Charlotte Financial Planning & Advice

WCCB TV Interviews Dr. Chris Mullis

Source: WCCB TV / Local Financial Advisors Say “Stay the Course” Following Historic Market Drop

Dr. Chris Mullis, NorthStar’s Founding Partner, did an on-air interview with WCCB TV news anchor Drew Bollea discussing how people should think about their investments in the midst of a global panic induced by the coronavirus. (click image to watch video)

Ironically, this interview was recorded on March 9, 2020 — exactly 11 years to the day since the crescendo of global panic that marked the bottom of the 2007-09 bear market.

Here’s the memo that we sent clients and friends ahead of this interview that elaborates on the points made during the news report:

March 9, 2020

At this morning’s opening level of 2,764, the S&P 500 is down over 18% from its all-time high, recorded on February 19. Declines of that magnitude are fairly common occurrences — indeed the average annual drawdown from a peak to a trough since 1980 is close to 14%. But such a decline in barely a month is noteworthy, not for its depth but for its suddenness.

As we all know by now, the precipitants of this decline have been (a) the outbreak of a new strain of virus, the extent of which can’t be predicted, (b) the economic impact of that outbreak, which is equally unknown, and (c) most recently, the onset of a price war in oil. (That last one is surely a problem for everyone involved in the production of oil, but it’s a boon to those of us who consume it.)

The common thread here is unknowability: we simply don’t know where, when or how these phenomena will play out. And in my experience, the thing in this world that markets hate and fear the most is uncertainty. We have no control over the uncertainty; we can and should have perfect control over how we respond to it.

Or, ideally, how we don’t respond. Because the last thing in the world that long-term, goal-focused investors like us do when the whole world is selling is — you guessed it again — sell. Indeed, I welcome your inquiries around the issue of putting cash to work along in here.

On March 3, the erudite billionaire investor Howard Marks wrote, “It would be a lot to accept that the US business world — and the cash flows it will produce in the future — are worth 13% less today than they were on February 19.” How much more true this observation must be a week later, when they’re down 18%.

Be of good cheer. This too shall pass.

What if “the other guy” wins?

As the election draws near, we’ve been fielding a lot of questions about what will happen if “the other guy” wins. We made this short video talking through what you need to know.

You can watch it here.

Click to watch it here.

How SCAMS Fool Smart People & How to Avoid BEING TAKEN

DO YOU THINK YOU’RE TOO SMART TO BE SCAMMED?

About 4 out of 5 people say yes.¹ Most also believe they’re better than others at spotting scams.² Yet, scams work—and they’re more prevalent and profitable than ever before.³ In fact, every 15 seconds, someone’s getting scammed.⁴

Each year, that’s billions lost. Seniors alone lose at least $2.9 billion a year to con artists.⁵ And they aren’t even the most vulnerable marks. Millennials are.⁶

So, why are financial scams more rampant and lucrative than ever before? Technology and the internet have been key. They’ve given scammers a better smokescreen and a global reach. They’ve also made it easier to perpetrate mass fraud schemes.⁷

Beyond having better tools, scammers also have better prey these days. The uncertainties of the day have made it easier to manipulate and con people.⁸ After all, we’re naturally averse to uncertainty.⁹ It scares us.¹⁰ It makes us desperate for stability and impulsive when a golden opportunity seems to arise.¹¹

That’s an ideal combination for scammers. And it’s why financial fraud spiked during the pandemic, just like it did during the Great Recession of 2008.¹²

That paints a dark picture, but it’s not all bad news. If you know what modern cons look like, you can easily spot and avoid them.

What Multi-Billion Dollar SCAMS Look Like

1. IMPOSTER SCAMS

Imposter scams involve someone posing as a person you trust as a way to steal from you. They might pretend to be from the government or tech support, or a family member having an emergency. In 2019, they drained bank accounts of more than $667 million, with the average victim losing about $700.³

To spot an imposter scam, always be suspicious of out-of-the-blue callers or new online “friends” requesting wire transfers, payments by gift cards, or access to your computer. Ask for a number to call them back, then contact the agency directly to confirm what the caller told you.

2. IDENTITY THEFT

Identity thieves steal and use personal information for financial gain. About 1 in 3 Americans have been, or will be, the victims of identity theft. About 1 in 5 will be victimized more than once. Credit card fraud is the most common type of identity theft, followed by loan fraud and bank fraud.³ In 2019, child identity theft alone resulted in more than $540 million in losses.⁹

You can protect yourself against identity theft by safeguarding your personal information and records. Shred sensitive documents, regularly change your passwords, and monitor your credit report routinely. Address any suspicious charges or new accounts as soon as possible.

3. SHOPPING SCAMS

Online shopping scams offer great deals on luxury items or something for free if you pay for shipping. While some just want to steal your cash, others try to get you to click on an ad that’ll download a virus or malware to steal your information.¹⁰ In 2019, more than $136 million was lost to shopping scams.³

Avoid shopping scams by always checking out return/refund policies before making a purchase. Pay by credit card, keep receipts for online purchases, and carefully review your credit card charges each month for any suspicious activity.

4. JOB OPPORTUNITY SCAMS

These scams promise opportunities to work from home, start your own business, become a mystery shopper, and more. No matter what income opportunity is presented, they all ask for money up front.¹¹ In 2019, these scams raked in about $85 million, with the average victim losing about $1,300.³

If you’re considering a new business opportunity, avoid a scam by doing your homework. Research opportunities before giving up cash or personal info. Check for any complaints against the company presenting the offer, and always get details up front, in writing.

5. PRIZE SCAMS

You’ve just won! But you have to pay some fee or share some personal information to collect your prize. That’s how lottery and sweepstakes scams work. They try to manipulate you once you’re excited and get you to act quickly.¹² It’s how they stole more than $121 million from Americans in 2019.³

Remember, legitimate sweepstakes and lotteries never require payment for prizes you’ve already won. If you need to pay to collect a prize, it’s a scam. If someone claims to be from a legitimate company, like Publishers Clearing House, look up the company’s phone number and call for confirmation.

How to Turn the Tables on SCAMMERS & Protect Your Finances

You never know when or how you may be targeted by a scam.

Con artists can bait you at any time, and their schemes are becoming increasingly sophisticated and organized.

Some con artists are even joining respected organizations to appear more trustworthy and put a legitimate face on their schemes. Bernie Madoff is a prime example. It’s how he was able to run one of the largest Ponzi schemes in history.¹³

Yet, as tricky as financial fraudsters can be, they aren’t rocket scientists. Remember, no matter how fancy a con artist’s tricks or disguises may be, they ALL rely on the same tactics.

They stress urgency and exclusivity, emphasizing how special you are to have been selected for some opportunity or offer. They play on emotions, like fear and excitement, and they may even present themselves as experts. Above all, they always demand money or information up front before you get anything.¹⁴

Of course, some of these features aren’t exclusive to money scams. Some legitimate opportunities will be time-sensitive or require something up front.

With financial fraud, however, you can usually expect at least one big red flag—like wildly poor grammar, an out-of-the-blue notice of a winning or penalty, or a request to wire money via Western Union or MoneyGram.¹⁵

All that can be easy to overlook when you’re dazzled by an offer for the first time. These details are easier to see as red flags, though, when you take a second or third look.

So, always take your time when you’re considering any new financial offer or investment opportunity.

Ask questions, be skeptical, and seek out feedback from someone you trust.

And if you are victimized by a scam, report it to the Federal Trade Commission here or the Federal Bureau of Investigation here so authorities can take action.

As advisers, we’ve seen how easy it is for people to get swept up and swindled by financial scams, especially when economic turbulence hits. We’ve also helped my clients weigh their options, consider fresh angles, and make strategic decisions that better support their financial goals.

If you’re considering a new investment or you’re thinking of ways to scam-proof your finances, let’s talk. Call us at the number below. We’d love to hear about the opportunities or strategies you’re considering and share some helpful advice.

SOURCES

1 – https://www.getsafeonline.org/news/consumers-think-they-are-too-smart-to-be-scammed/

2 – https://www.nextgov.com/ideas/2020/05/people-think-theyre-too-smart-fall-phishing-scams/165197/

3 – https://www.ftc.gov/reports/consumer-sentinel-network-data-book-2019

4 – https://money.cnn.com/2016/09/20/news/financial-fraud-every-15-seconds/index.html

5 – https://www.aging.senate.gov/press-releases/stopping-senior-scams-efforts-to-prevent-fraud-targeting-older-americans-examined-by-senate-aging-committee

6 – https://www.ftc.gov/system/files/documents/reports/consumer-sentinel-network-data-book-2017/consumer_sentinel_data_book_2017.pdf

7 – https://www.fbi.gov/investigate/organized-crime

8 – https://www.cnbc.com/2020/03/20/coronavirus-scams-on-the-rise-mimic-fraud-in-2008-financial-crisis.html

9 – https://www.experian.com/blogs/ask-experian/the-emotional-toll-of-child-identity-theft/

10 – https://www.consumer.ftc.gov/blog/2017/03/some-online-deals-charge-dont-deliver

11 – https://www.consumer.ftc.gov/features/feature-0019-business-opportunity-scams

12 – https://www.consumer.ftc.gov/articles/0199-prize-scams

13 – https://money.cnn.com/2008/12/29/news/newsmakers/zuckoff_madoff.fortune/

14 – https://onlinelibrary.wiley.com/doi/abs/10.1111/spc3.12115

15 – https://scambusters.org/scamlanguage.html

Strategy is your antidote to hysteria at T-27 days

The coronavirus is still very much with us, as is much of the economic dislocation occasioned by the resulting lockdowns. Granted, we are evidently closing in rapidly on a vaccine—indeed, a number of vaccines. But it may be quite some time yet before most of us will get access to a vaccine, and frustration may abound. Moreover, in the coming weeks we will have to go through a hyperpartisan presidential election, with a variety of voting issues we’ve never had to deal with before.

So before we’re further engulfed by these multiple unknowns, we want to take a moment to review what we as investors should have learned — or relearned — since the onset of the great market panic that began in February/March. And that ended when the S&P 500 Index regained its pre-crisis highs in mid-August.

The lessons, it seems to me, are:

No amount of study — of economic commentary and market forecasting — ever prepares us for really dramatic events, which always seem to come at us out of deep left field. Thus, trying to make investment strategy out of “expert” prognostication — much less financial journalism — always sets investors up to fail. Instead, having a long-term plan, and working that plan through all the fears (and fads) of an investing lifetime, tends to keep us on the straight and narrow, and helps us to avoid sudden emotional decisions.
The equity market went down 34% in 33 days. None of us have ever seen that precipitous a decline before — but with respect to its depth, it was just about average. That is, the S&P Index has declined by about a third on an average of every five years or so since the end of WWII. But in those 75 years, the S&P Index has gone from about 15 to where it is now. The lesson is that, at least historically, the declines haven’t lasted, and long-term progress has always reasserted itself.
Almost as suddenly as the market crashed, it completely recovered, surmounting its February 19 all-time high on August 18. Note that the news concerning the virus and the economy continued to be dreadful, even as the market came all the way back. We think there are actually two great lessons here. (1) The speed and trajectory of a major market recovery very often mirror the violence and depth of the preceding decline. (2) The equity market most often resumes its advance, and may even go into new high ground, considerably before the economic picture clears. If we wait to invest before we see unambiguously favorable economic trends, history tells us that we may have missed a very significant part of the market advance.
The overarching lesson of this year’s swift decline and rapid recovery is, of course, that the market can’t be timed — that the long-term, goal-focused equity investor is best advised to just ride it out.
These are the investment policies our clients have been following all along, and if anything, our experience this year has validated this approach even further.

A word now — really just a repetition of what we’ve said to you before — about the election. Simply stated: it’s unwise in the extreme to exit the quality equity investments you’ve been accumulating for your most cherished lifetime financial goals because of the uncertainties surrounding the election.

Aside from the self-inflicted wound of incurring capital gains taxes, your chances of getting out and then back in advantageously are historically very poor, nor can we possibly be helpful to you in attempting to do so. As we have done all year — and as we do every election year — we urge you to just stay the course.

As always, we’re here to talk any and all of these issues through with you.

Thank you, as always, for your support and your engagement. It is a privilege to know you.

The Investment Answer …simple, but not easy?

Everyone wants to know how to earn the most money with their investments. We all want that, right? Well, the answer is so simple you can scribble it on a cocktail napkin. We made a short video to share that sketch with you and to give you the answer. But be warned! There’s a paradoxical catch — “simple” doesn’t necessary mean “easy.”

Transcript:

Everyone wants to know how to earn the most money with their investments. We all want that, right? Well, the answer — The Investment Answer — is so simple you can scribble it on a cocktail napkin. That’s exactly what my friend and New York Times columnist Carl Richards has done for us in this sketch.

These are the factors that drive portfolio returns in the real world. The big circle on the left are the heavy hitters in rank order of importance. While the tiny circle in the bottom right reflects what doesn’t work.

By far the most influence is wielded by your behavior as an investor. That’s #1 by a wide margin. Do you take the long view with your investments? Do you understand that short-term volatility is normal? And, do you appreciate that pullbacks are temporary and the uptrend is permanent? The second biggest driver of returns is the percentage of stocks in your portfolio. And then what kind of stocks? Small companies have outperformed large companies over the long haul. And, value companies — those priced at a discount relative to their intrinsic value — outperform growth companies over the long term.

What’s not part of the investment answer? What’s is not a path to investing success? Marketing timing, stock picking, CNBC, and your brother-in-law’s advice.

Our team of PhDs at NorthStar Capital Advisors created this data-driven and time-tested approach for carefully managing our clients’ money. It’s formed by observation, by academic research, and by our real-world experience of successful investing over the past 14+ years.

But knowing the answer doesn’t necessarily translate to the success that we all seek. Think about our health. We all know how to live a healthy life, right? Nutrition and exercise. There’s the answer — The Health Answer — But do we faithfully practice these day in and day out, year after year?

To quote Warren Buffet, one of the greatest investors of all time, “Investing is simple, but not easy.” There’s the crucial paradox. “Investing is simple, but not easy.”

We practice the principles of long-term investing that have most reliably yielded favorable long-term results. Those principles are: planning; a rational optimism based on experience, and finally — patience and discipline. If you have any questions about “the investment answer” or that paradox of simple but not easy? We would love to hear from you.

As always, thank you for watching, we appreciate the opportunity to support your financial success, and please be well.

Climate risk (+ baby jaguar)

Need some distractions from your day? Scroll down to the bottom of this article. There’s a baby jaguar.

But first, let’s talk about climate change.

The wildfires, hurricanes, and floods we’ve seen in 2020 (on top of an already-awful global pandemic) make this an important conversation to have.

Think climate change isn’t an issue? Well, the market consensus is moving in the other direction.

Insurers, government entities, and large investors are treating climate change as a major systemic risk to financial markets.¹

Why? Because many companies and sectors are at risk from the costly heatwaves, wildfires, droughts, floods, and hurricanes that come with a warming planet.²

Do scientists agree on climate change? Yes, the vast majority of actively publishing climate scientists – 97 percent – concur that humans are causing global warming and climate change.

Most of the leading science organizations around the world have issued public statements expressing this, including international and U.S. science academies.³

So, what does climate change mean for investors?

Investors worry that climate risk could cause the prospects of certain companies to drop dramatically and ricochet throughout the financial system (much like what happened during the 2008 financial crisis).

But, unlike a global issue such as the coronavirus, the effects will play out differently around the country and the world.

Flood- or wildfire-prone areas could experience disruptions in business or find it difficult to insure homes and structures against damage.

Agriculture could be damaged by droughts and heat stress.

Already-warm areas could become too hot for comfortable habitation.

But, if the world goes all-in on sustainability too suddenly, there’s also a danger that the “transition risk” caused by new regulations or widespread shifts in energy use could also hurt markets or certain sectors of the economy.⁴

Well, what’s the good news?

There’s always hope. Many of the worst effects of climate change will play out over years and decades, not weeks and months.

There’s time for people, businesses, and governments to adapt. And humans are infinitely adaptable.

And there’s hope that the worst-case scenarios about a hotter world might not come to pass.⁵

I believe that optimism and pessimism can (and often should) co-exist.

I’m pessimistic about the climate path we’re on.

I’m optimistic that we will make the changes needed to get on the right path and steer away from the worst effects of climate change.

As a financial planner and wealth manager, I’m also staying on top of the growing body of risk models and research to help my clients chart a path through an increasingly uncertain world.

Ok, enough about climate change. Here are the distractions I promised.

Here’s a jaguar kitten learning how to swim.

And a four-year-old playing Mozart.

And a livestream of the jellyfish at the Monterey Bay Aquarium (with music!).

Deep breath. We can do this.

What do you think? Are you worried about climate change?

What do you think we should do about it?

Warmly,
Chris

Chris Mullis, Ph.D., CDFA®
Founding Partner

Financial Planning.
Wealth Management.
Since 2006AskNorthStar.com
(704) 350-5028

P.S. Markets have been volatile this month. It’s to be expected with so much uncertainty swirling about. We’ll reach out if I have anything critical to share.

¹_{https://www.nytimes.com/2020/09/08/climate/climate-change-financial-markets.html} _{https://www.nytimes.com/2020/07/21/climate/investors-climate-threat-regulators.html}

²_{https://www.spglobal.com/en/research-insights/featured/the-big-picture-on-climate-risk}

_{³https://climate.nasa.gov/faq/17/do-scientists-agree-on-climate-change/}

⁴ _{https://www.bankofengland.co.uk/knowledgebank/climate-change-what-are-the-risks-to-financial-stability}

⁵_{https://www.scientificamerican.com/article/the-worst-climate-scenarios-may-no-longer-be-the-most-likely/}

Frothy? Bubbles?

We’re not writing about cappuccinos, champagne, or bubble bath.

We’re talking stocks.

You may have noticed that the shortest bear market in history is over, and markets recently hit new record highs.

Will stocks keep going higher? Will they stay volatile?

Is another bear market around the corner?

Maybe. Maybe not.

As is pretty common in these situations, market strategists are split.

Some see a new bull market that reflects a recovering economy.¹

Others see troubling signs of a bubble that could burst.²

What could push stocks higher?

A market-ready COVID-19 vaccine or major treatment breakthrough that reignites optimism.
More government stimulus that supports consumers and businesses.
Good economic numbers that suggest we’re on the other side of the recession and the recovery continues.

What warning signs are flashing?

A rally mostly powered by tech mega stocks that isn’t reflected in the broader market.
Uncertainty around a November election that’s already contentious.
A possible “Minsky moment” market collapse fueled by the Fed’s easy money policy and unsustainable stock prices.³
Predictions of a second wave of infection that could provoke more shutdowns.

Bottom line, we can’t predict what comes next in the market and that’s okay. Why? Because it’s all short-term “noise.” History shows that all stock market declines are temporary interruptions in a perennial uptrend.

Since we no one can predict the future and no one can time the market, we’re focused on helping our clients stay fully invested which is the only sure way to capture the entirety of the market’s permanent advance. Those powerful portfolio returns over the long term are the reward for staying calm.

2020 has been the strangest year of our lives (probably yours, too), and it’s foolish to try to time markets right now — or any time for that matter. If you’re thinking about big moves or feeling anxious about what comes next, please reach out. We’ll talk through your ideas or concerns.

¹_{https://www.cnbc.com/2020/09/08/goldman-sachs-10-reasons-the-bull-market-has-further-to-run.html}

²_{https://www.cnbc.com/2020/09/07/stock-markets-cio-says-tech-bubble-not-expected-to-pop-anytime-soon.html}

³_{https://www.cnbc.com/2020/09/03/markets-are-facing-a-potential-minsky-moment-collapse-strategist-says.html}

7 Reasons Life Is Actually the Best It’s Ever Been

If you could be alive at any time in history, when would it be? Would you choose to live right now? Objectively, things aren’t easy for most of us right now. We’re facing social, economic, health, and environmental crises. With all the chaos of today, it can be tempting to lean on nostalgia and believe previous generations had it better or easier. And it can make us long for what seem like simpler times.

We may be too focused on the details to see the big picture. With a look at how far we’ve come, we can more clearly see how good we have it and how things, in many ways, really are getting better.

Consider these seven reasons life is actually the best it’s ever been.

#1 Life Expectancy

We’re living long than people have ever lived before. Worldwide, more than 3 in every 4 people live to be at least 65 years old. In the US, life expectancies for men and women have increased by more than 10 years since 1950. That’s 10 more years the generations before us didn’t have to enjoy retirement, spend time with family, and take in more of the life’s wonders.

#2 Health Care & Medicine

Progress in medicine and health care is one of the reasons we’re living longer than ever. In fact, since 1980, MRIs have been invented, smallpox was eradicated, artificial hearts were developed, and the human genome was sequenced. These and other advancements have done more than just extend the length of people’s lives. They’ve also compressed end-of-life decline, meaning people live better lives longer.

#3 Poverty & Income

Globally, poverty rates have dropped by more than 50% since 2000. In the U.S., 8.4 million people have risen out of poverty since 2014. Also promising, average earnings in the U.S. have increased nearly 20-fold since the 1950s. Adjusting for inflation, some experts say wages have grown by at least 35%, increasing Americans’ purchasing power today when compared to 70 years ago.

#4 Technology

Technological advancements have changed so much of how we live and navigate the world. Since 1950 alone, new technology has brought us credit cards, artificial intelligence, the internet, electric cars, cellphones, and GPS technology. These and other innovations have made our lives easier, safer, and better. In fact, while new tech can save time and reduce effort, it can also help save lives.

#5 Crime

Despite the headlines, over the last 25 years, crime has dropped dramatically in the U.S. Violent crime, like assault, robbery, and homicide, has fallen by more than 51% since 1993. Over the same period, property crime, like theft and fraud, has followed the same trend, dropping by more than 54%.

#6 Working Conditions

Labor conditions and laws have come a long way since the early 1900s, creating safer environments with better protections for workers. From safety regulations and wage laws to discrimination and child labor laws, U.S. workers are better protected than ever. Beyond safety, workplaces are also more diverse than ever before. In fact, the U.S. workforce has seen a surge of older workers, minorities, and women over the past 25 years.

#8 Quality of Life

Quality of life has improved sharply over the last 100 years, with astounding improvements in living standards across all socio-economic divides. In fact, the average standard of living in the U.S. today would have been envied by even the greatest rulers two centuries ago.

By most standards, we’re living longer, happier, better lives than our great-great-grandparents did.

Could the election tank the market? 3 things you need to know

The 2020 election is around the corner, adding another layer of uncertainty to an already volatile market.

This could be one of the most divisive races we’ve seen. We can’t predict its outcome or what it could mean for the economy.

So how can we keep a level head and make informed decisions amid so much chaos?

We made a quick video discussing three things you need to know to help protect your investments in the face of the unknown.

Video Transcript:

This is the FOURTH presidential election that we’ve navigated in our 15 years of helping our clients reduce taxes, invest smarter, and live better.

And we’re here to help you stay level-headed — even in times of chaos. The 2020 election is coming up fast, and we’ve had worried folks ask us: Will it tank the market?

In this video, we’ll give you three things to keep in mind so you can plan for uncertainty.

2020 has been wild, to say the least. And the upcoming election could be one of the most divisive races we’ve ever seen. Add a pandemic, confusing market trends, and it’s no wonder people are worried.

But let’s trade panic for perspective. Here are three WAYS we can prepare for election uncertainty:

#1 — It’s normal for markets to be more volatile in election years. But remember, other factors are always at play, like business cycles, interest rates, corporate profits — and, of course, unpredictable events like the pandemic. So what can you do? Take a deep breath and focus on the post-election period. If you want, we can help you create a plan to pursue long-term success, no matter who wins in November.

#2 — Markets don’t like uncertainty, and they don’t like surprises. So we can expect things to be a bit bumpy in the short term, especially in the weeks before and after the vote.

#3 — Regardless of who wins, the government will be focusing on the coronavirus and the country’s economic recovery. We don’t know what this will look like or how quickly things will happen. With some preparation now, we can help you create a financial plan that accounts for this uncertainty — and you can be less worried about your portfolio.

Listen, we don’t have a crystal ball. But we do have the advantage of knowing what’s happened in the past, and being able to prepare for what could happen in the future. While the past can’t predict the future, we can look to it for powerful perspective.

If you have questions about how the 2020 election might affect your portfolio or you’d like to talk one-on-one, please reach out.

As always — we thank you for your support, we appreciate your engagmement, and please be well.

4 Tips for Rocking Your Personal Finances in College

Heading off to college is an exciting life transition and a major growth opportunity. For many young people, it’s their first chance to manage their own finances. Parents and students who invest a little time, planning, and partnership up front will reap profound benefits for life. Follow these four tips to ensure that you have a great financial launch!

Open a checking account
Often the university credit union or local counterpart is a trustworthy, low-cost option. Download the bank’s mobile app to make easy deposits and to check account balances. Set automatic alerts to provide low-balance notifications or other helpful information. Parents will likely find it convenient to link their bank account to their child’s to provide monthly allowances, etc.

Build a budget
Discuss sources of money and allowances. Know what money is coming in and going out by tracking it. Sign up for Mint.com. Draft a simple spending plan and follow it. Don’t overspend. Don’t forget to budget for an occasional indulgence (within reason!). Resist temptations and impulse purchases. Learn to differentiate between wants versus needs. Expect to iterate a few times on your budget as parents and students adaptively learn the reasonable costs of college life.

Get a credit card
Credit cards are for the convenience and security of not having to carry large sums of cash. Credit cards are NOT for spending money you don’t already have. If you can’t pay off the entire credit card balance each month, you are OVERspending. Avoid on-campus promotions that covertly proffer high-interest-rate cards via enticements of free t-shirts, tumblers, or other trinkets. Again, the university credit union is often a safe space. It’s ideal to have a checking and credit card at the same bank to make payments and management easier. Set alerts (e.g., purchases > $100) to flag transactions above normal spending patterns and protect against fraud.

Start Saving and Investing NOW
I know it’s hard, but having the foresight and the discipline, as a college student, to save and invest will be LIFE CHANGING. No one ever told us this and it is our greatest financial regret. Committing to saving even a small amount each month will add up quickly over time and instill a good habit of saving. Compounding growth is magical — save $20 per month starting at age 18, invest it to grow at 8% per year, and keep doing this for 40 years. You will have contributed $9,600, but your account will have grown to $64,422 thanks to compounded growth. This is your “army of dollar bills” working and growing for you. To get started, open a Roth IRA at a low-cost provider (e.g., Vanguard or Fidelity) and invest your earned income in an S&P 500 index fund. Long-term success is predicated on time in the market, not timing the market.

The budgeting, spending, and savings habits that students form in the coming months and years in college will likely establish their money management persona for life. By cultivating this money-centric parent-student learning partnership, you’re making an investment in your long-term security and happiness.

Should I refinance my mortgage? (It’s more complex than you might think)

If you purchased your house years ago, you might be wondering: is now a good time to refinance?

You’d think the answer would be simple: getting a lower interest rate on a loan is better, right?

However, the right choice really depends on your situation. And with the way fees and mortgage interest work, a refinance is often a bad deal for a homeowner.

We made a short video walking through the key questions you need to ask before jumping into a refinance.