Market commentary you deem relevant

[Michael Rankin]

Right, and index funds (nor traditional mutual funds either) don’t allow for tax loss harvesting. A diligent FA can often cover the fee using that one tactic alone.

I’m definitely not in the people in your line of work are a waste of money camp.

My post above about setting up a simple IRA and putting the money in a index fund was just to illustrate how powerful that is versus doing nothing as far as a retirement account( I just started 2 years ago).

I’ve exchanged some messages with you here, and on bowsite. Also I’ve seen guys I would take their word to the bank refer to you on Bowsite with nothing but positive words.

If I had started this long ago, had a good size account, and we lived in the same area I would be wanting to be having some conversations with you.

 

[Beendare]

Heres an article by Morningstar on how to maximize tax efficiency on ETFs- ( its easy, peasy)
Morningstar is a good resource for investors

MORNINGSTAR

excerpt;
Over 60% of equity mutual funds distributed capital gains in 2022. Adding insult to injury, their average return was negative 17% over that stretch. Investors saw their portfolios shrink significantly, and yet they still owed taxes.

By contrast, just 4.5% of equity exchange-traded funds distributed capital gains in 2022. ETFs have earned their reputation on tax efficiency. While investors will still need to pay taxes for dividends and interest regardless of investment vehicle, ETFs easily circumvent many of the capital gains distributions that plague mutual funds.

Leveraging ETFs’ tax efficiency to defer capital gains can ease tax bills today, but ETFs aren’t immune to taxes. Investors in ETFs will still be on the hook for capital gains taxes when they sell the ETF. From a tax perspective, their primary benefit is affording investors the flexibility to defer capital gains taxes.

 

[SDHNTR]

Heres an article by Morningstar on how to maximize tax efficiency on ETFs- ( its easy, peasy)
Morningstar is a good resource for investors

MORNINGSTAR

excerpt;
Over 60% of equity mutual funds distributed capital gains in 2022. Adding insult to injury, their average return was negative 17% over that stretch. Investors saw their portfolios shrink significantly, and yet they still owed taxes.

By contrast, just 4.5% of equity exchange-traded funds distributed capital gains in 2022. ETFs have earned their reputation on tax efficiency. While investors will still need to pay taxes for dividends and interest regardless of investment vehicle, ETFs easily circumvent many of the capital gains distributions that plague mutual funds.

Leveraging ETFs’ tax efficiency to defer capital gains can ease tax bills today, but ETFs aren’t immune to taxes. Investors in ETFs will still be on the hook for capital gains taxes when they sell the ETF. From a tax perspective, their primary benefit is affording investors the flexibility to defer capital gains taxes

100%. Google the Edelen, Evans and Kadlec study on undisclosed trading costs if you really wanna get angry at mutual funds.

 

[SDHNTR]

I’m definitely not in the people in your line of work are a waste of money camp.

My post above about setting up a simple IRA and putting the money in a index fund was just to illustrate how powerful that is versus doing nothing as far as a retirement account( I just started 2 years ago).

I’ve exchanged some messages with you here, and on bowsite. Also I’ve seen guys I would take their word to the bank refer to you on Bowsite with nothing but positive words.

If I had started this long ago, had a good size account, and we lived in the same area I would be wanting to be having some conversations with you.

Thanks, that’s nice of you to say. I didn’t interpret your post as any kind of slight. And you’re right, socking away some money in an index fund is absolutely better than what the vast majority of Americans are doing, which is nothing. If you feed em regularly, minnows become whales. Keep at it.

I miss the old days of Bowsite, before the political conversations got out of hand.

 

[Throwin Darts]

I’ve been in the workplace 20 years now and started investing as soon as I got my first paycheck. I used to trade individual stocks and options. I’ve now been index only for about 15 years. All it took was me finding the S&P Active vs Passive Scorecard to know DIY index only was the path for me.

I hold three funds throughout my entire portfolio. Total Stock Market Index, Total International and Total Bond. That’s it. I have target holds for each and I rebalance with no emotion involved whatsoever. When it’s time it time. I do not believe in market timing. I also keep my investments tax efficient with tax deferred or tax free accounts holding bonds and reinvesting dividends. Taxable accounts hold stocks and I do not reinvest dividends, but rather build up cash until it hits a threshold and use that cash to rebalance. I have a plan and I stick to it and ignore the noise.

At 42 my 401k alone is now into seven figures just by maxing it each year I’ve been in the workplace. It was hard to do when I was first starting out but it was one of the best decisions I made as a young adult. If you miss a year and don’t take full advantage of that tax break you never get it back.

Get an advisor if you want but a little education, consistency and time goes a long long way.

 

[WhatToHunt]

Get an advisor if you want but a little education, consistency and time goes a long long way.

I think this is a great takeaway.

I admittedly have a bias because of my bad experience, and those of others I personally know. But the advisor I'd left a decade ago had come highly recommended to me by a family friend. Later when I told my friend I'd left the advisor, my friend said he was simply too prone to a gambling mentality and risked falling into emotions taking over, so the advisor was a safer bet for him. I'll not fault a person for knowing their faults, I suppose. Just happy I don't have those same predispositions I guess.

 

[Fowl Play]

TBH, you are asking a lot. CPA and CFP are two separate skill sets, thus the difference in designation. You probably can’t expect someone to do both jobs, at least not well. Yes, I know some firms and even some individuals do perform both tasks, but after 25 years in this biz, I’ve never seen it done well at a high level. Kinda like hiring a handyman to do some of both electrical and plumbing work on your house. Simple jobs, OK, but if you want to build your dream home, you’re gonna hire specialists. If your needs are complex, and it sounds like yours are, you want specialists IMO.

1.8% is high. I don’t know anyone who charges that much. But it’s a sliding scale, the more you got, the smaller % you should pay.

The new or emerging tech stuff is a tough one. You’d need someone intimately familiar with early stage companies. That’s a non starter for me. Not my bag. Again, that’s something that requires a very unique and specifically dedicated skill set. If you’re gonna do that well, that’s all you’re gonna do. My clients already have money and are far more concerned with making it last than they are hitting the next home run. Again, I think you’d be very hard pressed to find someone with a consistent track record of identifying productive opportunities to invest in new tech, while at the same time managing significant wealth later in a client’s life. Those are two different skills.

Perhaps your experience stems from the fact that the FA’s you have encountered in the past were disingenuous. They told you what they thought you wanted to hear, told you they could do it all, and then, not surprisingly, failed to meet your rather unique expectations. Personally, I would’ve told you up front I’m not the guy for you.

In short, respectfully, I can understand why you have been displeased and I think it may stem from the fact that you probably need several financial professionals, and instead are trying to find one jack of all trades.

It's a fair assessment. I guess, I consider minimizing taxes as part of my whole financial plan. So I wanted my CFP to know the tax code at least well enough to be able to do that.

In my case, the only time I got truly burned was when my CFP was trying to leverage me out of private stock, and I had AMT credits I wanted to use come tax time. My CFP was not aware that I could not use AMT credits in a year when I also owed AMT. So when I realized long term cap gains and wanted to use the credits to offset some of it, I could not. It would have been better for me to realize those Cap gains the following year (when I would not have owed AMT) and be able to use my credits. They aren't lost, and I can use them some other year with carryover, but it could have screwed me if I did not have an emergency fund to dip into to pay the additional tax I was not expecting.

It's definitely a niche market. But more and more companies are starting to offer ISO's rather than 401K matching. So would be good to see some CFP's start to specialize in it.

 

[SDHNTR]

It's a fair assessment. I guess, I consider minimizing taxes as part of my whole financial plan. So I wanted my CFP to know the tax code at least well enough to be able to do that.

In my case, the only time I got truly burned was when my CFP was trying to leverage me out of private stock, and I had AMT credits I wanted to use come tax time. My CFP was not aware that I could not use AMT credits in a year when I also owed AMT. So when I realized long term cap gains and wanted to use the credits to offset some of it, I could not. It would have been better for me to realize those Cap gains the following year (when I would not have owed AMT) and be able to use my credits. They aren't lost, and I can use them some other year with carryover, but it could have screwed me if I did not have an emergency fund to dip into to pay the additional tax I was not expecting.

It's definitely a niche market. But more and more companies are starting to offer ISO's rather than 401K matching. So would be good to see some CFP's start to specialize in it.

You have a reasonable gripe. When it comes to tax law, most CFP’s will know the basics, but tax law is its own complex field of study in and of itself. And I’d proffer that being aware of all the nuances of AMT is arguably beyond the basics, imo. That said, if your guy was in over his head, he should have been honest, and gotten some higher level help. Part of being a professional is knowing what you don’t know and when to pump the brakes. I think that’s where your previous guy went wrong. Saying I don’t know and I’ll get back to you with the right answer is always better than steering someone wrong.

You’re right that stock options (and especially RSU’s) are becoming more common in exec compensation packages. This is a niche, but not a rare one. I deal with it enough to identify a need, and can handle most cases, but I’m also honest enough with myself and my clients to admit that I don’t know it all and when to call in the big guns. Fortunately, I’ve also got a guy at my firm that is a bonafide expert and this stuff is all he does. I gladly refer out this kind of thing when needed. It works for both of us, and most importantly, is best for the client. Telling a client I’m not your guy is also important. Trying to be all things to all people is a recipe for disaster in this biz.

So back to my point, just like an MD or Attorney, financial advisors will naturally develop their own specialty over time and with experience. We all learn about specialized things like AMT and NSO’s vs ISO’s and such during our training and certifications, but unless you deal regularly with that unique kind of biz, you aren’t gonna stay fresh on the details. You need a guy who does that kind of stuff on the regular. You had that Jack of all Trades and you needed a specialist. You had an internist trying to do knee surgery.

Sorry you had a bad experience but it sounds like you ultimately made lemonade out of lemons. Bravo! Please just try not to lump us all in the same basket with those few bad apples. Most of us are pretty good dudes.

 

[Kilboars]

More TR gold.

The Tony Robbins Podcast: Tony Robbins Exclusive: Holy Grail of Investing – Chapter 1 on Apple Podcasts

Show The Tony Robbins Podcast, Ep Tony Robbins Exclusive: Holy Grail of Investing – Chapter 1 - Feb 6, 2024

podcasts.apple.com

 

[Beendare]

More TR gold.

The Tony Robbins Podcast: Tony Robbins Exclusive: Holy Grail of Investing – Chapter 1 on Apple Podcasts

Show The Tony Robbins Podcast, Ep Tony Robbins Exclusive: Holy Grail of Investing – Chapter 1 - Feb 6, 2024

podcasts.apple.com

I could tell you a long story how Tony Robbins ripped off my bro inlaw with terminal cancer many years ago with his multi level markets scam….

This hack is continually reinventing himself. Maybe he has some good advice now….but Stay away from anything requiring a subscription or money to him.

 

[SDHNTR]

I could tell you a long story how Tony Robbins ripped off my bro inlaw with terminal cancer many years ago with his multi level markets scam….

This hack is continually reinventing himself. Maybe he has some good advice now….but Stay away from anything requiring a subscription or money to him.

On a list of people I pay any attention to at all… this guy would not be on it! Especially for financial information. Not ever.

Motivational speaker hacks, especially ones with spray tans, need not apply. Unless, of course, we’re talking about Matt Foley! We don’t want any of us here to be living in a van down by the river.

 

[Beendare]

Speaking of quality free advice….I forgot how much good stuff is on that Morningstar site.
Its empowering…and easy.

Here at link they have many articles on portfolio construction…..
Portfolio construction

 

[Doc Holliday]

Interesting move here: https://www.cnbc.com/2024/02/07/bil...a-nyse-listed-fund-for-regular-investors.html

 

[cb122]

"Morningstar - The Long View w/ Christine Benz" is a well run and informative podcast that dives into different financial topics. She is a board member for the John Bogle Center for Financial Literacy.

 

[OMF]

Motivational speaker hacks, especially ones with spray tans, need not apply. Unless, of course, we’re talking about Matt Foley! We don’t want any of us here to be living in a van down by the river.

Hey! There are certain times when I'd love a good travel van...down by the river.

And Tony Robbins, how can you take advice from a guy from the movie Shallow Hal??

 

[Beendare]

I mentioned China is in trouble earlier in the thread….talk about a trend- wow. $500B in debt just went **poof**

If you want to see the tip of the iceberg and Chinas RE implosion in real time, Kyle Bass ( one of the smartest guys in finance) explains it in a short interview on CNBC c/o Youtube. I think its a must see

Huge implications for Taiwan…with the lack of a Chinese take over? Or does China go after Taiwan to distract from their bad news at home as these politicians have a tendency to do? ( above my pay grade- grin)

The good news with these trends is we don’t have to be first to the party- though the guys like Bass that are make billions. We can let the train get rolling and then hop on- less risk.

 

[Stache Attack]

Do my best to max out a Roth IRA I started 5 years ago. Standard 401k through work started just over a year ago. Doing max 401k match to get the most of employers money I can while not cutting myself short pay period to pay period. I’ve been looking to play with a high yield savings account for 18 or so month terms or go money market fund.

Even got the wife to start into an IRA I believe for this year. She’s been better than me on her 401k though as I worked seasonal jobs not offering…

 

[Kilboars]

I could tell you a long story how Tony Robbins ripped off my bro inlaw with terminal cancer many years ago with his multi level markets scam….

This hack is continually reinventing himself. Maybe he has some good advice now….but Stay away from anything requiring a subscription or money to him.

I used to wear out his cassette tapes in my 20’s. He was a major part of keeping me driven.

Never went to one of his seminars, just read or listened to most of his books

 

[Rich M]

I lost a company in 2009 due to recession and had a time of getting feet back under but now in a good spot. Past 50 so no mistakes is our motto and also why a financial adviser was introduced to the equation.

The expectations - FA would best invest the $, protect assets, and provide input into future opportunities. They stuck us in a proprietary mutual fund, let the money ride the market, and will only say wait when an opportunity arises. We "made" 16% 16% -22% and 9% over past 4 years and supposedly have made only 3% over initial investment (yes - math don't add up). He told me to wait when oil stock values dropped, same for covid drop. I'm mostly mad at myself for listening and not buying some dividend-producing oil stocks at a discount.

Need to invest the money the financial adviser has. Thinking Fidelity or Vanguard accounts.

Right now, looking at planning and understand the retirement approach - options for long term care insurance, SS, Medicare, taxes, etc.

I see that Medicare A is paid for while working over lifetime. Medicare B is based on annual income 2 yrs prior. Not sure if it ever goes down if you get it at higher rate...

 

[Beendare]

I lost a company in 2009 due to recession and had a time of getting feet back under but now in a good spot. Past 50 so no mistakes is our motto and also why a financial adviser was introduced to the equation.

The expectations - FA would best invest the $, protect assets, and provide input into future opportunities. They stuck us in a proprietary mutual fund, let the money ride the market, and will only say wait when an opportunity arises. We "made" 16% 16% -22% and 9% over past 4 years and supposedly have made only 3% over initial investment (yes - math don't add up). He told me to wait when oil stock values dropped, same for covid drop. I'm mostly mad at myself for listening and not buying some dividend-producing oil stocks at a discount.

Need to invest the money the financial adviser has. Thinking Fidelity or Vanguard accounts.

Right now, looking at planning and understand the retirement approach - options for long term care insurance, SS, Medicare, taxes, etc.

I see that Medicare A is paid for while working over lifetime. Medicare B is based on annual income 2 yrs prior. Not sure if it ever goes down if you get it at higher rate...

@RichM and anyone in Mutual funds. These typically have tax exposure ( read the Morningstar link) The short version is when a fund buys and sells out of positions, they incur a taxable event…and that gets passed on to you- good or bad. Its worth looking up what Taxes these funds incurred-they produce that number every year for your taxes- it should be on their website if you dont have it.

Point is, some of those high return funds that trade a lot don’t give you a good after tax return.

One no brainer rule for any retirement plan; the power of compounding is huge. If you can do that without tax consequences, its even better.

I dumped all of my mutual funds years ago for ETFs.

I’m in a high tax bracket….so making a bunch of trades on short term gains and losses has netted me very little after tax. Analysis has shown me I’m better off sticking with something for longer term. Even holding more than a year to capture the 20% cap gains rate sucks as i still have to add in my state tax ( high)

Just saying….its worth looking at these tax factors…the implication for me personally is huge.