• Summer Vacation Budgeting

    Tips for Saving Money While Traveling

    How You Can Enjoy the Season without Breaking the Bank

    Summer is the perfect time to take a break from the daily grind and go on a vacation. However, if you’re not careful, the cost of travel can quickly add up and leave you with a hefty bill. The good news is that with some careful planning and budgeting, you can enjoy a memorable vacation without breaking the bank. Here are some summer vacation budgeting tips for saving money while traveling this summer.

    Summer Vacation Budgeting Tip #1: Choose Your Destination Wisely

    The first step in saving money on your summer vacation is to choose your destination wisely. Consider destinations that are less popular or off the beaten path, as these are often more affordable. Look for deals on airfare and accommodations and consider traveling during the week instead of on weekends, as this can also save you money.

    Summer Vacation Budgeting Tip #2: Set a Budget

    Before you start planning your vacation, it’s important to set a budget. Determine how much you can afford to spend on airfare, accommodations, food, and activities, and stick to this budget as closely as possible. Keep in mind that unexpected expenses can arise, so it’s a good idea to set aside some extra money for emergencies.

    Summer Vacation Budgeting Tip  #3: Look for Deals and Discounts

    There are many ways to save money on travel, such as using travel reward points, booking early, and looking for deals and discounts. Consider using a travel rewards credit card to earn points that can be redeemed for airfare or hotel stays. Check with your employer, school, or membership organizations for any travel discounts that may be available. If you’re a veteran, you may qualify for special travel discounts, too.

    Related Article: Financial Planning For Recent College Graduates

    Summer Vacation Budgeting Tip #4: Plan Your Meals

    Eating out at restaurants can be a major expense while traveling. To save money, plan your meals in advance and look for affordable dining options, such as street food or local markets. Consider staying in accommodations that have a kitchen so you can cook some meals yourself.

    Summer Vacation Budgeting Tip #5: Choose Free or Low-Cost Activities

    One of the best ways to save money while traveling is to choose free or low-cost activities. Look for outdoor activities, such as hiking or biking, that don’t cost anything. Visit local museums or parks that offer free admission or take a self-guided walking tour of the city.

    Summer Vacation Budgeting Tip #6: Be Flexible

    Finally, be flexible with your travel plans. If you’re willing to travel during off-peak times or stay in less expensive accommodations, you can save a significant amount of money. Consider taking a road trip instead of flying or staying in a vacation rental instead of a hotel.

    Are You Financially Prepared for the Summer Season?

    For many people, summer is the time to enjoy travel and time off with family and friends. With some careful planning and budgeting, you can enjoy a memorable summer vacation without breaking the bank or veering off the path to achieving your financial goals. By choosing your destination wisely, setting a budget, looking for deals and discounts, planning your meals, choosing free or low-cost activities, and being flexible with your plans, you can save money and have a great time on your summer vacation.

    If you’d like to discuss more personal finance tips or create a financial plan, contact Lane Hipple Wealth Management Group at our Moorestown, NJ office by calling 856-249-4342, emailing info@lanehipple.com, or to schedule a complimentary discovery call, use this link to find a convenient time.

    Illuminated Advisors is the original creator of the content shared herein. I have been granted a license in perpetuity to publish this article on my website’s blog and share its contents on social media platforms. I have no right to distribute the articles, or any other content provided to me, or my Firm, by Illuminated Advisors in a printed or otherwise non-digital format. I am not permitted to use the content provided to me or my firm by Illuminated Advisors in videos, audio publications, or in books of any kind.

  • What are Buffer ETFs?

    Written by Emily Doak, CFA®
    Director of ETF Research,
    Charles Schwab Investment Advisory, Inc.

    Buffer exchange-traded funds (ETFs) offer a potential solution to a well-known problem in behavioral finance,
    which is that many investors find losses to be much more distressing than missing out on potential gains.

    Accordingly, buffer ETFs have become one of the fastest growing corners of the ETF market. Since 2018, over 100
    buffer ETFs have been launched, and they’ve attracted over $14 billion in assets.¹

    But it’s important for investors to understand that covering structured products in an ETF “wrapper”—which is what buffer ETFs are, in a nutshell, as we’ll explain below—doesn’t make them any less complex. Investors
    should be prepared to fully unwrap any investment product they are considering investing in, before making
    the investment.

    The story starts with structured products

    “Structured products” refers to packages of derivative contracts tied to other assets or metrics in the broader
    financial markets, such as equity indexes, credit spreads, interest rates, commodity prices, etc. Traditionally,
    structured products have been offered by large investment banks to both retail and institutional investors.
    These packages of derivatives offer investors unique patterns of returns in structures (often medium-term
    notes or insurance contracts) that are more convenient, and potentially more tax-efficient, than holding derivatives
    contracts directly.

    While they often sound great, structured products historically have come with some significant drawbacks.
    They can be expensive and often have opaque fee structures. They can be complex and difficult to value.
    They often contain credit risk, which means that they depend on large investment banks standing behind
    certain promises, and, in most cases, they lack secondary market liquidity, making them nearly impossible to sell
    before maturity.

    Enter the ETF wrapper

    Recently, fund sponsors have begun enclosing structured products within the ETF “wrapper,” believing they can
    offer the same strategies with greater transparency, more secondary market liquidity, and lower credit risk
    than traditional types of structured products. Buffer strategies were the first, and are currently the most
    popular structured product strategy to be offered in an ETF wrapper.

    Buffer ETFs are funds that seek to provide investors with the upside of an asset’s returns (generally up to a capped
    percentage) while also providing downside protection on the first predetermined percentage of losses (for example,
    on the first 10% or 15%).

    Most of the buffer ETFs currently on the market have a one-year outcome period, meaning that the caps and
    buffers (as stated) apply only to investors who purchase on the rebalance date and hold the ETF throughout the
    entire outcome period. Investors who purchase after the rebalance date will receive different caps and buffers based
    on the performance of the referenced index between the rebalance date and when they purchased the fund. Fund
    sponsors usually post the remaining buffers, caps, and days in the outcome period on funds’ websites.

    Buffer ETFs are built with flexible-exchange, or “FLEX,” options. Like other types of options, FLEX options give
    their buyers the right, but not the obligation, to buy or sell a security at a set price in the future. Like other
    options, they are guaranteed, or “cleared,” by the U.S. Options Clearing Corporation (OCC), a self-regulatory
    organization monitored by both the Securities and Exchange Commission (SEC) and the Commodity Futures
    Trading Commission (CFTC), and funded through the fees of member exchanges. This should provide FLEX
    options with lower counterparty risk than private swaps or other types of customized derivative contracts used in
    traditional structured notes, due to centralized clearing through the OCC.

    Buffer strategies are still complex

    However, whether offered as a traditional structured note or as an ETF, buffer strategies can still be complicated.
    Typically, there are three layers to a buffer ETF’s strategy:

    • First, the fund obtains synthetic exposure to an index by buying and selling options.
      •  
    • Second, the fund creates a downside buffer by purchasing a put option, which gives it the right to sell its exposure if the index declines in value. This is typically the most expensive part of the strategy, and it necessitates the third layer.
      •  
    • Third, the fund sells options to “finance” the purchase of this put. Typically, the fund will sell both a call option (which caps its upside potential) and a put option with a strike price lower than the put purchased (which resumes downside participation).

    The components of buffer ETF return

    At the end of the outcome period, or the date on which all the options expire (usually 12 months), a buffer ETF will roll
    into a new set of options contracts with the same buffer level and term length, but with a new upside cap. This cap
    may be higher or lower than the preceding period and will depend on options market conditions at that time.

    This structure has four important implications:

    • First, exposure to the index is limited to price returns (dividends are not included).
      •  
    • Second, downside protection is only “buffered,” not eliminated. When the referenced index falls below the downside buffer, the fund will resume participating in losses as a result of the put sold in layer three. In other words, if the index declines 27% during the outcome period and the fund has a 10% buffer, an investor will experience a roughly 17% loss (management fees will subtract slightly more).
      •  
    • Third, the fund’s upside is capped through the sale of the call option at whatever level generates sufficient additional income to offset the purchase of the put in layer two. Consequently, if investors want more downside protection, the trade-off is a lower upside cap. Conversely, for less downside protection, investors retain more upside potential.
      •  
    • Finally, the strategies employed by buffer ETFs will generally cause these funds to exhibit greater potential for loss than potential for gain. In other words, by capping the upside, investors miss out on gains that exceed the upside cap, but they still participate in all downside losses minus the buffer.

    Despite buffer ETFs’ growing popularity, investors shouldn’t ignore the impact that excluding dividends
    and capping performance will have on their overall experience. As a rule of thumb, when markets are more
    volatile investors typically can receive better terms, as volatility is a component of options pricing. However,
    the cost of the FLEX options held by these types of ETFs may not be well disclosed to investors, and rolling
    options (replacing expiring options with new options) may cause the performance of buffer ETFs to lag significantly
    compared to ETFs that directly hold the stocks in the underlying indexes.

    Bottom line

    During their relatively brief history, buffer ETFs have worked as expected—even during the extreme volatility of
    early 2020. Although they did not eliminate losses during those periods, they buffered them. The ETF wrapping also
    provides some benefits versus other structured products, such as greater transparency and liquidity.

    However, buffer ETFs aren’t right for everyone. Investors seeking downside protection should explore all their
    financial options before making a decision. These options may include adjusting your asset allocation to
    better match your risk tolerance, or exploring the role that annuities and insurance may play in your overall
    financial portfolio.

    ¹Based on data from FactSet, June 22, 2022.

    Important Disclosures:

    Investors should consider carefully information contained in the prospectus or, if
    available, the summary prospectus, including investment objectives, risks, charges,
    and expenses. Please read it carefully before investing.


    The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.

    Options carry a high level of risk and are not suitable for all investors. Certain requirements must be met to trade options through Schwab. Please read the options disclosure document titled “Characteristics and Risks of Standardized Options.” Supporting documentation for any claims or statistical information is available upon request.

    Investing involves risks, including loss of principal. Hedging and protective strategies generally involve additional costs and do not assure a profit or guarantee against loss. Multiple leg options strategies will involve multiple commissions. Covered calls provide downside protection only to the extent of the premium received and limit upside potential to the strike price plus premium received.

    All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed.

    Asset allocation strategies do not ensure a profit and do not protect against a loss in any given market environment.

    Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve.

    ©2022 Charles Schwab & Co., Inc. All rights reserved. Member SIPC.
    CC7049906 (0721-1UG2) ATL115574-01 (07/22)


  • Financial Planning for Recent College Graduates

    Six Steps to Prepare for Long-Term Success

    Graduating from college is a major milestone, but it can also be a daunting time for many young adults as they transition into the “real world”. If you have a recent college graduate in your life, they may be facing a number of financial challenges, from student loan debt to finding their first job. Financial planning may be the last thing on their mind, but you can use your influence and experience to help them see the benefit of taking financial planning steps as a recent college graduate in order to set themselves up for long-term success.

    Share the six steps below to help them get started.

    Financial Planning for Recent College Graduates Tip #1: Create a Budget

    The first step in any financial plan is to create a budget. Don’t think of it as something that constrains you. Rather, consider your budget a tool to balance spending on needs and wants, and to help you achieve your goals. Creating a budget helps you understand where your money is going and where you can make adjustments to save more. Start by listing all of your monthly income and expenses, including rent, utilities, groceries, transportation, and any debt payments, such as student loans. Then, look for areas where you can cut back, such as eating out less or finding a more cost-effective apartment. Be sure to set aside some money each month for savings, as well. (More on that below.)

    Financial Planning for Recent College Graduates Tip #2: Make a Plan to Pay Off Student Loans

    Student loan debt is a major concern for many recent college graduates. If you have student loans, make a plan to pay them off as quickly as possible. Consider consolidating your loans or refinancing them to get a lower interest rate. You may also want to explore income-driven repayment plans, which can reduce your monthly payments based on your income.

    Financial Planning for Recent College Graduates Tip #3: Start Saving for Retirement Now

    It’s never too early to start saving for retirement – even if you’re in your early twenties. When you begin your first professional job, be sure to take advantage of your employer’s 401(k). If they don’t offer one or you dislike the plan details, you can also open your own individual retirement account (IRA). The earlier you start saving, the more time your money has to grow. Your future self will thank you!

    Related Article: How Inflation Impacts Wealth Management and Investment Strategies

    Financial Planning for Recent College Graduates Tip #4: Plan to Navigate Rainy Days

    Life is unpredictable, and you never know when you might face an unexpected expense or job loss. That’s why it’s important to build an emergency fund so you won’t be forced into debt on rainy days – or seasons of life. Aim to save three to six months’ worth of living expenses in a separate savings account. This will give you a financial cushion in case of an emergency, and it will give you peace of mind, too.

    Financial Planning for Recent College Graduates Tip #5: Understand and Protect Your Credit Score

    Your credit score is an important factor in many financial decisions, such as getting a loan or renting an apartment. Make sure you understand what affects your credit score, such as paying bills on time and keeping your credit card balances low. It’s important to protect your credit score, too, so check your report regularly to make sure there are no errors or fraudulent activity. Check out this resource from the Consumer Financial Protection Bureau to learn more.

    Financial Planning for Recent College Graduates Tip #6: Set Financial Goals

    Another important step in financial planning for anyone – recent college graduates included – is to set financial goals. These could be anything from saving for a down payment on a house to paying off your student loans by a certain date. Having clear goals will help you stay motivated and focused on your financial plan.

    Recent College Graduates Should Begin Financial Planning Now

    Graduating from college is a big win and something to be proud of. It’s also a time of significant transition for many people, and it’s important to start off on the right foot financially in order to protect your future. Use the six steps above to take control of your finances now and set yourself up for long-term financial success.

    If you’d like to discuss financial planning for recent college graduates, contact Lane Hipple Wealth Management Group at our Moorestown, NJ office by calling 856-452-8026, emailing info@lanehipple.com, or to schedule a complimentary discovery call, use this link to find a convenient time.

    Illuminated Advisors is the original creator of the content shared herein. I have been granted a license in perpetuity to publish this article on my website’s blog and share its contents on social media platforms. I have no right to distribute the articles, or any other content provided to me, or my Firm, by Illuminated Advisors in a printed or otherwise non-digital format. I am not permitted to use the content provided to me or my firm by Illuminated Advisors in videos, audio publications, or in books of any kind.

  • Lane Hipple Sponsors 2nd Annual Noelle’s Light Golf Classic

    The charity event helped raise over $70,000

    The mission of Noelle’s Light is to deliver financial support to distressed families that are receiving treatment & care following a life-threatening fetal diagnosis. Their efforts are dedicated to uplifting families during their time of need. Eligible families can receive up to $5,000 in financial assistance to cover unexpected out-of-pocket expenses.

    On Monday, May 22nd, partners and employees of Lane Hipple participated in a golf tournament at Riverton Country Club in Cinnaminson, New Jersey to raise awareness and to support this important and impactful cause. For the second consecutive year, we joined founders Jodi and Alex Laughlin along with many others to help continue their efforts to support families in need through financial assistance, mentorship, and social networking.

    Left: Chief Operating Officer Mike Stringer, Managing Partner Thomas Lane, Jr., Financial Planner Gregory Reading, and Partner Thomas Lane, III.
    Right: Gregory Reading accepts the first place trophy from Noelle’s Light Co-Founder Alex Laughlin

    More About Noelle’s Light

    Noelle’s Light, Inc. is a New Jersey non-profit corporation whose mission is to provide financial support to distressed families that are receiving treatment and care following a life-threatening fetal diagnosis.

    The organization was incorporated in December 2017 and began operating in 2019 after receiving its federal recognition as a tax-exempt public charity under US Internal Revenue Code 501(c)(3).

    ​Noelle’s Light is co-founded by parents Jodi & Alex Laughlin, who lost their infant daughter in 2016 due to complications from a rare fetal condition. They emerged from their experience with the perspective that most families are financially unequipped to navigate the costs a life-threatening diagnosis.

    The organization is rooted in hope, compassion, and the duty we all have to help others in their time of need.

    DONATE HERE

  • Paying Off Your Mortgage vs. Investing More

    What’s the Best Strategy for Your Financial Future?

    Learn the Benefits and Drawbacks of Both Options

    Are you wondering about the benefits and drawbacks of paying off your mortgage vs. investing? Paying off your mortgage early and investing more are both strategies that can help you achieve long-term financial stability, but it can be difficult to determine which goal to prioritize. In this article, we’ll explore the pros and cons of both strategies to help you determine which may be the best for your financial future.

    Benefits of Paying Off Your Mortgage Early

    First, let’s consider the benefits of paying off your mortgage early. It sounds ideal, right? You can save money in the long run and own your home outright more quickly than the terms of your loan determined. By making additional payments or accelerating your payment schedule, you can reduce the amount of interest you pay over the life of your loan, potentially saving tens of thousands of dollars. Additionally, paying off your mortgage early can provide a sense of financial security and peace of mind, as you will own your home outright and have no mortgage payment regardless of what the future may hold.

    Drawbacks of Paying Off Your Mortgage Early

    Of course, the question of paying off your mortgage vs. investing would be an easy decision if there were only clear benefits to one decision or the other. However, there are also some drawbacks to paying off your mortgage early. If you put all your extra money toward your mortgage, you may miss out on other opportunities to invest that money and earn higher returns. Additionally, if you focus too heavily on paying off your mortgage, you may not be able to take advantage of other financial opportunities, such as saving for retirement or building an emergency fund. So, before you opt for paying off your mortgage vs. investing more – or focusing on another important financial goal – consider the opportunity cost of putting all your financial eggs in one basket, so to speak.

    Related Article: How Inflation Impacts Wealth Management and Investment Strategies

    Benefits of Investing More

    While there are clear benefits to paying off your mortgage vs. investing, don’t lose sight of the fact that investing more can be a powerful tool for building long-term wealth. By investing in stocks, mutual funds, or other assets, you have the potential to earn higher returns over time – potentially even outpacing the interest rate on your mortgage. Additionally, investing can provide diversification and help you build a well-rounded portfolio that can weather market fluctuations and economic downturns.

    Drawbacks of Investing More

    Investing, even in low-risk assets, does come with some risks. There is always a chance that you may lose money, particularly if you invest in riskier assets. Additionally, investing requires discipline and a long-term perspective. You must be prepared to weather market ups and downs, and not panic or make rash decisions when the market takes a downturn. If you already struggle with keeping your emotions in check with regard to your investments, it may not be best for you to significantly increase the dollar figure you’re investing.

    Paying Off Your Mortgage vs. Investing More: What’s Right for You?

    As with many financial decisions, what is best for your financial future truly comes down to your unique circumstances, goals, and priorities. If you value the security of owning your home outright and want to reduce your debt, paying off your mortgage early may be the best choice for you. On the other hand, if you’re willing to take on some risk and prioritize long-term wealth building, investing more may be the better choice.

    At the end of the day, paying off your mortgage or investing more are both valid strategies for achieving long-term financial stability. By weighing the pros and cons of each approach and considering your individual circumstances and priorities, you can make an informed decision about which strategy is right for you.

    If you’d like to discuss paying off your mortgage vs. investing more, contact Lane Hipple Wealth Management Group at our Moorestown, NJ office by calling 856-452-8026, emailing info@lanehipple.com, or to schedule a complimentary discovery call, use this link to find a convenient time.

    Illuminated Advisors is the original creator of the content shared herein. I have been granted a license in perpetuity to publish this article on my website’s blog and share its contents on social media platforms. I have no right to distribute the articles, or any other content provided to me, or my Firm, by Illuminated Advisors in a printed or otherwise non-digital format. I am not permitted to use the content provided to me or my firm by Illuminated Advisors in videos, audio publications, or in books of any kind.