Family Investment Center

For richer or poorer

2012-01-30T09:21:00.005-06:00

Kevin Krauskopf of the St. Joseph News-Press interviews Dan Danford and family financial education specialist Rebecca Travnichek about what couples can do together to avoid financial fallouts. They suggest getting help when you need it, communicating about finances often, setting mutual goals, knowing where your money is going, being honest with one another, setting ground rules, and considering getting separate checking accounts.

Considering the fact that money is a leading cause of divorce, it's crucial that couples work through their finances and stay on the same page.

Read the full article here.

Low interest rates = high opportunity

2012-01-25T16:07:00.004-06:00

A recent article on MSN Money suggests 7 "smart moves" while interest rates are so low:

1) Buy a home or rental property

2) Refinance your home

3) Buy a car

4) Give money away

5) Review investments

6) Lock in student loan rates

7) Pay off credit card debt

Click here to read the full article for information on each.

The best ways to eliminate debt

2012-01-19T16:44:00.003-06:00

Dan Danford, CFP® and Founder/Chief Executive Officer of Family Investment Center, answers this week's episode of Money Made Easy.

A popular way to eliminate debt is through the "debt snowball," which suggests that you pay off your smallest debt first instead of focusing on paying off the one with the highest interest.

Danford espouses Dave Ramsey's motto of paying off the smallest debt first, then move on to the next smallest debt. He says this method combines the financial need to eliminate debt with the psychological need to find an easier way to do so.

Old rules no longer apply

2012-01-13T14:11:00.004-06:00

In Tuesday's Globe and Mail, Roma Luciw discusses the old rules and new norms of personal finance, then answers questions about what has changed and why.

Click here to read the full article "Not your parents' personal finance rules."

Danford in SmartMoney

2012-01-11T12:38:00.004-06:00

Anna Prior of SmartMoney Magazine interviews Dan Danford of Family Investment Center and other financial planners about proper portfolio mixes for investors in different life stages.

Click here to read the article, "Perfect Portfolios: Your Next Move in This Market."

Danford in the New York Times

2012-01-09T16:22:00.003-06:00

Dan Danford, Founder/CEO of Family Investment Center, helped New York Times journalist Tara Siegel-Bernard with this important story about financial issues for 50+ workers. As we're helping several families with this exact problem right now, we thought it would be of interest to several readers.

Read the full article.

Financial fitness plan 2012

2012-01-04T09:12:00.006-06:00

"Most couch potatoes will never compete in a triathlon. But they don't need to. Just a few minutes of exercise a day can help the formerly inert shed pounds, boost their energy levels and live longer. If you're already getting a little exercise, a little more can get you truly fit.

The same is true with money. You probably won't transform yourself from a train wreck into a billionaire. With some effort, though, you can pay down debt, build up savings and look forward to a more comfortable financial future."

- Liz Weston in her MSN Money article, "Get financially fit in 2012"

Weston lists five things you can do to help reduce debt, boost savings, and cut expenses:

1) Get your priorities straight.

2) Implement a plan to deal with your debt.

3) Review your expenses.

4) Create your survival plan.

5) Protect what you've got.

Read the full article to find out how.

Financial New Year's Resolutions

2011-12-27T11:34:00.006-06:00

Dan Danford, CFP® and Founder/Chief Executive Officer of Family Investment Center, answers this week's episode of Money Made Easy.

Do you have a list of New Year's financial resolutions you think all people should undertake as we approach 2012?

When answering this question, Danford has a slightly different way of looking at financial resolutions. He suggests that any New Year's resolutions should be about an attitude shift and an understanding of a new way to look at money.

Happy holidays!

2011-12-22T12:19:00.004-06:00

From the folks at Family Investment Center, we wish you the happiest of holidays!

Dan Danford
Chris Danford
Jason White
Elaine Coder
Carolyn Pearl
Laura Price

Business summit a success

2011-12-19T16:10:00.008-06:00

One hundred business leaders and entrepreneurs attended last Friday's annual Business Summit held at the Fulkerson Center at Missouri Western State University.

The event, hosted by the St. Joseph Metro Chamber and the Steven L. Craig School of Business, consisted of several sessions of varying business topics. The keynote speaker was Patrick Carpenter, Vice President of Sales and Marketing for SRC Holdings Corp. in Springfield, Missouri.

The summit was presented by Family Investment Center and the Institute for Industrial and Applied Life Sciences.

Jennifer Hall of the St. Joseph News-Press provides more detail in her article, Speaker promotes 'open-book' concept.

It's the psychology, stupid

2011-12-12T09:57:00.005-06:00

Dan Danford, CFP® and Founder/Chief Executive Officer at Family Investment Center, was quoted in an article in the Wall Street Journal today. The article, "So, How Does Money Make You Feel?", written by Veronica Dagher, speaks with advisors about why people make bad financial decisions and what they've done to help people avoid these mistakes.

Read the full article.

Time to refinance?

2011-12-07T11:46:00.002-06:00

Dan Danford, CFP® and Founder/Chief Executive Officer of Family Investment Center, answers this week's episode of Money Made Easy.

With interest rates so low is now a good time to refinance or are there disadvantages to refinancing?

Danford addresses the costs associated with refinancing (new appraisal, new title company, etc.) but says this is the best time to refinance in the last 50 years. He explains why everyone should consider refinancing not only their marital home but also their credit cards and vehicles.

Positive change: three innovative investment ideas

2011-12-01T13:07:00.008-06:00

By Dan Danford, Principal/CEO, Family Investment Center

● $100 million of insurance per account. Banks usually offer $250,000 of FDIC insurance, and brokers $500,000 of SIPC.

● No sales or transaction fees. None.

● The world’s top experts in stocks, bonds, and mutual funds. World-wide investment luminaries like Bill Gross, usually at reduced fee.

One academic study explored the pace of change within a community. As I recall, researchers carefully documented how long it took farmers in a particular region to switch to a wholly-superior hybrid seed corn.

The pattern of change became famous. A small group of progressive farmers adopted new corn almost immediately. Typically, others were more cautious and waited a few years. At the study’s end, a few stubborn hold-outs were still planting the old corn even though the new was safer, widely-accepted, and proven through years of production.

That pattern is typical among consumers of all kinds. It’s true of technology, automobiles, and even new medicines. A few innovators jump right in, and almost everyone else pulls the old “wait and see.” A few people never try anything new.

Family Investment Center started in 1998. We brought some innovative ideas to our marketplace, and some successful groups and families joined us almost immediately. Since then, many other clients have adopted our unique approach to investing. Our largest single portfolio today is over $15 million.

Instead of being a more-traditional “seller” of investments, we are an expert “buyer” for each client. We seek quality investments, tailored to each client’s need, at a wholesale or institutional price. We select securities and investments from thousands of choices and dozens of fund families and firms. Virtually unlimited investment choice.

Today, we steward nearly a $100 million and our clientele has grown from early adopters to mainstream institutions and families. We serve several dozen nonprofit groups along with hundreds of successful families. Almost all those portfolios transferred here from other (traditional) institutions.

Our professional fees are based on the work and responsibilities involved. We work like an independent consulting firm or law practice. There are no hidden fees or commissions, and we have no financial relationships with outside firms. Essentially, clients pay us because we can help them accomplish more.

I’d welcome an opportunity to discuss our services with you. I think we can help you save substantially on fees while increasing the quality of your investment portfolios.

White to present "Financial Wellness" seminar

2011-11-29T16:32:00.005-06:00

At a Northwest Missouri State University seminar titled "Financial Wellness" on Wednesday, November 30th, Dr. John Baker and Dr. Jason White will present information on how to learn responsible credit card practices, understand credit scores, and how to prevent becoming the victim of identity theft. The event is hosted by the university's Human Resources department and the University Wellness Center.

Both Baker and White teach in the Accounting/Economics/Finance department at Northwest Missouri State University. Dr. White is also Director of Investments at Family Investment Center.

How to stick to a budget

2011-11-22T11:31:00.004-06:00

Dan Danford, CFP® and Founder/Chief Executive Officer of Family Investment Center, answers this week's episode of Money Made Easy.

He answers this financial advice question about setting a budget and helpful ways to actually stick to it:

"It seems every time I make a budget I stick to it for a bit and then slowly I start getting away from it. Then the spending gets too much so I sit down and create a budget again and the cycle repeats itself. Do you have any financial tips on how to actually stick to a budget?"

Danford explains why budgeting is similar to dieting: if your budget is too rigid you probably wont' stick with it. Watch the video for Danford's financial tips on how to stick to a budget.

Things Your Wall Street Broker Doesn't Want You To Know

2011-11-17T12:37:00.005-06:00

This video, presented by Alexander Efros of Athelon Wealth Management, discusses "7 Things Your Wall Street Broker Doesn't Want You To Know." As a commission-free investment advisory firm, we at Family Investment Center like his message and agree with his conclusions.

Most investment professionals work as sellers, representing specific investment firms or products. They earn sales commissions or transaction fees directly related to their success at selling. Good for their companies, but maybe not so good for their customers. Things are very different at Family Investment Center. We earn our fees by representing clients. We work as a buyer for each client family, matching low-cost and productive investments to their circumstances and goals. Our commission-free platform values expertise and experience above sales ability.

Generation Y, start saving!

2011-11-14T16:13:00.005-06:00

Think you'll have enough money saved for retirement? A recent article by Emily Brandon of U.S. News & World Report writes, "Twenty-somethings will need to save much more than their parents did for retirement. To do that, they'll need an early start -- and a game plan."

Read the full article on MSN Money.

White comments on Ginnie Maes

2011-11-09T11:35:00.007-06:00

Dr. Jason White, Director of Investments at Family Investment Center, was recently quoted by Financial Advisor magazine's Matt Greco in "Another Look at Ginnies." According to Greco, the 2008 financial crisis and GNMA funds’ investment in mortgages have led many to spurn these investments. But solid returns have caused some to reconsider. He asked advisors nationwide for their thoughts on the investment.

Read the full article.

Small Tips to Save Big this Christmas

2011-11-03T13:49:00.006-05:00

By Laura Price, Investment Advisor

It may seem early to start planning for the holidays, but now is the perfect time to draw up a shopping list and budget. Gift-giving and family gatherings can become expensive in a hurry. Here are a few tips for reducing the financial burden this season brings:

Make a gift list. Start by listing all the family members and friends you wish to give something to. Then assign a specific dollar amount to each person and do not exceed that amount. Neglecting to create a gift budget is recipe for disaster.

Take an inventory of your skills and talents. Instead of purchasing gifts for everyone on your list, perhaps homemade gifts (a growing trend!) would be appropriate. What are your gifts? Sewing? Woodworking? Scrapbooking? Baking? Photography? Put those talents to use to please the folks on your list who appreciate sentiment or practicality.

Gift exchanges. With family and friend holiday gatherings, it makes the best sense financially for each person to draw one name and set a price limit. That way, you’re only buying one $50 gift for Grandma instead of buying $20 gifts for ten people. You save money and Grandma gets a better gift.

Keep an eye on the ads. Clip out coupons and take advantage of Black Friday sales. Don’t want to fight the crowds? Most sales apply to online shopping as well.

Shop early. Stores LOVE last-minute shoppers. When you’re down to the wire and desperate to find a gift, you will almost always pay more. Take your time and start shopping early.

Search the Internet. The Internet has an abundance of resources for ideas on cheap holiday parties, homemade gifts, coupons, and other ways to make the holidays less expensive. It pays to do your research!

Start planning for next year. When this holiday season is over, immediately start saving for next year. Also review this year’s budget to see how you made out. What adjustments will need to be made next year? Some folks even set up a separate savings account for gifts, allocating a certain amount from each paycheck to avoid shelling out extra from their year-end paychecks.

Money Rules

2011-10-31T16:28:00.005-05:00

In MSN Money's Liz Weston's recent article "9 money rules to live by," she lists nine rules that will help you take control of your spending. And believe it or not, they're fairly simple!

Read the full article.

Financial Tips On Dealing With Political Rhetoric

2011-10-24T14:36:00.003-05:00

Dan Danford, CFP® and Founder/Chief Executive Officer of Family Investment Center, answers this week's episode of Money Made Easy.

Danford has a common saying around his office when it comes to political and financial regulation proposals: "Don't talk about what might happen, instead focus on what does happen." This is important because politics are an important aspect of financial planning. Investors consistently face the problem of an overabundance of news and talking heads trying to get their viewpoints across. Danford advises when you listen to the nightly news about all the problems and emergencies going on, listen very carefully. Until a proposal or regulation becomes law, its importance is probably very low for most family investors.

Will I have enough in retirement?

2011-10-17T16:17:00.005-05:00

It is often difficult to predict how much money we will need in retirement, as several factors must be taken into consideration when calculating retirement needs. A recent MSN Money article, "Is your retirement on track?" by Liz Davidson, offers suggestions on how to best predict what you'll need in retirement.

Click here to read the full article.

Why Recovering From The Recession Is On You

2011-10-13T08:35:00.003-05:00

Dan Danford, CFP® and Founder/Chief Executive Officer of Family Investment Center, answers this week's episode of Money Made Easy.

The turbulent economic times have many seeking financial help as they await a recovery.

Danford explains why your own circumstances are what truly matter when trying to recover from a recession.

Danford gives three financial questions for you to consider:

1. Where do you work?

2. How do you invest?

3. How much do you owe?

Find what you love

2011-10-07T15:58:00.010-05:00

Around here, we value entrepreneurs and free enterprise more than almost anything. A lot has been written about our hero Steve Jobs, but the best tribute comes from his own words. Enjoy.

Dan Danford, Founder of Family Investment Center

This is a prepared text of the Stanford University commencement address delivered by the late Steve Jobs, who was at that time CEO of Apple Computer and Pixar Animation Studios, on June 12, 2005:

I am honored to be with you today at your commencement from one of the finest universities in the world. I never graduated from college. Truth be told, this is the closest I've ever gotten to a college graduation. Today I want to tell you three stories from my life. That's it. No big deal. Just three stories.

The first story is about connecting the dots.

I dropped out of Reed College after the first 6 months, but then stayed around as a drop-in for another 18 months or so before I really quit. So why did I drop out?

It started before I was born. My biological mother was a young, unwed college graduate student, and she decided to put me up for adoption. She felt very strongly that I should be adopted by college graduates, so everything was all set for me to be adopted at birth by a lawyer and his wife. Except that when I popped out they decided at the last minute that they really wanted a girl. So my parents, who were on a waiting list, got a call in the middle of the night asking: "We have an unexpected baby boy; do you want him?" They said: "Of course." My biological mother later found out that my mother had never graduated from college and that my father had never graduated from high school. She refused to sign the final adoption papers. She only relented a few months later when my parents promised that I would someday go to college.

And 17 years later I did go to college. But I naively chose a college that was almost as expensive as Stanford, and all of my working-class parents' savings were being spent on my college tuition. After six months, I couldn't see the value in it. I had no idea what I wanted to do with my life and no idea how college was going to help me figure it out. And here I was spending all of the money my parents had saved their entire life. So I decided to drop out and trust that it would all work out OK. It was pretty scary at the time, but looking back it was one of the best decisions I ever made. The minute I dropped out I could stop taking the required classes that didn't interest me, and begin dropping in on the ones that looked interesting.

It wasn't all romantic. I didn't have a dorm room, so I slept on the floor in friends' rooms, I returned coke bottles for the 5¢ deposits to buy food with, and I would walk the 7 miles across town every Sunday night to get one good meal a week at the Hare Krishna temple. I loved it. And much of what I stumbled into by following my curiosity and intuition turned out to be priceless later on. Let me give you one example:

Reed College at that time offered perhaps the best calligraphy instruction in the country. Throughout the campus every poster, every label on every drawer, was beautifully hand calligraphed. Because I had dropped out and didn't have to take the normal classes, I decided to take a calligraphy class to learn how to do this. I learned about serif and san serif typefaces, about varying the amount of space between different letter combinations, about what makes great typography great. It was beautiful, historical, artistically subtle in a way that science can't capture, and I found it fascinating.

None of this had even a hope of any practical application in my life. But ten years later, when we were designing the first Macintosh computer, it all came back to me. And we designed it all into the Mac. It was the first computer with beautiful typography. If I had never dropped in on that single course in college, the Mac would have never had multiple typefaces or proportionally spaced fonts. And since Windows just copied the Mac, it's likely that no personal computer would have them. If I had never dropped out, I would have never dropped in on this calligraphy class, and personal computers might not have the wonderful typography that they do. Of course it was impossible to connect the dots looking forward when I was in college. But it was very, very clear looking backwards ten years later.

Again, you can't connect the dots looking forward; you can only connect them looking backwards. So you have to trust that the dots will somehow connect in your future. You have to trust in something — your gut, destiny, life, karma, whatever. This approach has never let me down, and it has made all the difference in my life.

My second story is about love and loss.

I was lucky — I found what I loved to do early in life. Woz and I started Apple in my parents garage when I was 20. We worked hard, and in 10 years Apple had grown from just the two of us in a garage into a $2 billion company with over 4000 employees. We had just released our finest creation — the Macintosh — a year earlier, and I had just turned 30. And then I got fired. How can you get fired from a company you started? Well, as Apple grew we hired someone who I thought was very talented to run the company with me, and for the first year or so things went well. But then our visions of the future began to diverge and eventually we had a falling out. When we did, our Board of Directors sided with him. So at 30 I was out. And very publicly out. What had been the focus of my entire adult life was gone, and it was devastating.

I really didn't know what to do for a few months. I felt that I had let the previous generation of entrepreneurs down - that I had dropped the baton as it was being passed to me. I met with David Packard and Bob Noyce and tried to apologize for screwing up so badly. I was a very public failure, and I even thought about running away from the valley. But something slowly began to dawn on me — I still loved what I did. The turn of events at Apple had not changed that one bit. I had been rejected, but I was still in love. And so I decided to start over.

I didn't see it then, but it turned out that getting fired from Apple was the best thing that could have ever happened to me. The heaviness of being successful was replaced by the lightness of being a beginner again, less sure about everything. It freed me to enter one of the most creative periods of my life.

During the next five years, I started a company named NeXT, another company named Pixar, and fell in love with an amazing woman who would become my wife. Pixar went on to create the worlds first computer animated feature film, Toy Story, and is now the most successful animation studio in the world. In a remarkable turn of events, Apple bought NeXT, I returned to Apple, and the technology we developed at NeXT is at the heart of Apple's current renaissance. And Laurene and I have a wonderful family together.

I'm pretty sure none of this would have happened if I hadn't been fired from Apple. It was awful tasting medicine, but I guess the patient needed it. Sometimes life hits you in the head with a brick. Don't lose faith. I'm convinced that the only thing that kept me going was that I loved what I did. You've got to find what you love. And that is as true for your work as it is for your lovers. Your work is going to fill a large part of your life, and the only way to be truly satisfied is to do what you believe is great work. And the only way to do great work is to love what you do. If you haven't found it yet, keep looking. Don't settle. As with all matters of the heart, you'll know when you find it. And, like any great relationship, it just gets better and better as the years roll on. So keep looking until you find it. Don't settle.

My third story is about death.

When I was 17, I read a quote that went something like: "If you live each day as if it was your last, someday you'll most certainly be right." It made an impression on me, and since then, for the past 33 years, I have looked in the mirror every morning and asked myself: "If today were the last day of my life, would I want to do what I am about to do today?" And whenever the answer has been "No" for too many days in a row, I know I need to change something.

Remembering that I'll be dead soon is the most important tool I've ever encountered to help me make the big choices in life. Because almost everything — all external expectations, all pride, all fear of embarrassment or failure - these things just fall away in the face of death, leaving only what is truly important. Remembering that you are going to die is the best way I know to avoid the trap of thinking you have something to lose. You are already naked. There is no reason not to follow your heart.

About a year ago I was diagnosed with cancer. I had a scan at 7:30 in the morning, and it clearly showed a tumor on my pancreas. I didn't even know what a pancreas was. The doctors told me this was almost certainly a type of cancer that is incurable, and that I should expect to live no longer than three to six months. My doctor advised me to go home and get my affairs in order, which is doctor's code for prepare to die. It means to try to tell your kids everything you thought you'd have the next 10 years to tell them in just a few months. It means to make sure everything is buttoned up so that it will be as easy as possible for your family. It means to say your goodbyes.

I lived with that diagnosis all day. Later that evening I had a biopsy, where they stuck an endoscope down my throat, through my stomach and into my intestines, put a needle into my pancreas and got a few cells from the tumor. I was sedated, but my wife, who was there, told me that when they viewed the cells under a microscope the doctors started crying because it turned out to be a very rare form of pancreatic cancer that is curable with surgery. I had the surgery and I'm fine now.

This was the closest I've been to facing death, and I hope it's the closest I get for a few more decades. Having lived through it, I can now say this to you with a bit more certainty than when death was a useful but purely intellectual concept:

No one wants to die. Even people who want to go to heaven don't want to die to get there. And yet death is the destination we all share. No one has ever escaped it. And that is as it should be, because Death is very likely the single best invention of Life. It is Life's change agent. It clears out the old to make way for the new. Right now the new is you, but someday not too long from now, you will gradually become the old and be cleared away. Sorry to be so dramatic, but it is quite true.

Your time is limited, so don't waste it living someone else's life. Don't be trapped by dogma — which is living with the results of other people's thinking. Don't let the noise of others' opinions drown out your own inner voice. And most important, have the courage to follow your heart and intuition. They somehow already know what you truly want to become. Everything else is secondary.

When I was young, there was an amazing publication called The Whole Earth Catalog, which was one of the bibles of my generation. It was created by a fellow named Stewart Brand not far from here in Menlo Park, and he brought it to life with his poetic touch. This was in the late 1960's, before personal computers and desktop publishing, so it was all made with typewriters, scissors, and polaroid cameras. It was sort of like Google in paperback form, 35 years before Google came along: it was idealistic, and overflowing with neat tools and great notions.

Stewart and his team put out several issues of The Whole Earth Catalog, and then when it had run its course, they put out a final issue. It was the mid-1970s, and I was your age. On the back cover of their final issue was a photograph of an early morning country road, the kind you might find yourself hitchhiking on if you were so adventurous. Beneath it were the words: "Stay Hungry. Stay Foolish." It was their farewell message as they signed off. Stay Hungry. Stay Foolish. And I have always wished that for myself. And now, as you graduate to begin anew, I wish that for you.

Stay Hungry. Stay Foolish.

Thank you all very much.

.

Market Reflections

2011-10-05T15:46:00.007-05:00

Written by Dr. Jason White, Director of Investments at Family Investment Center

EXECUTIVE CLIENT SUMMARY

“Grinding” is the most descriptive term I can muster to characterize the economic, market, political, and international events thus far in 2011. Our 24/7/365 news cycle and the old newspaper mantra “if it bleeds, it leads” seems to have paralyzed many in a fog of uncertainty. The issues we face really aren’t new: government debt, banking problems, geopolitical instability…but constant screeching media exposure takes a toll on our collective psyche.

Hyper-focus on the crisis of the day can suck investors into a vortex of fear, confusion, and perhaps worse – inaction. Helping clients overcome these natural human reactions to uncertainty is part of the reason we are hired to manage portfolios.

Following are some brief comments on observations I have made with regard to the economy and our client portfolios. I hope you find them helpful and informative!

MACROECONOMIC ANALYSIS

I have heard and read many experts comment on the potential for a double-dip recession in the second half of 2011 or early in 2012, but I find little evidence in my research to assign this a large probability of occurrence. The unemployment rate has ticked back down to 9.1%. Looking inside the numbers, public sector payrolls are generally decreasing, while private sector hiring is increasing, albeit at a speed that satisfies no one. GDP, the broadest measure of economic health, is grinding slowly higher. My 2011 forecast remains unchanged at 1.9% positive GDP growth for the year. Most economists believe we need a 3%+ GDP growth rate to see significant improvement in the unemployment picture, and I count myself among them. The economy needs to add close to 15 million new jobs to return to a “full employment” condition, where the unemployment rate is around 5%. This is the most important national challenge we face in the next 12 to 24 months.

MARKET OBSERVATIONS

The stock market moved with much volatility and with all companies in near lockstep during the first three quarters as large-, mid- and small-cap companies struggle for footing and clarity in the economy. Third quarter market uncertainty and isolated price shocks chewed up the gains for the year, mostly due to the uncertain outcome of Europe’s financial and debt crisis, and the future of the Euro currency itself. I wrote back in 1999 that a European currency union, with disaggregated fiscal and political systems, would be unsustainable in a national crisis (war, debt, natural disaster, etc.), and it appears the EU will need some emergency mending to hold the union together. Not impossible – but difficult and with an unpredictable outcome at this time.

Back in the United States, the Federal Reserve has continued to keep interest rates at historic lows to combat weakness and has announced guidance to continue relaxed monetary policy into 2013. The Fed has begun “Operation Twist,” a program to purchase longer-term government bonds with the proceeds of maturing short-term debt. Yet, corporate profits are consistently outperforming consensus expectations of analysts, despite higher energy costs and soft consumer demand.

THE DEBT CEILING

In our view, there is plenty of blame to go around for the embarrassing public display of sausage-making going on in Washington D.C. While this time seems different (as it always does), especially when amplified by the partisan media coverage coming from networks like NBC and FOX, this is no time for investors to run for the hills. We can take some comfort in the fact that the United States has been through this process many times, although there is some faint hope this time that the congressional “Super-Committee” might actually come up with some important reforms.

Pundits sarcastically comment that America always does the right thing after exhausting all other available options. They might be right in the short run, but the power of investment compounding always wins in the long run. We are still passionate practitioners of Modern Portfolio Theory, diversified asset allocation, and expense minimization. We will happily take any time necessary to help calm any fears clients may have regarding the long-run potential of the market. Contact us anytime for a “booster shot” on the science of long-run investment success!

FINAL THOUGHTS

Individual investors, thanks to the fear-and-greed genome of human nature, often make the classic and colossal mistake of trying to time the market in the short run. Academic and professional research shows repeatedly that investors tend to buy when the outlook is optimistic and sell when pessimism dominates opinion. The result is portfolio underperformance, failure to reach financial goals, and a smaller portfolio to do good works. Guiding investors toward a more dispassionate long-run diversified savings approach is what drives our thinking and actions every day.

Should you cancel your credit cards?

2011-09-26T16:53:00.003-05:00

Dan Danford, Founder and Chief Executive Officer of Family Investment Center, answers this week's episode of Money Made Easy.

Concerns about one's credit score is one of the more frequently asked financial question submitted for financial adviser Dan Danford to answer.

Credit scores are all about one thing: Can you pay your bills?

So how does canceling a credit card help or hurt your credit score?

Danford book helps families

2011-09-19T14:38:00.010-05:00

Dan Danford started Family Investment Center in 1998 to help families manage existing investments and grow financially independent. The firm currently serves over 150 key client families along with companies, retirement plans, and nonprofit groups. Family Investment Center is a commission-free Registered Investment Advisor stewarding almost $100 million. Danford was interviewed in his St. Joseph office.

Why write a book? Surely there are enough investment books in the marketplace.
True. But there’s a big story not generally told to consumers. I’m still astounded to encounter people who think of investing as a big game of chance. In truth, there’s solid science to investing, and I think it’s time for families to know about it. Instead, it’s often been limited to wealthy people and large foundations.

Why hasn’t this story been told to consumers before now?
It’s a function of the investment distribution system. Smaller investors – the typical family – buy investments through retail stockbrokers, insurance agents, banks, and fund salespeople. These channels focus on selling, and selling doesn’t allow much time for good consumer education.

Still, there’s no shortage of investment information.
Just look at the consumer press, though. I mean really look at the headlines and magazine covers. They simply mirror things that consumers already think. They’re selling buggy whips to horse owners. No one bothers to mention that Henry Ford created the automobile. Many financial salespeople do the exactly same thing.

Surely you’re not comparing yourselves to Henry Ford.
Of course not. We simply report the excellent work of others. Believe it or not, there’s a very large body of research about wealth management. Our book suggests over a dozen titles for further reading. Many, many, many people have contributed to the field and we’re not even part of that development. But I have taught investment classes in the business department at our university and I’ve spent nearly three decades managing money for wealthy people and groups.

Why Million Dollar Management? Many readers don’t have a million dollars.
And many financial professionals don’t manage a million dollars, either. That’s part of the point. Our sub-title is “Simple Lessons to Use Wealth Management Principles for Your Family Investments.” Many of these principles were originally discovered while studying and building large investment portfolios. But they work just fine with smaller accounts, too. That’s the first message of our book – families will enjoy more financial success if they manage resources in the same way as savvy millionaires.

What’s a good example of a difference between millionaires and the rest of us?
Dan Did you know that only one percent of millionaires trade stocks on a daily basis? Another one percent trade on a weekly basis. When Tom Stanley and William Danko wrote The Millionaire Next Door [1996, Longstreet Press] they found that fully 42 percent of interviewed millionaires hadn’t made a single trade in their portfolio during the prior year! Is that what you’d conclude after reading most personal finance magazines? I don’t think so.

Okay, you’ve made that point. Are there other messages in your book?
We think a lot about the morality of money. The notion that money is a responsibility and those of us blessed with having it should exercise sound judgment in its care and maintenance. We highlight some practical and religious family stewardship issues.

You’re beginning to sound like a prudent bank trust officer. How much has prior banking experience influenced your investment thinking?
A lot. I learned some terrific things during fifteen years as a trust officer. The best things we’ve carried over into Family Investment Center.

What’s something important that you learned?
For the typical investment professional, sales skills are critical for success. Brokers making huge money aren’t necessarily those knowing the most about investing or providing the highest return to clients. Instead, these are usually people with strong social skills and a powerful ability to persuade.

You sound as though this isn’t a good thing.
It isn’t necessarily a bad thing. But it can be a bad thing. Remember, this is a sales environment. These people are usually paid by sales commission. An ability to persuade can be a dangerous thing when coupled with high sales commissions.

So you dislike brokers. That’s what you learned?
That’s not right at all! There are some brokers I like a lot and some with very high ethical standards. But I intensely dislike any commission system. It places a salesperson’s need above the client’s. A few good people rise above this structure, but I can’t think of a single argument why sales commissions are good for the consumer. They were designed to help the company.

Yet, it is a salary system which has endured, even prospered, for decades.
Of course it is. These firms used to have a monopoly on market information. You had to use a broker to invest because there wasn’t any other choice. Charles Schwab and the Internet changed all that for the better.

How?
Now anyone wanting information can find it. The Internet combined with 24-hour news coverage has virtually eliminated any information advantage, so that reason for using a broker has diminished. And, thanks to Charles Schwab, you don’t have to use a high-priced intermediary anymore to place stock or bond trades. Today, full-service brokerage firms look like dinosaurs. Banks aren’t much better. I’ve got a glass jar in my office that is full of matchbooks from now-extinct local banks. Why do you think they’re merging like mad and trying so hard to enter other financial businesses? Consumers simply don’t understand competitive pressures taking place in the financial services industry.

If not traditional brokerage firms or banks, then what? What is the future for consumer investment services?
Well, I can’t be sure. We believe that “commission-free” investment services are a clear improvement. Commission-free professionals earn fees directly from clients and avoid commission-based investments. Working directly for the client frees them to make quality recommendations without real or perceived conflicts of interest.

That sounds much better. Why isn’t it the industry benchmark today?
It is growing quickly and some major firms are trying to transition to fees. One sad truth is that client fees are often less lucrative for the professional. Fees can be a great tool for both the client and professional, but you’ve got to have some volume to earn a living. Many brokers, insurance agents, bank investment officers, and fund salespeople can’t gather enough investment assets to survive. So, they stick with more rewarding commissioned products.

What about you? Your firm has used this fee-only model since inception. Does it work?
It works great. We are truly independent – not related to any bank, brokerage firm, or insurance company ¬ and revenues come directly from providing client service. We please clients or we die. Just like my grandfather’s grocery store back in the 1930s. Having said that, though, it hasn’t always been easy. Things change very slowly in the Midwest and we compete against some very talented traditional marketers. And, of course, over half of our existence has been during the worst bear markets ever. But, we’ve built enough volume to survive and we’re gaining a reputation that allowed us to grow during a pretty tough period. All things considered, it been a pretty good run. No complaints at all from me.

To purchase the book, click here.

Charlie Sheen, Paul McCartney, and Claude Monet

2011-09-13T10:25:00.006-05:00

By Dan Danford, Founder and Chief Executive Officer, Family Investment Center
St. Joseph News-Press guest column "Hey, St. Joe: We've got talent"
September 13, 2011

One of my favorite celebrity quotes recently came from – I know this is risky, but I’m going to use it anyway – Charlie Sheen. In the midst of personal and professional turmoil, Charlie uttered a line I absolutely love, “I’m tired of pretending I’m not special.” It is very revealing.

I often ponder similar thoughts in a gallery or at a concert. Did the artist have any appreciation for his or her own genius? Psychologists tell us we tend to “normalize” extraordinary things around us. Good or bad, we accept or adapt to almost anything we encounter.

In simple terms, this means Claude Monet painted water lilies without much regard for how special his work was. McCartney and Lennon likely penned “Sergeant Pepper” or “Abbey Road” without a lot of angst or introspection. When you hear wondrous music in your head all day long, or you craft multiple visions of the same lily pond, it’s probably hard to fathom the specialness of your gift.

Of course, some artists who do have a glimpse of their gift struggle mightily with that awareness. Artists with alcohol, drug or psychological problems are so common it’s almost expected of celebrity.

Business genius fascinates me, too. It’s not a money thing, necessarily, but money can be a sign of extraordinary commercial talent. (Part of Charlie Sheen’s success is the marriage of comic artistry with business acumen.) Steve Jobs or Steven Spielberg come to mind as top business artists.

Profits rise from selling a product or service. Remarkable profits rise from selling that product or service to masses of customers. Tally how many times you’ve seen “Star Wars” or “Raiders of the Lost Ark,” or count the number of Apple computers you see at Starbucks.

Actually, Starbucks offers a pretty good illustration of how a successful business can alter an entire culture. From historical perspective, any business that survives beyond a single generation is uncommon. If it spans multiple generations and global markets – say, Hillyard Inc. or Gray manufacturing – that’s really rare and special. Starbucks may transform American culture, but solid local companies have sizable impact on lives, too.

Sheen’s comment reveals awareness that some talent has remarkable business value. But I also recognize we normalize remarkable talent in our own midst. That’s why so many artists languish in obscurity until after their deaths. People around them – blinded by familiarity – overlook what’s obvious to future generations.

I know a few gifted artists; I have witnessed a few business miracles. I happily acknowledge people with special gifts whenever I see them. Life is so darned ordinary I crave these brief encounters. (The coming visit to Missouri Western State University by author Thomas Friedman surely qualifies as another opportunity.)

Is there a lesson in any of this? I think there is. Let’s drop the local modesty and join Charlie. I’m tired of pretending we aren’t special. I work with a gifted team, and I’m certain St. Joseph is home to many gifted teams and people.

It’s high time we recognize some of the greatness around us. We’ve been blinded by familiarity; St. Joe really has got talent. Let’s acknowledge our gifts.

Tips for Surviving Spouses

2011-09-12T09:25:00.005-05:00

The Circumstance: Often, a surviving spouse is faced with daunting financial decisions at a time of maximum vulnerability. A survivor sometimes receives large life insurance payments, legal settlements, retirement benefits, and money from other sources.

The Danger: Unfortunately, some individuals and firms market to these vulnerabilities with carefully devised presentations and strategies. Some boast bogus expertise or empty promises. Products are often very expensive, inappropriate for the individual, and inflexible for future years.

The Culprit: A commission schedule is the culprit. Most financial products are distributed through expensive sales channels. A commissioned broker, insurance agent, or financial planner earns high sales commissions for marketing annuities, mutual funds, or IRA rollover accounts. Since survivors often control large pools of money, a crafty sales organization can create hefty profits. Many do.

The Solution: Take away the sales commissions and you take away the problem. At Family Investment Center, we offer:

• Genuine compassion for grieving survivors
• No product sales
• Honest advice on the full spectrum of investments
• Honest expertise gained through decades of investment, trust, and life experience
• Genuine credentials earned through higher education, national trade organizations, and government regulation
• Fair and reasonable prices for professional services rendered
• Commission-free (“fee-only”) investment management services (if desired)

The Price: Free initial consultation. Registration, organization, and clerical services are available for an hourly fee. Investment management services are provided for an annual percentage of account value. Special projects quoted on a case-by-case basis.

After a spouse dies: a checklist

2011-09-06T16:31:00.004-05:00

Nobody wants to think about the prospect of losing a loved one, and when we do we often have no idea where to turn.

If you are not prepared, the onslaught of paperwork that will hit you after your spouse’s death may seem overwhelming. It is tough to get through it even when you are prepared. Here’s your to-do list:

Find out what you own. Gather copies of your joint tax records, retirement plan statements, all insurance policies, bank and brokerage accounts, and the deed to your house. Bundle the documents in one big file that you keep in a safe but accessible place, such as a locked drawer.

Order plenty of death certificates. You’ll probably need about two dozen copies of a death certificate to send to credit card companies, the company that holds the mortgage on your home, and insurers to verify his death.

Request benefits. Notify past employers and file for any benefits owed, such as pension income, life insurance, and health insurance coverage. Talk to the person in charge of employee benefits (the human resource department can direct you). You may need to talk to more than one employer for more than one plan. Find out about settlement options. Some plans ask you to choose between a lump-sum payment or an annuity, which can be made every month or year.

File for life and other insurance. Alert your life insurance company and file a claim. Your insurance agent should have all the policy information you will need and be able to help you obtain the necessary forms.

Notify government agencies. The Social Security Administration will need to be notified. You must have been married for at least nine months before your spouse’s death to be eligible for benefits, unless his death was the result of an accident or military service. Also, you should contact the motor vehicles bureau in your state to change car registrations to your name.

Contact banks, brokerage, and investment firms. Any joint accounts should be transferred to an account in your name. (You will need a copy of the death certificate to do so.) In many cases, you could be able to renegotiate the terms of any outstanding loans with your banker. If your spouse had a brokerage account, ask the broker to give you a value on the date of death. Estate taxes – if any – will be based on the valuation of assets in all accounts.

Review all insurance policies. Also update any life or disability insurance policies. If your spouse worked for a company that has a health plan covering 20 or more employees, the plan may continue to offer you and any dependents coverage for up to three years.

Invest wisely. This is not the time to be taking hot stock tips. Most financial planners recommend that you refrain from investing any lump-sum insurance or pension payout for at least six months, and ideally a year, after your spouse’s death. Stash any cash into liquid money market funds, or short-term certificates of deposit or Treasury bills.

Take your time. After you have negotiated through the must-do list and found the crucial documents, take a break. Don’t be pressured to make big financial decisions. When you are ready to take action, it’s a good idea to set up an appointment with a financial advisor to help you develop a short-term and long-term investment plan.

Jason White in Northwest Alumni Magazine

2011-09-01T12:08:00.009-05:00

Dr. Jason White, Principal and Director of Investments at Family Investment Center and Associate Professor of Economics at Northwest Missouri State University, was recently published in the university's alumni magazine. In the article, Jason reflects on his experiences as founder and faculty adviser for the school's Students in Free Enterprise (SIFE) team and the importance of a free enterprise capitalist society.

Click here to view the full article.

Financial Therapy Association

2011-08-26T12:38:00.005-05:00

One of the interesting observations that comes from almost 30 years of investment experience is that behavior determines success or failure. Truthfully, people tend to focus on fact and figures although that’s a small part of success. This new group is creating a framework to meld financial planning with helpful disciplines of psychology, sociology, and therapy. This is a 10-minute overview by FTA president Dr. Sonya Britt.

401(k) or IRA: Which do you fund first?

2011-08-24T11:25:00.006-05:00

Sure, we would all like to max out our annual contributions to both our IRA and company retirement plan. But for those times that you can't, a recent MSN Money article suggests 10 questions to ask when you're not sure which retirement account to fund first:

1) Do you get an employer match?
2) Do you plan to stay with your employer?
3) Will you really save on your own?
4) How much do you want to save?
5) Which option offers the investments you want?
6) What are the costs?
7) Which offers better protection?
8) Are you planning to retire early?
9) Will you want to borrow from your savings?
10) Are you (or your spouse) not working?

Click here to read the full article.

Why shopping pays

2011-08-19T11:43:00.004-05:00

Dan Danford, Founder and Chief Executive Officer of Family Investment Center, answers this week's episode of Money Made Easy.

As a frequent speaker to college students, Danford said he is often asked about spending. The first, and most important, point he stresses is making wise decisions when spending. Most people who suffer from financial hardship tend to have spending issues, he said.

Continuing his series of "back to basics" financial advice, Danford explains "why shopping pays."

Dan Danford joins NAPFA

2011-08-16T09:22:00.010-05:00

Dan Danford, Founder and Chief Executive Officer of Family Investment Center, was recently accepted to the National Association of Personal Financial Advisors (NAPFA). NAPFA is the nation's leading organization for commission-free advisors, focused on delivering unbiased, client-centered advice. Click here to read the announcement.

2011-08-09T10:06:00.007-05:00

Want some of the highest quality written commentary (without all the TV screeching monkeys) on the economic, financial and investment challenges ahead? Check out Pacific Investment Management (PIMCO). These guys are trusted pros and members of our inner circle of advisors:

Pacific Investment Management Company (PIMCO)

These are a few of my favorite things

2011-07-26T15:30:00.010-05:00

It’s been a long few months since the play-off game, but I’m re-posting this in honor of the Kansas City Chiefs Training Camp starting in St. Joseph this week!

Click here to read the article.

The Single Life: 3 Ways to Retire Well on Your Own

2011-07-21T14:40:00.004-05:00

Being single definitely poses some financial challenges. A recent Wall Street Journal article explores three things that can help single people retire well.

Click here to read the full article.

Suze Orman on annuities

2011-07-14T14:24:00.007-05:00

From the July 2011 Costco Connection:

Is an annuity really suitable for me?
Is it possible to make money without taking on risk?
How can I legally give up a wallet-draining time share?

Read Suze Orman's responses here.

Aligning incentives between advisor and client

2011-07-12T16:06:00.006-05:00

By Dan Danford, Principal/Chief Executive Officer, Family Investment Center

When I bought my last car, I faced a dilemma. At a critical point, I discovered that I liked the car a lot, but not the dealership. I had to choose: give up the car, or buy from a dealer I didn’t like.

Other people face the opposite problem. They like a particular dealership but aren’t happy with available brand names or models. They’d prefer a different car, but they want to buy it through their chosen dealer.

With cars, maybe you rely on a salesperson to answer technical questions, arrange test-drives, and help with the financing. You trust them to help you reach the right decision, sign necessary papers, and – hopefully – you go home happy.

What if you learned afterward that the salesperson earned special “incentives” all along the way? That the car you bought paid higher sales commissions (and cost more) than others? That your lender awarded paid vacation to sellers closing the most “deals?” Ultimately, you may have overpaid for the car and missed better financing opportunities. Would this upset you?

One solution might be a car “supermarket” – featuring multiple product lines through one dealer. You could get any vehicle you want through the same local dealership. Salespeople would be salaried, or at least they’d disclose how they are paid on every car. Then, you could reach truly informed decisions.

The compensation system is the problem. Behavior is often motivated by the way people are paid. Today, dealers sell the models they’re allowed (limited by the manufacturer) and salespeople sell easy options or those offering greater personal reward. For the consumer, it’s a dangerous system.

Family Investment Center exists to avoid similar problems in the investment industry. We don’t earn sales commissions or transaction fees. We help clients choose between thousands of investment options (no captive funds); there’s no financial incentive to recommend one choice over another. Our financial rewards are tied directly to long-term customer satisfaction.

Why you need to invest

2011-07-05T14:25:00.002-05:00

Dan Danford, Founder and Chief Executive Officer of Family Investment Center, takes a "back to basics" financial advice approach with this week's episode of Money Made Easy.

Dan is frequently approached by people wanting to know the difference between savings and investing. In this video, he explains three reasons to invest and why savings alone will not allow you to meet your financial objectives.

8 things to consider before retiring

2011-06-30T12:08:00.008-05:00

Here's a great article from MSN Money that provides a general checklist of items to review before making the move. These include:

1) Work-retirement tradeoff
2) Longevity and retirement
3) International investments
4) The U.S. dollar
5) Volatility
6) Glide path
7) Higher medical expenses
8) Income spigots

Click here to read the full article.

2011-06-29T14:48:00.003-05:00

Profits rising, stocks falling

2011-06-23T16:07:00.005-05:00

It's always nice to read some good news about the stock market and economy. Click the following link for the full Bloomberg article: "Stocks Cheapest in 26 Years as S&P 500 Falls, Profit Rises"

"What This Country Needs Is a Good 5% CPI"

2011-06-20T09:51:00.003-05:00

Perhaps what this economy needs is a "serious dose of inflation"? Click here to read the full article from the Wall Street Journal.

How to save money when in debt

2011-06-15T15:17:00.005-05:00

Dan Danford, Founder and Chief Executive Officer of Family Investment Center, takes a "back to basics" financial advice approach with this week's episode of Money Made Easy.

Danford said he is frequently approached with questions about savings from people faced with a mountain of debt or divorced dads looking for financial advice on divorce.

A common question he hears is:

"Why even bother to save at all? It seems like I’ll never be able to get ahead anyway, so why should I even try?"

Danford says that saving and spending habits have more to do with personal discipline than level of income. He explains different ways you can save, how to use the "Dan Danford eBay test", and more importantly, why you need to save money.

How fear can ruin your retirement

2011-06-08T16:11:00.010-05:00

Commentary on MSN Money article
By Laura Price, Investment Advisor at Family Investment Center

Click here to read MSN's original article.

Uncertainty about the future, fear of poverty, lack of confidence in their investing abilities and distrust of the financial services industry were four of the most common feelings expressed…

A common mentality is that after years of hard work and diligent saving, retirement is the time to “live it up” and spend the money you’ve worked so hard to preserve. And while this is true to a point, the sad fact is: budgeting is still hugely important in retirement. I’m friends with a couple who bought a new RV and boat and began traveling as soon as they hit retirement. They had saved up a nice nest egg and wanted to start spending it immediately. Four years into retirement, their IRAs had been sucked dry. They never feared poverty. They never even saw it coming.

Few people are fully confident in their investing abilities. And of those few, only some are actually competent investors. The do-it-yourself model has produced undesirable results for many. But if you hire someone to help, who do you hire? A broker? An independent advisor? A friend or relative that claims to know all about investing? Then once you hire them, what’s a fair amount of compensation? Will they trade excessively? Will your portfolio receive individual attention?

You know the old saying, “No one knows what the future holds.” It’s true. And whether you’re starting your first job or already in retirement, it’s critical that we take the right steps now to protect ourselves from what may happen in the future.

One 66-year-old retiree quoted in the report said he is "having night sweats now. I'm really concerned about having enough. You never know how long you'll live and how much you'll need."

I’m only 25, but from time to time (admittedly more often than I should), I get panicky over money. My dad, bless him, is often the one I go to for sympathy, and he is always quick to remind me that “it’s only money.” Easy for us to say as we’re years from retirement, huh? But let’s be honest: no matter what our age and employment circumstances are, it’s not worth getting sick over. After all, getting sick is expensive, too! Luckily there are folks available to help in the meantime. You still need to stay informed and aware of your investments and overall financial health, but hiring the right team of professionals removes a huge burden, which will help you sleep at night.

Said one 60-year-old about his investing uncertainty: "Trying to shift stuff around at our age is scary. . . . If you make a mistake, we're in a cardboard box eating dog food. I don't have 20 years anymore."

A good investment advisor will regularly review your portfolio and, in most cases, make only gradual changes toward a more conservative portfolio over time. Drastic changes to a portfolio can have drastic consequences. For example, when the economy tanked in the late 2000s, many investors made the mistake of liquidating their portfolios when the Dow was at its lowest, worried that they would lose everything if they held tight. When the market had jumped back up enough that they felt comfortable to reenter, they obviously paid much higher prices. Though still recovering, those who rode the wave through the recession are way ahead of their counterparts who had bailed out of fear and uncertainty. Emotions are powerful things, and when it comes to investing, it can be dangerous to let emotions get the best of you.

One 63-year-old said, "If I trusted an adviser, then I'm always wary because I know that they are out to make money. . . . I don't trust them handling my money."

This is where Family Investment Center is different. We actually DO care about our clients. We’re often called “nerds” because we’re genuinely interested in economics, investments, and finance and want to share that knowledge and expertise to help people. If we weren’t helping people, it would all be a waste.

“Yes,” you say, “but you’re a business.” That’s true. But with our fee-only structure, we have direct incentive to help you grow your accounts. So when you’re paying us a small percentage of your portfolio every year, that means that when YOU make more money, WE make more money. Plain and simple.

In a world where we’re constantly bombarded with news of scams in the securities industry, it’s important to stay cautious. There are various safety mechanisms available to investors, such as third-party account statements, custodial insurance, and so on. Bernie Madoff operated outside the rules and got away with it for a while. Ponzi schemes thrive when investors don’t keep their eye on these types of things. For goodness sake, if you don’t trust your advisor, switch. You need to feel comfortable with the person you’ve hired to look after your money.

Lessons from the wealthy

2011-06-07T09:14:00.007-05:00

By Dan Danford, Founder and CEO of Family Investment Center

We often hear that “the rich keep getting richer,” and that’s a common refrain in America. I usually enter this fray by noting that the “educated” keep getting richer; and that the best economic solution seems to be further education.

This is particularly true of financial education. I’ve been managing money since 1984, and I’ve noticed some important gaps in the typical family’s financial knowledge. Simply, wealthy people behave differently, and we can learn some important lessons from them:

The stock market isn’t a casino. Many middle-class people think it is. It’s true, buying a stock is risky. Buying many stocks, though, is prudent. Millionaires own stocks, but they aren’t frequent traders. When Drs. Tom Stanley and Phil Danko wrote The Millionaire Next Door (Longstreet Press, 1996), they discovered that fewer than one percent of interviewed millionaires traded stocks on a daily basis. Another one percent traded on a weekly basis. In fact, over forty percent hadn’t traded a single stock in the year prior to interview! Clearly, millionaires were investors, not gamblers.

The heart of wealth management is the idea of thoughtful diversification. This scientific basis for portfolio theory won a 1990 Nobel Prize in Economics (several, actually). In essence, risk is reduced and performance enhanced by owning a wide variety of investments. There’s a lot more to it, but that’s the basic concept.

Many so-called “safe” options collapse to genuine evaluation. Low interest rates, inflation, and taxes eat much of the gain from bank deposits or government bonds. Comfort comes at a very high price, and a bit of education about stocks and diversification can put your mind at ease.

Not all debt is bad. “Neither a borrower or lender be,” Shakespeare advised. And it’s become a sort of holy middle-class mantra. Despite that timeless advice, there are different kinds of debt, and not all debt is bad. Borrowing for consumer goods is almost always bad. Borrowing to buy a nice house in a nice neighborhood is almost always good.

Many quality advisors recommend against paying off a mortgage early, and there is solid evidence supporting this approach. Nevertheless, many middle class folks want to “pay off the house” as quickly as possible.

They think they’re doing the right thing, but money for paying down a mortgage comes from somewhere, and it’s no longer available to invest. That can be counterproductive. Our wealthy friends understand the difference between good and bad debt and they aren’t in a big hurry to pay off the mortgage.

There’s a distinction between price and value. In The Millionaire Mind (2000, Andrews-McNeel Publishing, his follow-up to The Millionaire Next Door), Dr. Tom Stanley discovered that millionaires tend to look at products on a long-term basis. They bought shoes or furniture based on the lifetime costs of ownership. Quality shoes or furniture cost more, but last much longer. Briefly, millionaires tend to focus on value instead of price.

I once worked with a fellow who proved this folly every three years. We were on the same purchase cycle with new automobiles. I’d carefully research various options, then choose my car with an eye towards resale value. He ignored this methodical approach, looking instead for the “cheapest” deal. We’d spend similar amounts when we finally reached a decision.

Three years later, I always got more money for my used car. And he never understood why. Instead, he’d launch right back into the very same pathetic cycle. Destructive buying habits are everywhere. In creating wealth, price is important, but value is more important.

Time is money. I used to be Moderator of our local church. Meetings just drove me crazy. I’d create agendas, monitor the time, and cancel unnecessary meetings. For me, a meeting is an avenue towards reaching some goal. Get together, have discussion, accomplish some objective, adjourn.

Well. It turns out that other people see church meetings in a different light. They’re social gatherings. The point of the meeting is – well, to meet. They get satisfaction from the activity, not necessarily the accomplishments.

Many people get similar satisfaction from investment chores. They drive to or telephone various banks about new rates on CDs. They study stocks, bonds, and mutual funds. They spend hours assembling, then computing annual tax information. A lot of very satisfying activity.

But, not necessarily productive activity. Who says that hours of amateur study generate better investment returns? Can a computer really replace a qualified and knowledgeable accountant? Will an extra quarter percent at the bank justify a tankful of gas or hour of time?

Do-it-yourself isn’t the best choice. “No one cares about my money as much as I do.” How many times have you heard that? It’s true, no one does care as much about your money.

But caring about your money isn’t always good enough. With rare exceptions, a good advisor knows more about your money than you do. I’ve spent a career studying financial issues and helping people manage investments. I’ve passed licensing exams and met professional credentialing standards. I have a graduate degree in business and I’ve started two successful investment companies. Modestly, I have insights and understandings my clients can’t have.

Further, caring about something isn’t always the best way to face decisions. It can be very hard to press a loved one to do a necessary, but painful, thing. We know how difficult it can be to use self-discipline – even when our own health is involved. The fact is, caring too much can be every bit as bad as caring too little.

Wealthy people hire advisors because it’s good business. It helps to have a knowledgeable, objective professional by your side. The cost is far less than the value. By definition, that’s a wise family choice. Plain and simple.

No apologies: we eliminate pain for our clients

2011-06-01T08:35:00.010-05:00

By Dan Danford, Founder and CEO of Family Investment Center

You’ll hear no apologies from me.

I’m extremely proud of what we do for our clients. We bring experience, expertise, objectivity, and compassion to each client. They don’t always see (or appreciate) everything we do for them, but that’s okay. Much like physicians, we can stop it from hurting, even if our clients don’t understand all the intricacies of modern medicine.

In its simplest form, that’s precisely what we do. We stop it from hurting. Worried about retirement? I’ll show how to pay for it. Worried about sending children or grandchildren to college? I know the best ways to save and pay for education. Worried about the high costs of long-term care or medical expenses? I have some helpful ideas about those, too.

Are you sleepless because your investment portfolio is too volatile? I can minimize risks without losing solid investment performance. Bothered by a lack of diversification? We know how to fix that.

Are you concerned that you might be paying too much for investment services and/or advice? We have extensive research about fund expenses and costs, including sales loads and distribution fees. In fact, we track over 27,000 different mutual funds or share classes and a wide variety of other common investments. We absolutely know what things cost.

Truly, the most valuable service we provide is comfort; that is, the ability to quit worrying and fussing with finance and investments. As fiduciaries, we have a legal obligation to work for each client’s best interest. Decisions we reach for and with clients reduce their decision-making burden.

Sometimes people arrive at our door with a history of painful investment relationships. These people are understandably skittish about accepting our help. But the skittishness evaporates when they realize that we are working exclusively for them. Our commission-free posture puts their interest first, and it’s both unique and welcome in the marketplace.

That may seem simple, but it’s not small. People today are inundated with noise. It comes from a variety of sources and features a lot of contradictory data. Much of it comes with a distinct point of view that may or may not suit their situation. Since we work with hundreds of clients with varied ailments and circumstances, we sort through this distracting clutter.

Could folks research and implement healthy solutions by themselves? Sure. But even after considerable study, they can’t bring our experience, expertise, and knowledge of diverse situations to bear on an issue. We do things for them that they simply can’t duplicate on their own.

As advisors, part of our challenge is structural. What we do is both very simple - and at the very same time - quite complex. Clients can easily see the simple things while the subtleties often hide in distant shadows. Sometimes the most critical issues (risks, costs, performance claims) are hardest to see. Distant benefits might seem hazy.

This clouded view is enhanced by the media. Most personal finance writers support the notion that investors should “go it alone.” And I’ll concur that most people are capable of basic investment and finance decisions. But that’s similar to suggesting that I should change the oil in my cars. That’s inconvenient for me, potentially hazardous, lengthier (including trips to the car parts store and a place to recycle used oil), and – ultimately – more expensive. Pain. Pain. Pain. Pain. Why would I choose to change my own oil?

Truthfully, people I talk with simply don’t want to do it themselves. When that’s the case, the only relevant issue is how to find a competent advisor who offers both comfort and value. If we can answer those two needs, our clients and our firm will prosper. It’s a healthy, beneficial relationship for both.

And, modestly, we provide highly skilled services for an exceptionally reasonable price. Comparatively speaking, we charge very little for professional services. Attorneys? They charge hundreds of dollars per hour, and up to thirty percent of a settlement or awarded damages. Architects? They usually bill fifteen percent of a project’s total cost. Realtors®? A normal commission is six or seven percent of a property’s selling price. Our modest investment fees pale by comparison.

Professional insight adds tangible value. Specialized knowledge about IRA withdrawal strategies might save $20,000 in taxes, or add $50,000 in tax-deferred growth. Is a few hundred (or even a few thousand) dollars a fair price for that reserve of knowledge? Think how much suffering that much money might save thirty years down the road. Similar examples abound.

That’s it. We eliminate pain for a fair and reasonable price. A big part of our job is to know about products, fees, strategies, and options in the marketplace. Routine tools and skills we employ are analgesics for our client’s pain. We ease decision-making and simplify life. We’re worth every penny.

How Co-Signing Affects Credit Scores

2011-05-26T13:57:00.011-05:00

Dan Danford, Founder and Chief Executive Officer of Family Investment Center, answers this personal finance question:

"My son wants to purchase a car and have me co-sign for it. I have an average credit score so I don't think I would be rejected as a co-signer, but will the fact that I am co-signing for my son affect my credit score in any way?"

Danford explains that while co-signing may not affect your credit score, it may affect your ability to get loans in the future.

Remember that loaning money or co-signing is a business transaction. Treat it as such.

How are your money beliefs affecting your net worth?

2011-05-20T09:36:00.008-05:00

How are your money beliefs affecting your net worth? We all view money a little differently, and whether we worship money, avoid it, or associate it with status could determine how much of it we have.

Click here to read Dr. Brad Klontz's "Your Money Beliefs Could Be Hurting Your Bottom Line."

College Costs: Tuition Is Just the Beginning

2011-05-12T08:47:00.000-05:00

The Wall Street Journal's Emily Blazer discusses costs you may not typically consider when budgeting for your child's college education. Food, clothing, transportation, extracirricular activities, storage, and many other miscellaneous expenses can add up! Click here to read the full article.

When Should You Retire?

2011-05-09T13:04:00.002-05:00

Dan Danford, MBA, CRSP,Chief Executive Officer at Family Investment Center wrote an article entitled Deciding When to Retire for the April issue of Medical Economics.

To read the article, click here.

Upside Down Home Value

2011-05-04T12:12:00.001-05:00

Financial adviser Dan Danford answers an unfortunately common personal finance question given the state of today's economy:

"I imagine I'm like a lot of people in today's economy with my marital home being upside down in value. Is there a way to refinance my house even though the value is upside down?"

Danford, MBA, CRSP, of Family Investment Center, explains refinancing a home and mortgage that is upside down in value.

Don't forget to catch up with Family Investment Center on our Twitter and our Facebook page.

2011-04-27T16:00:00.002-05:00

In edition to the tweets, blogs, and videos Dan Danford, CRSP Principal / Chief Executive Officer at Family Investment Center, reports on about finance. He also contributes to magazines like Medical Economics. This week's article is called Deciding When To Retire. Here, Dan answers this retirement question from a reader:

I was planning to retire from my practice at 65, but now the age at which one can collect full Social Security benefits has increased, should I postpone my retirement?

To read Dan's answer to this question, click here.

Women of Exellence Nominates Elaine Coder & FIC

2011-04-26T14:22:00.007-05:00

The Women of Excellence Awards is an event sponsored by the YWCA that recognizes a select group of successful women in the St. Joseph area. Last week the YWCA announced their 2011 nominations. Family Investment Center has been nominated for the Employer of Excellence category and Elaine Coder, Director of Client Services, has been nominated for the Woman in the Workplace category. The winners will be announced on Thursday, June 16th at Civic Arena. Good luck Elaine and congratulations to all of the nominees!

To read more about the 2011 Women of Excellence Awards, click here.

Brief Investment Message‏ from Jason White

2011-04-25T14:15:00.002-05:00

Friends,

I hope this message finds you well! With the NHL hockey playoffs at full throttle, I felt compelled to take a stab at a hockey analogy. Our investment advisory services team works relentlessly on our clients' behalf to try and skate to where the puck is going to be, rather than where it is right now. Such a principle keeps us grounded in our fundamental diversified long-term approach, even when media screeching reaches a fevered crescendo...

A Bit of News:

Recently, I was invited to be a participant in a round table panel discussion on fixed income investing at Kansas City's Interncontinental Hotel just north of the Plaza on Ward Parkway. The nearly two-hour discussion was really fascinating, and I enjoyed sharing my perspective as well as hearing from peers on investment strategy, the economy, interest rates and many other topics.

What I took away from the meeting was further validation about what we believe at FIC, and the way we go about building our customized client portfolios, our manager selection process, and our evaluation of talent.

On behalf of our entire Family Investment Center team, we are very grateful to be blessed with so many wonderful friends, and from all of us, please have a safe and peaceful Easter celebration.
Yours truly,

Jason T. White, Ph.D.
Director of Investments Family Investment Center

For an audio version of this text, click here

Dan Explains Tax Refunds

2011-04-20T16:30:00.001-05:00

With the deadline passed for having your taxes filed, financial adviser Dan Danford answers this timely tax question about how tax refunds work:

"Some years I owe money to the IRS, some years I get money refunded, and the amounts always vary. Is there a way to get a consistent refund or have an idea on how much I will receive or owe? If you live on a tight budget it's difficult when you receive an unexpected and unknown expense, such as owing additional taxes."

Danford, MBA, CRSP, of Family Investment Center, says while the tax refund process is easy to understand, there are many complicated factors.

Britt, Bell Study Financial Resiliency of Soldiers

2011-04-19T14:07:00.004-05:00

Mary Bell is one of the students in Dan's personal finance Ph.D. cohort, and Dr. Sonya Britt is one of his instructors. This new study is pretty important for a lot of reasons, but national security is one of them.

Read their article: Britt, Bell study financial resiliency of soldiers.

What If You Make Tax Mistakes?

2011-04-13T15:38:00.001-05:00

In this week's Money Made Easy, financial adviser Dan Danford answers a last-minute tax question:

"I'm always worried I'm doing the calculations wrong on my tax return because it's confusing to me. What should I do if I make a mistake on my taxes? Does it vary depending on the type of mistake I make?"

Danford, MBA, CRSP, of Family Investment Center, explains how the IRS treats inaccuracies on your taxes and what you need to do to correct any mistakes.

Philosophy

2011-04-13T10:47:00.002-05:00

I was thinking about an old friend and our very different circumstances today. Then it struck me. Over the past thirty years, Chris and I endured some unpleasant financial times in our effort to accomplish larger goals. On the other hand, my friend – knowingly or unknowingly - gave up some things he might have enjoyed today in order to avoid sacrifice along the way. The irony is how little these two paths differed, and, yet, how much they magnify financial results.

Small things produce large results. It’s the cumulative value of modest amounts over long periods. I heard an industry colleague profess that one pizza a week equates into $250,000 by retirement! From a lifestyle perspective, trading cars every three years isn’t a whole lot different than trading every two years. But the cumulative value of that change equals tens of thousands of dollars over several decades.

The same thing can be said for restaurant dining or rounds of golf or an extra thirty minutes of work each day. How much difference can any of these make in our quality of life? Cut back one pizza a week or skip the foursome on the fifth Saturday each month when it rolls around. Start work at 7:30 instead of 8:00 and see how much more productive (time is money) you can be.

Obviously, none of these little things are earth-shattering in and of themselves. Still, the differences they make are worthy of note. A few sacrifices today can make a huge difference later on!

- By Dan Danford, MBA, CRSP® at Family Investment Center

Don't forget to "like" us on Facebook and "follow" us on Twitter for news and updates.

Bank Certificates Trade Performance for Certainty

2011-04-11T16:02:00.006-05:00

Bank Certificates Trade Performance for Certainty
- By Dan Danford, MBA, CRSP®

A fellow visited St. Joseph last January for a job interview. When he arrived back home, he complained to his wife, “I could never live there. It’s always cold and blustery and there wasn’t a speck of green anywhere.” A different man (in several ways) came home from a July conference. “Hot and humid,” he explained, “why, I couldn’t bear that heat without a year-round air conditioner.”

Both men took a limited look at Missouri weather and drew mistaken conclusions. Actually, each explanation contains an element of truth, but either conclusion by itself is completely and totally wrong. By their faulty reasoning, everything depends on when you visit!

I sometimes hear a similar “bank rate” argument; it goes like this: “I could put my money in the bank and make as much as you made me through Family Investment Center.” Or, another way it’s said is “a bank paying two percent a year would have made me more money.” There may be some truth to these statements, but – like our example above - the logic is dangerously flawed.

Here’s why: Banks offer a sure low rate instead of a possible higher one. If you think about it, banks agree to pay two (or three, or four) percent only because they’re certain they can invest the deposits to earn more. Only, with the bank, they get to keep the difference as profit! I spent fifteen years in banking, and I can assure you this is true.

They know something that many customers don’t: guaranteed bank rates are short-term (usually forty-eight months or less), while most longer investments grow at a steeper pace. In essence, banks pay customers a guaranteed low rate, while using the deposits for more rewarding longer-term investments.

Bank accounts and certificates don’t fluctuate in value because their principal and interest is guaranteed. Balances grow at a very slow predictable rate. Common stocks or longer-term government bonds change value on a daily basis, because there’s a vibrant market for them.
In order to attract investors, these longer-term investments must offer higher potential rewards - it’s a basic foundation of economics. Generally, things that fluctuate will reward long-term investors by compounding at a higher rate.

So, high quality client portfolios containing stocks, bonds, or other kinds of investments will surely endure some slower times. Because of these fluctuations, there will always be periods of time – usually short-term - when bank deposits outperform them.

Banks look best when other investments fluctuate downward, and worst when portfolios explode upwards (customers rarely complain about this, though!). Like our earlier weather watchers, though, neither of these circumstances is really representative of long-term performance.

In most types of solid investing, there will be limited periods where a bank would have done better. That’s not the whole story, though, and bank customers trade performance for certainty. It’s an expensive choice to make.

7 Things You Should Never Say to Your Kids About Money

2011-04-08T15:01:00.003-05:00

Here's a link to an article that was published yesterday on Yahoo Finance. It gives 7 ways to avoid raising financially dysfunctional kids.

7 Things You Should Never Say to Your Kids About Money

Here's another blog Dan wrote on this topic.

What are you teaching your children about money?

Family Investment Center Referrals

2011-04-06T15:04:00.003-05:00

Our business is fueled by referrals. Various studies show that investment management services are chosen on the basis of friendship. Not necessarily friendship with the manager, but people generally choose managers recommended by friends and associates. Even among the wealthiest households, these informal referrals carry tremendous impact.

Referrals are even more important for me because I don’t like to sell. I’m at my best when someone approaches me to help solve a problem or organize investments. I don’t persuade people to buy our services; Instead, I show what we do and they decide whether I can help. If I can, great. If not, that’s okay, too.

Any referral is a nice compliment. It’s one person telling another that they know me, they like me, and – most importantly – they trust me. In a sense, it is a Stamp of Approval on my professional competence issued by the very best source: a trusted friend or respected colleague.
The ultimate compliment is a referral to someone’s parent. As adults, most of us worry about our parents. We want to help (if they need it) but we respect their independence and privacy. We are fairly protective and particularly cautious in recommending help, especially financial help. In brief, the standard of trust is exceedingly high.

Friends are always good to me and I help many parents and in-laws. But, this case was especially gratifying because the family genuinely needed assistance. We helped them identify assets, organize record keeping, plan their estate, and consolidate a variety of bank and investment accounts. They are such nice people and they were so grateful for my help.

It was touching. Their accountant son introduced us and I consider it the highest compliment I can get. It’s precisely why we started Family Investment Center.

Family Net Worth

2011-04-04T14:43:00.006-05:00

A family statement of net worth (balance sheet) is a powerful financial tool. A statement is easy to compute, updated quickly, and offers a great way to evaluate decisions.

First, to build your family’s statement, start by listing the honest resale value of all things you own. List all houses, cars, boats, household goods (the national average for families is around $30,000), collectibles, and anything else of value. Next, add financial assets. Include bank, brokerage, or mutual fund accounts. Include IRA accounts or retirement plans from work. Include the cash surrender value of insurance policies. In short, this list should include everything you own with the current value.

The second half is -- hopefully -- a much shorter list. Here, list everything you owe with today’s payoff value. Start with the mortgage. Then, add any car, student, or consumer loans. List the balances on credit cards or money you owe family members. Don’t forget loans on insurance policies or money owed to a company retirement plan.

Simply, Family Net Worth (FNW) is the difference between what you own and what you owe. It’s the liquidation value of your financial life. If you sold and liquidated everything you own and paid off all debts, what would be left in your wallet?

Knowing this number helps you financially. It’s a running tally of financial progress. Update the numbers occasionally and see if your FNW is rising or falling. A rising number indicates progress; one that slips requires attention. (Of course, there are life stages where FNW is expected to fall -- college years for children is one.)

It’s also a spectacular decision-making tool. Say, you’re trying to decide whether to replace a car or start a mutual fund account. Consider what will happen to your FNW five years from now. Estimate the future worth of the car and the mutual fund in 2004. Does this help decide? Similar processes can help decide between two cars (which will have better resale value?) and houses (ditto).

Not every family decision is reached on the basis of finance. But, finance should be considered as part of any major decision. Understanding FNW helps all of us make better choices.

Lipper Fund Awards

2011-04-04T14:25:00.004-05:00

For the second consecutive year, Lipper selected the Scout International Fund (UMBWX) as Best International Large-Cap Growth Fund. The award was based on consistent return among 197 funds evaluated on risk-adjusted returns over the three-year period ending December 31, 2010.

"In a field as competitive as International Large-Cap Growth funds, Scout International didn't rest after last year's win - they added to it."

- Jeff Tjornehoj, head of Lipper Americas Research

"Recognition like this simply affirms our selection process. Not every manager wins an award, but they are proven, consistent, and reasonably-priced. It's a good combination and clients enjoy the benefits."

- Dan Danford, CEO of Family Investment Center

UMBWX is a core holding in many of our clients' portfolios. Family Investment Center has no financial relationship with Scout Funds. One key service we provide is researching the mutual fund universe to help clients choose top fund managers for their portfolios. This type of recognition just confirms our selection processes.

The advisors at Family Investment Center specialize in managing large portfolios ($100,000 or more) of traditional investments. They do, however, advise investors on a broad range of wealth management services. Family Investment Center is a commission-free investment advisory firm registered with the SEC. More about this unique firm can be found at http://www.familyinvestmentcenter.com/, on the firm's blog at http://www.familyinvestmentcenter.blogspot.com/, or on Twitter at www.twitter.com/family_finances. Visit them at 3805 Beck Road, St. Joseph, MO 64506 or call (816) 233-4100.

Tax Rule Changes

2011-03-29T16:30:00.003-05:00

In this week's Money Made Easy, financial adviser Dan Danford answers this financial question from a viewer: I think tax rules change from year to year, so what are the big tax changes I should be aware of this year before filing?

Danford, MBA, CRSP, of Family Investment Center, says the real way to save money on taxes isn't really about how you file your tax return, but how you structure your financial life as you are living it.

Suze Orman 'The Money Class'

2011-03-24T16:35:00.009-05:00

By Ebonee Bright

Suze Orman is a two-time Emmy Award-winning television host, New York Times mega bestselling author, magazine and online columnist, writer/producer, and one of the top motivational speakers in the world today. Orman is undeniably America’s most recognized expert on personal finance.

Laura, Elaine and I had the opportunity to see Suze live this Tuesday. Here are 4 essential tips from the Money Class:

1. Live below your means, but within your needs
2. The pleasure of saving equals the pleasure of spending
3. Focus on gains, not losses

In this book Orman dismisses the old American Dream stating, "It used to be more, bigger, best. Everybody in America used to define themselves by all these things they had around them. And all of a sudden it came tumbling down. So the old American dream has died, and that is a good thing."

Orman redefines the American Dream stating that

"It's a dream where you actually get more pleasure out of saving than you do spending. It's a dream where you live below your means but within your needs. You are not spending every penny, you are not impressing people. You are living a life where you can sleep at night and you are actually happy."

However, like all gurus, Suze makes blanket statements that may not apply to everyone, like Orman dismissing the need for investment advisors.

Laura Price, Investment Advisor at Family Investment Center adds,

"When a member of the audience asked her how to find the best financial advisor, Suze responded, 'Look in the mirror.' I agree that we can and SHOULD educate ourselves about finances. But let’s face it – some people could read a thousand books about investments and financial planning and still not feel confident they’re managing their money properly. This is why they hire professionals – people who spend each day researching, evaluating clients’ portfolios, and reading about economic trends, new fund managers, and how a natural disaster in Japan or political turmoil in the Middle East might affect investments stateside. Most people don’t have that kind of time or energy to devote. We do."

Elaine Coder, Director of Client Services at Family Investment Center states,

"When you hire someone to help manage your portfolio, you communicate with them and stay involved. By understanding what your advisor is doing for you and how you benefit from institutional pricing you will be able to choose the right advisor. People want to spend their time doing what they’re best at and enjoy the most. Most of us would rather pay someone to do what they do best. I could learn to change oil in my car and check other things under the hood but I’d rather pay someone else who knows a lot more about it to get it done right and save me time and frustration."

Here is an excerpt from the book
Here is an article entitled the 10 important lessons from ‘The Money Class’

Consolidating Family Investments

2011-03-22T16:02:00.002-05:00

Look for ways to consolidate family investments. I know you’ve heard the conventional wisdom about avoiding one basket for all your “eggs.” Yet, it’s easier than ever to adequately diversify investments within one account or institution. We routinely diversify accounts – some with extremely high balances – in ways to protect our clients. As a safety measure, we select diverse portfolio managers, market sectors, and institutions (for bank deposits).

Consolidation pays another high dividend, too. You receive just one set of statements each month and one set of tax reports each January. Later this month, when you are deluged with statements (or waiting for a straggling 1099), think how nice it would be to have just one source for all these documents!

The last benefit of consolidation is most important. By combining accounts, you present a much fuller image of overall finances. Whether you hire a professional advisor or manage your own investments, it’s easier to devise, implement, and evaluate strategies when you look at the big picture. Which account types are best for taxable investments? Which are best for tax-free? Is there a good way to organize retirement distributions from IRA, annuity, or pension accounts?

Our goal for clients is fairly simple. We work with them to organize and supervise investments. In my experience, families do better financially when they simplify all investment processes. Consolidation is one good (and easy) way to accomplish this goal.

Money Creates Freedom

2011-03-22T15:54:00.000-05:00

I ran across the following paragraph in a magazine article about a book. It opened my eyes:

“Living rich requires freedom. Every dream of a rich life is based on the idea that you can pursue your interests without significant compromise. Living rich is having the freedom to live on the beach, to explore the world, to create art for art’s sake, to spend your life serving your fellow man, to seek internal peace.”
-Stephen M. Pollan with Mark Levine, Live Rich, Harper-Business, New York.

Isn’t this freedom an absolute truth? People don’t crave money; we crave freedom. Our personal picture of wealth isn’t leisure or sloth. Instead, we seek freedom to pursue things that mean a lot to us (including, occasionally, leisure). Good things, mostly for our family and friends.
To me, money is just a tool that helps us achieve these important goals, Used properly, money creates freedom.

Key Questions Mutual Fund Investors Should Ask

2011-03-21T15:55:00.002-05:00

1. What are the fund’s expenses? There is a significant correlation between fund expenses and long-term returns. The internal expense ratio is a compilation of various management and portfolio expenses. Different kinds of funds may cost more or less to operate. But, the fund you pick should be at or below the average for funds of its type.

2. What is the turnover rate? High turnover rates (more trading in the portfolio) are expensive. This, in turn, increases the expense ratio. Besides that, stocks or bonds sold at a gain may generate a taxable distribution later in the year. Shareholders prefer not to pay taxes on these capital gains distributions, so funds with lower turnover are popular for taxable accounts.

3. What is the investment style? Performance tends to follow sectors. So, when small cap value funds prosper (not lately), most funds managed in this style will prosper, too. It helps to know each fund’s style in building a diversified portfolio. Funds that drift often arrive at a hot sector too late in the game.

4. Who manages the fund? Not the fund family, but the actual portfolio manager. How much experience do they have? Are they responsible for past performance, or has that portfolio manager moved on to better things?

5. What is the fund’s policy towards holding cash? Cash (in the form of short-term government bonds) is a drag on stock portfolio performance in rising markets. It also provides a cushion when they fall. Who should make strategic cash calls? In general, I’d rather have all stocks in the fund and hold cash (if any) on my own.

6. What are the returns? Compare fund returns with similar investments and time frames. Look towards other funds with similar objectives before deciding whether to buy or sell. Seek good longer-term performance.

No one knows what the future holds, so every investment choice, in that sense, is a guess. But we can stack the odds in our favor by making reasoned, informed, choices.

Tax Filing Status

2011-03-21T15:52:00.001-05:00

In this week's Money Made Easy, financial adviser Dan Danford answers this financial question from a viewer:

What qualifies someone for "head of household" tax status? Do you have to claim a child as a dependent to qualify? What if you don’t have children but are the primary wage earner in a cohabitating relationship?

Danford, MBA, CRSP, of Family Investment Center, explains the difference between tax filing statuses and the rules required to qualify as a "head of household."

Empower Your Teen!

2011-03-18T15:26:00.020-05:00

KPVI News 6 (Pocatello, Idaho) recently wrote a story about the importance of discussing money with teenagers. They interviewed Dr. Brad Klontz, a financial psychologist who works with H&R Block Dollars & Sense, who suggested that parents start with five tactics:

1) Fight the urge to give advice; just listen.

2) If at first they don't succeed... let them try, try again.

3) Tell your teen to think before buying.

4) Model healthy financial behaviors your teen can follow.

5) Talk to your teen's school about efforts to reinforce financial lessons.

Click here to read the full story.

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Keep in touch with your Family!

2011-03-16T13:21:00.018-05:00

Schwab Makes Fortune's "Most Admired" List‏

2011-03-10T15:58:00.003-06:00

We get excited to share good news about the firms and people serving our clients. Charles Schwab was recently recognized by FORTUNE magazine as the #1 securities company on its list of "World's Most Admired Companies." Click here to view the full list.

"We're proud of the recognition our peers and other business leaders provided in this year's listing. We know how important the elements of the list are, and ranking number one for our industry on five of the nine categories, including innovation, use of corporate assets, social responsibility, financial soundness and quality of products was rewarding. Our success as a business depends on our clients' trust and confidence, and these factors are crucial in today's environment to building and maintaining that trust."

- Walt Bettinger, Schwab President and CEO

Family Investment Center has no financial relationship with Schwab, but they've been helping many of our clients since 1998. In fact, our clients hold nearly $70 million there. (We recently shot a brief video on client insurance and safety which discusses Schwab's $100,000,000 per account insurance coverage. Watch it here.) One key service we provide is helping clients choose top providers for their investment needs. This type of recognition just confirms our selection processes.

What are you teaching your children about money?

2011-03-10T15:34:00.004-06:00

Never tell children that their parents are wealthy. Kids who grow up thinking their parents are wealthy often learn to live like they are.

Teach your children discipline and frugality. These are values held by most financially successful adults. Yet, kids can’t learn them on their own. Who will teach them if you don’t?

Children shouldn’t realize you are affluent until after they have established a mature, disciplined, and adult lifestyle and profession. It’s better that they learn some things on their own.

Minimize discussions about inheritances or gifts. Parents sometimes forget these talks, but children don’t. Many years later, these seeds can grow into large family conflicts.

Never give gifts to adult children as part of a negotiation strategy. Bribes usually backfire with toddlers – and adults too. No one likes gifts with strings attached.

Stay out of your adult children’s family matters. Adults make their own choices, and you should let them. All children resent interference.

Don’t compete with your children. Adult children sometimes hold different financial values than parents. Money may be less important to them than other things – education, status, happiness. Let them be.

Remember that children are individuals. Don’t try to equalize nature’s inequality with money. It rarely works, and siblings resent it. Respect each child separately.

Emphasize achievements, no matter how small. One parent taught his son, “I’m not impressed by what people own. But I’m impressed with what they achieve.” Guess what? The son achieved a lot, including financial success!

Tell children that there are a lot of things more valuable than money. Most of us know this, but few emphasize it. Yet, it’s one of life’s most important lessons. How can anyone be happy without this knowledge?

I grapple with these issues regularly. All of us learn early financial values from our parents (even by default). Most of my clients learned both good and bad at the “family school.” Sadly, some never overcome bad lessons.

What are you teaching your children about money?

Cost-Benefit Analysis

2011-03-09T16:04:00.001-06:00

Financial adviser Dan Danford answers this financial question from a viewer:

I'm trying to learn how to invest and I've heard that I need to do a cost-benefit analysis of my options. Could you explain this more and how I'm supposed to use it? Is there a formula I should be looking at?

Danford, MBA, CRSP, of Family Investment Center, explains how to perform a proper cost-benefit analysis and the importance of knowing what you are trying to accomplish financially.

Financial Advisors

2011-03-02T10:31:00.002-06:00

In this week's Money Made Easy Dan Danford answers this question from a viewer:

"In your previous episodes you have mentioned Dave Ramsey a couple of times. I was wondering who are other financial advisers you really respect and why do you think they are better than the rest of the field?"

Danford MBA CRSP of Family Investment Center shares several of his favorite advisers and what financial advice you can get from each one.

Right to Work on the Move to Missouri?

2011-02-28T15:59:00.006-06:00

As a Finance and Economics student, oftentimes current news affects the direction of our class discussions. A Right to Work law secures the right of employees to decide for themselves whether or not to join or financially support a union. This debate started happening in Wisconsin and since then has moved into Ohio, Minnesota, and Indiana. The Right to Work has been a main news topic and many predict the law will go in effect in Missouri also.

Here are two articles I found on the topic:

This one is from the Wall Street Journal.
This one is from the National Right to Work Committee.

2011-02-25T11:01:00.000-06:00

Families gather around a table to catch up on events of the day. Table Talk is Dan Danford’s way of keeping family and friends informed about Family Investment Center and related topics.

By: Dan Danford, MBA, CRSP of Family Investment Center

One hard thing to understand about investments is how much the environment determines short-term performance. The overall economy, market conditions, interest rates, and/or political factors drive short-term performance far more than most people think.

And, yet, the interaction between these factors isn’t very predictable. I love watching pundits nearing a meeting of the Federal Reserve Open Markets Committee. Some economists predict an interest rate decrease, others an increase. Some say a rate decrease will be good for stock markets, others predict it as negative. Amazingly, 3/4 of these predictions will be dead wrong, and nobody thinks a thing about it … talk about market noise!

There’s powerful research saying that most market noise is useless. That our stock markets constantly ebb and flow, but with a strong upward bias (fueled by corporate pressures to grow). Predicting long-term growth is easy, predicting shorter-term gyrations nearly impossible.

That’s why we don’t “time” the market. Instead, we choose sectors and managers with proven long-term potential. Listen to the late PBS investment guru Louis Rukeyser:

“… in the long run, it doesn’t matter much whether your timing is great or lousy. What matters is that you stay invested. Because the real danger isn’t picking a bad day to invest – it’s missing out on the powerful market surges that come in brief and unpredictable spurts.”

Brief and unpredictable spurts are a problem. If you aren’t there when they happen, you don’t get the rewards. Since spurts are unpredictable, jumping in and out doesn’t work. The lesson is clear, to get solid returns, we need to stay in through tough times.

How To Plan For Retirement

2011-02-23T10:19:00.003-06:00

Danford, MBA, CRSP, of Family Investment Center, explains the need to start increasing your savings now, what type of growth investments you should be utilizing, and the importance of developing an emergency fund.

For more about this topic, click here.

Asking for Student Loan Forgiveness

2011-02-17T16:13:00.000-06:00

I found this article on Business Week about former students asking for student loan forgiveness. Robert Applebaum, a 35-year-old attorney in New York, started a Facebook group in January called "Cancel Student Loan Debt to Stimulate the Economy." The group now has 292,703 members.

Here’s an excerpt from the article:

“Applebaum is one of thousands of graduates struggling with the repercussions of student loans years after graduation. There were nearly $131 billion in outstanding private loans in 2008, according to Mark Kantrowitz, founder of FinAid.org, which tracks the college financial aid industry. In addition, there is $544 billion in outstanding federal loans for fiscal year 2009, up from $502 billion in 2008, according to the Education Dept.”

To read the rest of the article, click here.

Do you have a Facebook?

2011-02-15T15:59:00.003-06:00

I found this article about Facebook I thought was interesting. It seems like every couple months a new facebook feature comes out. Although Facebook’s growth is great for them, it comes at an expense for companies like Google, Yahoo, and Bing. These companies never dreamed they would have to compete with a social networking site. Facebook was for people to create online profiles and connect with one another. But with Facebook constantly integrating new features like web search, email, online gaming, and chat, it’s hard to draw the line at just social networking.

To read the article, click here.

To visit our facebook page, click here.

Aging Population Changes Retirement Planning

2011-02-14T17:01:00.002-06:00

In this article Aging Population Changes Retirement Planning, from Medical Economics Dan Danford, MBA, CRSP of Family Investment Center, answers this financial question from a viewer. "Why would you include a question about parents on a form designed to collect information to begin retirement planning? Aren't most parents gone by the time someone retires?"

To see how Dan responded, click here.

Dad's Divorce: How To Save Money on Taxes

2011-02-09T10:06:00.002-06:00

Dan is a weekly contributor to Dad's Divorce, a web site for men going through the divorce process. The site may have been designed for men, but the advice usually can apply to anyone. This week Dan Danford answers a popular tax season question in this week's edition of Money Made Easy: How do you save money on taxes?

Danford, MBA, CRSP of Family Investment Center, explains the need to understand how the tax system works and how the tax forms work. He also offers tricks to reduce your taxable income without actually earning less money.

For more information on taxes, click here.
For more information on taxes for students, click here.

Dad's Divorce: Explaining Interest Rates

2011-02-03T15:41:00.003-06:00

Dan is a weekly contributor to Dad's Divorce, a web site for men going through the divorce process. The site may have been designed for men, but the advice usually can apply to anyone. In this week's edition of Money Made Easy, host Dan Danford answers this financial question from a viewer: Why are interest rates currently so low and when are they expected to increase again?

Danford, MBA, CRSP of Family Investment Center, offers his financial opinion on the current interest rates and when they might increase again.

Are You Retiring In 2011?

2011-01-28T16:20:00.003-06:00

Retiring in 2011? What you need to know.
Staying flexible in retirement planning will help keep you fiscally fit.

To read more, click HERE.

State of the Union

2011-01-27T15:44:00.002-06:00

Did you get a chance to watch the State of the Union?
Here it is if you missed it.

Dad's Divorce: Debt Consolidation

2011-01-20T10:56:00.001-06:00

Financial adviser Dan Danford answers this financial question in today's edition of Money Made Easy: Can you explain debt consolidation services and how they work? I'm leery of all these ads I'm seeing about debt relief because they sound too good to be true.

Danford, MBA, CRSP, of Family Investment Center, offers his financial advice on debt consolidation along with showing an easy to understand chart that shows why a consolidation loan may be right for you.

Dad's Divorce: Choose a Fixed or Adjustable Rate Mortgage?

2011-01-20T10:53:00.002-06:00

In this edition of Money Made Easy, Dan Danford answers this financial question: Which mortgage rate is better, a fixed rate mortgage or an adjustable rate mortgage?

Danford, MBA, CRSP, of Family Investment Center, offers his financial advice on the benefits and disadvantages of both fixed and adjustable rate mortgages.

These Are a Few of My Favorite Things

2011-01-18T15:57:00.012-06:00

Observation from Investing Might Help Chiefs Football

I suffered through the Chiefs playoff game last Sunday. I’ve learned my hard lessons about cold-weather-football games, and keep an array of suitable boots and clothing. We even showed up early and did a modest tailgate. I tell people that the usual Chiefs season starts with optimism, and ends with disappointment; this year was no different.

Like any long-time Chiefs fan, I’ve had plenty of years to contemplate defeat. Still, the 2010 season will be remembered as a success. The team matured faster than expected and won more games than the three prior seasons. Not more games than each of the three prior seasons, but more games than the three prior seasons’ total. It was a big step forward.

It ended in disappointment, though. They won their division, made it to the playoffs, and whiffed on the national stage. In doing so, they actually set a record for playoff losses. No other team has as dismal a playoff record as our Chiefs. For fans, it’s puzzling and frustrating and maddening, and I can’t even imagine how the Hunt family and Chiefs players feel about it. Ouch.

My expertise is investments, not football. My athletic experience is limited to summertime softball (when I was much younger), and thousands of miles as a solitary runner from our local YMCA. I couldn’t begin to tell Todd Haley or Scott Pioli about their business; they have decades of experience and expertise that I lack. Their work motivating young and very large millionaires is massively different from my work choosing investments for local clients.

But I might offer one insight into the challenges they face. It comes from the investment business and watching Chiefs football over a couple of decades and multiple coach and personnel changes. Actually, Clark Hunt and I likely share similar longevity with the Chiefs! Many fans have longevity that far exceeds the players, coaches, managers, general managers, or media folks involved with the team.

One ongoing debate is about passive versus active investing. Academics noticed that many active managers failed to outperform statistical benchmarks. The benchmarks are expressed as index returns, with the Standard & Poor’s 500™ (S&P500) and the Dow Jones Industrial Average™ (DJI) being best known. (There are dozens of indices used in investing, but – to keep it simple – let’s just focus on those two for now.)

Each index is purely statistical. For the DJI, prices are tallied for thirty stocks. It’s the same thirty stocks, day after day, and the stock prices are entered into a mathematical formula. Boom – out jumps the number we see on television. As prices change during the day, so does the formula’s resulting number. That movement – up or down – offers some insight into the overall economic performance during a specific period of time.

The S&P500 index is broader by 470 companies. Each trading day (actually each minute of each trading day) stock prices of those 500 companies are calculated using another formula. The result is similar to the Dow average, except that this measure offers a broader gauge. Five hundred companies are more representative than thirty; so many professionals deem the statistic to be more representative.

There is a point to this. Though many people try, few investors actually do better than those (or other) statistical benchmarks. In other words, a portfolio manager using considerable research and expertise often fails when trying to beat a relevant index. In fact, there’s enough statistical evidence of these failures to spawn an entire industry of index fund investors.

Simply, an index mutual fund mirrors the exact holdings in the index. An S&P500 index fund holds the same 500 stocks in the same proportions as the index. When new money flows in, or old money flows out, buys and sells merely replicate the index.

Studies show that this passive approach is very successful. Active managers, perhaps because of trading and other costs, struggle to meet or beat an index. It’s as if the statistical compilation somehow surpasses the active effort and judgment of experienced traders. The debate rages on, but, like I say, there is strong evidence to support this phenomenon.

There are also strong advocates for active investing. Some of them even boast a powerful track record to “prove” their stock-picking expertise. They are outliers on the statistical curve, and it’s possible, maybe even probable, that some of them have captured investment lightning in a bottle. It’s also possible, or probable, that market randomness bestows that record upon them. Actually, there’s no way of knowing and I don’t really care. It is what it is.

What’s this got to do with Chiefs football? None of this discounts genuine talent or advantage. There are clearly teams in the league who have created an exceptional combination of process and players. That’s a magical combination when it happens, and it typically lasts for several years. We’ve seen it with the Patriots, Colts, Steelers, Cowboys, and Forty-Niners, among others.

Regular season football is a statistical game, played by multiple teams and some 1,600 players. You can easily create statistics to define an average player, an average team, even an average season. And crunching those same numbers, you might derive a statistical index fund of football. Using this model, football is a percentage game, and you can build a successful program by understanding those statistics and using them for personnel decisions, game plans, and specific offensive or defensive plays.

Marty Schottenheimer was a master at this. He built teams and managed games by the numbers. His Chiefs were among the winningest professional football teams of all times, and nearly as boring to watch as anything. Phrased “Marty Ball” by both critics and fans, those teams were perennial division winners. Strong defense, unimaginative offense; they marched their way, year after year, up the field and into the playoffs.

Where they died. The longstanding knock on Marty is that he’d do great in the regular season, then collapse in the playoffs. In fact, those collapses represent a big part of Kansas City’s dismal playoff record. But I don’t think it’s all Marty’s fault. Not Charlie Weiss or Todd Haley, either.

The culprit is statistical. Like an index fund, a statistical compilation (“percentage football”) might beat many teams in the league. Especially in the regular season where half the teams are – have to be – statistically below average. If you choose the right players, call the right plays, get the right bounces, have a similar number of good and bad calls by the referees, you’ll win more than you lose — and take a winning record to the playoffs.

Trouble is, other teams fighting their way into that tournament mastered similar statistical challenges. Once there, almost everyone is above average by either luck or design. Under those new circumstances, it’s unlikely that percentage football alone will produce multiple wins. In simplest terms, the things that get you to the playoffs aren’t the same things that get you through the playoffs.

That’s the critical lesson. 2010 was a wonderful year of progress for the Chiefs. Evaluations have already started and I’m certain that plans are being made for 2011 even as I write this. They know they have work to do and I know they are already on it. They certainly know more about the specific needs and details than I do. My expertise is with statistics and investing.

Index funds make perfect sense as part of a long-term investment strategy. They are low cost, tax efficient, and simple to understand and use. But they rarely make it to a list of top performers. The exact attributes that make them good long-term performers – deliberately-diversified, status quo, boring - also render them impotent against short-run or nimbler opponents. They are wonderful for marathons, but awful in the 40-yard dash.

What I’d recommend for clients is different for the Kansas City Chiefs. I love the marathon approach because long-term is what matters for most family financial goals. I’ve watched people chase top performers, and watched the dismal financial results. For clients, I’ve learned to carefully watch the forest while other people focus on trees. Percentage investing works best.

It’s not good enough for pro football, though. Percentage football is a formula for regular season success —and playoff disappointment. Which takes us right back to Marty Ball and the old Kansas City Chiefs. The timing is perfect for a better approach.
________________________________________________

Dan Danford is founder and CEO of Family Investment Center in St. Joseph, Missouri. The firm is a commission-free investment advisor registered with the SEC. Danford and other advisors at the firm specialize in managing large portfolios of traditional investments. They do, however, advise investors on a broad range of wealth management and other investment services. To learn more about Danford and this unique firm, visit them at 3805 Beck Road, St. Joseph, MO 64506, call (816) 233-4100, or visit http://familyinvestmentcenter.com/.

The Dangers of the Smartphone

2011-01-13T10:14:00.022-06:00

Here's an interesting story from CNN Money which warns readers that their most dangerous possession could now be the smartphone. Technology aimed to provide ease and convenience for the owner also makes fraud easier than ever. Read the full article to learn ways to safeguard your phone and protect your personal information if your phone were lost or stolen.

Budgeting when you're broke

2011-01-10T13:34:00.003-06:00

In this week's edition of Money Made Easy, host Dan Danford answers this financial question from a viewer: I find it really difficult to budget when I have such little income. So how do you budget when you are broke?

Danford, MBA, CRSP, of Family Investment Center, offers his financial advice on prioritizing your expenses with simple changes.

Teaching Kids About Money

2011-01-04T12:36:00.008-06:00

By Dan Danford, Family Investment Center
From Table Talk, August 12, 1999

Raising children is a common theme many of us face. As parents, we walk a fine line between giving kids what they want and teaching them important lessons about life.

Every family is different and so is every child. So, things that work with my girls may not work for you. But, I get many questions about money and kids, so these are some thoughts on the subject. Experience has been my main financial teacher, so the ideas aren't sacred and they continue to evolve. (I confess that my school counselor wife influences me. In fact, if you like an idea, if probably came from her. If not, lay the blame at my feet.)

First, kids won't learn good things about money unless we teach them. Default is unacceptable. What financial lessons come from television or other children in our schools or neighborhood? Are these lessons we want our children to learn? We must take positive action to override bad examples seen almost everywhere.

How should we teach the right lessons? Start by setting a good example. Forget what the spoiled athletes say; we are role models. Our children watch carefully and imitate our behavior. If we show prudence and discipline about spending, so will they. If we regularly save and wisely invest, so will they. We are the money gods in their lives, and they look to us as their mentors.

Let them learn through mistakes. A regular allowance is a great tool for this. Let them spend as they want, but patiently coach them in reaching good decisions. When they make bad decisions (and they will), let them suffer the consequences. Don't bail them out if they overspend. Overall, allowance dollars are tiny, but life lessons taught here can be huge.

Teach them to work. Children will not grow into productive adults unless they learn to work. Period. There's a good chance they won't want to work and a strong temptation to let them "enjoy life" as a teen. But, one critically important life lesson is to balance work and play. They won't learn this lesson without working and adulthood may be too late.

Life's focus shouldn't be finance and placing too much priority on money can be bad, too. So, a most important gift for our children is the lesson of perspective: in life, people are most important. Money is simply a tool to help the people we love. Nothing more. Nothing less. If we teach them this, our children will prosper.

Suggestions for creating a better shopping experience

2010-12-24T13:43:00.006-06:00

By Laura Price, Family Investment Center

I love grocery shopping. Seriously, I do. And in my opinion, of all grocery stores, Hy-Vee is crème de la crème. But due to, I admit, my own ill planning and procrastination, I found myself picking up last-minute holiday groceries just two days before Christmas. Needless to say, my poor timing sucked the thrill out of the normally-pleasurable experience.

After barely finding a parking spot at my beloved Hy-Vee, I was thrilled to see every checkout open and many employees roaming the aisles offering assistance (kudos!). Still, the crowds nearly drove me to insanity. From this experience, with the help of some friends, I developed a list of suggestions for grocery store management to consider. Stores could make extra annual revenue by imposing the following sensible fees:

1) Leaving your cart unattended in the middle of the aisle: $3.50 plus $1.50 cart removal fee (hey, you leave it, you lose it)

2) Letting your child drive the cart: $4.00

3) Cart heel bumps: $5.95 first offense, then $12.95 every bump after

4) Ringing up an overflowing cart in multiple orders: $7.00 convenience charge per order, rung up at a specially-designated register (check-writers can use only this register as well)

5) Express lanes accommodating those with only eight (8) items or less, $10.00 for every item exceeding the limit of 8.

6) Senior citizens get a 10% discount for shopping Monday through Friday between 9:00 a.m. and 5:00 p.m.

*Note: all fees are subject to doubling in the months of November and December.

I might also note that though #6 doesn’t seem like a profit-booster, there’s no doubt there are indirect financial benefits. Happier customers, young and old, yield higher sales. It just makes sense.

One of the best ideas provided was to use the above fee schedule as a fundraising mechanism. High school students police the stores, then the revenue is split between the students and the store. It’s a total win-win.

Have I missed any? Comments/suggestions? Fees too high? Too low? Know any grocers?

Money Made Easy: Financial New Year's Resolutions

2010-12-22T14:44:00.006-06:00

In this week's edition of Money Made Easy, Dan Danford answers this financial question from a viewer: What are some New Year's resolutions you think we should follow to help improve our finances?

Danford, of Family Investment Center, offers his financial advice on how you can have a better financial situation in 2011.

Table Talk

2010-12-16T15:08:00.005-06:00

Families gather around a table to catch up on events of the day. Table Talk is Dan Danford’s way of keeping family and friends informed about Family Investment Center and related topics.

By: Dan Danford, MBA, CRSP of Family Investment Center

Do you like to eat? Imagine a buffet where every customer is routed to a different line according to a pre-purchased ticket. Some customers enjoy traditional fare while others choose from the world's most delicious and exotic treats -- succulent lobster, prime angus beef, exotic side dishes, and luscious desserts.

Now, for sake of illustration, assume all meal tickets cost the same amount. Also, to emphasize my coming point, imagine that each buyer chooses the preferred line in advance, and for two entire weeks. Last, there's no deviation from the ticket once bought; i.e., no outside food or drink for two entire weeks (you reach an irrevocable food decision at the time of purchase).

Nearly everyone chooses the gourmet line, right? A seemingly simple decision. Of course, it can't be that simple because life isn't that simple. Instead, insert this bit of suspense into the process. A certain number of randomly selected diners will eat dog food. Not once or twice, but for the entire two weeks. And the odds differ depending on which ticket you choose -- one in ten traditional diners get Alpo, one in three gourmet diners. Over a year, there may be streaks of winners or losers, but the odds hold in the end. One in ten, or one in three.

At mealtime, lucky diners from both lines enjoy tasty, rounded meals. They happily discuss their good fortune, although some traditional eaters are openly envious of the gourmet fare. Occasionally, someone complains a bit, wishing they'd been smart enough to choose a gourmet ticket. In a distant corner, randomly selected losers sit dejectedly munching dog biscuits.

So, what's your choice? Traditional or gourmet meal ticket? Same cost, what's it going to be?

Seriously, is it worth extra risk to order gourmet food? In my example, a gourmet ticket increases your downside risk by over three hundred percent (from one in ten to over three in ten). With these odds, I'm guessing that most rational people (hypothetical in my example) will choose the traditional ticket.

So I am puzzled to watch people (non-hypothetical now) flock to high-risk, high-return market sectors. As we invest, we choose between options offering a variety of risk and return outcomes. Every decision faces an unknown outcome, although history provides some helpful hints about risk and reward. It is clear that some investment choices create greater opportunity to lose money. There are obvious streaks (we may have witnessed the longest winning investment streak ever), but, still, some investments offer a much higher potential for loss.

One measure of investment risk is a factor called Beta. Don't worry about the math, here, but realize that a Beta Coefficient is calculated for most stocks and mutual funds (ask your advisor). A Beta of 1.00 (perfect correlation) means that the security (either stock or fund) has moved exactly with the market (an index) during some measurement period. The market index went up five percent, and the security followed by rising five percent, too. The same exact percentages when the market moved down.

A high Beta (1.20) indicates that the security moved twenty percent more than the market -- both up and down. Lower Betas (.80) show the security moved less than the market (again, by twenty percent).

Now, Beta isn't foolproof (nothing is), but a high Beta mutual fund has fluctuated much more during the measurement period than a low Beta fund. So, chances of a bad outcome are much higher because downward fluctuations are so repulsive to investors. Usually, lower Betas result in lower overall performance. But, it's because risks are probably lower, too (based on past history).

Investors today don't seem to understand that a market (or stock, or fund) up hundreds of percent in twelve short months owns a very different risk profile from other options. It's not less risky because of recent performance, but almost certainly more so. If you doubt me, check the Beta for those highflying stocks or funds. It's okay to consider or even buy such investments, but you must know that your chances of sitting alone rise with this choice. Maybe rise a whole lot. Consider them for your $2,000 IRA contribution, perhaps, but not the entire kid's college fund.

Okay, the dog food illustration is overly dramatic. But the point is to explain risk in an understandable way and to suggest that there are very different potential risks -- measurable risks --for the choices we consider. One thing stands true from the illustration, when we approach the market with $10,000, the entry price is the same for either choice. We can buy $10,000 of a conservative choice or $10,000 of a riskier choice. It's the outcome that might differ.
Chances are good that we'll enjoy a favorable outcome with either choice. But, the chances of eating dog food are much higher with some choices than others. Risk and reward are absolutely related; the higher the potential gains, the higher the chance of losing money. It really is that simple.

If you'd like professional evaluation of risk in your portfolio, give us a call. Our objective research compares thousands of stocks, bonds, and mutual funds. We can help!

For more finance advice, follow Dan Danford on Twitter

Roth IRA Conversions

2010-12-14T12:56:00.004-06:00

"The primary attraction of a Roth IRA is the absence of future income taxes. Account holders contribute after-tax money, which grows tax-free until withdrawal." Excerpt from Dan Danford MBA, CRSP of Family Investment Center’s article in Medical Economics Magazine.

In this article titled Roth IRA Conversions, Opportunity or Trap, Dan discusses how changing a traditional IRA to a Roth is easier than ever, but may not be right for everyone. To read this article, click here.

Dad's Divorce: Paying Off Mortgage Debt

2010-12-14T12:40:00.002-06:00

Dan Danford is a regular contributor to Dad's Divorce, a web site for men going through the divorce process. Most of his advice, though, is general enough that everyone can use, particularly this podcast on mortgage debt.

In this week's edition of Money Made Easy, host Dan Danford answers this financial question from a viewer: Does it make sense to pay down my mortgage by making extra payments if I plan to sell the house in just a couple years with no intention of paying off a 30-year mortgage?

Danford, MBA, CRSP of Family Investment Center, explains why he likes mortgage debt and gives additional financial advice.

You can watch it right here.

Dad's Divorce: Prioritizing Debt

2010-12-07T10:45:00.001-06:00

In this week's edition of Money Made Easy, host Dan Danford answers this financial question from a viewer: Do you have a model or plan I should follow when it comes to prioritizing debt? In general, what debts should I pay off first, such as mortgages, credit cards, car loans, etc.?

Danford, MBA, CRSP of Family Investment Center, explains the "snowball model" and why paying off debt combines both financial and behavioral considerations.