Fake News!

Fake News is everywhere, I think. Who knows?

Fake news is on the rise, undermining credible news stories and causing angst. It attacks people, places and things by reporting stories that aren’t true. People shoot first and ask questions later by reacting to false headlines. Online posts, media outlets, and Heads of State rant against the proliferation of fake news stories. If someone doesn’t like a post or news story, they shout: Fake News! With all the data circulating the internet it’s imperative that you spend time separating the wheat from the chaff.

Fake news is alive and well in the investing world. Here are a few examples:

  • I don’t need to save money to accumulate wealth. False. One of the largest components to your wealth creation is how much money you save and invest monthly. How much should you save? A suggested amount is 10% to 15% of your income. If you’re waiting for a lottery ticket, corporate buyout, IPO, or inheritance from a rich uncle, you may be waiting for a long time – possibly forever. Saving $1,000 per month for 30 years will grow to $1.2 million if you can earn 7% on your investment.
  • I can borrow my way to wealth. Debt is an anchor and it will hinder your opportunities to create wealth. The more debt payments you’re making, the less money you can invest. Debt is also a fixed cost and will last the life of your loan. For example, if you borrow $300,000 for 30-years at 4.5%, it will cost you $247,000 in interest.
  • I’m young, I don’t need life insurance. If you’re married with young kids, have a mortgage, a few car loans, and a student loan or two, you need life insurance. How much? At a minimum you’ll need enough to pay off all your debts. If you include the cost for college and survivor income for your spouse, it will add to the amount of life insurance you’ll need. A stay-at-home spouse needs life insurance as well.
  • I’m young so I don’t need to save money until I’m older. Dave Ramsey tells a story about Jack and Blake. Jack is 21 years old and saved $2,400 per year for nine years and then stopped investing. He invested a total of $21,600 and it grew to $2.54 million. Blake, on the other hand, started investing at age 30. He invested $2,400 for 38 years. His total investment of $91,200 grew to $1.48 million. Jack’s nest egg is more than a million dollars greater than Blake’s all because he started when he was young.[1]
  • I’m old, I don’t need to invest for growth. You may live to age 100, or beyond. A person who retires at 65 might spend 35 years in retirement. If you retire your money to a bank or money market fund when you stop working, it will lose value after you factor in inflation and taxes. At a 3% inflation rate, your dollar will lose 35% of it’s value after 35 years – a loss of 1% per year. Contrast this to an investment in Vanguard’s S&P 500 Index Fund on May 29, 1984. A $10,000 investment is now worth $398,000!
  • I can trade my way to prosperity. Day traders, market timers and speculators generate high commissions, short-term tax liabilities, but not wealth. Asset allocation accounts for 93.6% of your investment return. The remaining 6.4% is attributed to market timing and investment selection.[2]
  • I can keep up with the Joneses. Do your friends drive Ferraris and drink Screaming Eagle Cabernet Sauvignon, but you drive a Prius and drink La Croix? If so, hanging out with your friends could be damaging to your wealth. Trying to keep up with your neighbors financially is a fool’s errand. Focus on your finances, not theirs. Who cares if your neighbor has a bigger boat?
  • I don’t need a financial plan. Have you tried taking a road trip without a GPS? Have you ever been lost on a mountain trail without a map? If you’ve ever planned a family vacation, you know the benefit of a solid plan. A financial plan will help you quantify and prioritize your goals. It will be your guide and travel companion.

Facts matter, especially when it comes to investing. Investment truth for success: Invest early, invest often, think long-term, keep you your fees low and create a financial plan.

The problem with quotes on the Internet is that it is hard to verify their authenticity.” ~  Abraham Lincoln (source: the Internet)

May 30, 2019

Bill Parrott, CFP®, CKA® is the President and CEO of Parrott Wealth Management located in Austin, Texas. Parrott Wealth Management is a fee-only, fiduciary, registered investment advisor firm. Our goal is to remove complexity, confusion, and worry from the investment and financial planning process so our clients can pursue a life of purpose.

Note: Investments are not guaranteed and do involve risk. Your returns may differ than those posted in this blog. PWM is not a tax advisor, nor do we give tax advice. Please consult your tax advisor for items that are specific to your situation.

[1] Financial Peace University

[2] Determinants of Portfolio Performance, Financial Analyst Journal, July/August 1986, Vol 42, No. 4, 6 pages; Gary P. Brinson, L. Randolph Hood, Gilbert L. Beebower.

Measure Twice, Cut Once.

I love DIY projects.

This past weekend I was going to fix my garage door. I researched the issue, watched a few YouTube videos and talked to some professionals. I felt confident I could fix it, so I ordered the supplies.

The project was going well until I started to add the new part. It wasn’t working. I reviewed the instructions, but no luck. Frustrated, I gave up after an hour and went back to the drawing board. After my review, I figured out that the part I had ordered was 1/16th of an inch too big, so I ordered another replacement part. When it arrived, I completed the project in less than ten minutes. A friend of mine once told me with the right tools you can fix anything. He was right.

The primary tool for an investor is the financial plan. It will give you a blueprint on how best to construct, or fix, your financial life. There isn’t a good plan or a bad plan, there’s only your plan. It will give you a picture of your current financial situation. How does it look? Are you on track to reach your financial goals? Do you need to make any adjustments? Will your fix be a tweak or a major overhaul?

Like a construction project, a financial plan can appear daunting. Here are a few suggestions to help you get started.

Take an inventory of your financial assets. Where are they located? Do you own stocks, bonds or mutual funds? Do you have a 401(k) or company retirement plan? If so, gather all your statements and put them in an investment folder.

Gather your important documents like tax returns, insurance policies, and Social Security statements. Put these items in your important documents folder.

Identify your income. In addition to your job, do you generate income from other sources? Royalties? Rental Income? Pension? Print your paystubs, W-2s and 1099s and put them in your income folder.

Create a budget or spending plan. Where is your money going? The best way to create a budget is to review your past six months of bank and credit card statements. Write down your expenses and then create categories like housing, shopping, groceries, entertainment, and so on. Once you’ve gathered this data, put it in your budget folder.

Do you have debt? Do you have a mortgage? Car loan? Student loan? Credit card debt? Print out all your statements that identify your debt levels, payments, balances and interest rates. After this is done, put your statements in a debt obligations folder.

Establish your goals. Do you want to travel the world? Buy a second home? Volunteer? Retire early? Start a new business? Leave a bequest? Write them down, all of them. Dream big. Once this is done put your list in a goals folder.

List your concerns. Are you worried about your finances? Are you concerned about running out of money? Market losses? Dying early? Living too long? After you write down your concerns and fears, put them in your concerns folder.

Once your exercise is complete you should have several folders identifying your assets, goals, and concerns. You now have the foundation for your financial plan. Schedule a meeting with your advisor or planner to hand over all your folders. They will review the data and build your plan. Simple.

You now have a financial plan to help guide you toward achieving your goals. I know you can do it!

Hammer away!

Real men don’t use instructions, son. Besides, this is just a manufacturer’s opinion on how to put this together. ~ Tim Allen

May 29, 2019

Bill Parrott, CFP®, CKA® is the President and CEO of Parrott Wealth Management located in Austin, Texas. Parrott Wealth Management is a fee-only, fiduciary, registered investment advisor firm. Our goal is to remove complexity, confusion, and worry from the investment and financial planning process so our clients can pursue a life of purpose.

Note: Investments are not guaranteed and do involve risk. Your returns may differ than those posted in this blog. PWM is not a tax advisor, nor do we give tax advice. Please consult your tax advisor for items that are specific to your situation.

 

 

 

 

 

 

 

Morehouse College

The graduating class of Morehouse College received an unexpected gift from their commencement speaker.  Mr. Robert F. Smith offered to forgive all the student loans for the class of 2019. Mr. Smith is a billionaire, philanthropist, investor, and fellow Austinite who announced his generous offer to the students this past Sunday. He said, “My family is going to create a grant to eliminate your student loans!”

The announced figure was $40 million. There are about 400 men graduating from Morehouse College so the average debt per student is $100,000. Quite an offer.

The beauty of his gift is that he can watch these young men bear fruit. He will witness firsthand how it will multiply many times over for generations to come. He added, “Now, I know my class will make sure they pay this forward.”

Individuals often wait until they die to give their money away for fear of it running out while they’re still living. Is one strategy better than the other? It’s a personal choice, of course, but giving your money away while you’re alive will allow you to observe the joy of helping others.

Do not withhold good from those to whom it is due, when it is in your power to do it. ~ Proverbs 3:27.

Are you blessed with financial resources? If so, here are a few ways you can help others.

Loan Forgiveness. You might not have $40 million sitting in your bank account but if someone owes you money, you can forgive their debt. A generous offer to those in debt, for sure. However, let them know it will likely be reported as taxable income. For example, if someone owes you $100,000 and you forgive their note, they’ll owe taxes on this amount.

At the end of every seven years you must cancel debts.” ~ Deuteronomy 15:1-2.

Private Annuity. Do you want to help your alma mater in other ways besides paying off the entire debt for this year’s graduating class? A private annuity may be an option. It will allow you to donate appreciated property like real estate or equities in exchange for an income stream. Let’s say you own a $500,000 piece of property with a low-cost basis. If you donate the land to the school, they will send you monthly income for a certain period. In addition to the fixed income, you’ll receive a tax deduction for the fair market value of your land.

Charitable Remainder Trust. This trust, like the private annuity, works well with appreciated assets. When you transfer assets to the trust, you’ll be able to sell them and diversify your holdings while avoiding a capital gains tax. Let’s assume you own $1 million worth of Amazon stock – your only investment. After the shares are transferred to the trust, you’ll be able to sell the stock, buy new investments, receive monthly income, avoid the capital gains tax and get a tax deduction. The charity will receive your assets after you die, thus the term “remainder.”

Donor Advised Fund. Establishing a Donor Advised Fund (DAF) will allow you to contribute cash or securities to your account and then distribute your donations over time and as you see fit. If you’re not sure who should receive your gifts, this is an excellent vehicle because you can bunch, or consolidate, your donations to receive a tax deduction and defer your distributions. The contributions are irrevocable, but you’ll be able to invest the assets inside the fund allowing you to control your investments and distributions.

Direct Gift. If you know the who, what, when and why for your donation, then a direct gift makes sense. If you want to give $100,000 to your favorite charity, you can create a direct link to the institution and bypass setting up a new account, trust or foundation. You’ll be able to deduct the fair market value of your donation.

Bring the whole tithe into the storehouse, that there may be food in my house. Test me in this,” says the Lord Almighty, “and see if I will not throw open the floodgates of heaven and pour out so much blessing that there will not be room enough to store it. ~ Malachi 3:10

Mr. Smith’s gift is breathtaking and monumental. It will allow these young men to hit the ground running unencumbered by debt with an opportunity to make an impact from day one. Morehouse College has some notable alumni like Martin Luther King, Jr., Edwin Moses, Spike Lee, Samuel L. Jackson and Herman Cain. Who knows, maybe a few men from the class of ’19 will join these legendary graduates as a result of their good deeds and works.

Et Facta Est Lux (And there was light) ~ Morehouse College Motto

May 20, 2019

Bill Parrott, CFP®, CKA® is the President and CEO of Parrott Wealth Management located in Austin, Texas. Parrott Wealth Management is a fee-only, fiduciary, registered investment advisor firm. Our goal is to remove complexity, confusion, and worry from the investment and financial planning process so our clients can pursue a life of purpose.

Note: Investments are not guaranteed and do involve risk. Your returns may differ than those posted in this blog. PWM is not a tax advisor, nor do we give tax advice. Please consult your tax advisor for items that are specific to your situation.

My Daughter

Do you give the horse its strength or clothe its neck with a flowing mane? Do you make it leap like a locust, striking terror with its proud snorting? It paws fiercely, rejoicing in its strength, and charges into the fray. It laughs at fear, afraid of nothing; it does not shy away from the sword. ~ Job 39:19-22.

My daughter left home today for her summer job as a wrangler on a Christian dude ranch. The ranch is a slice of Heaven, snuggled between several mountain peaks in Estes Park, Colorado.

My daughter started riding horses before she learned to ride a bike. My uncle, who spent his entire life working with horses, encouraged me to introduce her to another activity besides horseback riding. He was concerned about the cost and he knew it was going to be a lifelong commitment. He was right on both fronts but I’m glad I didn’t take his advice because horses have been instrumental in building her character. The confidence she earned while riding horses has been priceless. When she’s on the back of a horse she shows no fear and rides like the wind.

Ranch life is back-breaking work where wranglers rise early and stay up late. They do a thousand little things every day to make sure the horses and riders are safe. They run about 100 horses from the pasture to the barn before the sun rises.  At the barn the horses are cleaned from hoof to head and then saddled for their daily rides around the ranch or into the Rocky Mountain National Park. The horses are then moved back to the pasture after their day is done.  Moving horses between the pasture and the barn is called jingling and it’s quite a sight to see hundreds of horses running as one. Afterwards the wranglers return to the barn to put away saddles and make any necessary repairs to the property or equipment. It’s a long day, but their love of horses keeps them going.  Wranglers always finish what they start, and they take pride in their work.[1]

During the day the wranglers manage both horse and human. Each guest is assigned a horse for the week based on their ability and experience. Skill levels vary. Most riders are city slickers who might touch a horse once or twice a year. Wranglers do a great job of matching horse to rider. Horses are big animals and they must be respected. A wrong move by an inexperienced rider can bring harm to both horse and rider. Listening and watching the wranglers is important for the campers if they want to have an enjoyable vacation.

I spent many hours with my daughter at various barns mucking stalls, tacking horses, setting up barrels, moving cross rails, and tossing hay. I learned a lot about horses by watching her work. She took her time grooming her horse and planning her day before she led it into the ring. It was worth the wait as I watched her gallop on a thoroughbred as the sun was settling in for the day. She’d spend all day at the barn if I let her.

Investors can learn several things from wranglers.

Respect. The markets, like horses, are unpredictable and can change course quickly, often without notice. If you’re going to invest your life savings in the stock market, you need to pay attention to the details. It’s paramount to understand the innerworkings of the market or hire someone who does.  At one of her first horse shows, her horse got spooked and reared up. It scared me to death, but she remained poised and was able to calm her horse down. Markets will get spooked, so it is important to stay calm during the turmoil.

Plan. Wranglers plan each day. They choose the horses to ride and which trails to traverse. The weather report plays a significant part in their planning and saddle bags are packed accordingly. Before the wranglers let riders hop in the saddle, they have a long list of items that need to be completed. Before you invest, I recommend completing a plan. Which financial routes do you want to follow? What resources will you use to reach your financial goals? A financial plan can help you improve your investment experience.

Communicate. The wranglers are equipped with radios so they can communicate with each other about trail conditions, weather, riders, etc. By staying in constant contact they’re able to stay informed. Talking with your advisor on a regular basis is recommended. Communication is the key to a successful advisor-client relationship.

Adjust. Riders come in different shapes and sizes, so saddles and tack constantly need adjusting. Mountain conditions change quickly, so wranglers and riders need to be flexible. Investors need to be flexible as well and adjust their portfolios as needed. Markets are not static. Adjust accordingly. On one Sunday my daughter was riding bareback. I was sitting in a lawn chair reading a book. When the horse trotted around the turn near where I was sitting my daughter wasn’t on it. I jumped up to see her lying face down on the other side of the ring. I ran to see if she was okay. She turned over with a face full of sand and a big smile. She said, “He saw a squirrel and jumped.” She dusted herself off and got back on the horse. When the market corrects, dust yourself off and get back in the game.

Patience. Working with horses and riders requires patience. Horses have a mind of their own and, as you know, you can lead one to water, but you can’t make it drink. Dealing with inexperienced riders probably requires more patience than working with the horses. Investing for the long haul also involves patience. Creating long-term wealth takes time. Saving money monthly while reducing your expenses doesn’t create overnight riches, but it will build your net worth over time.

Courage. Wranglers are tough. It takes courage to deal with hundreds of horses, especially when the weather turns for the worst. Guiding young riders on a mountain trail in the Rockies is not for the faint of heart either. In addition, they encounter several types of wildlife – snakes, bears, or elk. Investors need courage as well, especially when stocks are falling. It’s difficult to stay focused on your investment goals when the market drops, but it’s necessary to stay the course for you to obtain your financial goals.

My daughter is a tough kid with a warm heart. A wrangler to the core. I love her dearly.

Giddy up!

There is something about the outside of a horse that is good for the inside of a (wo)man. ~ Winston Churchill

May 16, 2019

Bill Parrott, CFP®, CKA® is the President and CEO of Parrott Wealth Management located in Austin, Texas. Parrott Wealth Management is a fee-only, fiduciary, registered investment advisor firm. Our goal is to remove complexity, confusion, and worry from the investment and financial planning process so our clients can pursue a life of purpose.

Note: Investments are not guaranteed and do involve risk. Your returns may differ than those posted in this blog. PWM is not a tax advisor, nor do we give tax advice. Please consult your tax advisor for items that are specific to your situation.

 

[1] Cowboy Ethics, James P. Owen, The Code of the West

Do Investment Returns Matter?

The S&P 500 rose 13% in the first quarter.  Are you satisfied or frustrated if your investment portfolio “only” made 12%?

During the quarterly review season investors want to know how well their accounts performed. Did they make money? Did they outperform the market? Will the trend continue? These are common, and logical, questions investors ask their advisors – but are they the right ones to ask?

Of course, returns matter. However, rather than focusing solely on your investment returns, you should review your financial goals and savings target. Are you saving money? Are you investing for a purpose? Do you have written financial goals? If you aren’t saving any money, your returns won’t matter. Nor will they matter if you’re not investing for a purpose like buying a new home, saving for retirement, or funding an education.

Identifying your investment goals is paramount to determining if you’re on the right track. For example, if your goal is to retire with $1 million and your current account balance is $1.2 million, you don’t need to take aggressive risks with your money. A conservative mix of investments will help you grow and preserve your wealth. On the other hand, if your balance is $250,000, you’ll need to own a growth-oriented portfolio loaded with quality stocks.

Time is also a factor. A 25-year old who saves $500 per month needs to earn 6% per year to reach $1 million in assets by age 65. A 50-year old needs to earn 25% – an unrealistic rate of return.

Investment goals and time frames are linked. Will you need your money in one year or less? If so, invest in short-term investments like U.S. T-Bills, money market funds, or CDs. These low-yielding investments will underperform stocks over time, but your goal is not to generate the highest return because you’ll need the money in the near term.

Saving for college is also time dependent – 18 years or less. If you recently had a baby, then an all-stock portfolio makes sense. As your child approaches age 18, move the assets to safer investments. When my daughter was born her account was filled with individual stocks. When she entered college, I moved half her assets to U.S. T-Bills so I could pay for her tuition, rent and food. She’s graduating from college in December and this strategy worked well.

Retirement is a primary goal for most. Saving as much as possible for your retirement is recommended. You’re allowed to contribute $19,000 per year to your 401(k). If you’re 50 or older, you can add another $6,000. You can also contribute $6,000 to an IRA. You can contribute another $1,000 if you’re 50 or older

During your next quarterly review, focus on your goals rather than your returns. Here are a few suggestions to help you transition from returns to goals.

  • Establish goals. If you don’t have a target, you can’t measure your progress. Once you document your financial goals, you’ll know if you’re on track – or not. Set up a system to monitor your progress. You can create a savings thermometer like you see at fund raising events! If you’re on track, stay the course. If not, make the necessary adjustments.
  • Increase your savings. You can’t control the stock market and returns are fleeting, but you can control how much money you save. In 2017 the S&P 500 rose 21.8%. It fell 4.4% last year. Let’s return to our 25-year old investor. She needs to earn 6% per year to reach $1 million at age 65 if she saves $500 per month. If she increases her monthly savings to $1,000, she only needs to earn 3.32%.
  • Control your spending. To retire, you need to cover your expenses. The lower your expenses, the less money you’ll need to save for retirement. For example, if your annual expenses are $100,000, you’ll need at least $2.5 million to pay for your expenses. If you can lower them to $75,000, then the amount you’ll need to save is $1.875 million. Do you track your expenses? Creating a spending goal or budget plan will help you establish your asset target. Multiply your expenses by 25 to figure out how much money you’ll need for retirement. Are you on track?
  • Adjust your asset allocation. An allocation to 100% stocks will give you the best opportunity to create long-term wealth, but it will be a bumpy ride. In 2008 the S&P 500 fell 37%. A portfolio consisting of 50% stocks and 50% bonds fell 20%. Adding bonds to an all equity portfolio will reduce your risk. What is your appropriate asset allocation? It depends on your tolerance for risk, financial goals, and time horizon. You can click on this link to identify your risk tolerance: https://clients.riskalyze.com/risk-questionnaire/questionnaire-intro
  • Big wins. The largest investment in your account will have the biggest impact on your returns. My parents best performing stock has been Starbuck’s, it’s also their smallest position. It has little impact on their account. Denmark’s stock market has outperformed the U.S. market by 4% per year for the past 20 years. Denmark accounts for 1% of the global market capitalization while the U.S. accounts for 54%.[1] When U.S. stocks move it makes an impact, not so much with Denmark.

It’s important to generate positive long-term returns, but it’s more important to have financial goals. Take some time to identify your goals so at your next quarterly review meeting you can focus on your progress.

Risk comes from not knowing what you’re doing. ~ Warren Buffett

May 9, 2019

Bill Parrott, CFP®, CKA® is the President and CEO of Parrott Wealth Management located in Austin, Texas. Parrott Wealth Management is a fee-only, fiduciary, registered investment advisor firm. Our goal is to remove complexity, confusion, and worry from the investment and financial planning process so our clients can pursue a life of purpose.

Note: Investments are not guaranteed and do involve risk. Your returns may differ than those posted in this blog. PWM is not a tax advisor, nor do we give tax advice. Please consult your tax advisor for items that are specific to your situation.

[1] Dimensional 2019 Matrix Book

Latte Wars

A high-profile financial battle is brewing over coffee. Suze Orman has said that a daily coffee habit can cost you $1 million.[1] Her comments were called into question by Ben Carlson, blogger at “A Wealth of Common Sense.” He said, “This advice sounds good because the latte factor is catchy but it’s not useful advice.”[2]

Coffee, and other household items have long been at the center of the wealth debate. Financial professionals have encouraged clients to reduce their expenses by eliminating fast food, alcohol, cigarettes, donuts, etc. Reducing your expenses to improve your financial health is always recommended. However, eliminating these items from your daily routine will have a larger impact on your physical health than it will on your financial health.

Let’s ground up some numbers to find out if it makes sense to eliminate coffee from your budget.

Today, a cup of coffee costs about $2.50. If you work for forty years (25 to 65), you’d spend about $41,000 on coffee.

The average starting salary for college graduates is about $50,000. During a 40-year career they might earn $3.3 million.[3]  Their coffee habit will cost them 1.2% of their lifetime income.

How does this expense compare to other household items? According to the recent Consumer Expenditure Survey, the average household income is about $60,000. Housing is the biggest expense at 33% of income, or $19,884 per year. Food is next at 20%, followed by 15.9% for transportation. Healthcare is 8.2%. Entertainment is 5.3%.[4]

Consumers spend about 1.4% of their income on fruits and vegetables, about the same amount as they spend on coffee.  Should you eliminate fruits and vegetables from your diet to create wealth?

What if you ditched your coffee habit and invested the money in the stock market? A monthly coffee habit costs $50 ($2.50 x 20).  Investing $50 per month into Vanguard’s S&P 500 index fund (VFINX) from April 1979 to April 2019 would have grown to $1.14 million. The fund has generated an average annual return of 11.33% for the past 40 years.[5]

Of course, your numbers may differ, so here are a few ideas to help you with your spending habits.

  • Develop a budget or spending plan. Mint.com and other websites can help you improve your budgeting results. After taking stock of your revenue streams and expenses, identify items to reduce or eliminate. Look to big ticket items like housing, transportation or healthcare to make major changes to your budget.
  • Establish an emergency fund. Your emergency fund will help pay for unexpected expenses. Your fund balance should equal 3 to 6 months of your household expenses. It can be invested conservatively in a money market fund, savings account, CD, or T-Bill.
  • Invest for growth. Owning stocks for the long-haul is a great way to increase your wealth. Stocks have generated an average annual return of 10% since 1926 while U.S. T-Bills have returned 3.4%. A dollar invested in stocks is now worth $7,025. The same dollar invested in T-Bills grew to $21.[6] An investor of stocks can drink all the coffee they want!
  • Buy what you know. Peter Lynch, the former portfolio manager for the Fidelity Magellan fund, suggested investors buy what they understand. If you’re a coffee drinker, then Starbuck’s is an obvious investment choice. A $10,000 investment in Starbuck’s in June 1992 is now worth $2.6 million.[7] A quick inventory of the products in your house can be the foundation for a solid investment portfolio. Do you own any Apple products?
  • Review your spending and investment accounts. Reviewing your financial data daily, monthly, annually, or as needed is recommended to make sure you’re on the right path. At a minimum, it should be done annually.

It’s okay to spend money on things you enjoy so long as they don’t bust your budget. Living within your means is the preferred way to increase your wealth and enjoy the fruits of your labor, so drink and invest wisely!

As a note, Starbuck’s is adding a S’mores Frappuccino® this month. I’m not a coffee drinker, but I will purchase their S’mores drink because I want to and it’s in my budget!

I put instant coffee in a microwave oven and almost went back in time. ~ Steven Wright

 

May 2, 2019

Bill Parrott, CFP®, CKA® is the President and CEO of Parrott Wealth Management located in Austin, Texas. Parrott Wealth Management is a fee-only, fiduciary, registered investment advisor firm. Our goal is to remove complexity, confusion, and worry from the investment and financial planning process so our clients can pursue a life of purpose.

Note: Investments are not guaranteed and do involve risk. Your returns may differ than those posted in this blog. PWM is not a tax advisor, nor do we give tax advice. Please consult your tax advisor for items that are specific to your situation. The investments highlighted are for informational purposes only and not recommendation to buy or sell. I’m not a coffee drinker, so my coffee expense numbers may be low.

 

 

[1] https://www.cnbc.com/2019/03/28/suze-orman-spending-money-on-coffee-is-like-throwing-1-million-down-the-drain.html, Emmie Martin, March 28, 2019.

[2] https://awealthofcommonsense.com/2019/04/the-stephen-a-smiths-of-personal-finance/, Ben Carlson, April 16, 2019

[3] https://www.cnbc.com/2019/02/15/college-grads-expect-to-earn-60000-in-their-first-job—-few-do.html, Abigail Hess, February 17, 2019

[4] https://www.bls.gov/opub/reports/consumer-expenditures/2017/home.htm, website accessed 5/2/2019.

[5] Morningstar Office Hypothetical Tool, website accessed 5/2/2019

[6] Dimensional Matrix Book 2019. Historical Returns Data – US Dollars.

[7] Morningstar Office Hypothetical Tool, website accessed 5/2/2019