Investing the right way
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.
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.
Investor protection is probably the #1 thing I spend time thinking about at Luther Wealth. As an independent financial adviser, it can be tough for a prospective client to trust that I will safeguard their savings. Although I’m constantly looking to improve, I am very proud of the level of security I can offer my clients.
I can’t think of a worse investment than penny stocks. Maybe a Ponzi Scheme is worse? Debatable.
Penny stocks seem to be gaining popularity as a water cooler investment. They are esoteric. They seem to require a lot of research. Similar to cannabis stocks, crypto, and Gamestop, they are fun to talk about.
I have been using a self-developed web app called Indie Adviser for the past year to help with my work as an independent financial adviser. Next week, I’m planning to open it up publicly in a limited demo / beta test. Here’s the demo video– check it out and let me know what you think!
