Self Storage Investing – Interview with Kris Benson

Having a tough time throwing away all your extra junk... sorry treasures?

You are not alone. Everyone else has this problem too. This is one of the reasons that the trend in self storage investing has been experiencing a great run over the past 25 years, outperforming many other real estate sectors.  Are you investing in self storage units? 

Kris Benson discusses what you are missing out with self storage investing and why you have not heard of these interesting trends in this space.  Join us this week to learn why you should consider this sector.


3 Reasons Every Investor Should Consider Self-Storage Investing as Part of Their Alternative Investment Portfolio

We talk with a lot of investors everyday who ask us a simple question.  “Why should I invest in self-storage?” Obviously, as a self-storage operator we are bias but there are three data points that we believe make this a fantastic asset class for investors to evaluate for their own portfolios.  

Wait a minute, self-storage is a legitimate asset class?  Some statistics on the self-storage industry that may surprise you.  Here are some numbers on the industry as of 1st quarter of 2019 

(https://www.sparefoot.com/self-storage/news/1432-self-storage-industry-statistics/)

  • Number of Self-Storage Facilities in the U.S. 48,000-52,000
    • That’s more than the number of McDonalds and Starbucks in the US combined!
  • 9.4% of Americans rent a storage unit
  • Average annual industry revenues of $38,000,000,000

The self-storage industry has definitely come of age in the past 10 years.  I remember when a self-storage facility was in a very rural area on a gravel pad and to rent a unit you had to go into the house to talk with the owner.  Now facilities are being built on prime real estate on the corner of main and main with 3 story glass and brick retail offices rivaling the very nicest Starbucks location!

Why has there been such interest in the asset class?  I think that brings us back to the three reasons we are bullish on storage.

Outstanding Returns:

The first thing that every investor should look at is historical performance.  According to the National Association of REIT (NAREIT)* the Self-Storage asset class has achieved an average annual return of 16.85% over the past 25 years.  Self-Storage has outperformed Apartments (12.93%), Retail (12.04%), Office (12.15%), and the S&P 500 (7.06%) over that same time period.

Downside Protection

I am a big believer that history repeats itself so I am always interested in the performance of an asset class in an economic downturn.  According to that same NAREIT database, looking back at the last recession in 2007-2009, Self-Storage lost -3.86% in value versus Apartments which lost (-6.72%,) Retail (-12.32%), Office (8.16%), and the S&P 500 (-21.10%) Even when downsizing, Americans do not seem to lose their appetite for storage.

Market Consolidation Opportunity

Finally, investors should understand what the long-term runway may be in a particular asset class.  According to the 2019 Self-Storage Almanac the publicly traded companies own less than 25% of the Self-Storage market. There is a consolidation opportunity for self-storage operators to acquire facilities owned by mom and pop operators and generate revenue enhancements by deploying a professional management strategy.

The performance, protection, and opportunity offered in the Self-Storage asset class make it a very attractive addition to any investor’s portfolio!

That doesn’t mean that the asset class comes without risk.  The biggest risk right now is on the supply side. We have seen a major development cycle in storage with many developers jumping in to maximize their returns.  As you can see in the chart below from the US Census Bureau the self-storage industry has kept the construction industry very busy over the last few years. Does this mean it’s too late to invest and garner a strong return?

We don’t think so. Just because the 50 top MSA (Metropolitan Statistical Areas) have seen a bunch of new developments doesn’t mean there are not any opportunities to be had to create value.  

Reliant has typically operated in the secondary and tertiary markets in the southeast where typically there is less competition and more “mom and pop” operators.  Keep in mind that storage is a micro market business. What really matters is the 1, 3, 5-mile radius around your facility because consumers will not travel for storage.  Typically, we see 70%+ of our tenants within that 5-mile radius. It needs to be convenient to work or home for them to use the facility. Unlike multifamily where a consumer may travel for the right school district or amenity, storage is an air-conditioned garage so location is key.

Our acquisition team is looking at things like population growth, average income, job growth, rental rate growth in those rings are what tell the story around demand for storage.  Even if a market like Atlanta has seen a bunch of development and may be oversupplied that doesn’t mean there isn’t a 5-mile radius in the suburbs that has opportunity. It’s definitely a sharp shooters game right now in storage.

If you are interested in learning more about Reliant and our track record in the industry you can check out www.reliantinvestments.com .  If you are interested in learning more about real estate investing, we built www.krisbenson.com that has a video series giving you the high level knowledge you need to evaluate real estate.

Kris Benson is the Chief Investment Officer of Reliant Real Estate Management.  Reliant Real Estate headquartered in Roswell; GA is a vertically integrated commercial self-storage operator.  Currently, Reliant is the 25th largest self-storage operator in the US with 53 properties owned across 8 states with just over 35,000 units and 4.5MM rentable square feet.  Reliant has sold another 21 properties and have achieved an average project level IRR net of fees of 45% with an average hold time of just over 3 years.

Reliant Real Estate is currently raising a $50MM equity fund focused on stabilized and value-add self-storage properties across the Southeast.  Reliant is seeking long term equity partnerships with investors/groups that align with our long-term goals.

*https://www.reit.com/data-research/reit-indexes/annual-index-values-returns 


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Looking for a better way to invest? 

Consider Betterment.

It doesn’t cost much to start, and you get access to a portfolio built around your risk tolerance and your goals. Using Modern Portfolio Theory, pioneered by a Nobel laureate, Betterment can help you build wealth without getting caught up in the noise of the market.


Today's Guest: Kris Benson

Kris Benson is the chief investment officer for Reliant Investments, a subsidiary of a Reliant Real Estate Management and one of the top 30 commercial self storage operators in the U.S in 2018. Kris is part of the investment committee and develops institutional quality self storage investment opportunities for accredited investors.


In the last 12 months the Reliant team has invested over $100MM in self-storage
projects and raised over $50MM from investors. Self-Storage provides a unique
opportunity to invest in one of the most successful asset classes in the past 5
years and take advantage of the institutional interest moving forward. Reliant is
currently raising equity for a $50MM equity fund focusing on value add and
stabilized self-storage assets. 


Kris's investing goals have always been about changing the paradigm of trading time for money in order to have time for more of the things we love to do. Likewise, investing in real estate has been Kris' steadfast path to passive income and he is passionate about inspiring others to change their mindset around investing for their future. 


Kris graduated from the state University of Binghamton and currently lives just outside Saratoga Springs NY with his wife Jenn and two sons Noah and Luke. He is an outdoor enthusiast with a passion for the ski mountain, the lake and his mountain bike!

Kris' Online Presence


Today's Panelists

Shareholder Yield – A Secret Investing Methodology That Leaves Dividend Yield in the Dust – Interview with Meb Faber

Are you looking for high dividend yield stocks? You are missing the boat. Some of the best shareholder friendly stocks may not show up in your favorite dividend ETF or mutual fund. Today we dive into the concept of Shareholder yield. Its like looking for dividend stocks on steroids. According to Meb's research companies with high shareholder yield outperform the S&P500 and their dividend yielding stock counterparts. Learn more about how shareholder yield can impact your investing strategy.

“Many people begin investing their money without a true understanding of what has happened in the past, and often bias their expectations toward their own personal experiences.” - Meb Faber

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YCharts - Smart Investment Decisions Made Simple

We here at Money Tree Podcast use YCharts to uncover new investing opportunities, analyze trends and monitor our progress. YCharts is a powerful financial data platform designed for Individual Investors, Financial Advisors and Asset Managers. Their platform makes our lives easier. What can be better than that.

We struck a deal for our listeners where you get 20% off your access to YCharts if you sign up in the next month


YCharts of The Day

Shareholder Yield vs. Dividend Yield

shareholder yield comparison

Shareholder Yield vs Dividend Yield for MSFT and AAPL

shareholder yield

Shareholder Yield vs Dividend Yield XRX Vs XOM

shareholder yield comparison  xrx xom


Today's Guest: Meb Faber

Meb Faber, Chief Investment Officer 


Mr. Faber is a co-founder and the Chief Investment Officer of Cambria Investment Management.  Faber is the manager of Cambria’s ETFs and separate accounts. Mr. Faber is the host of The Meb Faber Show podcast and has authored numerous leather-bound books. He is a frequent speaker and writer on investment strategies and has been featured in Barron’s, The New York Times, and The New Yorker. Mr. Faber graduated from the University of Virginia with a double major in Engineering Science and Biology. 


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Today's Panelists

The Formula for a Relaxing Retirement – Retirement Coach Jack Phelps Discusses The Essential Parts Retiring Well.

What are your biggest concerns about retirement?

Are you concerned about retiring well? Are you worried about having enough money at retirement?Are you stressed about retiring period?

You are not alone. Most Americans who are close to retiring are concerned about what the next step is.

It makes sense right? How many people have retired before... So how would you know what to do.

This week we interview retirement coach Jack Phelps about how to retire well.


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Looking for a better way to invest? 

Consider Betterment.

It doesn’t cost much to start, and you get access to a portfolio built around your risk tolerance and your goals. Using Modern Portfolio Theory, pioneered by a Nobel laureate, Betterment can help you build wealth without getting caught up in the noise of the market.


Today's Guest:  Jack Phelps

Jack Phelps left a career with a large financial services firm in order to offer independent advice in the best interests of his members rather than his employer. In the twenty-five years since, he’s become an impassioned advocate and guide for people facing the complex transition from a lifetime of working hard and saving smartly to spending and enjoying what they’ve built. A college athlete, Jack knows the profound difference a great coach can make, and combines a coach’s rigor and gift for explanation with years of education and hands-on experience in finance. Learn more about The Relaxing Retirement Coaching Program at: TheRetirementCoach.com.

Jack's Online Presence:



Today's Panelists

Danielle Martino- Federal Reserve, Monetary policy, and Central Banking

We love talking to Wall Street Insiders. This week we have an insider from the Federal Reserve Bank of Dallas. We dig into why the Federal Reserve monetary policy is bad for America, but more importantly we discuss what the actual problem is... And its not what you think. 

We cover many of the problems the US Federal Reserve faces today as well as down the road.  


Rumors of My Birth Are Not Greatly Exaggerated

Summary:

  • The not seasonally adjusted BLS birth/death model is often misrepresented
    as the ‘culprit’ for exaggerated strength in payrolls given
    critics compare it to the seasonally-adjusted headline number; that
    said private-sector benchmark revisions in the year to March 2019
    of -0.4% are outside the +/- 0.1% band classified as statistical noise
    meaning births of 274,000 overstated strength
  • Continuing jobless claims provide hard data, and are much more
    reliable than payrolls which are subject to long-lagged revisions;
    claims fell (good) at a recent peak rate of -14.2% last September,
    and have since risen (bad) by 2.5%, the first increase of the current
    expansion
  • ASA’s nine-month deterioration depicting falling temporary employment
    corroborates the continuing claims signal; high-paying
    jobs for workers also contracted in October, which will hit spending
    given the top 40% of earners account for more than 60% of
    consumption
Federal Reserve Monetary Policy


Paul Revere did not ride into the Massachusetts night screaming, “The
British are coming!” Betsy Ross did not design the U.S. flag though
she did helpfully suggest five-pointed stars over those with six points
for ease of construct. The original cowboys donned derby hats, not
Stetsons, which weren’t even in existence until 1865. The Declaration
of Independence was ratified on July 4, 1776 but wouldn’t be signed
until August 2nd of that year. And the New York suicide rate fell following
the stock market crash of 1929. There were two prominent Wall
Street figures who took their lives, but there was no jumping out of
windows. And that’s just the short list of Americana myths.


Bearish investors also cleave to a myth, one they likely will for all
time – the fabled birth/death model. Every time there’s a jobs report
which surprises to the upside when it’s expected to disappoint, you
can set your watch to how long it takes for the birth/death model to be
trumped out to take the blame. Friday was no exception. The most strident
devotees cumulated the additions to further exaggerate payrolls
mythical strength over the past year. There’s just one problem. They’re
monkeying with the wrong math.


It’s important to understand the intent of the number crunchers at the
Bureau of Labor Statistics. Measuring the number of jobs created at
new firms and companies that shutter operations is an exact exercise
once a year when tax records are updated. So they created the birth/
death model to estimate it based on the trends of the past five years.
Cyclical inflection points, however, negate the efficacy of those historic
averages, which is where we find ourselves today given private-sector
benchmark revisions in the year to March 2019 of -0.4% are outside
the +/- 0.1% band classified as statistical noise. This dynamic renders
October’s addition of 274,000 via the model overly optimistic
.


But here’s the key that most miss – you can’t simply subtract that number
from the 128,000 that was reported for the month, a figure that’s
reported on a seasonally adjusted basis given the birth-death factors
are not seasonally adjusted. The mistake, however, is made with regularity
by angry masses of bears who want a simple scapegoat to explain
away the data coming in stronger than forecasts.


More to the point, why leave it at that when there are alternative
hard sources of data that can better reveal the truer underlying trend
in payrolls well before revisions are reported this coming February.


Continuing jobless claims (the red line) can get you there. This is hard
data representing those who are currently receiving unemployment
benefits, and they’re reported weekly. As you can see, after troughing
at a recent low of -14.2% last September, continuing claims are on the
rise – they’re up 2.5%, their first increase in the current cycle.


In the last cycle, claims first rose in February 2007, a point at which
we knew the economy was slowing as is the case today. But nonfarm
payrolls did not fall until July of that year nor did they stay in the red
until February 2008 when we were two months into recession. This is
why economists classify payrolls as a lagging indicator.


As you can see, the ASA Staffing Index doesn’t have a history that
stretches back to the years that preceded the last economic contraction.

In fact, it debuted in July 2007, when non-farm payrolls first printed
negative warning recession was imminent. The index then simultaneously
peaked in December 2007 with the highest non-farm number that
would be seen until March 2010.


If it wasn’t for the corroborating continuing claims signal, we’d be
reluctant to assign the term “definitive” to the ASA’s recent deterioration.
While temporary employment has been declining for nine
months, it lingered in contraction for an even longer stretch in the 13
months through May 2016, the last industrial recession.


Let’s let the last line, the blue line – high-paying job creation among
workers (as opposed to managers) – be the deciding factor, bearing in
mind one Jerome Powell has hung his hat on consumption sustaining
the current expansion. As a reminder, we define “high-paying” as jobs
excluding Retail, Education and Health Services, Leisure and Hospitality
and “Other” Services.


Presumably, consumption hinges on income and confidence in its
durability, which thereby encourages households to take on debt, the
other critical support that underpins spending. And that precondition
relies on high-paying job creation given the top two quintiles of job
earners account for more than 60% of consumption, not just retail sales
.


The current cycle has featured exactly three months in which high-paying
jobs among workers have contracted – January and May 2016 and
October 2019
. You might agree the economy then and now is in different
places, which we hope dispels the myth of it being in a “good place.”

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YCharts - Smart Investment Decisions Made Simple

We here at Money Tree Podcast use YCharts to uncover new investing opportunities, analyze trends and monitor our progress. YCharts is a powerful financial data platform designed for Individual Investors, Financial Advisors and Asset Managers. Their platform makes our lives easier. What can be better than that.

We struck a deal for our listeners where you get free access to YCharts for a month so you can test it out.


YCharts Of The Day:

This first chart looks at the Fed’s policy shifts in the last decade.

This second chart look at the historical performance of the S&P 500 and Nasdaq after the Fed makes a change to interest rates

The last one is how the 10-2 Treasury Spread relates to the S&P 500.



Today's Guest:  Danielle Martino

Danielle DiMartino Booth is CEO & Chief Strategist for Quill Intelligence LLC, a research and analytics firm celebrating its one-year anniversary of launching The Daily Feather and the four-year anniversary of the Weekly Quill.  

 

DiMartino Booth set out to launch a #ResearchRevolution, redefining how markets intelligence is conceived and delivered with the goal of not only guiding portfolio managers, but promoting financial literacy. To build QI, she brought together a core team of investing veterans to analyze the trends and provide critical analysis on what is driving the markets – both in the United States and globally.

 

Since inception, commentary and data from DiMartino Booth’s The Daily Feather have appeared in other financial sources such as Bloomberg, CNBC, Fox Business, Institutional Investor, Yahoo Finance, The Wall Street Journal, MarketWatch, Seeking Alpha, TD Ameritrade, TheStreet.com, and more.

 

A global thought leader on monetary policy, economics and finance, DiMartino Booth founded Quill Intelligence in 2018.  She is the author of FED UP: An Insider’s Take on Why the Federal Reserve is Bad for America (Portfolio, Feb 2017), a full-time columnist for Bloomberg View, a business speaker, and a commentator frequently featured on CNBC, Bloomberg, Fox News, Fox Business News, BNN Bloomberg, Yahoo Finance and other major media outlets. 

 

Prior to Quill, DiMartino Booth spent nine years at the Federal Reserve Bank of Dallas where she served as Advisor to President Richard W. Fisher throughout the financial crisis until his retirement in March 2015. Her work at the Fed focused on financial stability and the efficacy of unconventional monetary policy.

 

DiMartino Booth began her career in New York at Credit Suisse and Donaldson, Lufkin & Jenrette where she worked in the fixed income, public equity, and private equity markets. DiMartino Booth earned her BBA as a College of Business Scholar at the University of Texas at San Antonio. She holds an MBA in Finance and International Business from the University of Texas at Austin and an MS in Journalism from Columbia University.

Danielle's Online Presence:



Today's Panelists

Space Economy – Are There Moonshot Opportunities Or Is It Too Early To Shoot The Moon?

Space... The final frontier. A universe of endless possibilities.

There is a emerging trend of investing in the space economy. This week we discuss whether this is an early chance to shoot the moon one some space investments or whether these investments will fizzle out. We interview Andrew Chanin about how investors can participate in this sector.


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Looking for a better way to invest? 

Consider Betterment.

It doesn’t cost much to start, and you get access to a portfolio built around your risk tolerance and your goals. Using Modern Portfolio Theory, pioneered by a Nobel laureate, Betterment can help you build wealth without getting caught up in the noise of the market.


Today's Guest:  Andrew Chanin

Andrew Chanin, Co-Founder and CEO of ProcureAM. ProcureAM is a new ETP issuer behind The Procure Space ETF (UFO), the world’s first pure-play space ETF. UFO tracks the S-Network Space Index, the first Certified Space Data Product™ to be recognized by the nonprofit Space Foundation. Andrew is "famous" in the ETF industry for launching various successful thematic ETFs, most notably cybersecurity ETF HACK that surpassed $1B in less than a year. 

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Today's Panelists

How Money Works: The Federal Reserve, Interest Rates, Inflation and Deflation – Interview with David Stein

Are you wondering how the Federal Reserve interest rates impact your life? Probably not... But you should. Interest rates impact everything that you do related to money.

This week we are discussing how the Federal Reserve's actions effect interest rates, inflation and deflation. We discuss why they manipulate interest rates, how this can effect your money, and what the Federal Reserve fears most (hint, its not ghosts).

How Many Works: How the Federal Reserve Impacts Investors

Authored by: David Stein

We often hear how the Federal Reserve just cut interest rates and perhaps the stock market rallied because it did so. Who is the Federal Reserve, what does it mean that they cut interest rates, and how does it impact you as an individual investor?

What Central Banks Do

The Federal Reserve is the U.S. central bank. It is also called “the Fed” for short. The Fed was created in 1913 when President Woodrow Wilson signed the Federal Reserve Act into law.

Most countries and regions have central banks. Examples include the Bank of England, the Bank of Japan and the European Central Bank. The purpose of central banks is to ensure stability in the financial system. That means making sure there is not too much inflation, which measures the rise in prices over time. Financial stability also means the economy is growing, but not too quickly since a rapidly expanding economy can lead to inflation. 

The Dual Mandate

The U.S. Congress has given the Federal Reserve two primary objectives: ensure stable prices and full employment. The primary way the Federal Reserve seeks to accomplish this dual mandate is through its monetary policy, which are actions the Fed takes to influence interest rates. For example, as part of its monetary policy, the Fed sets a target for very-short-term interest rates such as the interest rate it pays on deposits commercial banks hold at the Federal Reserve. Another short-term interest rate target is the Federal Funds rate, which is the interest rate that banks charge to lend money to each other overnight.

When the financial media says the Federal Reserve cut interest rates they are referring to the central bank lowering the Federal Funds target rate as well as the interest rate the Fed pays on deposits held at the central bank, which are known as reserves. 

How the Fed Influences Longer-term Interest Rates

While the Federal Reserve typically only directly controls short-term interest rates, its actions can also influence longer-term rates. A long-term interest rate can be decomposed into a series of short-term rates. For example, you could choose to borrow money for five years or you could take out a loan for one year and then refinance it every year for 5 years. Or if you could find a lender, you could take out a loan and refinance it every month for five years. There are even some businesses that borrow money for one day and refinance the loan every single day.

Because borrowers and lenders have the flexibility to choose their time frame for lending and borrowing, the level of long-term interest rates is directly influenced by households’ and businesses’ expectations for short-term interest rates. The biggest driver of those expectations is what central banks are doing with regards to monetary policy. Is the Federal Reserve lowering short-term interest rates and communicating that it will continue to do so? Or is the Fed increasing short-term rates? The short-term interest rate along with expectations for future short-term rates influences longer-term rates, which in turn influences how much households and businesses want to borrow. Lower interest rates encourage more borrowing while higher interest rates encourage less.

How the Federal Reserve Chooses the Level of Short-term Interest Rates 

Currently, short-term interest rates are about 1.5% in the U.S. while in other countries short-term rates are close to zero. Central banks set short-term interest rates at a level that approximates what is known as the neutral rate of interest. This is an unobservable interest rate or a theoretical rate. Central banks believe this neutral rate of interest is low enough to encourage businesses to borrow money to invest in new projects including hiring more workers. It is also the interest rate that motivates households to borrow to buy a new home or buy a car, which can keep construction and manufacturing workers employed. In other words, the neutral rate of interest is the rate of interest that ensures everyone that wants a job can get a job and that the economy continues to expand, but not at a pace that leads to too much inflation. The Federal Reserve sets a target for short-term rates that it believes matches the unobservable neutral rate of interest, which is the rate the Fed believes will ensure financial stability.

Additional Interest Rate Drivers

There are two other factors that influence the level of interest rates. The first is inflation expectations. When lending money, if investors and banks believe inflation will be higher in the future then they will want additional compensation in the form of higher interest rates to protect them against that loss of purchasing power.

In addition, if investors and banks are uncertain regarding future central bank actions or future inflation then they will want a higher interest rate to compensate for that uncertainty. That additional compensation is called a term premium.

These three factors: future short-term interest rate expectations, inflation expectations, and the term premium are the theoretical basis for the level of interest rates. Of course, the actual level of interest rates is set in the market based on the willingness of banks and investors to lend and the willingness of households and businesses to borrow.

How the Federal Reserve Impact Investors

Actions by Federal Reserve and other central banks can influence interest rates as individuals adjust their expectations based on what central banks say and do. In turn, fluctuating interest rates impact the prices and returns of numerous asset classes including bonds, stocks, and real estate. 

Extended periods of low interest rates like we have seen in the past decade mean investors earn less on their conservative investments such as savings accounts, bank certificates of deposits, and short-term bonds. Those low interest rates push individuals saving for retirement to save more while motivating retirees to spend less or find other ways to generate additional income.

Given the significant influence the Federal Reserve and other central banks have over interest rates, financial markets and the economy it is important that as individual investors we stay aware of what central banks are doing.


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Sign up to be one of our Money Tree Ultimate Insiders. You will have instant access to new episodes, automatically have access to our monthly giveaways, and the potential to be a guest panelist on our show


Looking for a better way to invest? 

Consider Betterment.

It doesn’t cost much to start, and you get access to a portfolio built around your risk tolerance and your goals. Using Modern Portfolio Theory, pioneered by a Nobel laureate, Betterment can help you build wealth without getting caught up in the noise of the market.


Today's Guest:  David Stein

David Stein helps individuals become more confident investors via audio, video and books. For the past five years, he has hosted the weekly personal finance podcast Money For the Rest of Us. The show has more than 250 episodes and over 10 million downloads. David's upcoming book, Money For the Rest of Us: 10 Questions to Master Successful Investing will be published by McGraw-Hill in October 2019. Previously, David was Chief Investment Strategist and Chief Portfolio Strategist at Fund Evaluation Group, LLC, a $70 billion institutional investment advisory firm, where he co-headed the 21-person research group. David's former institutional clients include The Texas A&M University System, the University of Puget Sound, and the Sierra Club Foundation.

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Money Conversations: How To Talk About Money With Elderly Parents

What is more awkward that talking to your parents about money?

If you are like me, not much.

Its a close call between talking to them about money or about the birds and the bees.

This week we discuss how to talk to your parents about money with Cameron Huddleston. She talks about why this is such an important topic, how you can make the conversation a lot less weird, and what can happen if you don't have this awkward conversation.

5 Reasons to End Your Fear of Talking to Your Parents About Their Finances

By Cameron Huddleston

Talking to your parents about their finances might seem like one of the most awkward conversations you can have. It ranks right up there with the birds and the bees talk your parents gave you when you were a child. In fact, you still might cringe every time you think about that awkward conversation.

But talking about money with your parents might seem even more taboo than talking about sex. A survey by personal finance website GOBankingRates found that 10% of respondents said they’d be more comfortable talking to their parents about their romantic life than their parents’ finances. And 9% said they’d rather talk to their parents about their parents’ romantic life than their finances.

Trust me – talking to your parents about their finances isn’t nearly as difficult as it seems. It’s certainly not as weird as talking to them about their love life. (Seriously, I can’t understand why anyone would rather talk to their parents about that.)

But if you are afraid of having family financial talks, it’s time to get past those fears. Why? As the author of Mom and Dad, We Need to Talk: How to Have Essential Conversations With Your Parents About Their Finances, I can tell you that the consequences of not having these conversations can be a lot scarier than the conversations themselves. Here are five reasons why you should stop being afraid to talk to your parents about their finances and should start the conversation as soon as possible.

Reason 1: The Conversation Won’t Be as Awkward as You Think

A friend of mine told me that he recently talked to his parents about their finances after his mom had a health scare. He wanted to make sure their finances were in order to deal with situations like that and to find out whether they had important legal documents such as a will, a power of attorney to make financial decisions for them if they no longer could and an advance health care directive that spelled out what sort of end-of-life care they did or did not want.

My friend said that the first conversation with his parents was the toughest – but it really wasn’t that hard. He just thought it was going to be awkward, which made starting the conversation difficult for him. Once my friend and his parents started talking, though, he realized that his fears were overblown.

If you let your parents know that you want to talk to them about their finances because you’re looking out for their best interests, they likely won’t get upset with you. Some parents might balk initially. But most will open up and start having these conversations with you.

Reason 2: Your Parents Might Not Have Their Financial Act Together

You might think you don’t even need to talk to your parents about their finances because you assume that they have their act together. They worked hard and seem to be getting by just fine. So why rock the boat by sticking your nose some place it doesn’t belong?

Unfortunately, your parents might not be as on top of their finances as you think. A 2019 survey by the Insured Retirement Institute found that 45% of baby boomers surveyed did not have any retirement savings. An earlier IRI survey found that only a quarter of boomers think they have enough money for health care expenses in retirement. And many don’t have a plan for paying for long-term care – which more than half of adults 65 and older will need at some point.

If your parents are among those statistics, they might turn to you for support as they age. You need to know whether they will need your help sooner rather than later so you can be prepared financially – or emotionally if you have to tell them you can’t afford to help them. You’ll also have time to encourage your parents to take steps to be better prepared (such as downsizing before they retire) and to meet with professionals such as a financial planner, accountant and long-term care insurance agent to help them plan.

Reason 3: Your Parents Might Not Have Essential Legal Documents

There’s also a good chance your parents don’t have the legal documents they need. A Gallup poll found that nearly half of adults ages 50 to 64 don’t have a will, and more than one-third of adults 65 and older don’t have a will. If you die without a will, your state laws will dictate who gets what. So if your parents want to have a say in who gets what they leave behind (even if it’s not much), they need to put it in writing in a will. Otherwise, family members could end up in court fighting over who gets what.

Even more important than a will are power of attorney and living will documents – which surveys have found that at least half of boomers don’t have. A power of attorney is someone you legally appoint to make financial decisions for you if you can’t. A living will (also called an advance health care directive) lets you spell out what sort of end-of-life medical care you do or do not want and name someone to make health care decisions for you if you can’t.

You have to be mentally competent to sign any of these legal documents. If something were to happen to your parents and they hadn’t named you their power of attorney or health care proxy and you needed to make financial or health care decisions for them, you’d have to spend thousands of dollars and several months in court proving they were incompetent so you could be appointed to act for them.

Reason 4: Your Parents Probably Won’t Initiate the Conversation

Some parents are eager to talk with their adult children about their finances. Some even give their kids updated spreadsheets of all of their accounts and passwords annually. But these parents are a minority.

Most won’t open up to their kids about their finances for several reasons. Fortunately, an Ameriprise survey found that the most common reason that older adults haven’t talked with their kids about their finances is because they simply haven’t gotten around to having the conversation.

Just because your parents haven’t talked to you about their finances doesn’t mean they don’t expect you to be involved with their finances as they age. In fact, it’s quite the opposite.

A survey by Fidelity Investments found that an overwhelming majority of parents expect one of their children to help manage their finances in retirement, be their caregiver and be the executor of their estate when they die. Yet, a large percentage of children expected to fill these roles didn’t know of their parents’ expectations.

Wouldn’t you rather know if your parents expected you to be involved in their financial lives before you actually had to step in and help?

Reason 5: This Conversation Can’t Be Avoided

I didn’t have detailed conversations with my mom about her finances before she was diagnosed with Alzheimer’s disease at the age of 65. Fortunately, I did get her to meet with an attorney while she still was competent enough to sign a will, power of attorney and living will. But I had to figure out the details of her finances as she was forgetting things. And I had to discuss long-term care with her as she needed it.

My situation with my mom is not unique. With people living longer, there’s a greater chance that your parents will have to rely on you or other family members for care-giving or financial support as they age. And the truth is, you will have to have conversations with your parents one way or another. It’s better to do it when they’re healthy and mentally competent. Then you can talk about what ifs and make a plan for emergencies rather than wait until an emergency happens when emotions are running high and there are fewer options to deal with the situation. As I said, as awkward as talking to your parents about their finances might seem, the consequences of not having the conversation can be much worse.

Cameron Huddleston is the author of Mom and Dad, We Need to Talk: How to Have Essential Conversations With Your Parents About Their Finances. She also is an award-winning journalist who has been writing about personal finance for more than 17 years. You can learn more about her at CameronHuddleston.com.

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Today's Guest:  Cameron Huddleston

Cameron Huddleston is an award-winning journalist with more than 17 years of experience writing about personal finance. Her work has appeared in Kiplinger’s Personal Finance, Business Insider, Chicago Tribune, Fortune, MSN, Yahoo, USA Today and many more print and online publications. She currently is the Life + Money columnist for GOBankingRates.


U.S. News & World Report named me her of the top personal finance experts to follow on Twitter, and AOL Daily Finance named me one of the top 20 personal finance influencers to follow on Twitter. She has appeared on CNBC, MSNBC, CNN and “Fox & Friends” and has been a guest on ABC News Radio, Wall Street Journal Radio, NPR and other radio shows nationwide. She also has been interviewed and quoted as an expert in The New York Times, Chicago Tribune, Forbes, MarketWatch and more.

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Today's Panelists

How Do Bloggers Make Money? Zero to Financial Independence in 1 Year

Have you ever been sitting in your job wondering how you could quit and be financially independent? You are in for a treat. Logan Allec became financially independent in one year from blogging. This is a great episode if you have ever wondered, how do blogger make money? Ever thought of becoming a blogger or content creator for a living yourself?

Its not all sunshine and rainbows, but Logan shares some of his secrets and shows you how he did it.


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Looking for a better way to invest? 

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It doesn’t cost much to start, and you get access to a portfolio built around your risk tolerance and your goals. Using Modern Portfolio Theory, pioneered by a Nobel laureate, Betterment can help you build wealth without getting caught up in the noise of the market.


Today's Guest: Logan Allec

Logan Allec is the founder of Money Done Right, a personal finance website devoted to helping everyday Americans live happier lives by giving them actionable ideas on building, growing, and maintaining wealth. Money Done Right is an affiliate partner with over 100 brands, primarily in the fintech space.  Before becoming an Internet entrepreneur, Logan was a practicing CPA with a multinational professional services firm serving large, publicly-traded companies. His experience helping large corporations save millions of dollars in taxes inspired him to help everyday people lead better financial lives as well. This desire became his motivation for founding Money Done Right in July 2017 as a hobby and then a side hustle while he was still working at a CPA firm. Within eight months of launching, Logan quit his day job and started working full-time on Money Done Right.

 

Logan has been recognized as a personal finance, tax, and credit expert in publications such as CNBC, USA Today, MarketWatch, U.S. News & World Report, HuffPost, Reader’s Digest, and more.  Living in the Los Angeles area with his also-entrepreneurial wife Caroline and his son Hunter, Logan enjoys playing basketball at the gym and exploring local hikes. He’s also been known to be quite competitive at board games.

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ESG Investing Socially Responsible Investing and Climate Change – Dale Wannen

Want to invest to make the world a better place? Want to invest in companies that are changing the world? Interested in ESG Investing?

You have come to the right place. This week we discuss socially responsible investing, ESG Investing , Impact Investing and the pros and cons of trying to change the world with your investing dollars. We also discuss what people get right and what they get wrong about socially responsible investing.

esg investing


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Looking for a better way to invest? 

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It doesn’t cost much to start, and you get access to a portfolio built around your risk tolerance and your goals. Using Modern Portfolio Theory, pioneered by a Nobel laureate, Betterment can help you build wealth without getting caught up in the noise of the market.


Today's Guest:  Dale Wannen

Dale Wannen runs Sustainvest Asset Management, an investment advisory firm solely focused on the world of sustainable and responsible investing.  He is passionate about getting investors to realize that how they invest can in the long run, effect what this world will look like in 10, 20 or 50 years.

 

Dale Wannen, founder of Sustainvest Asset Management LLC,  has over 20 years experience in wealth management and financial services. He specializes in ESG investment strategies, securities analysis, and shareholder advocacy.  He is often a guest speaker on the topic of ESG investing and shareholder activism. Dale has an MBA in Sustainable Management from Presidio Graduate School in San Francisco and a B.A. in Economics from Rowan University and currently sits as a Board of Director of non-profit Stewards of the Coast and Redwoods and is an investment committee member of the Sonoma County Community Foundation.

 

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Today's Panelists

My Worst Investments Ever and The Stories from Personal Finance Professionals

A Very Special episode this week... Live from Bankok and Live from Washington DC... We discuss our worst investments ever. Want to learn from the mistakes of others? Good. It is a lot smarter than making them yourselves. This week we discuss some Titanic investing failures and the top 6 mistakes to avoid at all costs.

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list of worst investments


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Looking for a better way to invest? 

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Today's Guest:  Andrew Stotz

In 1992 Dr. Andrew Stotz, CFA moved from a management career at Pepsi-Cola in California to teach finance in Thailand, he has never stopped teaching since then. However, in 1993 he fell in love with the job of being a financial analyst for which he was eventually voted #1. He transitioned into the job of head of research to cap a 20-year career at various investment banks. During that time, he co-founded CoffeeWORKS, Thailand’s leading B2B specialty coffee roaster and served as president of CFA Society Thailand. He now runs A. Stotz Investment Research, which services institutions and high net worth investors. In 2017 he launched the ValuationMasterClass.com to teach everything he learned to aspiring analysts. In 2018 he started MyWorstInvestmentEver.com podcast to help future generations reduce their investment risks by learning through the stories of others. Andrew lives in Bangkok with his 81-year-old mother, who will attest that he remains an analyst at heart!

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Today's Panelists