Investing the right way
The biggest financial headlines in 2022 have been about poor market performance amidst high inflation. This has led many investors to search for ways to protect the value of the savings from eroding under inflation. There are 3 primary ways to guard against rising prices as a US-based investor: 1) Invest in equities or equity-like securities, 2) Invest in I-bonds, or 3) Invest in TIPS. But first, what exactly is inflation?
2022 has been an extremely bad year for almost every asset class! Stocks and bonds have suffered large losses. And inflation has been high, further eroding the value of investors’ savings. In a bear market, it is absolutely critical for long term investors to avoid panic selling at all costs.
I generated this text in part with OpenAI’s large-scale language-generation models. Upon generating draft language, I reviewed, edited, and revised the language to my own liking and I take ultimate responsibility for the content of this publication.
Simplified Employee Pension (SEP) Plans are a fantastic tool for small business owners, and employees of small businesses, to save and invest for retirement. They are simple to manage, and they come with major tax advantages. In some ways, they are superior to employer 401k plans.
I generated this text in part with OpenAI’s large-scale language-generation models. Upon generating draft language, I reviewed, edited, and revised the language to my own liking and I take ultimate responsibility for the content of this publication.
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!
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?
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.
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.
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.
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.
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.
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.
