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As the calendar pages turn to December, many minds shift to the holidays, but the year-end is perhaps the most crucial time to reflect on your financial health. This period offers a unique opportunity to optimize your budget, manage your debt, reduce tax liability, maximize retirement savings, and position yourself for financial success in the new year. Here are some important actions to consider as the year concludes.

Your budget is the foundation of your financial plan. A clear understanding of your cash flow is essential for your financial health. The first step should be to analyze your bank and credit card statements for the past 12 months. This can help you evaluate the effectiveness of your existing budget and identify areas for improvement. Categorize your spending into essential and discretionary expenses. Look for recurring expenses that no longer serve you, such as unused gym memberships or subscriptions. Canceling these before January 1st provides an immediate cash infusion every month. Next, analyze your spending seasonally. Did your spending increase during the summer with travel or before the holidays with gift purchases? Use this data to create a more accurate budget for the coming year, smoothing out the expected high-cost months. With a clearer picture of your actual spending, establish a realistic budget for the next 12 months, ensuring it aligns with your core financial values and goals.

When I began my career with NBD Bancorp, my colleagues would gather around the Quotron machine every afternoon to get the reading on the CRB (Commodity Research Bureau) Index. After more than a decade of high inflation, investors were attuned to any sign that it might accelerate once again. The CRB Index covered 21 commodities, and it was viewed as a harbinger of inflation. But inflation wasn’t the real worry; no, the real fear was high interest rates to combat inflation.

37 years after my trip down memory lane, investors remain obsessed with interest rates. The question is, “Why?” Interest rates are crucial to stock investors for several reasons.

First, interest rates are a good barometer for the economy and have predictive value. When an economy has been growing strongly for several years, imbalances show up. Certain components and commodities may be hard to obtain as supply has failed to keep up with rising demand. When demand exceeds supply, Economics 101 says prices go up.

A friend recently sent me a video from Instagram promoting an “AI-powered day trading bot.” The pitch was clean, fast, and convincing. Fund a brokerage account, connect the bot, and sit back while the algorithm makes trades for you, no market experience required. It promised a 90% win rate and monthly returns of 5% or more. It sounded like an opportunity you’d be foolish to miss. Risk was barely mentioned, aside from a note tucked in the fine print.

Behind the slick packaging was the same story I’ve seen many times before: a shortcut that ignores context, risk, and long-term planning. My friend sent it to me more as a joke than as an investment idea, thankfully, but it illustrates what we navigate daily: a world where financial advice is everywhere, but wisdom is getting increasingly harder to find.

The CFP® Board recently conducted a survey of over 1,000 households and published the results in a study titled “Steering Clear of Financial Misinformation.” The survey found that nearly three in five Americans have made a financial decision they later regretted because of online misinformation. That number doesn’t surprise me. What used to require a phone call or a meeting now shows up in an Instagram Reel, a YouTube short, or a flashy blog post promising the “one hack the rich don’t want you to know.” We’re flooded with financial content. Some of it is helpful, even thoughtful. But a lot of it is incomplete, out of context, or flat-out wrong. And there’s almost never a disclaimer that says, “This might not apply to you.”

A few years ago, Hendrik Bessembinder, a finance professor at Arizona State, conducted a study of stock market returns over the past century that yielded interesting results. In his study of approximately 26,000 companies, which also accounted for companies that either went out of business or were acquired, Bessembinder found that approximately 60% of stocks underperformed Treasury bills, even after considering dividends. While approxi­mately 40% of stocks demonstrated relative outperformance, much of this outperformance went to offsetting the underperformance of the laggard 60%. Just 2% of companies were responsible for more than 90% of the aggregate wealth creation of the stock market relative to Treasury bills.

Of course, the impact here is skewed heavily to huge long-term winners given the results were measured by market capitalization. Nvidia’s run to a $4 trillion dollar market value would have a significantly larger impact on an updated version of this study than a mid- or small-capitalization company growing tenfold over a multi-year period. With approximately 40% of stocks outperforming Treasury bills, there remain plenty of winners to choose from, though probably not as many as some would assume. Also, the stocks that move the needle on overall stock market wealth creation eventually tend to break through to become a significant right tail outlier.

A recent press release from the Bureau of Labor Statistics tells me that the cost of living is rising at only a measured pace. The latest Consumer Price Index (CPI) measurement says inflation was only 2.4% over the past 12 months. Excepting a brief spurt during the pandemic, measured inflation has been consistently tame since the late 1980’s. I don’t buy it. Let’s dig into what the inflation numbers really mean.

I like talking about inflation because it’s unintuitive in surprising ways. Too, I’m animated by what I view as a conspiracy to pretend the cost of living is rising slower than it really is. It’s a minor conspiracy. There are no robes or rituals, just a tacit agreement between politicians and economists that the country does better when inflation is perceived to be lower. Some of the downward bias exerted on the data is methodological, but this Viewpoint will focus on a deeper, philosophical bias about what the concept of “cost of living” ought to mean.

Retirement is a time to enjoy the fruits of your labor, but it also comes with important financial and healthcare decisions. Two of the most significant government programs that retirees rely on for providing income and health care are Social Security and Medicare. It is important to have a good understanding of these programs in order to make sound decisions when applying for benefits. This outline should provide a primer of these programs.

Social Security

The Social Security Act was signed into law in 1935 as part of President Franklin Roosevelt’s New Deal. It was designed to provide income for retirees, people with disabilities, and survivor benefits. Today, it’s a vital source of income for retirees, assisting them in maintaining their pre-retirement standard of living. It is funded through payroll taxes, with workers and employers each contributing 6.2% of wages up to $176,100 in 2025.

On the evening of Wednesday, April 2nd President Trump announced reciprocal tariffs for about 90 countries, with many of the tariffs far higher than previously expected. Mr. Trump’s so called “Liberation Day” led to a historic two-day selloff with the S&P 500 dropping 10.5%. The decline represents the fourth worst two-day drop since the index was created in 1957, trailing the outbreak of the pandemic in 2020, the aftermath of the collapse of Lehman Brothers in 2008, and the 1987 market crash. Going back to the 1920’s using the S&P 90, the precursor to the S&P 500, Mr. Trump’s two-day loss has been eclipsed only six times, surpassing disasters including the 1929 crash, the Nazi Blitzkrieg in 1940 and a couple of declines near the bottom of the Great Depression in 1932 and 1933. That’s keeping quite some company. On the bright side, subsequent returns have been more positive.

After more than a decade and a half of bull market returns interrupted only briefly by the pandemic and the onset of the Ukraine war in 2022, investors have been conditioned to look at declines as buying opportunities. However, in early 2025 the market looked vulnerable to the downside, regardless of tariffs. Around mid-February the S&P 500 was up about 4%, almost half the return of a typical year, and that nice performance came after two 25%+ yearly advances. At the time, the 2025 forward P/E ratio of the S&P 500 had risen to 22.2, 12% above the five-year average of 19.8 and 21% above the 10-year average of 18.3. The multiple wasn’t that far below the spectacular 26 achieved in 2000 before the dot-com crash.

We aren’t estate attorneys, but we have decades of experience observing how clients and their heirs have handled estate matters. One aspect of our work is that there is almost always at least one client estate somewhere in the process of administration. With more than 350 clients we have seen a lot.

Rule number one is, “Choose your successor trustee (or executor) wisely.” As fiduciaries, they are required to follow the terms of trusts and wills and act in the best interest of beneficiaries, but they also have some latitude and differing degrees of supervision.

Executors obtain their authority from a probate court, and this implies some degree of court supervision. Most states, including Michigan, allow both supervised and unsupervised executorship. Under the supervised version, the executor must submit most actions for court approval. This takes time and costs the estate considerable fees, not just from the court but also from the executor who is typically permitted to charge reasonable and customary fees. The alternative is to allow an executor to operate free of court supervision; this is faster and cheaper, but it brings risks as well.

Every day, we're inundated with spam calls, fraudulent mailers, and deceptive emails. Cybercriminals continually refine their methods to trap unsuspecting victims. Even the most cautious among us can be duped under the right circumstances. It is important to stay informed about emerging scam techniques and to remain cautious when something seems slightly off. 

Contrary to the common belief that scammers only target the elderly or those experiencing cognitive decline, no one is immune. Business owners face even greater risks, as every employee can serve as a potential gateway for scammers seeking to exploit vulnerabilities and access sensitive information.

The founder of Hindenburg Research, Nate Anderson, is closing his shop. The stock market is losing a valuable, and singular, contributor. While most research shops truck in optimism—Buy into this untapped trillion-dollar market! Buy the next Amazon for $1 per share! Buy, Buy, BUY! — Hindenburg was different. As its name implied, Hindenburg focused on disasters. It went looking for Ponzi schemes and frauds, and it often found them.

Active for about 8 years, Hindenburg would publish an in-depth post almost monthly. Lo to the owners and managers of its targets, as it was not uncommon for a Hindenburg report to tank a stock’s price and ruin a management team’s day. Crucially, Hindenburg chose its targets carefully. According to Anderson’s goodbye post, Hindenburg’s research led to criminal or civil charges against nearly 100 people, “including billionaires and oligarchs.” The vast majority of those targets got what they deserved in my estimation. Good on Hindenburg!

In high school I took a class introducing the basics of investing. Our teacher, a nice man who vaguely resembled Auric Goldfinger from the James Bond movie, had the somewhat unenviable task of teaching investing to a bunch of adolescents with no formal accounting or finance training. I remember going through the Investor’s Business Daily (IBD), looking at the daily stock quotes and a list of companies picked by IBD as most attractive based on a combination of earnings, stock price performance, and other factors like relative strength. I also recall spending a fair amount of time going through the Dick Davis Digest, an investment newsletter offering short summaries of companies with recommendations of individual stocks

One of the great attractions of this class was entry in a stock picking competition that pitted small teams of students across the state of Michigan against each other. For the competition, which ran for approximately two months, I paired up with a friend. As two highly competitive individuals who viewed ourselves as future investment professionals, to say we wanted to win this competition would be an understatement. I’m not sure exactly what we thought passed for thorough analysis at that point, but we certainly did it, ultimately settling on some blue-chip names and if I remember correctly, a company speculated as a takeover target.

As 2024 draws to a close, it’s time to conduct a comprehensive review of your financial situation and set the stage for a prosperous new year. Here’s a detailed year-end financial planning checklist to help you wrap up 2024 on a strong note and prepare for 2025.

Personal Financial Inventory

First take stock of your current financial position. List all your assets, including emergency funds, bank accounts, retirement accounts, investment portfolios, real estate equity and valuable personal property. Next, catalog all debts, such as mortgages, car loans, student loans and credit card balances. Well done, you have created your own personal balance sheet, a picture of your overall financial health. This is also a great time to review your current credit report and check your credit utilization ratio. It’s recommended that you do this at least once per year. Your credit utilization refers to the ratio of your current credit balances to your credit limit. It is a key factor in determining your credit score. A lower ratio indicates that you are using a small portion of your available credit, which is favorable for your credit score.

After working part-time at Provident for a year and a half, I am thrilled to announce that I will now be transitioning to a full-time role with the team as a Financial Analyst. While I have met a few clients, I am eager to meet more as I become more involved in day-to-day activities.

As with most small companies, we at Provident wear many hats. Most of my time is spent on trading, marketing, and client service including helping clients evaluate Roth conversion opportunities, Social Security timing, and withdrawal strategies, among others.

Google searches are often entertaining. As I was thinking about a title for this column I typed “The Taxman Cometh?” into my browser, looking for information about the various tax proposals from our two presidential candidates. The first thing to pop up was a 1991 episode of the television show Murder She Wrote. In the episode, a close college friend of Detective Jessica Fletcher was the prime suspect in the murder of her husband as her store, Miss Edna’s Pies, was being investigated by the IRS. As always Jessica solves the crime, a clever embezzlement scheme by a mysterious employee. While the stakes we face are less than life or death, we all need to stay tuned to possible tax changes and their impact on our pocketbooks and investment accounts. 

Voter polls indicate that the economy is the number one issue in this presidential campaign. Tax policy has taken on an outsized importance as the individual tax provisions of the 2017 Tax Cuts and Jobs Act (TCJA) are set to expire at the end of 2025. Each candidate has put forth a dizzying array of proposed tax changes. By the time you read this column there may be more. Let’s examine how tax law would look if the TCJA expires plus the proposals from each candidate. This review is intended to be informative and analytical, not an endorsement of a candidate or any particular policies. 

From time to time, I like to provide a behind-the-scenes update from Provident. The focus this time will be on the steps we take to keep your data and money safe from theft. 

Cybersecurity is constantly on our minds. About two years ago, we enlisted Schwab’s help to assess our cybersecurity arrangements and identify opportunities for improvement. This was not in response to any known shortcomings and wasn’t intended to diminish the role of our technology vendor. Rather, it was meant to be a second source, particularly since the Schwab consultant is an expert in our industry and understands the regulatory structure we work under. This is an ongoing process as indicated by my last request of the consultant - to schedule an annual progress update, a process we will continue. 

The SECURE Act and SECURE 2.0 Act introduced a number of changes related to IRAs, some favorable and some unfavorable. One of the unfavorable changes was the introduction of the “10-year rule,” where traditional and Roth IRAs inherited by non-spouse beneficiaries (with certain exceptions for eligible designated beneficiaries) had to be emptied by the tenth calendar year following the IRA owner’s death. Previously, non-spouse beneficiaries could stretch out the distributions over their own life expectancies, resulting in smaller required payouts and greater potential for tax-advantaged growth. Congress felt this was too big of a break for beneficiaries and needed to offset the funds lost from delaying required minimum distributions (RMDs), which led to the rule change. Spouses, along with certain other eligible designated beneficiaries were able to continue taking distributions from inherited IRAs over their own life expectancies, but this change meant most beneficiaries were now forced to take distributions sooner.  

The 10-year rule as initially outlined left some room for interpretation, and there was some confusion whether those who inherited an IRA must take minimum withdrawals each year or if they could wait until the final year to fully distribute the funds in the account. This topic was covered in a Viewpoint in 2022, as the IRS had proposed a rule requiring annual minimum distributions during the 10 years. Investors pushed back against this proposal, but the purpose of this Viewpoint is to highlight that the Internal Revenue Service recently issued long-awaited final regulations specifying the annual distribution requirement for many inherited IRAs. Even these final rules, however, may be impacted by public criticism of the rules and the outcome of the November elections. 

Almost all people value the utility which their children will get from consumption higher than they value their own. –Milton Friedman

Some people want the last check they ever write in their life to bounce. Spend all your money while you’re alive. Otherwise, it will be too late. It is hard to find fault with that concept, but the execution is tricky. If we live only for today, then eventually tomorrow catches up with us. On the other hand, if we only accumulate for its own sake then we risk missing out on life’s opportunities.

Wealthy people tend to be accumulators. Some are probably over-accumulators. The question of how much accumulation is optimal is a complex one.

A durable power of attorney (DPOA) along with a healthcare advance directive are important components of a comprehen­sive estate plan. These legal documents are for adults of any age, as unexpected events such as accidents and illnesses can happen to anyone. These documents authorize a trusted individual, referred to as the agent or attorney-in-fact, the right to act on behalf of the person granting the power (the principal) in all financial, legal and medical matters. The DPOA agent and the healthcare advance directive agent do not have to be the same individual. There are several strong arguments for why an individual should have a durable power of attorney and a healthcare advance directive.  

If the principal becomes incapacitated due to illness, injury or mental decline, these legal documents ensure that someone they trust can make decisions for them. These documents make the intent of the principal clear and help prevent arguments between family members over the actions that need to be taken. Without a DPOA and healthcare advance directive, the principal’s loved ones would have to go through a lengthy and expensive legal process in order to gain court approval to obtain the same powers. In this case, the court will appoint a guardian or conservator to make decisions for the principal, which may not align with their preferences and may create disputes within the family. 

Since the Pandemic, the Federal Reserve reminds me of a gymnast that utterly failed his Floor exercise but is trying desperately to stick the landing on the Uneven Bars. 

Hindsight is always 20-20, but as inflation was getting going in 2021 the Fed was far too slow to adjust its policy stance. Believing that increasing prices were primarily a function of broken supply chains, the Fed maintained its zero-interest rate policy and aggressive purchases of government and mortgage-backed bonds into early 2022, well after the economy began experiencing mid-to-upper single digit inflation starting in April 2021. While it is understandable why the Fed placed much of the blame on supply chains, a failure to appreciate the impact of the $5.2 trillion in fiscal stimulus related to the Pandemic, equivalent to about 25% of GDP, on the prices of scarce goods and services is confounding. The Fed blew the Floor exercise. 

It never dawned on me how uniquely American my job is until I came to the United Kingdom. I am working remotely from the middle of England for most of 2024. My wife Elizabeth is English. We want our kids to better understand this half of their heritage. We will come back to the US in August for the start of the new school year. Liz was granted leave from her job in Ann Arbor for about eight months. I’m writing this from the guest room, now the home office, of my in-laws’ rental property in the small town of Rothwell, Northamptonshire, keeping some late hours due to the time difference. 

Traveling reveals lots of interesting details about other cultures. This immersive, extended stay is teaching me some subtleties of English life I hadn’t observed during shorter visits in the past. You’re probably aware of our different definitions of “football”. In the US we drive on the right. In the UK it is optional. Beyond the big, obvious differences, I’ve found the schools here are generally a little stricter. Farms are smaller, which greatly affects the landscape. People socialize in pubs differently.