What Is Money? Part 3

In our first two posts we unpacked the profound influence money has on our lives, explained the basic functions money serves, and introduced the concept of barter.  Today we’ll pick back up with the important role barter played in the evolution of money and the transition from barter to commodity money.

Bartering - directly exchanging goods and services based on mutual need - served as a natural precursor to more complex economic systems. Direct trading between parties encouraged people to develop expertise in a specific area. That specialization of labor, while still limited, led to higher-quality goods, as well as more efficient production. 

This newfound prosperity would lead to increased “cross-border” trading, incentivizing new relationships with neighboring communities. It’s difficult to overstate the impact these developments had on the growth of civilization.  

🤷🏻‍♂️The Need for Something New

For all of the prosperity bartering created, its limitations were quickly reached as societies grew. Barter’s biggest drawback was its dependence on the double coincidence of wants: 

“the double coincidence of wants occurs when two parties each have something the other wants, and they agree on the value of these items, making an exchange possible.”

As the economy grows in complexity, this direct trade of value for value becomes more and more difficult. Societies needed a versatile way to exchange value - one that was not dependent on the simultaneous alignment of wants or needs.  It would be simpler if the participants in the economy had a thing that could be easily held and used in exchange for the goods and services they need. 

And this is the beginning of money as we know it.

💰The Beginning Of Money:

As we saw in part 2, in order for a thing to serve as money it needs to serve at least 3 functions:  1) Medium of exchange 2) Unit of account 3) Store of value. 

You can read more about these functions here (link to What Is Money Pt 2).

This thing, whatever it would be, needed to make life and trade simpler.  In much of Africa, Asia and the Middle East, cowrie shells began to be used, becoming one of the earliest forms of commodity money. In Northern Africa, glass beads were prized for centuries and would become a medium of exchange, allowing trade to dramatically increase across countries and continents. 

Interestingly, as late as the 1600’s wampum shells were considered legal tender among native Americans and early European settlers. By 1660 they lost their status as legal tender as more and more British gold and silver coinage found its way to American shores. 

Whether sea shells, glass beads, or some other commodity, they had to have the following characteristics, which would enable them to be used for money:

Desirability:  The item had to be desirable on some level. Shells and beads had smooth, shiny surfaces and distinctive oval shapes which were visually attractive. They were prized as ornaments and symbols of status. Both the shells and beads were easily woven into clothes and fabrics to serve as decorations or adornment. 

Durability:  Able to withstand frequent handling without wearing down, the item had to be well-suited for use in everyday transactions. They also needed to be non-perishable, unlike fruits, vegetables or livestock. Being durable and long lasting would make them a more ideal store of value. Shells and beads would often be worn, carried and traded so they needed to withstand daily use and abuse.

Portability:  Small and lightweight, cowrie shells and glass beads were easy to carry, making them more practical for trade than bulky commodities like livestock or grain. An item that was able to be moved over long distances efficiently was of great value when trading across borders. 

Scarcity:  The item needed to be limited in supply, difficult to counterfeit, and hold their value over time. While naturally found in coastal regions, the shells were valuable throughout West Africa, Asia and the Middle East because they were not readily accessible. Glass beads had been produced in North Africa for centuries, and were desirable in other parts of Africa, Asia and Europe that were farther away. Both items were regularly used for everything from purchasing goods and services to paying taxes.

Neutrality:  The items needed to be valued, yet not consumed or used, like wheat or tools. Up to this point, trade occurred when each party had something the other wanted, and we planned to use them. Money would become something we do not consume or use up, but exchanged for the items we desired. 

Unfortunately, while significantly more advanced than barter economies, early commodity monies also had limitations. Shells became less valuable as trade routes expanded and they were more easily acquired. European traders began mass-producing beads and flooded African markets, robbing the money of its scarcity. This form of inflation destroys a money’s perceived value, eventually leading to its failure. 

Barter was the solution to the limitations of individual production. Early forms of commodity money paved the way for societies to trade at a scale that was previously inconceivable, advancing civilization exponentially. These early economies were so successful at growing societies they would eventually become obsolete. 

⚡Money Is A Technology

Hopefully you’re beginning to see a theme: money is a technology that, if successful, will eventually lead to its own replacement.  

This is a feature of technology, not a bug. Here’s a simple example: LPs made music available on demand. Cassette tapes made music so portable you could listen in your car. CDs made cassettes obsolete by greatly improving sound quality and providing quick access to your favorite songs through digital files. MP3s erased demand for CDs by dematerializing music and allowing for vast collections to be carried around in your pocket and sent from device to device over the air. And now apps have removed the need for an MP3 player as you can stream nearly all of recorded history anywhere, anytime on your phone. 

Technological innovation is part of a healthy society, and money is a form of  technology. We’re just not taught to think of it this way. Like any technology, innovation will lead to new and better forms, which allow for new and better forms.

The journey from barter to early commodity money reveals a fascinating pattern of human ingenuity. Each step in this evolution addressed the limitations of its predecessor, showcasing money as a dynamic technology responding to societal needs. The transition from cowrie shells and glass beads to more standardized forms of currency highlights an important truth: successful monetary systems inevitably pave the way for their own successors.

This cyclical progression reminds us that the concept of money is far from static. It continues to evolve, driven by the ever-changing demands of expanding trade networks and growing economies. The story of money is, in essence, the story of human progress – a testament to our ability to create, adapt, and innovate in the face of economic challenges.

In our next installment, we'll explore how these early forms of commodity money led to the development of metallic currencies, setting the stage for the modern financial systems we know today.

This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.

LPL Financial Representatives offer access to Trust Services through The Private Trust Company N.A., an affiliate of LPL Financial.

Planting Seeds of Legacy: The Lasting Value of Estate Planning

Imagine your legacy is like a garden, cultivated over a lifetime. Like a master gardener plans for seasons beyond their own, estate planning is the art of planning and nurturing this garden for future generations. At Sequoia Advisor Group, we're your partners in this long-term cultivation. We bring the experience to help your legacy withstand time's tests.

We understand each garden is unique. Let us help you craft a plan that ensures your garden continues to thrive, bloom, and provide long after you've set down your tools - a living, growing extension of your life's work.

The Five Pillars of Estate Planning

Like the roots of a tree, a robust estate plan anchors your legacy through five essential documents:

1). Simple Will: Designates how your assets will be distributed and who will be responsible for this process.

2). Durable Power of Attorney: Appoints someone to manage your financial affairs if you become incapacitated.

3). Healthcare Power of Attorney: Authorizes someone to make healthcare decisions on your behalf.

4). Living Will: Specifies your preferences for medical treatment in situations where you cannot communicate.

5). Trust: Manages your assets during your lifetime and specifies their distribution after death.

Each of these documents plays a crucial role in ensuring your wishes are honored and your loved ones are cared for when you're no longer able to do so yourself. But why are so many of us reluctant to engage in this vital process?

Confronting Mortality: The Ultimate Act of Love

Estate planning requires us to face our own mortality—a prospect that can be as daunting as staring into an abyss. But here's a paradigm shift for you: creating an estate plan is one of the most profound acts of love you can offer your family. 

It's not about death; it's about life and the legacy you leave behind.

• It provides clarity and direction during emotional times

• It prevents potential family conflicts and legal battles

• It ensures your values and wishes are respected and carried forward

By embracing estate planning, you're not just preparing for the inevitable; you're actively shaping the future and providing a roadmap for those you leave behind.

The Key to Confidence

Estate planning is more than just legal documents; it's a gift of confidence—for you and your loved ones. It's knowing that you've done everything in your power to make their lives easier during a difficult time. It's the comfort of knowing your hard-earned assets will be distributed according to your wishes, and that your values will continue to influence future generations.

As you contemplate your estate plan, remember that you're not alone in this journey. The advisors at Sequoia are here to guide you through every step, ensuring your legacy is strong and enduring.

Ready to plant the seeds of your lasting legacy? Contact Sequoia Advisor Group today, and let's craft an estate plan that will stand the test of time.

This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.

LPL Financial Representatives offer access to Trust Services through The Private Trust Company N.A., an affiliate of LPL Financial.

The Financial Squeeze: Navigating America's Growing Financial Pressure

💸 A New Financial Reality

More and more we are seeing the evidence that things are not great in the economy. We’ve read the reports, seen the statistics and heard the rumors, but from our perspective, until recently, nothing had really changed. Whether traveling for work, on vacation or just having dinner in a local restaurant, if activity was any sign, there was little evidence of a broken economy. 

Over the past couple months though, a troubling trend has emerged. In more and more meetings, some families are expressing signs of financial stress, anxiety, or worse. Sadly, a growing number of people with whom we’ve met have lost or are losing their jobs due to employee reductions. We’re starting to see first hand the growing financial squeeze on households. 

The sad reality is, a staggering one-third of American families are now struggling to pay their bills. As with most challenges, understanding the  situation is the first step toward overcoming it.

🌪️ The Perfect Storm

Inflation: In 2022 inflation began to significantly impact the prices of nearly everything.  And it is at this point a reasonable person might ask, “Well who or what caused that?” It’s hotly debated, but I’ve got a pretty well reasoned opinion and the finger points at the very same group of “experts” who are now trying to fix it. But that is a conversation for another day. 

Despite efforts to curb it, inflation also continues to erode purchasing power, making everyday expenses even more burdensome for families across the nation.

As you may have observed, much of what is taking place in our economy is far outside of our control. Regardless, our finances are our responsibility. And really, no one should be surprised that government officials have managed to invent a cure that is worse than the disease.

Rising Debt: Rising costs, often coupled with lifestyle decisions or expectations have led to record-high household debt levels coupled with soaring interest rates have created a challenging environment for many Americans. This combination has made it increasingly difficult for households to manage their finances effectively. 

Here are just a few realities Americans are facing:

• 36.4% of Americans reported significant difficulty in paying for regular household expenses in April 2024, up 6.7% from 2022.

• Household debt hits a record $17.8 trillion.

• 54% of the country has been using a high interest credit card to pay at least one bill for more than a year.

• Credit card balances have risen significantly, reaching $1.142 trillion in Q2 2024, with an average balance of $6,501 per cardholder.

High Interest Rates: Higher interest rates have historically been used to purposefully slow an economy. Unfortunately this has a downstream effect, ultimately making it more difficult for households to manage their finances. 

In March of 2022, the Federal Reserve began to raise interest rates in an effort to combat inflation. This increases the cost of borrowing across the board, affecting mortgages, car loans, credit cards, and other forms of consumer debt. 

This puts additional strain on household budgets, often forcing families to allocate a larger portion of their income to debt payments. Unfortunately what often comes with higher interest rates, by design, is slowed economic growth. This means potential job losses or reduced work hours. 

💪 Build Financial Resilience

In times like these we go back to the basics. After all, the fundamentals are the fundamentals for a reason. One of our goals is to empower you with knowledge and strategies to weather difficult financial times. Here are a few strategies that could help:

Create and Stick To A Budget

I’ve worked in personal finance for nearly 25 years. Without exception, the individuals and families who have consistently grown their wealth while maintaining financial security, even through difficult times, are those who have and live by a budget. It’s like a superpower. Today, with apps and technology that can do 60% or more of the work for you, there really is no excuse. If you would like some guidance, we have some favorites we’d be glad to share. 

Emergency Fund Creation

Did you know that 40% of Americans can't cover a $400 emergency expense? Generally speaking this is not the case with our clients. We guide, encourage and support the practice of building robust emergency funds. They are meant to act as a critical buffer against unexpected financial shocks. If you don’t have one, and you still have the means, start aggressively building one today. Aim for 3 to 6 months of household expenses. 

Strategic Debt Management

If this is a struggle and there is a chance of making some changes, act quickly. Selling, trading, consolidating or renegotiating are all options. Because rates have risen this challenge is greater. Every option may not be ideal, but not taking action as a result is not an option.  

Negotiate and Communicate

If you are at the point (and maybe even if you aren’t) where paying your monthly obligations has become a problem, don’t hide. Take action. Negotiating lower rates on bills like internet, phone, or insurance may be more of an option than you realize. Secondly, contact your creditors and lenders early. Be upfront. Tell them your situation, let them know your desire to pay what you owe, but let them know something else has to be arranged. Being proactive can go a long way and can save you the nightmare of collections calls and scary letters in the mail. 

Side Hustles

Never has there been a time where building a side hustle was more possible. There are seemingly endless ways to make a few hundred to a few thousand extra dollars a month with a little effort. Seeking additional income sources can make a big difference when finances are tight.

Personalized Financial Planning

We recognize that each client's situation is unique. We specialize, not only in growing wealth, but managing and protecting it. Our team has learned and developed many strategies over the years to navigate a variety of financial situations and realities. Our tailored approach ensures that your financial strategy aligns with your specific needs and goals.

🤝 Your Partner in Financial Success

The financial squeeze affecting America is a complex challenge, but it's not insurmountable. With the right strategies, support, and knowledge, you can navigate these turbulent economic waters successfully. At Sequoia Advisor Group, we're more than just financial advisors – we're your partners in pursuing an independent financial future. 

Ready to take control of your financial future? Contact Sequoia Advisor Group today for a personalized consultation. Together, we can build a strategy that not only withstands the financial squeeze but seeks to thrive despite it.

This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.

Education Savings: 529 Plans vs. UTMA Accounts

The start of a new school year is the perfect time to take stock of your family's financial situation and consider how you can save for your child's future education expenses. Whether your child is heading off to kindergarten or college, having a solid plan in place can make a huge difference in their financial stability and opportunities. In this article, we'll explore two popular education savings options: 529 Plans and UTMA (Uniform Transfers to Minors Act) accounts. We'll break down the benefits and limitations of each, and provide guidance on how to choose the right one for your family's unique needs and goals.

Something To Think About

Before investing in a 529 Plan, it's a good idea to consider the specific benefits and incentives offered by your state or the state where your child may attend college. Some states provide state tax deductions or credits for contributions to a 529 Plan, which can significantly enhance the plan's overall value. Additionally, withdrawals from a 529 Plan are federally tax-free if used for qualified education expenses, but state tax treatment may vary. Consulting with a tax professional can help you navigate these nuances and ensure you're making the most informed decision for your family's unique situation.

Tax Advantages and Growth Potential

📚 529 Plans offer tax-free growth and withdrawals for qualified education expenses, akin to the benefits of a Roth IRA but for education. This makes 529 Plans highly attractive for those looking to maximize savings and minimize tax liabilities.

🏛️ Many states provide additional incentives such as deductions or credits for contributions to a 529 Plan, further enhancing their appeal.

Understanding these tax benefits is crucial as they can substantially increase the effective return on your investments in a 529 Plan, making it a powerful tool for building education savings.

Flexibility and Control

🔀 UTMA accounts provide the flexibility to use the funds for any purpose that benefits the minor, not just educational expenses. This can be advantageous if the child's future needs are uncertain or extend beyond educational expenses.

💸 However, the account control shifts to the child when they reach the age of majority, which could lead to less prudent spending.

This flexibility can be a double-edged sword. While it allows for broader use of the funds, it also introduces risks regarding how those funds are eventually used.

Impact on Financial Aid

📊 In financial aid calculations, 529 Plans are treated as parental assets, which typically have a minimal impact on aid eligibility. This treatment can preserve more aid options for the student.

📉 Conversely, assets in a UTMA account are considered the student's assets, potentially reducing eligibility for financial aid significantly.

For families expecting to apply for financial aid, understanding how different assets are assessed can be key to maximizing eligibility.

Investment Options and Contributions

 📈 529 Plans sometimes have limited investment options compared to UTMA accounts, which can invest in a wider range of assets including real estate and individual stocks.

🎁 Both accounts benefit from the annual gift tax exclusion ($16,000 in 2023), allowing family members to contribute without gift tax implications.

These characteristics highlight the need to align investment strategies with the specific saving goals and risk tolerance of your family.

Final Thoughts

Deciding between a 529 Plan and a UTMA Account is more than just a financial decision; it's a strategic choice that can shape your child's future. Each option has its strategic advantages, from tax benefits and impact on financial aid, to flexibility in usage and control over the funds. 

By carefully considering these factors, you can position your savings strategy to best support your child's educational and future financial success.

Pro Tip: There is an important difference between Kentucky and Indiana 529 tax laws. Indiana taxpayers can receive a state income tax credit equal to 20% of their contributions to a CollegeChoice 529 plan. There are some simple guidelines that must be followed, this provides an excellent opportunity for Indiana residents to use a 529 to their family’s benefit.

For more personalized guidance on setting up the right education savings plan, consider consulting with an advisor at Sequoia Advisor Group. Our team is dedicated to helping you make the best choices for your family's unique needs, always keeping your best interests at the forefront of our advice. 

Sequoia Advisor Group's Perspective

At Sequoia Advisor Group, we recognize that each family's situation is unique. The value you place on tax advantages versus future flexibility is the kind of tailored recommendations we specialize in. Our approach always centers on you and striving to understand your specific needs and goals. 

You can reach us at 502.576.3440 or info@sequoiaadvisorgroup.com

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. 

What Is Money, Part 2

Welcome back to our series, "What Is Money?" In our first post, we began exploring the profound impact of money on our lives, our families, and even the future of humanity. We discussed how, despite its crucial role, many of us don't fully understand what money actually is (you can read it here). To gain a clearer understanding, we emphasized the importance of delving deeper into the essence of money, rather than just its functions.

🔄The Barter System

Now, to truly grasp what money is, we need to explore its origins. Today, we'll dive into the historical context of money, starting with the barter system. To answer the question of what money is, we must first look at what it has been. 

The earliest economies were simple barter systems where participants engaged in the direct exchange of goods and services. People traded items of inherent value, like cattle or grains, based on what they had and what others needed. For example, a blacksmith might trade his services shoeing a farmer’s horses for some beef from that same farmer’s cattle.

💵Functions of Money

In this simple economy, there was no need for money. In a barter system the goods and services themselves were exchanged, value for value. This is known as the double coincidence of wants and occurs when two parties each have something the other wants, and they agree on the value of these items, making an exchange possible. As the economy grows in complexity, this direct trade of value for value becomes more and more difficult. 

For example, what happens when a farmer needs a new barn, he has livestock to trade, but the carpenter doesn’t need livestock at this time. Maybe there’s an attorney who does need some livestock, and the carpenter needs some legal services. However, the carpenter doesn’t want to trade his livestock, and the attorney doesn’t need the services of the carpenter. And who’s to say that all of those goods and services balance out to approximately the same value. This can get pretty complicated pretty quickly. It would actually be simpler if the participants in the economy had an item that could be easily held and exchanged by everyone to purchase the goods or services they need. This item would act as money, and as such must serve three primary functions: 

1) Medium of exchange 

2) Unit of account 

3) Store of value.  

A medium of exchange is anything widely accepted for goods and services. This medium has an agreed-upon value, also known as a unit of account. A unit of account is like a common measuring stick for value, helping people determine how much one item is worth in relation to another. This also makes it possible to accumulate and combine various amounts of the item to purchase different amounts of goods or services. Finally, the value can be preserved if one holds the item until they need to make a purchase, making it a store of value. These are the three most fundamental functions of money. 

Already, from this simplest of economies, a barter system, we’ve identified the need for an item that fulfills these three functions. While more information is needed to fully answer the question, what is money, this is a good place to pause and dig a little deeper. That is because what money is and what its functions are, while related, are not one and the same.

💎Money Is Time

Before we move on from the barter system let's identify what is really being bought, sold, or traded. At first glance, it may seem obvious: chickens, a side of beef, flour, boot repairs, clothes, or a new wagon wheel. On the surface, this is true, but what these goods and services represent is what truly matters.

Each of these goods and services fundamentally represent time and energy. Time is a scarce resource. Early in life, it seems like we have time in abundance and there will always be more, but as we age, we realize this isn't the case. Each of us has a finite amount of time. This makes time both precious and non-renewable. Once spent, time cannot be reclaimed, which is why our choices on how we use it are so important. Whether we invest it in work, leisure, learning, or relationships, our time is always scarce and therefore valuable.

In this context It's important to recognize that we're not only talking about the immediate time spent growing, tending, or delivering a good or service. We must also consider the time invested in learning and honing the craft. The quality of a good or service is proportional to the time spent understanding, practicing, and perfecting it. Mastery involves trial and error, and those who have invested significant time to develop their skills are able to create something of even greater value than those who haven't.

🔋The Role of Energy in Value Creation

By energy, I literally mean calories. I am referring to the physical and mental effort, powered by the consumption of food and water, that a person uses to perform tasks over time to produce things which are valuable and/or desirable. Whether it is raising a chicken from an egg to one that lays eggs, growing corn from a seed to many ears of corn, or learning to tan a hide and work with leather to form it into the shape of a shoe that sits comfortably around a person’s foot, they are expending energy in the form of calories burned to use their body and mind to develop something of value. And the calories consumed to generate this energy are the result of the investment of time and energy in the past so we can do work today. 

While demand, quality, scarcity and market conditions contribute to the value of a good or service, the investment of one’s time and energy also play an important role. Without it, the good or service would not exist. 

 🌱The Birth of an Economy

In any scenario we can imagine in a simple bartering system, at the foundation are individuals who get up every day to build, make, farm, learn, practice, and improve. Once they have expended enough energy and time, the desired good or service they create becomes valuable—a contribution to society and humanity, something that pushes back against entropy, quite literally making the world a little bit better. By investing these resources to create what others need and want, they encourage others to trade what they have accumulated with their own time and energy for these valuable creations. This is how an economy is born.

As we’ve seen, early economies relied on the direct exchange of goods and services through barter, highlighting the intrinsic value of human labor and skill. This foundational concept is key to understanding economic progress. In our next post, we’ll delve into how these early exchanges evolved into the use of a variety of items serving as money, eventually leading to the development of coins and paper currency and revolutionizing economies and societies. Stay with us as we uncover the journey from barter to modern currency, and discover how these historical developments continue to shape our financial world today.

The Importance of a Medical Power of Attorney for College Students

Congratulations! Your child's off to college. But amidst the excitement of campus tours and course selections, a silent shift occurs: at 18, your child gains full control of their medical decisions. Are you prepared for the day when "I'm their parent" no longer grants you access to their health information?

Due to privacy laws like HIPAA, once a child turns 18, parents no longer have the automatic authority to make healthcare decisions or access their medical records. This is where the importance of a Medical Power of Attorney (POA) becomes critical, especially for college students.

⚕️What is a Medical Power of Attorney?

A Medical Power of Attorney is a legal document that allows an individual (in this case, a college student) to appoint someone they trust, typically a parent, to make healthcare decisions on their behalf if they become incapacitated and unable to do so themselves. This authority can be crucial in emergency situations where immediate decisions are necessary.

🎓 Why is it Necessary for College Students?

🔹 Swift and Effective Decision Making: In emergencies, every moment counts. A medical POA ensures that parents can quickly access medical records and make informed decisions without bureaucratic delays.

🔹 Legal Framework for Decision-Making: This document provides a clear legal basis for parents to intervene and make necessary medical decisions which might otherwise be restricted due to privacy laws.

🔹 Peace of Mind: Knowing that there is a plan in place provides comfort to both parents and students, allowing them to focus on education rather than potential legal hurdles during crises.

🔑 Key Considerations in Establishing a Medical POA

🔹Legal Guidance: It’s advisable to consult with an attorney to ensure that the POA adheres to state laws and accurately reflects the student’s wishes.

🔹State Regulations: Since legalities may vary by state, understanding local requirements is essential.

🔹Family Dynamics: Open discussions between parents and students about the expectations and scope of the POA can prevent future conflicts.

🔹Collaboration with Healthcare Providers: Establishing a rapport with healthcare professionals ensures that they understand and respect the legal authority granted by the POA.

⚠️ Challenges and Limitations

While a medical POA is beneficial, it’s not without challenges. Misunderstandings can arise between parents and students regarding the extent of decision-making powers. This is one of the many reasons to consult with an attorney and a trusted advisor. Regular communication coupled with clear guidelines can help mitigate such issues. 

🎁 Wrap It Up

Establishing a Medical Power of Attorney for college students is more than a legal formality—it's a proactive step towards safeguarding their health and ensuring that in times of need, the right decisions can be made swiftly and with full authority. 

At Sequoia Advisor Group, we understand the nuances involved in such critical preparations and are here to provide the guidance and support needed to secure your child's well-being as they embark on their college journey. If you have kids over the age of 18 and haven’t taken this critical step, don’t wait any longer. Give us a call today at 502.576.3440 or email us at info@sequoiaadvisorgroup.com.

For parents and students alike, considering a medical POA is a vital component of college preparation, ensuring that focus remains on education and personal development, rather than potential legal and medical emergencies.

This information is not intended to be a substitute for individualized legal advice. Please consult your legal advisor regarding your specific situation.

LPL Financial Representatives offer access to Trust Services through The Private Trust Company N.A., an affiliate of LPL Financial.

What Is Money? Part 1

Welcome to the first post in our series, "What Is Money?" It might seem like a simple question, but the answers profoundly impact our lives, our families, and even the future of humanity. This might sound like an overstatement, but as you follow this series, you'll see just how true it is.

In my nearly 25 years in personal finance, I’ve noticed that although money plays a crucial role in our daily lives, many of us don’t truly understand what it is. This series aims to help us think more clearly, and more deeply, about the true nature of money.

💰Unpacking Money's Influence

Money affects us all.  It is woven into the fabric of society, shaping culture and influencing values and behavior.  Money plays such a central role that historically it has been issued and controlled by nations.

Governments and institutions frequently make decisions regarding money that leave us feeling uneasy. We sense their actions impact us, even if we’re not entirely sure how. The complexity of these issues often leads us to form seemingly strong opinions based on surprisingly weak knowledge.

Consider, for example, the topic of money printing. Most of us are familiar with the term, especially in recent years. But what exactly does it mean? Can money just be printed? How does this affect regular people like us? Is it bad, good, or simply necessary?

Understanding what money truly is helps us gain a better grasp of these larger-than-life issues and can positively affect how we earn, spend, save, and invest. With a clearer understanding of money, we can make informed decisions, benefitting our financial well-being and that of our families.

Over the next few posts, we will explore the history of money, the functions of money, modern money, and what money may look like in the future. I aspire for this series to enhance your understanding and inspire you to interact with money in new, more informed ways.

Over the years I have conducted more than a few Google searches for "What is money?" in search of a simple, straightforward answer. Since you're reading this, you can safely assume I didn't find one.

Here’s the result from Wikipedia: "Money is any item or verifiable record that is generally accepted as payment for goods and services and repayment of debts, such as taxes, in a particular country or socio-economic context." Not bad, but it’s not the “Aha!” moment I’m looking for either.

Here’s another definition from Investopedia: "Money is any item or medium of exchange that symbolizes perceived value." I like this one a bit more because it’s simple and mentions 'value', a concept that is central to understanding money. But it leaves me wondering: What is value? Where does it come from? What does it represent? 

It is really those questions that are driving this series. I’m not so interested in the functions of money as I am in the essence of money. Said another way, I’m not interested in what money does, or should be able to do; I want to understand what it is or what it fundamentally represents.

🤔Rethinking the Essence of Money

My reasoning is simple. If we can get to the essence of what money is, it becomes easier for us to relate to it and more difficult for others to obfuscate its purpose and value. Your money is an extension of you. It represents what you have accomplished, what you know, and your experiences. Think about it: the money you earn is a direct result of your skills, your time, and your effort. It’s a tangible acknowledgment of your hard work and achievements. At least it should be. 

However, if this is true, why is it frowned upon to equate our net-worth with our self-worth? Are you not more than your assets or the balance of your bank account? Absolutely! You have value because you exist. You are valuable because you were made by, and in, the image of God. This is true, good and immeasurably meaningful. 

But, if that is true then we must also acknowledge that we were created with and for a purpose. If we cannot agree on that, an entirely different conversation is required before we can even begin to agree on money. It is absolutely my position that people have purpose and when each of us strives to live into that purpose, corporately we are pushing back against entropy and creating the order and structure necessary for civilizations to exist.  

In order for a society to exist, or for civilizations to grow and thrive, individuals must contribute their time and energy, their knowledge, experience and expertise. This is necessary in order to maintain what has been built while also continually improving upon and creating new technologies and opportunities for a better future. 

In light of this, if we fully understood what money represented, we’d be far more comfortable with this idea that it is an extension of us, representing our individual contribution to society.

Unfortunately we give very little thought to what money is and what it represents. This is a direct result of the level of comfort we enjoy in modern society. When an economy is stable, we don’t see the need to question the nature of money. There is no motivation to delve into its complexities. But when economic turmoil strikes, or when we notice large disparities in wealth and access, it is natural to start questioning the fundamentals. Some of you have parents or grandparents who were affected by the Great Depression or who came from a less developed country with an untrustworthy currency. It’s noteworthy that those experiences have caused them to view and treat the financial resources differently than those of us who have never faced a profound financial crisis. 

Understanding what money truly is helps us see through the complexities and manipulations. It allows us to grasp how our money represents our time, energy, and achievements. Having this knowledge brings clarity to why it’s essential to safeguard money’s value and purpose.

I hope you’ll stick with me on this journey. At a minimum, it will be informative and intriguing. To truly grasp what money is, we’ll need to delve into its origins. How did we move from bartering with life’s essentials to using coins and paper bills? What lessons can we learn from these early transactions that still apply today? In our next post, we’ll journey back in time to uncover the evolution of money and how it laid the foundation for our modern financial world. You won’t want to miss it!

End Post 1

Mastering Your Revocable Living Trust

The revocable living trust can be a powerful estate planning tool. While it offers significant advantages, like avoiding probate and providing clear instructions for asset management after death, it also comes with pitfalls that can undermine its effectiveness if not properly addressed. 

In this article we’ll take a brief look at these pitfalls and how you can avoid them to maximize the benefits of a revocable living trust. 

✒️📔Craft a clear, helpful document

After learning they are the trustee of a deceased loved one’s trust, clients and referrals often contact us for guidance on how to properly administer the trust's directives. Upon review we find the trust, while created with the best intentions, is a mess to administer for a bevy of reasons. A poorly written trust benefits no one. Here are a few ways to get started:

🧐Specify Details: Clearly define beneficiaries, set terms for distribution, and outline the powers and responsibilities of trustees.

❌⚖️Avoid Ambiguities: Vague language or omissions can lead to disputes among beneficiaries or legal challenges, potentially dragging your estate into court.

🤔🛡️Consider Contingencies: Prepare for unexpected scenarios by including contingency clauses. This helps manage unforeseen changes such as the incapacity of a trustee or beneficiary, ensuring the trust continues to operate smoothly.

✍️💲Document Trustee Compensation: If the trustee is to be compensated, clearly state the compensation terms to prevent disputes and ensure transparency.

✅💰The Importance of Proper Funding

Funding your trust is a crucial step in the process. Unfortunately one of the most common mistakes we see is trusts left unfunded. An unfunded trust is just an expensive stack of paper. But a properly funded trust enables the primary benefits to be realized. Two of those benefits are:

🚫 Avoiding Probate: By transferring assets like real estate, bank accounts, and investments into the trust, these assets bypass the lengthy and public probate process.

🔐 Immediate Access: Proper funding ensures that trustees have immediate access to the assets for distribution according to the trust's terms upon your passing.

The good news is that funding the trust is not difficult, but it does require some guidance and intentionality. Here are a few steps to insure your trust is properly funded:

🏠➡️Title Transfer: Assets must be legally transferred to the trust. This involves changing titles and deeds into the name of the trust. To transfer real estate into the trust, you must prepare and sign a new deed that transfers ownership from yourself as an individual to yourself as the trustee of the trust. This deed then needs to be recorded with the local county recorder’s office. Depending on your state, there may be forms and fees involved.

🔀📄Change Account Registrations: For assets like bank accounts, investment accounts, and vehicles, you need to change the title or ownership to the name of the trust. This typically involves presenting a copy of the trust agreement to the financial institution or agency and completing their required forms. It's essential to ensure that all paperwork reflects that the asset is now owned by the trust.

👪🎯Update Beneficiaries: For certain assets, like life insurance or retirement accounts (e.g., 401(k), Roth IRA), you can designate the trust as a beneficiary. This doesn't change the ownership of the asset while you're alive but ensures the asset will be transferred to the trust upon your death. This is particularly important for coordinating these assets with your overall estate plan.

📊🔄Monitor and Update: Maintaining accurate and up-to-date records of the assets held in the trust is crucial. This includes documenting any additions or removals of assets. Regularly reviewing the trust with your estate planner or attorney is also recommended to accommodate any changes in your life circumstances or in the law that might affect your estate planning.

If you’ve made it this far you are well on your way to having a revocable trust that will accomplish your objectives. Below are just a few more steps that will supercharge your efforts.

📚Comprehensive Planning with Ancillary Documents

In addition to a revocable living trust, comprehensive estate planning should include other essential legal instruments to cover all aspects of your life and legacy:

📝 Powers of Attorney: Designate a trusted person to handle your financial decisions if you're incapacitated, ensuring continuity in managing your financial affairs.

🏥 Healthcare Directives: Outline your preferences for medical care and appoint someone to make health decisions on your behalf if you are unable to do so. This ensures that your health care wishes are respected and followed.

🔗 Coordinating Documents: Ensure your trust is aligned with these other estate documents and accounts. This prevents conflicts and oversights that could complicate the administration of your estate.

⚖️🧭Legal Guidance and Estate Alignment

To ensure your estate plan is both effective and compliant, seek professional advice:

👩‍⚖️ Professional Assistance: Engage experienced estate planning attorneys to draft and review your trust documents. They can provide crucial insights and ensure legal compliance.

🔄 Annual Reviews: Regularly review and update your estate plan to reflect any changes in laws or personal circumstances. This keeps your plan relevant and robust, adapting to your evolving needs.

😅Conclusion

A revocable living trust is a versatile and valuable tool in estate planning, offering streamlined asset management and privacy benefits. However, its effectiveness heavily relies on proper setup, funding, and maintenance. By addressing common pitfalls such as inadequate funding, vague documentation, and failure to update, you can ensure that your estate is managed and distributed exactly as you intend. Regular reviews and expert advice are key to leveraging this tool effectively, providing peace of mind and securing your legacy for future generations. 

Your team at Sequoia Advisor Group is here to help you navigate this process. Call us today at 502.576.3440 or email us at info@sequoiaadvisorgroup.com to get started. 

This information is not intended to be a substitute for individualized legal advice. Please consult your legal advisor regarding your specific situation.

LPL Financial Representatives offer access to Trust Services through The Private Trust Company N.A., an affiliate of LPL Financial.

Excellence In Everything: Rooted in Our Values at Sequoia

At Sequoia Advisor Group we have 5 Core Values that set us apart as well as define how we operate. They are:

• People First

• A Special Place

• Excellence In Everything

• Details Matter

• Cultivate Joy

This post is part of a series about our Core Values and why they matter so much to us. 

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Our clients deserve nothing less than our best. Every plan, every decision, every interaction is an opportunity to fully honor the trust you've placed in us.

What Excellence Looks Like at Sequoia

Personalized Financial Plans: Your financial plan is meticulously crafted to align with the unique canvas of your life's ambitions and circumstances. Through in-depth analysis of your personal situation, values and goals, we develop tailored strategies to guide you in the pursuit of your vision of prosperity and fulfillment.

Sophisticated Investment Management: Our approach to investment management is dynamic and informed by rigorous research. We continually analyze economic conditions and integrate the latest strategies to construct globally-diversified portfolios designed for prudent risk management and results that align with your objectives.

Proactive Communication: We pride ourselves on exceptional client service, keeping you fully informed through regular updates and educational insights. You'll always understand the rationale behind our recommendations as we partner with you in full transparency.

Continuous Improvement: The financial landscape constantly evolves, which is why our team embraces ongoing professional development. We strive to participate in advanced credentialing programs and diligently follow industry innovations to ensure you receive the latest and most effective guidance.  

Honoring Your Trust Through Excellence

At the end of the day, our obsession with excellence is about honoring you—our clients. You have worked hard and chosen to entrust us with your most precious assets: your future and your legacy. We view this as both a privilege and a duty to ensure that your trust is rewarded with excellence.

This commitment to excellence guides every facet of our work at Sequoia, ensuring we are not just your advisors, but partners, working toward lasting financial success and fulfillment.

"Why We Put People First"

At Sequoia Advisor Group we have 5 Core Values that set us apart as well as define how we operate. They are:

• People First

• A Special Place

• Excellence In Everything

• Details Matter

• Cultivate Joy

This post is part of a series about our Core Values and why they matter so much to us. 

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At Sequoia Advisor Group, our number one priority is you - the people we serve. Finance is about more than just numbers on a page. It's about your life, your family, your hopes and dreams for the future.

Our unwavering belief that each person bears inherent value, shapes all our interactions. This conviction ensures everyone is treated with the utmost care and consideration, reflecting our understanding of each life as a precious gift. This perspective not only guides our interactions but also deeply influences our approach to financial planning.

We understand that when you entrust us with your finances, you're doing much more than handing over an investment portfolio. You're giving us a glimpse into your world, your values, and the vision you have for your life's journey. That's why from the very first meeting, we take the time to truly understand your story.

What are your biggest goals and priorities? How much risk are you comfortable taking on? What kind of legacy do you want to leave for your loved ones?

These are the types of questions that guide our financial planning process. We don't just look at your assets, we look at the people behind those assets.

Our "People First" philosophy shapes everything we do, from preparing tailored financial plans to providing a reassuring voice whenever you have money worries keeping you up at night. We know the financial world can seem complicated, even overwhelming at times. That's why we're here - to be a steady, empathetic partner you can rely on.

Imagine sitting down with your advisor and rather than being bombarded with dry numbers and impersonal projections, you get someone who genuinely listens. Someone who wants to know about your grandkids' college plans, that dream vacation you've always wanted to take, the mission or charity you’re most passionate about, or how you envision your retirement years. Those personal details are hugely valuable inputs that allow us to craft a financial plan aligned with your real-life vision.

When you work with Sequoia, you're part of our family. And like any good family, we’ll strive to never loss sight of what really matters - the people we've been trusted to guide in the pursuit of their vision of financial freedom and fulfillment.

Money is a tool to help you live your best life, not an end in itself. As your financial ally, our role is to make dealing with the numbers as simple and stress-free as possible so you can spend more time focused on your family, friends, passions and goals.

We're in this together. And with our "People First" commitment, we not only affirm the value of each person, but also fulfill our mission to positively impact the lives of those we serve.

A Special Place: The Heart Of Sequoia Advisor Group

At Sequoia Advisor Group we operate around 5 core values that define how we operated and set us apart. They are:

• People First

• A Special Place

• Excellence In Everything

• Details Matter

• Cultivate Joy

This post is part a series about our core values and why they matter so much to us. 

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In Louisville, Kentucky where the hum of daily life resonates with the spirit of progress, Sequoia Advisor Group is designed not just for excellent work, but to uplift, inspire, and remind us of the beauty that surrounds us. 

As a financial planning and investment firm we aim to put people first, not only through our services, but through our office environment, carefully crafted for both staff and clients. 

View from a castle in Tuscany. “Open Window To Poppiano”

Our office, located just off I-264 and Shelbyville Road strikes a balance between the accessibility of city life with a somewhat surprising nod to nature. Our location, nestled between Louisville's primary malls, is about as central as it gets, ensuring ease of access for everyone. Yet, what sets it apart is not just convenience, but the unexpected green space. Our view is comprised of a lovely creek, cut between mature trees and regularly visited by a variety of wildlife, creating a peaceful backdrop to our daily work. 

The design of our office space is a physical manifestation of our belief in creating an environment that fosters comfort, inspiration, and a sense of belonging. Inspired by the concept of an art gallery, our walls proudly display the creativity and talent of local artists, with artwork that invites inspiration and conversation. 

“Justify 2018” / “American Pharoah 2015” / “Secretariat 1973”

Currently, we are honored to feature the paintings of MartiMar, a Louisville native whose art captures the spirit of our city, from the majestic beauty of horses to the timeless excitement of the Kentucky Derby. Marti will soon make the transition from a successful medical executive to a full-time artist. Her story is a testament to the power of following one's passion. It’s a journey we've been privileged to help plan, and now showcase.

“Reflections Of Energy”

The artwork that adorns our walls is not only for admiration, but is also for sale, with 100% of the proceeds going to the artist. This is not just our way of saying thank you, it’s also our way of contributing to the cycle of creativity and the beauty that enriches our community. We’d love for you to stop by the office Monday - Friday to view the art. 

Our commitment to creating "A Special Place" goes beyond visual aesthetics. From the way we greet our guests with their preferred refreshment to the subtle, custom scent that fills the air, every detail is crafted to make the Sequoia experience uniquely welcoming. 

Sequoia Blend Coffee in partnership with Sunergos Coffee, Louisville KY

At Sequoia Advisor Group, we believe that the environment in which we work significantly influences how we work and the quality of what we produce. In a world that often prioritizes immediate gratification, we choose to focus on quality, lasting value, and the principle that how you do anything is how you do everything. 

We aim to make Sequoia Advisor Group a beacon of creativity, community, and unwavering commitment to the well-being of those we serve.

You can learn more about our featured artist, Marti Mar here: www.martimar.art

You can learn more about Sequoia Advisor Group here: www.sequoiaadvisorgroup.com. 

What Is The Debt Ceiling

What Is The Debt Ceiling And Why Does It Keep Coming Up?

The debt ceiling is like the nation's credit card.

To run with the analogy, it’s like the kids having a credit card, but little idea of what credit is or how it works. They just know that every so often the credit card company sends a notice stating that they’ve almost maxed out the card and will have to stop spending if something doesn’t change. So what do they do?
They ask mom and dad to get the credit limit increased of course😎 .

Mom and dad argue about why the kids are spending so much. Mom says they can use it to pay for a the laptop and some sports equipment, which they need, but after that, they need to live on their allowance. This means they’ll need to cut their spending and use their allowance to pay down the credit card bill. YIKES!!

Dad says the kids deserve what other kids have - of course they need the basics, but they also need nicer school clothes, a few pair of shoes, and an iPhone. And some headphones. After all, they are good kids and they deserve it. He argues the kids young and can always pay down their debt later. For now it’s important they have what they deserve. 🤯.

Mom says dad is the one being irresponsible. Dad says mom is mean.

But here’s the rub. The kids have mom and dad’s credit card. Mom and dad do the majority of the spending, and they’ve always done the majority of the spending. They don’t understand budgets and credit any more than the kids. It’s hard to tell the kids no. It’s hard to buy a smaller house, and drive a used car. So instead of making those tough choices, mom and dad whip out the credit card.

In the end, mom and dad have always increased the limit on the credit card, avoiding divorce and bankruptcy by mere minutes.

In real life, the kids are the American people. Mom and dad are congress. Congress spends the money. The Treasury Department, who pays the Federal Governments bills, is the credit card company. No analogy is perfect, but it'll do.

Every year the Federal Government runs a deficit, meaning, they spend more than they make. About how much more do they spend than they make each year?

Well I’m glad you asked.
About $1.4 trillion more. Uh huh. Trillion. With a T.

$1,400,000,000,000.00. 👈 That much more.
The nation’s budget is $4.8 trillion in 2023. $1.4 trillion is about 30% of $4.8 trillion, meaning currently we spend about 30% more than we make. Every year.
That $1.4 TRILLION overage is the amount we put on the nation’s “credit card” every year. And it goes up every year.

That number is estimated to increase to $2 trillion annually by 2028, but who’s counting. More on that in a minute.

But....there’s a problem. Well, obviously. But there’s another problem. Actually there are several problems.

These problems are why this particular debt ceiling debate is a bit more concerning than the 23 other debt ceiling debates that have happened since 1997.

Problem #1 - We’ve already hit the debt ceiling.

Note the date on that article; January 19, 2023. You can read the article here.

The Treasury Department is already taking what it calls “extraordinary measures” to pay the government’s bills while congress points fingers at each other and takes exactly zero accountability for their actions.

“Extraordinary measures” are nothing more than not paying some bills in order to pay other bills. In this case, the Treasury is not paying money into the 'Civil Service Retirement and Disability Fund’ or the ‘Postal Service Retiree Health Benefits Fund’🙄 .

As one can imagine, these “extraordinary measures” only buy so much time. At some point the Treasury will have to stop paying other bills, and the gravity of the problem increases. This brings us to problem #2.

Problem #2 - The funds could run out more quickly than previously estimates projected 👀 .

On April 10, 2023 the Congressional Budget Office (CBO) released their report on the first 6 months of the fiscal year. Turns out the annual deficit is already at $1.1 trillion. That means, at this pace, our deficit won’t be $1.4 trillion, but $2.2 trillion. “I thought that wasn’t supposed to happen until 2028” you say! I know!

The report says this year’s deficit increase due to higher than expected expenditures coupled with lower tax receipts.

That is a 50% increase in the deficit and could easily push the debt ceiling debate back to center stage much more quickly than congress expected.

Yes, there are more problems...like:

✅ Congress is more divided ideologically than ever and demonstrates minimal capacity to work together.

✅ Our economy is still struggling to recover from the pandemic keeping financial tensions and concerns high.

✅ There is a growing chorus of voices outside the US actively seeking ways to transact apart from the dollar.

Those can wait for another day.

The primary reason this conversation matters at all is, we could exhaust the “extraordinary measures” more quickly than Congress anticipates. If Congress is too focused on political gamesmanship they could easily put the country at real risk of default.

What’s Likely to Happen?

This is the 23rd time in the past 25 years we’ve hit the debt ceiling (see chart below).

Increasingly congress has used this issue as a political lever against the other party to extract some concessions, pushing the deadline into the final hours in order to maximize leverage and exposure.

And yet they have always increased it. I don’t expect anything different this time. However, the concern that the deadline could be closer than they realize and could lead to unintended consequences is a real possibility. The economy is enormous, and

we shouldn’t assume they know how long they can wait to act, or if what they do will work. Based on their rhetoric it seems far more likely that they lack even the most basic understanding of financial and economical principles...they don’t even care when the bills are due. And therein lies the real concern.

The Bottom Line

Congress is playing a dangerous game that is of little to no benefit to the American people. Rather than trying to score political points, Congress must find ways to work together to address a serious issue that could legitimately damage the United States ‘credit score’ on the global stage. The most likely scenario is that they will find a resolution in the final hours, but there is a real concern that this time the grace period on their overdue payment could come sooner than they can write the check.