You’re probably doing banking all wrong

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Nick Foy, CFP®

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®

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”

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

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Nick Foy, CFP®

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”

Three steps to teaching your kids about money

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Nick Foy, CFP®

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®

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”

More income doesn’t make you rich

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Nick Foy, CFP®

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®

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”

Why revenue source matters

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Nick Foy, CFP®

An unfortunate reality of my industry is that you can make money as a “financial advisor” no matter who pays you. After the recent failure of the effort to require advisors act in their clients’ best interest, I’ve determined it’s time to call a spade a spade, and shed some light on those who masquerade as advisors.

The determining factor for each of these is the source of the revenue. Is the professional being paid to offer financial advice, to manage a portfolio, or to sell a product? If the latter, it’s likely they’re not actually a financial advisor. Here are a few of my favorites:

Continue reading “Why revenue source matters”

Homes aren’t savings accounts

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Nick Foy, CFP®

Back in 2011, when we still had cable, my wife and I would waste time vegging out watching HGTV. We saw people searching for their first home, renovating their current home, and looking for the perfect vacation home, sometimes all in the same episode.

Experts would help them with their construction and/or transaction, and by the end of a thirty minute segment, everything would be clean and beautiful and ready for living their best life.

Before (and sometimes after) a renovation project was complete, they’d often show the homeowner how significant the improvements were from a financial perspective, revealing their estimates for how much could be expected to be recouped were the owner to sell.

And it was totally, entirely, misleading. Continue reading “Homes aren’t savings accounts”