Spring Ruminations
My latest quarterly ramblings to my Financial Professionals list are out: Financial Professionals Spring 2024
Investment Rules
A while back the topic of “Investment Rules” came up in an email exchange, and I wrote a quick list of mine. These are just my simple, and perhaps arbitrary, rules. I’m mostly trying, as Charlie Munger said, to not be stupid: “It is remarkable how much long-term advantage people like us have gotten by …
Being Helpful
A while back I was thinking about advice for younger professionals so I read a few networking books. (I thought I had read them a long time ago, but apparently I picked up the essence without ever actually reading the books. I corrected that.) Anyway, I highly recommend, Give and Take. A related book is …
Winter Ruminations
My latest quarterly ramblings to my Financial Professionals list are out: Financial Professionals Winter 2024
Time Diversification, Part II
I touched on this previously, but I want to address it again. There is widespread belief in what is sometimes called “time diversification.” The question is really: is there mean reversion in the equity risk premium (ERP) over time? If so, if you have a bad ERP experience early it reverses later so that if …
Other Risk Reduction
I’ve written about portfolio risks, insurable risks, silly risks, etc., but I thought I’d spend a few minutes here on a few other things you can do to reduce other types of risk. Here are a few things that all of us here at Financial Architects do personally that we think many (most?) people probably …
Fall Ruminations
My latest quarterly ramblings to my Financial Professionals list are out: Financial Professionals Fall 2023
Forecasting
I read an excellent post last year, There will Always Be Sorcerers. I have written on forecasts before, here for example, and at that link, I included some good quotes on planning and prognosticating. Howard Marks came out with a memo (here) which gave me a few more: There are two kinds of forecasters: those who …
Bucket Strategies, etc.
A fellow advisor wrote in a professional online forum last year, “[I]n rocky times I turn off dividend reinvestment and let the cash build so if they need money from me, we don’t have to sell principal.” I want to comment not only on that, but also on so-called bucket strategies that I don’t think …
Summer Ruminations
My latest quarterly ramblings to my Financial Professionals list are out: Financial Professionals Summer 2023
Savings Rates
A newer advisor on a financial planning message board wanted to know (spelling/grammar/punctuation corrected): As an aspiring financial planner, I am curious to know: in your professional experience as a financial planner, have you found that investments are an essential part of growing one’s wealth, or can someone achieve financial success without investing and just …
Tax-Advantaged Accounts in an Inflationary Environment
I rant talk a lot about the importance of maxing out contributions to tax-advantaged accounts (IRAs, 401(k) plans, Roths, etc.). Since you can’t “catch-up” later, anytime you don’t contribute the maximum (or if you withdraw more than required) you are reducing the benefits of these accounts. (It’s one of my four rules for guaranteed financial …
Spring Ruminations
My latest quarterly ramblings to my Financial Professionals list are out: Financial Professionals Spring 2023
Investment Rules
The topic of “Investment Rules” came up in an email exchange a while back, and I wrote a quick list of mine. These are just my simple, and perhaps arbitrary, rules. I’m mostly trying, as Charlie Munger said, to not be stupid: “It is remarkable how much long-term advantage people like us have gotten by …
Estate Tax Avoidance
The short paper here is about what “loopholes” should be closed to raise revenue. Consequently, it is also a great guide to those perfectly legal strategies. Many of these may be closed eventually, but until then it’s a good guide. Here’s the list of strategies: Zeroed-out GRATS IDGTs Minority interest discounts Gifts over bequests (tax …
Winter Ruminations
My latest quarterly ramblings to my Financial Professionals list are out: Financial Professionals Winter 2023
Modern Monetary Theory and Free Lunches
The recent higher inflation has dampened enthusiasm for this somewhat, but I hope with a short explanation to drive a stake through its heart. (If you have no idea what this is, see this and this – or just go and enjoy your life!) This is a very simple explanation that glosses over a little …
Capital Gains Taxes are Really Options Positions
Imagine I have 1,000 shares of stock with a price of $20/share; a basis of $4/share; and a marginal tax rate (now and forever) of 25% (just for simplicity). I can think of that as a combination of: A stock position worth 1,000 * $20 = $20,000 A liability of ($20 – $4) * 1,000 …
Fall Ruminations
My latest quarterly ramblings to my Financial Professionals list are out: Financial Professionals Fall 2022
Financial Planning vs. Wealth Management
When asked, we refer to ourselves as “wealth managers” and this month I thought I would explain that term and a few related things. Wikipedia defines Wealth Management as: [S]ervices to a wide array of clients ranging from affluent to high-net-worth (HNW) and ultra-high-net-worth (UHNW) individuals and families. It is a discipline which incorporates structuring …