Mosaic Wealth ConsultingDavid J. Estatico, CFS, CRPC®Private Wealth Advisor7467 State Route 22New Alexandria, PA 15670724-668-7900dave.estatico@mosaicplanners.comwww.mosaicwealthconsulting-estatico.com

June 2015It's Complicated: Money and Happiness

Planned Charitable Giving

Millennials vs. Boomers: How Wide Isthe Gap?

How important are dividends in the S&P500's total returns?

It's Complicated: Money and Happiness

See disclaimer on final page

Does more wealthlead to morehappiness?Researchers havetackled this questionfor decades, andalthough the resultshave differed, onefact is certain: Therelationship betweenmoney and

happiness--or "well-being," as manyresearchers put it--is complicated.

Think before you spendIn their book, Happy Money: The Science ofSmarter Spending, Professors Elizabeth Dunnand Michael Norton summarize their own andothers' research. What they found is that it's notnecessarily how much you make that matters tooverall happiness (although that certainlycontributes), but what you do with your money.They boiled down the findings to five "keyprinciples of happy money."

1. Buy Experiences. Investing in memoriescan result in a more sustained level ofhappiness than buying a bigger house, a moreluxurious car, or other material goods. Buyingthe latest technological gadget might elicit thekind of joy of a child experiences opening anew toy on the holidays, but just like that newtoy, the gadget loses its novelty with time--aprinciple psychologists refer to as "hedonicadaptation." On the other hand,experiences--even those that are fleeting ormay initially provoke trepidation, such as hanggliding--create memories that help fosterprolonged contentment.

2. Make It a Treat. While you're investing inthose experiences, be sure to spread them outso they don't become expectations or habits. Inthis way, the novelty of each new experiencewill be fully realized. As the book says,"Abundance is the enemy of appreciation." Thisis also true with something as simple as acappuccino. If you make it a daily ritual, itbecomes a habit. If you instead substitute yourdaily coffee once a week with a froth-coveredtreat, then it becomes a reward to savor.

3. Buy Time. According to Dunn and Norton,individuals should ask themselves the question,"How will this purchase change the way I usemy time?" For example, will it allow you tospend more time with your friends or family, orcreate more "to-dos" to clog your list? Will itfree you up to participate in more activities youenjoy? Investing in products or services thatallow you to spend time on the things you lovewill lead to greater overall well-being. And, saythe authors, don't fall into the trap of putting adollar value on your time, as this leads toincreased stress levels. "Simply feeling likeyour time is valuable can make it seem scarce."

4. Pay Now, Consume Later. Paying for atreat or experience up front, such as eventtickets you buy months in advance, allows youto benefit from the extended pleasure of eageranticipation. With all due respect to Tom Petty,the waiting, it seems, may be the best part.Conversely, credit cards can be a dangerous,albeit convenient, financial tool, facilitating a"consume now, pay later" dynamic. One studycited in Happy Money found that all 30 peoplesurveyed underestimated their monthlycredit-card bills by a sizable average of nearly30%.

5. Invest in Others. Regardless of yourcircumstances--wealthy or not, young orold--research finds that spending money onothers leads to greater happiness thanspending on oneself.

The danger zonesWhile some experts differ on whether higherincomes result in greater levels of happiness,they tend to agree on the following: Increasingdebt levels are detrimental to happiness, andkeeping up with the Joneses can lead to ageneral sense of dissatisfaction. Instead,actively managing debt while finding ways toappreciate what you already have on aday-to-day basis may help you makewell-thought-out saving and spending choicesthat support your overall level of well-being.

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Planned Charitable GivingToday more than ever, charitable institutionsstand to benefit as the first wave of babyboomers reach the stage where they're able tomake significant charitable gifts. If you're likemany Americans, you too may have considereddonating to charity. And though writing a checkat year-end is one of the most common ways togive to charity, planned giving may be evenmore effective.

What is planned giving?Planned giving is the process of thinkingstrategically about charitable giving to maximizethe personal, financial, and tax benefits of yourgifts. For example, you may need to receiveincome in exchange for the assets you donate,or you may want to be involved in deciding howyour gift is spent--things that typically can't bedone with standard checkbook giving.

Questions to considerTo help you start thinking about your charitableplan, consider these questions:

• Which charities do you want to benefit?• What kind of property do you want to donate

(e.g., cash, stocks, real estate, lifeinsurance)?

• Do you want the gift to take effect during yourlife or at your death?

• Do you want to retain an interest in theproperty you donate?

• Do you want to be involved in deciding howyour gift is spent?

Gifting strategiesThere are many ways to donate to charity, froma simple outright cash gift to a complex trustarrangement. Each option has strengths andtradeoffs, so it's a good idea to consider whichstrategy is best for you. Here are somecommon options:

Outright gift. An outright gift is an immediategift for the charity's benefit only. It can be madeduring your life or at your death via your will orother estate planning document. Examples ofproperty you can gift are cash, securities, realestate, life insurance proceeds, art, collectibles,or other property.

Charitable trust. A charitable trust lets yousplit a gift between a charitable and anoncharitable beneficiary, allowing you tointegrate financial needs with philanthropicdesires. The two main types are a charitableremainder trust and a charitable lead trust. Atypical charitable remainder trust provides anannuity or unitrust interest for one or twopersons for life. An annuity interest providesfixed payments, while a unitrust interest

provides for payments of a fixed percentage oftrust assets (valued annually). At the end of thetrust term, assets remaining in the trust pass tothe charity. This can be an attractive strategyfor older individuals who seek income. Thereare a few other variations of the charitableremainder trust, depending on how the incomestream is calculated. With a charitable leadtrust, the order is reversed; the charity gets thefirst, or lead unitrust or annuity interest, and thenoncharitable beneficiary receives theremainder interest at the end of the trust term.

Charitable gift annuity. A charitable giftannuity provides a fixed annuity for one or twopersons for life. It's easier to establish than acharitable remainder trust because it doesn'trequire a formal trust document.

Private foundation. A private foundation is aseparate legal entity you create that makesgrants to public charities. You and your familymembers, with the help of professionaladvisors, run the foundation--you determinehow assets are invested and how grants aremade. But in doing so, you're obliged to followthe many rules and regulations governingprivate foundations.

Donor-advised fund. Similar to but lessburdensome than a private foundation, adonor-advised fund is an account held by acharity to which you can transfer assets. Youcan then advise, but not direct, how your assetswill be invested and how grants will be made.

Tax benefitsCharitable giving can provide you with greatpersonal satisfaction. But let's face it, the taxbenefits are valuable, too. Your gift can result ina substantial income tax deduction in the yearyou make the donation, and it may also reducecapital gains and estate taxes. With a charitableremainder trust, you generally receive anup-front income tax deduction equal to theestimated present value of the interest that willeventually go to charity.

Charitable contribution deductions are generallylimited to 50% of your adjusted gross income(AGI), or 30% or 20% of AGI depending on thetype of charity and the property donated.Disallowed amounts can generally be carriedover and deducted in the following five years,subject to the percentage limits in those years.Your overall itemized deductions may also belimited based on the amount of your AGI.

The charity must be a qualified public charity inorder for you to enjoy these tax benefits. Not alltax-exempt charities are qualified charities fortax purposes. To verify a charity's status, checkIRS Publication 78, or visit www.irs.gov.

Planned giving is theprocess of thinkingstrategically aboutcharitable giving tomaximize the personal,financial, and tax benefits ofyour gifts.

There may be costs andexpenses associated withtrusts, private foundations,and donor-advised funds.Income from charitabletrusts and charitable giftannuities is not guaranteed.

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Millennials vs. Boomers: How Wide Is the Gap?Texting versus email (or even snail mail). AngryBirds versus Monopoly. "The Theory ofEverything" versus "The Sound of Music.""Dancing with the Stars" versus "AmericanBandstand."

It's no secret that there are a lot of differencesbetween baby boomers, born between1946-1964, and millennials, who were generallyborn after 1980 (though there is disagreementover the precise time frame for millennials). Butwhen it comes to finances, there may not be asmuch difference in some areas as you mightexpect. See if you can guess which generationis more likely to have made the followingstatements.

Boomer or millennial?1) I have enough money to lead the life I want,or believe I will in the future.

2) My high school degree has increased mypotential earning power.

3) I rely on my checking account to pay for myday-to-day purchases.

4) I consider myself a conservative investor.

5) Generally speaking, most people can betrusted.

6) I'm worried that I won't be able to pay off thedebts that I owe.

The answers1) Millennials. According to a 2014 survey bythe Pew Research Center, millennials weremore optimistic about their finances than anyother generational cohort, including babyboomers. Roughly 85% of millennials said theyeither currently had enough to meet theirfinancial needs or expected to be able to livethe lives they want in the future; that'ssubstantially higher than the 60% of boomerswho said the same thing. Although a higherpercentage of boomers--45%--said theycurrently have enough to meet their needs, only32% of millennials felt they had enough moneyright now, though another 53% were hopefulabout their financial futures. Source:"Millennials in Adulthood," Pew ResearchCenter, 2014

2) Boomers. The ability of a high schooleducation to provide an income has droppedsince the boomers' last senior prom, while acollege education has never been morevaluable. In 1979, the typical high schoolgraduate's earnings were 77% of a collegegraduate's; in 2013, millennials with a highschool diploma earned only 62% of what acollege graduate did. And 22% of millennialswith only a high school degree were living in

poverty in 2013; back in 1979, the figure forboomers at that age was 7%. Source: "TheRising Cost of Not Going to College," PewResearch Center, 2014

3) Boomers. Not surprisingly, millennials are farmore likely than boomers to use alternativepayment methods for day-to-day expenses. Astudy by the FINRA Investor EducationFoundation found that millennials are almosttwice as likely as boomers to use prepaid debitcards (31% compared to 16% of boomers).They're also more than six times as likely to usemobile payment methods such as Apple Pay orGoogle Wallet; 13% of milliennials reportedusing mobile methods, while only 2% ofboomers had done so. Source: "The FinancialCapability of Young Adults--A GenerationalView," FINRA Foundation Financial CapabilityInsights, FINRA Investor Education Foundation,2014

4) Millennials. You might think that withthousands of baby boomers retiring every day,the boomers might be the cautious ones. But inone survey of U.S. investors, only 31% ofboomers identified themselves as conservativeinvestors. By contrast, 43% of millennialsdescribed themselves as conservative when itcame to investing. The survey also found thatmillennials outscored boomers on whether theywanted to leave money to their children (40%vs. 25%) and in wanting to improve theirunderstanding of investing (44% vs. 38%).Source: Accenture, "Generation D: AnEmerging and Important Investor Segment,"2013

5) Boomers. Millennials may have been aroundthe track fewer times than boomers have, buttheir experiences seem to have given them amore jaundiced view of human nature. In thePew Research "Millennials in Adulthood"survey, only 19% of millennials said mostpeople can be trusted; with boomers, thatpercentage was 31%. However, millennialswere slightly more upbeat about the future ofthe country; 49% of millennials said thecountry's best years lie ahead, while only 44%of boomers agreed.

6) Millennials. However, the difference betweenthe generations might not be as significant asyou might think. In the FINRA Foundationfinancial capability study, 55% of millennialswith student loans said they were concernedabout being able to pay off their debt. That's notmuch higher than the 50% of boomers whowere worried about debt repayment.

Can you tell the differencebetween the attitudes ofbaby boomers andmillennials when it comes tofinances? Take this quiz andsee.

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Mosaic Wealth ConsultingDavid J. Estatico, CFS, CRPC®Private Wealth Advisor7467 State Route 22New Alexandria, PA 15670724-668-7900dave.estatico@mosaicplanners.comwww.mosaicwealthconsulting-estatico.com

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2015

David J. Estatico is a registeredrepresentative of Lincoln FinancialAdvisors Corp.

Securities and investment advisoryservices offered through LincolnFinancial Advisors Corp., abroker/dealer (member SIPC) andregistered investment advisor.Insurance offered through Lincolnaffiliates and other fine companies.Lincoln Financial Advisors Corp.does not provide legal or taxadvice.

Mosaic Wealth Consulting andMosaic Employee Benefits are notaffiliates of Lincoln FinancialAdvisors Corp.

Are stock dividends reliable as a source of income?Dividends can be an importantsource of income. However,there are several factors youshould take into considerationif you'll be relying on them to

help pay the bills.

An increasing dividend is generally regarded asa sign of a company's health and stability, andmost corporate boards are reluctant to cutthem. However, dividends on common stockare by no means guaranteed; the board candecide to reduce or eliminate dividendpayments. Investing in dividend-paying stocksisn't as simple as just picking the highest yield;consider whether the company's cash flow cansustain its dividend, and whether a high yield issimply a function of a drop in a stock's shareprice. (Because a stock's dividend yield iscalculated by dividing the annual dividend bythe current market price per share, a lowershare value typically means a higher yield,assuming the dividend itself remains the same.)

Also, dividends aren't all alike. Dividends onpreferred stock typically offer a fixed rate ofreturn, and holders of preferred stock must bepaid their promised dividend before holders ofcommon stock are entitled to receive theirs.

However, because their dividends arepredetermined, preferred stocks typicallybehave somewhat like fixed-incomeinvestments. For example, their market value ismore likely to be affected by changing interestrates, and most preferred stocks have aprovision allowing the company to call in itspreferred shares at a set time or at a specifiedfuture date. If you have to surrender yourpreferred stock, you might have difficulty findingan equivalent income stream.

Finally, dividends from certain types ofinvestments aren't eligible for the special taxtreatment generally available for qualifieddividends, and a portion may be taxed asordinary income.

Note: All investing involves risk, including thepotential loss of principal, and there can be noguarantee that any investing strategy will besuccessful. Investing in dividends is a long-termcommitment. Investors should be prepared forperiods when dividend payers drag down, notboost, an equity portfolio. A company's dividendcan fluctuate with earnings, which areinfluenced by economic, market, and politicalevents.

How important are dividends in the S&P 500's totalreturns?In a word, very. Dividendincome has representedroughly one-third of the totalreturn on the Standard &

Poor's 500 index since 1926.*

According to S&P, the portion of total returnattributable to dividends has ranged from a highof 53% during the 1940s--in other words, morethan half that decade's return resulted fromdividends--to a low of 14% during the 1990s,when the development and rapid expansion ofthe Internet meant that investors tended tofocus on growth.*

And in individual years, the contribution ofdividends can be even more dramatic. In 2011,the index's 2.11% average dividend componentrepresented 100% of its total return, since theindex's value actually fell by three-hundredthsof a point.** And according to S&P, the dividendcomponent of the total return on the S&P 500has been far more stable than price changes,which can be affected by speculation and ficklemarket sentiment.

Dividends also represent a growing percentageof Americans' personal incomes. That's beenespecially true in recent years as low interest

rates have made fixed-income investments lessuseful as a way to help pay the bills, In 2012,dividends represented 5.64% of per capitapersonal income; 20 years earlier, that figurewas only 3.51%.*

Note: All investing involves risk, including thepotential loss of principal, and there can be noguarantee that any investing strategy will besuccessful. Investing in dividends is a long-termcommitment. Investors should be prepared forperiods when dividend payers drag down, notboost, an equity portfolio. A company's dividendcan fluctuate with earnings, which areinfluenced by economic, market, and politicalevents. Dividends are typically not guaranteedand could be changed or eliminated.

*Source: "Dividend Investing and a Look Insidethe S&P Dow Jones Dividend Indices,"Standard & Poor's, September 2013

**Source: www.spindices.com, "S&P 500Annual Returns" as of 3/13/2015

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