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Investing

Higher Rates: The Tempest in the Teapot

Published January 11, 2017

Anybody who was surprised that the Federal Reserve Board finally decided to raise its benchmark interest rate last month probably wasn’t paying attention.  The U.S. economy is humming along, the stock market is booming and the unemployment rate has fallen faster than expected.  The incoming administration has promised lower taxes and a stimulative $550 billion infrastructure investment.

The rate rise is extremely conservative: up 0.25%, to a range from 0.50% to 0.75%—which, as you can see from the accompanying chart, is just a blip compared to where the Fed had its rates ten years ago.

How to Increase Your Returns with Tax-Savvy Investing

Published October 28, 2016

After market-risk and inflation-risk, which investors take great strides to mitigate through sound investment practices, taxation-risk presents the biggest obstacle to building wealth. A sound investment strategy not only seeks to generate returns on your capital, it also seeks to preserve as much of your capital as possible to keep it working for you. One of the surest ways to preserve your capital is to reduce the amount of taxes you pay on investment income and gains. By incorporating tax-saving strategies into your investment plan, you can minimize the impact that taxes have on your capital-at-work.

With your asset allocation it’s all about location

One of the first rules of wealth accumulation is to sock away as much of your income as possible into a tax-qualified retirement plan, such as a 401k, 403b, or an IRA. This gives you an immediate and long-term tax advantage. However, in terms of an overall asset allocation strategy, the placement of various types of investments among your tax-qualified plans and your non-qualified investment accounts is nearly as important as the selection of investments for meeting your particular investment objectives. At its simplest, you should place your tax efficient investment in your non-qualified investment accounts, and your non-tax efficient investments in your qualified accounts.

Why You Need an Investment Coach

Published September 23, 2016

If you believe some of the world’s greatest investors, such as Benjamin Graham and Warren Buffet, it’s not investments that cause people to lose money; rather, it’s people who cause people to lose their money. What is meant by that is investing with sound principles and intelligent practices will always have a greater likelihood of success. However, without a solid investment plan and the discipline to stay the course, investors are much more vulnerable to their emotions which, more often than not, can lead to disastrous results. In other words, an investor’s worst enemy is likely to be themselves.

To use a more familiar analogy, consider a business executive who decides to get back into fitness. To ensure that he had a plan and that he would be doing everything correctly according to his objectives, he hired a personal trainer. They customized an exercise and nutrition regimen and began training together twice a week. After two months, the executive felt as if he knew exactly what to do, so he fired his trainer. After all, he had the plan and he knew the regimen, so why pay for more training?

A Prescription for Reducing the Pain

Published August 19, 2016

There’s no question that we experience emotional pain and anxiety when our portfolios are losing money due to market downturns.  Behavioral scientists tell us that we feel losses twice as intensely as positive returns.

But that doesn’t tell us what we really want to know, which is: other than selling at the wrong time and locking in losses, how do we make these downturns less painful?

Will You Outlive Your Income? How to Improve the Odds You Won’t.

Published August 12, 2016

While our extended longevity should be greeted with gratitude for the possibility of enjoying a longer life with our friends and families, many retirees are approaching it with trepidation, wondering if their hard earned assets will be sufficient to fulfill their vision of a good life for the rest of their life – however long it should last. At the critical point when assets are to be converted to income and a spend-down plan is launched, retirees need the assurance that they won’t outlive their income, which, to some is their greatest fear.  

Old Rules of Thumb Have Become Dangerous Assumptions

Unfortunately, the traditional and outdated retirement planning models espoused by the media and the general financial services population only serve to generate more angst among retirees. Not only do many of them still adhere to the old “allocate for your age” asset allocation strategy, they continue to base their spend-down plans on the traditional life expectancy model that requires us to die on time in order for the plan to work. In today’s near-zero-interest rate environment and in the face of life spans that can expand to age 100, these planning assumptions dangerously defy current realities.

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