You’re probably doing banking all wrong

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Nick Foy, CFP®
nick@greenwaywealth.com

The traditional brick-and-mortar bank is a relic of days gone by, like cable TV and Myspace. If you’re still using one, it might be time to reconsider your life choices, at least as it relates to the location of your checking and savings accounts.

Most of the people I meet with have accounts at either Bank of America or Wells Fargo. In Charlotte, I suspect a significant majority of people bank at one of those two behemoths. I’m assuming most people who have accounts there maintain them out of convenience: They think it’s too difficult to make a change, or they don’t understand how significant the advantages are to banking elsewhere.

Here are two reasons to consider switching to an alternative banking option: Continue reading “You’re probably doing banking all wrong”

Advisors Behaving Badly: Three Ways to Avoid Getting Scammed

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Nick Foy, CFP®
nick@greenwaywealth.com

Sometimes, investors are their own worst enemy. But too often, their “advisor” takes the cake.

Last week, the New York Times ran a story about an advisor at JP Morgan who rang up over $128,000 in commissions in a year, on an account worth just over $1 million:

“After about six months, she learned that the account, worth roughly $1.3 million at the start of 2017, had been charged $128,000 in commissions that year — nearly 10 percent of its value, and about 10 times what many financial planners would charge to manage accounts that size (emphasis mine).

The client has Alzheimer’s, and her 58-year old daughter was assisting her with managing the account and her day-to-day finances. The money was invested with what she considered to be a reputable firm, and she thought she was dealing with a trustworthy advisor. It turns out he’s not actually an advisor; he’s a broker who took advantage of a woman who couldn’t look out for herself, and a daughter who was doing her best to make good decisions on her mom’s behalf. Continue reading “Advisors Behaving Badly: Three Ways to Avoid Getting Scammed”

Investors behaving badly – An Overview

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Nick Foy, CFP®
nick@greenwaywealth.com

The biggest enemy to investor success is typically…investors themselves.

In today’s WSJ, Jason Zweig wrote an excellent overview of some of the most significant biases that investors struggle to overcome. I experienced it myself after working with thousands of self-directed Vanguard clients (and they’re among the best of the bunch!). It’s a big part of the reason I decided to get into this business to begin with: Without a guide to provide accountability, many fail to recognize and avoid their own biases, and end up much poorer as a result.

An example from the article:

“Behavioral economics teaches that people are overconfident: They believe they know more than they do, or they assume their knowledge is more precise than it is.

I’m 100% certain that’s true for everybody else, but there’s no way that applies to me.

If you’re paywall blocked but you want to dig in deeper, I recommend Zweig’s excellent book: Your Money and Your Brain: How the New Science of Neuroeconomics Can Help Make You Rich

Most people who darken my office door for the first time assume I get paid to invest people’s money. That’s technically true, but investing has become increasingly commoditized over the past decade. The modern, expert advisor creates value by helping people avoid costly mistakes. Without some understanding of what those mistakes could be, and someone to help them avoid the pitfalls, people limit their own potential success.

The world’s simplest financial plan – don’t buy stuff you can’t afford

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Nick Foy, CFP®
nick@greenwaywealth.com

Last month, Marketwatch ran a story detailing people who take out a loan to pay for their vacation. Yes, it really is just as bad an idea as you’d think.

It turns out companies like Affirm are willing to lend people money for just about anything, sort of like a credit card. Of course, that money doesn’t come cheap: The interest rates range from 10-30%, sort of like a credit card.

Reading that story reminded me of this skit from circa 2006 SNL, wherein an expert shares the holy grail of personal finance: Don’t buy stuff you can’t afford.

Continue reading “The world’s simplest financial plan – don’t buy stuff you can’t afford”

Simplifying Complexity – applying the millennial mindset

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Nick Foy, CFP®
nick@greenwaywealth.com

Millenials have earned a (perhaps well-deserved) reputation for being “entitled, lazy, and over-confident.” But their attitude toward money and things, paired with a penchant for simplicity, might produce better investors than ever before, if only they can develop the necessary patience.

Those 80 million Americans born between 1980 and 2000 have taken a different tact when it comes to spending their money. Assuming they can stick with a job long enough to earn something, their attitude is much more in line with what research has shown actually brings satisfaction:

Millennials are highly adept at using technology and social media influences many of their purchases. They prefer to spend on experiences rather than on stuff. Seventy-eight percent of millennials—compared to 59% of baby boomers—“would rather pay for an experience than material goods,” according to a survey from Harris Poll and Eventbrite cited on Bloomberg. Continue reading “Simplifying Complexity – applying the millennial mindset”

Three steps to teaching your kids about money

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Nick Foy, CFP®
nick@greenwaywealth.com

Most kids aren’t great with money. But then again, neither are most parents.

When it comes to teaching kids about money, I find few know where, or when, to start. Not many of us had parents of our own who taught basic financial literacy lessons, and we all know that just about nobody ever receives information about personal finance in school.

A couple of weeks back, the Wall Street Journal ran an article providing some ideas on the topic, but for the most part, the story was focused on teens (and later). But, in order to truly have an impact, I think parents should start teaching basics at a younger age.

It’s tough to get 96% of people to agree on anything, but check this out:

“Some 96% of 128 college students in a recent study said they wished their parents taught them practical skills such as budgeting and saving (emphasis mine).”

I’ll assume the remaining 4% either learned practical skills about money as kids, or were recovering from a late night frat party and didn’t really understand the question.

So when, and how, should parents start teaching their kids about money, debt, and investing?

Continue reading “Three steps to teaching your kids about money”

Don’t be like that guy

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Nick Foy, CFP®
nick@greenwaywealth.com

From Nobel Prize winning economists to Warren Buffett, a consensus has formed for investor-centric advisors and thought leaders: Index (or passive) investors stand a better chance of having a great investment experience than their active counterparts. Decades of research and data have provided us a deep insight into the ways of the market. Stock markets don’t always make sense; sometimes, in fact, they go completely berzerk. But investors who focus on those things they can control: costs, taxes, diversification, and their own behavior, are probably going to capture more of the return that markets provide than those who overspend in what the data shows us is likely to be a futile attempt to beat a benchmark.

I drew this conclusion after studying the markets for the past 17 (or so) years, 11 professionally. Now, as a relatively young (middle aged?) advisor, I’m grateful to have developed this understanding early in my career.

Some aren’t so fortunate.

Continue reading “Don’t be like that guy”

What are you turning money into?

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Nick Foy, CFP®
nick@greenwaywealth.com

In 2005, I bought my first house. It was a total starter home north of Charlotte. New construction, 1,500 sq feet, it became the place that my wife and I lived for five or so years after we married.

Toward the end of the construction process, I realized I was really just taking money and turning it into a house. In 2011, we moved closer to town and ended up building a home in which we still live. I had the same feeling the second time around.

Turning money into other things can be either good or bad, depending on what’s on the other side of the exchange. Continue reading “What are you turning money into?”

More income doesn’t make you rich

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Nick Foy, CFP®
nick@greenwaywealth.com

The media and politicians make this mistake all the time, but it’s worth pointing out: More income doesn’t make you rich.

A couple of months ago, Business Insider answered the question entirely incorrectly: How much money you have to earn to be considered rich in 42 major US cities.

The article proceeds to tell us how much income someone needs to earn in order to be in the top 1% in cities all over the country. What they don’t mention, though, is that income has almost nothing to do with wealth. Continue reading “More income doesn’t make you rich”

Where we’ve been; where we’re going

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Nick Foy, CFP®
nick@greenwaywealth.com

Every so often I plan to use this format to spend some time talking about me. Or, more specifically, about us, as in Greenway, our employees and our clients. And our (hopefully) future clients.

In some ways, I got into this business accidentally (hence the name of the blog). I never had any intention of going into finance; it was far too stuffy for me. I knew I wanted the focus of my career to be about doing something that I found meaningful, but I’m sure I could’ve made anything seem meaningful somehow. Continue reading “Where we’ve been; where we’re going”