Year End Gift Giving Ideas           

Are you struggling to find the perfect gift for your loved ones? Are you having trouble buying something for the person who has everything? Do your loved ones need another pair of socks, matching pajamas, or decorative hand towels? It can be challenging to buy gifts for others, so here are a few last-minute ideas.

Cash. You can give away $16,000 per person without impacting your estate and gift tax exclusion, and it is not limited to family members. If you’re inclined, you can gift $16,000 to friends, neighbors, co-workers, and strangers.

Appreciated Securities. If you still own an appreciated security or two, consider donating it to your favorite charity. The charity receives your stock, and you receive a tax deduction. More importantly, you won’t pay a capital gains tax when you donate your shares, nor does the charity.

Donor Advised Fund (DAF). If you’re unsure where to donate your dollars, consider establishing a donor-advised fund and giving your money away later. You’ll receive a tax deduction when you contribute money to your fund, but you don’t have to distribute the funds immediately. For example, if you contribute $100,000 to a DAF today, you can give away smaller amounts over the coming years to multiple charities. Here is a link to Schwab’s Charitable Fund: https://www.schwabcharitable.org/donor-advised-funds

Qualified Charitable Distribution (QCD). If you’re 70 ½ or older, you can distribute up to $100,000 from your IRA to charitable organizations. In addition to supporting a nonprofit, the distribution fulfills your annual required minimum distribution (RMD). You won’t receive a tax deduction for your gift and won’t pay taxes on the distribution. It’s a win-win.

Charitable Remainder Trust (CRT). A CRT is similar to a donor-advised fund, except you’ll receive income from your gift and the charity receives your remaining assets at your death. For example, if you donate $1 million to a CRT, you may receive annual income in the range of $50,000 to $80,000, and when you pass, the remaining assets are sent to the organization you selected.

529 Education Plan. The gift of education is priceless. If you have grandchildren or great-grandchildren, consider establishing a 529 education plan. The money grows tax-free if you use the funds for education expenses. A 529 plan can pay for tuition at multiple levels, including K through 12, college, trade, graduate, law, or med school.

Fruitcake. It’s an excellent gift, and it will never expire!

It’s the gift-giving season. If you have ample resources, consider helping those in need or supporting the next generation. Your gift will spread joy and cheer for years to come.

Each one must give as he has decided in his heart, not reluctantly or under compulsion, for God loves a cheerful giver. ~ 2 Corinthians 9:7

November 21, 2022

Bill Parrott, CFP®, is the President and CEO of Parrott Wealth Management 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. Our firm does not have an asset or fee minimum, and we work with anybody who needs financial help regardless of age, income, or asset level. PWM’s custodian is TD Ameritrade, and our annual fee starts at .5% of your assets and drops depending on the level of your assets.

Note: Investments are not guaranteed and do involve risk. Your returns may differ from 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. Options involve risk and aren’t suitable for every investor.

How Much Can I Spend?

The market turmoil and volatility are causing heartache for investors, and rightfully so, especially those in retirement. Losing a paycheck after a lifetime of employment is terrifying, but not having a steady paycheck in a down market is even worse. However, we can’t control the market, but we can control our spending, and Americans love to spend money.

Spending is a crucial ingredient for a successful retirement. Once your assets can cover your annual spending, you can retire, regardless of age. Most people rely on Social Security and personal investments to meet their needs, and a few will benefit from a pension plan. Social Security payments and pension benefits offer fixed payouts, unlike variable consumer spending.

We offer financial planning to help individuals better plan for their golden years, and annual spending is a number we need to complete the process. Yet, few can provide an adequate number because they don’t track their expenses, and it is the one variable required to answer the question about retirement. If you tell me how much money you spend, I can tell you if you’re ready to retire.

By now, you have probably heard of the 4% rule. I won’t delve into the research, but the study found that you should not run out of money if you withdraw 4% of your assets each year. The good news is that now you can buy a 30-Year United States Treasury Bond yielding 4%. So, if you retire today, you can guarantee a 30-year fixed payout of 4%! If your account balance is $1 million, you can lock in an annual payment of $40,000. If your annual expenses are $100,000, you need $2.5 million in assets. The math is simple: Multiply your expenses by 25 to arrive at your asset level.

  • Your Expenses: $_________________
  • Multiply your expenses by 25 to arrive at your required asset level.
  • Assets Needed: $_________________

If your assets are sufficient to cover your expenses, you can retire. Congratulations! If not, you need to reduce your spending or increase your assets.

How long will your assets last? Another beneficial calculation is to divide your assets by your expenses to see how long your money will last. For example, if your assets are $1 million, and you spend $100,000 per year, your money will last ten years. If you reduce your spending to $50,000, it can last for twenty years. This practical calculation will shine a light on your financial situation.

  • Your Assets: $___________________
  • Your Expenses: $________________
  • Divide your assets by your expenses.
  • Asset longevity (Years): __________

Spending is the primary level, but what if you don’t want to reduce your expenses? What if you love your lifestyle and don’t want to cut anything from your budget? You need to increase your revenue if you don’t want to reduce your spending. Can you work part-time, drive an Uber, teach a class, or turn a hobby into a career? Another strategy is to turn non-income-producing assets like commodities or cryptocurrencies into cash-flow-generating investments.

The stock market will recover, the economy will rebound, and geo-political tension will ease, but your expenses will last forever.

Too many people spend money they haven’t earned to buy things they don’t want, to impress people they don’t like. ~ Will Rogers

November 12, 2022

Bill Parrott, CFP®, is the President and CEO of Parrott Wealth Management 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. Our firm does not have an asset or fee minimum, and we work with anybody who needs financial help regardless of age, income, or asset level. PWM’s custodian is TD Ameritrade, and our annual fee starts at .5% of your assets and drops depending on the level of your assets.

Note: Investments are not guaranteed and do involve risk. Your returns may differ from 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. Options involve risk and aren’t suitable for every investor.

Risk Off

Cryptocurrency exchange FTX is imploding and needs to raise money, and it has halted customer withdrawals as it explores its options.[1] FTX sponsors the Miami Heat Arena and Major League Baseball, endorsed by Tom Brady, Gisele Bundchen, Steph Curry, and Shohei Ohtani. Its bright light attracted speculators like moths to a flame.

It appears that FTX commingled client funds with their trading firm, Alameda Research – a major no-no for US-regulated firms.[2] FTX is Bahamas based, out of reach of US regulators, and it’s unclear how investors will get their money back since most cryptocurrencies are not regulated.

The concern over FTX has dealt a blow to cryptocurrencies, exchanges, and institutional investors. Coinbase is down 82% this year, Bitcoin and Ethereum have fallen 58%r, the ProShares Bitcoin Strategy ETF has dropped 67%, and the Grayscale Bitcoin Trust has lost 74%. Sequoia Capital is writing down their investment in FTX to zero, a loss of $150 million, and Binance, another crypto exchange, will not rescue FTX and has backed away from discussions.

I don’t want to solely pick on cryptocurrencies because traditional assets like stocks and bonds are down significantly this year. The Nasdaq is down 31%, long-term bonds have dropped 34%, and all asset classes are struggling.

Risk arrives quickly and without warning, quickly wiping out years of gains. You can’t avoid danger if you own growth assets like stocks, real estate, or digital assets. To obtain higher returns, you need to risk capital. However, you can do some things to minimize your losses.

  1. The first rule of risk management is not to invest more money than you can afford to lose. Do not speculate with safe funds.
  2. If it is too good to be true, it probably is. Do not chase shiny objects with promises of oversized returns hyped by celebrities.
  3. Do not borrow money for speculation. Leverage is the best way to lose more than you intended when your investment goes south. The bank must get paid on time, regardless of how your investment is performing.
  4. Do not speculate on the money you need in one year or less. Today, you can buy US T-Bills with a guaranteed rate of 4%.
  5. Do not speculate with money earmarked for large purchases like a home, wedding, or college tuition.
  6. Take calculated risks. Do your homework, read the small print, and decide. Do not let friends, influencers, or actors pressure you to invest.
  7. If you want to speculate, limit your exposure to 3% to 5% of your investable assets. If you own $1 million in assets, your speculation budget is $30,000 to $50,000.
  8. If you plan to invest in private placements or illiquid investments, ensure your liquid assets can cover at least five years of your living expenses.

We crave instant gratification, and few people want to grow rich slowly. We are a culture of impatience, and the thought of waiting for anything is unacceptable, but if we move too quickly, we risk missing the details. Haste makes waste.

Fortune favors the brave. ~ Matt Damon, Crytpo.com commercial

November 10, 2022

Bill Parrott, CFP®, is the President and CEO of Parrott Wealth Management 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. Our firm does not have an asset or fee minimum, and we work with anybody who needs financial help regardless of age, income, or asset level. PWM’s custodian is TD Ameritrade, and our annual fee starts at .5% of your assets and drops depending on the level of your assets.

Note: Investments are not guaranteed and do involve risk. Your returns may differ from 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. Options involve risk and aren’t suitable for every investor.


[1] https://www.wsj.com/articles/ftx-tapped-into-customer-accounts-to-fund-risky-bets-setting-up-its-downfall-11668093732?mod=hp_lead_pos2

[2] Ibid

My Client Patty

I’ve worked with Patty (not her real name) for the past thirty years. She became a client when I worked for a large Wall Street firm, and in the early 1990s, we developed a rudimentary financial plan that’s still working today. Patty is now in her mid-nineties and does not worry about market corrections, drops, dips, pullbacks, or crashes, and she usually says, “We’ve seen this before, and we know the market will recover.”

Soon after completing her financial plan, she called to ask if she could afford a new car, and I told her she could buy two. Her financial plan allowed us to invest and spend courageously, regardless of economic conditions, and it still does.

Her plan has been in distribution mode from the beginning, and we have sent her more money than her account is currently worth because of the long-term trend of the stock market and the power of compounding interest. Her wisdom and foresight have kept her invested despite the generational headwinds.

A few years ago, she blessed her great-grandchildren by opening education accounts. She had more than enough money for the rest of her life, so she cracked open her nest egg to fund the accounts. Her great-grandchildren may attend college for free because of her generous gift.

Patty is strong in her faith and receives great joy from serving others with her time, talent, and treasure. She is an optimist with a positive outlook on life and does not let a bear market sour her mood.

After each portfolio review, I half-joking ask Patty if she could speak to all my clients because of her positive outlook. She won the race long ago, focuses on things she can control, and ignores the rest.

If Patty had panicked during the past three decades, she would not have the wealth she does today, nor could she have funded her great-grandchildren’s education accounts. She has been able to overcome her fear and focus on the future.

I have a hundred years of data for stocks, bonds, interest rates, inflation, etc., to try and convince clients that markets rebound, but Patty is living proof that if you follow your plan, think long-term, and have faith, things will turn out well.

If you want to succeed as an investor, follow Patty’s lead.

Someone’s sitting in the shade today because someone planted a tree a long time ago. ~ Warren Buffett

October 17, 2022

Bill Parrott, CFP®, is the President and CEO of Parrott Wealth Management 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. Our firm does not have an asset or fee minimum, and we work with anybody who needs financial help regardless of age, income, or asset level. PWM’s custodian is TD Ameritrade, and our annual fee starts at .5% of your assets and drops depending on the level of your assets.

Note: Investments are not guaranteed and do involve risk. Your returns may differ from 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. Options involve risk and aren’t suitable for every investor.

Year End Strategies

Investors are limping into the fourth quarter battered and bruised from a bumpy market as stocks and bonds continue to trade lower on inflation fears and rising interest rates. Regardless of the chaos, there is still time to make smart year-end moves to shore up your finances.

Buy Stocks. Buy stocks if your time horizon is three to five years or more. The price drop allows you to purchase individual stocks and funds at lower valuations. History shows it pays to buy stocks during bear markets while others sell. If you need proof, review the previous bear markets of 1956, 1961, 1966, 1968, 1973 -1974, 2000 – 2003, 2007-2009, 2018, and 2020.

Buy Bonds. Buy bonds if your time horizon is one to three years. The one-year US T-Bill yields 4%, the highest level in fifteen years, and the rate is guaranteed!

Sell Stocks. If you own a few losers in your taxable account, sell them to realize a loss. You can offset your gains with losses, and if you don’t have any gains, you can write off $3,000 from your tax returns and roll over the loss forever until it’s gone. You can buy back stocks you sell in thirty-one days to avoid the wash sale rule. For example, if you sell Apple today, you can repurchase it on October 23.

Sell Bonds. If you purchased bonds during the COVID crisis, you have losses because the yields were considerably lower than they are now, and when interest rates rise, bond prices fall. Selling your bonds will trigger a tax loss and allow you to buy new ones with higher yields.

Required Minimum Distribution. If you’re 72 or older, it’s time for your IRA required minimum distribution. The calculation is a function of your 2021 year-end valuation and your age. If you fail to take your RMD, the IRS will assess a 50% penalty on the projected distribution amount. For example, if your RMD amount is $20,000, the IRS will penalize you $10,000, so don’t forget!

Rebalance. It’s been a volatile market this year, and your asset allocation might need an adjustment. Your asset allocation is probably too conservative as stocks have fallen. Rebalance your account to return your portfolio to your intended target.

Qualified Charitable Distribution. If you’re 70 or older, consider a qualified charitable distribution. The IRS allows you to donate up to $100,000 from your IRA to charities. Why use a QCD? The distribution qualifies as a required minimum distribution, avoids taxes, and benefits groups or organizations you support.

401(k) Contribution. The maximum contribution for 401(k) plans is $20,500 if you’re under 50 and $27,000 if you’re 50 or older.

Roth 401(k). Take advantage of your Roth 401(k). Plan participants can contribute to the Roth 401(k) regardless of income; at retirement, it can roll over to a Roth IRA.

Roth Conversion. If your IRA is down in value, consider a Roth conversion, especially if you’re still working and have significant assets in a taxable account. You can take advantage of lower stock valuations in your new Roth IRA by converting today. As stocks recover, you needn’t worry about paying taxes or the required minimum distribution again.

IRA Contribution. The maximum contribution for an IRA is $6,000 if you’re under 50 and $7,000 if you’re 50 or older. The amounts apply to both traditional and Roth IRAs. However, you can’t contribute the maximum amount to both IRAs.

Donate. The giving season is here, and non-profit organizations raise most of their funds during the fourth quarter. Donating to charities benefits you and the groups you support because they get your money, and you receive a tax write-off. Consider donating stocks or funds with significant capital gains because you can write off the security’s fair market value and avoid paying the capital gains tax.

Give. You can give away $16,000 per year under the annual exclusion, which is not a taxable event to you or your beneficiary. For example, if you’re married and have ten kids, you can give away $320,000.

Get outside. The fall is an excellent time to visit a national or state park as temperatures cool and leaves change color. Hiking in the mountains or walking on the beach is a reminder that all is well in the world.  

Look deep into nature, and then you’ll understand everything better. ~ Albert Einstein

September 22, 2022

Bill Parrott, CFP®, is the President and CEO of Parrott Wealth Management 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. Our firm does not have an asset or fee minimum, and we work with anybody who needs financial help regardless of age, income, or asset level. PWM’s custodian is TD Ameritrade, and our annual fee starts at .5% of your assets and drops depending on the level of your assets.

Note: Investments are not guaranteed and do involve risk. Your returns may differ from 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. Options involve risk and aren’t suitable for every investor.

Buy T-Bills?

Stocks, bonds, and Bitcoin are down sharply this year as inflation and interest rates soar. The Federal Reserve continues to raise short-term interest rates to try and combat inflation, and, as a result, cash is an alternative to stocks and other growth-oriented assets. Why is it time to buy T-Bills? Let’s find out.

T-Bills are the safest investment in the world, guaranteed regardless of how much you invest. If you want safety and liquidity, look no further. The current rate for a one-month T-Bill is 2.56%, and if you extend the maturity to one year, it jumps to 4%, a sharp increase from the past couple of years. The 1-Year T-Bill has ranged from a high of 8.64% to a low of zero since 1990, and the 32-year average has been 2.85%.  

According to Barrons, Berkshire Hathaway, led by Warren Buffett and Charlie Munger, own more than $75 billion worth of T-Bills.[1] They use them to fund their corporate operations and make strategic acquisitions. In last year’s annual report,  Mr. Buffett had this to say about cash and other short-term investments, “Charlie and I have pledged that Berkshire (along with our subsidiaries other than BNSF and BHE) will always hold more than $30 billion of cash and equivalents. We want your company to be financially impregnable and never dependent on the kindness of strangers (or even that of friends). Both of us like to sleep soundly, and we want our creditors, insurance claimants, and you to do so as well.”

Here are a few reasons to buy T-Bills.

  1. T-Bills are an excellent choice if you’re anxious about rising interest rates. They are auctioned weekly with maturities of 4-, 8-, 13-, 26-, or 52 weeks. It’s possible to build a short-term ladder with bills expiring weekly, and if interest rates continue to rise, you can reinvest your proceeds at higher rates without suffering a principal loss.
  2. T-Bills can protect your account if you’re worried about a further stock market correction. Transferring 50% of your account to bonds from an all-equity portfolio can lower your risk by 37%. T-Bills are a hedge against falling stocks because they’re negatively correlated. The S&P 500 lost 8.25% in June, and T-Bills rose 0.06%, and during the initial phase of COVID, stocks fell 12.4%, and T-Bills jumped by 0.13%.[2]
  3. T-Bills can offer you more safety than your bank if you hold a significant cash position. T-Bills are guaranteed, regardless of the amount you buy. Rather than transferring money between several banks to qualify for FDIC insurance, you can purchase T-Bills.
  4. If you need your money in one year or less, T-Bills offer liquidity and safety not found in other investments, like stocks.

Treasury Direct (https://www.treasurydirect.gov/) is an excellent way to buy US Treasuries. After you create your account, you can participate in auctions or buy existing issues. You can also contact your advisor if you don’t want to buy them yourself.

T-Bills are bought for safety, not for growth. You must own stocks to create generational wealth and T-Bills to preserve it.

Bye, bye, and buy bonds.

“Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas.” ~ Paul Samuelson

September 19, 2022

Bill Parrott, CFP®, is the President and CEO of Parrott Wealth Management 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. Our firm does not have an asset or fee minimum, and we work with anybody who needs financial help regardless of age, income, or asset level. PWM’s custodian is TD Ameritrade, and our annual fee starts at .5% of your assets and drops depending on the level of your assets.

Note: Investments are not guaranteed and do involve risk. Your returns may differ from 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. Options involve risk and aren’t suitable for every investor.


[1] https://www.barrons.com/articles/warren-buffett-t-bills-ultra-safe-investment-51660580408, by Andrew Bary, August 16, 2022

[2] DFA Returns Web

Are You Ready To Retire?

Are you ready to enjoy your golden years? Retirement is a goal for most investors, especially those who have faithfully contributed to their 401(k) plan for three or four decades. Is it time to cash in your chips and go all in on retirement?

A successful retirement requires years of planning and covers three main topics: Where will you live? What will you do? How will you pay for it? Let’s explore each subject.

Where to live?

A key component of retirement is where to live. Do you want to retire in your hometown or move to an exotic location? I love the beach, and living in Laguna Beach, La Jolla, or Maui ranks high on my list, but I also love the mountains, so Estes Park and Colorado Springs are strong contenders. I love sunshine, which removes the Pacific Northwest and the United Kingdom. I want access to restaurants, entertainment, sporting events, hospitals, and airports, eliminating most rural areas. After you decide on your retirement destination, will you supersize your home or downsize it so it’s economically affordable? Of course, if you invest well, you can own multiple homes. According to the Department of Labor, housing accounts for approximately 32 percent of expenditures for those aged 65 and over.[1]

List your top three retirement destinations.

  1. _________________________________________________________________________
  2. _________________________________________________________________________
  3. _________________________________________________________________________

What will you do?

What will you do in retirement? Do you want an active retirement or one of leisure? I plan to hike, bike, ski, fish, dive into a good book, and watch movies. I also plan to volunteer and serve others. Having hobbies is paramount in retirement and will keep you active and focused. Another possibility is to turn your hobby into a revenue-generating machine by selling your goods through Shopify or Etsy. Hobbies can improve your health, and according to WebMD, they reduce stress, promote mental health, and improve relationships.[2]

List your top three hobbies.

  1. _________________________________________________________________________
  2. _________________________________________________________________________
  3. _________________________________________________________________________

How will you pay for it?

After you decide where to live and what to do, how will you pay for it? If you plan well, then your resources should be able to support your lifestyle. Before you send the retirement email to your boss and colleagues, take an inventory of your assets. What do you own – stocks, bonds, mutual funds? In addition to your investments, will you receive a pension? And don’t forget Social Security because it will be a primary ingredient of your retirement income. How much income can you expect in retirement? If your investment portfolio is $1,000,000, expect an annual income stream of $40,000; if your Social Security is $30,000 per year, your projected retirement income is $70,000 before taxes. Keeping tabs on your expenses is a must in retirement, and controlling your spending can prolong your retirement assets. Of course, the opposite is also true. If you spend with reckless abandon, you could run out of money.

What are your top three sources of retirement income?

  1. _________________________________________________________________________
  2. _________________________________________________________________________
  3. _________________________________________________________________________

Retirement is an exciting time, but do you need to wait until your sixty-five? No. If your assets support your lifestyle, you can retire anytime; no need to wait until your employer offers you a gold watch, but how do you know you won’t run out of money? A financial plan can tell you if you’re on track to leave the workforce. It quantifies your hopes, dreams, and fears and will project your future spending based on your current assets, spending limits, and financial goals.

A person retiring at age 40 needs more growth assets than one retiring at 75 – age matters. Owning stocks allows your money to combat inflation, and inflation will destroy your purchasing power if you leave your money parked in cash or T-Bills. Do not retire your assets when you retire because stocks can help you enjoy a fruitful retirement, despite their recent performance.

If you’re not ready to fully retire, consider taking a few months off as a trial run. Rent a home in a different city, cruise the seven seas or volunteer in a national park. Give it a try; you can always return to your nine-to-five job.

Beware the hobby that eats. ~ Benjamin Franklin

August 22, 2022

Bill Parrott, CFP®, 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 you can pursue a life of purpose. Our firm does not have an asset or fee minimum, and we work with anybody who needs financial help regardless of age, income, or asset level. PWM’s custodian is TD Ameritrade, and our annual fee starts at .5% of your assets and drops depending on the level of your assets. We have waived our financial planning fee for the remainder of the year, so your cost is $0.00.

Note: Investments are not guaranteed and do involve risk. Your returns may differ from 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. Options involve risk and aren’t suitable for every investor. Ideally, I will own homes in Colorado and California to enjoy surf, sand, and snow.


[1] https://www.bls.gov/opub/btn/archive/housing-expenditures.pdf

[2] https://www.webmd.com/balance/health-benefits-of-hobbies, Venkat S.R. and reviewed by Poonam Sachdev, 5/23/2022

College Football

Next week starts another college football season, the best time of the year. The usual suspects like Alabama, Georgia, and The Ohio State University are projected to finish near the top. The offseason was entertaining as USC and UCLA said they would leave the Pac-12 and join the Big-10, causing a domino effect amongst the other power conferences. Regardless of who ends up where I know the season will be exciting and enjoyable.

Before the season starts, analysts and industry experts opine about the best teams in college football. There is no shortage of lists projecting conference winners, bowl games, and Heisman Trophy finalists. However, these projections are futile because teams still must play the games, and as Mike Tyson said, “Everyone has a plan until they get punched in the mouth.” For example, last year, the Baylor Bears were picked to finish in eighth place in the Big-12 Conference. The experts said they would win two games and finish conference play with a mediocre record of two wins and seven losses. What happened? Baylor finished the season with twelve wins and beat Oklahoma State for the Big-12 Championship. And they did not stop there as Baylor dismantled Ole Miss in the Sugar Bowl. So much for predictions.

The best coaches and teams in college football focus on plays and execution. They’re only concerned about things they can control and do not worry about predictions or projections. They know that if they do not turn over the football or make mental mistakes, the odds of winning rise dramatically.  

As an investor, consider following the lead of great college football coaches and programs by focusing on your goals, spending, savings, and asset allocation. They are the only things you can control; everything else is beyond your reach. If you decide to time the market, trade excessively, or attempt to predict the future, you could end up in the poor house. It’s impossible to control interest rates, market volatility, or the inflation rate, so don’t try. Also, ignore those who think they know what will happen tomorrow. Though they may look the part while pontificating on TV, they don’t know more than the viewing audience.

Focus on your financial plan and goals as markets continue to bounce around. Think long-term, buy stocks, and enjoy the college football season.

Though I don’t make predictions, I believe Baylor beats Alabama for the National Championship.

Win one for the Gipper. ~ George Gipp

August 20, 2022

Bill Parrott, CFP®, 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 you can pursue a life of purpose. Our firm does not have an asset or fee minimum, and we work with anybody who needs financial help regardless of age, income, or asset level. PWM’s custodian is TD Ameritrade, and our annual fee starts at .5% of your assets and drops depending on the level of your assets. We have waived our financial planning fee for the remainder of the year, so your cost is $0.00.

Note: Investments are not guaranteed and do involve risk. Your returns may differ from 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. Options involve risk and aren’t suitable for every investor. I did not attend Baylor, but I did play college football for the University of San Diego.

Pikes Peak

Pikes Peak looms large at 14,115 feet above sea level, known as America’s Mountain, and is also the inspiration for America the Beautiful. Pikes Peak Highway allows people of all abilities to enjoy the spectacular views from the summit. In addition to driving to the top, visitors can enjoy a comfortable ride on the Pikes Peak Cog Railway, and more adventurous types can hike to the summit.

The trip to the summit by train takes about an hour and a half. If you drive, allow for three to four hours, and if you hike the 13.5-mile trail, allocate eight hours or more. The fastest recorded time to summit Pikes Peak was 7 minutes 57 seconds in 2018 as driver Romain Dumas of France raced up the hill during the annual Pikes Peak Hill Climb. I recently reached the summit via the Cog Railway. It was a beautiful ride through the Pikes National Forest, and the views were stunning.

As I mentioned, there are several ways to reach the peak, and if you invest, there are numerous routes to reach your financial goal, and you must decide which one to take. You may obtain your goal sooner or later, depending on your chosen path.

Let’s explore a few investment tools to help you reach your financial goals.

  • You will need a financial plan regardless of the path you choose. All the visitors that reached the summit of Pikes Peak followed a route, or path, to the top, and they had a plan. A financial plan is your trail map, train schedule, or road map, and it will help guide you on your financial journey and lead you to your final destination.
  • Establishing goals is paramount for financial success. Each visitor to Pikes Peak had a goal to summit the mountain. If you set financial goals, you will increase your odds of investment success. According to a Harvard study, 3% of their graduating 1979 MBA class had written goals, and their net worth was ten times that of the remaining 97% of their classmates who did not have any written goals.[1]
  • A timeline can help you succeed as an investor. After committing your dreams to paper, prioritize them, so you know which ones to pursue first. In addition, consider your timeframe. For example, buying a new car may have a shorter timeframe than retiring to a tropical island.
  • The proper investment can enhance your investment success as well. If you need your money in less than one year, invest in CDs or US Treasury Bills. If you don’t need the money for decades, buy stocks.
  • Regardless of your path, stop to enjoy the view, check your bearings, and take stock of your inventory. A regular check-up can ensure that you’re still on the right path.

There are many roads to financial success; select the one that best suits your needs and utilize all the tools and resources available to reach your financial summit!

Oh beautiful, for spacious skies
For amber waves of grain
For purple mountain majesties
Above the fruited plain

~ America the Beautiful

August 12, 2022

Bill Parrott, CFP®, 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 you can pursue a life of purpose. Our firm does not have an asset or fee minimum, and we work with anybody who needs financial help regardless of age, income, or asset level. PWM’s custodian is TD Ameritrade, and our annual fee starts at .5% of your assets and drops depending on the level of your assets. We have waived our financial planning fee for the remainder of the year, so your cost is $0.00.

Note: Investments are not guaranteed and do involve risk. Your returns may differ from 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. Options involve risk and aren’t suitable for every investor. I enjoyed the train trip to the summit, but my goal is to hike the trail to the top of Pikes Peak.


[1] https://www.wanderlustworker.com/the-harvard-mba-business-school-study-on-goal-setting/

Ready To Launch

My daughter starts her job in a few weeks, and we are helping her set up her apartment. After years of schooling, she is ready to begin her career, and assisting a child in launching her career takes years of planning and patience. It’s bittersweet because she is leaving the nest to create a new life in a new state, but she is ready to soar.

As a parent, I give my daughter unsolicited financial advice regularly, and sometimes she welcomes it, so here are a few more tidbits for her as she begins a new chapter.

  • Create an emergency fund because unexpected expenses occur often. As your income rolls in, allocate a few dollars monthly to a savings account or money market fund so you can access it quickly. Do not invest your emergency fund in stocks, bonds, or cryptocurrency.
  • Contribute at least ten percent of income to your 401(k) plan. If your company offers a Roth option, choose it because your money can grow tax-free for decades. Initially, allocate 100% of your funds to stocks, and do not buy bonds.
  • Donate ten percent of your income to groups, charities, or organizations you support. Cheerful givers are also successful investors.
  • Open a brokerage account to buy stocks. Investing in a taxable account gives you flexibility if you want to retire early, buy a house, or travel the world.  
  • Buy and hold stocks. Don’t worry if the stock market rises or falls because it will do so regularly, and the market will experience corrections of 20% or more every few years. The odds of a 50% stock market crash during your working career is 100%. Down days in the market are opportunities to buy great stocks at lower prices. Don’t fear corrections.
  • Avoid buying gold, silver, or other commodities. It’s okay to buy gold or silver coins as collectibles but not as investments. Historically, commodity investments perform poorly relative to stocks.
  • Buy insurance to protect your car, home, valuables, and loved ones. Do not buy life insurance as an investment, and avoid whole-life insurance.
  • Avoid credit card debt at all costs. Debt is a four-letter word; if it grows, it can lead to delayed gratification or financial ruin.
  • Spend freely. If you’re contributing to an emergency fund, a 401(k) plan, and an investment account, then it’s okay to spend the rest of your paycheck on anything you want without guilt.

I’ve seen thousands of financial plans and investment accounts during my career, and the most successful investors I’ve met own stocks, start investing early, save money, and control spending. Individuals who fail to save or invest in their twenties or thirties struggle to make ends meet later in life.

Let’s run a few numbers as to why it’s essential to start investing sooner rather than later if your goal is to retire with a million dollars at age sixty-five.[1]

  • At age 25, you need to save $380 per month.
  • At age 35, you need to save $820 per month.
  • At age 45, you need to save $1,920 per month.
  • At age 55, you need to save $5,777 per month.

If you start investing early, your money can grow through the power of compounding and time. If you started your career forty years ago, in 1982, you enjoyed close to 10% returns as the S&P 500 rose 3,888%; for every $10,000 you invested, it’s now worth $398,000!

Investing takes time and patience. If you start early and save often, the stock market can grow your wealth, even if you make a few bad investments along the way.

Good luck, Little Bird!

You can be young without money, but you can’t be old without it. ~ Tennessee Williams.

August 9, 2022

Bill Parrott, CFP®, 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 you can pursue a life of purpose. Our firm does not have an asset or fee minimum, and we work with anybody who needs financial help regardless of age, income, or asset level. PWM’s custodian is TD Ameritrade, and our annual fee starts at .5% of your assets and drops depending on the level of your assets. We have waived our financial planning fee for the remainder of the year, so your cost is $0.00.

Note: Investments are not guaranteed and do involve risk. Your returns may differ from 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. Options involve risk and aren’t suitable for every investor. My first investment was the Franklin Utility Fund when I was 24.


[1] I used a 7% annual return, and I know $1 million dollars in forty years will not be sufficient to retire.