Financial Architects
Financial Planning & Wealth Management
As wealth managers, we are frequently asked some variation of the question “So, what do you think the market is going to do?” or “What do you think of XYZ stock?” Those are difficult questions to answer, and this month’s post is an attempt to explain our perspective. The reason that those questions are problematic …
Many people have prepared for the future and prepared a will, powers of attorney, etc. A letter of instruction is not a legal document, but simply a letter that tells survivors where to find things, who to contact for various things, and any other information they will need that they may not know. This may …
My latest quarterly ramblings to my Financial Professionals list are out: Financial Professionals Summer 2024
I used this example in classes for financial advisors back in the day: Client gives you $100,000 and it goes up 100% in period 1 so the balance is $200,000. Client is excited then and gives you $1,000,000 more so the account has $1,200,000. Account then goes down 25% in period 2 so $1,200,000 becomes …
I had a conversation recently with a young adult who was focused on buying a home. It got me thinking about priorities, and while it was on my mind I wrote some general advice for young people: While individual situations will vary, as a young adult there are some basic financial milestones that I think …
My latest quarterly ramblings to my Financial Professionals list are out: Financial Professionals Spring 2024
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 …
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 …
My latest quarterly ramblings to my Financial Professionals list are out: Financial Professionals Winter 2024
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 …
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 …
My latest quarterly ramblings to my Financial Professionals list are out: Financial Professionals Fall 2023
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 …
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 …
My latest quarterly ramblings to my Financial Professionals list are out: Financial Professionals Summer 2023
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 …
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 …
My latest quarterly ramblings to my Financial Professionals list are out: Financial Professionals Spring 2023
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 …
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 …