students, quoting Robby Novak. Novak, who also goes by the name, Kid President , is a 13-year-old boy who, despite living with osteogenesis imperfecta, a rare genetic disorder that makes his bones extremely brittle, has built an online empire using his intelligence, charm, wit and boundless optimism to inspire others.
  • There are three primary ways to invest in the stock market; mutual funds, exchange traded funds (ETFs) and individual stocks.   With mutual funds and ETFs your money is pooled together with money from other investors and is professionally managed in accordance with a predefined objective.   Some major benefits of investing in mutual funds and ETFs include diversification, professional management and
  • Hello! In financial planning we do a lot of asset inventories. A tally of everything of value the client owns. Cash, real estate, stocks, bonds, 401k plans, IRAs, life insurance policies, cars, etc. A young person may have very little of these types of assets and in fact may have more liabilities (debts) than assets. But young people have one very important asset that those of us of a certain age are rapidly losing Read on to learn more! Best, Michelle Morris, CFP®, EA BRIO Financial Planning Recently I was talking to a young woman in her mid-twenties about her assets. In this context I was referring to financial assets* which are things of monetary value that you possess. She said somewhat apologetically I really dont have any assets. But she was mistaken. Her biggest financial asset is her Human Capital. Huh? I hear you ask. Simply put your human capital is your ability to earn and save money which diminishes over time. It is illustrated here: On the left axis: Total Economic Wealth is the sum of your Human Capital and your Financial Capital. Early in young adulthood Human Capital (the green shaded portion) is high. But your Financial Capital (the blue line) is low. As time goes on your Human Capital diminishes but your Financial Capital will increase if you save and invest regularly. Eventually your Financial Capital exceeds your Human capital and you can retire and live off your financial capital. Enjoy your youth as it is fleeting. But dont forget to get started on your blue line ASAP. Your 56 year-old self will thank your 26 year-old self! *Certainly young people have plenty of non-financial assets for example the ability to read small print without glasses.
  • Hello! In financial planning we do a lot of asset inventories. A tally of everything of value the client owns. Cash, real estate, stocks, bonds, 401k plans, IRAs, life insurance policies, cars, etc. A young person may have very little of these types of assets and in fact may have more liabilities (debts) than assets. But young people have one very important asset that those of us of a certain age are rapidly losing Read on to learn more! Best, Michelle Morris, CFP®, EA BRIO Financial Planning Recently I was talking to a young woman in her mid-twenties about her assets. In this context I was referring to financial assets* which are things of monetary value that you possess. She said somewhat apologetically I really dont have any assets. But she was mistaken. Her biggest financial asset is her Human Capital. Huh? I hear you ask. Simply put your human capital is your ability to earn and save money which diminishes over time. It is illustrated here: On the left axis: Total Economic Wealth is the sum of your Human Capital and your Financial Capital. Early in young adulthood Human Capital (the green shaded portion) is high. But your Financial Capital (the blue line) is low. As time goes on your Human Capital diminishes but your Financial Capital will increase if you save and invest regularly. Eventually your Financial Capital exceeds your Human capital and you can retire and live off your financial capital. Enjoy your youth as it is fleeting. But dont forget to get started on your blue line ASAP. Your 56 year-old self will thank your 26 year-old self! *Certainly young people have plenty of non-financial assets for example the ability to read small print without glasses.
  • Last month I recommended the site creditkarma.com to a client. This is a great site for checking your credit scores and reports. Its secure and its free! Detailed 3rd party review HERE .
  • Last month I recommended the site creditkarma.com to a client. This is a great site for checking your credit scores and reports. Its secure and its free! Detailed 3rd party review HERE .
  • Richard Russo is one of my favorite authors and he recently came out with Trajectory a collection of 4 short stories. I like short stories particularly in the summer. Long complicated novels are mostly winter fare for me. Each one of these stories about imperfect people living in an imperfect world packs a punch, and I was sorry when they were over. Im going to give away 2 copies of this book if youd like to enter just shoot me an email at michelle@briofp.com
  • Richard Russo is one of my favorite authors and he recently came out with Trajectory a collection of 4 short stories. I like short stories particularly in the summer. Long complicated novels are mostly winter fare for me. Each one of these stories about imperfect people living in an imperfect world packs a punch, and I was sorry when they were over. Im going to give away 2 copies of this book if youd like to enter just shoot me an email at michelle@briofp.com
  • Ken Gronbach  What Is Your Future? If you want to predict the future with accuracy, only one crystal ball will do: people, by the numbers. By looking at demographics, we can predict the future. From commercial to social to political to cultural trends, counting people reveals what will trend in the next ten years. That’s because it’s based on what people are really doing, from fertility to
  • Chris Michaud Real Estate: What Is Next? Politicians, bureaucrats, home buyers and housing activists are at it again.  History is repeating itself right in front of us, and if we do nothing to stop the volatility in real estate markets, we risk the impending doom of the next housing collapse.  The Great Housing Recession caused Americans to lose great amounts of net worth.  Ronald Reagan
  • My Response to: “Goal Setting Doesn’t Work.” Sarah Robbins of Blue Blaze Financial Advisors, walking in Bryce Canyon National Park A recent article by Darren Hardy, the creator of the magazine, SUCCESS , shows his smiling picture beside an article where he makes the bold claim that “Goal setting doesn’t work”. As a huge believer in goal setting, I was taken back by the headline but went in with an open-mind. “Maybe this guy has a point I haven’t considered,” I thought.
  • Investing internationally might worry some US investors, but it can provide vital diversification in your portfolio.
  • If real estate's your game, did you know that it's possible to defer capital gains by taking advantage of a Section 1031 exchange that allows you to swap investment property on a tax-deferred basis?
  • If you're thinking about hiring new employees this year, you won't want to miss out on these tax breaks.
  • Crowdfunding websites such as Kickstarter and GoFundMe have become increasingly popular for both individual fundraising and small business owners. The upside is that it's often possible to raise the cash you need, the downside is that the IRS might consider that money taxable income. Here's what you need to know.