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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.

The view from the plane as we flew onto Mt. Denali for a May, 2017 attempt is burned into my memory. The long sprawling glaciers occupying the lower mountain, littered with hundreds of 2,200-foot-deep crevasses, bore the ‘Big three’ dangers quickly to mind: slip-n-fall, crevasse fall, and avalanche, in that order. This was the culmination of a dozen years of dreaming, praying and planning; these risks were present, and those crevasses looked like big hungry mouths to me! Accumulating real wealth, meaning wealth that is increasing after taxes and inflation, sufficient to fund a potentially long and expensive retirement in a high inflation society comes with its own ‘Big Three’ hazards: inflation, tax hikes, and the high cost of care late in life, in that order. Consider the landscape of these risks as you find great solutions in the planning of your own financial future:  

• The Fed systematically creates inflation to fund government deficit spending, and then understates it so government payments rise slower than real inflation. Wealth production requires an after-tax return greater than real inflation, not achievable with a 5% CD or Money Fund. Many Americans are watching their bank account values grow, but their real (after taxes and inflation) wealth grows not! Real wealth production requires risk taking and exposure to the asset classes that have performed best during inflationary times: real estate, high quality stocks, and other hard assets. Be sure to maintain liquidity, manage risk, and take a long-term view with invested assets.

• Be convinced it is inflation you fight, not deflation. Thousands of middle-class families have been impoverished for lack of understanding this. The primary enemy is not volatility, but Federal Reserve Notes, and anything easily converted into them. Be liquid enough to handle prolonged volatility but fear the ‘Notes’. It is logical in inflationary times that high quality assets, especially when producing a stream of present income, should cost more Notes, not fewer to buy.  

• Retirement account values are high, tax rates are historically low, and budget deficits are unhinged. Never has it been more important for Americans to have a smart long-term tax plan.

• The “Tax Cuts and Jobs Act” is set to expire December 31, 2025, after which income tax rates may rise. The assumption of retiring to a lower tax bracket may be faulty, and the IRS is co-owner of all traditional retirement accounts. Choose to pay more taxes at lower rates, pay less taxes at higher rates, and minimize lifetime taxes by: a) understanding the taxability of your Social Security payments, b) utilizing a non-retirement brokerage account for annual tax-posturing and tax-loss harvesting, c) considering “Backdoor” and strategic annual Roth Conversions, d) factoring future RMD’s into your tax and retirement plans, e) participating in Qualified Charitable Distributions and f) a Health Savings Account, and g) aggressively funding traditional accounts in high-income years.¹

• Commit the issue of the care you will require as the older body breaks down to your thinking. Think about where you will receive this care, from whom, how it will be funded, and the implications to your loved-ones. Your personal Plan of Care will likely be multi-faceted, so be patient, keep notes, and stick with it. 

Warren Buffet and others contest the most important aspect of investing is “avoidance of a catastrophic loss.” The ‘Big Three’ dangers on Denali formed a prism of risk awareness, and then risk mitigation, that proved most helpful to our team. Use your knowledge of inflation, the probability of future tax hikes, and the high cost of care late in life to sharpen your financial plan.

Think about it, Shaun.

“But my God shall supply all your need according to his riches in glory by Christ Jesus.” ~Philippians 4:19

1 Smart Asset, “5 Tax Strategies for Your Retirement Income,” July 12, 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.

My vegetable garden always looks incredible in late May following the spring rains. The beds are orderly and full, plants flourishing, early harvest active, and weed containment stellar; but nature is persistent, and as the daily workload increases in mid-summer’s soggy heat, the war on weeds invariably morphs into a furious battle to save the harvest! Just as the gardener benefits not from that which is grown but from that which is harvested, a retiree profits not from wealth that is accumulated but from wealth that is retained after Uncle Sam takes his share.

The first step in effective retirement planning is to realize that tax planning is an indispensable factor, and the goal is not necessarily to minimize taxes each year, a primitive strategy which can end terribly during one’s retirement, but to creatively minimize the total taxes paid over one’s lifetime. The second step is to work with a CPA who embraces this concept, which likely contradicts their early education, and who owns the responsibility not merely to prepare your annual return, but to work with your advisor to achieve this end. To these you also want to consider adding the following tax strategies:

• Maintain a cost basis for each asset on your Net Worth Statement and a total cost basis for your estate. This will drill the aforementioned truths into your thinking and inspire you to become an effective tax planner.   

• Maintain emergency savings equal to nine months of household spending. This will prevent you from paying taxes and penalties on retirement plan distributions to cover unplanned expenses. 

• Utilize advanced planning software to compare the ultimate tax benefit of Roth vs. Traditional vs. after tax accounts to your personal plan. Appropriate contributions based on your findings.  

• Fund a non-retirement brokerage account (NR-Brokerage Article) and benefit from annual tax harvesting and other versatile tax features.

• Use low income/low tax bracket years to increase the cost basis on appreciated assets and offset high income/high tax bracket years by skewing retirement contributions towards traditional accounts.

• Investigate Strategic Annual Roth Conversions (SARC), particularly between post-full employment and commencement of Required Minimum Distributions (RMD’s, age 73) to lock the tax in at a lower rate and reduce future RMD’s exposed to potential tax hikes.

• If over age 70½, consider Qualified Charitable Distributions (QCD), especially if you are receiving unneeded RMD’s and/or already give regularly to a 501(C)(3) organization, but KNOW QCD RULES.  

• Make sure your retirement and estate plans are tax savvy and highly complementary organisms.

Each year I try to add a new weed-fighting technique to the containment strategy to increase the ultimate yield. I believe it will benefit your family immensely to do the same as you plan your financial future with the aid of an intelligent tax plan.

Think about it, Shaun.

“In an abundance of counselors there is safety” ~Proverbs 11:14

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.

My vegetable garden consists of raised companion beds, hydroponics, Hugelkultur, decomposed wood chips, traditional dirt, and a Cotieres, six distinct gardening techniques originating in several different countries, each with advantages and disadvantages. Since the climate varies yearly, and with each plant species possessing needs and vulnerabilities, likes and dislikes, the variation challenges my stunted creativity and vastly improves the probability of overall success every year. An equal number of account types can be utilized as you strive to build the wealth required to fund an expensive retirement, each with advantages and disadvantages, and considerable thoughtfulness should be applied to your endeavor! Consider the taxable brokerage account, its versatility and benefits, and the important role it can fill in your overall investing strategy:

• The account can be owned individually or jointly, and beneficiaries may be named. It can also be owned by a revocable or irrevocable trust. In all these cases probate is avoided, and the account complements the carefully crafted estate plan.

• When not owned by an irrevocable trust the account is liquid, unlike retirement accounts for investors under age 59 ½. A portion of emergency savings may be held within it, and generally at a higher interest rate than banks will pay.

• The account offers securities of many types in virtually every asset class. Investment options greatly exceed most retirement plans.

• Unlike retirement specific accounts, no formal agreement is entered into with the U.S. government, a fiscally reckless institution which can (and has) change(d) the rules in the middle of the game to its own advantage.

• For those receiving Required Minimum Distributions but not in need of income, shares of securities may be journaled from an IRA to the non-retirement brokerage account with an “In Kind” transfer. This allows ownership and compounding of dividends to continue.  

• Various tax advantages, though distinct from retirement plans, are presented. A strategy may be employed to create income or deferral and can be adjusted year to year. Tax-loss harvesting can be utilized annually to offset gains and losses, and against investments held inside the account or elsewhere, and losses not applied in the year realized can be saved for future years. This versatility can wonderfully complement an investor’s overall tax plan.

The Hugelkultur garden produces abundantly in a drought, even during a water ban. The Cotieres provides live, organic vegetables in the middle of a snowy winter. Once planted, the hydroponics garden can be neglected until the harvest. It should be noted that the non-retirement brokerage account should be used as a complement to formal retirement plan accounts, not as a replacement of them. As you construct a well-rounded funding strategy for your retirement, thoughtfully protecting yourself from the many developments that can derail you, the versatile non-retirement brokerage account is sure to fill a valuable role.

Think about it, Shaun.

“The prudent sees danger and hides himself, but the simple go on and suffer for it.”   ~Proverbs 27:12

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.

I’ll never forget a story my uncle told me many years ago about how he ventured into a large field on his dairy farm alone. When a good distance from the fence line he looked up the hill, and in near disbelief saw an angry bull staring at him 100 yards away signaling a charge. Seconds later, knowing he couldn’t win a race to the fence, and with the bull hurling towards him, he had the courage and understanding to run at the bull, which in its own disbelief turned around and sprinted over the hill! That decision gave my uncle the opportunity he was looking for and likely saved his life. It’s critical for investors to realize the stock market is primarily a psychologically driven entity, and that its cyclical peaks and valleys are more accurately measured by investor sentiment than other factors. Famed, late investor, Sir John Templeton, wisely perceived that “Bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria.” It’s notable Templeton defined the stages of the market cycle with exclusively psychological terms. What are some reliable measures of market sentiment, where does sentiment stand in the present bull market, and what disciplines can apply this knowledge to your benefit?

Measures of general market sentiment include, but are not limited to:

• The general attitude towards stocks of the people in your own sphere of influence. When normal conversations universally begin turning to the stock market, a cyclical top or bottom likely approaches.

• Widely read newspapers and magazines routinely make highly uncharacteristic predictions about the stock market right before major cyclical turns. Look for claims like, “Will stocks ever go down again?”, or “The stock market is roadkill.” 

• Market-wide cash flows will reveal where uneducated money is being directed, while the COT (Commitment of Traders) Report shows where educated money flows.

This week Stansberry Research revealed that after two years of soaring stock prices, not only are the investing masses not “all in” on stocks, they are buying bonds at ten times the rate of stocks and building cash Money Market positions towards an all-time high.¹

Helpful disciplines may include:

• Understand the biggest risk today lies in not owning the types of assets that tend to appreciate in a highly inflationary culture, assets like real estate, high quality stocks, and other hard assets. A Money Fund paying 5% may be the best rate in decades, but it still devours wealth at 2% annually when real inflation is 7%!

• Consider positioning your long-term investments at the high end of your personal risk tolerance level when the major stock indexes are above their respective 200 Daily Moving Averages, and at the low end when they reside below it. 

• Maintain ample cash savings so long-term investments can stay invested and serve their important purpose of building wealth, wealth that in a high inflation society you will likely need in the future.

Knowledge of a 2,000-pound angry beast packed with muscle, coupled with the emotional fortitude to act on that knowledge equipped my uncle to make the right decision at just the right time. God bless your investing efforts as you strive to navigate a market as formidable.

Shaun

“Give a portion to seven and to eight, for you know not what disaster may happen on earth” ~Ecclesiastes 11:2

1 Stansberry Research, Review of Market Extremes by Brett Eversole, June 12, 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.

Following established trails up a forested mountain does not resemble devising one’s own advance of the contours of a snow or ice-covered alp. One requires a modern map; the other requires deep study and an intimate knowledge of the topography to be traversed. I recall using three software programs to carefully plan our first climb of Mt. Whitney’s Mountaineer’s Route in 2010, which in a white-out would have led us to an impasse right under a massive unstable cornice! Good visibility exposed the error from a mile away, but seldom does ineptitude prove inconsequential in such a hostile environment. The achievement of your personal and financial goals in today’s world is equally complex, which reveals the impetus of a formidable challenge laden with deadly pitfalls. Consider the framework of a successful plan, customizable to particular family dynamics:

• Identify and prioritize primary financial goals, such as a comfortable retirement, funding a child’s education, buying a second home, or creating a succession plan for your business. Be as specific as possible in defining each objective.

• Map each goal separately with a conservative time frame in mind. It’s far easier, and far less disruptive to other priorities, to push an outlay back than to pull it forward.

• Fund each objective with a separate investment account, as varying time frames will result in distinct risk levels, return objectives, and funding requirements.

• Use every tax advantage available to you in the pursuit of each goal, realizing the best tax plan results in the lowest lifetime tax, not necessarily the lowest present year tax.

• Use every financial principle at your disposal in the appropriation of your hard-earned, God-given capital. Become well acquainted with timeless financial principles, like diversification, dollar-cost-averaging, dividend compounding, position sizing, maintaining an exit plan, and rebalancing risk.

• Keep investment expenses at a minimum, which directly reduce investment returns and the probability of achieving your goals.     

• Annually monitor progress towards each endeavor and adjust risk/allocation, return objective and funding commensurately.

Like mountaineering, financial planning consists essentially of identifying specific priorities, appropriating resources towards those ends while applying every principal advantage, and then adjusting the approach as progress is consistently monitored. God bless your planning efforts!

Shaun

“A wise man thinks ahead” ~Proverbs 13:16

“The plans of the diligent lead surely to abundance, but everyone who is hasty comes only to poverty” ~Proverbs 21:5

“For which of you, desiring to build a tower, does not first sit down and 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.

Dividend payments are not guaranteed and may be reduced or eliminated at any time by the company.

There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.

Dollar cost averaging involves continuous investment in securities regardless of fluctuation in price levels of such securities. Investors should consider their ability to continue purchasing through fluctuating price levels. Such a plan does not insure a profit and does not protect against loss in declining markets. 

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.

Cultivating a vegetable garden is one of the most enjoyable and rewarding experiences I’ve had. Organically enriching the soil, rotating crops, companion planting cohabitant species, timing climatic growth and fruit-bearing cycles, and, of course, harvesting and enjoying the bounty is a truly enriching endeavor. Let’s consider the foundation, forms, and fruit of wealth-building, which can be equally rewarding. 

A sturdy foundation is critical for the stability and resiliency of your estate, and it consists of:

• Income, which is essential and requires work. Maximize income by using your God-given talents, with specialization in your field, and working hard. Think favorably about work, and never stop learning.

• Positive cash flow, which requires income to exceed spending. Maintain a strict budget and live below your means.

• Emergency savings equal nine months of total household spending.

• Strict debt management. Avoid consumer debt, and do not attempt to retire while in debt.

• The right amount of the right type of life insurance, so your estate can survive an untimely death.

While wealth-building comes in many forms, certain consistencies necessarily apply. Once the foundation is fully formed, invested capital must earn an average after-tax return greater than the rate of real inflation; otherwise, any perceived wealth-building is a mirage. Secondly, catastrophic risks must be identified and insured; otherwise, the estate is one calamity away from extinction. The following formulas may then be pursued:

• Dollar-cost-averaging through systematic purchases into high-quality stock funds tends to lower the average cost per share and helps avoid a large purchase at peak prices.

• Concentration of invested capital into assets which tend to appreciate during periods of high inflation, like real estate, capital-efficient stocks, and other real assets. That being said, understand and honor your personal risk tolerance at all times.

• “Give to Caesar what is Caesar’s,” but have an intelligent tax plan and do not pay a penny more in taxes than is required.

• Minimize investment expenses, which directly reduce returns, and then compound the reduction indefinitely.

• Plan the funding of retirement income strategically, so no more capital is required to fund that need than is necessary, so that invested capital can resume wealth-building.

• Think of the wealth-building process as a multi-generational effort, plan your estate wisely, and teach your children the same.

Finally, the fruits of wealth-building are mentionable:

• Through your diligence and stewardship, it will prove to be God’s faithful provision for you and your family for generations.

• It will incite a spirit of thanksgiving, which is proven to have profoundly positive effects on a person’s general health and happiness.

• It will enable you to give generously to others in need, especially those who can’t repay you, which is a most fulfilling privilege.

•  It will provide opportunities for you to enjoy the fruits of your labor.

While these are great blessings, it’s also mentionable that wealth is a tool, not an identity, and is, therefore, not to be hugged and horded but held loosely and shared. Furthermore, it won’t shield you from the trials and hardships of life on earth, which are apportioned to us all. I hope your consideration of this perspective of wealth-building is a blessing to you, and happy Memorial Day.

Shaun

“What do you have that you did not receive?”~1 Corinthians 4:7

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

“God loves a cheerful giver.”~2Corinthians 9:7

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 authors only and do not reflect the views of LPL Financial.

Dollar cost averaging involves continuous investment in securities regardless of fluctuation in price levels of such securities. Investors should consider their ability to continue purchasing through fluctuating price levels. Such a plan does not insure a profit and does not protect against loss in declining markets.



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.

I remember feeling deep respect for the head guide of our Mt. Ranier climb in 2009 as he opened our introductory meeting with the words, “The risk you are about to take may result in your injury or death”. The climb the sixteen of us were inspired to attempt came with unavoidable life-threatening risks. Likewise, building and retaining wealth in an inflationary culture requires a degree of risk-taking. Absent inflation, this isn’t the case; in fact, in the 125-year period from 1800-1925 America experienced zero net inflation, when wealth creation involved simply spending less than earnings on subsistence and saving the difference; but we are not living in the 1800’s, and inflation changes everything.

The U.S. government’s 1990-Based formula places today’s inflation rate at 7.5%.¹ If accurate, this means a 5% CD or Money Fund, the highest rate in many decades, is losing 2.5% in value before taxes are levied. Today many hard working, fiscally responsible Americans think they are growing their personal wealth as savings accumulate, even as that wealth shrinks in real terms! For simplicity, let’s understand present real inflation is north of the interest earned on cash savings, and identify the facts and strategies that can help us grow our wealth in spite of the Fed’s penchant to resolve government fiscal irresponsibility with currency devaluation. First, the facts:

• To grow real wealth, the average return on all assets owned must produce a net (of taxes) minimum return equal to the real rate of inflation.

• Investment holdings with a return potential higher than real inflation possess some level of market risk.

• An investor who wishes to grow real wealth in an inflationary environment must assume some risk with their investment holdings.

Understand your personal risk tolerance and never stray far from it. Minimize the emotional swings which accompany risk and volatility by investing only in enterprises you understand well. Minimize investment expenses, which reduce returns and compound the reduction indefinitely. Value investments with present income because inflation devalues the promise of future income. Compound dividends in capital efficient businesses over the rest of your life. Cap individual holdings at 5% to limit risk concentration. Eradicate dead money by finding a 4%+ interest rate on all cash savings. To these basic inflation-friendly investment strategies you may want to add:

• Position overall allocation at the high end of your risk tolerance level when the major indexes are above their 200 Daily Moving Averages. Accept higher volatility.

• Position overall allocation at the low end of your risk tolerance level when the major indexes are below their 200 Daily Moving Averages. Seek stability.

• Maintain Stop-Loss orders on all holdings with market risk except for capital-efficient dividend compounders. To avoid algorithmic price abuse, do not enter your Stop-Loss orders into the trading system.

In closing, remember you fight inflation, not deflation; many savers hide in the very cash instruments most quickly devalued by the inflation they fear! Understand you must manage the risk inflation forces you to take, or it’ll manage you, and the market is equipped to inflict the maximum amount of pain on the largest number of investors possible. Be creative and use every means available to mitigate investment risk as you overcome the destructive forces of the modern American inflation.

Shaun

“Wealth gained hastily will dwindle, but whoever gathers little by little will increase it.” ~Proverbs 13:11

“There was a great famine in the city. The siege lasted so long that a donkey’s head sold for eighty pieces of silver, and a cup of dove’s dung sold for five pieces of silver.” ~2 Kings 6:2

1 Shadow Government Statistics, Inflation, May 10, 2024 https://www.shadowstats.com/alternate_data/inflation-charts

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 authors only and do not reflect the views of LPL Financial.

Dividend payments are not guaranteed and may be reduced or eliminated at any time by the company.

There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.

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.