How the Mendelson Family is managing their finances and investments in these unprecedented times…
After sheltering in place for nearly three months, life here in Northern California is starting to resemble a new normal. Businesses are beginning to reopen (good) and traffic congestion remains light (also good). As you’ve probably seen and read, bicycle sales have exploded (great!).
To do our part in making our communities safe again, your Elevation Wealth Partners team continues to provide full services from our home offices. We are available in-person as necessary and look forward to returning to our commercial places of business later this year.
Sheltering in place, at times, has been emotionally challenging for all of us. Our oldest daughter, Sydney, was not able to take her driver’s license exam and we had to cancel her Sweet 16 party. Dance performances for which our youngest daughter Elliot had trained nearly a year were cancelled.
Mind you, being stuck at home hasn’t been all bad. As a family we’ve become closer and not just in proximity. We held a dinner cooking challenge: Top Chef – Mendelson Edition. Despite my impressive seven-layer La Jolla Dungeness crab stack and Sydney’s baked manicotti, Elliot won hands-down with her homemade hummus and perfectly cooked salmon.
Like many of you, we’ve thought long and hard about our personal and financial priorities. We’ve temporarily scaled back our lifestyle expenditures by cooking more and eating out less. Perhaps the best elements of what we’ve learned that last few months will carry on in positive ways in our lives going forward (Read: The quarantine has changed us – and it’s not all bad).
How we are invested. Often clients and prospective clients ask me: What are you invested in? At first, I was surprised by the question because the obvious answer should be, “The exact same things (mutual funds and exchange traded funds) that you are invested in!” However, I’ve come to learn it’s a sincere question because many financial advisors don’t work like this, especially non-Fiduciary advisors. (Elevation Wealth Partners is a Fiduciary and registered as an Investment Advisor with the U.S. Securities & Exchange Commission (SEC). Advisors that work at brokerage companies are registered with FINRA (a self-regulatory agency) and are therefore not Fiduciaries. Read more about the difference.
Personally, I would find it troubling if an advisor was not invested just like his or her clients. So, what is the Mendelson Family doing?
- A road map to start. Just like we advocate for our clients, we have a comprehensive financial plan that tracks our assets, liabilities (debts), plots our saving and spending goals, and tracks our progress toward well-defined financial and life goals.
- Our investment portfolio: 90% Stocks and 10% Bonds. Just like our clients, our largest holdings are the DFA Core Equity Funds. 16% of our portfolio is in ESG Funds (the consideration of environmental, social and governance factors alongside financial factors) we recommend to clients. This helps align our investments with our personal values without compromising investment returns. Learn more about ESG investing.
- Save early and often. We maximize the contributions to our retirement accounts every year. Sometimes this hurts and comes at the expense of putting money into our kids’ 529 college saving accounts or a trip to Hawaii gets replaced with a camping trip. Next, we max out our Health Savings Account. Unfortunately, the accident-prone Mendelsons never have money left over. Now that the kids are out of braces, hopefully next year.
- 529 College Savings Accounts. Shortly after the girls were born we opened 529 college savings accounts for them in the Utah College Savings Plan (now www.my529.org). They are invested in a moderate to conservative mix of DFA Global Equity and Vanguard Bond Funds with the plan to begin withdrawing the funds in 2 – 6 years.
- We are well-insured with enough term life insurance on me (the primary breadwinner) and ample insurance to cover just about every contingency or liability (including an umbrella policy and disability insurance).
- Automobiles. We have three (we recently purchased a small SUV for Sydney to drive once she gets her driver’s license). One of them is electric and I love knowing that the solar panels on our roof fuel my car! On average, our cars have 110,000 miles on them and I don’t foresee us getting a new car anytime soon.
- Mortgage. We have 26 years remaining on our 30-year fixed mortgage. I don’t know where will be in 26 years. That depends on where the girls settle down and there are lots of amazing places in the world we could see ourselves living.
In our household, we talk opening and freely about money. The kids have to earn theirs and justify purchases. If Elliot wants to blow hers on a Costco size box of Fruit Roll-Ups, she just has to make a strong enough case for it. Kristin and I frequently remind them we’ve all won the human lottery by being born in the greatest country, at the greatest time, and to amazing parents (what Warren Buffet has referred to as winning the “ovarian lottery”). And to make the most of opportunity, we expect hard work and responsibility.
Obviously, each of us has a unique financial situation. Hopefully, you and your loved ones are safe and healthy. And through this period of sheltering-in-place, you’ve reflected on your priorities (both financial and life). We’ve had a number of Zoom meetings with clients who believe their retirement is now much sooner than they expected or are grappling with a career change. No matter your circumstances – good or not so good – you always have options. Of course, we’re here to answer questions you, or anyone important to you, may have as we navigate this challenging time together.
