Month: August 2024

Experienced mountaineers know precisely where every utensil is at all times, whether on the person or in the pack, and can find it quickly in the dark. I’ve seen a 50-Year-old man throw a public tantrum and miss ‘summit day’ on an expensive climb due to his ignorance of this rudiment of team climbing. Many mountaineers are dead for not knowing that on a steep glacier every essential item must constantly and securely be attached to the harness. I read of a man who chased his pack into a 2,200-foot-deep crevasse on Denali as he discovered too late the importance of this mountaineering axiom. Essential is the aid of proven practices while engaging in dangerous activities, whether it be mountaineering, motorcycle racing, or managing one’s financial life. Benefit from the following smart financial concepts as you successfully plan your financial future:

• The benefits of scrutinous and creative thinking are immeasurable. Every American must identify and discard harmful monetary notions, partly because financial principles aren’t taught in school, and partly due to rampant cultural materialism. Denying oneself unnecessary comforts and enjoyments can create a world of life-changing opportunities. Prior to a large, off-budget expenditure, ask yourself if there exists a more productive use for the dollars, whether it be to fill a gap in your own retirement plan, or by someone else in need.

• Prioritize contentment above financial wealth, for there is no definite connection between the two. Discover by trial and error your greatest interests, and whether it be birdwatching, nature-walking, or astronomy, replace habitual consumerism with the simple things that bring you joy. This powerful idea in action both improves quality of life and reduces probability of financial hardship.

• Realize the danger of debt and understand it only makes financial sense to borrow money if that money is invested productively. Maintain a relatively small level of debt, never carry consumer debt, and never retire while in debt. 

• Understand the difficulty of replacing a large portion of your earned income for decades in an inflationary culture and use every means and month at your disposal in its attainment. Once the financial foundation of debt management, a positive cash flow, emergency savings, and the right amount of the right type of life insurance is in place, pay yourself first by investing 20% of your income for retirement.

• Understand the value of income, earn it as long as possible, and invest primarily in things that produce it. Non-income producing investments generally carry greater risk and are incapable of leveraging the greatest wealth-building principle on earth: compounding. Increase the probability your income will survive you by annuitizing a modest portion of your total retirement capital.

• Manage catastrophic market risk with position-sizing and stop-loss orders. It’s not what you make that counts, it’s what you keep.

• Acknowledge the probability of meaningful tax increases in America and apply a smart tax plan to prepare for it. Uncle Sam is co-owner of all traditional retirement accounts, so stop believing the whole account is yours. Utilize taxable Roth Conversions to maximize the taxes you pay in lower brackets, and traditional, deductible contributions to minimize the taxes you pay in higher brackets.  

Leverage these practices for your own benefit and teach them to your children while they are young.

Think about it, Shaun.

“A good man leaves an inheritance to his children’s children.” ~Proverbs 13:22

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any opinions or forecasts contained herein reflect the subjective judgments and assumptions of the author.

https://www.fivestarprofessional.com/spotlights/90982

Award based on 10 objective criteria associated with providing quality services to clients such as credentials, experience, and assets under management among other factors. Wealth managers do not pay a fee to be considered or placed on the final list of 2012/2022 Five Star Wealth Managers.

As a vegetable gardener, if I don’t bring three contenders for the harvest into subjection early in the growing season, I labor without pay to feed weeds, rodents and bugs. Each does its share to encroach upon, and ultimately consume the precious fruit of my labors! We live in a materialistic society which measures economic output primarily by consumer spending, not investment or production, but personal consumption. Modern Americans enjoy, and, therefore, must pay for many comforts and conveniences not available to former generations, and yet think of them as necessities. Acknowledge and eradicate the financial behavior patterns which, when added to the materialistic and inflationary dynamics of our culture, increase the probability a financial hardship will occur during one’s retirement.

• Buying a new car. I lost $5,000 on the only new car I ever bought driving out of the dealership and couldn’t have burned the money as fast! Consider a certified, three-year-old Japanese-built vehicle with under 50,000 miles, and use your large savings to pay-off consumer debt, build emergency savings in a high interest savings account, or make a wise investment.

• Ungoverned daily indulgences. A $5 daily latte at Starbucks equals $152/month, which invested at 8% over 25 years makes the retirement account $144,022 larger. Abstaining from simple enjoyments isn’t required, but knowing the long-term financial impact of habitual behaviors is prudent.

• Insufficient emergency savings results in consumer debt, 401(k) loans, and taxable IRA distributions (which are sometimes penalized). Carry 6-9 months of total annual household spending in a high interest bank account or money market fund for emergencies and quickly rebuild it when it falls below this threshold.

• Consumer debt forever nibbles on the fringes of your wealth-building efforts, and far more than you realize. Don’t ever carry consumer debt voluntarily. 

• Borrowing from a 401(k) is generally inadvisable for several reasons. Since bull markets last longer than bear markets on average, most loans are repaid at higher prices, more than negating the benefit of paying the interest to yourself. In a loss of one’s job loan payments must continue, and the plan account can’t be rolled over unless the loan is first repaid.

• Having appropriately sized emergency savings without earning a competitive interest rate or having too much in emergency savings are both counter-productive behaviors, especially in an inflationary culture. The former forfeits market rates on the time value of money while the latter puts too little return on too great an amount.

• Generosity is commendable, but voluntarily giving beyond one’s ability can be consequential. Know your future needs first.

The goal of wealth-building efforts are stewardship and provision, not miserly living or wealth itself. Behaviors to identify and eradicate are those which a) prevent a family from becoming financially independent, or b) can meaningfully damage or destroy one’s retirement. The simple solution is to plan wisely, prioritize retirement savings, and avoid financially destructive behaviors.  

Think about it, Shaun.

“Precious treasure and oil are in a wise man’s dwelling, but a foolish man devours it” ~Proverbs 21:20

“For which of you, desiring to build a tower, does not first sit down to count the cost, whether he has enough to complete it.” ~Luke 14:28

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any opinions or forecasts contained herein reflect the subjective judgments and assumptions of the author.

https://www.fivestarprofessional.com/spotlights/90982

Award based on 10 objective criteria associated with providing quality services to clients such as credentials, experience, and assets under management among other factors. Wealth managers do not pay a fee to be considered or placed on the final list of 2012/2022 Five Star Wealth Managers.

A fascinating case study in mountaineering is found in “Mountain of Ice,” a Jon Krakauer narrated Nova documentary of an ascent of Vinson Massif, Antarctica’s highest peak and the coldest mountain on earth, by a mostly world class climbing team. A team-wide disagreement broke out over whether to ascend the head wall via an easily navigable, but treacherous ice fall, or an adjacent, straight forward 50-degree slope. Half the team feared the inexperienced photographers would fall to their deaths on the steep slope, while the other half refused to risk their lives on the unpredictable ice fall. Lacking concession, a split-up resulted in half the team ascending each route, both successfully, after which a full reconciliation occurred. The decision to rollover a retirement plan to an eligible IRA or leave it in the company plan can be as complicated and as financially consequential as the Vinson Massif team’s headwall decision! Consider the advantages of each option as you chart your course to a successful long-term retirement:

Reasons to roll a retirement plan to an IRA may include:

• Flexibility to make changes and/or withdrawals more quickly by avoiding plan restrictions and delays.

• Quicker and smarter planning changes may result from a qualified fiduciary advisor being better educated on new Secure Act regulations than is your third-party plan administrator.

• Control of personal funds and easier integration of the account with one’s personal financial, tax, and estate planning.

• Easier adherence to Secure Act rules for beneficiaries inheriting retirement funds.

• Option to make Qualified Charitable Distributions (after age 70 1/2).

• Dramatic increase in investment options, including many new asset classes and investment types.

• Eradication of complicated retirement plan withdrawal restrictions.

• Consolidation of “like” retirement accounts offers simplicity and ease of control, including more flexible withholding options and aggregated RMD calculations.  

• Better service and more personalized attention from a fiduciary advisor who may be an expert in IRA tax law.¹

Reasons to leave assets in a company retirement plan may include:

• Better creditor protection than IRA’s for account owners residing in states which have minimal or no creditor protection.

• Uninsurable plan participants can purchase group life insurance without proving insurability and with retirement plan assets. Keep in mind complicated rules may apply at retirement.

• Required Minimum Distributions can be delayed by those still working, though only with an active retirement plan. Keep in mind portability rules allow an IRA to be rolled into an active retirement plan, providing the plan allows it.

• Retirees between age 55 and 59 1/2 (50 and 59 1/2 for public safety employees) can take withdrawals from a company retirement plan penalty-free, though taxes still apply.²

Guides with knowledge, experience, and integrity will seek the safest and surest path to the desired destination. These are essential characteristics, especially when multiple, complicated route options exist, as the two head guides on the Vinson Massif headwall ascent proved. Every climber said they chose the right guide and route! An experienced fiduciary advisor represents your interests alone and should prove to be an excellent choice of guides.

Think about it, Shaun.

“Where there is no guidance, the people fall, but in an abundance of counselors there is victory” ~Proverbs 11:14

1,2 Manual from Ed Slott & Company’s Exclusive Two-Day IRA Workshop, July 18-19, 2024

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any opinions or forecasts contained herein reflect the subjective judgments and assumptions of the author.

https://www.fivestarprofessional.com/spotlights/90982

Award based on 10 objective criteria associated with providing quality services to clients such as credentials, experience, and assets under management among other factors. Wealth managers do not pay a fee to be considered or placed on the final list of 2012/2022 Five Star Wealth Managers.