Five Minute Finance

Finding a financial advisor is daunting because you know it’s important and yet it’s so hard to figure out.  Bottom line up front: Start with finding Certified Financial Planners (CFP®) that understand your situation; do a little online research and then interview a couple. Tune into this week’s podcast to learn more about: Hiring a CFP®.  This should be a minimum bar. There are plenty o...

In this bonus episode, Matt and I continue our conversation about stock market bubbles and in particular behavioral economics.  We discuss how the future investing models might change based on more studies of human behavior.  Smarter people than the two of us will study and dissect the market in new ways based on human participants. We also chat about different areas of the markets, diff...

The stock market is reaching new all-time highs, which begs the question:  Are we in a market Bubble?  There are two areas to review when thinking about “bubbles” in the stock market: the market fundamentals (valuations) and investor sentiment (or behavior). Both of these are looking quite hot.  On the fundamental side, the popular Shiller PE Ratio currently sits at  38.5...

BONUS Episode! Matt and I continue our conversation. Listen in to the discussion on Zombie investors: how the massive uptick in index investors may be affecting markets Is it Good? Are the capital markets still good for companies and investors? Have we gotten away from the point of investing? Complexity: If you can't explain it, don't invest in it. Find out more about Mike at https://www.mortonfin...

I absolutely love what software can do for us, freeing up our time and energy to focus on the less mundane. And when Robo-Advisors first launched, with simple portfolios of low-cost index funds, they were great. Taking away the human emotions, keeping you invested correctly with a massively diversified portfolio - what's not to love? However, I've recently come across a few problems that stem from...

On today’s show, Meg Bartelt, CFP®, MSFP joins me to talk about how you should think differently about your total compensation in order to take advantage of your employer benefits.  Meg is the founder of  Flow Financial Planning , LLC, a fee-only, virtual financial planning firm dedicated to women in their early-to-mid career in tech. She specializes in  equity compensation  an...

How do you make your money work for you?  Do you take it to the casino and bet on black? Do you have fun at the race track? Do you save into your 401(k) and put the money into an index fund? Or do you buy individual companies each week on Robinhood? Each activity may  win  or  lose  you money in the future. Does that make it investing, speculating, or trading? Each word me...

You need to have a plan in case of an emergency and typically you need some money to go with that plan:  your Emergency Funds.  First, let’s define Emergency:  something which happens unexpectedly, which you could not easily predict would occur at this moment.  Examples include losing a job, having a severe accident or having to take care of a loved one. As you can tell, these...

With the advent of the index fund in the 1970s, the battle began: actively managed funds versus passive index funds.  Which belongs in your investment portfolio? Actively managed funds have people responsible for deciding which companies to invest in and include in the fund. These funds will typically have a strategy to invest in a certain sector or style such as  US large-cap growth com...

The majority of advice online is too generic to take seriously for your personal finances. The 60/40 portfolio (60% stocks and 40% fixed income) is used in academic research and might be the median portfolio for retirees - but that doesn’t make it appropriate for you. How should you construct your own portfolio for now and the future? Think about when you are going to spend your money and divide i...

As Independence Day approaches, it makes me think about all of our freedoms including the choice to make  work optional . It’s a modern convenience, to be sure: retirement is a very modern idea. The interesting thing about financial independence is that it leads to other freedoms. Not only can you choose how to spend more of your time, you can speak your mind without fear of being cancel...

Bitcoin and other cryptocurrencies are all the rage. But should you invest your money in them? I recently received this listener question: “There is a lot of talk going on about Bitcoin and Dogecoin.  Are they good investments?“ Bottom Line Up Front:  I do not currently recommend putting money in cryptocurrencies, because it would be mostly speculation and not investing. Realize that if...

Inflation is all over the news: it’s a scary subject encouraging you to read more headlines. But how should you actually prepare your investment portfolio for potential inflation? As always: it comes down to planning. If you have a well-diversified portfolio of stocks and bonds then there’s good news: you can do nothing. Be ready to make adjustments as those investments go up or down, as you typic...

How can you create a financial plan before you know where to aim? Your unique goals in life, what drives you, what you want to accomplish and what’s truly important - those are the targets. Not simply “retire someday”. You don’t have to read a ton of self-help books or try to discover this on your own. There is a process that has been refined by the Kinder Institute of Life Planning to help indivi...

Congratulations! As you approach retirement, your investment portfolio has grown to a size that you suspect you’ll be fine to stop working and live the good life. But…. how do you actually generate income from those retirement accounts?  And how should you invest now that you’re so close to retirement? I use a bucket strategy to talk about investing in retirement.  There are three mental...

You don't often think of a retirement account for your children, but the Roth IRA is too appealing to pass up. Once you get money into a Roth IRA, it grows tax-free forever, which is a very long time for a young child! Megan Russell from Marotta Wealth Management joins me to discuss the myriad of benefits of this amazing account. Tips covered in this episode include: How Young? : You can start thi...

Yes, you can turn $3,000 into $50 million dollars. What's the catch? It takes a long time. So, unfortunately, you won't be around to spend it. But this is a great way to think about setting up your kids or grandkids for long-term financial success. It's really simple math that relies on compound interest to generate significant growth over many years. The basics: Invest $3k into a Small Cap Value...

If you are thinking about investing in individual company stocks, what should you consider? In today's episode we discuss: Risk versus Reward: A company that does well has the potential to have its stock price go up over time, making you a lot of money. However, the opposite is also true: you can lose all your money if it goes out of business. Diversification: Owning a single company makes you tie...

A listener asks the following question: "I’ve luckily survived the pandemic so far and my job has continued to be busy.  Through the last few years, I’ve found that my savings have grown quite nicely but I’ve been hesitant to invest the extra cash into the market.  Now I realize I have about $200,000 in cash that I can invest for the future.  How do I get that invested when the mark...

I tell all my clients: you have to protect yourself from financially catastrophic events before we can plan savings and investments for your future goals. Insurance involves thinking about "the bad things" that might happen, so it's not a fun topic. But it's very important to ensure nothing comes along and wipes you out financially. In today's show we chat about: What to consider when reviewing he...

Would you like to have more $$ growing in a tax-free account forever? Let me show you how: Maximize your 401(k) contributions, $19,500 for 2021 into your Traditional 401(k) [or maybe the Roth 401k] Add after-tax contributions to your 401(k). Maybe 5%, $10,000 or even $30k. Whatever you are allowed within your employer's plan. Immediately roll those after-tax contributions to the Roth "side" of you...

You could use your Health Savings Account (HSA) to pay for current medical expenses. However, if you can, I recommend that you invest the full HSA amount into the stock market and allow it to grow and compound. The HSA is the only account that has triple-tax benefits: you don't pay taxes on contributions, growth or withdrawals (for qualified medical expenses). Did you know: You can save your recei...

A backdoor Roth is a way for high-income earners to be able to contribute money into a tax-free Roth IRA account. It is a matter of contributing non-deductible money to a Traditional IRA and then converting that to a Roth IRA. The tricky part comes during the conversion: If you have any money in an IRA that has not yet been taxed, you're going to owe taxes on that. In today's episode we discuss: T...

From savings to brokerage, 401ks, HSA, and 529 accounts: there are a lot of accounts to choose from! Where should you focus your savings? What is the "right" account to put your money to save on taxes and grow it for the future? Today we discuss the order of account funding, which accounts to focus on first, second and third. Listen as we discuss: Paying off high-interest debt first Saving for Eme...

A listener asked the following question: "My company just went through an IPO.   I have been working for a large technology company for the past 7 years.  I am 34 years old, single, and find myself in an entirely new situation. My stock is now worth over $4m dollars and I have no idea what exactly I should do next!  How do I think about this new wealth?  Do I sell some of...