Wednesday, December 18, 2019

It's Dividend Season!

Pathways Advisory Group, Inc.
Evon Mendrin, CFP®

 If you’re investing in mutual funds, a curious thing tends to happen each quarter. The value of your funds all suddenly dip! What is the cause? A market calamity across every type of investment??

While regular market activity might affect the value too, one key reason for the dip in prices is the dividend. Mutual funds hold a bunch of stocks, bonds, and other investments. These stocks may pay dividends and the bonds interest. To avoid paying taxes on this income themselves, mutual funds are required to pass them on to you, the shareholder. This can be done annually, but often each quarter. You may see larger capital gain distributions at the end of the year as well.

That’s a good thing, right? Sure, you are able to benefit from the cash flow of the many stocks and bonds you are invested in. However, it does something funny to the price. Each quarter, mutual funds that pay dividends will reduce their share prices by the same amount of the dividend being paid out. This happens on the “ex-dividend” date, the first date you can buy the mutual fund but not have a right to receive that quarter’s dividend.

For example, let’s say XYZ Stock Fund has a current price of $10.00 per share. The fund is set to pay a $0.10 per share dividend on Friday. So, on Thursday, the “ex-dividend” date, the price will drop by the same amount to $9.90 per share. 

This makes sense – cash leaves the mutual fund, which lowers its total value of assets (Net Asset Value). So, the price adjusts accordingly. And you, the current owner, still end up the same financially. Your fund goes down $0.10, but you get a $0.10 cash dividend.

Why now? It’s now that time of year! In fact, the 16th - 18th of this month marked the “ex-dividend” date for many of the mutual fund we invest in. We hope this post sheds some light on the change in prices.

Happy Dividend Season and Happy Holidays!

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Monday, November 25, 2019

Holiday Hours!

 The Pathways Advisory Group, Inc. office will be closed for the following holidays:

Thursday, November 28th, 2019
Friday, November 29th, 2019
Tuesday, December 24th, 2019
Wednesday, December 25th, 2019
Closed at Noon - Tuesday, December 31st, 2019
Wednesday, January 1st, 2020
Monday, January 20th, 2020
Monday, February 17th, 2020
Friday, April 10th, 2020
Monday, May 25th, 2020
Friday, July 3rd, 2020
Monday, September 7th, 2020

In case of an emergency, 
please contact Schwab directly at 1(800) 435-4000.

Happy Holidays!

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Friday, October 25, 2019

Kids-n-Money: The Pre-Teen Years

Pathways Advisory Group, Inc.
Dustin J. Smith, CFP®

In 2017 I wrote about our first humbling experiences with our kids-n-money and diving into the book The Opposite of Spoiled. We’ve made some progress since then. The kids, now pre-teens, have developed stronger temptation muscles and they ask a lot of questions:

How much do you have in our College accounts? 

Can I use my Donate for the jogathon at school?

How much do I have in my Invest account?

Why should I add to my Invest if you add to it for me every month?

I’ve got a hundred dollars in my Save but I don’t have anything in mind, can I just add it to my Invest? 

What would it be like if everyone had a summer break?  My favorite question!

How much did we pay for this house?

How much do you have in your Truck account?  

How much do you have in your Retire accounts?

The kids have outgrown their Money Savvy Pigs® but, as you can see from their questions, the spend, save, donate and invest money choice experience has shaped how they think about money.  That’s definitely a win!  Now, about those tricky allowances:

Allowances:  The suggestion from the Opposite of Spoiled, was to separate your child’s allowance from their chores.  This made sense to us, as household chores are responsibilities not compensated tasks, so we went with it.  However, we quickly learned that an allowance without daily expectations feels like an entitlement – not exactly our intention.

Summer Chore Cards:  Inspired by Michelle’s post about the Carter household, we decided to take a break from allowances and experiment with chore cards for the summer (Unload and put away groceries = $1, Fold and put away Laundry from the Laundry basket =$1, etc.).  Without an allowance, there will be more incentive to help out.  Hopefully this, plus the extra free time, allows them to experience the value of hard work, a sense of accomplishment and the joy of being helpful.

Back to School:  Fresh off the lessons of summer, it was time to reset expectations and reinstate allowances.  We went with the usual $7/week, settled on the typical expectations (homework, lunches, make your bed, etc.) but decided to add one weekly rotating household chore from the summer list. 

Like most parenting topics, the kids-n-money topic has evolved through lots of trial and error.  We learn something new with each experiment.  Life also gets in the way periodically.  I am at least two weeks behind on their allowances, as of this post.  Please do not tell them to ask for interest!  We are trying to take it all one year at a time – soon, whether we like it or not, they will be teenagers!!!!


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Monday, September 2, 2019

Watch Out For Equifax Settlement Scams

Pathways Advisory Group, Inc.
Evon Mendrin, CFP®

In 2017, Equifax - one of the three major credit bureaus - experienced a data breach affecting at least 143 million people. Now, there is a class action lawsuit settlement awarding those affected free credit monitoring and a potential cash payment. Of course, internet fraudsters are using this settlement as an opportunity to create new scams.

Internet bad guys are now trying to trick you into filing an Equifax claim and get a $125 payment because your personal data was in the Equifax data breach. They are sending phishing attacks that look like they come from Equifax. When you click on the links, you wind up on a fake website that looks like it's Equifax but will try to steal your personal information. Don't fall for it.

If you want to file a claim, go the legit FTC website and click on the blue "File a Claim" button. The website will check your eligibility for that claim, as not everyone's information was compromised. Here is the link to the FTC site:   
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Thursday, August 22, 2019

Jeff’s Guide to The Financial Media

Pathways Advisory Group, Inc.
Jeff Karst, CFP®

Often times when I read the headlines, I get a chuckle.  Of course, their intention is to grab your attention.  The more people that “click” on their article, the more advertising they can sell.  It’s not about education for them.  With a bit of volatility to end 2018, it was prime time for the media. We’ve seen the same within the last few weeks. Here is my (not so) definitive guide to interpreting the headlines.

“Stocks Clawed Back to Positive Territory” 

Basically, stocks should be going down and the only way they were able to make it positive for the day was through sheer grit.  Much the same way a zombie climbs out of the grave.

“Stock Sell-Off Intensifies” 

You can replace “Intensifies” with any word you like (to make the headline more attention grabbing).  The media always uses the phrase “sell-off”.  As if, by some miracle, stocks are sold and no one buys them.

For any stock to be sold, there must be a buyer on the other end of the transaction.  If there were no buyer, the stock could not be sold. For every seller that believes now is the time to sell, there’s a willing buyer that believes now is the time to buy. “It takes two,” as they say.

“Markets in Turmoil amid _________ fears”

This usually means that one of the major stock indices have dipped slightly in value, often by 2-3%. It’s often coupled with some impending doom for the economy, stocks, or both. Based on this headline alone, you’d guess markets are down 35% for the year. What’s often missed is that – although they dipped for the day – stocks might actually have strong positive performance for the whole year.

This is the case in 2019. The S&P 500 (+16.73%), Russell 2000 (+11.7%), and all but a few international indices are positive year-to-date despite the recent “turmoil”. Beyond one year, these dips tend to be short-lived compared to the overall long-term growth of stocks around the world.

We have no clue how the year will end. But as Evon wrote in his blog post, Perspective During “Turmoil”, “It’s amazing what perspective can do when faced with one day’s dramatic event. Taking a step back gives us the opportunity to evaluate what’s really going on and not overreact.”

 “XYZ Company Earnings Missed Expectations”

How does the company miss expectations?  Wouldn’t they want to always exceed expectations to, you know, make more money?  Perhaps the real answer is, the analysts were wrong.  The media doesn’t want to say that.  That would mean that the prognosticators aren’t actually able to see the future.

“It’s tough to make predictions, especially about the future.” – Yogi Berra

Focus on Your Goals

It’s hard to ignore these headlines given what we experienced in the 4th quarter of 2018 or in the past few weeks. It’s human nature to be affected by the short-term news flashes. We must remember what the long-term trend of stocks has been. If your goals are long-term, then your focus should be too.

Lastly, focus on the things that are within your control. We can’t control the ups and downs of the markets, let alone guess where they’re heading next. We also can’t control what the news writes about it. Instead, focus on the amount you invest, the amount of each type of asset you hold (stocks, bonds, and real estate), the expenses you pay, and the taxes you owe. Therein lie the keys to your success!

Note: All returns data are as of writing, 08/19/2019. The data very well may have changed by the time you read this

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Monday, July 1, 2019

Office Closed this Friday for 4th of July Holiday

Our office will be closed this Friday, July 5th, as part of our observance of the 4th of July holiday. In case of an emergency, please contact Schwab directly at 1(800) 435-4000.

We wish you a Happy 4th of July!

The Pathways Team

Friday, June 7, 2019

Summer Jobs

Pathways Advisory Group. Inc.
Michelle Carter, CFP®

If you're a parent, you may have mixed feelings about summer vacation.  

Video Courtesy of Kids Are The Worst

Look familiar?

Each year, as the weather becomes hotter and the days become longer, I begin to think about my goals for those 10 weeks.  It's a break from traditional school work, but since children are always learning, what do I want to teach them this summer?

This year, I want them to learn the feeling of accomplishment from earning their own money.  My kids are ages 4-7 and don't receive an allowance.  They are expected to help around the house, mostly in their own rooms, with some regular chores added in (clear the table, feed the cat, etc).  I wanted to take it up a notch, and summer seemed like a great time to do this.

I am creating a "Work for Hire" board.  You can find multiple examples of this online.  Here is one:

Photo Courtesy of The Chic Site

The basic premise is to post a chore to be done and attach the payment.  With younger kids, you can use pictures (a dusting rag or a broom) and pay with quarters.  With older kids, you can use tougher chores for higher pay.  It's a flexible way to teach children hard work and money management.  

At the end of the week (or month) you can take them to spend some of their hard earned money, or you can save all summer for a bigger reward just before school starts.  I have even seen it done with Monopoly money, complete with a "mom store" for spending hard earned "money" on small treasures.

We are going to give this a try this summer in the Carter household.  I'm sure we will learn what works best for us as we go.  It will be a fun experiment, and I look forward to reporting back this fall on how it went!

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