Resources

If the pandemic has proven anything, it’s that life-altering occasions—both those we experience firsthand and those that merely present themselves as possibilities—have the potential to uproot even the firmest of financial plans. Why? Because reminders of what’s most important to us—wake up calls about how we spend our time and, as an extension, our money—can and should trigger reevaluation of our plans for the future.


And although the exact nature of any pandemic-related changes to a financial plan will look different for everyone, a few common themes have surfaced over the last year and a half that are worth discussing with your advisor:

Risk Tolerance—Has the pandemic changed the way you look at your willingness, need or ability to assume risk in your portfolio? How did you react to last year’s market volatility? Rebalancing your asset allocation can help you adjust back to your plan based on how things have changed.

Ask: Am I comfortable taking market risks anymore?

Saving and Spending—For many, staying at home meant a new perspective on dollars saved and dollars spent. Does your financial plan still reflect your cashflow needs in 2021? Events of the last year may also have underscored the need for an emergency fund in case of an unexpected job loss or health crises.

Ask: Does my budget reflect how I actually spend these days? Am I prepared financially if something unexpected happens?

Travel—Whether you have the itch to change things up after staring at the same four walls for too long or “someday” bucket-list trips took on a new sort of urgency, consider what impact travel investments can have on your overall plan.

Ask: Since tomorrow is never promised, is it finally time to take that dream trip?

Remodeling—Home additions, lifestyle upgrades, finally putting in that pool—there is no doubt that 2020 gave way to a wave of home improvement projects. Doing so can have a material impact on one of your most important assets.

Ask: Is the investment to make my space more comfortable a prudent one?

Relocating—Considering a major move to be closer to family or maybe finally buying that second home in a place that you truly love? Real estate moves come with tax implications that should be on the agenda next time you speak to your advisor.

Ask: Should I move closer to family?

Planning for Retirement—Did the pandemic remind you how much you missed working, or maybe how little your 9-to-5 actually matters to your happiness? If your timeline for retirement has changed, your financial plan will need to, too. Tax changes could also predicate a change in how you’re saving for retirement and warrant a closer look at your situation.

Ask: Am I doing all I can to plan for the retirement I now envision?

Wills and Estate Planning—The pandemic prompted many to consider how prepared they or their loved ones are for end-of-life. As an extension of that, making sure your estate plan is in order became more important than ever.

Ask: Are my affairs in order and do they reflect my most up-to-date wishes?

Whatever realizations may have arisen for you, and whether you think they’re large or small, make sure they are figuring into your financial plan designed and built with the contours of your life in mind.

The opinions expressed by featured authors are their own and may not accurately reflect those of Buckingham Strategic Wealth®. This article is for general information only and is not intended to serve as specific financial, accounting or tax advice. Individuals should speak with qualified professionals based upon their individual circumstances. The analysis contained in this article may be based upon third-party information and may become outdated or otherwise superseded without notice. Third-party information is deemed to be reliable, but its accuracy and completeness cannot be guaranteed. IRN-21-2495

© 2021 Buckingham Strategic Wealth®

As we’ve learned, economic circumstances can at times change relatively quickly and unpredictably. Companies in some sectors may suffer while others thrive. Your personal economy, which is based on your particular situation, may be completely different than your neighbor’s.


It often feels like trying to predict what things will cost and where the economy is going is like throwing darts blindfolded. Take your best guess. You can listen to 10 different economists on any given day and get 10 very diverse opinions on where the economy is headed. And what is happening in your state or hometown is often much different than what is happening in other regions of the country.

Supply and demand are key factors in pricing. Housing costs have increased significantly over the last couple years as we come out of the COVID-19 pandemic. Because basic building costs have skyrocketed, homebuyers are looking for existing homes and the inventory is low.

People are on the move, some to areas where more opportunities exist currently. And people are relocating to where they truly want to be and living costs are less. They have learned that they can work remotely. No more lengthy commutes to and from the office.

Even though your economic circumstances can change suddenly, you can still plan and prepare yourself for whichever way the wind may blow. Are your finances resilient enough to effectively withstand whatever headwinds may come your way?

Look ahead at what could change in your life. What if you lose your job or your business? What if your spouse loses a job? What if you get sick and cannot work? We all know someone who has gotten into financial difficulties. We tend to think these problems will never happen to us.

Pretend your income stops and living expenses keep rising. How much money will it take to pay your bills for as long as necessary? Knowing what’s required to support your family for six months or a year is good information. You can then prepare yourself by building a rainy-day fund.

Keeping your debt manageable is important when it comes to controlling your destiny. If you are living paycheck-to-paycheck because you are making payments on your house, cars, boats, snowmobiles and credit cards, consider a scenario in which you are unable to support those expenditures. Figure out what items are necessities and what things are luxuries, and consider starting to make some hard choices to get on sound financial ground.

Knowing in advance how you can adjust to changing circumstances can be comforting. Can you or your spouse afford to change careers? Are you willing to move to improve your financial picture? Can you spend less and save more to buffer your reserves? Knowing that your finances are able to sway with the wind will give you peace of mind and the knowledge you can weather any storm for as long as may be necessary.

A version of this commentary originally appeared July 3 in the Casper Star-Tribune.

The opinions expressed by featured authors are their own and may not accurately reflect those of Buckingham Strategic Wealth®. This article is for general information only and is not intended to serve as specific financial, accounting or tax advice. Individuals should speak with qualified professionals based upon their individual circumstances. The analysis contained in this article may be based upon third-party information and may become outdated or otherwise superseded without notice. Third-party information is deemed to be reliable, but its accuracy and completeness cannot be guaranteed.

By clicking on any of the links above, you acknowledge that they are solely for your convenience, and do not necessarily imply any affiliations, sponsorships, endorsements or representations whatsoever by us regarding third-party websites. We are not responsible for the content, availability or privacy policies of these sites, and shall not be responsible or liable for any information, opinions, advice, products or services available on or through them. IRN-21-2351

© 2021 Buckingham Strategic Wealth®

Despite a lengthy global pandemic, supply chain delays, inflationary spikes in segments of the economy, and a very tight labor market, your business is highly successful. Yet maybe these challenges, or even other circumstances, have placed financial pressure on your business that you still need to successfully navigate. Whether your business is currently healthy or under a bit of strain, a key question still needs asking: How is your personal financial situation?


A healthy business does not automatically translate into you being on a positive track toward your long-term financial priorities and goals. Similarly, a business with challenges does not automatically translate into a troubled personal financial situation. Business owners who have a healthy financial life have been intentional about achieving that success. Those who are not yet financially successful, or who do not know how to become intentional in pursuit of financial health, can implement 10 strategies to begin that journey.

1. Pay yourself first. Saving income into a qualified retirement plan, starting at the youngest age possible, can reward business owners with the power of compounding growth over a lifetime. The longer recurring deposits can be invested into a diversified portfolio, particularly when savings are pre-tax and grow tax-deferred over decades, the greater the likelihood that this will be the most beneficial financial opportunity available for achieving the lifestyle you want in retirement. As a hedge against higher future tax rates, consider also saving into a Roth 401(k) or Roth IRA.

2. Always know where your money should go. Optimally, a maximum of 50% of gross income will go toward financial needs: loan payments and taxes. The next 30% of income can go toward wants, otherwise known as lifestyle spending, allowing 20% to be saved toward long-time financial priorities.

3. Always know where your money does go. A fiduciary financial planner, or even budgeting software, can identify how your income is currently spread across your financial needs, wants and savings. If savings are not 10% to 20% of gross income, it greatly reduces the probability of funding future financial priorities.

4. Properly align financial priorities: needs, wants and savings. Reconcile the gap between where your money is going relative to where it should be going. Determine, either with a fiduciary financial planner or independently, how to redirect personal cash flow into the right categories. Then refresh a Monte Carlo analysis to stress-test if the redirected spending is projected to sufficiently fund your future priorities. If not, work through the spending exercise until your projections show that you are on track to reach your goals.

5. Properly align loans with the debt payment ratio. This principle is contradictory to how most people think. Rather than paying down debt as quickly as possible or avoiding debt altogether, wealth can accumulate tax-efficiently at a faster rate through pairing an intentional debt repayment methodology with the funding of a qualified retirement plan or other tax-efficient vehicle. Keys to success include establishing or refinancing into loans with tax-deductible interest and/or very low fixed rates with longer terms. Proceeds from any reduction in required monthly loan payments should be entirely redirected into savings, rather than spent on lifestyle.

6. Design the best company retirement plan for your cash flow. Small business owners can utilize standard or even custom-designed company retirement plans to save very large sums annually on a pre-tax and tax-deferred basis. Through a defined contribution 401(k) profit sharing plan, and potentially even a defined benefit plan paired with it, retirement plans can provide the single largest tax and saving benefit for business owners.

7. Make peace with how much you can afford to spend. After years of subsistence-level living through school or during the start-up phase of your business, nobody wants to eat mac ‘n’ cheese indefinitely to be able to save aggressively. Yet, maybe one shouldn’t buy the most expensive home in the neighborhood or stretch on luxury vehicles until implementing a comprehensive plan that balances the wants of today with the need for long-term financial health.

8. Take a comprehensive approach to investing. Portfolios should be considered in aggregate and in the context of your need, ability and willingness to take investment risk. Picking stocks, or trying to anticipate which direction the stock market will go in the near-term, is a loser’s game. Assembling and rebalancing a globally diversified portfolio in pursuit of market-like returns follows the evidence of successful investing.

9. Manage risk through proper insurance coverage. Insurance transfers financial risk from an individual, or a business, to a larger pool of people and companies. Transferring risk protects against undesirable and unexpected events. Insurance is not an investment vehicle, and it is not a retirement plan structure. It is, however, critically important to be protected across many areas of risk at a proper level. Rely on a fee-only financial planner who does not sell insurance or have a commission-driven conflict of interest to help assess the areas and levels of coverage needed.

10. Establish an estate plan aligned with your objectives. A proper estate plan should include all documents that will empower successors upon one’s incapacitation or death, plus specify who and/or what will benefit from the transfer of possessions and assets after death. A critical step is to properly title all accounts and beneficiaries consistent with the priorities listed in these documents. Estate planning needs to be refreshed every five years, or more frequently if major events in life occur, to assess how changes in your circumstances and state or federal laws have impacted your plans. Many institutions will not accept documents that are older than five to seven years, further emphasizing the need to maintain your plan.

It is important to recognize that these strategies are not arbitrary but are instead designed to specifically support the pursuit of defined, personal financial goals. Rather than focusing only on your business operations, you should implement processes to comprehensively connect your business and your personal financial health. Your personal income starts with the bottom-line financial health of your business, yet, by applying these 10 strategies, your priorities for the future do not have to remain dependent solely on the present health of your business.

This commentary originally appeared July 14 on thestreet.com.

The opinions expressed by featured authors are their own and may not accurately reflect those of Buckingham Strategic Wealth®. This article is for general information only and is not intended to serve as specific financial, accounting or tax advice. Individuals should speak with qualified professionals based upon their individual circumstances. The analysis contained in this article may be based upon third-party information and may become outdated or otherwise superseded without notice. Third-party information is deemed to be reliable, but its accuracy and completeness cannot be guaranteed.

By clicking on any of the links above, you acknowledge that they are solely for your convenience, and do not necessarily imply any affiliations, sponsorships, endorsements or representations whatsoever by us regarding third-party websites. We are not responsible for the content, availability or privacy policies of these sites, and shall not be responsible or liable for any information, opinions, advice, products or services available on or through them. IRN-21-2305

© 2021 Buckingham Strategic Wealth®

When it comes to meeting your most important financial goals, time in the market can be a significant factor. And that means sticking with your financial life plan for the long haul, through the market’s ups and downs and across inevitable – sometimes lengthy – periods of underperformance. Value investors, who have seen large growth stocks roar ahead in recent years, know what that feels like. But, finally, those who chose to stay the course are reaping the reward of their discipline. See how!

Written by Daniel Campbell, CFA

Independent of one’s political leanings, it’s becoming increasingly likely that U.S. taxpayers are heading into an environment of higher tax rates and more progressive tax policy.


While specifics are still in development, questions and implications abound as to how changes in long-term capital gains rates, estate tax exemption limits and income tax rates may impact our financial lives.

These are the kinds of things we at Buckingham love to sink our teeth into – which is a good thing as it happens to be what we do for a living!

In our latest Buckingham Talks we reconvened Buckingham’s Chief Client Officer David Levin with Chief Planning Officer Jeffrey Levine, CPA/PFS, CFP®, AIF®, CWS®, Wealth Advisor Maryann Vognild, CFP® and Senior Tax Manager Danielle Colbert to draw on their extensive strategic tax planning experience and share useful ideas for your approach to taxes in 2021 and beyond.

You can watch a replay of that webcast here.

“No one enjoys being wrong,” Daniel Kahneman told Adam Grant, who recounted their conversation during a recent interview, “but I do enjoy having been wrong, because it means I am now less wrong than I was before.”


Grant describes Kahneman, the psychologist seen as the originator of and greatest contributor to the field of behavioral economics, as “a living legend,” a lofty label that Grant himself is sure to earn any day now. So when these two sages, known for having gotten so much right, talk about their enjoyment in having been wrong, it provides a special comfort to those of us who find ourselves acknowledging our errors more often.

Being wrong stinks

First, I love that they admit to their humanity—not just that they are occasionally wrong, but that it kinda sucks when the realization initially strikes. Helpful humbling is often initiated through a little hurting. And one of the best ways to salve that sting is to recognize the benefits to be gained from being more right into the future.

One of the biggest humblings of my career was also one of my most important lessons. I grew up professionally in financial firms that believed the primary justification for their existence was picking the right stocks, bonds and mutual funds at the right times for their clients. I genuinely believed this was the best use of our time and energy, until I was exposed to the evidence—that the vast majority of stock pickers don’t actually beat their benchmarks long-term and that allocating and reallocating active funds likely only increases the costs investors are virtually guaranteed to incur in pursuit of “alpha” that’s very difficult to sustain over the long-term!

Having been wrong can be great

THAT was a humbling moment (courtesy of Larry Swedroe, an early standard-bearer of evidence-based investing). It stung. And that’s because I genuinely believed I had the right answers to the right questions and was applying what I knew in the best way I knew how. But that event provoked better questions with better answers and eventually led to a series of subsequent illuminating moments that collectively amount to a financial planning epiphany…if there is such a thing. The end result has been helping more people better.

Great! So, considering the myriad benefits of “having been wrong,” how can we be wrong more often? First, we must acknowledge why acknowledging our wrongness is so difficult, and here again Kahneman’s work is our chief guide.

Confirmation bias

Confirmation bias is our natural tendency to seek out information that will confirm what we already believe. We’re more prone to discounting something that would lead to doubt and amplifying something that would lead to certainty than we are to embracing unadulterated objectivity. This applies to all our standing beliefs, however they were formed. But this is where things get really interesting.

Desirability bias

If confirmation bias is selective sifting of incoming information to support our standing beliefs, desirability bias is doing the same in support of something that we want to be true. Yes, the researchers behind one study observed that people “updated their beliefs more if the evidence was consistent (vs. inconsistent) with their desired outcome. This bias was independent of whether the evidence was consistent or inconsistent with their prior beliefs.”

That particular study focused on our political beliefs, but it’s just as applicable to our dealings with money and investing. Whatever we want to call it, there’s evidence that we’re really good at fooling ourselves (although it’s also important to point out that our biases aren’t just signs of human brokenness and often come with associated benefits). What, then, is a solution?

Complexify

While I think we do well to simplify in many aspects of life and money, it can also be a mistake, especially in matters of thinking that tend to be boiled down to two competing sides.

“I’ve completely rethought that,” Grant says in the same interview. “I now think that the both-sides perspective is not part of the solution, it actually exacerbates the polarization problem.”

He continues, “That’s largely because it’s so easy for us to fall victim to binary bias, where you take a very complex spectrum of opinions and attitudes, you oversimplify it into two categories, and when you do that you know which tribe you belong to; the other side is clearly wrong and may be bad too. It just locks people into preaching about why they’re right and prosecuting everyone on the other side for being wrong.”

Rather than expand our singular viewpoint, calcified by confirmation and desirability biases, to a dualistic battle royale that may only further harden our stance, Grant suggests the solution is to explore other angles and viewpoints beyond our purview. And they’ve seen this work at the Difficult Conversations Lab, with many of the toughest either/or debates over topics like gun control, abortion and even more divisive material, like the Yankees/Red Sox rivalry.

Believe it or not, even in the nerdy world of financial planning, many topics within our advisor community get people pretty fired up: active vs. passive investing, permanent life insurance vs. term, control vs. tax efficiency in estate planning, to name a few. These nuanced subjects are all worthy of some complexification.

How about you? Are there any issues or arguments where you need to complexify? Are there any relationships you might help heal following a couple years of intense polarization over issues of politics, race, face masks and vaccines by exploring other angles?

Here are 10 lessons from what they’ve learned at the Difficult Conversations Lab that might help, and I’d also highly recommend Grant’s and Kahneman’s new books, Think Again and Noise, respectively.

This commentary originally appeared June 13 on Forbes.com.

The opinions expressed by featured authors are their own and may not accurately reflect those of Buckingham Strategic Wealth®. This article is for general information only and is not intended to serve as specific financial, accounting or tax advice. Individuals should speak with qualified professionals based upon their individual circumstances. The analysis contained in this article may be based upon third-party information and may become outdated or otherwise superseded without notice. Third-party information is deemed to be reliable, but its accuracy and completeness cannot be guaranteed.

By clicking on any of the links above, you acknowledge that they are solely for your convenience, and do not necessarily imply any affiliations, sponsorships, endorsements or representations whatsoever by us regarding third-party websites. We are not responsible for the content, availability or privacy policies of these sites, and shall not be responsible or liable for any information, opinions, advice, products or services available on or through them. IRN-21-2306

© 2021 Buckingham Strategic Wealth®

Sssssnap!

That was the sound of the proverbial camel’s back breaking in September 2017, after Equifax announced a data breach that exposed the personal information of an astounding 147 million people. A steady drumbeat of data breaches had occurred prior to this time, yet nothing of the magnitude and severity of Equifax’s knockout punch.


If the 2008 financial crisis was when we lost our innocence regarding the financial system’s safeguards, in similar fashion the Equifax breach was when we said goodbye to any default trust that our identities would remain secure. This breach was the last straw for me and countless millions of people. I finally began taking more proactive measures to protect my identity and personal data.

When I began sharing the steps I was taking, and offering to assist others in the same, I was wholly unprepared for the reaction. There was an overwhelming response and acute interest; a raw and exposed nerve had evidently been struck. I spent the better part of two weeks dedicated to helping those around me avoid being the next casualty of a data breach.

Ever since that time, I have woven identity theft prevention into the financial planning process. After all, where does financial planning end and identity theft prevention begin? It is all tied together and, as I see it, these two elements cannot be separated one from another. Following are the preventative measures that I have personally taken, and regularly incorporate into the financial planning process.

Credit freeze

Sure, I had read and heard about credit freezes (sometimes referred to as a security freeze), but said warnings flew in one ear and out the other. Yet after the Equifax breach occurred, it seemed I couldn’t implement the freezes for my wife and I fast enough.

A credit freeze essentially slams the door shut on many types of fraud that an identity thief may attempt, such as opening a bank account or credit card in your name. For example, if you were to apply for a new credit card, the credit card company would run a credit background check on you. If your credit was frozen, the credit check could not be completed, and thus you would be denied the credit card unless you temporarily unfroze your credit. In similar fashion, if a fraudster attempted to obtain a credit card in your name (unbeknownst to you), the application process would be halted if your credit was inaccessible.

You can freeze your credit at the three major credit bureaus (Equifax, Experian and TransUnion) as well as at the lesser-known credit bureau Innovis. Once you have completed the freezes, you will sleep better at night.

Credit report

Although establishing a credit freeze may prevent identity theft in the future, it will not alert you of fraudulent activity that may have occurred in the past. To uncover that, you will need to periodically review your credit report for suspicious activity, such as the opening of a bank account or credit card that you don’t recognize.

I review my credit report using www.annualcreditreport.com, which allows one free credit report per year from each of the three main credit bureaus. Although I have never found any suspicious records on my credit report, I have discovered long-lost and unused credit cards, which prompted me to close the accounts. There is no reason to have unnecessary accounts and data floating around in cyberspace, so go ahead and cancel that JCPenney card you activated 15 years ago in order to save $27.

Credit monitoring

At this point, I have no formal stance on purchasing a credit monitoring service (such as LifeLock or Identity Guard). These services monitor the internet and dark web for instances of identity theft and will alert the user of potentially suspicious activity. They typically also provide assistance for victims of identity theft, as well as identity theft insurance coverage.

Personally, I choose to use a credit monitoring service. The peace of mind that it gives me is well worth the cost, yet others may come to a different conclusion after performing their due diligence. For me, the most valuable aspect of this service isn’t in the monitoring itself (although I do value that, to be sure). Rather, it is access to a partner with the specialization necessary to assist me in the rare event that my identity is stolen. Identity theft can take years to unravel and may be both financially and emotionally devastating, so I consider using a credit monitoring service to be a form of “sanity insurance.”

It is likely that your financial life plan takes into account risk management, yet have you considered how identity theft prevention fits into your risk management program? If not, think about the three items I’ve raised as a starting point: credit freeze, credit report and credit monitoring.

This commentary originally appeared June 7 on thestreet.com.

The opinions expressed by featured authors are their own and may not accurately reflect those of Buckingham Strategic Wealth®. This article is for general information only and is not intended to serve as specific financial, accounting or tax advice. Individuals should speak with qualified professionals based upon their individual circumstances. The analysis contained in this article may be based upon third-party information and may become outdated or otherwise superseded without notice. Third-party information is deemed to be reliable, but its accuracy and completeness cannot be guaranteed.

By clicking on any of the links above, you acknowledge that they are solely for your convenience, and do not necessarily imply any affiliations, sponsorships, endorsements or representations whatsoever by us regarding third-party websites. We are not responsible for the content, availability or privacy policies of these sites, and shall not be responsible or liable for any information, opinions, advice, products or services available on or through them. IRN-21-2178

© 2021 Buckingham Strategic Wealth®

So, your kid is the next LeBron James or Megan Rapinoe. Congratulations, but this article isn’t for you, because your child is either going straight to the pros or is an elite athlete and will likely have many scholarship offers. You can skip the rest of this article and save yourself the 10 minutes. But if your child is competitive in their chosen sport and you’re looking for some guidance on how to get a college athletic scholarship, then you’ll find this beneficial.


What are the chances?

Luckily, there is some good data available when it comes to this question. The first step is to get an idea of how much athletic aid is available for your child in their sport. You’ll want to learn how many high school athletes play it, how many of those compete in college, and how many potential scholarships are available for them. For example, if your child is an aspiring softball player, the ScholarshipStats.com data shows that there were 389,206 high school softball players last year. There were 33,494 college players. That’s an 8.5% chance of playing in college and a 1.7% chance of playing NCAA Division I. You can also see that the NCAA limits Division I softball scholarships to 12 per school and the average scholarship amount is $18,267.

There are scholarship limits for each NCAA Division—I, II and III—and for each sport. However, not every school fully funds those scholarships. Even though a school is able to offer 14 scholarships, they may be willing to fund only 10 scholarships.

Headcount sports are those that limit the number of athletes per team who can receive scholarships. Currently, the headcount sports are men’s and women’s basketball, FBS football, women’s tennis, women’s gymnastics and women’s volleyball—all in NCAA Division I. For example, men’s and women’s basketball are limited to 13 and 15 scholarships, respectively. So, a women’s basketball team could offer 15 scholarships to 15 individuals, assuming that the school were to use all of its scholarships. However, it is important to note that some of those 15 individuals might not receive full scholarships. “Headcount” simply means that the school cannot give scholarships to more than the allotted number of athletes.

In contrast, scholarships may be split among multiple athletes in every other sport—so-called equivalency sports. For example, an NCAA Division I men’s or women’s ice hockey team can offer up to 18 total scholarships, which can be offered as 18 full rides, 36 half scholarships, or any combination the coach sees fit, so long as the total scholarship value does not add up to more than the value of 18 full scholarships.

If your child is an elite athlete in one of those six headcount sports, they could receive a full scholarship. Otherwise, most other scholarship offers are partial. In fact, in the recent book “Who Gets In and Why,” author Jeffrey Selingo wrote, “Most of your neighbors who tell you that their child earned a ‘sports scholarship’ actually received something worth less than a very used car.”

Start by checking your sport to see what the scholarship potential is, then, when you are looking into particular schools, you can ask how many scholarships they actually offer. The more they fund, the better your chance of receiving some money. Keep in mind that those scholarships are spread out among freshman, sophomores, juniors and seniors. Each year, there might only be about a quarter of those scholarships up for grabs among the incoming freshman, depending on how they are allocated among the current student athletes.

The proverbial “free-ride” full scholarship gets a lot of press, but in reality, most athletic scholarships cover only a fraction of the cost of college. According to ScholarshipStats.com, Southern Methodist University gave the largest athletic scholarships in the 2019-20 school year, averaging $48,500. While that is significant, families still had to come up with another $28,000 to cover the full cost of that year, let alone the other three years. Across all of NCAA Division I, the average athletic scholarship is far less at approximately $18,000. And at the NCAA Division II level, total athletic scholarships were roughly one-fourth that of the Division I level. This is not to say, “Don’t try.” Rather, do your homework to put the odds in your favor.

Academic Aid

The best way to maximize your total financial aid package is to combine any athletic aid with possible academic or merit aid. Trying to find schools where your child will be among the top 25% of applicants academically will increase their chances of getting a decent offer for academic aid. This will also make you a more attractive recruit for coaches because they may not need to spend as much of their athletic scholarship money.

The overall goal is to get a quality education without breaking the bank. Perhaps your child has their sights set on attending a certain school, but there isn’t much athletic aid available for various reasons. A strong academic record could make that school a viable option financially if you can help enhance the school’s academic profile.

Eligibility

Beginning early in your child’s high school career, check the eligibility requirements for competing at different collegiate levels. NCAA Division I, II, III, NAIA and NJCAA all have different levels of eligibility criteria. Certain test scores, GPAs and core classes are required for each. In addition to the eligibility requirements, if you child plans to play in NCAA Division I or Division II, they’ll need to create an account with the NCAA Eligibility Center (formerly NCAA Clearinghouse) to get their certification of eligibility. If they are looking at an NAIA school, they can register for eligibility at play.mynaia.org.

For the love of the game

So far, we have talked exclusively about scholarships. However, there are hundreds of schools that field competitive teams but are not allowed to offer athletic scholarships. Most of those schools are in NCAA Division III, but some are Division I, such as the Ivy League. It just so happens that many non-scholarship schools are some of the most selective colleges and universities in the country, and a good athlete can use his or her skills to gain a significant advantage in the admissions process.

According to ScholarshipStats.com, Harvard’s recent admission rate was 5%, but athletes were 15% of the student body. In the same year, Princeton admitted 7% of all applicants, but athletes comprised 20% of the student body. A similar dynamic has been observed at other highly selective schools, including Amherst, Bowdoin, Middlebury, MIT, Williams and the U.S. service academies—Air Force, Army and Navy.

This is largely due to the fact that these small to mid-sized schools often have just as many sports teams and roster spots as large universities, so if they are to remain competitive, they must admit athletes. In his aforementioned book, Selingo observed, “In the fall of 2018, Amherst enrolled 676 athletes, thirty-six more athletes than the University of Alabama overall. Amherst has 200 more athletes than Northwestern University.”

So, if a student-athlete is willing to play their sport for the love of the game, their talent could be their ticket into a selective school. However, just like those seeking an athletic scholarship, the key to gaining admission to a selective school is getting the attention of the coach, so that the coach can lobby the admissions office on your behalf. In his recent book, “The Price You Pay for College,” Ron Lieber writes, “The admissions edge is real at these schools, and they grant that advantage through a so-called tips system that coaches use to boost the number of applications from favored prospects.”

The happiness factor

I was a college athlete once (a long time ago). I was fortunate to make it through most of my career with relatively few injuries. However, not everyone is that lucky. Choosing a school where your child will be happy, regardless of playing time, is important. Lots of things can happen to prevent them from playing all four years. A severe injury, loss of interest, a coach leaving or elimination of the program are just a few. Will your child be happy at that school without the sport? Does the school have the major they desire? Is their scholarship guaranteed for all four years? Or just year by year? How long does it take kids to graduate? A fifth year—without a scholarship—can be costly! What is the viability of the school financially? COVID-19 has put a lot of pressure on schools to reduce costs, including cutting athletic programs. In some cases, cost-cutting was not enough, and colleges were forced to shut their doors entirely. Another complication due to COVID-19 is a backlog of student athletes. Many athletes were granted another year of eligibility. So incoming freshman are finding fewer scholarships available, fewer roster spots, and less playing time. Schools may not be able or allowed to fund more scholarships if they are extending offers for seniors granted another year to compete.

This article is not an all-encompassing guide, but it is meant to provide some food for thought and get you thinking about different aspects of the decision. You’ll need to do some research to find out when college coaches start recruiting in a particular sport, when you should reach out to them, and when they are allowed to be in communication with you. You can use reputable recruiting services to help build a profile and gather helpful information. Casting a wide net when searching will increase your chances of getting a more generous offer, even if it’s not from your top-choice school. The best outcome is to find a great fit for your child, and there isn’t a right or wrong way to do that.

This commentary originally appeared June 5 on thestreet.com.

The opinions expressed by featured authors are their own and may not accurately reflect those of Buckingham Strategic Wealth®. This article is for general information only and is not intended to serve as specific financial, accounting or tax advice. Individuals should speak with qualified professionals based upon their individual circumstances. The analysis contained in this article may be based upon third-party information and may become outdated or otherwise superseded without notice. Third-party information is deemed to be reliable, but its accuracy and completeness cannot be guaranteed.

By clicking on any of the links above, you acknowledge that they are solely for your convenience, and do not necessarily imply any affiliations, sponsorships, endorsements or representations whatsoever by us regarding third-party websites. We are not responsible for the content, availability or privacy policies of these sites, and shall not be responsible or liable for any information, opinions, advice, products or services available on or through them. IRN-21-2193

© 2021 Buckingham Strategic Wealth®

Indeed, the only reason we have a right to expect a higher rate of return on any given investment is that we’re willing to endure greater risk, and, in all likelihood, higher volatility. But just how much volatility?

Let’s look at some of the scariest market moments of the past 50 years, specifically how far the market—in this case, the S&P 500—dropped over a handful of notable time periods:

What you might find interesting, however, is just how quickly the market historically has recovered ground. It came roaring back so quickly that most of us have already forgotten our most recent crisis. After the oil embargo drawdown, it only took the market nine months to make investors whole. The Black Monday crash only required 14 months of patience, while the tech bubble recovery was slower at 40 months. Even in the worst of these recent market crises, the 2008 financial crisis, in which the market pulled back more than 50%, you only had to wait 26 months to get your money back.

But let’s be sure to put the word “only” in quotes—because if you saw your retirement nest egg of $1 million come crashing down to $447,000, my guess is that you were more than a little stressed out. In fact, I think it’s fair to suggest that most investors with “real money” on the line simply couldn’t handle that type of drawdown. Most would bail out. Maybe you did.

That’s why the most successful investors recognize that the best portfolio isn’t the one that has the potential to make the most money, but the one they can stick with for the long term. The goal isn’t squeaking out another percentage point or two of return over your lifetime while white-knuckling your smartphone, sweating over your investing app of choice, every time the reality of investing returns to claim its risk toll.

Instead, consider acknowledging this reality—and your own personal willingness to endure risk. Then offset the growth engine of your portfolio—your exposure to stock—with the stabilizing agent of the most conservative, boring fixed income or bonds. Consider the following gut check test, the goal being to match your maximum tolerable loss with an appropriate maximum equity exposure:

To use this simple guide most effectively, don’t try to imagine what a particular percentage loss would feel like; multiply the value of your investment portfolio today by the number on the left and use actual dollars. Even then, hypotheticals can be challenging, rarely drawing out the actual feelings we’re likely to endure in real life. So if you were invested in any of the crises listed above, ask yourself the question, “How did it feel to lose ___% of my portfolio back then?”

And when in doubt, err on the side of conservatism, because we tend to feel the pain of loss twice as strongly as the joy of gain—and because it feels better to miss out on a little upside than to bail out on an overly aggressive portfolio after losing a lot.

This article originally appeared May 16 on Forbes.com.

The opinions expressed by featured authors are their own and may not accurately reflect those of Buckingham Strategic Wealth®. This article is for general information only and is not intended to serve as specific financial, accounting or tax advice. Individuals should speak with qualified professionals based upon their individual circumstances. The analysis contained in this article may be based upon third-party information and may become outdated or otherwise superseded without notice. Third-party information is deemed to be reliable, but its accuracy and completeness cannot be guaranteed. Indices are not available for direct investment. Their performance does not reflect the expenses associated with the management of an actual portfolio nor do they represent the results of actual trading.

By clicking on any of the links above, you acknowledge that they are solely for your convenience, and do not necessarily imply any affiliations, sponsorships, endorsements or representations whatsoever by us regarding third-party websites. We are not responsible for the content, availability or privacy policies of these sites, and shall not be responsible or liable for any information, opinions, advice, products or services available on or through them. IRN-21-2181

© 2021 Buckingham Strategic Wealth®

Many investors with the benefit of hindsight understand what they missed out on by not getting started earlier, which often leads them to want to give their kids or grandkids a head start. Beyond providing for a child’s everyday expenses, this may translate into a desire to begin saving for their future and to afford them a sense of financial security. If you already know that you want to start building savings to someday support a child or grandchild in their chosen endeavors, the next question is how to go about doing it.

Before we dive into the options, you must first think through the why behind your decision. It is important to get a good handle on what you hope to accomplish with these savings, and the better you can define your goal for the funds, the easier it is to determine which type of account is the best fit. Here are a few questions to prime the pump:

What is the goal? Do you want to set aside some money so the child has a rainy-day fund when they are older? Is the idea to just get them started? Or to expand the next generations range of choices? To teach the child about money and investing? To get them engaged and interested in finance? Or just to have somewhere to deposit birthday checks from relatives? Perhaps you want to leave a legacy or something for the child to remember you by. Define your goals before you and your advisor identify the most appropriate tool to pursue them.

How would you like the money to be spent? After determining what you want the funds to accomplish, think about whether you would like the money to be used for a more specific purpose or at a particular time in the child’s life. A common example is to stipulate that the funds be used strictly for education expenses or only once the child reaches adulthood. On the flip side, you may what the child to always have access to the funds.

How much control would you like to retain? Would you like to retain control of how the funds are invested and spent from the account to ensure your wishes are carried out?

Now that you have had the opportunity to examine your deeper motivations, it’s time to decide the best type of account to accomplish your wishes. There is some flexibility here; for example, down the road you can transfer a savings account or UTMA into a 529 account or a trust. The following is a high-level overview of options that are available to parents and grandparents who want to start saving:

Bank Account or Savings/Money Market Account

This can be a great place to start accumulating dollars for your kids. The pro is that these accounts are easy to set up and are accessible. In most cases, you can simply set up an account where you bank. The downside is that interest rates are very low and you won’t be earning much on dollars saved today. Many parents will use this type of account to encourage children to learn financial discipline by matching contributions. Depending on the funds accumulated and the runway for their use, you may consider investing them for the longer term.

Custodial Brokerage Account or UTMA (Universal Transfer to Minors Act Account)

The next option is a custodial brokerage account or UTMA, which can help the money work for the kid a bit more. Like the bank or savings account, this is a great option if you’re looking for simplicity and accessibility. You set up an account in your name for the benefit of the minor child. The child will have access to the account and gain full control once they reach the age of majority, which varies by state. At that time, the beneficiary (in this case, the child) can use the funds however they would like. They could buy a car or make a down payment on a new house; there is no restriction on utilizing these funds. A drawback to this type of account is that there’s no tax benefit from saving in this way.

529 Education Savings Plan

529 plan accounts are a popular choice if your objective is to provide for the child’s education. You are limited to using this money for qualified education expenses or you pay taxes and a penalty, but a 529 plan may cover K-12 education as well as college. They usually provide a state tax deduction when you make the contribution and the earnings or growth in the account comes out tax free.

Set up a trust

The most complex and costly of these options is to set up a trust fund for your child or grandchild. Given that it at least involves working with an attorney to draft the trust document, this route isn’t as common unless you plan to gift larger amounts of money over the years or if you want to retain more control over the use of the funds. Depending on how it is written, a trust can offer you flexibility in directing how the funds are used, as well as help protect that money in the future if creditor or divorce concerns arise.

Passing down wealth to the next generation or even to your grandchildren can be a powerful expression of your values. As such, it helps to know the rules around any gift you choose to make. With the current annual gifting exclusion amount, you can give any individual up to $15,000 a year ($30,000 total as a married couple) without the need to file a gift tax return. If you’re considering a large gift, it’s a good idea to consult with your advisor or accountant.

In conjunction with, or in lieu of, financial support, reflect on what you can give the next generation in the way of knowledge. How can you pass on good financial life skills and habits? Talking about money and providing opportunities to learn can be just as important, if not more important, than the dollars you put aside over the years.

The opinions expressed by featured authors are their own and may not accurately reflect those of Buckingham Strategic Wealth®. This article is for general information only and is not intended to serve as specific financial, accounting or tax advice. Individuals should speak with qualified professionals based upon their individual circumstances. The analysis contained in this article may be based upon third-party information and may become outdated or otherwise superseded without notice. Third-party information is deemed to be reliable, but its accuracy and completeness cannot be guaranteed.

By clicking on any of the links above, you acknowledge that they are solely for your convenience, and do not necessarily imply any affiliations, sponsorships, endorsements or representations whatsoever by us regarding third-party websites. We are not responsible for the content, availability or privacy policies of these sites, and shall not be responsible or liable for any information, opinions, advice, products or services available on or through them. IRN-21-2204

© 2021 Buckingham Strategic Wealth®