Today on World Teacher Day we are honoring the educators who taught us the most (and some who are just beginning their teaching career). We also want to honor another important person, who not only has taught all of us important principles of finance and business, but who also has maintained an atmosphere of education throughout our firm. Our founder, Christina Winch, began her career as a high school teacher. Through the casual advice she offered to her fellow teachers, Christina recognized a need for more formal financial education and advice. She earned the required licenses and opened her firm in 1981. In the more than 40 years since, the business has grown exponentially, though the goal has remained steadfast. We don’t just handle our clients’ retirement accounts, we work very hard to explain what we do, why we do it and how each decision, by us and by our clients, matters. We teach in formal classes, during client meetings and on each phone call. We want our clients to understand their Required Minimum Distributions, the difference between qualified and non-qualified accounts, the taxable impact of withdrawals, how to determine their risk tolerance, how to plan for Long Term Care expenses, the importance of updating their beneficiary designations, among countless other things. We take care of these things for our clients, and we also make sure they understand why we do it. The desire to educate, born in a high school lunchroom more than 40 years ago, still fuels every conversation we have with clients and their families. That is the standard she set, and the legacy she’ll leave. Happy World Teacher Day to all of our favorite educators and to our founder, Christina Winch.
Since our inception back in 1981, we at Winch Financial have been passionate proponents of education. We believe that access to a wide variety of excellent educational resources strengthens a community and provides an easier path forward to its members. Several of our staff members, including our founder Christina Winch, began their careers as teachers. School likely will look very different for everyone this year and we send our support and encouragement to all of the teachers, administrators, students and families who, we know, will rise to these historic challenges. We’re here to help in those efforts. If you have questions about using your 529 plan to pay for educational expenses for which you had not originally planned, please call us. In many cases, you can use your college savings funds to pay for private tuition or expenses related to homeschooling. Likewise, if your student has received a refund for college expenses paid for through their 529 plan and you are unsure how to use those funds without incurring a penalty, please check with us. Unless you use that refund for other approved educational expenses you will probably need to reinvest them in the 529 plan. If your college student has decided to take a gap year, you may be wondering about that 529 plan you set up. The good news is, those plans have no expiration date, so you can use the funds to pay tuition and related expenses when your student returns to school. If he or she decides not to return at all, you can always change the beneficiary on the account, or use the funds to pay for vocational school or approved training programs. With so many opportunities for online enrichment, you may even want to use the unused funds for your own continued education. As this global pandemic limits opportunities for travel and entertainment, you might consider using your extra free time to further your… | Read More »
High schools around the country are doing a much better job of providing financial education to students, but the best teaching still occurs in the home. You can start with a simple piggy bank and show your little people how to set a goal and then save to achieve it. By the time they get to grade school, children should understand these basic principles of saving and spending, but they also should begin to understand what it means to invest money in something and how and why people borrow money. Teach them about income and why a good education and training can lead to more. Children should learn how to count money, how to budget, why you should try very hard not to spend more than you make. In later grade school years you can teach them how to manage a credit card and why adults need insurance. By the time they get to middle school your kids are ready to learn about the stock market and how interest rates and inflation affect the value of money. It might be fun to pick out and track a few stocks with them and show them how they can take financial risks to make money. Middle schoolers already experience sales tax, so you can start talking to them about property and income taxes and how to factor them into your purchases and financial goals. Revisit as often as you can the idea of making and keeping a good budget plan and how to avoid paying interest rates and late fees. Talk about insurance and why people need to protect themselves. By high school, many students begin receiving a paycheck, which is an excellent opportunity to drive home the impact of taxes and Social Security on income. Many will also be planning to apply for college and that process also offers a very necessary opportunity to discuss loans, interest rates, budgeting, and your… | Read More »
Next week, you’ll be hearing a lot about an historic bull market. That’s because most analysts agree that on August 22, the stock market is likely to have avoided a 20% or more decline from on a closing basis for 3,453 calendar days making it the longest bull market in history. This calculation tracks the current bull market from March 9, 2009. On that day, the Dow Jones Industrial Average lost 80 points, or 1.2%, to end at 6,547.05, its lowest point since April 15, 1997. The S&P 500 index lost nearly 7 points or 1%, to end at 676.53, its lowest point since Sept. 12, 1996, and the Nasdaq Composite lost 25 points or 2%, to end at 1,268.64, its lowest point since Oct. 9, 2002. Since March 9, 2009, the market has not dropped 20% from its closing day high. A correction is defined as two consecutive quarters of negative GDP growth. While we celebrate this historic milestone, we’re also keeping an eye on factors that might signal a potential slowdown. The spread between the two-year treasury and 10-year treasury appears to be tightening, which can be a leading indicator for a recession (which is defined by two consecutive quarters of negative GDP growth). The market breadth is also very narrow and mostly due to the strong performance of the FAANG stocks. (Facebook, Amazon, Apple, Netflix, and Google). New home sales appear to be slowing down. Student loan and consumer debt is expanding. With strong earnings, low unemployment and a healthy economy, we remain cautiously optimistic that the record bull run will continue.
The first and most important step toward financial health is education. All other steps follow that one. As retirement options become increasingly sophisticated, fine print consequently more lengthy, and pensions decidedly rare, investors need to work harder to understand the impact of the important choices they make. Fortunately, access to quality financial education has improved. Podcasts, blogs, books, seminars and financial education classes all offer plenty of valuable information, most literally available at your fingertips. Of course, you need to check your sources and be leery of sales pitches, but that still leaves a wide variety of legitimate options. Winch Financial offers financial classes in several locations through the University of Wisconsin continuing education system and, while we cover the information in our syllabus, we also tailor each class to its participants because finances are personal and everyone’s risk/reward profile is unique. We also send out a weekly commentary, which not only covers what happens in the stock market each week, but also offers some explanations behind the moves. Many of us subscribe to a variety of financial podcasts. We also follow Dave Ramsey and have taken his Financial Peace University course. If you do one thing for your retirement this year, we urge you to educate yourself. That education is going to lead to other tasks, so here are a few more steps you can take to get financially fit this year: Track you expenses. This may seem like a tedious task (because it is), but you can make it easier by making it part of your daily routine. Digital banking has made it easier to categorize expenses and we find that seeing where your money goes makes you much more intentional about your spending. Once you’ve tracked your expenses for a few months, you can set a realistic budget pretty easily. Random budgets waste time. The best budgets develop from your own spending habits. Change your passwords. This… | Read More »