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The Best Time to Start a Financial Plan is Now

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by Tricia Bush, CPA, CFP®, Partner, Bestgate Advisors

Are you thinking about investing your hard-earned money but feeling a bit overwhelmed by all the choices out there? Don’t worry, you’re not alone.  It can be intimidating if you don’t have a good grasp of the basics. Let’s break down the different investment options in a way that’s easy to understand, especially if you’re a newbie.

Understanding Your Investment Choices

1. Stocks: Investing in stocks means owning a piece of a company. When you buy stocks, you’re essentially betting on the company’s success. Stocks can offer high returns but also come with higher risks due to market fluctuations. When you select individual stocks, your market return depends on the success of those specific companies.

2. Bonds: Bonds are like loans you give to governments or corporations. In return, they pay you interest over time. Bonds are generally considered safer than stocks, but because of this, they offer lower potential returns. For instance, you can invest in U.S. Treasury Bonds or corporate bonds issued by companies like Coca-Cola or Walmart.

3. Mutual Funds: Mutual funds pool money from multiple investors to invest in stocks, bonds, or other assets. They are managed by professionals who make investment decisions on behalf of the fund’s investors. An example of a mutual fund is the Vanguard Total Stock Market Index Fund, which invests in a broad range of U.S. stocks. This allows you to invest in just one fund but have multiple stocks and bonds in your portfolio. However, nothing is free, so because you are getting the benefit of a professionally managed fund, it comes with a fee, called the expense ratio.  This typically ranges between 0.10% -2.00% of the investment value due to varying degrees of active management.

4. Exchange-Traded Funds (ETFs): ETFs are similar to mutual funds but trade on stock exchanges like individual stocks. They often have lower expense ratios and can provide diversification across various asset classes, typically 0.05% – 1.00%. For example, the SPDR S&P 500 ETF (SPY) tracks the performance of the S&P 500 Index.

5. Real Estate: Investing in real estate involves purchasing properties or investing in real estate investment trusts (REITs). Real estate investments can generate rental income and appreciate in value over time. You could invest in a residential property or consider a REIT like Vanguard Real Estate ETF (VNQ), which holds a portfolio of real estate assets.

6. Commodities: Commodities include physical goods like gold, oil, or agricultural products. Investing in commodities can serve as a hedge against inflation and provide portfolio diversification. For instance, you can invest in gold through exchange-traded funds like SPDR Gold Shares (GLD).

Tax Benefits of ETFs Over Mutual Funds

As noted above, ETFs are similar to mutual funds, with one of the biggest differences being how they are taxed.  ETFs often have tax advantages over mutual funds. They are structured in a way that minimizes capital gains distributions, which can help reduce your tax liability. Additionally, ETFs allow investors to control when they realize capital gains by buying and selling shares on an exchange.

Key Considerations When Choosing Investments

Expense Ratios: Always compare expense ratios when selecting mutual funds or ETFs. Lower expense ratios mean less of your investment returns are eaten up by fees, leaving more money to grow over time.  When comparing mutual funds and ETF investment returns, be sure to incorporate the expense ratio in your analysis, so you’re looking at the true net return of the fund.

Risk Tolerance: Understand your risk tolerance before investing. Younger investors can generally afford to take more risk because they have more time to recover from market downturns.

Diversification: Diversifying your investments across different asset classes (stocks, bonds, real estate) can help spread risk. Index funds and ETFs are excellent tools for achieving instant diversification.

Long-Term Goals: Define your investment goals, whether it’s retirement savings, buying a home, or funding education. Your goals will influence your investment choices and strategy.

Beginner-Friendly Investment Strategies

Target Date Funds: These funds are designed for specific retirement dates. They automatically adjust their asset allocation (stocks vs. bonds) based on your target retirement year, meaning less decisions and monitoring on your part. This hands-off approach is ideal for long-term investors. Examples include Vanguard Target Retirement 2050 Fund or Fidelity Freedom 2035 Fund.

Index Funds: Index funds aim to replicate the performance of a specific market index, like the S&P 500. They offer broad diversification and are passively managed, resulting in lower fees compared to actively managed funds. A popular example is the Vanguard Total Stock Market Index Fund (VTSAX).

Why Start with Beginner-Friendly Options?

Investing can feel daunting, especially for beginners. That’s why starting with target date funds or index funds is a smart choice:

Simplicity: These funds offer a straightforward approach to investing, making it easier to get started.

Diversification: Both target date funds and index funds provide instant diversification across multiple assets, reducing risk.

Cost-Effectiveness: With lower expense ratios, these funds ensure more of your money stays invested and working for you.

In Conclusion

Investing is a marathon, not a sprint. Start by educating yourself about different investment options and strategies. Consider your risk tolerance, investment goals, and time horizon before making decisions. Target date funds and index funds are excellent choices for beginners, offering simplicity, diversification, and cost-effectiveness.

Remember, the key to successful investing is staying informed, staying patient, and staying disciplined. Start small, stay consistent, and watch your investments grow over time. Happy investing!

Disclaimer: The information provided in this article is for educational and informational purposes only. It should not be construed as investment advice or a recommendation to buy or sell any financial products or securities.

Beth Ohler & Co. Opens as a New Team of J&B Real Estate

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Alisha Yocum

Beth Ohler & Co. recently started as a new team of J&B Real Estate. Ohler, who has been an agent for J&B Real Estate for seven years now leads her team out of the company’s office in Walkersville. Ohler says opening her new company allows her to maximize the team’s reach and allows for more flexibility in providing all the great services they offer!

Ohler’s team will include three additional agents and an administrative/marketing assistant. Combined, the team has over 14 years of experience.

Whether you are looking to sell or looking to buy your first home, a farm, land, or a townhouse, Ohler says she is ready to help you. The company even offers discounts for first responders!

When asked what advice Ohler had for the current real estate market, she advises sellers to use someone local who knows the market, so they can develop a strategy to maximize your sale. For buyers, she had similar advice: Don’t wait. Contact a realtor as soon as possible, even as much as a year out, so you can make sure everything is in order for when you are ready to buy.

Ohler resides on her farm in Thurmont with her husband, David, and two daughters, Madison and Jordyn.

When not selling real estate, you will find her around town at the softball fields or showing livestock her family raised on their farm. Ohler is also known for her support of the local community.

In December, Ohler connected with her parents at Kelco Plumbing and brother at Bulletproof Roofing to provide a Santa’s Workshop event for the community. Ohler says she hopes to do more events like this in the future, as giving back to the community is an important part of her business.

For more information about Beth Ohler & Co., view the advertisement on page 24.

Real Estate – Is It Still a Seller’s Market?

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By Julie Byrd & Erin Kelly

Realtors, Long & Foster Real Estate, Inc.

The housing market is influenced by the state of the economy. With so many economic developments recently, you may be wondering about the impact on the housing market. To keep you informed, we looked at a few factors that are currently affecting the real estate market.

Rising Mortgage Rates

The recent increase in mortgage interest rates—currently over five percent—are the highest they’ve been in more than 14 years, and these rates are expected to continue to rise throughout the rest of 2022. We have noticed that in some instances, these increasing rates are resulting in hesitant buyers.

Persistent Seller’s Market

It’s still a seller’s market, with low inventory of homes available; however, we are starting to see a shift in the amount of days properties are on the market and the amount of offers coming in. In past months, many homes were going under contract in less than seven days, but we are now seeing homes sit on the market a little longer. We are also seeing fewer offers on available properties—1 or 2, instead of 8 to 10—as had been common. Since real estate is hyper-local though, this trend varies in different areas.

Increased Job Openings

We’re experiencing an all-time high for job openings in the United States. As the job market heats up, employers will be competing for qualified candidates, which should push wages higher.

Inflation

Inflation, however, is currently outpacing wage increases. But, as it stabilizes, higher wages should boost consumer buying power, helping minimize the affordability issues that come with higher mortgage rates and home appreciation.

The good news is that buying a home is an excellent hedge against inflation. While the amount you’re paying for food, gas, and materials has increased, locking in a 30-year fixed rate mortgage will keep your housing costs steady.

If you’re planning to sell your home while it is still a seller’s market, we would be happy to provide you with a comparative market analysis of your home’s value and guide you throughout the entire process. Alternatively, if you’re planning to buy a home, we can help you prepare, so you’ll be ready to make a winning offer. Our best wishes for a great July!

Real Estate – Is It Still a Seller’s Market?

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By Elle Smith,

Realtor, J&B Real Estate Is it still a seller’s market? That is the question everyone is asking. And, everyone has an opinion on what they think will happen to the market. I don’t have the answer, but I can share with you how the market today is different from the market in 2008. And, I can share what is happening in our market right now.

In 2008, the market was different than today’s market in that the real estate growth was driven by relaxed-lender practices. Low interest rates and extremely low down-payment requirements allowed people who would otherwise never have been able to buy a home to become homeowners (per Housing Capital, https://homesitewiz.com/home-renovation/best-answer-what-caused-the-real-estate-crash-of-2008.html). The low interest rates and low down-payments created a seller’s market, which, in turn, drove prices of homes up. However, when interest rates started to increase, the buyers who bought on ARMs were now upside down on their mortgages. This caused an influx in foreclosures and resulted in prices crashing.

Today’s market is not driven by these same factors. Low interest rates have certainly played a part in this becoming a seller’s market. The significant difference is the influx of buyers today. We have seen an unprecedented number of buyers entering the market the past several years, causing a strain on the housing inventory. In addition, new home builds are down. Combine this increase in buyers with the low inventory of new builds, and we have today’s market.

So, what will happen with interest rates that have already started rising? It is hard to predict, and I wouldn’t want to even try. What I can say is that interest rates are rising and, at the time of this writing, are at 5.5 percent and are expected to continue to rise through the rest of 2022. There is currently only 11 residential listings in the 21788-zip code. The Catoctin High feeder area has 45 total listings (this number includes land, lease, commercial, and residential). So, at least for the near future, the seller’s market is not ending. It will be interesting to see where the market is when my next article comes out in the fall. Enjoy your summer and support the local carnivals and farmers’ markets.

Location, Location, Location

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The “REAL” in Real Estate

By Sandi Reed Burns,

Realtor, Climb Properties Real Estate

Happy spring, everyone! Let’s spring right into what’s going on in your area as of March 22, 2022, according to Bright MLS data.

Thurmont: 29 total listings—made up of land, leases, commercial, and residential. If we only look at residential sales, there are a total of nine and four of them are “coming soon.” (This excludes the new builds under construction, as they are not on the MLS).

Emmitsburg: 16 total listings—made up of land, leases, commercial, and residential. Again, if we only look at residential sales, there are four active listings and zero “coming soon.”

Rocky Ridge: 7 total multiple listings types.

It certainly doesn’t look like much of a “Spring Market,” does it? This low inventory remains to keep the prices higher and limits buyers’ options of available homes.

Here’s a snapshot from National Association of Realtors: “February 2022 brought 6.02 million in sales, a median sales price of $357,300, and 1.7 months of inventory. The median sales price is up 15% year-over-year, and inventory was down 0.3 months from February 2021.”

I’m going to spring right to the point. We need more inventory in order to balance out the market. So, if you’re thinking about selling, please contact your local Realtor® for advice, and thank you for being part of the solution.

Location, Location, Location

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Buying or Selling in Today’s Market

By Elle Smith, J&B Real Estate, Inc. Realtor

It’s no secret that the real estate market in our area has been in a strong sellers’ market. And, it’s no secret that Frederick County is a desirable area. I’ve been blessed to call this area home my entire life, and I would not want to live anywhere else. So, I can understand why our area is so popular. Whether buying or selling a home, it’s never too early to start preparing.

During the holiday season, the market tends to slow down. This year is no exception. While the market is still healthy, we have seen a slowdown in activity. This makes it the ideal time to prepare to sell. If you have been considering selling, take this time to get your home ready for the spring selling season.

When I go on listing appointments, the number one question I get asked is “What do we need to do to prepare to sell our home?” The biggest thing you can do is declutter. The less clutter, the more spacious a home will feel. This may involve boxing things and putting them in storage. Make sure all appliances and major systems are in good operating condition. Touch up paint and drywall—neutral colors are always an excellent choice. Enhance the curb appeal: keep grass mowed, leaves raked, snow shoveled, and make a welcoming entrance. Remove or minimize personal items and photographs. Finally, clean your home top to bottom. Try to view your home through the eyes of a potential buyer. Think about what would make it appeal to you if you were seeing it for the first time. Updated bathrooms and kitchens will get more interest from potential buyers. And, with the increase in working from home and virtual school, home office areas are increasingly important. Outdoor living spaces—patios, decks, sunrooms—are also a big draw for potential buyers.

Selling your home during the holiday season can be challenging, but do not let it deter you from listing now. There are advantages to selling your home this time of year. Traditionally, there are less homes on the market, and therefore, less competition. Some buyers want or need to buy a home before the end of the year for job reasons. Even if you are waiting for spring to put your home on the market, it is never too early to start preparing your home for sale.

Buyers, don’t let the term “sellers’ market” scare you if you have been wanting to buy a home. With interest rates at record lows and rental prices at record highs, this is a good time to buy a home.

Depending on the property, you could pay a monthly mortgage payment that is less than a monthly rental payment. And, with the lack of rental properties in our area, buying a home is a realistic option.

When writing an offer on a home in this market, you want to be a competitive buyer. So, always be pre-approved with a mortgage lender before beginning your home search. A pre-approval will tell you how much house you can afford and will give you a summary of cash you would need at settlement. Meeting with a real estate agent is also one of the first things you should do. Maryland encourages all parties to have representation, so having an agent represent you as a buyer is in your best interest.

A buyer’s agent will meet with you to discuss your needs and wants. They can create a search for you that will alert you to “coming soon” and “active” properties on the market. They will represent your best interests in the home-buying process. Looking online is great, but sometimes the home you love may be under contract before you see it online. A buyer’s agent can send you alerts the minute a property hits the market.

 Buying or selling a home can be an exciting, yet overwhelming, step. Having a professional there to help you along the way can make it less stressful.

Wishing you a Merry Christmas and wonderful New Year.