3RD QUARTER RETURNS

BondsBbg Barclays U.S. Agg. Bond Index

U.S. Large StocksS&P 500 Index

U.S. Small StocksRussell 2000 Index

International StocksMSCI EAFE Index

Emerging Market StocksMSCI Emerging Markets Index

Real EstateS&P Global REIT Index

CommoditiesBloomberg Commodity Index

Managed FuturesCS Managed Futures Index

+0.9%

+4.5%

+5.7%

+5.4%

+7.9%

+1.4%

+2.5%

+1.8%

bitcoinsthe world of

A N D O T H E R C R Y P T O C U R R E N C I E S

3R

D Q

UA

RTE

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01

7

Building Ideal Futures

giving backApple PieAs

As American

SOCIAL SECURITY THEN AND NOWHistory in the Making:

GRATEFUL FOR OUR VETERANS A DAY ON THE BADGER HONOR FLIGHT

Whether you want to support the relief and recovery efforts for the victims of the recent hurricanes or support your favorite qualified charity, two lesser-known charitable giving strategies can also serve to reduce your tax liability.

Charitable Giving Tax-Saving StrategiesMost people are well aware of giving cash or a check. But there are two not-so-well known high-powered, tax-saving charitable giving strategies that provide extra bang for the buck. Before the end of the year, consider making a gift to your favorite qualified charity using one of these two strategies.

Charitable IRA DistributionsQualified charitable distributions (QCDs) are distributions made from an individual retirement account (IRA) directly to a qualified charity, and up to $100,000 can be gifted and excluded from the taxpayer’s gross income. Only individuals aged 70½ and older are allowed to take part in this charitable giving strategy, and these direct donations count towards the taxpayer’s required minimum distribution (RMD).

Although the gift cannot be included as a charitable deduction on the taxpayer’s income tax return (Schedule A – Itemized Deductions), the income stays off the income tax return altogether, potentially saving the taxpayer federal taxes (and sometimes state income tax too, depending on the state of residence). This strategy was made permanent via legislation as part of the Protecting Americans from Tax Hikes (PATH) Act of 2015.

giving backApple PieAs

As American

Donor-Advised FundsA donor-advised fund (DAF) is a charitable account set up with a custodian/broker that can receive assets from an individual and be sent to a qualified charity. The owner of the DAF account controls the entire process, including when to gift to the donor-advised fund, how much to gift, and what asset to gift to a charity of choice.

A tax deduction (up to 30% of AGI if securities are used) is received when making a gift to the DAF. The tax deduction is based on the market value of the appreciated security on the date that the gift is made. It is important to keep in mind that if securities are gifted to the DAF, they must have been owned for at least one year before being gifted.

This strategy works well when an individual has appreciated securities, like stocks, that he or she can gift. The asset(s) can sit in the DAF and await direction on when to be sent to the charity of choice. This strategy is excellent when an individual has higher-than-usual income, such as from the sale of a business or earning a large bonus. The individual can front load several years’ worth of charitable gifting in one year, thereby taking advantage of a larger tax deduction that year. Then, the individual can send smaller amounts to qualified charities from the DAF over a period of several years.

Ask Your Advisor About Options and RulesIf you are looking for ways to make a difference and minimize your tax obligation before the end of the year, ask your tax professional or financial advisor about these two strategies. Although they are not complex, make sure you understand all of the rules before taking action.

Four years ago, my grandfather-in-law and 80 other veterans were welcomed home by a crowd of 5,000 in Dane County Regional (Madison) Airport. Standing in a crowded terminal with my wife and kids, I felt awe-struck and honored to witness it. That feeling – that strong tug on my heartstrings – is still there when I think about the crowd roaring as these men walked or rolled their wheelchairs towards their loved ones. This was the culmination of their day-long Badger Honor Flight to Washington, DC.

Fast forward to 2017. Badger Honor Flight (BHF) asked if I was interested in being a “volunteer guardian” on one of their flights. Given the age and needs of some veterans, each veteran has an accompanying “guardian” who spends the day with them. Many volunteers are relatives of the veterans.

I am not a veteran, and quite honestly I didn’t feel “worthy” of being a guardian for one of these men. But BHF told me it was an ongoing need for a few guardians to accompany vets who were having trouble finding a guardian. I decided this was an experience I shouldn’t miss, and I signed up for the October 7th flight. I’d like to share that day with you.

My day began with meeting my veteran at the Dane County Regional Airport at 4:30 am. He had served in the Air Force during Vietnam from 1969 to 1973.

The Badger Honor Flight program launched in late 2005 and the 2,500th veteran to go on BHF was on my trip. BHF has cycled through most of the WWII veterans still with us and also has taken a significant number of Korean veterans. If I have my numbers right, there were 4 WWII, 22 Korean, and 62 Vietnam veterans on my flight.

After a two-hour flight, we arrived in Washington, DC to a breathtaking welcome. There was a band at the Reagan National and a line of people waiting to greet us; we saw everything from former Wisconsinites now living in DC to Cub/Boy Scout troops there to honor our vets.

Our group boarded four large buses and our busy day began. Everywhere we went, we had an escort by the Capitol Police. They stopped traffic for us, they put us through intersections without regard to traffic signals, and we were allowed to “park” directly in front of each place we visited. We first drove through the front gates of Arlington National Cemetery and walked around a bit before watching the “Changing of the Guard” ceremony at the Tomb of the Unknown Soldier.

From the overview of this memorial, you can see the discoloration of the Pentagon a few hundred yards away from where Flight #77 struck the building on 9/11.

We proceeded to the Lincoln Memorial, Vietnam Memorial Wall, and Korean War Memorial. Probably one of my most memorable moments of this trip was watching eight of our veterans line up for a photo in front of the Vietnam Memorial Wall; you see, this group had served together in the same infantry unit in Vietnam and had planned to go on this trip together.

After another short bus ride, we pulled up right in front of the World War II Memorial and spent an hour exploring there. By now, we’ve been going for 12+ solid hours and it was clear that some were tiring. We finished our stops with a visit to the FDR Memorial. This was a beautiful setting where we walked through the memorial and took a stroll back to the front of the memorial along a sidewalk right next to the Potomac River.

As the sun was setting, we finished our day with a drive around Washington to see the Capitol, the White House, and the Smithsonian.

To read more of “A Day on the Badger Honor Flight,” visit https://www.savantcapital.com/blog/a-day-on-the-badger-honor-flight

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Savant has always valued organizations and programs that align with our corporate values. Philanthropy is part of our culture; we believe it is good business to support the areas in which our clients, employees, and offices are located through charitable giving, corporate sponsorships, and volunteerism. One specific organization we are proud to sponsor is Badger Honor Flight. Through this sponsorship, Brent Lindell, a financial advisor in our Madison office, was given the opportunity to serve and honor veterans from WWII, Korea, and Vietnam. Here is Brent’s story from his important mission.

GRATEFUL FOR OUR VETERANS A DAY ON THE BADGER HONOR FLIGHT

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Thus far in 2017, cryptocurrencies have become the hot, new investment. At last count, there are 1,205 known cryptocurrencies in existence with a total market cap of approximately $172,000,000,000 – slightly larger than PepsiCo and slightly smaller than General Electric. The five most popular currencies – Bitcoin, Ethereum, Bitcoin Cash, Ripple, and Litecoin – make up just over 80% of the total cryptocurrency market. Still less than a decade old, Bitcoin is one of the oldest cryptocurrencies available. Investors who bought one Bitcoin for $10 or less in 2012 or earlier have seen the price accelerate to over $5,000 as of October 2017. The future of these cryptocurrencies (aka digital currencies) is highly uncertain; however, we don’t believe we can completely ignore them, either. As a recent Barron’s article stated, whether these currencies have staying power or not, the technology behind them, known as “blockchain,” is likely to change financial markets in the coming years in avenues other than digital currencies. Read on for an introduction to the world of digital curren-cies, an illustration of some of the risks, and a perspective on whether it is an investment opportunity.

Cryptocurrencies were created to be used like any other currency such as the dollar or euro, but stored digitally. The creation and transfer of these currencies are based on an open source encryption network that is completely independent of any central authority.

The currencies can be bought and sold using a currency exchange and stored in a digital wallet – no physical tokens exist. All transactions that have ever happened with Bitcoins or other currencies are stored in one long, giant digital ledger called the blockchain which is kept and validated simultaneously by a network of computers. Computers on the network are often referred to as “miners” that are racing to verify the block of transactions in the hopes of earning new Bitcoins as reward. This process can be loosely compared to having a shared Excel document that no one person can change without the verification by others. In reality, these miners are mostly Chinese-owned computer programs that are verifying transactions, not individuals like us. Today transactions are started, completed, and verified within 10-20 minutes (beating credit cards by days), but in the future, the goal is to complete/verify within seconds. Each Bitcoin owner then has a “key” to access their money. The keys (strings of characters) are used to verify transactions and validate them in a block.

bitcoinsthe world of

A N D O T H E R C R Y P T O C U R R E N C I E S

POSSIBLE RISKSWhile not an exhaustive list, here are some of the risks that exist within the Bitcoin/digital currency world today:

1. Regulatory risk could come in a few forms • Cryptocurrencies could be considered as not legal tender, and their value

could go to essentially zero. • Investment taxes could be modified to higher rates to discourage use. This

would also decrease the value of a Bitcoin and other digital currencies. • It is too early for governments to settle on what type of asset it is and how

to treat it. For now, the U.S. government has encouraged central bankers to study it. In September, China’s government implemented a trading ban on cryptocurrencies on exchanges.

2. Volatility • As a very young asset, there is very much to be learned about how digital

currencies will react in different scenarios. Additionally, Bitcoin and others have been very volatile assets (five times more volatile than the S&P 500 as measured by the daily standard deviation since 2012) for the duration of their short history.

3. Large-Scale Cyber Attacks • Since Bitcoin’s inception, approximately one-third of its exchanges have

been hacked. Others could be susceptible to similar cyber attacks.

4. Digital Wallet Storage • The currencies are stored in a digital wallet in the cloud or on your

computer’s hard drive. As mentioned above, the cloud could be hacked. If stored on a hard drive, there is the risk of a computer virus destroying them, accidental deletion by the user, or even theft.

5. “Altcoin” Risk • Perhaps in the future, one cryptocurrency will prove superior and become

the leading currency/investment option. This dominant currency could be Bitcoin, Ethereum, Ripple, or any other cryptocurrency (potentially not even in existence at the present), and all other cryptocurrencies could become essentially worthless.

6. Greater Fool Theory • Warren Buffett claims an investment in gold is based on finding a greater

fool to buy it from you for a higher price at a later date because there are no cash flows to the investor between the initial purchase and the sale of the asset. This theory applies to cryptocurrencies as well.

Source: itBit, NASDAQ, Business Insider, Coin Market Cap, Barron’s

HOW A BLOCKCHAIN WORKS

AN INVESTMENT OPPORTUNITY?Bitcoin and other cryptocurrencies have only gained traction due to their potential opportunities. Many look to move away from cash toward a more efficient, electronic payment. Others would like to handle their money without utilizing the current banking system. And somewhat sensibly, citizens of countries with economies that have fallen on hard times buy cryptocurrencies as an alternative method to maintain the value of their assets.

Clearly, there are many risks to owning Bitcoin or any other cryptocurrency, but it is also true that there is potential for reward. It may be something you have interest in testing for yourself; however, at this time we consider it more of a gamble than a long-term investment opportunity. Other than the supply and demand effects on price, there are no fundamental earnings or coupon income expected similar to what one would look for in stocks and bonds. Furthermore, for the time being, there is no tie to inflation which other investments might provide as an attractive characteristic. Lastly, there is no history of evidence that these are a prudent investment for a long-term investment portfolio.

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After the Civil War Pension program was created, and prior to the adoption of Social Security in 1935, several movements formed to address the issue of economic security for the disabled, widows and widowers, and those of old age. A brief timeline notes some of the more relevant and interesting movements:

• The March of Coxey’s Army – Jacob Coxey called on the unemployed throughout the country to join him in a march to Washington (1894) to address economic security issues.

• Every Man a King – Huey Long, Governor of Louisiana, created the Share Our Wealth idea (1930s) that would guarantee each family an income of $5,000 per year and allow those over age 60 to receive an old-age pension. This was in response to the Great Depression, which found America facing its most devastating modern economic crisis.

• State Old-Age Pensions – by 1932 there were 17 states that incorporated old-age pension laws. These pension programs were ineffective due to county restrictions and the elderly reluctant to go on “welfare.”

• The Townsend Movement – Francis Townsend, a doctor, found himself unemployed with no savings at the age of 66. He created the Townsend Old Age Revolving Pension Plan (1933), which proposed that every citizen over 60 receive $200 per month.

• The Social Security Act (1935) – the official adoption of a social insurance program.

– In 1940 approximately 222,000 people received monthly Social Security benefits

– In 2016 over 60 million people received monthly Social Security benefits

Americans have always been good at solving problems. Saving Social Security from insolvency so that the program can continue to provide benefits to those in need will be a great challenge. Like many presidents in the recent past, President Trump has taken a “wait-and-see” approach to addressing the future insolvency of Social Security. Potentially making changes to Social Security has been considered political suicide, in that the necessary change will impact those in the workforce (higher payroll taxes), retirees (decrease in benefits), or both.

At Savant, we view Social Security benefits as an important planning topic and have created a detailed process for helping individuals and families navigate through a somewhat complex area. When preparing for a conversation, we often review a client’s potential longevity, other sources of income, their current employment status, and financial planning strategies and how these strategies could impact the decision about claiming Social Security benefits. We implement our experience with software to help identify the best claiming strategies available for the client. It is our dedication to this important topic that has helped lead to insightful conversations and our goal of creating ideal futures.

To learn more about the history of Social Security, visit this website: https://www.ssa.gov/history/briefhistory3.html

Social Security had its start prior to August 14, 1935 when President Roosevelt signed The Social Security Act. Although it was not called Social

Security at the time, Civil War Pensions were America’s first Social Security program. Over 600,000 soldiers died in the American Civil War, leaving behind hundreds of thousands of widows, orphans, and disabled veterans. The survivors were left in a world that was not well prepared to accommodate such transition.

The Civil War Pension program began during the Civil War, and benefits paid were linked to the disabilities incurred as a direct consequence of military duty. Widows and orphans were eligible to receive pensions equal to what their deceased spouse/father would have received if disabled and not deceased. By 1910, Civil War veterans and their survivors qualified for a system much like Social Security is structured today, a system whereby the disabled, the survivors, and the older-age veterans could receive benefits.

Here is an abbreviated list of potential solutions that address the future insolvency of the Social Security trust funds:

• Change the way the cost-of-living adjustment (COLA) is calculated. Annual COLAs ensure that those receiving Social Security benefits can maintain their lifestyles as the cost of goods increases with inflation. Currently, the COLA is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). Prior to 1972, there were only increases in Social Security when Congress decided there was a need to do so. Now, it is an annual calculation. Proponents of a change in the COLA have introduced using the chained Consumer Price Index approach, which has been said to be a more accurate measure for calculating changes in the cost of living.

• Increase the payroll tax rate. The Social Security payroll tax rate is currently 12.4% (employees pay 6.2% and employers pay 6.2%).

• Increase the cap on taxable wages. The Social Security payroll tax rate (above) is applied on the first $127,200 individuals earn each year. Earnings above $127,200 are not taxed by Social Security.

• Increase the full retirement age (FRA). FRA is a term used to determine the age at which an individual can receive his/her “full” amount of promised Social Security retirement benefits. An individual can receive a reduced amount of retirement benefits as early as age 62. For those born between 1947 and 1954, the FRA is age 66. The FRA gradually increases to age 67 for those born between 1955 and 1959 and is a full 67 for those born in 1960 or later.

SOCIAL SECURITY THEN AND NOWHistory in the Making:

TAKEAWAY

We are Savant. Real people

with unique perspectives

to help guide you.

VANTAGE POINTS

Savant advisors are genuine people with diverse life experiences. Their

unique perspectives and expertise allow them to help clients build ideal

futures. Learn more about some of our advisors, and hear about life

from their vantage point by visiting savantcapital.com/vantage-points.

Market return data from Morningstar Direct. Indices used: U.S. Large Cap-CRSP U.S. Total Market TR Index, U.S. Large Value-MSCI U.S. Prime Market Value Index, U.S. Small Cap-MSCI U.S. Small Cap 1750 Index, U.S. Small Value-MSCI U.S. Small Value Index, Int’l Large-MSCI EAFE Index, Int’l Large Value-MSCI EAFE Value Index, Int’l Small-S&P EPAC Small Index, Int’l Small Value-S&P EPAC Small Value Index, Emerging Mkts-MSCI Emerging Markets Index, TIPS-BofAML U.S. Treasury Inflation-Linked Securities Index, Short Bonds-IA SBBI U.S. 1 Year Treasury Constant Maturity Index, Interm Bonds-Barclays U.S. Aggregate Bond Index, Int’l Bonds-JPM GBI Global Ex US Hdg Index, Global REITs-S&P Global REIT Index, Commodities-Bloomberg Commodity Index, Managed Futures-Credit Suisse Mgd Futures Liquid Index, Reinsurance-Swiss Re Global Cat Bond Index. Some indices have been appended prior to their inception date with similar indices in order to construct a full data set for time period.

Savant Capital Management is a Registered Investment Advisor. This information is not intended as personalized investment advice. The index returns herein assume reinvestment of all dividends and interest and do not reflect fees or expenses. Index portfolios reflected in this publication are not representative of any actual client returns. Savant’s marketing material should not be construed by any existing or prospective client as a guarantee that they will experience a certain level of results if they engage the advisor’s services and includes lists or rankings published by magazines and other sources which are generally based exclusively on information prepared and submitted by Savant.

Please remember that past performance is not indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Savant Capital Management), or any non-investment related content, made reference to directly or indirectly in this newsletter will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this newsletter serves as the receipt of, or as a substitute for, personalized investment advice from Savant Capital Management. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to their individual situation, they are encouraged to consult with the professional advisor of their choosing. Please Note: “Ideal” is not intended to give assurance as to achieving successful results. Savant Capital Management is neither a law firm nor a certified public accounting firm and no portion of the newsletter content should be construed as legal or accounting advice. If you are a Savant Capital Management client, please remember to contact Savant Capital Management, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services. A copy of Savant Capital Management’s current written disclosure statement discussing our advisory services and fees is available upon request.

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