“The toilet paper had armed guards.”
“We celebrated my birthday with a dinner party over Zoom.”
“My officemate jumped on my desk and drooled on my keyboard during a meeting.”
One day, we’ll look back on these strange days and tell stories about the COVID-19 pandemic of 2020.
But right now, we’re getting through it. One day at a time.
How are you doing? What stories can you share with me about your life right now? Email me at email@example.com and tell me. I’d love to hear about them.
In difficult times, it’s easy to think we are alone. Especially when our loved ones and support system are far away or reduced to virtual connections.
We are all learning how to adjust to a new world and stay grounded when headlines are blaring and our very health and well-being are under threat.
I’m working on being grateful for the great things in this life.
I’m grateful for my wife.
I’m grateful for our children.
I’m grateful for our family, friends, and neighbors.
I’m grateful for work that allows me to help people in my community get through times like these.
I’m grateful for you.
What are you grateful for?
Like WWII and 9/11, we’re living through days that will define future generations and change the very fabric of our society.
I don’t envy the policymakers making grim trade-offs between life, death, and the economy. How long do we socially distance? What about the 10 million+ who have lost jobs?1 Or the businesses that have been forced to close?
I hope with all my heart that each one of them has a financial plan and someone they can go to for advice. But my head knows better. I know that most Americans can’t survive a $1,000 emergency and only 17% have a financial adviser to help them.2
What trade-offs are we willing to make to protect those at greatest risk from the disease? We can’t put a dollar figure on human life. But we can put a dollar figure on the human cost of jobs lost and businesses closed.
The next few weeks are going to be tough for all of us. And I want you to know that I’m here for you.
Layoffs and furloughs are happening and I’m helping affected clients create a game plan to get through the next few months. If this happens to you or someone you love, please let me know immediately so I can help you determine if you’re eligible for special assistance. And, also please remember our COVID-19 pro bono program that we’ve launched to serve people who don’t normally have access to fiduciary advice.
How do we make good decisions with so much uncertainty and mixed information?
We make a choice:
We can choose to crumble under the weight of fear and uncertainty…
We can choose to simply hunker down and endure…
We can choose to grow, flourish, and come out stronger on the other side. We can be grateful for our blessings and focus on what’s within our control: our mindset, our behavior, and the actions we take.
I am fundamentally optimistic about humankind’s ability to weather this crisis and use it to grow.
I’m optimistic about how our society will adapt and change due to this crisis. Some of the greatest changes and innovations in history grew out of frightening, pessimistic times.
I’m optimistic about the heroes fighting the disease on the front lines.
I’m optimistic about the people helping friends, neighbors, and strangers stay safe and comfortable.
I’m optimistic that those with jobs will continue working to keep this country going while we wait and heal.
I’m optimistic about the innovators staying up late in labs, workshops, factories, and offices around the world to create vaccines, treatments, and tools to beat the virus.
I’m optimistic about the new inventions and technologies that will grow out of necessity.
I don’t know what challenges the world will throw at us in the coming days and weeks. I do know that I am grateful to be surrounded by smart, motivated people who push me to do better.
How can you show up for the people around you? How can you be your best self in these times?
How can I help you do it? Email or call and let me know.
Be safe and be well,
|Chris Mullis, Ph.D.
NorthStar Capital AdvisorsFinancial Planning.
Growing your wealth is a combination of making money and saving money. Today we’re focused on the latter half of that equation. Current trends in the debt market could save thousands of dollars per year for mortgage borrowers.
Mortgage rates fell to their lowest level on record today, pulled down by fears that the spread of the coronavirus could weigh on the U.S. economy.
The average rate on a 30-year fixed-rate mortgage fell to 3.29% from 3.45% last week (see chart). This is its lowest level in its nearly 50-year history. The 15-year fixed-rate mortgage dropped to 2.79% from 2.95% the prior week.
Mortgage rates are closely linked to yields on the 10-year Treasury, which this week dropped below 1% for the first time following an emergency Federal Reserve rate cut on Tuesday. Expectations are that the 30-year fixed rate could even drop below 3% in the next few weeks.
These historically low interest rates represent a special opportunity to potentially save thousands of dollars per year by refinancing your mortgage.
Whether it makes sense to refinance depends on a host of factors.
We want to help you do the math and decide if you should refinance. We invite you to share the key parameters of your mortgage loan confidentially and securely using this link:
- Mortgage Loan Questionnaire
(if you own multiple properties, please submit one form per property)
We will dig into your data and make a detailed evaluation. We will come back and advise you on how much you could save now, or what’s your future trigger point for capturing significant savings as rates continue to evolve.
We’re strong believers in the abundance cycle. Please share this offer to family & friends and share the wealth!
(Holiday decorations & countdown courtesy of a very excited 11-year-old named Benjamin Mullis)
Let’s face it. Buying meaningful gifts for our family and friends is really, really hard. If you want to give something that has a larger impact long after the holiday season has passed, why not give the gift of financial education and wisdom for living a fulfilled life?
Given the academic background of our firm, I know the following is going to be a big shocker. Here at NorthStar, we love reading books and we love giving books as gifts! Below you’ll find the NorthStar Guide to Gifts That Pay Off. It’s full of our favorite book and money-related gift recommendations for those ages 4 to 94!
So what’s the most valuable holiday gift of 2019? A fun lesson in financial literacy and living your best life!
NorthStar Capital Adivsors
The end of the year provides a number of financial planning opportunities and issues. These include tax planning issues, issues surrounding investment and retirement accounts, charitable giving, cash flow & savings, and insurance & estate planning issues.
We use the checklist below to proactively scan for many actionables to help serve our clients. In this checklist, we cover a number of planning issues that you need to consider prior to year-end to ensure you stay on track, including:
- Various issues surrounding your investment and retirement accounts including matching capital gains against any investment losses in taxable investment accounts and ensuring that all Required Minimum Distributions (RMDs) are taken.
- Tax planning issues including moves dependent upon your prospects for higher or lower income in the future. You will also want to review where you sit relative to your tax bracket as this is a good time to make moves to fill out your tax bracket for the current year that also might prove beneficial down the road.
- For those who are charitably inclined there are several strategies that will also help reduce your tax liability that can be considered based upon your situation.
- For those who own a business, tax reform has created some opportunities surrounding pass-through income from your business to your personal return. Accelerating or deferring business expenses presents another solid planning opportunity.
- It’s wise to review your cash flow situation as you near year-end to see if you can fund a 529 plan for children or grandchildren or to see if you can save more in an HSA or employer-sponsored retirement plan like a 401(k).
This is a comprehensive checklist of the types of year-end planning issues that you should be discussing with your financial advisor to ensure you maximize cash flow and tax opportunities in the current year and beyond.
Inheritances received via an IRA can be advantageous since you can choose to stretch the required distributions across your life expectancy, giving the assets more time to grow (plus taxes aren’t due until withdrawals are made). Here are key best practices to keep in mind:
- When you inherit an IRA from anyone other than your spouse, you can’t roll it over into your own IRA
- Instead, you have to retitle the IRA so it is clear the owner died and you are the beneficiary
- If you move the account to a new custodian, make sure it is a “trustee to trustee” transfer”
- If the check is mistakenly made out to you, the IRS will consider it a “total distribution” subject to tax and if you are anyone other than the surviving spouse, it would effectively end the IRA
- Be aware there are deadlines for all of these actions
- If the IRA owner dies after age 70 1/2 (when required withdrawals start) and didn’t yet take a withdrawal for the year, the heir has to do so by December 31
(if you miss the deadline, you are subject to a 50% penalty on the amount you should have withdrawn!)
- If you are a nonspouse beneficiary, determine the required distribution by looking up your life expectancy on the single-life table in IRS publication 590
(most IRA custodians will calculate the required withdrawal amount for you but you need to make sure they are using the inherited IRA calculation)
- Once you receive a 1099 form, confirm that the custodian properly indicated the distribution as a code “4”
Dr Robert Clark (NC State University), Dr. Annamaria Lusardi (George Washington University), and Dr. Olivia Mitchell (University of Pennsylvania) analyzed a unique dataset that combined 401(k) performance data for 20,000 employees plus financial literacy data for the same workers.
Investors deemed to be more financially knowledgeable than peers enjoyed an estimated 1.3% higher annual return in their 401(k)s or other defined contribution plans than those with less knowledge.
According to the study’s authors:
“We show that more financially knowledgeable employees are also significantly more likely to hold stocks in their 401(k) plan portfolios. They can also anticipate significantly higher expected excess returns, which over a 30-year working career could build a retirement fund 25% larger than that of their less-knowledgeable peers.”
Financially savvy people tend to save more and are more likely to invest those savings in the stock market. But past studies haven’t clearly demonstrated that these people necessarily make better investment decisions. The authors look at patterns in 401(k) retirement accounts and find that more sophisticated investors do indeed get better returns on their savings.
The following is a brief excerpt from the commencement address by Dr. Chris Mullis (Financial Planner & Founding Partner at NorthStar Capital Advisors) to the graduating class of Providence Day School on May 31, 2013. The full text of Dr. Mullis’ speech, that includes career advice, financial guidance, and a few pearls of wisdom, can be found here.
At our financial advisory firm, we developed complex computer algorithms and use them to manage our clients’ investment portfolios. But the basic steps you need to take to manage your own money well are deceptively simple. First, live within your means and avoid being caught up in rapid lifestyle inflation. You will not live like your parents when you first start out. Second, save and invest your money wisely. Let me elaborate on this point.
Wealth accumulation depends on three factors: how much you save, the rate at which your money grows, and how long you save. That last factor, time, is very, very important. There’s an urban legend that Albert Einstein once said that compounding interest is the most powerful force in the Universe. That quote is likely misattributed but the message is spot on. If you save $5,000 a year for 40 years and earn 8% annually, you will eventually have $1.3M. But if you delay starting for merely 5 years, your results after 35 years will be only $860k. That 5-year delay preserved $25k of short-term capital but ultimately cost you >$400k in the long run. Time is the most powerful lever in the machinery of investing. Nothing else comes close to it.
So what do you need to do? Start saving and investing right out of high school regardless of how hard you think it hurts or how unpleasant the tradeoffs. Even if you set aside only 5% of your paycheck starting out, do it to get into the habit of saving. Delaying getting serious about investing until my 30s was a significant financial mistake on my part. No one ever sat me down and explained how important it is to start investing early. Now that we’ve had this little talk, you’ll never be able to say that no one told you.
Warren Buffett once said, “Someone’s sitting in the shade today because someone planted a tree a long time ago.” It’s planting season and your deadline to act is coming up very soon!
If you have an individual retirement account (IRA) or are considering opening an IRA, 2018 contributions to IRAs can still be made up through April 15, 2019.
Make it a double? If you really want to make the most of the growth potential that retirement accounts offer, you should consider making a double contribution this year: a last-minute one for the 2018 tax year and an additional one for 2019, which you’ll claim on the tax return you file next year. That strategy can add much more to your retirement nest egg than you’d think.
2018 / 2019 Annual IRA Contribution Limits*
- Traditional IRA:
$5,500 + $1,000 if you are 50+ years (2018)
$6,000 + $1,000 if you are 50+ years (2019)
- Roth IRA:
$5,500 + $1,000 if you are 50+ years (2018)
$6,000 + $1,000 if you are 50+ years (2019)
*Note: Your specific maximum contribution limit can be affected by your taxable compensation for the year and the availability of an employer-sponsored retirement plan.
The savings, tax deferral, and earnings opportunities of an IRA make good financial sense. The sooner you make your contributions, the more your money can grow, and the more “shade” you’ll have to enjoy in the future.
If you have any questions about how to make the most of your IRA savings opportunity, please give us a call at 704-350-5028.
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