National Debt

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Greetings, all! If you’ve ever been to Manhattan, maybe you’ve seen it: the National Debt Clock. Located on the western side of One Bryant Park (coincidentally the Bank of America building – hello irony!), the National Debt Clock is a billboard-sized display that constantly updates the United States gross national debt as well as each American family’s share of that debt. Is this something that should keep you up at night? Should you be worried about the yearly deficit, the rising national debt (and your share of it)? We thought we would take this month to provide a little context for you. Hopefully, the links and our comments will help shed some light on these often misunderstood concepts. 

  • Read: With a new administration in the White House and another stimulus bill in the works, government spending (and our national debt) seems to only grow. This article from The New York Times explains the issue in detail without getting bogged down with too much jargon. With low-interest rates and a stock market that seems content to chug along, it looks like we’ll continue much on the same path that we’ve been on. What do you think about that?
  • Listen: “The deficit is the shortfall between the tax revenue the government collects in a given year and the money it spends.” From NPR’s Planet Money, this podcast digs into what the deficit is, and whether it is the universal ‘bad’ that it is usually assumed to be. This quick bit of listening also prompts you to think about whether running a deficit is moral, and what kind of deficit spending could actually be a good thing that leaves future generations richer. For a follow-up, focused on inflation, check out this episode where a 13-year old asks a great question.
  • Watch: As stated in its name, Modern Monetary Theory is a new way of understanding money. Where does it come from? How does it work? Do we have to worry about inflation and interest rates? What is the role of the government in controlling monetary supply? This video from Money for the Rest of Us is a succinct dive into the basics of Modern Monetary Theory. If you’ve got another 20 minutes to spend and want some more concrete examples, we recommend this video from Economics Explained (and avocado toast makes an appearance!).

Thank you for taking the time to check out this month’s newsletter. We hope we have given you something to think about and maybe even talk about with your friends and family. The above concepts are foundational to our understanding of the economy and the role of government in it. Please reach out if you have any questions or comments. We love hearing from you!

Make it an amazing month!
The Bona Fide Family

Managing Funds

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Greetings, all! We hope your year has gotten off to a productive start! At the Bona Fide base, we have been busy and it is shaping up to be an amazing year of growth and development. For this newsletter, we are going to focus on a topic we haven’t really touched upon in the past. It is a question we receive from time to time and we felt there would be some value in devoting a newsletter to it. The question is, ‘Why do I have to transfer my accounts to TD and/or Betterment for you to manage them?’. If this is something you’ve ever wondered about, we hope the following links will provide you with some answers.

  • Read: This article from Investopedia highlights the best way to move from one advisor to another. Many of the same reasons apply to why someone would want to move their accounts from one location to another. One of the great benefits of working with an advisor to do so is that we handle all the details for you so you have the time and peace of mind to focus on your other obligations – consider this a concierge or white-glove service. Once all the accounts are in one place, keeping track of investment records and transaction history, maximizing tax efficiency, ensuring investment fees are as low as possible, and securing trades at the lowest possible cost are all easily achieved.
  • Watch: If you are working with us, we hope you are already sold on the reasons for having a financial advisor. The Money Guys do an excellent job of illustrating the value of working with a financial professional, and more so, a CFP, who is a fiduciary working for you and only you! In How and When to Hire a Financial Advisor, a stat we love is that of the 271,700 financial advisors in America only 3,700 are fee-only. We are proud to be fee-only fiduciaries, not driven by commissions or other sales fees. When you work with Bona Fide Finance and move your accounts over, the fees you pay are transparent and you can be sure that we are working to maximize your gains and minimize your fees. When you have accounts spread all over the place, you have no such assurances. As touched upon in the video, talking about this sometimes feels a bit self-aggrandizing, but sometimes it is important to beat on your own drum.
  • Listen: Ok, so we are deviating a bit from our original topic, but we felt with all the news around Robinhood and Gamestop these days, you might forgive us for this detour (and it does relate in a very important way). This podcast from MarketPlace breaks down what has gone on so far with Robinhood, Gamestop, and the Reddit group that has been making waves through the market. To bring this back to our original topic, one of the benefits of having your accounts under the Bona Fide umbrella is that we act as a kind of filter for you when these kinds of stories pop up. When we handle your investments, we ensure that you will stay above the fray when storms of irrationality flair up.

We hope these links have provided you with some clarity as to the benefits of moving your accounts to be managed by Bona Fide. It is an important decision and part of the holistic management process that is crucial to your long term financial success. Lastly, we want to remind you that your accounts are always yours. You always have full control of them and your money isn’t locked away from you. If you would like to chat more about this aspect of the business, we are always happy to take the time and answer any questions you may have. Feel free to share these links with friends and family and please reach out with any comments you have.

Make it an amazing month!
The Bona Fide Family

Mistakes to Avoid in the New Year

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Without a doubt, 2020 has been a challenging year and most people are looking forward to the promise that the new year brings with it. Resolutions receive a lot of attention, but we at Bona Fide don’t mind being a bit contrarian in our approach. In that spirit, we are focusing this newsletter on the mistakes and pitfalls that you want to avoid in the New Year. Leave those bad habits in 2020!

  • Read: One of the biggest mistakes in any person’s financial picture is unnecessary complexity. Have too many bank accounts? Too many credit cards? Too many things floating around to keep track of? We are huge fans of simplicity and efficiency. This blog post from Mint.com does an excellent job of detailing a few ways to simplify your finances for the New Year. We especially like the tip regarding reviewing your monthly subscriptions. Don’t let those small ticket items grow into a monthly monster!
  • Listen: Tired of hearing about all these mistakes to avoid in the New Year? Take a break with this podcast, where the host Shannah Game (another CFP) talks about money mistakes that are OK to make. She is extremely easy to listen to and identify with. These are 30 minutes that are sure to make you feel better about any ‘mistakes’ you may have made in the past and give you a sense of wellness to move forward into the future. 
  • Watch: While this video focuses on pitfalls to avoid during the pandemic, the lessons here can be extended to your whole life (and most do). The hosts are both CFPs (yay!), along with holding other designations, so we know the information we are getting is sound. We love the breadth of information presented in this video and the way they make suggestions for people of all ages. This is a great one to share with family and friends!

We love putting together these resources for you and helping you win with your finances! Please reach out if you have any questions or just want to chat about any of the links we’ve provided. Happy New Year!

Warmly,
The Bona Fide Family

Cybersecurity

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Welcome to November! This monthly newsletter’s topic, cybersecurity, is focused on that which we interact with every day, while we may not be aware of the implications of our online presence. As we are spending more and more of our lives in virtual spaces, we feel it is of the utmost importance to know the basics of protecting our personal information. Take some time with these links and make sure to protect yourself. As usual, feel free to share the content with your friends and family. Reach out if you have any questions! 

  • Read: This article discusses the future of cybersecurity. It touches upon several issues such as how large companies handle your data, government regulations, the growing cybersecurity industry, and (in our opinion one of the most important takeaways) the biggest security threat to the average person. Hint: it is something you use every day. 
  • Listen: Appropriately named, Down the Security Rabbit Hole will take you deep into an issue of what the hosts term the 31st human right, data ownership. It is an interesting idea. Most of the services you use for “free” on the internet aren’t really free. The sites are harvesting your personal information and selling it to companies who target you for ads. The hosts speak with Richie Etwaru, a human data ethicist about how data ownership is a fundamental human right, the principles of data ownership and how they’re different from privacy or security, and how data ownership is a great leveling factor for society. 
  • Watch: This video is presented by the talented actor (Blossom, Big Bang Theory) and neuroscientist (yes, you read that right!) Mayim Bialik. She goes over the basics of cybersecurity in an easy to understand manner. It’s only a 6-minute video, so it’s a quick way to get yourself thinking about the key points of cybersecurity. 

BONUS: Here is a link to our favorite password manager, One Password. Trust us – your password “system” isn’t as good as you think it is. Create one great password and remember it. Add all your passwords to One Password and everything is safe and sound. It is easy to use and the interface is great. If you aren’t using a password manager, we highly recommend it!

If you find the information provided valuable, please pass this email along to your family and friends! Better yet, recommend them to subscribe to this monthly newsletter by signing up on our website!

You can click on the links below to access this month’s resources. Thanks for reading, listening, and watching!

Student Loans and Politics

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Read. Listen. Watch.To say the first of the Presidential debates was memorable would be an understatement. Something that seems to have gotten forgotten in between all the one-liners and talking points was the subject of student loans. Many of our clients and their loved ones currently have student loans or will in the future, so we wanted to devote this month’s newsletter to what is an incredibly important issue to so many Americans. As usual, feel free to share these resources around and follow up with any questions you may have. We are here to help!Read: Bank Rate does a wonderful job of going over some of the most pressing questions many people have regarding President Trump and Biden’s respective stances on student loans. They give a measured and level-headed estimation of what is happening with student loan debt now and what may happen in the future.Listen: When saddled with a massive amount of student loan debt, one of the most difficult things to do is wrap your head around trying to make your payments and live your life at the same time! Luckily, due to forbearance, you’ve got some time to take a breath and do some planning. In this recent episode of the Student Loan Planner podcast, consultants Rob Bertman and Meagan Landress share their best tips to find balance with budgeting, saving, investing, and paying off debt without sacrificing your quality of life. Yes, it is possible to deal with your student loans and live your life! Make sure to scroll to the middle of the page where you’ll find the audio.Watch: In this episode of the Zack Beck Show, Zach goes over the proposals (and their probability for success) by both Trump and Biden (in a non-partisan way) and touches upon the offer Elizabeth Warren and Chuck Schumer made to Trump which would give him the power to cancel up to $50,000 in student loan debt for all Americans.If you find the information provided valuable, please pass this email along to your family and friends! Better yet, recommend them to subscribe to this monthly newsletter by signing up on our website!

You can click on the links below to access this month’s resources. Thanks for reading, listening, and watching!

Presidential Elections and the Market

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What does history tell us about presidential elections and the market? Check out these resources below:

  • Read: This article from Business Insider says the market has been correct a whopping 87% of the time in predicting the outcome of the presidential elections since 1984. If the stock market has been going up in the 3 months prior to the election, the incumbent wins and vice versa. 
  • Listen: Did you know that presidential elections share something in common with lions, sharks, and mosquitos? You’ll have to listen to this amazing podcast with Meb Faber to learn more as Meb gives great direction on healthy investor mentality.
  • Watch: Investors often wonder whether the market will rise or fall based on who is elected president. Watch this video from Dimensional as they share the effects and patterns of presidential elections on the capital markets. The conclusion at the end of the video may surprise you! 

If you find the information provided valuable, please pass this email along to your family and friends! Better yet, recommend them to subscribe to this monthly newsletter by signing up on our website!

You can click on the links below to access this month’s resources. Thanks for reading, listening, and watching!

Investing in Real Estate

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Real estate is a powerful investing tool that can create wealth and financial benefits for investors in ways other assets cannot. We receive questions about this all the time; below are some resources centered around understanding this important financial subject. Whether you are interested in real estate on a personal level or as an investment, these links are a great way to dive deeper into a fascinating topic:

  • Read: This article from Million Acres (a Motley Fool company) details the basics of real estate from an ownership and investment perspective. With the great variety of real estate topics about which to learn, this article is an excellent jumping-off point to utilize as there are tons of links to follow.
  • Listen: One of the tricky things about real estate is that it is so location-specific. Even if you have the desire and funds to invest, you may not be able to find any good deals in your geographic area. That’s where investing outside your local market comes into play. Nick Giulioni discusses his own approach of building a portfolio of real estate in Indiana though he is based in California. While the idea makes many people nervous at first, investing in out-of-state markets opens you up to countless opportunities to find your next great deal!
  • Watch: Bigger Pockets is one of our favorite sources for real estate knowledge. They present real estate concepts in easily digestible bites and this video is no different. Here, Brandon goes over calculating numbers on a rental property. Understanding these calculations is absolutely critical if you intend to invest in real estate.

If you find the information provided valuable, please pass this email along to your family and friends! Better yet, recommend them to subscribe to this monthly newsletter by signing up on our website!

You can click on the links below to access this month’s resources. Thanks for reading, listening, and watching!

Investing in your Health

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There are many ways in which a person can invest; a most practical but seemingly unconventional way would be to invest in your health. Especially in light of the recent compromising health issues facing the globe with covid-19, placing care and attention on you own personal health can pay dividends. After all, “if you haven’t got your health, you haven’t got anything” (to quote my wife’s favorite movie, The Princess Bride): if you’re not healthy enough to enjoy the hard work on which you’ve you spent your life, you’re missing out! Check out the following three resources on this topic:

  • Read: States differ right now in their own response to covid, and while we in North Dakota have a lot more general freedom than many in the rest of the country with eased restrictions, there is still a great personal responsibility to reduce the opportunity for covid to spread. This Time article has great tips for staying physically and mentally healthy in the midst of staying at home.
  • Listen: Roger Whitney of The Retirement Answer Man presents how the quality of your health can have major financial implications on your financial wellbeing in retirement in 1) healthcare costs; 2) preventing Alzheimer’s disease; and 3) the possibility of work after retirement. Additionally, he outlines six areas of wellness (including physical, intellectual, emotional, social, spiritual, and occupational) and discusses the financial benefits of investing in them. It is important to start investing in this now before you reach retirement so that you can enjoy it!
  • Watch: We’ve heard it 100 times throughout our lives – how to improve your overall health. This handy video reminds us of the top five steps in doing so: maintain a healthy BMI, don’t smoke, exercise, eat more fruits and veggies, and get some good sleep! Start with building one small habit in these areas if you haven’t already, and reap the rewards of better health!

If you find the information provided valuable, please pass this email along to your family and friends! Better yet, recommend them to subscribe to this monthly newsletter by signing up on our website!

You can click on the links below to access this month’s resources. Thanks for reading, listening, and watching!

Factor Investing

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Factor investing is an investment approach that involves targeting quantifiable firm characteristics or “factors” that can explain differences in stock returns. Over the last fifty years, academic research has identified hundreds of factors that impact stock returns. The following three resources provide varying degrees of depth into this topic. Check them out below:

  • Read: Factor Investing Fact Check: Are Value and Momentum Dead? by Wes Gray, PhD. Dr. Gray earned an MBA and a PhD in finance from the University of Chicago. His interest in bridging the research gap between academia and industry led him to found Alpha Architect, an asset management firm that delivers affordable active exposures for tax-sensitive investors. You can also listen to this conversation between Wes Gray and Meb Faber.
  • Listen: Dr. Daniel Crosby touches on the psychology of investment momentum in this 14-minute podcast. He is a psychologist and behavioral finance expert who helps organizations understand the intersection of mind and markets.
  • Watch: What is factor investing? This handy article and accompanying brief video from Investopedia give an overview of this perspective in investing.

If you find the information provided valuable, please pass this email along to your family and friends! Better yet, recommend them to subscribe to this monthly newsletter by signing up on our website!

You can click on the links below to access this month’s resources. Thanks for reading, listening, and watching!

Budgets and Bear Markets

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Read. Listen. Watch.Times of crisis can bring with them unpredictability. We are all likely experiencing a change in our financial holdings, whether due to layoffs, reduced hours or wages, or through increased expenses as we navigate this current situation. We’ve put together some resources that will hopefully provide some financial solace and guidance as we enter a new month. Check them out below:Read: This article from a YNAB user highlights how utilizing a budget can change even a 75% reduction in pay from a crisis to an inconvenience. Some of you may be experiencing a similar trend in your finances right now from an income perspective – but if you’ve worked hard on your budget this situation doesn’t have to up-end your plans. YNAB also put together this video on budgeting in uncertain times. Trust your budget!Listen: Dr. Jim Dahle of White Coat Investor has a great podcast episode detailing a Bear Market Action Plan. He highlights what TO do in a bear market, and definitively what NOT to do in a bear market. He offers very steady advice for all of us where emotions may be running high with what to do given the current situation nestled in a pandemic.Watch: While this is not a video, the visual image is strong – check out this graphic that condenses the history of bear and bull markets since 1926. An interesting summary: the average bear market lasted 1.3 years with an average cumulative loss of -36%. The average bull market lasted 6.6 years with an average cumulative total return of 339%. Keep your eyes on the long-term view, not the short-term.If you find the information provided valuable, please pass this email along to your family and friends! Better yet, recommend them to subscribe to this monthly newsletter by signing up on our website!

You can click on the links below to access this month’s resources. Thanks for reading, listening, and watching!