By Glenn J. Downing, MBA, CFP®

I began Part I - New Asset Class with this statistic:  one in five people in the US have invested in or used cryptocurrency.  As Bitcoin becomes more widely accepted – indeed, Fidelity is offering it in 401K accounts – it is high time for me to write about it. 

And there’s a lot to write.  I’m going to break this up into two blogposts:  Part I covers the foundation of bitcoin and how it works, and here in Part II I answer the question, Why crypto currency?    

Fundamentally Bitcoin is one of many cryptocurrencies.  It is an asset.  It is bought and sold through various exchanges called wallets.  It can be used to pay for goods and services.  These transactions happen on the blockchain. 

The Gold Standard

In 1981 the US came off the gold standard, meaning your currency is backed by nothing beyond the ascription of value of millions of people.  Currencies...

By Glenn J. Downing, MBA, CFP®

I was astonished to hear this statistic:  one in five people in the US have invested in or used cryptocurrency.  That means that Bitcoin is indeed a thing, and it is time for me to write about it. 

And there’s a lot to write.  I’m going to break this up into two blogposts:  here in Part I I’ll cover the foundation of bitcoin and how it works, and in Part II - Inflation Hedge I’ll answer the question, Why Bitcoin?    

Fundamentally Bitcoin is one of many cryptocurrencies.  It is an asset.  It is bought and sold through various exchanges.  You hold Bitcoin in accounts called wallets.  It can be used to pay for goods and services.  These transactions happen on the blockchain. 

Cryptocurrency

Lots to break down here.  First, the concept of a cryptocurrency.  This is a currency backed only by the value that people ascribe to it.  Right away I can...

by Glenn J. Downing, MBA, CFP®

The foundation for any sort of financial planning begins with cash flow management.  Income -expenses = dollars available to be invested toward future goals.  We’ve worked with people from all walks of life who have cash flow issues, including those with very high incomes.   It all comes down to the same thing:  you have two choices.  Increase income or cut expenses to make savings happen.

 To frame the thinking here, I challenge clients to separate out necessary spending from discretionary spending.  Necessary spending is just that:  what must I spend to house myself, feed myself, clothe and groom myself, and get back and forth from work.  Bare bones, in other words. 

 The exercise I bring to my readers then is this:  Let’s look at every expenditure you’ve made in the last several months.  Now sort them:  necessary or discretionary.  Here’s a...

By Glenn J. Downing, MBA, CFP®

Increasing Regulatory Scrutiny

An area of increasing regulatory scrutiny is retirement plan rollovers to IRAs. This is a common transaction, and done every day, but it just might not be in your best interests.  Why?  Several factors:

Reasons Why NOT to do a rollover IRA

• If your plan at work is covered by ERISA legislation (Employee Retirement Income Security Act) – typically a profit sharing or 401K – it has complete creditor protection, no matter the balance. An IRA will have limited creditor protection, typically up to the amount needed to maintain your lifestyle. 
• Loans are permitted from employer plans. No loans ever from IRAs.
• Early withdrawal penalties of 10% apply to retirement plans before age 55. It is age 59 ½ for IRAs.  So if you are age 55, separated from service, and rolled your retirement funds into an IRA, you’ve just given yourself 4 ½ years of 10% withdrawal penalties.
• If you are...

By Glenn J. Downing, MBA, CFP®

What might an employer do to incentivize the workforce?  Make his employees owners.  Gives them an entirely new perspective on the job.  What employee-owned businesses do you know?  Does Southwest Airlines come to mind?  The flight attendant pouring your coffee may very well be a millionaire in SW stock if employed there long enough.  A little closer to home, how about Publix, where shopping is a pleasure?  Publix is a privately-owned company, but with a strong employee-ownership policy – and it shows.  People who work in Publix are actually helpful, and actually greet shoppers!

Employee-Owners

In our practice the main two ways we see employers accomplishing the goal of employee ownership is through  stock options and restricted stock units (RSUs).  The first involves the employee making a purchase of employer stock; the second is a direct stock grant to the employee.

In the stock option, the...

 By Glenn J. Downing, MBA, CFP®

You may have noticed in all CameronDowning email signatures this text:

                                      Where 5% of all revenue is donated

                                        To homeless assistance in Miami.

What’s behind this?  I thought my readers might find the story interesting.

Shortly after Jonathan Cameron and I founded CameronDowning in 2014, I read a piece in the Wall St. Journal about companies that fulfilled their ethical obligations to the community by giving money to charitable endeavors off the top, rather than as planned gifts.  This really caught my attention.  Lots to consider here. 

An obligation?  As a business do we have an ethical obligation to the community at large?  After all, one...

By Glenn J. Downing, MBA, CFP®

Child:  But Daddy – that’s not fair! 

Daddy:  Well, son, life’s not fair.  Whoever said it is lied to you.  Fair is where you go to ride rides. 

Anyone who’s ever been in one of my CFP® classes has heard me use this expression, and indeed I picked it up in one of my own CFP classes.  Yes, the practice question you’re trying to answer may not be fair, but the CFP® Board tests you with questions like this, so toughen up.   

Fairness, Justice, and Equity

I’ve been thinking about fairness lately, along with justice and equity, and the different shades of meaning in the words.  I think of fairness in terms of fair play, i.e. the referee applies the rules even-handedly to both teams with no partiality.  Justice, on the other hand, speaks to issues of right and wrong in our relationships with one another.  Right behavior is just behavior, and wrong...

Ah, greenbacks, lettuce, clams, or Benjamins – no matter what we call it,  cash is still king!  There are few places in the world that will not take the American dollar as payment.  I fact, I can only think of two:  inflight on American Airlines, and Uber.   

Any Reasons NOT to Use Cash?

Here’s a valid reason NOT to use cash:  if some young socialist decides to knock you over the head to redistribute your wealth, those dollars are gone and cannot be replaced.  Had the young socialist only reaped your credit cards, you can get on the phone and stop those cards, and you have only a maximum $50 liability per card, if even that. 

Another reason not to use cash is airline miles and hotel points.  This is my personal practice.  We run as much as possible through the American Airlines cards and the Marriott Visa, and the points (and benefits) really add up!  But if you’re going to do this, you must have the...

Here’s a question for you, ladies.  You’re out on a first date at a restaurant with someone new.  You’re interested . . . not sure, but interested.  It’s just a date . . . let’s see how the evening goes, you think to yourself.  When it comes time to pay the check, he:

1. Pays with a gold card
2. Flashes a thick wad of greenbacks and pays cash.
3. Tells you how much your half is.

If it is #3, dump him right then and there and block his phone number. 

But between #1 and #2, which impresses you the most?

Credit was for Losers

Way back when I was a young man people paid cash for most everything.  In fact, it was a mark of pride to do so.  Credit was for people who couldn’t afford to pay cash – losers, in other words.  But now!  After working with many clients on cash flow organization, I can tell you that most people simply use a card to purchase everything, and most millennials don’t even carry cash.

by Glenn J. Downing, MBA, CFP®

Everyone at some time or another needs some cash - and quickly!  The question is, have you anticipated this need and saved into it?  Or do you need to scramble?  What follows is a list of ten helpful suggestions.  

Here are 10 places to consider, in descending order.  

1. Your emergency fund.  But if you’re reading this, I’m guessing you haven’t established and funded your emergency fund.  So when this particular cash shortfall hump is over, you know what you need to do!
2. Tap a relative. Be sure to repay promptly along with a suitable gift, i.e. a gift card, nice bottle of wine, etc.
3. A 401K loan. In this case you’re borrowing money from yourself.  There will be an interest charge, but you’d be paying the interest back into your own account.  Typically, you can borrow out the account value up to $50,000, and you replay the loan through payroll withdrawal. ...