5 Ways Fraudsters May Lure Victims Into Scams Involving Crypto Asset Securities

Content shared from the Security and Exchange Commission (SEC). The SEC’s Office of Investor Education and Advocacy is issuing this Investor Alert because fraudsters continue to exploit the popularity of crypto assets to lure retail investors into scams. Crypto assets may include assets commonly referred to as cryptocurrencies, crypto, coins, and tokens.

Fraudsters often use innovations and new technologies to perpetrate investment scams, and this has been the case with crypto asset securities-related investments. While federal and state regulators continue to bring enforcement actions in this space, recovering money from the fraudsters can be difficult because it can be challenging to trace and recover funds. For example, fraudsters can use technology to obscure their identities or hide the trail of funds using crypto assets. Recovering your investment from a crypto asset-related scam can also be difficult because fraudsters can quickly send your funds overseas.

Fraudsters use a variety of techniques to convince investors to hand over their hard-earned money. Here are five things you should watch out for to avoid losing your money to a scam involving crypto assets.

Fraudsters Connect With You on Social Media Platforms or Through a Supposedly Accidental Text Message, and Then Gain Your Trust.

Fraudsters may initiate contact with potential victims on social media platforms — including professional networking, dating, and messaging websites/apps — or through unsolicited text messages. They may pretend to be an old friend or claim to have contacted you accidentally. The fraudster may quickly move communications with you away from the initial platform. The fraudster may then initiate a friendship or romantic relationship with you to build trust and convince you to invest your money before disappearing with your funds. These relationship confidence scams are sometimes referred to by a term that is as unpalatable as the fraudsters’ conduct — “pig butchering scams.”

One way this type of scam can play out is that after a fraudster has established an online relationship with you, the fraudster may claim to know about lucrative investment or trading opportunities, including investments involving crypto assets. The fraudster may even indicate that a relative or friend works at a financial firm or is an “insider” and therefore is able to provide trading information. The fraudster may direct you to a legitimate-looking (but fake) website or to a widely-used app that can be downloaded from a well-known app store, make it look like you have profited, and even allow you to withdraw a small amount of “profits,” further gaining your trust. The fraudster may then ask you to invest larger sums of money. When you want to withdraw your funds, the fraudsters often come up with an excuse why that is not possible, or they may tell you for the first time that you must pay more to cover fees or taxes. Frequently, there is no way you will recover your investment or any “profits” so paying additional funds only causes you to lose more money.

For anyone you have met solely online or through an app:

1. Do not make investment decisions based on their advice or solicitation. Note that fraudsters may direct you to get Bitcoin at a Bitcoin ATM (or kiosk) or through a crypto platform in order to make investment deposits, and then tell you where to send that Bitcoin. Keep in mind that an investment may not be legitimate if you are required to pay for it with crypto assets.

2. Do not share with them any information relating to your personal finances or identity. Do not given them anything like your bank or brokerage account information, tax forms, credit card, social security number, passport, driver’s license, birthdate, or utility bills.

Fraudsters Exploit the Hype Around Emerging Technologies Such as Artificial Intelligence (AI).

Fraudsters may use the growing popularity of artificial intelligence (AI) as a hook for luring investors into crypto asset securities-related investments. It might seem exciting to invest in crypto asset-related investments that have a connection to AI, but be careful. Fraudsters often use the hype around new technological developments, like emerging AI technologies, to lure investors into scams. Fraudsters may use catchy AI-related buzzwords and make claims that you will make a lot of money when their only intention is to steal your money. They may claim to deploy bots that use AI to find the best crypto asset-related investments.

Fraudsters also may use AI technology itself to produce realistic looking websites or marketing materials to promote investment scams, including crypto asset-related investment scams. Similarly, they may use AI technology to create “deepfakes” — cloning, altering or faking voices, images, and videos to deceive investors. They may even create deepfakes of celebrities, government officials, or your loved ones in order to gain your trust or to convince you to send funds.

Fraudsters Impersonate or Exploit Trusted Sources.

Be aware that communications — including phone calls, voicemails, text messages, messages via social media, emails, letters, and certificates — may falsely appear to be from official U.S. government sources, including the SEC. If you receive a communication that appears to be from the SEC, do not provide any personal information until you have verified that you are dealing with someone from the SEC, and not an impersonator.

AI technology has made it even easier for fraudsters to impersonate government agencies, organizations, and individuals in luring investors into scams. Fraudsters may even impersonate your friends or family members using AI technology to create deepfakes. They also may hack your friends’ or family members’ social media accounts, and then post or send messages pretending to be from them. For example, they may post that your friend or family member has become a crypto asset expert and seeks friends to join in trading or investing.

Even if you are certain that an investment pitch is coming from a friend or family member, keep in mind that they may have been fooled into believing that the investment is legitimate when it is not. Sometimes fraudsters target communities or groups by recruiting leaders or others to pitch an investment without them knowing that the “opportunity” is a scam.

Fraudsters May Pump Up the Price of a Crypto Asset and Then Sell at Your Expense.

Fraudsters may conduct pump-and-dump schemes with crypto assets, including so-called “memecoins” that refer to popular culture or internet memes. For example, fraudsters may create a memecoin and then tout it on social media – sometimes in what they refer to as a “pre-sale” – to get others to buy and “pump” up, or increase, its price. Then the promoters or others working with them “dump,” or sell, before the hype ends, profiting from the pumped up price. Typically, after the promoters sell and take their profit, the price decreases rapidly, and everyone else who bought the tokens loses most of their money. Never make investment decisions based solely on information from social media platforms or apps.

Fraudsters Demand Additional Costs That They Falsely Claim Will Allow You to Withdraw From Your Account, or to Recover Losses.

In investment scams, including ones that involve crypto asset securities, fraudsters may demand that you pay additional costs, fees, or taxes to withdraw money from your account. This is an example of an advance fee fraud, where investors are asked to pay a bogus fee upfront before receiving anything. For example, fraudsters may falsely tell you that your account has been frozen by a regulator or because a regulator is investigating your account. They may ask you to pay a large deposit, fee, or sum of taxes to unfreeze your account. If you pay, however, you are unlikely to receive your initial investment and will also lose the additional payment.

Another way fraudsters may trick you into paying additional costs is by telling you they “mistakenly” deposited money into your account and ask you to refund the money. They never actually put money in your account – it’s just a ploy to convince you to give them more money.

Fraudsters also may target you if you already have lost money or crypto assets due to bankruptcy or a scam. They may ask you to send them the private key to access your crypto assets, or to put in additional money or crypto assets, offering to “help” you recover what you lost. In reality, if you pay, you likely will not get back what you put in and will instead have been scammed again.

***

Don’t get caught up in the fear of missing out (FOMO) on a purported investment opportunity that seems new or “cutting-edge.” If you are considering an investment involving crypto asset securities, look out for the tactics described above and other warning signs of an investment scam.

5 Simple Steps to Take BEFORE You Sell Your Veterinary Practice

We recently spoke with Kayla Donovan about her thoughts on selling a veterinary practice. Below, she's shared an overview for vet practice owners.*

Owning a veterinary practice can be a fulfilling and financially rewarding venture. However, it also comes with its unique set of financial challenges. In this blog, we'll explore the critical role of personal financial management for veterinary practice owners and how your personal finances can significantly impact the success of your practice.

As a veterinary practice owner, your personal financial stability is closely intertwined with the health of your business. By understanding and managing your personal finances effectively, you not only ensure your own financial well-being but also lay a solid foundation for the growth and prosperity of your practice.

1. Establish Financial Goals

Setting clear financial goals is the first step towards securing your financial future. As a veterinary practice owner, it's crucial to have both short-term and long-term goals for your personal finances. Short-term goals may include paying off debt, building an emergency fund, or saving for a family vacation. Long-term goals might involve retirement planning, investing in real estate, or funding your children's education.

By defining these goals, you create a roadmap for your financial journey. These goals will serve as a source of motivation and direction, helping you make informed financial decisions.

2. Plan for Cash Flow

Managing cash flow is paramount for personal financial stability and the success of your veterinary practice. To ensure you have enough funds to cover both personal and professional expenses, consider creating a detailed cash flow plan. This plan should account for your practice's income and expenses as well as your personal financial obligations.

A well-structured cash flow plan allows you to allocate funds efficiently, ensuring that you can reinvest in your practice, pay yourself a fair salary, and maintain a healthy work-life balance.

3. Manage Debt

Debt management is a critical aspect of personal finance. High-interest debts can quickly erode your financial security and put your practice at risk. It's essential to develop a debt repayment plan that prioritizes paying off high-interest debts first while maintaining necessary business and personal expenses.

Consider consolidating high-interest debts into lower-interest options, such as a business loan or personal line of credit. This can reduce the financial burden and help you regain control of your finances.

4. Plan for Retirement

Planning for retirement is often overlooked by many veterinary practice owners. However, it's a crucial step in securing your financial future. Working with a financial advisor who specializes in retirement planning can help you create a tailored retirement plan that aligns with your personal goals and the financial needs of your practice.

By contributing to retirement accounts and investments, you not only secure your own retirement but also ensure the continued success of your practice, as a well-prepared owner can transition out of the business smoothly when the time comes.

5. Seek Professional Counsel

Aside from a personal Financial Planner, there are two other relationships you must have before selling your veterinary practice. 

1. A Trusted CPA (ideally one who specializes in veterinary practices)

2. An experienced Practice Broker

The value of an experienced Practice Advisor can’t be discounted… here are a few things they’ll help you to consider before putting your business on the market.

Preparation is Key: Start planning early with your broker to maximize offers. They'll help construct a roadmap, ensure clean financials, and offer guidance on making your practice more marketable.

Timing Matters: Discuss your personal and professional timing with your advisor, aligned with market trends. Timing the sale right can significantly impact offers and opportunities.

Know Your Worth: Work with your advisor and accountant to determine your practice's value and uncover growth opportunities. Early valuation helps shape your roadmap.

Unlock Higher Offers: Utilizing a broker not only ensures higher offers but also streamlines the sales process, allowing you to focus on running your practice stress-free. Don’t leaving money on the table by trying to do it on your own!

Conclusion

In summary, mastering your personal finances as a veterinary practice owner is not just about securing your own future; it's about ensuring the continued success and growth of your practice. To thrive in the veterinary industry, follow these five key money moves:

1. Set clear financial goals for both the short and long term.

2. Develop a cash flow plan that balances personal and professional expenses.

3. Prioritize debt management and consolidation to reduce financial stress.

4. Collaborate with a financial advisor to create a solid retirement plan.

5. Aligning yourself with the right trusted advisors can make all the difference in successfully selling your practice. 

By taking action now to improve your personal finances, you are setting the stage for a prosperous future for both you and your veterinary practice. Your financial stability and success go hand in hand, and with careful planning and dedication, you can achieve both.

ABOUT TRIUNE FINANCIAL PARTNERS

Triune Financial Partners is committed to empowering people with life-changing financial counsel. Triune is an independent firm that values clarity, simplicity, and transparency. We're a fiduciary, which means we always put our clients' interests first. In addition to Financial Life Planning for individuals and families, we also serve 100+ businesses, churches and nonprofits to craft powerful 401(k) and 403(b) plans for their organizations. Whether you're working with one of our Financial Life Planners or setting up a 401(k) plan for your organization, Triune is here to help you thrive financially.

Interested in working with us? Get in touch here.

*The content shared in this blog post includes material and viewpoints from a collaborating entity, Kayla Donovan of Evo Transition Partners. Please note that the business operations, opinions, and perspectives presented by the collaborator are solely their own and do not necessarily reflect the views, policies, or endorsements of Triune Financial Partners, LLC (Triune). Triune does not warrant or assume any legal liability or responsibility for the accuracy, completeness, or usefulness of any information, product, or process disclosed by the collaborator. The inclusion of any third-party content does not imply endorsement or recommendation by Triune.

Building a Diversified Portfolio for Tech Workers in Uncertain Times

Written by Brad Banowetz, Financial Planner

You know that feeling of hitting refresh on your browser and seeing your company stock soaring? That rush of excitement, the sense of being part of something groundbreaking, and the tantalizing whisper of early retirement. For many of us in the tech world, it's a familiar experience, and one that often comes bundled with a generous package of company stock options. But let's be honest, that feeling can also be a double-edged sword. While riding the rocket ship of a fast-growing tech company can be exhilarating, there's also often a hidden danger lurking beneath the surface: an overly concentrated portfolio.

At Triune Financial Partners, we've seen firsthand the unique challenges tech workers face with concentrated stock positions. As a former Tesla employee, myself, I understand the allure of riding the wave of a high-growth company. But as a financial advisor, I also know the importance of diversification – spreading your assets across different industries and asset classes to mitigate risk, weather market storms, and accomplish personal goals.

Why Diversify?

Imagine riding a unicycle down a winding mountain path. Every bump, every gust of wind threatens to throw you off balance. That's what a concentrated portfolio feels like in volatile markets. One bad turn for your company stock, and your entire financial future could be thrown into jeopardy.

Diversification is like riding a sturdy mountain bike. With multiple wheels and gears, you can navigate uneven terrain with greater stability and control. This doesn't mean abandoning your beloved tech stock entirely. It simply means allocating a portion of your wealth to other sectors, asset classes, and even geographically diverse investments.

The Challenges of Tech-Heavy Portfolios

• Volatility: Tech stocks are notorious for their up and down cycles. While the potential for high returns is enticing, the potential for significant losses is just as real. A concentrated position amplifies this risk, leaving your financial wellbeing dangerously exposed to the fortunes of one company.

• Lack of Income: Many tech companies prioritize reinvesting profits for growth rather than paying dividends. This means relying solely on stock appreciation for income in retirement can be risky. Diversifying into income-generating assets like bonds and dividend-paying stocks can provide a more stable financial cushion.

• Overconfidence: Riding the wave of a successful company can breed overconfidence. Investors may underestimate the risks involved and neglect diversification, potentially setting themselves up for a rude awakening when the market inevitably changes.

Beyond the Numbers: Focusing on Your Goals

Financial planning is about more than just numbers on a spreadsheet. It's about understanding your goals and values to help craft a plan that leads you to achieve your financial dreams. This plan starts with understanding your current financial picture, looking at where you want to go, and taking steps to get you from point A to B. At Triune Financial Partners, we believe in a holistic approach, considering not just your investments but also your debt, spending habits, and long-term goals is the key to a successful financial future. Investing is just one piece of the puzzle.

It's common for advisors not focused on holistic planning to stop at the investment management part of diversification. This approach strictly looks at what you currently have in your portfolio and determines how much you need to sell based on what the suggested allocations typically look like – typically 5% to 10% of your net worth. For example, an individual with a $1M net worth, shouldn’t hold more than $50,000 to $100,000 in one stock. Working with an advisor that is only focused on your investment allocation will tend to lead you down a path of high tax implications and unclear direction on how to use the funds. 

Building a Diversified Portfolio

At Triune, we focus on holistic planning which means your goals are what drives the rest of the plan. Instead of strictly looking at your investments as a percentage, we’ll help you identify where you’d like to go and how you can use your portfolio to get you there. From that point, we’ll then build out a plan based on your risk tolerance to help sell off portions of your concentrated portfolio to allocate it towards the proper asset. For example, if you want to carve off part to use for a house down payment in 5 years – that will get invested much differently than if you tell us you’d like to carve off a portion for your retirement in 30 years. This goals-based approach allows us to be intentional about where to park funds to make sure they are there when you need them. 

Fortunately, there are effective strategies for tech workers to diversify their portfolios without sacrificing their belief in their company's future. Here are a few tips:

• Set Goals: One size fits all approaches don’t work here. Your life is personal and involves short, medium, and long term goals. Each goal requires specific strategies and plans to accomplish. 

• Sell gradually: Selling a large portion of your stock all at once can trigger significant tax consequences. Consider a gradual divestment strategy, spreading out the sale over time to minimize tax impact.

• Consider Tax Consequences: Understanding your income and the different tax implications of stock awards is important to minimizing the impact taxes have on your plans results. Implementing specific strategies can help reduce this burden even further. 

• Seek professional help: Navigating the complexities of portfolio diversification can be overwhelming, especially for busy tech workers. Consulting a qualified financial advisor can help you develop a personalized strategy that aligns with your goals and risk tolerance.

The Triune Difference

As an independent firm, we're not beholden to any specific products or financial institutions. We're free to prioritize your best interests and provide objective, unbiased advice. We also value clarity, simplicity, and transparency, ensuring you understand every step of the process.

Whether you're a seasoned tech veteran or a fresh-faced startup employee, remember, your financial future is not tied to the fate of any single company. Embrace diversification, and empower yourself to build a resilient portfolio that can weather any storm. At Triune Financial Partners, we're here to guide you every step of the way.

Contact us today to schedule a free consultation and take control of your financial future.

Remember, diversifying your portfolio is not about abandoning your dreams. It's about building a stronger foundation for achieving them.

ABOUT TRIUNE FINANCIAL PARTNERS

Triune Financial Partners is committed to empowering people with life-changing financial counsel. Triune is an independent firm that values clarity, simplicity, and transparency. We're a fiduciary, which means we always put our clients' interests first. In addition to Financial Life Planning for individuals and families, we also serve 100+ businesses, churches and nonprofits to craft powerful 401(k) and 403(b) plans for their organizations. Whether you're working with one of our Financial Life Planners or setting up a 401(k) plan for your organization, Triune is here to help you thrive financially.

Interested in working with us? Get in touch here.

Aligning Your Values & Your Money: Financial Wellness in the New Year

The new year has begun, and like many of us, you have probably set a few New Year’s Resolutions. And like the majority of Americans, you will probably quit on your resolution within three months.

Womp womp. 

Kind of a downer, right? We feel it, too. 

But it’s the reality – many of us fail to stick to our goals, even when we have the best intentions.

And while we cannot give you advice on how to stick with your health goal, or help you read the 12 books you’ve committed to reading, we can help set you up for success with your financial goals. 

One of the most critical steps to accomplishing your financial goals is ensuring they are aligned with your values… your “why”. 

Aligning your values with your financial goals will help you to stay on track (or get back on track if you get knocked off), and will facilitate greater financial wellness along the way. Because as they say, it’s about the journey, not the destination. 

So let’s dig in and discuss some of the fundamentals of financial wellness, and make a game plan for aligning your unique personal values with your money. 

What is Financial Wellness?

Financial wellness goes beyond simply having enough money. It encompasses a holistic approach to managing our financial lives, taking into account our emotional, mental, spiritual and physical well-being. 

Financial wellness is about having a sense of control over our finances. It is about knowing where our money is going and making conscious decisions about how we spend, save, and invest.

When we are financially well, we are not only focused on the present moment, though we are likely able to enjoy it more fully. We also have a long-term perspective and are able to make decisions that will benefit us in the future. We are able to set realistic goals and create a plan to achieve them. We are also able to navigate unexpected financial setbacks and make adjustments as needed.

The Connection Between Values and Money

Our values play a significant role in shaping our financial decisions. They serve as a compass, guiding us in determining what brings us joy, satisfaction, and fulfillment. By understanding our core values, we can make intentional choices that align with our beliefs and priorities.

Identifying Your Core Values

Take some time to reflect on what truly matters to you in life. What are the guiding principles that shape your decisions and actions? Is it family, adventure, health, spiritual growth, or contributing to a cause you believe in? Identifying your core values will help you align your financial goals with what you find most valuable.

How Values Influence Financial Decisions

Once you have a clear understanding of your values, you can start evaluating how they impact your financial decisions. For example, if two of your core values are "family" and "adventure", you could invest more thoughtfully in family vacations to make lasting memories. We like to refer to these investments as getting a "good return on life". 

Steps to Align Your Values with Your Finances

Now that we understand the importance of aligning our values with our money, let's explore some practical steps to achieve financial wellness.

Evaluating Your Current Financial Situation

The first step is to evaluate your current financial situation. Take stock of your income, expenses, debts, giving and savings. This evaluation will provide a clear picture of where you stand financially and help you identify areas that may need improvement.

Setting Financial Goals Based on Your Values

Once you have a thorough understanding of your financial situation, it's important to set goals that align with your values. These goals can be short-term, such as paying off debt or saving for a vacation, or long-term, such as purchasing a home or planning for retirement. By setting goals that are meaningful to you, you are more likely to stay motivated and committed to achieving them.

Creating a Value-Based "Budget"

As you may have read before, we don't really believe budgets work. So we'll call it a Spending Plan. A spending plan is a powerful tool that can help you align your values with your finances.

As you create your spending plan, allocate your income to reflect your priorities. Consider how much you want to allocate to different categories such as savings, investments, travel, health, home improvement, giving, etc. This is often the first step to aligning your money with your values... in essence, you're "voting with your dollar"... and you're casting a ballot for the life you want to live. 

Maintaining Financial Wellness Throughout the Year

Financial wellness is an ongoing journey. It requires regular check-ins and adjustments to ensure that we stay on track. Here are some tips to help you maintain financial wellness throughout the year:

Regular Financial Check-ins

Set aside time regularly to review your financial progress. Are you on track for what's most important to you? Use this opportunity to make any necessary adjustments or modifications to your financial plan.

Adapting Your Financial Plan as Your Values Evolve

Our values may evolve over time as we gain new experiences and perspectives. As your values change, it's important to revisit your financial plan and make adjustments accordingly. Regularly reassess your goals and ensure they continue to reflect what is important to you.

Overcoming Challenges in Aligning Values and Money

Aligning our values with our money is not always easy. There are often challenges that can hinder our progress. Here are some common challenges and strategies to overcome them:

Dealing with Financial Stress

Financial stress can make it difficult to align our values with our money. It's important to practice self-compassion and develop healthy coping mechanisms to manage stress. Seek support from loved ones, mentors or consider consulting a financial professional who can provide guidance and help you navigate difficult financial situations. 

Balancing Multiple Financial Goals

It's common to have multiple financial goals that may sometimes compete with one another. When faced with competing goals, prioritize based on your values. It may be helpful to break down larger goals into smaller, manageable steps. By taking a systematic approach, you can make progress towards each goal while ensuring alignment with your values.

Conclusion

In conclusion, aligning your values with your money is a powerful way to achieve financial wellness. By understanding the concept of financial wellness, recognizing the connection between values and money, and taking practical steps to align your finances with your values, you can create a life that is both financially secure and meaningful. Remember, financial wellness is a continuous journey, so regularly revisit and adapt your financial plan as your values evolve. May this new year be an opportunity for you to align your values and money, bringing you closer to a life of fulfillment and satisfaction.

ABOUT TRIUNE FINANCIAL PARTNERS

Triune Financial Partners is committed to empowering people with life-changing financial counsel. Triune is an independent firm that values clarity, simplicity, and transparency. We're a fiduciary, which means we always put our clients' interests first. In addition to Financial Life Planning for individuals and families, we also serve 100+ businesses, churches and nonprofits to craft powerful 401(k) and 403(b) plans for their organizations. Whether you're working with one of our Financial Life Planners or setting up a 401(k) plan for your organization, Triune is here to help you thrive financially.

Interested in working with us? Get in touch here.

5 Powerful Reasons Business Owners Should Establish a 401(k) Plan

Saving for retirement is a no-brainer – at least, it should be.

But for some business owners, creating a 401(k) plan is not on their “to-do list.”

We’ve worked with hundreds of business owners and seen countless times the value of offering a retirement plan – not just for your employees, but for you. There are probably some benefits you aren’t aware of, so let’s dive into why offering a 401(k) plan will benefit you.

1. Retirement saving and investing. 

This one seems obvious, but it’s worth mentioning.

Saving for retirement is an essential part of any Financial Life Plan. One of the most common ways–and first steps–is to contribute to your 401(k) plan. Studies suggest that you should save at least 15% of your gross earnings (depending upon life stage and goals) for retirement. The maximum contribution you can make in 2023 is $22,500, or $30,000 if you’re age 50 or older. You can choose if your contributions are either Pre-tax or Roth. Unlike IRAs, there are no income limits for Roth in a 401(k) plan, so even high-income earners have options.

When it comes to saving for retirement, the earlier, the better. For both you and your employees, the benefits of a 401(k) are unmatched when it comes to creating a strong plan for retirement

Read More: The Basics of Retirement Planning

2. Tax Planning

If you don’t currently offer a 401(k) plan, you might be missing out on some significant tax benefits.

Many small business owners overpay on their income taxes, but a properly designed 401(k) retirement plan can help you save money on taxes. Business owners get tax deductions for their pre-tax contributions, employer matching contributions, as well as plan expenses. Some of our clients choose to utilize al Profit-Sharing option in their plan. 

Profit Sharing is a way to save up to $66,000 ($73,500 for those 50+) inside a properly designed 40(k) plan. The tax savings on that amount can be more than the contributions for employees. This means some of the money you were going to pay to the government in income taxes goes to your employees instead.  Win / Win! 

Let us help you determine if Profit Sharing is a good option for you based on your team’s specific demographics. A fiduciary like Triune will work closely with your CPA and a Third Party Administrator (TPA) to determine the right amount for you to put into a Profit-Sharing plan and maximize benefits.

You might be wondering the value of redirecting some of this money to your employees, and this leads directly into our next three points: Recruit, Reward, Retain. 

3. Recruit

Offering a retirement plan option to your employees is a significant component of the total compensation package. In fact, many employees look for this specifically when seeking work. 

So it’s become increasingly mainstream to offer a 401(k) plan with a robust matching formula. This can be used as a recruiting tool–and for smart business owners, marketing matching benefits is a key part of their recruiting strategy.  Discretionary Profit-Sharing on top of matching, tied to a 6-year graded vesting schedule, can be the cherry on top!

4. Reward

Rewarding your employees is a key way to ensure their dedication to your business goals–and we’re not talking about pizza parties or “Casual Fridays.” Many employers choose to offer a 401(k) match to their employees, and some make a Profit-Sharing contribution at the end of the year. Some of our clients do this every year, while others choose to only enact Profit-Sharing if they have a really good year in business. 

Creating targets that everyone can work toward together–and then rewarding your team for hitting them–is not just a great way to reward your employees, but to build a culture of team players.

5. Retain

By regularly rewarding your employees with meaningful incentives, you’ll retain them for longer than the average business owner.

Retaining employees longer than a year or two is challenging in this market. But most companies don’t offer a Profit-Sharing incentives–so this can make you stand out as an employer.

Of course, you’ll need to communicate the true value of what you’re offering to your team. If one of your 26-year-old employees gets an extra $2,500 into their 401(k) because everyone hit their targets and the company increased revenue, that could be worth up to 10X that amount by the time they retire.

Read More: Why You Need a Second Opinion Service For Your 401(k) Plan

Conclusion

If you’re a business owner ready to offer a 401(k) plan, please reach out to learn more about working with Triune. Many financial advising firms don’t have the capacity to personalize 401(k) plans and Profit-Sharing. We work closely with all our clients to custom design 401(k) plans specific to their needs. We would be honored to visit with you about your situation.

ABOUT TRIUNE FINANCIAL PARTNERS

Triune Financial Partners is committed to empowering people with life-changing financial counsel. Triune is an independent firm that values clarity, simplicity, and transparency. We're a fiduciary, which means we always put our clients' interests first. In addition to Financial Life Planning for individuals and families, we also serve 100+ businesses, churches and nonprofits to craft powerful 401(k) and 403(b) plans for their organizations. Whether you're working with one of our Financial Life Planners or setting up a 401(k) plan for your organization, Triune is here to help you thrive financially.

Interested in working with us? Get in touch here.

Is Too Much Cash a Bad Thing? An Analysis of the Pros and Cons

It’s easy to assume there’s no problem with having a lot of cash on hand. After all, you do need to have cash on hand in many situations. Whether it's for paying bills, saving for goals, or simply having some extra spending money, cash is an essential part of our daily lives.

But is there such a thing as having too much cash? There can be. 

In this article, we'll take a closer look at the concept of "too much cash" and examine the pros and cons associated with holding excess funds.

Btw… when we say “cash”, we mean the money you have in checking, savings or money market accounts. 

Understanding the Concept of “Too Much Cash”

Before we dive into the pros and cons, let's first define what we mean by "too much cash.”

Essentially, this refers to a situation where an individual or business has more money on hand than they need for their immediate needs or planned expenses.

While having some extra cash can provide a sense of security and freedom, holding too much can lead to missed opportunities and other potential drawbacks

How Much Cash is Too Much Cash?

The answer to this question will vary depending on a number of different factors, including an individual's income, expenses, and financial goals.

Here’s an example for how we might determine this number for a Triune client:

Basic Situation 

• The client’s short-term needs include their emergency fund, travel, and a minor home improvement. 

• The client spends ~$7,500/mo on their lifestyle, plans to spend $10,000 on a home improvement project, and wants $5,000 for their travel this year.

Determining the Right Amount of Cash

• $22,500 – Emergency Fund (this client is comfortable with three months’ lifestyle costs)

• $10,000 – Home Improvement 

• $5,000 – Travel 

Total Cash Needed = $37,500

If the client has cash above $37,500, then it should likely be put to better use (like paying down high interest debt or investing)

The Role of Cash in Personal Finance and Business

Cash is, of course, a tool that we use to purchase goods and services. However, it also provides a sense of security and flexibility.

Cash reserves can be used to weather unexpected financial setbacks or plan ahead for major expenses or goals. For businesses, cash is an important component of day-to-day operations, helping to fund growth and handle unforeseen expenses.

However, holding onto excess cash can have some downsides.

For example, if that cash is simply sitting in a low-interest savings account, it may not be earning as much as it could be. We see a Financial Life Plan in “time horizons”, and if the time horizon for your goal is within two years, then keeping it in savings (ideally a high interest account) is wise. But if you have cash you don’t really need for more than 2 years, then paying down debt more aggressively or investing the money is likely a smart move. 

So while having some extra cash on hand can provide a sense of security and flexibility, holding onto too much can have potential drawbacks. Be sure to consider factors like interest rates, investment opportunities, and personal financial goals in order to determine the appropriate amount of cash to hold onto. And of course, you should always speak to your financial advisor about how much cash you need available for your lifestyle.

The Pros of Having Excess Cash

While holding too much cash can be ill-advised depending on your financial goals, there are certainly some benefits to having a solid reserve of funds on hand. Below, we’re sharing a few advantages to consider.

Financial Security and Emergency Funds

Perhaps the most obvious advantage of having excess cash is the sense of security it provides. By having a buffer of funds available, individuals and businesses alike can weather unexpected financial challenges without having to resort to taking on debt or selling off assets.

An emergency fund can cover expenses like medical bills, car repairs, or job loss without disrupting long-term financial plans or causing undue stress. In addition, having excess cash can provide peace of mind and reduce anxiety around financial uncertainty. 

Flexibility in Decision Making

Cash reserves can provide a degree of flexibility when it comes to making financial decisions.

For individuals, this could mean being able to take time off from work without worrying about paying the bills, or having the funds to pursue a new hobby or interest. For businesses, a cash reserve could allow for more experimentation and risk-taking with new products or ventures.

Having excess cash can also provide the freedom to make choices that align with one's values and priorities. For example, an individual may choose to take a lower-paying job that offers more fulfillment, or a business may choose to invest in sustainable practices that align with their mission.

Increased Bargaining Power

Whether it's negotiating a lower price on a large purchase or securing better loan terms, having a strong cash position can make it easier to achieve desired outcomes.

It can also provide cushion in negotiations and reduce the pressure to accept unfavorable terms. This can lead to better outcomes and more favorable agreements over the long term.

The Cons of Holding Too Much Cash

Now that we’ve reviewed possible benefits to having excess cash on hand, there are also some drawbacks to consider. Below, we’re sharing a few potential downsides. 

Inflation and Loss of Purchasing Power

One of the biggest risks associated with holding excess cash is the potential for inflation to erode its value over time. As prices rise, the purchasing power of cash can decrease, meaning that holding onto too much cash can actually result in a net loss over the long term.

For example, if an individual holds onto $10,000 in cash for 10 years, and inflation averages 2% per year during that time, the purchasing power of that $10,000 will have decreased to approximately $8,166. This means that even though the individual still has $10,000 in cash, they can only buy goods and services that are worth $8,166 in today's dollars.

Opportunity Cost of Uninvested Cash

While some level of cash reserves can be advantageous, holding onto too much can mean missing out on potentially higher returns available through investing in stocks, mutual funds, or other assets.

For example, if an individual holds onto $50,000 in cash instead of investing it in a diversified portfolio of stocks and/or bonds, they may miss out on potential returns of 7-10% per year, depending on market conditions. Over a 10-year period, this could mean missing out on hundreds of thousands of dollars in potential investment gains.

Potential Mismanagement and Overspending

Finally, holding onto excess cash can potentially lead to poor financial decisions or overspending. Without a plan in place for how to allocate funds, individuals or businesses may be more prone to impulse purchases or other financial missteps.

For example, if an individual receives a large windfall of cash and decides to keep it all in cash without a plan for how to use it, they may be more likely to overspend or make poor financial decisions. Similarly, if a business has excess cash on hand and doesn't have a clear plan for how to allocate it, they may be more likely to make unnecessary purchases or investments that don't align with their long-term goals.

While holding onto excess cash can provide a sense of security and stability, it's important to consider the potential downsides and risks associated with doing so. By carefully evaluating your financial goals and needs, and developing a clear plan for how to allocate your assets, you can make more informed decisions about how much cash to hold onto and how to invest the rest.

Striking the Right Balance

So how can individuals and businesses determine the right amount of cash to hold?

It ultimately comes down to assessing financial goals and needs, along with considering the aforementioned pros and cons. Your financial advisor can help you think through what the best course of action is based on your unique situation and goals.

Below are a few strategies to keep in mind.

Assessing Your Financial Goals

The first step in finding the right balance of cash reserves is to assess personal or business financial goals. Individuals and businesses should consider what short-term and long-term financial needs they have, as well as what objectives they hope to achieve with their funds.

Diversifying Your Assets

One strategy for managing cash holdings is to diversify assets across different types of investments.

For individuals, this could mean investing in stocks, bonds, or real estate alongside cash reserves. For businesses, diversification could involve investing in new products or services, or exploring alternative revenue streams to supplement cash holdings.

Regularly Reviewing Your Cash Position

Finally, it's important for individuals and businesses alike to regularly review cash holdings and assess whether they're maintaining the right balance.

This could involve setting up regular financial planning meetings, or working with a financial advisor to establish a long-term strategy for managing assets and cash reserves.

Conclusion

There's no one right answer to the question of whether holding too much cash is a bad thing. For some individuals and businesses, larger cash reserves may provide a sense of security and flexibility that aligns well with their financial goals. For others, maintaining a smaller cash position in favor of other investments or assets may prove more beneficial.

That’s why we go through the complete Financial Life Planning process with each of our clients. We learn about their unique circumstances, desires, and challenges to help decide what is best for them.

ABOUT TRIUNE FINANCIAL PARTNERS

Triune Financial Partners is committed to empowering people with life-changing financial counsel. Triune is an independent firm that values clarity, simplicity, and transparency. We're a fiduciary, which means we always put our clients' interests first. In addition to Financial Life Planning for individuals and families, we also serve 100+ businesses, churches and nonprofits to craft powerful 401(k) and 403(b) plans for their organizations. Whether you're working with one of our Financial Life Planners or setting up a 401(k) plan for your organization, Triune is here to help you thrive financially.

Interested in working with us? Get in touch here.

How to Stick to Your Financial Goals

You know you need to have financial goals, but you’re not sure where to begin. 

Even when you have goals, it can be challenging to follow through with them, leading many to give up.

In this blog, we’ll share tips on how to set and achieve financial goals based on our decades of experience working with clients. 

How To Set Financial Goals

It's not enough to set just any goals or pick random numbers and hope for the best. You need to set goals that are realistic and achievable (but hopefully a little aspirational as well)!

Below are some questions you should ask yourself and tips to keep in mind to help you set effective and attainable financial goals:

What’s Your Current Financial Situation?

Before setting any financial goal, you must first understand where you stand financially. This means taking a careful look at your income, expenses, assets, liabilities, and credit score. 

For instance, if you have a lot of debt, it may not be realistic to set a goal of saving for a down payment on a house until you've paid off most of your higher interest debt. Of course, this depends on your unique situation and goals, but this is why understanding your current financial situation is an important step to goal-setting. 

Read More: How To Create a Debt Payoff Plan

What Do You Want to Accomplish in 5 Years, 10 Years, and Beyond?

Having long-term financial goals is vital in ensuring that you achieve financial stability in the long run. Identify the primary objectives you want to achieve and break them down into smaller, achievable steps.

For example, if you want to buy a house in 5 years, you can break down this goal into smaller steps such as saving for a down payment, improving your credit score, and paying off debt. This will make the goal less intimidating and more achievable.

Each Financial Goal Needs a Deadline and a Price Tag

Each goal needs to have a “deadline” and a “price tag” so that it's measurable–and so that you can proactively plan to accomplish it. This is an essential step that often gets forgotten.

Even if you have to re-adjust along the way, having a deadline and a clear price tag in mind is essential to actually achieving your goal.

Are You and Your Partner Aligned?

If you have a partner, you’ll need to make sure you’re aligned not only on what your goals are, but also how you’ll attain them. Achieving financial goals is not a one-person show, so don’t skip this necessary step. 

Create a Realistic Savings Plan

You need to know how much you can save and how long it will take you to achieve your savings goals. Determine what you need to save for, how much you need, and the timeframe in which you plan to save.

It's important to be realistic about how much you can save. If you try to save too much too quickly, you may become discouraged and give up on your goals.

Consider starting small and gradually increasing the amount you save as you become more comfortable with the process.

Create a Spending Plan

Instead of having a budget that can be restrictive, create a spending plan that enables you to prioritize your spending.

Identify your necessary expenses such as rent, utilities, food, and an emergency fund. Once that is set, you can plan for everything accordingly. For more advice on creating your spending plan, check out our blog with tips and advice to do this.

Having a spending plan will help you avoid overspending and ensure that you have enough money to cover your necessary expenses. It will also help you identify areas where you can cut back on spending and redirect those funds towards your savings goals.

Read More: Why Budgets Don’t Work (And What You Should Do Instead)

Decide How Much You’ll Save, then Automate

After understanding your current financial situation and creating a spending plan, you can decide how much you want to save based on what’s left. With that savings plan, you can set up automatic monthly transfers to your savings account, brokerage account, or retirement account (the account will depend on your specific goal).

Automating savings will help you stick to your plan even on days when you're low on motivation. It will also help you avoid the temptation to spend the money you intended to save.

By making it a habit to save a certain amount each month, you'll be well on your way to achieving your financial goals.

Be Kind to Yourself

Remember that maintaining financial goals is a marathon and not a sprint. If you make a mistake, don't feel discouraged–instead, use it as a lesson learned. Develop a mindset that encourages progress over perfection so you can stay motivated even when the going gets tough.

And remember to celebrate your successes along the way, no matter how small they may be. 

Be Proactive About Potential Problems

In other words, prepare instead of repair. At Triune, we encourage our clients to be prepared to face any financial emergencies by having an emergency fund. Your emergency fund needs may vary, but three months of your living expenses in savings is a good rule-of-thumb. This way, you'll be able to deal with any financial emergencies that might arise, without derailing your financial goals.

It's also important to regularly review your financial plan and make adjustments as necessary. Life is unpredictable, and unexpected expenses can arise at any time. By regularly reviewing your plan, you'll be better prepared to handle any financial challenges that come your way.

Resources that can help

If you want to achieve your financial goals, don't be afraid to seek help. There are many resources available that can help you learn more about money management, financial planning, and investments. 

1. Online financial planning tools. There are many websites that offer free financial planning tools, such as Mint. These tools can help you create a personalized financial plan and track your progress towards your goals.

2. Blogs, podcasts, and books. Experts in the field give free advice every day (check out the Millenial Money blog or the Planet Money podcast at NPR). Tap into their expertise and use what makes sense for your planning and goals.

3. Financial Advisor. A financial advisor can provide personalized advice and guidance on how to achieve your financial goals. They can also help you create a customized financial plan that takes into account your unique financial situation and goals.

Sticking to your financial goals requires discipline and focus, but with effective strategies and a proactive mindset, you can make your financial goals a reality. Remember to celebrate every milestone you achieve and to stay motivated even when financial challenges come your way. By taking advantage of the many resources available, you can make your journey towards financial stability more manageable and successful.

ABOUT TRIUNE FINANCIAL PARTNERS

Triune Financial Partners is committed to empowering people with life-changing financial counsel. Triune is an independent firm that values clarity, simplicity, and transparency. We're a fiduciary, which means we always put our clients' interests first. In addition to Financial Life Planning for individuals and families, we also serve 100+ businesses, churches and nonprofits to craft powerful 401(k) and 403(b) plans for their organizations. Whether you're working with one of our Financial Life Planners or setting up a 401(k) plan for your organization, Triune is here to help you thrive financially.

Interested in working with us? Get in touch here.

Why You Need A Second Opinion Service for Your 401(k) Plan

Have you requested an “S.O.S.” (Second Opinion Service) for your company’s 401(k) Plan or 403(b)?

If you’re a Business Owner, CFO, Controller, VP-Finance or Human Resources Director, it is vital for you to get a second look at your retirement plan. Did you know that – according to the IRS – YOU are the person responsible for ensuring your retirement plan is in compliance with both the Internal Revenue Code and the terms of your plan document? Learn more here.

Scrutiny of 401(k) Plan fees is at an all-time high. If the IRS or U.S. Department of Labor audits your 401(k) Plan – which has become more likely in recent years – then you must know the answers to these two questions (amongst others):

1) How much does your 401(k) Plan cost?

2) Have you deemed this cost reasonable?

Perhaps you do know how much it costs… great!

But do you know how much your plan should cost? The most effective way to answer this question is to request an “S.O.S.” report from a trusted Retirement Plan fiduciary advisor firm like Triune.

If you run a 401(k) for your business, your compliance risk is real and should not be ignored. 

Think about it like this – how does your cell phone plan today compare to ten years ago? Think about the cost, whether you have unlimited talk, text and data, and other “throw-ins” (like ESPN+, Netflix, Hulu, or similar). Has your provider ever contacted you to offer you more minutes and features at a lower cost?

For most of us, the answer is no. Wireless companies aren’t in the business of asking you to pay them less. The same can be said for 401(k) plan providers – which is why it’s recommended that you initiate the process of benchmarking your 401(k) Plan with a simple S.O.S. Report.

Industry costs have decreased in recent years* due to several factors:

• Your plan has likely grown

• Shrinking margins within the 401(k) industry

• Better technology

• Cutthroat competition

Additionally, our S.O.S. measures your plan’s performance, design, and the advice your employees are receiving (or not). Are your employees “on-track” to retire with dignity someday? You – and they – deserve to know.

I talked to someone recently who said retirement benefits and readiness were primary reasons that her employees were so long tenured.

One last pro tip: Be certain the firm you choose to conduct your S.O.S. operates as a Fiduciary, and is experienced in the field. Many 401(k) Plans today are sold by stockbrokers, life or health insurance agents, or financial advisors who only have two or three 401(k) Plan clients. It’s hard to become efficient or expert at anything without repetitions and practice. 

At Triune, we have a dedicated team who focuses solely on 401(k), 403(b), and Cash Balance plan benchmarking, advisory, oversight and service. Learn more here.

ABOUT TRIUNE FINANCIAL PARTNERS

Triune Financial Partners is committed to empowering people with life-changing financial counsel. Triune is an independent firm that values clarity, simplicity, and transparency. We're a fiduciary, which means we always put our clients' interests first. In addition to Financial Life Planning for individuals and families, we also serve 100+ businesses, churches and nonprofits to craft powerful 401(k) and 403(b) plans for their organizations. Whether you're working with one of our Financial Life Planners or setting up a 401(k) plan for your organization, Triune is here to help you thrive financially.

Interested in working with us? Get in touch here.

 *https://www.asppa.org/news/401k-plan-fees-decline-again

Originally published June 20, 2019

Celebrating 18 Years: The Triune Founding Story

Triune’s story can be summarized in a single, simple recognition: God owns it all.

In the fall of 2004, long-time friends Jim Mullinix and Jeff Jaworski, CFP® were enjoying a round of golf together. As they played the second hole Jeff asked Jim a simple question: 

“What if we started an independent financial planning firm?”

Jeff’s idea for a completely independent firm–coupled with Jim’s vision for faith to be a part of the culture–made for a great combination. They saw the firm as God’s business with their role to be good stewards of that business, much like the approach Triune brings to its client relationships to this day.

As fate would have it, a business-changing opportunity presented itself within the first weeks of Triune’s formation. Triune was introduced to a large regional physician group looking for better investment advice and a better plan design for their 401(k) plan.

Enter long-time friend of both Jeff and Jim, Geoff Huber, CFP®. Geoff had spent the last several years specializing in the 401(k) retirement business. Triune secured the 401(k) business and from that opportunity sprung multiple private client personal planning opportunities.

That additional private client work presented an opportunity to bring on yet another advisor who Jim had known and worked with for the previous decade. Bob Sparrow, CFP® joined the firm as a partner, using his previous experience building a business to specialize in working with business owners.

Within two short months, the firm had doubled in size.

The financial crisis of 2008 would test the resolve of every element of the financial services industry, including Triune. However, it proved to be a blessing and growth opportunity as they saw first hand how clients with a complete and thorough financial plan weathered that storm far more effectively than those who were simply focused on investments. 

Photo of Triune team in 2008.

“It’s always better to prepare than it is to repair” became a mantra, and so they drew a line in the sand. From that point on, Triune would only accept new clients who were willing to go through the complete “Financial Life Planning” process before taking on the management of any investment accounts.

“Most financial advisors aren’t interested in getting into the spaghetti of people’s lives,” Jeff said. “Triune is a firm believer that the ONLY person or firm qualified to give investment advice is one who takes the entire picture into account. We’ve had situations where somebody wants us to manage money for them, but we had to politely decline because they weren’t willing to go through the Financial Life Planning process.”

In 2015, another “divine appointment” occurred as a personal friend of Jim’s became a private client. It just so happened that this friend was an esteemed consultant in the veterinary industry and frequently spoke and consulted with veterinarians all over the country. A formal business relationship with Fritz Wood was born.

Fritz regularly speaks and consults with large pet health groups, veterinary management groups, and veterinary colleges. Inevitably, the professionals listening to Fritz’s talks or paying him to consult would follow up with questions on their practice 401(k) plan and personal finances. No longer a practicing CFP® Professional and CPA, Fritz realized partnering with Triune was the best way to help his veterinary audience achieve their goals.

By sending them to a team of advisors he trusted with his own planning, Triune’s niche with veterinary practice owners has expanded greatly and last year alone, nearly 20 new veterinarians across the country became new clients.

“That’s where it began over 10 years ago,” Geoff said. “Fritz helped us develop a network of people all across the country.”

Group photo from the fifth anniversary party in 2010.

Triune’s since promoted two other advisors to partner.

The first was Bob Crew, CFP®. It comes as no surprise that a previously existing friendship and long-standing professional relationship would be re-kindled through a Kingdom Advisors national conference.

Through a series of what felt like God-orchestrated life events, Bob and his wife found the desire to return to Kansas City to be closer to adult children. Bob had been part-time as an advisor with Triune, but still based in Wichita. At the same time he was considering the move to Kansas City, Triune needed a full-time experienced Certified Financial Planner practitioner. Bob joined Triune in 2009, and was promoted to partner in 2016.

“Meeting the team at Triune was definitely providential,” Bob said. “What drew me to working with them was the opportunity for collaboration. I’m better in a group of peers than I am as a lone ranger.”

The second was Bryan Gum, CFP®. Since the average age of the partners was north of 50, it seemed only fitting that the growth of a new generation of advisors begin. Through a series of conversations with a long-time client, an introduction was made to their son. Things fit well and before long Bryan was responsible for shepherding many Triune client relationships.   

In January 2020, Bryan became a partner of the firm, and as the youngest member of the leadership team, he has big visions for Triune’s future.

“I want us to empower people, completely, when it comes to their money,” Bryan said. “My vision is that we are known as the most thoughtful, holistic financial planning firm in the country.”

Photo of the partners from 2022

It’s been quite a journey from the three-person start (Jim, Jeff, and an assistant) and some $30 million in assets managed. In 2023, Triune Financial Partners has grown to over 900 private clients and over 100 401(k)/403(b) plans, representing $1 billion of assets under management. Jim officially retired in 2022, leaving big shoes for now Managing Partner Jeff Jaworski, CFP® to fill.

“Our faith, and wanting the same thing for our clients and ourselves, has united us and allowed us to overcome challenges we’ve faced along the way,” Jeff said. “That’s been really important and foundational to our success. We share a belief in each other–that together we were better off than any one of us would be on our own.”

ABOUT TRIUNE FINANCIAL PARTNERS

Triune Financial Partners is committed to empowering people with life-changing financial counsel. Triune is an independent firm that values clarity, simplicity, and transparency. We're a fiduciary, which means we always put our clients' interests first. In addition to Financial Life Planning for individuals and families, we also serve 100+ businesses, churches and nonprofits to craft powerful 401(k) and 403(b) plans for their organizations. Whether you're working with one of our Financial Life Planners or setting up a 401(k) plan for your organization, Triune is here to help you thrive financially.

Interested in working with us? Get in touch here.

Tips on Maximizing FDIC Insurance Coverage

Recent bank closures may have you confused and concerned about what this might mean for you. (For more information about Silicon Valley Bank’s closure, read our blog about it here.)

In all the updates about these closures, FDIC insurance has been a hot topic of conversation, so we thought we would attempt to clarify what it is, how it works, and how it may impact you. 

What Is FDIC Insurance and How Does It Work?

FDIC (Federal Deposit Insurance Corporation) insurance is a program that provides deposit insurance to protect depositors if their bank fails. The program was established in 1933 during the Great Depression to provide confidence and stability in the banking system. Today, it insures deposits at more than 5,000 banks and savings institutions in the United States.

FDIC insurance gives depositors peace of mind knowing that their deposits are protected up to a certain amount. This protection helps to maintain the stability of the banking system, as depositors are less likely to panic and withdraw their funds if they know they are insured by the federal government.

Read More: Silicon Valley Bank Collapse: What You Need to Know

Pros and Cons of FDIC Insurance

Pros:

1. Protection of deposits: FDIC insurance provides protection of up to $250,000 per depositor, per insured bank. This means that if a bank fails, depositors will receive up to $250,000 of their deposits back. 

• Certain investment firms have programs where you can receive increased insurance coverage through partner banks.

2. Stability of the banking system: FDIC insurance helps to maintain stability in the banking system by giving depositors confidence that their deposits are safe.

3. Free coverage: There is no cost to depositors for FDIC insurance. Banks pay premiums to the FDIC to fund the insurance program.

Cons:

1. Limited coverage: FDIC insurance only covers up to $250,000 per depositor, per insured bank account. If a depositor has more than $250,000 in deposits in one account at one bank, the excess amount is not insured.

2. Not all types of accounts are covered: FDIC insurance only covers certain types of accounts, such as checking and savings accounts, money market deposit accounts, and certificates of deposit (CDs). Other types of accounts, such as retirement plans and investment accounts, are not typically covered.

3. Not all banks are insured: Not all banks and savings institutions are insured by the FDIC. It is important to check whether a bank is FDIC-insured before opening an account. 

1. As an aside, credit unions are covered by the National Credit Union Association (NCUA). For more information on how that works, click here.

Overall, FDIC insurance is an important program that provides protection to depositors and helps to maintain stability in the banking system. However, it is important to be aware of the limitations of FDIC insurance so that you know where you do, and don’t, have coverage.

Lesser Known Tips to Maximize FDIC Insurance

While many people are aware of the basic coverage limits ($250,000 per depositor, per insured bank), there are lesser-known tips and strategies that can help you maximize your FDIC insurance coverage (which is helpful if your Financial Life Plan includes holding a larger amount of cash for a period of time). 

Utilizing Multiple Account Ownership Categories

One way to increase your FDIC coverage is by utilizing multiple account ownership categories. For example, if you have a joint account with a spouse or family member, you will have up to $500,000 in combined coverage ($250,000 per person). Additionally, if you have revocable or irrevocable trust accounts, you may be able to extend your coverage even further. Trust accounts often allow for multiple beneficiaries, which means that you could have additional coverage for each beneficiary.

Spreading Your Funds Across Different Banks

Another way to increase your FDIC coverage is by spreading your funds across different banks. While it may be more convenient to keep all of your accounts with one bank, spreading your funds across multiple banks will increase your overall coverage. 

Leveraging Revocable and Irrevocable Trusts

As previously mentioned, trust accounts can provide additional coverage. Revocable trusts are those that can be changed by the owner, while irrevocable trusts cannot be changed. By establishing a trust account, you can ensure that your beneficiaries are protected and potentially increase your FDIC coverage in the process.

Not all types of trusts are eligible for FDIC coverage, so it's important to understand the rules and requirements.

Navigating Joint Accounts and Beneficiaries

Joint accounts can be a convenient way for spouses or family members to share funds. However, there are important considerations to keep in mind when it comes to FDIC coverage and estate planning.

The Impact of Joint Accounts on FDIC Coverage

Joint accounts with two individuals are insured up to $500,000, but this limit is shared between the account holders. If you have multiple joint accounts with the same person, it is important to take this shared coverage into account.

For example, let's say you have a joint savings account with your spouse with a balance of $400,000, and a joint checking account with your spouse with a balance of $300,000. While the total balance of both accounts is $700,000, the FDIC coverage for both accounts is only $500,000, since the accounts are jointly held with the same person. This means that $200,000 of your funds are not covered by FDIC insurance if they are at the same bank.

As we mentioned earlier, spreading your cash across different bank accounts is typically best to ensure maximum protection.

Designating Beneficiaries for Increased Protection

Designating beneficiaries on certain accounts, such as retirement accounts or pay-on-death (POD) accounts, can provide additional coverage. For example, a POD account with two beneficiaries may be insured up to $500,000 (assuming $250,000 per beneficiary).

It is important to keep beneficiaries up to date and ensure that the account ownership and beneficiary designations are aligned with your estate planning goals. 

Business Accounts and FDIC Insurance

Coverage for Business Accounts

FDIC coverage for business accounts works differently than coverage for personal accounts. Instead of the $250,000 coverage limit per depositor, per account type, per bank, coverage for business accounts is based on the number of business owners. Each business owner is insured up to $250,000 per ownership category, per bank.

Tips for Maximizing Business Account Protection

To maximize coverage for business accounts, it is important to understand the different ownership categories and ensure that the accounts are structured accordingly. For example, if you have multiple owners, setting up a joint account may provide additional coverage. Additionally, multiple accounts with different banks could provide more overall coverage.

Conclusion

FDIC insurance is an important safeguard for anyone who banks in the United States. By understanding the basics of FDIC insurance and implementing some lesser-known tips and tricks, you can maximize your coverage and ensure that your deposits are protected in the event of a bank failure. With careful planning and education, you can take control of your finances and rest easy knowing that your hard-earned money is safe and secure.

ABOUT TRIUNE FINANCIAL PARTNERS

Triune Financial Partners is committed to empowering people with life-changing financial counsel. Triune is an independent firm that values clarity, simplicity, and transparency. We're a fiduciary, which means we always put our clients' interests first. In addition to Financial Life Planning for individuals and families, we also serve 100+ businesses, churches and nonprofits to craft powerful 401(k) and 403(b) plans for their organizations. Whether you're working with one of our Financial Life Planners or setting up a 401(k) plan for your organization, Triune is here to help you thrive financially.

Interested in working with us? Get in touch here.

Sources:

https://www.fdic.gov/resources/deposit-insurance/faq/index.html 

https://ncua.gov/support-services/share-insurance-fund 

https://www.fdic.gov/resources/deposit-insurance/ 

The Basics of Retirement Planning

It’s never too early to start planning for retirement.

The benefits of an early start are significant, and the rewards far outweigh the costs. However, many people neglect to save for retirement, leaving them vulnerable to financial stress during their senior years. 

Whether you are planning your retirement or looking for ways to enhance your existing plan, we’re here to provide you with valuable insights to help you achieve your retirement goals.

Read More: How to Stick to Your Financial Goals

Understand Your Retirement Goals

What’s your plan for retirement? How will you spend your time?

This is the starting point for creating a plan that caters to your needs. 

At Triune, we encourage our clients to sit down and intentionally consider their transition to what’s next. Rather than a life of pure leisure, we believe in creating a life of purpose. We see retirement as a time of your life that’s “work optional.”

Figure Out How Much You’ll Need

Determining how much you’ll need for retirement can seem like a daunting task. Many people take the approach of estimating how much you’ll need to save for retirement as a whole, but we take a different approach.

Instead, we determine a relevant number based on your anticipated lifestyle and healthcare needs. For instance, if (in today’s dollars) you live on $8,000/month + retire before medicare kicks in, we can determine what maintaining a similar lifestyle may look like (plus other goals like travel, etc.). We’ll factor in assumptions for inflation and investment returns, and then work backwards to a savings rate. Your savings rate will vary depending upon when you’re starting and what your goals are. That said, the academic world suggests saving 15% of your gross income, starting early, in order to “be on-track” for sustaining your lifestyle in retirement.

Maximize Your Retirement Savings

Regardless of what your retirement plan is, we encourage our clients to maximize retirement savings as much as they can. 

Here are ways you can do that (in order of importance):

1. Max-out your employer match: Let’s say your employer matches 50% of your contributions to your 401(k), up to 10 percent of your total income. If you make $100,000, that’s $5,000 of free money going toward your retirement savings each year. That’s the only free lunch in town! Be sure your 401k or 403b contribution rate allows you to receive the maximum match from your employer.

   Read More: Why You Need a Second Opinion Service for Your 401(k) Plan

2. Max-out your Roth IRA: If you don’t have a Roth IRA, it may be worth looking into getting one. For those of you who have one, be sure to max it out every year. Check with your financial advisor to see how much you can put in, as the limit might change depending on your age, tax filing status, and income. In 2023, you can put in $6,500 if you’re under 50 and $7,500 if you’re over 50. In order to take full advantage of the allowable maximum contribution, single tax filers must have a modified adjusted gross income (MAGI) of less than $138,000 in 2023. If married and filing jointly, your MAGI must be less than $218,000 in 2023.

3. Max-out your 401(k) to the IRS limit: Again, the amount you can input into this account will depend on any recent changes to regulations around this and your age. In 2023, you can put $23,500 into your 401(k) if you’re under age 50, and $30,000 if you’re 50 or older. Your employer matching contributions do NOT count against this maximum, so think of this is the most YOU can put into your 401k or 403b via payroll deduction.

4. Max-out your Health Savings Account (HSA): If you’re covered by a high deductible health insurance plan, you qualify for an HSA. This is an account you can use to pay for qualified health expenses with tax-free dollars (in other words, you get a federal income tax deduction for your contribution amount!). In 2023, you can contribute up to $3,850 for employee only plans, and up to $7,750 for married couples and/or family coverage. Those who are over the age of 55 can contribute an additional $1,000.

5. Fund a taxable brokerage account: Once you’ve maxed-out (or contributed the amount your Financial Life Plan needs in order to be on track) the above accounts for retirement, then consider funding a taxable brokerage account. Unlike IRAs, 401k’s, 403b’s and HSAs, there is no tax deduction for contributions, and it doesn’t come out tax free like Roth accounts. But, the gains in this account are taxed at capital gains rates (which are lower than current federal income tax rates so long as you hold your underlying assets for > one year). Realized gains when you sell investments held less than one year in a taxable brokerage account are taxed at ordinary income rates. 

If you follow the steps above, you’re likely well on your way towards a comfortable retirement.

Evaluate Your Investment Options

There’s a lot of advice out there about how to go about investing. We work with our clients to understand what works for them and their Financial Life Plan. 

When it comes to assessing your investment options, we recommend the following principles: 

• Broad and global diversification. Diversifying your investments is an excellent way to reduce business risk. The more companies you own in a portfolio, the less impact any single one company can have on your returns. We recommend a widely diversified portfolio for our clients so that they can “own the market”, rather than betting on a single stock, or a single sector (Tech, Healthcare, etc.). Additionally, it’s important to think globally. The US controls ~54% of all corporate capital. This means that ~46% of all available investment opportunities for stock ownership are outside of the US. Having a portfolio that helps you capture ownership of the global markets makes sense.

• Allocate based on your personal goals and timelines. We recommend using the “Three Bucket Approach” when investing. This helps you to identify which of your goals/needs occur in the short, mid and long-term. The shorter your time horizon, the less risk and volatility you’d want in the portfolio. See the graphic below: this demonstrates the “time horizons” we assign to each bucket, and the general characteristics investments in that bucket should have.

• Align with your risk tolerance. How much risk (defined as “volatility” in your portfolio) are you willing to take? There’s a spectrum of risk tolerance, and it’s important to select the option that most aligns with you.

• Rely on academic, market-based research. We look to the academic research to understand and implement the financial science of reliable investing, rather than picking the “flavor of the month” touted by fund managers and Wall Street.

  Read More: Should I Retire When the Stock Market Is Down?

The three bucket approach to saving includes goals that are short term (0-2 years), mid-term (3-4 years), and long-term (5+ years).

Plan for Taxation Issues

How will taxes affect your retirement income? There are a few different things to keep in mind as you consider this. Some accounts have different tax implications, and there are some strategies you can employ to avoid major (bad) surprises caused by taxes.

We’ll start by breaking down the tax implications for these accounts.

Traditional IRA Tax Implications

With a traditional IRA, contributions are tax deductible (often called “pre-tax” because these contributions directly lower your taxable income, thereby allowing you to NOT pay income taxes on those dollars). Because you get this tax benefit up front, the IRS taxes withdrawals from these accounts at ordinary income tax rates. If you withdraw funds before age 59 1/2, the IRS also applies a 10% penalty. The benefit of investing in a Traditional IRA is the immediate tax deduction, but investors must be aware that it’s all taxable when you take it out.

Roth IRA Tax Implications

With a Roth IRA, contributions are not tax deductible (often called “after-tax” or “post-tax” because you’ll still pay income tax on that earned income). However, withdrawals from a Roth IRA are tax free! There are some rules (account must have been opened at least 5 years ago, and you must be age 59.5 or older) to qualify for this tax free distribution of funds. However, there are also some IRS-approved loopholes that make Roth IRAs (but not necessarily Roth 401k plans) uniquely flexible.

Taxable Brokerage Account Tax Implications

Taxable brokerage accounts are subject to federal and state (where applicable) capital gains taxes on the earnings generated by the investment. There is no tax deduction for contributions. 

Capital gains taxes are split into two categories… short-term and long-term. Short-term capital gains are simply the gains that have occurred in an investment held for less than one year. Long-term capital gains are gains that have occurred in an investment held for more than one year. At this time, short-term capital gains tax rates are the same as ordinary income rates, and long-term capital gains rates are lower under current tax law.

Because of this, it is generally advisable that assets held in a brokerage account should be held for more than one year to take advantage of the lower long-term capital gains tax rate. Taxes are only paid on realized gains, but they’re owed regardless of whether you actually distributed money out of the account or not.

Tax-Loss Harvesting

Tax-loss harvesting is a tax strategy that involves intentionally selling investments at a loss in order to offset capital gains or income from other investments. This strategy can be used to reduce the total amount of taxes owed on investments that have appreciated or generated income during the year. 

Additionally, tax-loss harvesting can be used to reset your cost basis and purchase new investment shares of a similar stock or fund at current market value and use any losses towards future capital gains taxes. Ultimately, tax-loss harvesting can help investors optimize their overall tax bill and maximize potential investment returns.

This is something you want to consider thoughtfully with the help of your CPA.

Before making any big changes to your retirement planning, be sure to check with your financial advisor.

And remember, we’re here to help.

About Triune Financial Partners

Triune Financial Partners is committed to empowering people with life-changing financial counsel. Triune is an independent firm that values clarity, simplicity, and transparency. We're a fiduciary, which means we always put our clients' interests first. In addition to Financial Life Planning for individuals and families, we also serve 100+ businesses, churches and nonprofits to craft powerful 401(k) and 403(b) plans for their organizations. Whether you're working with one of our Financial Life Planners or setting up a 401(k) plan for your organization, Triune is here to help you thrive financially.

Interested in working with us? Get in touch here.

How to Create a Debt Payoff Plan

If you’re trying to get on top of your finances, one of the most important steps you can take is to create a debt payoff plan.

Paying off debt can be overwhelming and oftentimes it can be hard to know where to start. But with a little bit of planning and dedication, you can make a plan to get rid of your debt and get on the path to financial freedom. 

Read More: How to Stick to Your Financial Goals

Different types of debt

Debts can come in many forms, each with their own unique set of consequences.

• Credit card debt is common, and usually comes with hefty interest charges that can add on quickly if payments aren't made on time. We encourage our clients to avoid credit card debt as much as possible.

• Secured debt involves an asset you agree to give up should you default on the loan, much like a car loan or mortgage. 

• Personal loans are unsecured debts, and typically don't require any collateral upfront, though they may cost more in total interest than secured debts.

• Student loans come with stricter repayment requirements, often requiring direct debit payments over a number of years.

• Your consumer debt will impact your credit score, so it's important to be mindful of how much debt you take on, as well as how frequently you pay it back.

Knowing the details about different types of debt can help you make informed decisions about borrowing money in the future. At Triune, we work with you to avoid debt as much as possible, especially high interest debt, like with credit cards.

We also help our clients make a plan to pay off any existing debt they have. Here are some steps we use with clients to help you create a debt payoff plan: 

1. Make a list of all of your debts.

Start by making a list of all of your debts, including the loan amount, the interest rate, and the minimum monthly payment. This will help you get a better picture of how much debt you’re dealing with. 

2. Prioritize your debts.

Once you have a list of all of your debts, you’ll need to prioritize which ones you want to pay off first. Generally, it’s best to start with the debts with the highest interest rate first. This will save you the most money in the long run. 

3. Calculate your monthly Spending.

Once you know how much you owe and which debts to prioritize, you need to calculate your monthly budget. Make sure to include all of your income, expenses, and debt payments. Before you begin making extra payments on your debt, make sure you establish an emergency fund equal to one month of your total budget. This protects you for when life throws its curveballs (eventually, you’ll want to build this up to a larger amount, but starting here is great!). With your newly established budget, you need to figure out how much money you have left each month to put towards your debt payments.

Read More: Why Budgets Don’t Work (And What You Should Do Instead)

4. Make a plan to pay off your debt.

Now that you have a better picture of how much money you have to work with, it’s time to make a plan for how you’ll pay off your debt. You can use the “debt snowball” or “debt avalanche” method to decide which debt to pay off first. With the debt snowball method, you start by paying off the debt with smallest balance, then once it’s paid off, you add that monthly payment to the payment of your next debt… and continue “snowballing” payments until it’s all paid off. With the debt avalanche method, you start by paying off the debt with the highest interest rate first, and then like the snowball method, roll those payments into the next debt as they get paid off.

5. Stick to your plan.

Now that you have a plan, it’s important to stick to it. Try to make extra payments when you can and stay on top of your debt payments.

Creating a debt payoff plan can be a daunting task, but it’s one of the best ways to get on top of your finances and start working towards financial freedom. With just a little bit of planning and dedication, you can do it.

And remember we’re here to help. If you’re looking for financial planning support, reach out to our team today.

About Triune Financial Partners

Triune Financial Partners is committed to empowering people with life-changing financial counsel. Triune is an independent firm that values clarity, simplicity, and transparency. We're a fiduciary, which means we always put our clients' interests first. In addition to Financial Life Planning for individuals and families, we also serve 100+ businesses, churches and nonprofits to craft powerful 401(k) and 403(b) plans for their organizations. Whether you're working with one of our Financial Life Planners or setting up a 401(k) plan for your organization, Triune is here to help you thrive financially.

Interested in working with us? Get in touch here.

Why Budgets Don’t Work (And What You Should Do Instead)

Ready to start budgeting, but unsure where to begin? We’ve got you covered.

At Triune, we believe that being good stewards of everything we’ve been given leads to less stress and more fulfillment. This means managing your money well, and subsequently, spending less than you earn. 

But here’s the catch: your traditional budget is likely NOT the best way to do this. 

Read More: How to Stick to Your Financial Goals

Why don’t budgets work?

We know it’s a bit contrarian to say budgets don’t work, but here’s why:

Budgets don’t work because you essentially create a “pass/fail” exam for your future self, and your future self is not really concerned about you.

We’ve seen it repeatedly. Our clients create a detailed budget, but they aren’t able to stick to it perfectly, so they feel defeated, and then they give up on it. 

You set a strict budget for yourself, and then you’re surprised when you don’t stay on budget because you’re HUMAN and decided to get extra guac on your burrito bowl. 

We still think tracking your spending habits is important, but we don’t believe a hyper-specific budget is the best way to do this.

Instead, we think two things are important…. 

1. Create a spending plan 

2. Track it and keep score

Let’s dive in.

5 Steps to Create a Spending Plan

Ready to track your spending habits in a way that works for you?

Creating your spending plan actually starts with everything besides spending. The model we follow is simple, and money flows in this order → GIVE → OWE → GROW → LIVE. 

1. Identify your take-home income. 

How much are you bringing home each month? Figuring out this number is the beginning to figuring out how to allocate your spending. 

2. Determine how much you want to GIVE.

We encourage our clients to give generously, so this is the next step in our process. Ask yourself how much you feel called to give and what kinds of organizations/people you want to support. Then, incorporate this into your plan. This may be a fixed dollar amount, or a percentage of your take-home pay; both will work!

3. Determine how much you OWE.

Are you making payments towards your debts to get them paid off within the timeframe you desire? Are you on top of taxes (for business owners and self-employed folks, are you setting aside the amount you’ll owe)? Make sure this is prioritized in your plan. Your debt payments likely represent a fixed dollar amount in your plan, and depending on your tax situation, you may be saving a percentage of your income to put towards taxes, or have a specific dollar amount your CPA instructed you to pay towards your quarterly estimates. Making sure this step is done before GROW and LIVE is important to ensure you’re never behind on what you OWE. 

Read More: How to Create a Debt Payoff Plan

4. GROW: Decide how much you need to save.

Are you saving for your short-term goals (travel, home improvements, etc.), and investing for the long-term? Work with your financial advisor to determine how much you need to save for each of these goals, and put that amount into savings right when you get your paycheck. As our clients have learned, the time horizon of your goals will determine the “buckets” in which you save – if you’re unsure about where to save for your goals, reach out to us for guidance. 

5. Figure out how much you need to LIVE. 

Now what’s left? After you’ve subtracted your giving, debts, taxes, and savings, you have your lifestyle “budget”. The beauty is that this “budget” is one that actually allows you to accomplish what’s most important, because you prioritized things properly.  

Caveat: if you do this exercise and find that what’s left for “LIVE” is truly not enough to meet your lifestyle needs, then work back up the list. Reconsider your savings goals… maybe you can’t take three big vacations this year, but one. Adjust accordingly to ensure everything fits. More on this in the questions below.

Once you’ve identified your monthly budget, consider the following questions:

• Can you live your everyday life on this remaining lifestyle amount? If not, consider changes you need to make to spending.

• If you feel aligned with your spending and don’t want to make further changes, then look at your savings goals — would you give something up in order to spend more today? 

It’s an ongoing balancing act between your savings and lifestyle – and ideally your investing, taxes, debt and giving don’t get overthrown by overspending. 

Let’s Break it Down

So what would this look like in practice? Let’s take a look at Jane’s income and spending plan below.

Before we dive in, we’re going to operate under the assumption that Jane already auto-deposits money into her retirement savings each month and has an emergency savings account. 

With that in mind, Jane’s monthly take home income is $8,000 after taxes. She wants to give 10% of her income to various charities, so she initially sets aside $800 for giving. She’s a W2 employee, so in her situation, she doesn’t need to worry about setting aside extra money for taxes. However, she does put $500 toward her student debt each month.

She’s saving up to put a down payment on a house in the next five years, so she puts $2,000 into her brokerage account, where it’s appropriately invested for her time horizon. She’s also planning to go on a trip to Europe next year, so she sets aside $500/mo into a high yield savings account to fund that vacation. 

That leaves $4,200 for the rest of her expenses. She pays $2,200 in rent each month, so now she has $2,000 for everything else–groceries, other bills, and the fun things in life.

Read More: The Basics of Retirement Planning

Pie chart representing Jane’s spending breakdown

How to Keep Score

Keep score — use a Spending Tracker (we like Mint.com, YNAB, and Monarch Money, to name a few), and track your spending each month. These tools are fantastic because they’ll do the “heavy lifting” for you by automatically pulling in transactions from your bank and categorizing them for types of expenses (bills, groceries, personal care, etc.).

Are you within that total lifestyle amount? If so, great! Keep it up!

If not, review where you overspent, and consider how you might self-correct in the next month.

Conclusion

Spending over the course of the year is a game of averages. We all have expensive months, things we didn’t plan for that come up, like birthdays and holidays, a car breaking down, or an unexpected trip to Urgent Care.

However, if you are averaging a monthly spending that is consistent with your overall Cash Flow Plan, then you are on the path to financial freedom (and peace of mind today!).

Silicon Valley Bank Collapse: What You Need to Know

We’re sure you’ve heard the news over the last week regarding the failure of Silicon Valley Bank. Here is a brief recap of what is going on, and our thoughts on how you should consider this within your own Financial Life Plan. 

Rest assured: there is no need to panic. 

But this event does bring up some important and relevant planning topics. 

Read More: Should You Retire When The Stock Market Is Down?

What is Silicon Valley Bank, and what just happened?

In December 2022, Silicon Valley Bank (SVB) ranked as the 16th largest bank in the United States with assets of $209B. It’s important to remember that, even with a high-profile name and lots of tech companies and venture capital funds as clients, SVB was just a bank.

However, as of March 10th, SVB has been shut down by the CA Department of Financial Protection & Innovation, marking the largest bank failure since 2008 and the second-largest in history. 

Despite specializing in business banking for startups in the Tech/Biotech/Healthcare Sciences industries, SVB functioned like any traditional bank. They accepted client cash deposits, maintained required reserves, and either lent out funds or invested the excess. 

One of their significant investments included government bonds, which are typically considered low-risk, but proved disadvantageous as interest rates increased dramatically this last year.  

Alongside the bank, SVB's startup clientele faced greater difficulties in meeting their financial obligations due to the higher interest rates (aka borrowing costs). This, and a more reluctant venture capital environment, lead to lower client deposits at SVB. 

More specifically, they purchased $80B in government bonds (aka lent $80B to the U. S. Government) at 1.6%. Problem is, the same “no-risk” investments were now paying 5% by this time last week. So, on their books, this $80B must be carried at a discount. This spooked customers. And to make things worse, a well recognized venture capitalist investor recommended his clients move their cash out of SVB. Rumors spread quickly.

In response, to help with their cash liquidity, SVB chose to sell $21B worth of bonds at a loss of $1.8B.

The public took notice, and with the (ultimately correct) assumption that SVB’s liquidity issues were significant, depositors began pulling cash out which further exacerbated the crisis. On March 9th, the bank had $42B in attempted withdrawals.

Now the FDIC has taken over, and working with the Treasury and Federal Reserve, they made a remarkable announcement – beyond the standard $250,000 FDIC-insured deposits, they’ve also guaranteed the uninsured deposits (a whopping 93% of SVB’s deposits were above the $250,000 insurance level… which is likely unique to SVB and the clientele it served). In other words, all bank customers will be made whole.

This is where we find ourselves as of now, though there will likely be more news on this in the coming days.

Graphic from the WSJ:

What does this mean for you?

This situation brings to light a few takeaways worth learning from, and reviewing in your own planning.

1. Understand FDIC insurance, and how it applies to your bank accounts.

FDIC-insured banks cover up to $250,000 per depositor in covered accounts. (A much deeper dive is provided by the FDIC here).

If your Financial Life Plan recommends holding a large cash amount in the bank, you may consider “stacking” FDIC insurance (an example would be each spouse having an individual account + a joint account, allowing you to obtain $1,000,000 in combined coverage), OR you might consider having multiple checking or savings accounts at separate banks. 

As you’ve heard us say by now, holding too much idle cash can be harmful, so it’s a good opportunity to make sure your cash amounts are intentional and functioning as part of your overall Financial Life Plan.

Read More: Tips on Maximizing FDIC Insurance

2. Avoid backing yourself into a corner where you must sell an asset at a bad time. 

This is precisely what happened to SVB (if they had been able to hold their government bonds until maturity, we may not even be talking about this right now), and it is precisely why Triune uses a “Three Bucket Approach” to financial planning and investment management. 

If you think you’ll need money in the next 0-2 years (aka your “short-term bucket” for emergency fund, short-term goals, etc.), then that money should be in a stable, liquid “investment” – we often recommend a high-interest savings account with FDIC insurance and/or a CD (depending on your unique situation). 

Your mid-term and long-term buckets are where you have the time horizon needed for investments like bonds, stocks and real estate. If you need money in the near-term, you have no business investing it. 

Having a short-term need for cash and the volatility that comes with long-term investments is likely to spell disaster.

3. Should you be worried?

Although the news of the SVB closing can be concerning to some, it doesn't have to be a cause for alarm. While not a desirable outcome, the protocols to protect depositors are in place (and in this case, the Treasury and Fed going above and beyond the insured coverage). The bank's assets will be auctioned off to the highest bidder (almost certainly just a larger healthier bank, or multiple banks). 

It might feel intimidating when something like this happens, but it isn’t likely to significantly impact those who are not direct customers of SVB. Furthermore, the market is both cyclical and adaptive—it has a way of course-correcting itself, and this downturn is unlikely to have any lasting impact on a thoughtful, intentional Financial Life Plan and investment strategy.

How to Tackle Your Home Improvement Project(s) in 2023

Since the onset of the pandemic, we've all had to adjust to more time at home - working, school, cancelled vacations, and bringing social gatherings "in-house.”

This has led many of us to rehab, remodel and renovate our spaces so that our homes are more functional, or simply more enjoyable.

What once felt like a "someday, maybe" goal has perhaps become a more immediate need.

For those of you still considering this financial goal, we encourage you to discuss with your Triune advisor how it best fits into your Financial Life Plan. For a "jumping off point", here is our guide for how to tackle your home improvement projects in 2022. 

We hope you'll find these guidelines helpful, or perhaps have a friend or family member worth forwarding this article to.

💰 Paying Cash

How you pay for your home improvements will depend on your unique situation and the scope of your project.

Saving up and paying cash is the ideal way to accomplish this goal. Using saved up funds ensures that you can truly afford the project, and you avoid paying excess fees and interest that come with financing. 

A few things to consider before you start writing checks:

• Will you still have enough for your emergency fund?

  • Think of your emergency fund amount as the "zero" in your savings account. You can't go below zero, so if you have to spend into your emergency fund, that's a clear signal that you do not yet have enough for your project.

• What other goals might you have to sacrifice?

  • Are there other large expenses you may have to forego in order to pay for your home improvements? Be sure to consider these trade-offs in advance.

Of course, paying cash requires more patience and may not be possible depending on the size and timeframe of your project. If you can't afford to pay cash today, consider if that is a sign for you to postpone your project, or perhaps scale it back.

🏦  Financing Options

When it comes to financing a home improvement, you have a few options. You could get a HELOC (Home Equity Line of Credit), a home equity loan, or a home improvement loan, or do a cash-out refinance. 

• HELOC

  • This option is likely to provide you with the most flexibility. This is a secured loan (backed by your home), and usually carries lower interest rates than other loans and credit cards. You'll likely need to have at least 15% to 20% equity built up in your home to qualify.

  • The biggest benefit is that it's a revolving line of credit, so you'll only start paying back the money you borrow as you borrow it. With today's long timelines for contractors to complete work, this can be a huge benefit to not have to pay on a loan until you actually use the credit line to pay for the completed project.

• Home Equity Loan

  • This option is best for someone who wants a fixed rate, can handle a new monthly payment, and needs the funds upfront. It is sometimes called a "second mortgage", but it's entirely separate from your primary mortgage, and comes with its own fixed rate and repayment terms.

• Home Improvement Loan

  • Because this loan is an unsecured loan, you do not have to have significant equity in your home to be approved. However, this loan typically comes with higher interest rates and can only be used for smaller projects.

• Cash Out Refinance

  • This option replaces your current mortgage with a new, larger loan with a new interest rate. Often viewed as a convenient loan because you maintain a single monthly payment on a single loan, this will make the life of your loan longer, and therefore more expensive.

A note on interest rates: As you're likely aware, interest rates have been rising sharply since the beginning of the year, so your financing options may be more costly than you previously calculated.

For those of you getting ready to tackle that big project this year, be sure you work with your Triune advisor to discuss all the pros and cons, and explore the best option for you. 

And don't forget to send us a pic of your new digs when it's all done!

Secure Act 2.0 (2023 changes inside)

We hope your year is off to a great start! As many of you may have already heard, 2023 brought with it new legislation that will likely affect ALL of us in one way or another. 

So let's dive in!

After months of debate, Congress finally passed some major changes to retirement laws at the end of 2022. (1)

The Setting Every Community Up for Retirement Enhancement (SECURE) Act 2.0 changes are numerous, complex, and will roll out over several years.

Let's focus for now on some changes for 2023:

The age at which required minimum distributions (RMDs) begin increased to 73 in 2023. 

This change impacts folks born between 1951 and 1959.

The penalty for missing all or part of an RMD decreased to 25% in 2023. 

However, if you correct the past-due RMD and pay taxes on it within two years, the penalty drops to 10%. (3)

Qualified Charitable Distributions have a few more options. 

Starting in 2023, folks who are aged 70½ or older can gift a one-time amount of $50,000 (adjusted for annual inflation) to a charitable remainder unitrust (CRUT), charitable remainder annuity trust (CRAT), or charitable gift annuity (CGA). (4)

Roth savings get a boost. 

Starting in 2023, employers can offer workers the choice to receive vested matching contributions directly to their Roth account, where they’ll grow tax-free. (2) Also, Roth contributions to SIMPLE and SEP-IRAs are authorized in 2023. (5) However, we'll have to wait for the IRS and custodians to work out procedures before folks can take advantage of these new opportunities.

More folks can take early distributions from their retirement accounts without penalty. 

Starting in 2023, victims of disasters and folks who are terminally ill will be able to access their retirement accounts early without incurring a 10% penalty. (6) There's plenty of fine print, so let's have a conversation if you think you might be eligible.

Bottom line: 

There’s A LOT to unpack in the new laws. Many new rules, including changes to catch-up contributions and 529 plans, will roll out in 2024 and 2025.

As we’ve learned with previous new regulations, Congress might enact new laws, but we often have to wait for the IRS, other agencies, and the marketplace (ex. 401k record-keepers) to catch up before we can fully make use of them.

Stay tuned for more updates as the new rules shake out.

Sources:

1. https://www.plansponsor.com/official-secure-2-0-law/

2. https://www.fidelity.com/learning-center/personal-finance/secure-act-2

3. https://www.kiplinger.com/retirement/new-rmd-rules

4. https://www.fidelitycharitable.org/articles/secure-act-2-0-retirement-provisions.html

5. https://tickertape.tdameritrade.com/retirement/secure-act-2-0-now-law-how-it-s-likely-to-change-your-retirement-planning--19304

6. https://www.jdsupra.com/legalnews/secure-2-0-changes-rules-for-retirement-9979502/

Risk Disclosure: Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Past performance does not guarantee future results.

This material is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. The content is developed from sources believed to be providing accurate information; no warranty, expressed or implied, is made regarding accuracy, adequacy, completeness, legality, reliability, or usefulness of any information. Consult your financial professional before making any investment decision. For illustrative use only.

This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific situation with a qualified tax professional.

The information in this email is confidential and intended solely for the addressee. If you are not the intended addressee and have received this email in error, please reply to sender and inform them of this fact.

We cannot accept trade orders or distribution requests through email. These requests and any other important messages that are urgent in nature should be called into our office at (913) 825-6100.

Should You Retire When the Stock Market Is Down?

Should You Retire When the Stock Market Is Down?

As we’ve written about in the past, downturns in the market are often followed by feelings of uncertainty - fear of the the future. These emotions often manifest as actions - decisions we make that impact our financial lives.

We often hear from folks (prospecting & existing clients alike) the million-dollar question... “Should I retire now, or wait until the market comes back up?”

For our younger clients who aren’t yet looking to retire, it may be the same question but for a different life transition... “Should I start my own business/change jobs now, or wait until the economy is in better shape?”

As many of you know, this question is founded on some old fashioned ideas that were shoved into our minds by the “financial media”. Ideas that say...

• You can’t retire during a recession

• Your spending needs to decrease when your portfolio value decreases

• You should time your retirement around movements in the market

While there is merit to these ideas (more on that later*), we want to debunk some of these money myths and provide clarity for you as you navigate life’s big transitions.

Timing the Market vs. Time Horizons

One thing is certain, we don’t have the ability to accurately predict which way the market will move on any given day. So, if you’re waiting for a sunny spring day where the markets send you a note saying they “guarantee to go up for the rest of your retired life”, keep dreaming...

Because you cannot time market movements, you must manage your money to time horizons.

Many of you know this as our “Three Buckets” approach. Each bucket represents a time horizon for a financial need or goal:

• Short-Term — 0-2 years

• Mid-Term — 3-6 years

• Long-Term — 7+ years

These time horizons are determined by decades of academic and market research, and are designed to allow the market to work in your favor by you staying disciplined within each time horizon.

Here’s why a market downturn (and even a recession) should not be the determining factor as to whether or not you should retire...

If you have properly allocated money into each time horizon bucket, then you needn’t worry about short-term market movements.

Okay, but WHY?

Three Big Reasons:

1. When you’ve planned appropriately, you should have up to a two-year runway of cash on hand.

   So if you retire now, while the market is down, no big deal! You’ll pull from your cash reserves to meet your needs over the next 18-24 months.

2. As time goes on, and the market eventually recovers, we make allocation changes within your portfolio.

   Need more cash to replenish your short-term bucket? We’ll look to sell stock funds or bond funds within your portfolio to create the necessary cash. Whether or not you decide to sell stocks or bonds at that time will depend on multiple factors (total portfolio value, current performance, your unique tax situation).

3. We manage your portfolio in conjunction with your Financial Life Plan.
   So you can rest assured that your financial time horizons are being reviewed, and your investment holdings are being managed pursuant to the unique timing of your life.

At the end of the day, that’s what it’s all about, right? Getting your financial resources to align with your unique goals and values... not the other way around.

*Special Note: As described above, a stock market downturn should not directly effective your daily spending decisions. However, there is merit to this approach from one simple standpoint... if you decrease spending due to a market downturn, the two years of cash you’ve planned for in your “short-term bucket” will now stretch further... making you more resilient overall to the market’s downturns. But if you plan accordingly, a market downturn should not necessitate a spending change.

Again, if you feel this could be helpful to friends and family, please send it along. We welcome an introduction to those you think most highly of.

Thank you for your continued trust. It’s an honor to work alongside you.

Student Loan Forgiveness: What You Need to Know

The Announcement:

On the heels of President Biden’s announcement last week, there is a lot of confusion and many questions around Student Loan Forgiveness. There are parameters for who qualifies, and which loans can be forgiven, so it is very important that you determine whether or not you qualify, and then make an action-plan from there. 

While things may change in the coming weeks, here is what we know so far…

** Note: If you have student loans, please contact your Triune advisor to discuss your unique circumstances.

Not a Triune client, but have questions? Schedule an intro call today.

What You Need to Know:

1. This only applies to Federal student debt.

2. You are eligible if your Adjusted Gross Income (AGI) is less than $125,000 ($250,000 if married filing jointly). Your AGI from 2020 or 2021 may render you eligible, but 2022 income will not (per the New York Times).

3. The Department of Education will cancel up to $10,000 per borrower, and up to $20,000 for Pell Grant recipients.

4. The pause on student loan repayments has been extended to December 31, 2022. Borrowers should expect payments to resume in January 2023.

5. The Department of Education has also proposed a new income-driven repayment plan that caps monthly payments at 5% of discretionary income (down from 10% for some of the current income-driven repayment programs). This only applies to undergraduate loans.

Special Note if you have ALREADY made payments (or even paid off) your Federal student loans:

• According to the Federal Office of Student Aid, you can request a refund for any payments made since March 13, 2020.

  • You will likely need proof of payment.

  • Not all loans are eligible (like the FFEL, Federal Perkins Loans, private student loans).

• So, if you paid up to $10,000 towards your qualifying student loans since March 13, 2020, you may request a refund of those payments, and then request student loan forgiveness to have the remaining amount forgiven.

  • Be sure that your income qualifies before taking this step.

What To Do Next

1. Watch for the online application expected to be launched in the coming weeks for borrowers to provide their income information. This application is expected to be made available before the repayment pause ends on December 31.

2. You can sign up for updates by checking the “Federal Student Loan Borrower Updates” box and entering your email at the Department of Education's subscriptions page.