Joel’s Published Column



Giving Thanks and Paying Yourself First

As we roll into the one-year mark since the 2016 Presidential Election, we have much to be thankful for. The stock market as measured by the S&P 500* recently closed at its highest level ever recorded. The unemployment rate is at 4.2% as measured by the Bureau of Labor statistics. Genesee County’s housing market has returned to pre-financial crisis levels.

Clients ask me if these stats really have to do with our current President or not. My response is often, “It doesn’t hurt that the only thing President Trump cares about is business and the economy.” I won’t give him credit for everything; but, I believe the American capitalist’s animal spirits have awakened. They’re making business decisions based on the new reality that businesses and the economy will remain the Trump Administration’s primary focus. Whether this administration lasts another six months, three years, or seven years, it seems Trump hopes to be known as the “pro-business President”.

So, as I think through who will benefit from our pro-business President, it leads me to the same answer: people who own things could benefit most from this administration. Who has benefited so far? Homeowners, and business owners all seem to be in the same boat in terms of things being better than they were a year ago. Some are lucky enough to be homeowners or a business owners; but I’m hoping that the majority have taken our previous advice about paying yourself first, and have started putting money away in their retirement accounts.

As a friendly reminder, one option to start saving for retirement is in a company-matching 401k or 403b account. With these employer-sponsored plans, your employer can match your contribution up to a certain percentage of your income. For many employers, one “safe harbor match” is to match 100% of the first 3% of employee income, and then 50% of the next 2%. It works out to a 4% match if the employee puts in 5%. That’s an 80% match! This is before the funds are put to work in any type of markets as long-term investments.

If you don’t have access to employer-sponsored plans like 401ks or 403bs, then almost everyone has access to Individual Retirement Accounts (IRA). There are two types: the ROTH IRA and the traditional IRA. The Roth IRA is typically beneficial for those in lower income tax brackets who believe they will be in a higher tax bracket during retirement. The traditional IRA that can benefit those currently in a higher tax bracket. They can deduct contributions now, while they are in a higher bracket, and then withdraw it during retirement, when they are in a lower one.

My opinion is the business environment and economic environment may be on the cusp of a very long-term expansionary period. Obviously, there will be economic recessions in the future; but, the one consolation prize, due to this current crazy administration, could be a very positive tailwind for the business community. Owners of things could well benefit from this administration’s policies. We need to seriously consider paying ourselves first to ensure that we don’t miss the boat. If you need help finding a starting place, get with a financial advisor who can help you get on the right path.


Pension Rollovers

Do you know where your Pension Plan is?

Many people know they have a pension plan, but they’re not quite sure how it works, how stable it is, or exactly how their money is invested. The details are often hazy.
Pension plans are also called “defined benefit” plans because they provide a predetermined, continuous income for retirement. This fixed payout is generally determined by factors such as your exit salary and your seniority or longevity at work. Government pension plans commonly require employer contributions, though union and private pension plans may not.

If you do not have a pension plan:

It may be worthwhile to find out if your employer offers one. Ask for the details, and be sure to find out at what point you become eligible. It’s typical for an employee to gain eligibility after three to five years.

If you have a pension plan:

It’s important to keep tabs on it and make sure you understand it. For example – do you know if your plan is stable? Increasingly, employers are terminating pension plans and either directing pension assets into annuities or issuing lump-sum payouts to workers.

If you were in a pension plan that was terminated,

or if you had a pension plan with a former employer that has since gone out of business, contact the Pension Benefit Guaranty Corporation ( This is an agency of the federal government created to protect pension plan assets.
If you are more than five years away from retirement it may seem too soon to bother tracking down pension plan details, but it’s never too soon to start.
It’s important to get all the information you can about your plan, and once you have that information, you need to keep up with it.

After all, your retirement may depend on it.

If you have further questions, or if you’re ready to start planning for your retirement, be sure to contact your Financial Advisor.

Budgeting Rules of Thumb

I don’t know about you, but I’ve had a pretty great summer! As of this writing, we have had rather reasonable weather, not too hot and not too cool – kind of a Goldilocks summer … just right. With the season in full swing, and the end around the corner as we head back to school, I think it’s time to re-visit the subject of budgeting. Many people often wonder, “how much of my income should I be spending on my mortgage? Or my cars? Or my food?” Although there is no hard line in the sand on these questions, there are guidelines to help us spend less than we earn.

To help manage our expectations of a good starting point for a budget, I’ve compiled a list of major expenditures and some guideline percentages. According to the Department of, (, the average household income in Michigan is $51,084 as of 2015. So, we’re going to use an even $50,000 number as our starting place. I created the chart below to help us examine a rough breakdown of what a budget could look like.

From this chart, there are some obvious facts we can glean. You can see that if we come in at the high end of the range on every expense, we end up over-spending by almost 50% more than what we make. Again, these are benchmarks to provide a starting point of what we should be spending. Every household is going to be different and place a different value on specific areas. Some may give more and spend less on recreation or vice versa. To be in a good financial position, families can examine these percentages and make comparisons with their own household income to make sure that each month, they are spending less than they make.

The most successful budgeting families I have encountered will have a weekly budget review and conversation to ensure they are staying within their guidelines. I know it seems daunting at times; but this is a must-do for people on the path to financial prosperity. It doesn’t matter if you make $40,000 or $400,000 – to be successful at budgeting, we all need to spend less than we bring in.

Using Debt to Invest May Not Be the Best Idea

Markets continue to baffle investors. Mediocre news, lunacy in Washington D.C. and threats of nuclear war seem to be hitting the headlines on a weekly, if not daily basis. One would think with these types of events, the markets could easily be in free-fall. For the time being, it seems the exact opposite. Per, the markets continue to grind to all-time highs on the Dow Jones Industrial Average to higher than 22,000. I’ve eluded to the possibility that the next great crash probably won’t come until everyone stops asking about the next crash. We may need to be wary of getting too comfortable with the markets parading higher.

In one recent week, I had two clients ask about going to the sidelines, and two ask about taking out a mortgage at 4% to use those proceeds for market investment where they may get a much higher return. This behavior may reveal the state of America and some of its citizens. In terms of investing, one group thinks the world may be ending and the other group thinks it’s just starting to get good. So, is this an indication of too much bullish sentiment? Not really; I’m looking for more of a 5/1 ratio of people wanting to get in on this huge bull market before I would be concerned about a major pull-back. That isn’t to say that we may not see one here in the next year or so – but for now, the sentiment I feel is still tenuous at best.

Don’t get emotional

Regarding answers to both of my clients’ questions – one about going to cash, and one “betting the farm” on a market move higher, my response was the same. “I don’t think that would be a great idea at this time.” Wanting to go to cash because of geopolitical tensions tends to be an emotionally driven response. I would argue that investment decisions based on emotion usually don’t end up with the result originally intended. In the past many sophisticated businessmen have made money by investing with borrowed funds. But, these investments may not have been put into something as erratic and unpredictable as the stock market.

Are you anxious about the markets or the different threats your portfolio may face? If so, I would suggest meeting with your financial advisor and take a hard look at your current asset allocation. Ensure that your investments match your risk tolerance and long-term objectives.

When is the next crash coming?

As we are hit daily with what seems to be a new Washington scandal or news of the latest ISIS terrorist attack, the stock market has continued to trend higher since the election, as measured by the S&P 500 Index*. As I’m out at different social gatherings – graduation open houses, Fourth of July parties, summer BBQs and the like, a constant question will be asked by almost everyone: when is the next crash coming?

Let me be clear: no one knows when the next crash is going to come. However, I think investors have been conditioned to expect crashes to wipe out their portfolios. As humans, we are creatures of habit and like things to be predictable.

The stock market has not been terribly kind to investors over the past 17 years. First, there was the 9/11 attacks which came at the start of a long, drawn out recession that sent the market spiraling lower for about 2.5 years. Then, just as we thought we had it all figured out and could make money in the real estate flipping business, the housing crisis of 2008 wiped out more wealth in both the stock market and the housing market since any crisis since the Great Depression**. For many investors, all they’ve known is that when the stock market makes new all-time highs, watch out – it’s just a matter of time before the next crash wipes away all gains.

My two cents

Since we may have been conditioned to expect crashes, here is my “two cents” on the situation. Crashes rarely ever come when most people are asking about them. For example, how many people were asking about the looming housing crash in 2005? In fact, most of my clients were asking why we weren’t riding the real estate boom and what funds are available to invest in that specialized in real estate. People tend to forget that leading up to the tech bubble of 2000, lots of people were quitting their jobs to become day-traders in this new sector called internet commerce. (no longer in business) was going to revolutionize Christmas shopping and people HAD to have that stock. What could go wrong?

Bubbles in asset classes happen every so often, but rarely do many people have the wherewithal to profit from the bursting of these bubbles. My guess is that about the time most people are no longer asking the question “when is the next crash coming?” and are excited again about how high the stock market has gone, that will probably be the time when we should sit up and take notice. Ask yourself this: how many people are saying, “Wow! I think the Dow Jones has a chance to go to 50,000 over the next ten years?”

Of course, I’m not making any type of prediction like that, but this bull market could continue to trend higher for some time.
In my opinion, investors should consider meeting with their financial advisors to determine whether their portfolio is positioned correctly according to their long-term goals and objectives, and making sure the balance in their portfolios of stocks to bonds is appropriate.