ITI Financial Mgt. EnewsletterPlanning Your Financial Future

Troy E. KennedyPrincipalITI Financial Management4650 S. National • Suite A-1 • Springfield • MO • 65810417-889-2550 • 877-889-2660tkennedy@itifinancialmgt.com • ITIfinancialmgt.com

Spreading Generosity

December 2020See disclaimer on final page

ITI Financial Management is a fee only, non commissioned investment advisory firm headquartered in Springfield, Missouri. We presently manageapproximately $85 million for over 200 accounts. In November 2009, Springfield Trust & Investment Company sold to a large out of town bankholding company. After 17 years as a shareholder/executive vice president with Springfield Trust & Investment Company, Troy Kennedy foundedITI Financial Management to continue to provide the highest level of personalized investment management and financial planning services. Thereare no fees to hire ITI nor are there any fees to terminate the relationship. It is truly a partnership with each client.

ITI Financial Management/Troy Kennedy is a Registered Investment Advisory Firm headquartered in Springfield, Missouri. All client assets areheld in custody at TD Ameritrade Institutional. All client statements, distributions, and internet access are provided by TD Ameritrade.

Americans gave almost $450 billion to charity in 2019, an increase of 4.2% over the previous year. Individualsaccounted for more than two-thirds of this amount, followed by contributions from foundations, bequests, andcorporations. Here is a breakdown of the recipients of this generosity, by percentage of total charitablecontributions.

Source: Giving USA 2020

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Sharing Your Money Values Can Be Part of Your LegacyWhen it's time to prepare the next generation for afinancial legacy, you might want to bring your familymembers together to talk about money. But sittingdown together isn't easy, because money is acomplicated and emotionally charged topic. Ratherthan risk conflict, your family may prefer to avoidtalking about it altogether.

If your family isn't quite ready to have a formalconversation, you can still lay the groundwork for thefuture by identifying and sharing your money values —the principles that guide your financial decisions.

Define Your Own ValuesWhat does money mean to you? Does it signifypersonal accomplishment? The ability to provide foryour family? The chance to make a difference in theworld? Is being a wise steward of your moneyimportant to you, or would you rather enjoy it now?Taking time to think about your values may help youdiscover the lessons you might want to pass along tofuture generations.

Respect PerspectivesThe unspoken assumption that others share yourfinancial priorities runs through many money-centeredconversations. But no two people have the samemoney values (even relatives). To one person, moneymight symbolize independence; to another, moneyequals security. Generational differences and lifeexperiences may especially influence money values.Invite your family members to share their views andfinancial priorities whenever you have the opportunity.

See Yourself as a Role ModelYour actions can have a big impact on those aroundyou. You're a financial role model for your children orgrandchildren, and they notice how you spend yourtime and your money.

Look for ways to share your values and your financialknowledge. For example, if you want to teach childrento make careful financial decisions, help them shop foran item they want by comparing features, quality, andprice. If you want teenagers to prioritize saving for thefuture, try matching what they save for a car or forcollege. Teaching financial responsibility starts early,and modeling it is a lifelong effort.

Practice Thoughtful GivingHow you give is another expression of your moneyvalues, but if a family member is the recipient, yourgenerosity may be misconstrued. For example, youradult son or daughter might be embarrassed to acceptyour help or worried that a monetary gift might comewith strings attached. Or you may have a familymember who often asks for (or needs) more financialsupport than another, which could lead to familyconflicts.

Defining your giving parameters in advance will makeit easier to set priorities, explain why you are makingcertain decisions, and manage expectations. Forexample are you willing and able to:

• Help fund a college education?• Provide seed money for a small business?• Help with a down payment on a home?• Pay for medical expenses?• Contribute to an account for a family member with

special needs?• Offer nonfinancial help such as child care or

transportation?

There are no right or wrong answers as long as yourdecisions align with your financial values and you aresure that your gift will benefit both you and your familymember. Maintaining consistent boundaries that definewhat help you are willing and able to provide is key.Gifts that are not freely given may become financial oremotional obligations that disrupt family relationships.

The Great Wealth TransferSeventy percent of U.S. household wealth is held by oldergenerations. Although younger people may be far behindtoday, they stand to inherit much of this wealth in thecoming decades, while also accumulating wealth throughtheir own efforts.

Source: Federal Reserve, 2020 (Q2 2020 data)

Reveal Your Experiences with MoneyBeing more transparent about your own financialhopes and dreams, and your financial concerns orstruggles, may help other family members eventuallyopen up about their own.

Share how money makes you feel — for example, thesatisfaction you felt when you bought your first homeor the pleasure of giving to someone in need. If youhave been financially secure for a long time, yourchildren may not realize how difficult it was for you, orfor previous generations, to build wealth over time.Your hard-earned wisdom may help the nextgeneration understand your values and serve as thefoundation for a shared legacy.

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Five Tips to Regain Your Retirement Savings Focus in 2021In early 2020, 61% of U.S. workers surveyed said thatretirement planning makes them feel stressed.1Investor confidence was continually tested as the yearwore on, and it's likely that this percentage rose —perhaps even substantially. If you find yourself amongthose feeling stressed heading into the new year,these tips may help you focus and enhance yourretirement savings strategy in 2021.

1. Consider increasing your savings by just 1%. Ifyou participate in a retirement savings plan at work, tryto increase your contribution rate by just 1% now, andthen again whenever possible until you reach themaximum amount allowed. The accompanying chartillustrates the powerful difference contributing just 1%more each year can make over time.

2. Review your tax situation. It makes sense toreview your retirement savings strategy periodically inlight of your current tax situation. That's becauseretirement savings plans and IRAs not only help youaccumulate savings for the future, they can help loweryour income taxes now.

Every dollar you contribute to a traditional (non-Roth)retirement savings plan at work reduces the amount ofyour current taxable income. If neither you nor yourspouse is covered by a work-based plan, contributionsto a traditional IRA are fully deductible up to annuallimits. If you, your spouse, or both of you participate ina work-based plan, your IRA contributions may still bedeductible unless your income exceeds certain limits.

Note that you will have to pay taxes on contributionsand earnings when you withdraw the money. Inaddition, withdrawals prior to age 59½ may be subjectto a 10% penalty tax unless an exception applies.

3. Rebalance, if necessary. Market turbulencethroughout the past year may have caused your targetasset allocation to shift toward a more aggressive orconservative profile than is appropriate for yourcircumstances. If your portfolio is not rebalancedautomatically, now might be a good time to see ifadjustments need to be made.

Typically, there are two ways to rebalance: (1) you cando so quickly by selling securities or shares in theoverweighted asset class(es) and shifting theproceeds to the underweighted one(s), or (2) you canrebalance gradually by directing new investments intothe underweighted class(es) until the target allocationis reached. Keep in mind that selling investments in ataxable account could result in a tax liability. Assetallocation is a method used to help manageinvestment risk; it does not guarantee a profit orprotect against investment loss.

4. Revisit your savings goal. When you first startedsaving in your retirement plan or IRA, you may haveestimated how much you might need to accumulate to

retire comfortably. If you experienced any major lifechanges during the past year — for example, a changein job or marital status, an inheritance, or a new familymember — you may want to take a fresh look at youroverall savings goal as well as the assumptions usedto generate it. As circumstances in your life change,your savings strategy will likely evolve as well.

The Power of 1%Maria and Nick are hired at the same time at a $50,000annual salary. Both contribute 6% of their salaries to theirretirement accounts and receive a 3% raise each year. Nickmaintains the 6% rate throughout his career, while Mariaincreases her rate by 1% each year until she hits 15%. After30 years, Maria would have accumulated more than doublethe amount that Nick has.

Assumes a 6% average annual rate of return. This hypothetical exampleof mathematical compounding is used for illustrative purposes only anddoes not represent the performance of any specific investment. It assumesa monthly contribution and monthly compounding. Fees, expenses, andtaxes were not considered and would reduce the performance shown ifincluded. Actual results will vary.

5. Understand all your plan's features. Work-basedretirement savings plans can vary from employer toemployer. How familiar are you with your plan'sspecific features? Does your employer offer amatching and/or profit-sharing contribution? Do youknow how it works? Are company contributions andearnings subject to a vesting schedule (i.e., a waitingperiod before they become fully yours) and, if so, doyou understand the parameters? Does your plan offerloans or hardship withdrawals? Under whatcircumstances might you access the money? Can youmake Roth or after-tax contributions, which canprovide a source of tax-free income in retirement?Review your plan's Summary Plan Description toensure you take maximum advantage of all your planhas to offer.

All investing involves risk, including the possible lossof principal, and there is no guarantee that anyinvestment strategy will be successful.1) Employee Benefit Research Institute, 2020

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How to Help Maintain a High Credit Score

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2020

IMPORTANT DISCLOSURES

Broadridge Investor Communication Solutions, Inc. does not provide investment, tax, legal, or retirement advice or recommendations. Theinformation presented here is not specific to any individual's personal circumstances.

To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for thepurpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional basedon his or her individual circumstances.

These materials are provided for general information and educational purposes based upon publicly available information from sourcesbelieved to be reliable — we cannot assure the accuracy or completeness of these materials. The information in these materials maychange at any time and without notice.

During the holiday shopping season, your credit scoreis probably the last thing on your mind. But as youstart your seasonal spending, remember to use creditwisely so you can start the new year with a healthycredit score. The following tips can help you maintainor potentially improve your credit score throughout theholidays and beyond.

Know how your credit score is calculated. Themost common credit score is expressed as athree-digit number ranging from 300 to 850. (Somelenders may calculate it differently, but this should be agood guideline.) The score is derived from a formulausing five weighted factors: payment history (35%),amounts owed (30%), length of credit history (15%),new credit (10%), and types of credit in use (10%).1Keeping these components in mind can help you stayon track with your credit.

Make payments on time. Set up alerts for everycredit card you have so you don't miss notifications ofcharges, statements, or due dates. To help avoidmissed payments, set up automatic payments. If youdo miss a payment, contact the lender and bring theaccount up-to-date as soon as possible.

Keep credit-card balances low. If you carry abalance, consider paying down the cards with thehighest balance-to-credit limit ratio first while keepingup minimum (or higher) payments on others. Don't"max out" your available credit.

Be careful about opening and closing accounts.Some retailers may offer discounts on purchases ifyou sign up for a store credit card, but store cardsoften have high interest rates and low credit limits.Unless you plan on shopping regularly at that storeand the card offers useful bonuses or discounts, avoidapplying for new credit cards solely to save money onpurchases. Likewise, try not to close multiple accountswithin a short period of time — this could actually hurtyour credit score.

Research before using credit boosting services.You might be tempted to sign up for a free service thatpromises to instantly boost your credit score, butthey're usually only worth considering if you have athin credit file and/or a low credit score. Theseservices can't fix any late payments you've made orreduce the impact of an excessive level of debt.

Monitor your credit report regularly. You can ordera free credit report annually* from each of the threemajor consumer reporting agencies atannualcreditreport.com. If you find incorrectinformation on your credit report, contact the reportingagency in writing, provide copies of any corroboratingdocuments, and ask for an investigation.

*Due to the COVID-19 pandemic, Equifax, Experian,and TransUnion are offering free weekly online reportsthrough April 2021.1) Fair Isaac Corporation, 2020

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