Financial Architects
Financial Planning & Wealth Management
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 …
My latest quarterly ramblings to my Financial Professionals list are out: Financial Professionals Winter 2023
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 …
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 …
My latest quarterly ramblings to my Financial Professionals list are out: Financial Professionals Fall 2022
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 …
There seems to be view (particularly on the left) that some wealth distributions are grossly unfair (and government should do something about it), but they have not thought through the implications of their beliefs. Take whatever distribution you think is the outer limit of fair, for example suppose you think no one should have more …
My latest quarterly ramblings to my Financial Professionals list are out: Financial Professionals Summer 2022
Below are some strategies for coping with market downturns. Before getting to that though, it is fundamental to have an appropriate portfolio before the downturn occurs. That means not only properly diversified, but also one with a risk level that you will be comfortable with when the inevitable downturns come. One very popular strategy is …
How should an asset allocation change over time? Most folks (financial professionals included) believe that the longer your time horizon the more risk you can take. That, as stated, is clearly wrong. Let me explain by way of an example. Assume an individual is 35 years old and inherits $1,000,000. He or she will not …
My latest quarterly ramblings to my Financial Professionals list are out: Financial Professionals Spring 2022
There is no way to value Bitcoin or other cryptocurrencies (since there are no cash flows from it) so we are in the realm of uncertainty, not risk. Gambling has known odds (more or less, depending on what you are betting on) and a negative expected return (house gets a cut). Investing has estimable odds …
I did a post on decision-making years ago (here) but I wanted to share some more on it. As financial advisors, our “product” is really wisdom (as I’ve said before), and it turns out we are wiser about other people’s situations than we are our own. This has two implications, 1) our clients (even our …
My latest quarterly ramblings to my Financial Professionals list are out: Financial Professionals Winter 2022
What should be the response to a low return environment (i.e. high prices on stocks and bonds)? I have touched on this before (here for example), but it seems like it might be time again. If returns are lower than they were in the past, but risks are the same (i.e. the return per unit …
I have been thinking about wealth taxes that have been proposed and it occurred to me that we already have a few of them (property taxes are one, I’ll get to the other below) but we don’t think of them as wealth taxes. That led me to think about some other illogical tax items. This …
My latest quarterly ramblings to my Financial Professionals list are out: Financial Professionals Fall 2021
If you have a prudent financial plan, with no legacy desires, you very well might accidentally leave your heirs an estate large enough to have an estate-tax problem anyway! I’ll give the conclusion first (less technical) and then the detail of how it was derived (which is almost certainly more than you want to know). …
This is new, although I’ve written similar things before: Financial Success (2016) Broke Rich People and Loaded Poor People (2016) “Good With Money” (2019) Aristotle believed that our goal should be eudaimonia which is frequently translated as “happiness” but what he meant was much closer to well-being or human flourishing. Before Financial Architects existed I …
My latest quarterly ramblings to my Financial Professionals list are out: Financial Professionals Summer 2021