I am a big proponent of passive investing. But, recently, I have been running a little experiment running a paper trading account with actively managed funds. I selected an active fund manager based on the fund’s track record. I thought it would be interesting to walk through how I picked the manager, and then invite you to attempt to pick a manager using the same information I had. Then, I will show you how your pick would have performed. Good luck!
Continue reading “Can You Beat Me at Picking an Active Manager?”Why I Cover My Clients’ Commissions
Most retail securities brokerages now offer commission free trading. However, I elect to use a brokerage platform that still charges commissions (IBKR PRO). And furthermore, I cover my clients’ commissions directly out of my portfolio management fee. Why do I do this when there are free options available?
Continue reading “Why I Cover My Clients’ Commissions”Critical Flaws in Binance and Other Crypto Exchanges
For most of 2022, financial news has been filled with stories about big losses across all asset classes. But one of the biggest losers has been cryptocurrencies like Bitcoin and Ethereum. This has led to many investors reconsidering their allocations to cryptocurrency. I don’t recommend cryptocurrencies as an investment for any of my clients, but the topic does come up occasionally. But let’s set aside any recommendation I have about cryptocurrencies themselves. I’d like to bring up a recommendation I have about the various methods of cryptocurrency investing. In short, I strongly recommend against using an online exchange such as Binance to invest in cryptocurrencies.
Continue reading “Critical Flaws in Binance and Other Crypto Exchanges”Direct Indexing in Luther Wealth’s Future
In the great divide between active and passive investing strategies, Luther Wealth is definitely in the passive camp. All of my clients are fully invested in low cost mutual funds and ETFs. I use a proprietary asset allocation algorithm, but the securities themselves are just vanilla index funds. But lately I have been considering altering this ETF strategy for certain clients. Not in favor of an active strategy, but rather in favor of a different passive style known as direct indexing.
Continue reading “Direct Indexing in Luther Wealth’s Future”Was Wordle Sold for a Fair Valuation? Probably Not.
Admit it– we’re all hooked on Wordle. It’s annoying and cluttering up everyone’s social media, but we can’t stop doing the daily puzzle and checking our scores against our friends. So if we’re stuck with it for a while, we might as well try to learn something from it.
Continue reading “Was Wordle Sold for a Fair Valuation? Probably Not.”My Favorite Financial Sites
Nothing fancy here, just a quick list of my favorite financial sites (besides Luther Wealth) and what I use them for. It’s a fairly short list, because most financial sites are actively harmful to the typical investor.
Continue reading “My Favorite Financial Sites”RMDs: Required Minimum Distributions
Do you have money invested in a retirement account? If so, you may be responsible for taking Required Minimum Distributions (RMDs) every year to avoid IRS penalties. Unfortunately, the IRS guidance on the topic is quite confusing. I have attempted to assemble my own RMD notes into a helpful flowchart for determining if you are subject to RMDs. Please keep in mind that I am not a tax adviser or accountant. This is not tax advice. You are ultimately responsible for correctly calculating your RMD.
Why does the IRS require distributions?
Most retirement accounts confer some type of tax advantage. The federal government designed them to help individuals save for retirement. The government didn’t design them to establish multi-generational tax shelters. So, in most cases, when a retirement account holder reaches a certain age, or passes away, the IRS requires the account to start gradually liquidating.
Continue reading “RMDs: Required Minimum Distributions”What is Bitcoin?
Bitcoin is a monetary system. The best way to understand it is in comparison to two other monetary technologies: the gold standard and the U.S. Federal Reserve. In both of these systems, you need a way to control how much money exists (supply), and how people give it to each other (exchange). Bitcoin is simply one more way to implement supply and exchange of currency.
Bitcoin is also a thing that random d-bags talk about to each other, and to their bored dates. We will not discuss that aspect of bitcoin here but it’s actually the predominant societal aspect of bitcoin.
This article was originally posted on December 14, 2015 and updated on December 1, 2021.
Should I Buy A New Car?
For several years, I’ve been thinking about buying a car. This is a big deal for me, because I have owned exactly one vehicle in my life, a 2004 Ford Ranger. He’s my buddy. I feel bad about looking for a new one, but it’s time (or so I thought). One consequence of my vehicle loyalty is that I haven’t given any thought to buying a car since long before I was interested in financial planning.
It’s pretty confusing! So I want to share my thought process here to illustrate 1) a way to think about buying cars, and 2) how the economics of car ownership can be an example of how we can use a financial modeling approach to simplify other complicated decisions.
Continue reading “Should I Buy A New Car?”Avoid Sketchy Financial Adviser Fees
How much is your financial adviser charging you? You might not know, and if you think you know, you might be wrong. The industry is rife with deceptive pricing practices and it’s easy to miss details, even if you read the fine print. In some cases, advisers can even structure fees to be completely invisible to the client.
Continue reading “Avoid Sketchy Financial Adviser Fees”