2020 Fourth Quarter Newsletter

With Knowledge Comes Confidence

NEWSLETTER
FOURTH QUARTER 2020

UPCOMING WEBINAR

Adulting 101:
Financial
Planning
Basics

The average amounts of student loan debt and median credit card 2021 WEBINARS
balances are increasing every year. Even if you aren’t in debt, how
do you get yourself to a point of financial security? This quarter’s Mark your calendars! We will continue presenting
workshop will focus on increasing knowledge of personal finance webinars instead of in-person workshops through
concepts and help attendees learn about practical application the 2021. For more details or to register, visit our website,
20- and 30-somethings can use to achieve their long-term goals. Facebook, or Eventbrite. Following is the 2021 line up:
We will discuss budgeting, paying off debt, saving, investing, estate
planning, and insurance. Our goal is to empower our attendees with APRIL 21, 2021, 6 -7:30 P.M.
financial knowledge and provide them some action items to get
started in the right direction on the road to financial success. 2021 Market Briefing

If you or someone you know would benefit from attending this JULY 21, 2021, 6 -7:30 P.M.
webinar, RSVP today!
Raising Moneywise Kids
WEBINAR DETAILS:
OCTOBER 20, 2021, 6 -7:30 P.M.
WHEN: Wednesday, January 20, 2021, 6-7:30 p.m.
Retirement Planning
WHERE: Webinar (We will email you the webinar link.)

COST: None. This is a free event, so please share the
information with a friend.

RSVP: By Monday, January 18, 2021 to
[email protected], Eventbrite,
or by calling 317-872-5090

Learn more about financial planning basics in our monthly
Adulting 101 blog at wefinancialadvisors.com/blog.

Worley Erhart-Graves Financial Advisors is a Registered Investment Advisor. Registration as an investment advisor is not an endorsement of the firm by
securities regulators and does not mean the advisor has attained a particular level of skill or ability. All expressions of opinion reflect the judgment of
the authors as of the date of publication and should not be construed as personalized investment advice. Different types of investments involve varying
degrees of risk, and there can be no assurance that any investment will either be suitable or profitable for a client’s portfolio. Worley Erhart-Graves Financial
Advisors is not engaged in the practice of law or accounting. Always consult an attorney or tax professional regarding your specific legal or tax situation.
Worley Erhart-Graves Financial Advisors, Inc., is affiliated with Smitson Erhart-Graves Tax Advisors, LLC, through common control and ownership. Smitson
Erhart-Graves Tax Advisors provides accounting and tax preparation services. If you require such services, we may recommend you use Smitson Erhart-
Graves Tax Advisors, although you are under no obligation to do so. Fees for financial planning and investment advisory services are separate and distinct
from the fees Smitson Erhart-Graves Tax Advisors charges for their services.

Cheers To 20 Years

Juli Erhart-Graves, CFP®

As many of you know, 2020 marked the firm’s 20th In spite of the changing environment,
anniversary. We had lots of ideas and plans on how we were we were able to not only support, but
going to celebrate this milestone throughout the year. Then participate in, virtual events for the Ronald McDonald House
a global pandemic hit! Our grand celebration was scaled Charities of Central Indiana and the National Psoriasis
down drastically. We were able to highlight our newly- Foundation. In addition, we were able to physically be
refreshed website, as well as spotlight our team members present at the Indy Women’s Half Marathon in September.
for their accomplishments and contributions to the firm’s
success, all while continuing to provide top-notch services One of the most meaningful things for me this year is the
to our longstanding clients, as well as welcoming new growth of the firm. We have added two additional staff
clients. positions and promoted one person (more on that in
next quarter’s newsletter)—all geared around expanding
This year has made everyone step outside their comfort our investment and tax services. 2020 has had its ups
zone. Our longtime, in-person workshops were transitioned and downs, but what a way to celebrate the firm’s 20th
to online webinars with outstanding positive feedback. We anniversary! Cheers to 20 years!
relied on our contingency plans and technology during
the mandated “stay at home” order by Indiana’s Governor.

What is Fueling the Rise in Homeownership?

Gail Gill, CFP®

On average, over the past 50 years, 64% of the U.S. population At first, many thought homeownership
has owned their own home. This is true, except for the years would fall due to COVID. In fact, in the
between 1995-2012, which represents the rise and fall of second quarter of 2020, housing demand whipsawed from
the housing bubble during which homeownership peaked at down 41% to up 40% year-over-year. So, what happened?
69.2% in 2004. On reflection, some economists concluded When we took a second look, we found that most of the
that 64% of Americans owning their own home and 36% unemployment was in the service industries, such as leisure
renting was the norm and a reading above that may be cause and hospitality, restaurants, bars, hotels, travel, entertainment,
for alarm. But in the second quarter of 2020, homeownership retail, etc., which tend to have a high percentage of
edged its way back up to 67.9%. So, should we be concerned workers that rent their home versus buying. This means
that history may repeat itself? homeownership wasn’t hit as hard as everyone thought it
would be.
The difference this time is that homeownership has not
increased due to subprime mortgage loans being issued Many of those that kept their job during COVID are now
by banks. Instead, it’s due to historically low interest rates working from home with family in tow—the first time with
causing debt-to-income ratios to be competitive enough for everyone home 24/7. Families found themselves clamoring
mortgage applicants to qualify for a mortgage. Those who did for more space and ended up buying bigger houses in the
not qualify for a mortgage before, now do in many cases. suburbs, which opened smaller starter homes for first-time
home buyers.
• This upward swing in home ownership coincides with the
population shift of renters that are now homeowners. The Millennials, who have been known for putting off settling
surge started in 2015 but really got its legs from 2017- down, are now buying their first home. With mortgage
2020. rates so low, they have found their entry point into
homeownership. And then there are the Baby Boomers, which
• All races and ethnicities increased their position of are the largest group of homeowners. Boomers are having
homeownership from 2015 to 2020, with White a major impact by staying healthy and living longer in their
homeownership increasing by approximately 4.64%, homes than ever before. In fact, the increase in “gray divorce”
Blacks by 7.93%, and Hispanics by 11.50%. has more second homes being purchased.

• All age groups benefited from historically low mortgage All this leads to the fact that homeownership is not currently
rates with the largest increases in the under 35 and 35-40 experiencing an affordability crisis. We will, however, have to
age groups. keep a close eye on it until this health scare is over and our
economy is back to running at full capacity.

Plan Now to Make Tax Time Easier

Pam Smitson, CPA, CGMA

As we say goodbye to 2020 (thank goodness!), a bit of • Review your prior year return.
preparation now for this year’s tax return will pay off when it Chances are good that the information
comes time to file. Here are a few suggestions that may be you needed for your return last year, will be needed this
helpful: year too. Make a checklist of what you will need and who
to contact to get it, if necessary (such as daycare receipts).
• Develop a system that works for you. For example, Bonus points if you check things off as they come in the
create either labeled folders or an electronic folder door!
for scanned documents. Your system should keep all
important information together and be easy to access so • Identify new items. Remember to also gather information
you will be more likely to use it. If you plan to use scanned for new items that may be relevant at tax time, such as
documents, have a temporary home for paper documents inherited financial assets (IRA accounts, etc.), or if you
prior to scanning. started a side gig during the year. Or, if you disposed of
assets (such as a house), you will need information on the
• …And use it. Tax forms usually start arriving by mail or are sale to figure gains or losses.
available online in January. As documents come in the
door, put them in the designated spot so they do not get
lost on the kitchen counter or in your email inbox. Also,
review forms carefully, and if any information is inaccurate,
contact the issuer ASAP for a correction.

Should I Refinance My Mortgage?

Margaret Gooley, CFP®, CDFA®

The answer to this question is the classic financial planner of time you’ll have a mortgage by 10
answer to everything: ”It depends.” years and will still pay a total of $110,000
in interest over the life of the new loan. This represents
I’ve been hearing this question quite a bit since mortgage loan an additional $5,000 in interest paid over the life of your
interest rates have dropped to new lows in recent months. mortgage. As you can see, if your goal is to pay off your
While refinancing may sound like a great deal to get a lower mortgage quickly or pay as little interest as possible over the
rate or a lower required monthly payment, you should also life of the loan, refinancing may not be your best option. If in
consider your long-term goal for the mortgage, how much this same example, however, you refinanced and added back
interest you’ve already paid on your current loan, as well as the $500 monthly savings as extra principal payments each
the fees and time involved in the process of refinancing. month, you could pay off the balance in about 17 years with
around $59,000 in total interest paid on the refinanced loan,
Consider if you took out a 30-year, $300,000 mortgage 10 representing a much greater interest cost savings.
years ago at an interest rate of 4%. You’ve made the regular
monthly P&I (principal and interest) payments of about $1,435 If your goal is to lower your monthly required payment so you
each month for 120 months, and now your balance is about have less stress each month making ends meet, refinancing
$235,000. At this 4% rate, due to amortization schedules, your mortgage may be a good option for you. Using the
you’ve already paid about $110,000 in interest. If you were to numbers in the previous example, you could add about $500
keep making the regularly scheduled payments on this loan of cash flow back to your monthly budget by refinancing.
for the full 30 years, your total interest paid would be about Keep in mind, however, there will always be closing costs and
$215,000 over the life of the loan. Now, let’s say you found a other fees, like home appraisals, to be included in the total
great deal to refinance the $235,000 balance at 2.75% for 30 amount you’ll spend to go through the refinancing process. Be
years. Without any closing costs added to the balance, the sure to run the numbers or ask for an unbiased, professional
new required monthly P&I payment would be about $960. opinion if you’re unsure of the best option for you.
Under this new loan, however, you’ve extended the amount

STANDARD PRESORT
US POSTAGE
PAID

INDIANAPOLIS, IN
PERMIT NO. 937

3500 DePauw Blvd. | Suite 1035
Pyramid One, Third Floor
Indianapolis, IN 46268

317.872.5090 Phone
855.872.5090 Toll Free
317.872.5095 Fax

wefinancialadvisors.com

Smitson Erhart-Graves Tax Advisors is accepting A message from Bonnie
new clients and appreciates referrals.
When Grace Worley (big sister) asked
We are expanding our professional tax services offered through our me if I wanted to join her firm 25 years
affiliate firm, Smitson Erhart-Graves Tax Advisors, LLC. Services include ago, I have to admit that not only
tax preparation, annual tax planning, or long-term tax planning in was I clueless about what a mutual
harmony with your financial plan. Our client base includes individuals, fund was, I had no knowledge about
corporate, partnerships, estates, and trusts. financial planning and the impact it
could make in one’s life. Well, what an education it has
A Warm Welcome been. Joining the firm changed the trajectory of my life
to Anita Ison, CPA in many ways. Financial planning made me aware of my
ability to control many aspects of my destiny. I know that
Smitson Erhart-Graves Tax Advisors sounds hokey, but it’s true. At age of 60, I am fortunate to
be able to retire with a solid financial future. This journey
Anita started at Smitson Erhart-Graves has also allowed me to be a part of many wonderful clients’
Tax Advisors, LLC in September 2020. Her lives as they walked their own paths. One of my joys these
primary responsibilities include working many years has been watching clients celebrate big life
with clients on their annual tax filings and events such as the birth of their first child, the purchase of
working with her colleagues to address their dream home, and seeing their pride when they saved
the tax implications of financial decisions. diligently for their children’s education. I have worked with
She comes from a nationwide public accounting firm with a focus in some very talented women and joined in their passion to
employee benefit plans. She is a graduate of Indiana University School make lives better for those who pass through our door.
of Business and earned her CPA designation in 2001.
But now it is time for my next adventure. Bonnie has left
the building!

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