Current strategies for tax optimization by asset location in after-tax, pre-tax, and tax-free (Roth) accounts are unchanged. Because of lower rates, retirement savers will have more after-tax money in 2018, but pre-tax deductible contributions to 401(k)s, 403(b)s, and IRAs will have a smaller effect on taxes due. Those working in retirement as sole-proprietors or LLCs can […]
Paper money is the original risky asset, pays nothing, and is fully exposed to inflation. Wall Street would have you believe that holding cash will destroy your purchasing power over the long-term. Cash held as 3-month T-Bills–cash equivalents–has not only kept up with inflation, it has modestly beaten inflation in 53 out of the last […]
Summary One thing income is not is wealth. This is the first confusion we might encounter: High income does not necessarily mean great wealth. Savings is the source of income that protects our lifestyle when other income stops, but savings by itself, even significant savings, is not wealth. Income and wealth are taxed differently, so […]
Wall Street is selling wealth management by managing returns volatility when the vast majority of us probably need something else. Depending on where you are in the lifecycle, you likely will be better served managing savings or managing spending.
For existing portfolios I rebalance when Upside regional allocations fall more than 20% outside of their regional target percentage. This rebalancing allow us to add to those regions in the global market portfolio that are now selling at a lower cost—buying low—while we sell at higher prices those regions that exceed their targets by 20% when that occurs. Buy low, sell high!