BLUE CHIPNEWS

BLUE CHIPSecond Quarter 2014

RonaldBlue&Co.

for Wealth. For Life.®isdomW

OUR PERSPECTIVE

®

Error in recent Blue Chip News:The Tax Planning article in the First Quarter 2014 issue of the Blue ChipNews contained an error. The first tip on page 2 erroneously stated thatindividuals have up until the time that they file their 2013 tax return, withextensions, to make their 2013 contributions to their traditional IRAs,Roth IRAs, and their Health Savings Accounts. In fact these contributionsare due by April 15, 2014. Filing an extension does not affect the deadlinefor these contributions. We apologize for the error.

We accelerated this issue of Blue Chip News to ensure you were aware ofthe error prior to the April 15 deadline. The next issue of the newsletterwill be mailed at the end of August.

“Can you please buy me that?”“Can I have that?” What parent hasnot heard those words before?

As we enter the stage of havingschool-aged children and youngteens, we find ourselves in theposition of saying “yes” or “no” a lot.This is part of our job as we seek tomake wise decisions for our children.But when it comes to money, myadvice is to learn how to say, “Yes”while teaching children how to makewise use of their resources. You knowthat you’re going to spend money onthem anyway…why not help themlearn how to make their own choices?This shift in thinking allows you tomove into the role of the ‘yes person’and consultant, rather than the arbiter

By Jeff Chinery, Managing Director Everyday Steward Division of what is good or

bad.

This life lessonmirrors what RonaldBlue & Co. hasarticulated so well –we have unlimitedopportunities, yetlimited resources.Even young childrencan learn that most ofus do not have anunlimited supply ofmoney.

Looking forward to their failures

Watching our kids get hurt is probablythe hardest thing to do as a parent. Atsome point in their lives, they aregoing to make mistakes or have

regrets about money. Unfortunately,sometimes those mistakes occur whenthe stakes are high: they’re in their 20sand 30s and buying cars or racking up credit card debt.

With young children, we have theopportunity to allow them to fail whenthe consequences are relatively small(candy, shoes, a jacket, etc.). As wemove into ‘yes’ mode as parents andgive them funds so that they can makethe spending choices, they will learnhow to weigh the tradeoffs andultimately may make mistakes orchoices they regret.

We certainly don’t want them toexperience regret or failure, but thepain of doing so at 13 is much less

Jeff & his family

Teaching Kids About the Value of Money

2

Founded in 1979 and headquartered in Atlanta,Georgia, Ronald Blue & Co., LLC is one of the largestindependent fee-only wealth management firms inthe United States, as measured by more than $7billion of assets under management. Through anetwork of 13 branch offices and four distinctdivisions, the company provides financial wisdombased on biblical principles to clients across thewealth spectrum. The firm employs close to 350 teammembers and serves more than 6,000 clients inalmost all 50 states. (as of 12/31/13)

The information found in this issue of the Blue Chip News may notbe entirely applicable to your current portfolio or investmentstrategy. Please feel free to contact your Ronald Blue & Co.financial advisor with any questions or to discuss specificchanges in your current financial situation. Participants inretirement plans receiving a copy of Blue Chip News anddesiring additional information should contact their planadministrator. Certain information about Ronald Blue & Co.’sinvestment process and required financial disclosures arecontained in Form ADV, Part II. Please contact your financialadvisor if you would like a copy, or a copy of Ronald Blue &Co.’s current Privacy Statement.

RB&Co. Corporate ProfileRonald Blue & Co., LLCNational Office300 Colonial Center ParkwaySuite 300Roswell, Georgia 30076Phone: 800.841.0362Fax: 770.280.6001

than at 23 or 33 when the proverbialtoys are so much bigger.

Getting Started

H e r e a r e s o m e a g e s p e c i f i crecommendations:

• Younger years (ages 3 - 10)Focus on the habits of giving andsaving, as well as allowing them toexperience spending choices. Theamounts are not as critical as theprocess. For example, you mightwant to start with them earning onedollar per week, then have themtithe/give a quarter, save a quarter,and have the rest to spend.

• Pre-high school years (ages 11 - 14)They should begin owning theirspending decisions and weighingtrade-offs, as well as continuing thefocus on giving and saving. In thisseason, you can begin to let them savefor and buy gifts, entertainment items,etc. Depending on their age andallowance amount, matching theirspending can work well as youmove them to independence in acertain area.

This whole process is fluid anddynamic. There is not a one-size-fits-all approach, so keep going back tothe bigger picture goal of transferringownership to them. Below are a fewmore general thoughts:

• Share with them your successes andfailures and what works for you –and the trade-offs that you wrestlethrough.

• Take into account their personalities.With the spendthrift, you will have togo more slowly and expect moremistakes. With the miser, you willhave to push them to spend andmaybe give them expirations so thatthey don’t wind up without shoes!

• With clothing, consider buying thecore of what they need, and thengradually allow them to make thedecisions.

• Allocate their allowance at thebeginning of the year. Considergetting all the cash in January andputting it in envelopes dated for eachweek of the year. This planning stepwill help you eliminate being shorton cash when allowance day comes.Set the rule that there’s no accessbefore the date on the envelope.

For Grandparents

There are great opportunities forgrandparents to financially assist in theraising of this next generation. Hereare a few considerations:

1. Value the parents’ role. Your childrenwill almost certainly make differentchoices with their kids than youmade with them. It is important torespect the role God has given tothem. Simply determine how youcan best come alongside them andsupport their efforts.

2. If you are setting aside educationfunds for grandchildren, such as in a529 plan, communicate your planwith the parents. It can be a real

blessing to them to have thepressure taken off to save for100% of college. If you intend toassist with pre-college educationexpenses, spend some timediscussing that with them, as theymay be weighing choices aboutwhere to live or their privateschool alternatives.

3. If you do give gifts to the children(or for the grandchi ldren) ,communicate your intent but don’tattach strings. Allow the parents tomake the decisions they feel arebest given their responsibility.

4. Consider giving the gift offinancial planning. The financialfoundation set by your children(who are now parents) in this lifestage is critical to make sure theyare on the right trajectory.

The Bottom Line

When it comes to teaching kidslessons about money, it’s importantnot only to model good choices butalso to help them learn to make gooddecisions for themselves. Thisdiscernment comes with practice andsometimes making mistakes .However, learning these lessonswhen the consequences are relativelyminor is preferable to having adultchildren who know very little aboutmoney management. Start early byhelping young children make smallchoices in how they spend theirmoney. In the next issue, we’ll lookat topics pertaining to olderteenagers and college-aged children.

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On March 23, 2010 the AffordableCare Act (ACA) – also known as“Obamacare” – became federal lawand significantly changed the U.S.healthcare system. Perhaps one of thebiggest changes is the individualmandate, which requires you and yourdependents to have health insurancein 2014 or pay a penalty.

Purchasing coverageInsurance coverage that satisfies thefederal standard can be providedthrough your employer, publicprograms like Medicare or Medicaid,the Veterans Administration orTRICARE programs for the military,or an individual policy that youpurchase on your own. If you are notcovered by one of the previouslymentioned plans then the ACA createdinsurance marketplaces where youcan buy coverage online, over thephone, or in person.

If you buy insurance through themarketplace, tax subsidies areavailable if your 2013 income is lessthan 400% of the federal poverty level(which amounts to $45,960 for anindividual and $94,200 for a family offour). Cost-sharing subsidies alsosubstantially reduce the deductibles,copayments, coinsurance, and totalout-of-pocket spending limits forpeople with incomes up to 250% ofthe federal poverty level (equal to$28,725 for an individual and $58,875for a family of four).

Individuals can only purchase throughthe ACA during an open enrollmentperiod. The open enrollment periodfor 2014 was from October 1, 2013 toMarch 31, 2014. If you missed theMarch 31 deadline, you must waituntil the next open enrollment for2015 (November 15, 2014 throughJanuary 15, 2015) unless you arecovered under certain qualifyingevents like getting married, having oradopting a child, or experiencing an

unexpected loss of healthcarecoverage.

There are some exceptions tothe individual mandate thatinclude financial hardship, thosewith religious objections, andindividuals whose situationprevents them from obtainingcoverage (e.g. prisoners).Coverage or exemption from theindividual mandate does nothave to be reported until your2014 income tax returns are filed, whichare due by April 15, 2015.

It is important to note that you can gooutside the marketplace to getinsurance coverage on your own at anytime, but you will not receive the taxsubsidies.

Penalties for noncomplianceIf you missed the March 31 deadlineand do not have insurance for threeconsecutive months or longer, you willbe liable for a tax penalty to bewithheld from your federal tax refund.The penalty in 2014 is the greater of1% of your family’s income, or $95 peradult and $47.50 per child. Althoughthe penalty in 2014 may seemnegligible, by 2016 it will increase tothe greater of 2.5% of family income or$695 per adult and $347 per child. Afew plans will offer short-termcoverage for 2014 between March andNovember, but you will not be exemptfrom the tax penalty. If you’reuninsured for just part of the year, thepenalty is equal to 1/12 of the yearlypenalty for each month that you’reuninsured. If you are uninsured for lessthan three months, the penalty does notapply.

The Bottom LineThis short article is not intended to givecomprehensive advice on how to selecthealth insurance. Generally, anemployer-sponsored traditional healthcare plan with reasonable employee

monthly premiums is a good optionfor most individuals. However,depending upon your income leveland age, insurance from the federalmarketplaces with potentialsubsidies and lower out-of-pocketlimits may be the better choice. Itpays to comparison shop.

While paying the tax penalty may beless expensive in the short-term thanpaying insurance premiums, the realpenalty would be the cost of needingmedical care and not havinginsurance coverage. In a day whenhealthcare costs have reached alltime highs, the question is not do Ineed health insurance coverage, butwhich insurance provider will bestmeet my healthcare needs?

If you need objective advice onob ta in ing hea l th in su rance ,invest igate these opt ions:• Yo u r c o m p a n y ’s H u m a n

Resources department• G o v e r n m e n t w e b s i t e s

w w w. h e a l t h c a r e . g o v a n dwww.hhs.gov/healthcare

• For those on Medicare orMedicaid, www.medicare.gov andwww.cms.gov

• A local insurance agent whospecializes in health coverage

Gathering facts on the variouscoverage options is the first step tobringing clarity to a confusingdecision.

What Happens If You Do Not Have Health Insurance?

Attractive

Neutral

Unattractive

- EM stocks- Gold- Commodities

- Corporate Bonds - U.S. Stocks

- U.S. Treasuries- REITs- Treasury Inflation-

Protected Securities(TIPS)

Large Small Int’l EM

1st Qtr 2014(as of 2/28)

1.0%1.8%

1.3%

25.4%

31.6%

19.8%

-5.7%

0.2%

-3.4%

2.0%

*Indices used: Large—S&P 500 Index, Small—Russell 2000 Index, Int’l—MSCI EAFE Index, EM—Emerging Markets Free Index, Bonds—BarclaysAggregate Bond Index, Commodities—Credit Suisse Commodity Index. The “Asset Class Results” selected show investment returns for differingasset classes over the time periods illustrated. The “Key Economic Indicators” represents select U.S. economic indicators. The investment returnsand economic indicators and their relationship could differ significantly from those shown if different time periods were illustrated. Pastinvestment performance in any single asset class or style is not a predictor of future results. No information on this page or in this newslettershould be construed as individualized investment advice.

Asset Class Results*

3.8%

2.1%

Bonds Com’s

Large Small Int’l EM Bonds Com’s

Year-over-year change2011 2012 2013 2014

GDP 1.8% 2.4% 2.5% 2.5% (as of 12/31)

Total Employed 1.6% 1.7% 1.5% 1.6% (as of 2/28)

CPI 3.0% 1.7% 1.5% 1.6% (as of 1/31)

Money Supply (M2) 9.7% 8.0% 6.8% 6.8% (as of 1/31)

• GDP measures the total value of goods and services in an economy.

• Total Employed measures total workers in an economy.

• CPI measures the change in price of consumer goods and services.

• Money Supply (M2) consists of currency, travelers checks, checkingaccounts, savings accounts, CDs, and retail money market mutualfunds.

* All measures except the latest quarter represent year-over-year changes ending on the date indicated.

Key Economic Indicators (1st Quarter 2014)

Economic Forecast

Second Quarter 2014

1 Year

We are pleased to release to you a series of videos, which will further explain Principled Reasoning andhow it is used. Please visit our website, www.ronblue.com, and look under the Resources tab to viewthese videos.

For nearly 35 years, Ronald Blue & Co. has helped thousands of clients achieve financial peace of mind and meet their financialgoals by applying technical expertise and biblical principles. After the 2008 financial crisis, concerns over slow economic growth,fiscal deficits, and unprecedented central bank monetary policy highlighted the need for an investment decision-making processthat creates financial peace of mind and assists in meeting clients’ financial goals in this new economic environment. As a result,we saw an opportunity to integrate our principles more systematically into our investment process for building more resilientinvestment portfolios. This pioneering effort resulted in an investment framework known as Principled Reasoning.

Principled Reasoning is an investment decision-making framework that combines a deep understanding of timeless biblicaltruths, significant knowledge of economies and investments, rigorous global research, and an in-depth evaluation of riskdynamics. The primary objective of Principled Reasoning and the investment process is to meet investors’ financial goals in amanner that frees them from anxiety and discontent.

Asset Class ValuationsR

eal G

row

th

Projected long-term conditions

6%

5%

4%

3%

2%

1%

0%

-2% -1% 0% 1% 2% 3% 4% 5% 6% 7%

Inflation

Current economic conditions

Recovery

Reflation

Overheating

Stagnation

Potential Outcomes

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Principled Reasoning