Financial Planning Dentist
  1. Manage risk, not return – the timeline for college planning is somewhere between 0 and 20ish years. And unlike most of your investments listing the timetable is a non-starter. Families don’t want to see their children delay college because markets are sluggish. So managing the account should center around the timeline and risk, and not exclusively return. 
  2. Keep fees low – over the long-term fees are one of the most important parts of investing, and that is still true for 529s. Using low costs indexes is likely the best way to invest.
  3. Use tax-advantaged accounts – Roths, 529s, really anything that can allow you to continue investing year in and out without consequences on the gains. 
  4. Know your state tax rules – I live in colorado and we have a fantastic tax relationship between income taxes and Colorado-sponsored 529s. Know what that looks like for your state.
  5. Don’t invest in college at the expense of your retirement – if you are planning for both that’s fantastic, but if the committed dollars come at the expense of retirement you need to rethink the strategy. There is no way to finance retirement, and there are ways to finance college.

Find more support for college planning on the InRolled® College Planning page.

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Kevin Taylor

DSNP: The Next Investment Playground for the Internet Revolution

The realm of social media has largely been dominated by centralized platforms like Facebook, Twitter, and Instagram. These platforms have redefined the way we communicate, but they also come with inherent challenges, from concerns over user privacy to the monopolization of social discourse. Enter the Decentralized Social Network Protocol (DSNP): a groundbreaking technology aiming to decentralize the very essence of social networking. The Decentralized Social Network Protocol (DSNP) is capturing the attention of tech enthusiasts, innovators, and investors alike. The reasons for this spotlight are multifaceted, ranging from its transformative approach to social media to its potential for disrupting the status quo. Here’s why DSNP is being heralded as the next significant investment playground for the digital era: What is DSNP? DSNP is a protocol designed for building decentralized social networks. At its core, DSNP facilitates peer-to-peer communication, allows users to control their data, and provides a foundation for developers to build decentralized social media apps. Key Features: 1. Decentralization: Instead of data being stored and controlled by a single centralized entity, it is distributed across a decentralized network, minimizing the risk of censorship and data monopolization. 2. User-Controlled Data: Users have complete control over their data. They decide what to share, with whom, and for how long. 3. Interoperability: DSNP enables various decentralized applications (DApps) to communicate with each other, allowing users to interact across platforms without restrictions. Why Is DSNP Important? 1. Privacy and Control – Centralized platforms, by design, have control over users’ data, often exploiting it for profit. With DSNP, users have full authority over their information. This change can significantly enhance privacy and reduce unsolicited ads, content manipulation, and other invasive practices. 2. Censorship Resistance – A decentralized system is naturally resistant to censorship. With no central authority to dictate terms, users can communicate more freely, and ideas can flow more naturally. 3. Encouraging Innovation – DSNP provides a fertile ground for developers to create new types of social media platforms. With a shared standard protocol, more innovative and user-focused DApps can emerge. Challenges Ahead While DSNP presents a compelling vision for the future of social media, it isn’t without challenges: 1. Adoption: Convincing users to move from familiar platforms to new decentralized ones can be a challenge. The success of DSNP depends on both user and developer adoption. 2. Scalability: Decentralized systems often face scalability issues. As the number of users grows, ensuring that the system remains fast and efficient is crucial. 3. Regulation: As with many innovative technologies, there is a potential for regulatory challenges. Governments may struggle to understand and legislate decentralized platforms effectively. DSNP offers a promising alternative to traditional social media, focusing on user control, privacy, and decentralization. While the road ahead is filled with challenges, the potential benefits for users, developers, and society at large are immense. As DSNP and similar initiatives gain traction, we could be witnessing the dawn of a new era in digital communication, one where users are at the center and not just products for profit.

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combining my 401(k)s
Peter Locke

Combining my 401(k)s

Have you wondered, should I be Combining my 401(k)s? your not alone and we have written the below guide to whether or not its going to be right for you and your strategy. After a decade working with clients the most frequent questions I received was one of these two questions: Should I combining my 401(k)s from my previous employer(s)?  How do I move/consolidate my old 401(k?  The answer to “Should I combining my 401(k)s” is “YES” for the following reasons: You’re most likely being charged – When you were an “active” employee your plan administrator (people that hold your 401k) didn’t charge you, however, now that you’re “inactive” employee, you’re probably being charged an annual fee, if not a quarterly one just to have an account. This is standard practice and can cut into your growth over the long term It may no longer be invested – A lot of plan administrators are required to move your 401(k) into an IRA. This is especially true if your company was acquired or went out of business. When this happens the plan administrator will liquidate all of your investments and move it into cash. So this whole time when you thought it was invested in an Mutual Fund that tracked the SP500 and an International Stock Mutual Fund while the stock market continues to go up and up you haven’t participated in it.  You aren’t paying attention to it – If you’re still invested you’re probably not investing properly. This is like if with your last oil change, the guy at XYC Oil Change Gas Station didn’t put the sticker on your car to tell you when to do the next oil change. You just kept driving thinking everything was fine when in reality it’s been 15,000 miles and your car is about to die. This is a little dramatic but imagine if you had invested in oil because your grandfather had Exxon his whole life and told you it was the greatest stock in the world. But the reality is it has more than 50% of it’s value in the last year.  Or maybe before you left your last employer you thought the market was too high so you moved it into cash or a bond fund. Regardless of the situation, you need to pay attention to how it’s invested.  Your investment options are limited – There are probably better investment options with a Rollover or Traditional IRA. Maybe you got a new job and your new employer has a 401k that has good low cost options. Some employers let you have what’s called a Self-Directed Brokerage 401(k), meaning you can buy your own stocks, index funds, ETFs, or Mutual funds at little to no cost.   If you wait long enough you’ll probably forget about it – Let’s say it’s only a small amount and run the numbers. A $5,000 investment earning 8% per year would be $50,000 in 30 years or what I like to view as 2-3 years of education for your child or a down payment on an investment property. The answer to “Should I combining” my 401(k)s” is “NO” for two reasons: With a 401(k) you have creditor protection – Funds held in qualified ERISA plans, like a 401(k), are generally protected from creditors. So if you went bankrupt, there was a court judgement or a creditor came after your assets, then your 401(k) may be protected up to its full value. Unlike with IRAs or Roths (not qualified ERISA plans), assets can be exempted from bankruptcy up to $1,362,800. Creditor Protection  Backdoor Roth IRA – If you keep your money in a 401k by leaving it there or rolling it into a new 401(k) and don’t have any money in an IRA or Rollover IRA, then you can do what’s called a Backdoor Roth IRA (read our article called Backdoor Roth) and make sure you Follow the Rules  The Answer to Question 2 You have four options: Keep the 401(k) with the previous employer – Please review Question 1 for the pros and cons of doing this Rollover your balance to your new employers 401(k) – Ask your plan administrator at your new employer if their 401(k) plan accepts rollovers. Make sure you understand the plans fees and investment choices before moving forward.  Rollover your 401(k) into a Traditional IRA or Rollover IRA Request a Direct Rollover from your 401(k) so that you can move your money into an account you have more control over and is all one place (there is no limit to how many 401(k)’s you move into an IRA. If you have 3 previous employers all you need to do is open 1 Traditional IRA or Rollover IRA (if you want to move it into a 401k in the future) and request 3 direct rollovers from your previous 3 companies into this one account. A direct rollover means the check is made out to the company (brokerage firm) where your new IRA is. For example, if I opened an account with Vanguard the check would be made payable to Vanguard for the benefit of (FBO) your name and your account number. This is very important to understand as a Rollover and Direct Rollover have completely different meanings.  A rollover means the check is payable to you and if you don’t put that check back into an account within 60 days then it is a taxable distribution to you and you’ll owe the IRS taxes on that full amount. Also, you’re only allowed to do this once per year.  Withdraw all of your funds and pay income tax on the entire lump sum (we do not advise unless absolutely necessary) – If you’re looking to take multiple steps back in regards to your retirement plan and want a big pay day and a big tax bill then you’re allowed to take all the money out and put it into the bank. Again, unless you absolutely need this money and even then

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Investing 2021
Market InSights
Kevin Taylor

Rudolph with Your Nose So Bright

If you don’t recall the most famous reindeer of all, Rudolph, the Montgomery Ward creation possesses the special characteristic to guide Santa’s sleigh among a fog that would have otherwise canceled Christmas. Like Rudolph’s nose, I’m going to highlight a couple of macroeconomics bright spots that we like right now, that will surely support markets and guide us through the fog of 2021. Enjoy the holiday season and may you have a prosperous new year.  Unemployment – I think it’s fair to say that the spike in unemployment (fastest spike ever) and the subsequent drop in unemployment (fastest drop ever) have given politicians the hyperbole they need, but the rate getting back to 6.7% means a couple of good things going forward. Firstly, the “easy to lose” and “easy to return” jobs were flushed out in the spike, and the jobs that could easily return have. This means that while each percentage point from here on out is going to be harder and harder, the headline risk of massive jobless swings has likely settled for now. Unemployment in the +6’s has been the recent peaks for prior negative economic swings. In 2003, we peaked at 6.3%, 1992 7.7% even the economic crisis in 2009 only saw a peak of 9.9%. So at least the unemployment figures have gotten back to “normal bad” and not “historically bad”. But here is the good news for 2021, from this point forward we will get positive headlines for employment. I think we have crested, the liquidity in the markets has helped, and near term the unemployment outlook is stable. This pandemic is different than a cyclical recession, this can be resolved as quickly as the damage was done, and for between 4-8 quarters we can see a routine and constructive print for joblessness. This will be a supportive series of headlines for markets.  Inflation – Inflation will be a headwind for bonds and cash but will be constructive for some assets. Those invested in equities will see an increase in capital chasing the same number of assets. This inflation will be constructive for stocks and other hard assets from 2021 but will cut into the expectations for the buying power of dollars going forward. Expect long term dollar weakness. Additionally, we’re not alone, this pandemic is global and I anticipate every central bank to prefer adding liquidity to their economies over the risk of inflation. Expect countries that emerge from the pandemic quickly to see a major tailwind from global inflation, those whose course is slower and shutdowns longer to be hampered by it.   Debt – Record low borrowing costs should tee up leveraged companies for success. This is absolutely a situation where “zombie” companies will be created, so investors should be aware of the health of companies they are buying, but long term, allowing companies that have been historically highly leveraged to restructure at amazing rates, or even granting companies that have healthy balance sheets more cheap capital to take on more cap-ex projects for the at least a decade or more will be supportive for the market on the whole. As I write this, the 2-10 spread is .8%, in my opinion giving corporate CFO’s carte blanche to begin issuing new debt and extending all maturities on existing debt. Seeing these companies become so tenacious in the debt market normally would spook investors, but it’s hard to imagine a more supportive environment for borrowers than sub-2% borrowing costs for AAA companies and sub-4% for high yield borrowers. Debt was low for the recovery after 2009 and is now bargain-basement prices. These are rates that are likely to persist through 2021 and with Janet Yellen (Dovish) at the treasury, and no change in the attitude of the Fed I’m not seeing a change in sight. This will likely mean yields will be below inflation for some time as central banks try to juice the recovery at the expense of inflation.  Earnings – Companies have broadly been able to understate their earnings projections through the pandemic. The science of slow-rolling their debts, and lowering the expectations of analysts has been fantastic. Companies across sectors have been able to step over the lowered bar without major disruption this year. Now while, for the most part, the pandemic has given them top cover to have earnings below their historic figures, the companies in the S&P 500 have done a fantastic job this year of collectively using this window to reset the expectations of investors without sounding alarms. Managing expectations lower, then beating them has been a theme in 2020, that in 2021 will look like a great trajectory for earnings as we emerge from COVID-19. This is going to be a fantastic and virtuous atmosphere of rising earnings. The usual suspects for this earning improvement cycle will show up, banks, technology, and consumer discretionary investors will like this reset in the cycle and the aforementioned upswing in earnings these groups are poised for.

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