Investment Philosophy

We believe in long-term investing. We subscribe to the Modern Portfolio Theory and effective diversification across dissimilar asset classes. We invest in a wide variety of asset classes with the goal of capturing the return on capital that inevitably global capital markets produce. We are one of a select group of Loring Ward Advisor Services approved advisors in Maryland and the only one located on the Eastern Shore.

  • We're located in beautiful Historic Downtown Chestertown

    We're located in beautiful Historic Downtown Chestertown

  • Move your "Someday" closer with our IRA's.

    Move your "Someday" closer with our IRA's.

Financial Services

Financial Services

We provide investment and financial advice across the entire financial spectrum—and strive to make an extremely complicated field simple again
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Advisors

Advisors

Martin Knight is a Certified Financial Planner™ and has passed the Series 7, Series 24, Series 31 and Series 66 exams. He is licensed to sell securities and to offer investment advice for a fee in Maryland. He also holds a Maryland Life and Health insurance license.
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Articles

Our collection of articles on investing strategy and market insights. The articles were written by advisors on our team.
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The Best Advice Ever Received

This coming July it will be nine years since I retired from MSP and as I was telling someone the other day, I still have dreams about being a State Trooper.  Sometimes they are so vivid I’ll wake up and look outside to make sure there’s not a roller parked in front of my house.  I loved MSP and really enjoyed the people I worked with.  It is not just a job; it’s a lifestyle.   Anyway, these days I keep track of what’s going on in the Department through an awesome Facebook page called, “MSP, The People Behind The Shield.”  I think a Sergeant named Doug Forrester started it up sometime around the beginning of the year.  It was a great idea and if you’re not a member you should be.

The page has about 1,200 former or current MSP employees who follow it.  Almost every day I stop by and check it out and I’ve been very impressed by the posts.  We’ve had intelligent arguments from drug legalization, to the role and mission of the Department, to the sad state of the patrol vehicles.  Anything under the sun can and does come up on that page.  It’s usually very positive dialogue always with well-reasoned comments.  The third floor would do well to monitor and participate on the page to get valuable feedback on the problems and concerns of our MSP family.  Of course, I’m sure the brass are probably upset by some of the posts and most certainly there is someone somewhere at HQ trying to figure out how to squelch it.  (Just like they tried with G-Rat at Westminster back in the day.)  A few weeks ago a trooper posted a photograph of his odometer on his patrol car—it read 365,000 miles!  They’re lucky the guy isn’t posting it in the front page of the Baltimore Sun.  The page is not about complaining though—it’s about information and idea exchange among people with similar backgrounds and interests.  It is healthy for the Department and they should embrace it, not fight it.

To get to my point, one of the questions that started some incredible feedback came just after an academy class graduated from Sykesville.  It asked something like, if you had one piece of advice to give to a new recruit what would it be?  The responses to that question were inspiring and thought provoking.  Most were officer-survival related, some about family and co-workers.  Many were about surviving in a highly politicized department.  The post started me thinking about when I came on the job.

It was January of 1979 and I was just hired as a cadet in the Truck Weight Enforcement Division.  I was slowly working my way through a pile of paperwork for Miss Zelda at the TWED office in Pikesville when a Sergeant walked in and said, “Cadet, first things first, join deferred comp!”  I didn’t know what deferred comp was—heck, I didn’t even know three stripes made you a Sergeant but I did know that he outranked me—even Miss Zelda outranked me—and on that first day I was all about doing what I was told.  So out of the $8,000 or so in annual salary I started setting aside a whopping $30 bucks a paycheck.

That Sergeant was Ken Harry and to this day I think it was probably the best single piece of personal advice I ever received.  Over the next 26 years each time I got a pay-scale-step—we actually got them in those days—or a promotion, I increased my deferred comp deposit.  When I retired it was, and still is, a nice little retirement account.  So for you new people coming on to the Department, or if you’ve never joined to begin with, let me point out some of the exciting features and characteristics of what we call deferred compensation.  (Don’t toss the magazine–stick with me, it’s only a few more paragraphs.)

Deferred Comp in MSP is actually what the IRS calls a 457(b) plan[1].  The 457(b) is only offered to government and non-profit employees.  It allows employees to take money before taxes are paid and set it aside in an investment account (with MSP it must go to Nationwide Retirement Solutions) where it grows (or shrinks) free of taxation.  Employees are allowed to defer up to $17,500[2] of income per year into a 457(b).  The money is available to the employee when they leave the agency free of any penalties.  This is a key difference between the 457(b) and the 401(k) plan—you don’t have to wait until 59.5 years of age to access the plan.  You can take money out of a 457(b) plan without penalty once you leave the job—no matter how old you are.   Income taxes are due once you take it out of the 457(b) but there’s no 10% penalty.  (This does not include DROP money—if you leave the job before age 50 then all DROP money must stay in a qualified account until age 59.5 or else the 10% penalty applies.)

Another benefit of the 457(b) over the 401(k) is that you can contribute the maximum to both plans.  So you can save $17,500 in a 457(b) and another $17,500 into a 401(k) effectively setting aside up to $35,000 of current income until later.  By the way, it is usually not advisable to start the 401(k) until you max-out the 457(b).

Deferring income and its taxation means that you determine when to withdraw the money and pay income taxes on it.  For example, by setting aside $100 now—it only costs you about $70 to $75 in take-home-pay since the rest would be withheld for various taxes.  You can then take that $100 out at some future point when your income is liable to be less and you’re in a lower tax bracket.  You might even move out of a high tax State, such as Maryland, which would take somewhere in the neighborhood of $6 or $7 bucks depending on which county you live to an income-tax-free state and skip that tax altogether.

There is a good chance that after retirement your federal tax bracket is lower due to reduced income (you’re not going to be working NSA overtime forever) and/or maybe you are planning on moving to one of the seven states[3] where they don’t tax income locally.  Now that $100 you put away that was only really worth $75 is maybe worth $85.  And that’s not counting any growth you picked up on the investments along the way.

Finally, we all know what an 18 year-old Marty Knight would’ve done with that deferred income—he probably would’ve spent it on junk.  Stuff that would’ve been tossed in the trash long ago.  (In all likelihood I would have bought more softball bats.)  Now, I have the money safely invested in the market waiting till a time when I might really need it.  And it was all because of a simple piece of advice by then Sergeant Ken Harry.  Thanks Ken.

 

Marty Knight, MBA, CFP® is a retired Captain from the Maryland State Police and is currently a Financial Advisor with Chesapeake Investment Advisors Inc.  Securities and Advisory services are offered through Geneos Wealth Management, Inc. Member FINRA/SIPC.  He can be reached at 800-994-0221 or emailed at mknight@chesadvisors.com

 

[1] 457(b) is the section number in the Internal Revenue Code.

[2] $17,500 for CY 2014.  If over 50 employee is allowed an additional $5,500 per year as a “catch-up.”

[3] Alaska, Florida, Nevada, South Dakota, Texas, Washington or Wyoming.

Don’t Eat the Marshmallow!

We all procrastinate.  The Human species is a procrastinator.  Don’t beat yourself up over it, but don’t deny the problem either.  We all would rather put off unpleasant tasks today that we can do tomorrow.  Given a choice between checking your email/Facebook page or finishing off that latest Criminal Investigation Supplement report and most Troopers will choose the former.  We will eventually get to the supplement but it can usually wait.

As a financial planner I meet people in all stages of their lives; some are beginning their work-life; some are finishing; some are already retired; and others are starting their second careers.  Consequently, I get to see firsthand the effects of financial procrastination and it is not a pretty sight.  Often, by the time we meet, some folks are beyond the point where they can correct their past errors.  I think the most serious financial mistake we see is a person’s failure to save enough money for the future and most of the time it is due to their inability to delay instant gratification—which in a way, is simply saying they procrastinated in saving.

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Windfall Elimination Provision & Government Pension Offset—Social Security Benefits for Retired Troopers

Social Security benefits may not be the most exciting topic in this edition—and reading about obscure Social Security Administration regulations may not be your favorite pastime; but this stuff is important—and it’s complicated—so grab a double espresso, sit down, turn the TV off, and read up.

First of all, let me say up-front what I have said in this magazine many times—you are one of the fortunate in the world who have a government pension. Most of my clients do not. They have no guaranteed monthly paycheck; no automatic and unlimited cost-of-living raises; no subsidized health-care; and for that matter; no 22-year retirements. People usually have what they have saved in an IRA or 401K and when they retire they get nothing from their employer other than their last paycheck and a pat on the back. (Surprisingly, because they had to take control of their own retirement and actually save some money–many of these clients are better off than our own retiring Troopers; but that’s a subject for another edition.)

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457(b) and 401(k)

This edition we will cover the two defined contribution investment retirement plans available to you as a State Employee. Maryland offers two plans to employees of the State Police, the IRC 457(b) Deferred Compensation Plan and the IRC 401(k) plan. They are so named by the section number of the Internal Revenue Code where they are defined. Surprisingly, you can fully participate in both, but we’ll cover that later.

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Successful Investing In Spite of Yourself

The absolute worst enemy of investing and saving and thus building wealth is human emotion.  Human emotion whispers in our ear every day that we should do something, take action, make decisions about our investments, etc., when in reality, most of the time we should do nothing at all.

When it comes to investing, the saying don’t just sit there, do something, should be turned around to don’t just do something, sit there.  I have found the best investors and the ones with the most assets are people who understand the simple concept of periodical and unemotional investing.  It really is that simple.

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Life after the Maryland State Police

I’ve always thought that one of the greatest benefits of becoming a Maryland State Trooper is the chance to retire at a comparatively early age–for me 45.  The majority of the working world must continue to work until at least 66 or 67 years of age.  Of course, we are speaking of retiring from the State Police only, not many people completely retire at 45.  It is more the opportunity to change professions that makes being a Trooper something unique.  Some people fear career change while other can’t wait to begin.  This edition’s article will cover a few things to think about when nearing your MSP retirement.

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Life Insurance—YUK!

Ok, just so we’re straight from the opening line, I don’t think anybody really likes life insurance.  It’s like auto insurance—who gets up in the morning and thinks, “Wow, joy, joy!  I get to send in an insurance premium check today.”

But—unless you’re immortal nobody gets out of here alive!  Sooner or later we are all going to die.  The hope we all have is that it’ll be much later than sooner, but, in the event death does comes sooner than we have planned for, we need to protect the ones we leave behind.

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The Balance Sheet

Debt must be a wonderful thing. Just look at how much debt the good Ole USA has—and we are the largest economy in the world—by far. If the richest, most prosperous nation in the world is also the one that borrows the most money, then is it a leap to think that what debt has done for the US can also do for our personal finances? The answer in a word is, no; a big NO as a matter of fact. In this edition we are going to look at how to improve our personal Balance Sheet.

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The Ubiquitous Mutual Fund

Mutual Funds are everywhere! They are in your retirement accounts, your personal investment accounts, your pension system, they dominate TV and radio commercials, and entire magazines are dedicated to tracking their performance. But just what exactly is a Mutual Fund? Chances are your financial future is somehow affected by the selection, performance and quality of a Mutual Fund, so perhaps it’s a good time to go over some basics regarding this popular investment vehicle. Besides, the best time to review or talk about a “basic” concept is when it is so “understood” that everyone assumes everyone else already knows about it.

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The Market!

As I write this during the third week of October 2008 the world’s equity markets are in the midst of a sharp decline—some are calling it a “melt‐down.” Many mutual funds have fallen over 40% for the year and there seems to be no end in sight.

Warren Buffet says “Investing is simple but not easy” and in today’s market that statement is truer than ever. Investing boiled down to its essential elements is very simple, buy something at one price and sell that thing later at a higher price. Buy low and sell high. But while intellectually investors know what to do—emotionally investors often do the opposite. Studies have shown that investors invest more money when the market is up and take money out of the market when it is down—basically buying high and selling low.

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