The SECURE Act’s pushback for the start of RMDs to age 72 opens the Roth conversion wider. High taxes forced by the new ten-year distribution requirement can cut inherited tax-deferred IRA accounts in half. Setting up an accumulation trust as the beneficiary of a Roth account can create a tax-efficient trust that could last for […]
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!
Value averaging down increases market returns by lowering your basis. Dividends increase the total return further.
That’s how you catch a falling knife without bleeding. And that’s why this is a good time for those who have a strong balance sheet and a long-term plan to manage Upside, Floor, Longevity, and Reserves.
Most folks think investing is about picking stocks and dodging in and out of the market before the roof falls in. Maybe with play money. In real life, investing is about figuring out your life goals, how to pay for them, and then designing an investment approach that will get you to a successful outcome, […]
You know that the fees you pay to invest your savings matter, and that these costs, even tiny percentages, can significantly reduce your gains over a lifetime of saving and investing. You are probably also aware of the rise of “robo-advisors,” web-based automated do-it-yourself investment management sites like Wealthfront and Betterment that provide sophisticated, algorithmic […]
Upside is the amount that can be exposed to market risk for growth without jeopardizing household lifestyle.