SOURCE: www.thebalance.com/fed-funds-rate-history-highs-lows-3306135

HOW HIGH CAN IT GO?

In 1979 & 1980, The Federal Reserve funds rate reached

a high of 20 pointsin an effort to combat double-digit inflation.

Interest rates, it appears, are on the rise. For most of us, the impact of rising interest rates is mixed. We “win” in some areas and “lose” in others.

Let’s take a closer look...

In December, the Federal Reserve increased its benchmark interest rate a quarter of a percent. This rate increase doesn’t directly impact the rates you pay or earn. It is actually the target rate that banks lend money to each other.

But historically, this rate increase eventually percolates from the Federal Reserve to banks to the rest of us. Even though this rate increase is very modest and designed to have a minimal short-term impact, the result could mean savings accounts pay out a little more, mortgage rates will rise from their historic lows, and — of note to many Helmstar clients — bond-rich portfolios will likely see returns flatten.

Why do bond-heavy portfolios see lower returns when interest rates rise?

When interest rates rise, the interest rates paid by savings accounts (and similar low-risk vehicles) also rise. To make themselves attractive, bond issuers must increase what they pay.

If you currently own a bond that pays 3%, but new, similar bonds are now paying 4% and you decide to sell, you will have to discount the price of your existing bond to make your 3%-yielding bond as attractive as a 4%-yielding bond. The result? Bond prices drop.

So even though the stock market and interest

VOYAGER

FROM THE DESK OF… features rotating columns from Helmstar

partners Tom Steelman, and Ben Boettcher, ChFc, CFP.TM

ISSUE 6 . JANUARY . 2017

Rising Rates: The Ups & Downs

The impact of rising interest rates.

P1

Reducing Debt BeforeRetirement

Tips for staying out of debt in your golden years.

P4

Raising Financially Independent Kids

Helpful hints for having a positive impact on your children’s financial future.

P2

FROM THEDESK OF…

TOMSTEELMAN

Insights on wealth, personal finance and more

A R E G I S T E R E D I N V E S T M E N T A D V I S O R Y F I R M

DID YOUKNOW?

Follow us on FacebookYes — we’re on Facebook! Find us at www.facebook.com/HelmstarGroup where we share additional personal finance and investing tips.

Have a friend or family member who you think could benefit from receiving our Voyager newsletter?

Let us know.

Go to helmstargroup.com/contact or call 208.429.0800

and we’ll make sure they receive it.

PASSALONG! © 2017 The Helmstar Group.

Material in this newsletter is for informational purposes only. It is not to be construed as tax, legal or investment advice. Information has been gathered from sources believed to be reliable, but individual situations can vary. Please consult with an investment, legal, accounting or tax professional about your unique situation.

helmstargroup.comT 208.429.0800 | F 208.429.0801250 S. 5th St. Suite 600 | Boise, ID 83702

If a 20-year old invests

$5,000 today and earns a steady

8% interest rate, it will grow to

more than

$159,602 by age 65.

Continued on page 3

Very few of us enjoy change. Yet for every one of us, change is a major force in our lives. Children grow and leave the nest. Careers begin and end.

Change is everywhere, all the time.

In terms of investing, change — from business cycles to interest rates — impacts the financial strategies we employ to help you reach your goals. At Helmstar, the not-so-secret weapon we employ to take advantage of this change is plan-ning. A solid, long-term plan lets you seize the positive side effects of change while weathering the negative side effects.

Helmstar’s approach to planning is different than most. We start by understanding your life and life goals before we develop your financial goals. From there, we can develop the strategies and tactics that will help you get there. These strategies go beyond stocks and bonds. We address ALL types of investments.

This plan gives you the power and confidence to fly straight despite the strong winds of change. And it gives you confidence that you’re on the right track. All along, we’ll keep you abreast to whatever degree you’d like.

In this issue we cover several types of change, from rising interest rates (pg 1) to reducing debt before retirement, (pg 4) that we look forward to discussing further with you. But as we begin a new year, we also want you to know that you don’t need to wait for an annual review to discuss these issues.

If you have questions, please contact Ben, myself or any other member of the Helmstar team any time. We’re here and ready to help.

4

RISING RATES: The Ups & Downs

Select Helmstar clients have their very own personal financial website. They can monitor progress of their financial goals in real time, with all accounts, assets, and even debts if they’d like, in a single, helpful dashboard.

Access it all 24/7 in the Helmstar Client Center: www.helmstargroup.com/client-center

STAY CLOSE TO YOUR PLAN

Most retirees don’t want to be — and shouldn’t be — saddled with debt as they head into their “golden years.”

Debt decreases flexibility and increases risk in retirement. After all, any money that must go to pay debt obligations can’t go to other retirement goals. That’s why most of the financial plans Helmstar develops with clients include the aim of paying off debt as retirement nears.

While your situation is likely unique, there are a few types of debt that you should eliminate before you transition out of working life.

Credit cards and other unsecured debt. Normally at high interest rates, these debts put the magic of compounding interest to work — but not in your favor!

Student loans. Whether for you or for the kids, lingering, often long-term, debts like this add financial and psychological stress if they’re hanging around in retirement.

Car loans. One of the tricks of retirement planning is to prepare for a long life (lucky you!) while enjoying your retirement from day one. Key to this is being able to pay cash for depreciating assets like cars. As you near retirement, if you must finance it, perhaps it should wait.

Mortgage. For many soon-to-be retirees, a mortgage may be one of the few tax shelters available. In this way, a mort-gage can be “good debt.” But if you can pay a little more towards your principal each month, you may be able to free up significant cash flow for retirement. We encourage this, and most Helmstar clients have no mortgage debt at retirement.

Compound interest is the 8th wonder of the world. He who understands it, earns it... he who doesn’t... pays it. — Albert Einstein

REDUCING DEBT BEFORE RETIREMENT

Please visit

to read past newsletter articles, additional

personal finance tips, and more.

helmstargroup.com/blog/

Read more!Once a parent, always a parent. No matter their age, you can have a positive impact on your children’s financial future.

Consider these tips for helping your kids become more financially independent, whether they’re toddlers or nearing retirement themselves!

When they’re really young (toddler to tween)

Don’t give them everything they want. Learning delayed gratification and the connection between doing the right thing and earning the appropriate reward should start young — and continue, well, forever.

Encourage problem solving. Financial independence begins with critical thinking, and critical thinking begins with problem solving. Don’t jump in with solutions, let your kids find their own from a very early age.

Tie allowance to chores. Making a connection between work and money is a powerful lesson to learn young.

Start saving and gifting early. Require (or at least strongly encourage) saving and giving a portion of allowance, birthday money, etc. You might even try a “401k day” where you match the amount they save.

As they mature (tween to teen)

Talk long-term. Long-term thinking begins with long-term talking. Have conversations about the power of compound interest and the value of saving for cars, college and even a first home.

Model good behaviors. When you save, give, spend wisely, and invest, your kids will notice. Teaching by “do what I do, not just what I say” is a powerful tool.

Practice gratitude and charity. Helping kids understand the gifts of all they have and the rewards of helping others (not just with money, but also by volunteering time) is critical. Talk about it openly. Make plans together. Focus on character over things.

Encourage employment. Teenage jobs teach important lessons. Supporting part-time work during school or summers will teach life lessons and give teenagers a view into the sorts of work they enjoy (or don’t.)

Get them credit smart. Credit and debt, from credit cards to student loans to mortgages, are a big part of most of our lives. Educate your kids on the opportunities and dangers of these tools.

Do the math. At this age, it’s time to discuss the financial reality of adulthood: the costs of college, rent, health insurance. If they don’t know what things cost they can’t begin thinking about their budget.

Adults (20s + beyond)

Set boundaries. It’s great to want to help your kids. It’s not great if they become reliant on your help. Set limits to your generosity and set the expectation that you raised a respon-sible, independent adult, not a perpetually dependent child.

Help when they need it… with a plan. Sometimes adult children need financial help. But that help should come attached to a plan that will get them standing on their own two feet. Whenever you offer any assistance, also include time to share your wisdom.

Treat them as the grownups they are. If you offer a loan, have them pay it back with interest. If they live at home, have them chip in with “rent.” These are opportunities to teach them how the “real world” works — with more friendly terms.

Guide, don’t prescribe. Remember: it’s their life. Don’t try to define their career or other types of “success.” Instead, give guidance and help them accept responsibility for their actions — and the results of those actions.

Raising Financially Independent Kids —

AT ANY AGE

“RISING RATES: THE UPS & DOWNS” continued from page 1

rates may be rising, portfolios with many bonds may experience a flattening or even a slight drop.

This adjustment is a natural part of the ebb and flow of the market. And because you’ve opted to take a long-term view of your portfolio, by working with Helmstar, it’s unlikely that any significant moves in your allocation are neces-sary. (Of course, if you have questions about your specific situation, please ask us — we’re happy to help.)

Nobody can accurately predict the future. This slight increase in rates – only the second rate increase by the Federal Reserve in the past decade – may continue to increase if the market remains strong.

For many investors, bonds remain an important part of their portfolio. For buy- and-hold investors, rising interest rates could, in fact, have a positive effect over the longer-term.

No matter what, the important thing is to take a holistic view of these increases and work with us to ensure that your portfolio reflects your risk tolerance and goals.

Confused? Concerned? Eager to explore new opportunities?The Helmstar team is committed to

guiding you through the ever-changing investment landscape.

LET’S TALK.

32

WORK HARD.PLAY HARD.The team that plays together stays together.

It was great to celebrate the end of 2016 and the beginning of 2017

with the Helmstar family.

We hope your family’s new year is off to a great start, too!

SOURCE: www.thebalance.com/fed-funds-rate-history-highs-lows-3306135

HOW HIGH CAN IT GO?

In 1979 & 1980, The Federal Reserve funds rate reached

a high of 20 pointsin an effort to combat double-digit inflation.

Interest rates, it appears, are on the rise. For most of us, the impact of rising interest rates is mixed. We “win” in some areas and “lose” in others.

Let’s take a closer look...

In December, the Federal Reserve increased its benchmark interest rate a quarter of a percent. This rate increase doesn’t directly impact the rates you pay or earn. It is actually the target rate that banks lend money to each other.

But historically, this rate increase eventually percolates from the Federal Reserve to banks to the rest of us. Even though this rate increase is very modest and designed to have a minimal short-term impact, the result could mean savings accounts pay out a little more, mortgage rates will rise from their historic lows, and — of note to many Helmstar clients — bond-rich portfolios will likely see returns flatten.

Why do bond-heavy portfolios see lower returns when interest rates rise?

When interest rates rise, the interest rates paid by savings accounts (and similar low-risk vehicles) also rise. To make themselves attractive, bond issuers must increase what they pay.

If you currently own a bond that pays 3%, but new, similar bonds are now paying 4% and you decide to sell, you will have to discount the price of your existing bond to make your 3%-yielding bond as attractive as a 4%-yielding bond. The result? Bond prices drop.

So even though the stock market and interest

VOYAGER

FROM THE DESK OF… features rotating columns from Helmstar

partners Tom Steelman, and Ben Boettcher, ChFc, CFP.TM

ISSUE 6 . JANUARY . 2017

Rising Rates: The Ups & Downs

The impact of rising interest rates.

P1

Reducing Debt BeforeRetirement

Tips for staying out of debt in your golden years.

P4

Raising Financially Independent Kids

Helpful hints for having a positive impact on your children’s financial future.

P2

FROM THEDESK OF…

TOMSTEELMAN

Insights on wealth, personal finance and more

A R E G I S T E R E D I N V E S T M E N T A D V I S O R Y F I R M

DID YOUKNOW?

Follow us on FacebookYes — we’re on Facebook! Find us at www.facebook.com/HelmstarGroup where we share additional personal finance and investing tips.

Have a friend or family member who you think could benefit from receiving our Voyager newsletter?

Let us know.

Go to helmstargroup.com/contact or call 208.429.0800

and we’ll make sure they receive it.

PASSALONG! © 2017 The Helmstar Group.

Material in this newsletter is for informational purposes only. It is not to be construed as tax, legal or investment advice. Information has been gathered from sources believed to be reliable, but individual situations can vary. Please consult with an investment, legal, accounting or tax professional about your unique situation.

helmstargroup.comT 208.429.0800 | F 208.429.0801250 S. 5th St. Suite 600 | Boise, ID 83702

If a 20-year old invests

$5,000 today and earns a steady

8% interest rate, it will grow to

more than

$159,602 by age 65.

Continued on page 3

Very few of us enjoy change. Yet for every one of us, change is a major force in our lives. Children grow and leave the nest. Careers begin and end.

Change is everywhere, all the time.

In terms of investing, change — from business cycles to interest rates — impacts the financial strategies we employ to help you reach your goals. At Helmstar, the not-so-secret weapon we employ to take advantage of this change is plan-ning. A solid, long-term plan lets you seize the positive side effects of change while weathering the negative side effects.

Helmstar’s approach to planning is different than most. We start by understanding your life and life goals before we develop your financial goals. From there, we can develop the strategies and tactics that will help you get there. These strategies go beyond stocks and bonds. We address ALL types of investments.

This plan gives you the power and confidence to fly straight despite the strong winds of change. And it gives you confidence that you’re on the right track. All along, we’ll keep you abreast to whatever degree you’d like.

In this issue we cover several types of change, from rising interest rates (pg 1) to reducing debt before retirement, (pg 4) that we look forward to discussing further with you. But as we begin a new year, we also want you to know that you don’t need to wait for an annual review to discuss these issues.

If you have questions, please contact Ben, myself or any other member of the Helmstar team any time. We’re here and ready to help.

4

RISING RATES: The Ups & Downs

Select Helmstar clients have their very own personal financial website. They can monitor progress of their financial goals in real time, with all accounts, assets, and even debts if they’d like, in a single, helpful dashboard.

Access it all 24/7 in the Helmstar Client Center: www.helmstargroup.com/client-center

STAY CLOSE TO YOUR PLAN

Most retirees don’t want to be — and shouldn’t be — saddled with debt as they head into their “golden years.”

Debt decreases flexibility and increases risk in retirement. After all, any money that must go to pay debt obligations can’t go to other retirement goals. That’s why most of the financial plans Helmstar develops with clients include the aim of paying off debt as retirement nears.

While your situation is likely unique, there are a few types of debt that you should eliminate before you transition out of working life.

Credit cards and other unsecured debt. Normally at high interest rates, these debts put the magic of compounding interest to work — but not in your favor!

Student loans. Whether for you or for the kids, lingering, often long-term, debts like this add financial and psychological stress if they’re hanging around in retirement.

Car loans. One of the tricks of retirement planning is to prepare for a long life (lucky you!) while enjoying your retirement from day one. Key to this is being able to pay cash for depreciating assets like cars. As you near retirement, if you must finance it, perhaps it should wait.

Mortgage. For many soon-to-be retirees, a mortgage may be one of the few tax shelters available. In this way, a mort-gage can be “good debt.” But if you can pay a little more towards your principal each month, you may be able to free up significant cash flow for retirement. We encourage this, and most Helmstar clients have no mortgage debt at retirement.

Compound interest is the 8th wonder of the world. He who understands it, earns it... he who doesn’t... pays it. — Albert Einstein

REDUCING DEBT BEFORE RETIREMENT