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I remember on day one of a three-day winter climb in the White Mountains of New Hampshire my Whisper Lite stove, the only option for heating our freeze-dried food, malfunctioned. While I weighed the options of feeding the caloric crave with yet more frozen trail bars, or raw, freeze-dried dinners, a gracious and more prepared camper restored my defunctive apparatus with the required spare parts in minutes, before his meal was cooked, with a smile! Returning home, I immediately purchased a second stove and full repair kit, and repeatedly disassembled and reassembled it. Knowledge is useful in the adventures of life, and often critical, especially in the world of investing. Consider the consistent practices of many professionals as you strive to become a better investor yourself:

• Understand the underlying security options available to you. Common and preferred stocks, bonds, managed futures, REIT’s, MLP’s, and cash equivalents each possess distinct characteristics, risks and potential, and behavior patterns in specific market environments. Gain a basic knowledge of both the favorable and unfavorable conditions for each asset class.

• Understand the account types available to you. Direct mutual funds, brokerage accounts, company retirement plans, traditional and Roth IRA’s, and dividend reinvestment plans are common account types. Each has peculiar characteristics and varying qualifications and expenses. Discover the combination of these which best aligns with your financial plan and can offer the most comprehensive long-term tax benefits.

• Have a specific “BUY” strategy and stick to it. Building an investment portfolio requires investing, so get to it! Dollar-cost average long-term investment programs, especially in the early years. Never miss an employer-matched contribution. Follow strict parameters when making single purchases. Do not attempt to catch a falling knife by purchasing a cratering stock, avoid ‘doubling down’ on a losing position, and don’t feel rushed or pressured to buy. Courageously add to winning positions.

• Maintain an exit plan on all trades at the time of purchase, and honor it. Run with your winning trades, but dump losers with ruthless expediency! Maintain stop-loss orders on all non-forever holdings privately; avoid entering a stop-loss order as a pending trade with your broker. Know the conditions in which you will sell a given holding.

• Diversify your investment portfolio across various industries and asset classes. In the mountains it is said, “cotton kills”, but in the financial world it is said, “concentration can kill”!

• Favor capital-efficient, dividend-paying businesses in leading industries, and automatically reinvest all distributions. Limit speculations in both size and frequency. 

Seek to become a methodical wealth producer by consistently making wise investment decisions with tested investing techniques. Think about it, and blessings on your efforts!

Shaun

“Rule #1 is never lose money. Rule #2 is never forget rule #1.” ~Warren Buffet

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

“Know well the condition of your flocks, and give attention to your herds.” ~Proverbs 27:23

The opinions voiced in this material are general, are not intended to provide specific recommendations, and do not necessarily reflect the views of LPL Financial.

All investing involves risk including the possible loss of principle. No strategy ensures success or protects against loss. Dividend payments are not guaranteed and may be reduced or eliminated at any time by the company.

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. 

Asset allocation does not ensure a profit or protect against loss. 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.

I’m no Master Gardener, but I do immensely enjoy time in my vegetable garden, and so appreciate the opportunity to grow my own healthy food. People see my garden and assume it requires an absurd amount of time to cultivate and maintain; the truth is it takes a small amount of time every day. Appropriating daily attention to a thing requires the understanding it is a process, not an event. Most gardeners do a big planting in the spring, enjoy a big harvest in the fall, and apart from the grocery store, otherwise might starve! How will you replace a sufficient portion of your earned income for a 25 year period in a high inflation environment without outliving your capital? Consider the following ‘best practices’ as you cultivate, and then receive from, your own retirement income plan:

• Healthy vegetables require nutrition, hydration, proper P/H, and sunshine. Your future retirement will likely require income-producing capital, and to build capital, you must invest. Many people strive to invest at least 10% (and even 20%) of their gross income for retirement, appropriate it primarily to the ownership of great businesses in tax-advantaged investment accounts, and fund it with hard work, career advancement, and frugality.

• Manage the risk level (and stock exposure) of each retirement asset based on two things: 1) your investment objective for that asset, and 2) time until drawdown begins.

• Advanced gardeners incorporate companion planting to reduce weeds, and to increase yields by more efficiently tapping into the base of nutrients. Consider developing a thoughtful withdrawal strategy from a companion of income sources that meets the annual need in a tax-efficient and wise investment manner without disrupting your estate plan. Employ the assistance you need to pull this off.  

• Understand the rules and taxability of your Social Security benefits, and how this income source fits into your plan. Make your Social Security election based on the highest probable lifetime net income benefit, considering all factors. 

• The ‘staples’ of my vegetable garden are asparagus, beans, potatoes, tomatoes, and green zucchini; everything else is experimental. Often a staple of successful retirement plans is an income source you can’t outlive. If Social Security is your only source of permanent income, consider the guaranteed income benefit of annuities for a select portion of your retirement capital. Scrutinize annuity expenses ruthlessly.

• Consider a Roth Conversion in low AGI tax years.1 Realize the period between partial retirement, and when Required Minimum Distributions (RMD’s) begin, are often the most beneficial years to “fill up” a lower tax bracket with an annual Roth Conversion. Never miss a high benefit Roth Conversion opportunity to neglect! Touch base with your CPA on this issue annually. The second beet planting must go in before August!     

Teach these things to your children when they are young. Enjoy the process. Think about it. Shaun

“Never depend on a single income. Make an investment to create a second source”. ~Warren Buffet

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

1 Smart Asset, “8 Steps to Building a Successful Retirement Income Planning Strategy”, Javier Simon, July 11, 2023. https://smartasset.com/retirement/7-situations-when-you-need-a-financial-advisor-most

The opinions voiced in this material are general, are not intended to provide specific recommendations, and do not necessarily reflect the views of LPL Financial.

Investing in stocks offers no guarantees and involves various risks and the potential for loss of principle. Investors should consider the risks before investing in stocks.

Fixed and Variable annuities are suitable for long-term investing, such as retirement investing.  Gains from tax-deferred investments are taxable as ordinary income upon withdrawal. Guarantees are based on the claims paying ability of the issuing company. Withdrawals made prior to age 59 ½ are subject to a 10% IRS penalty tax and surrender charges may apply.  Variable annuities are subject to market risk and may lose value.

Traditional IRA account owners have considerations to make before performing a Roth IRA conversion. These primarily include income tax consequences on the converted amount in the year of conversion, withdrawal limitations from a Roth IRA, and income limitations for future contributions to a Roth IRA. In addition, if you are required to take a required minimum distribution (RMD) in the year you convert, you must do so before converting to a Roth IRA.

This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.

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.

Some climbers think of mountaineering as a challenging event and an opportunity for accomplishment. Though these are aspects of climbing, defining the sport this way can lead to summit fever, which can kill you. Climbers who learn to embrace the process of mountaineering think of each climb as a unique and exciting adventure, from choosing a mountain wilderness to call home, to unpacking and penning a narrative of the expedition. Which perspective do you suppose offers a safer, more fulfilling, and more enduring experience? I have started to think about those to whom I will leave my cache of climbing gear when the time arrives. That gear will come with a history, stories and memories, and a renewed life and mission! Estate planning and mountaineering share these dynamics. Carefully working through the following estate planning list is akin to mapping a major mountain excursion:

• The wise mountaineer always knows exactly what, and where each item is in the pack. Store a well-protected digital and/or hard-copy spreadsheet of all physical, functional, collective and financial assets, and share it with your executor. Feel free to request an Estate Planning Checklist from my office.

• List your debts. Include monthly payment amount with method, payment date, loan duration, and contact information.

• Experienced climbers think in grams not ounces. Consolidate individual security positions with the same registration into a brokerage account. Name, and periodically update beneficiary designations for every ‘beneficiary-eligible’ asset. Store your most recent beneficiary list with vital documents.        

• Make a membership list. This will benefit organizational members, family and friends, and may cash in on otherwise forfeited life insurance coverage.

• Gather vital papers, like estate planning and personal identity documents, and deeds to vehicles and property, and safekeep them together with your executor’s knowledge and access. Take this opportunity to review the specific “present” funding of your estate plan with your attorney.

• Permit closure of your digital life with a list of websites, usernames, and passwords.  

• Every mountaineer needs a partner, and is only as good as that partner. Become a discerner of character and do business with those you trust, and with whom you communicate well. Instigate an ongoing dialogue between your tax preparer, esquire, and wealth manager. Have one agree to ‘moderate’ the process with exceptional note-keeping.¹ 

• Understand the legal authority your designated Powers of Attorney and Health Proxies will have over you in the case of your incapacity, and appoint such powers exclusively to those whom you trust with your welfare and life.

• Put in place the legal documents required to best protect and distribute your estate, in all matters perceived, and keep them current. Include a personal letter to convey your purposes and intentions in the bequest of your earthly belongings.¹   

Enjoy your estate planning journey, and may it bless your heirs as you intend. Think about it, Shaun.

“Know well the condition of your flocks, and give attention to your herds.” ~Proverbs 27:23

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

1 TRW LAW, “25 Steps for Estate Planning”, 2023 The Law Offices of Travis R. Walker, P.A. https://www.traviswalkerlaw.com/25-steps-for-estate-planning/

  The opinions voiced in this material are general, are not intended to provide specific recommendations, and do not necessarily reflect the views of LPL Financial.

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.

Newton’s First Law of Motion, that a moving object will persist in both speed and direction unless interrupted by an external force, has significant financial implications. The ethic to habitually save and invest a portion of one’s monthly excess minimizes external forces of derailment with the wealth it creates. Dollar-cost averaging, matched and/or deductible contributions, tax deferred growth, low expense index funds, and penalized early withdrawals are contributing factors to continuous wealth production. The portion of your retirement expenses attributable to future healthcare costs, which the Bureau of Labor Statistics suggests for Americans is presently 8.1%, or $13,000 annually,¹ is treated preferentially to your other investments in a Health Savings Account (HSA), and can, therefore, compound that portion of your retirement wealth more efficiently.

HSA’s offer for qualified expenses what Traditional and Roth IRA’s don’t: tax-deductible contributions, tax-deferred growth, and tax-free withdrawals, whoa! Since future qualified healthcare costs will likely exceed what is accumulated in a HSA, most Americans should be utilizing this super tax-efficient means of wealth production. Consider the rules, dynamics, and primary benefit of a HSA:

HSA RULES

• 2023 HSA contributions require enrollment in a health plan with a minimum individual deductible of $1,500 ($3,000 for a family), and an out of pocket maximum of $7,500 ($15,000 for family).

• Participants may not be enrolled in Medicare, and may not be claimed as a dependent on someone else’s tax return.

• The 2023 contribution limit is $3,850 ($7,750 for family), though participants over age 55 can invest an extra $1,000.

• Contributions must be made by the tax filing deadline, like IRA’s (April 18, 2023 for 2022 contributions).

• A 6% excise tax applies to overcontributions, and stiff taxes and penalties apply to distributions spent on nonqualified expenses,² so know HSA rules.

• Qualified medical expenses include co-pays, dental treatments, medications, and many over-the-counter products, but do not include cosmetic services, gym memberships or supplements. IRS Publication 502 provides a more exhaustive list.³

HSA Dynamics

• Tax-deferred growth is a key benefit of the program, yet only 15% of current HSA’s are invested! Some custodians offer stocks, bonds, mutual funds and ETF’s. Consider your time horizon, risk tolerance and investment objective before investing HSA funds.

• Keep receipts and an expense log for HSA transactions.

• Name beneficiaries on a HSA account. Spouses inherit all tax benefits, but non-spouses lose the tax-free withdrawal benefit.⁴  

HSA Primary Benefit 

Deducting an investment (into a great business at a fair price) from your taxable income, then compounding the dividends and growth of that investment on a tax-deferred basis for decades, then withdrawing the funds to pay for future health expenses tax free, are the unequalled tax and investment benefits of the HSA.

The HSA, now that is an object in motion!

Think about it, Shaun.

“It’s far better to buy a wonderful company at a fair price, than a fair company at a wonderful price.”  ~Warren Buffet

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

1,3,4 Evergreen Gavekal, “Utilizing a Health Savings Account”, by Katie Vercio, June 22, 2023 https://evergreengavekal.com/utilizing-a-health-savings-account/

2 Fidelity, “HSA Contribution Limits and Eligibility Rules”, September, 2022. https://www.fidelity.com/learning-center/smart-money/hsa-contribution-limits

The opinions voiced in this material are general, are not intended to provide specific recommendations, and do not necessarily reflect the views of LPL Financial.

All investing involves risk including the possible loss of principle. No strategy ensures success or protects against loss. Dividend payments are not guaranteed and may be reduced or eliminated at any time by the company. Asset allocation does not ensure a profit or protect against loss. 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.

Forecasting mountain weather is an extremely challenging exercise at its easiest. The climber’s life is hinged to a consensus of probable weather scenarios, while on a slab of granite big enough to generate its own weather from invisible systems of energy without warning. To say the climber advances with a back-up plan is an understatement, yet the determination to “rope up” or “hunker down”, remains a critical daily assignment. Investors, like climbers, also operate within a realm of probabilities, and from them must constantly make a forecast of price scenarios, and their financial lives also depend on those judgments. Good climbers understand the indications offered by cloud formations and seek the help of every weather factor before advancing. That example of discipline compels us as investors to consider two more indications that stock indices are reversing:

• The S&P 500 just posted its first positive Trailing 12-Month Return in over a year. A mere 9 times in 73 years, including 2022, has this measure posted a year or longer of stock price declines. Following the 8 prior reversals, in every single case the S&P 500 moved higher over the ensuing year, and by an average percentage nearly twice that of all 12 month periods over the 73 year timespan.¹ A sample base of 73 years is significant, sample occurrences don’t exceed 100%, and twice the average return is noteworthy.  

• Stock indices have been climbing “the wall of worry”. This is phase one of a bull market, especially those following major bear markets, like in 2022. Recent polls and reports reveal stock sentiment among investors is the most bearish in a dozen or more years. A recent Gallup poll showed only 18% of investors believe “the best long-term investment” will be stocks, the lowest reading since 2011.² This indication is very comforting to those accumulating shares of great businesses at this time, given the extraordinarily counter-intuitive nature of the stock market, and the average investor’s failure to understand that dynamic.

We can add these two additional indicators to the stock market “positives” identified last week: probability of a rate cycle peak, decelerating inflation, S&P 500 above its 200 daily moving average (DMA), historic sideline cash, and the history of post, mid-Presidential election years for stocks. Don’t forget rules have exceptions. No indicator is perfect or can be trusted alone. Indicators are like truth, which is supported and affirmed by other truths, which are all agreeable. The scales of probability seem to be suggesting to Prudence that stock market positives now decidedly outweigh negatives, but stay vigilant, and watch for the additional indications streaming in.     

Think about it, Shaun.

“Every prudent man acts with knowledge, but a fool flaunts his folly.” ~Proverbs 13:16

“In the business world, the rearview mirror is always clearer than the windshield.” ~Warren Buffet

1 Stansberry Research, Daily Wealth, “Stocks Turn Positive, With More Gains to Come”, by Brett Eversole, June 8, 2023. 2 Stansberry Research, Daily Wealth, “A Changing of the Guard in Investment Sentiment, by Brett Eversole, June 6, 2023.

The opinions voiced in this material are general, are not intended to provide specific recommendations, and do not necessarily reflect the views of LPL Financial.

All investing involves risk including the possible loss of principle. No strategy ensures success or protects against loss. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested in directly. The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

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.

During a Denali expedition in 2017, following a 9 day confinement at 14,200 foot camp due to a severe cold storm that saw a handful of climbers with frozen appendages rescued by helicopter, a climbing day arrived! To our dismay and disapproval, the expedition’s head guide decided we would not ascend the head wall to cache supplies on the West Buttress Ridge due to perceived avalanche danger from the 8 inches of snow that accumulated in the night. Retrospective analysis concluded three things: 1) the extreme cold air and constant sunlight over 9 days had consolidated prior accumulations into a sheet of ice, leaving great climbing conditions with little probability of avalanche, 2) the teams which climbed that particular day safely advanced in near-perfect conditions, and 3) that guide decision squandered our team’s only remaining opportunity to summit. Erring on the side of safety and conservativism is sometimes prudent, but success requires the climber to identify opportunities to ascend the mountain, and to do so! Investing is similar to climbing in this regard. Let’s identify the bigger risks and opportunities in the stock market today, in hopes of gaining insight as to whether this is a “hunker down” or “rope up” moment.

Big stock market negatives today include:

• The credit market is tightening, which generally accompanies recession and triggers bankruptcy for heavily indebted businesses. When credit gets too tight, a systemic crisis can erupt. So far the credit market has tightened modestly.

• After improving substantially in Q1, market breadth is declining. Broad advances in stock prices are sustainable, but narrow advances, when indexes rise as the price of most stocks in those indexes fall, are a warning. So far breadth declines seem to be indicating a mere pause in the advancement of stock prices.

• The yield curve warns of a coming economic contraction. The most reliable recession indicator with a near perfect 70 year track record is flashing red. Some notable investors suggest yield curve warnings are no longer reliable due to the Fed’s predominant ownership of outstanding Treasury bonds. So far the yield curve warning of a deep and lengthy contraction has not been substantiated by other economic data.

Big stock market positives today include:

• The Fed has indicated a rate pause, and that rates approach a cycle peak. Less bad conditions often indicate major reversals, especially pertaining to the cost for businesses to access operational credit.

• Inflation continues to decelerate. “The invisible tax” is generally punishing to stock prices when rising, as was the case in 2022, but again, less bad conditions can present enormous opportunity for the nimble, as most investors wait for more certain indications to buy.

• The S&P500 remains above its 200 daily moving average, historically a time to buy stocks.

• A mountain of cash remains on the sidelines, awaiting more certain indications to buy, but many of America’s greatest investors are carefully positioning themselves in front of it. 

• In the past century there has not been a single down year for stocks in a post, mid-presidential election year. This could prove arbitrary, but 100 years is a long time.

In conclusion, while significant risks remain for stocks, the positives look more influential, less uncertain, and more numerous than the negatives. This does not appear to be a time to hide from the storms in your tent! Great businesses with large free-cash flow, and which dominate their respective industry and pay consistent dividends are selling for the lowest valuations in years. Buying great businesses after big sell-offs, like in 2022, is generally a very wise thing to do. If you ever see every stock indicator flashing green, STOP, for the real buying opportunity has definitely passed you by! Stay vigilant. Stay diversified. Focus on quality. Look for screaming buys in leading sectors and industries.

Think about it, Shaun.

“Give a portion to seven, or even to eight, for you know not what disaster may happen on earth.” ~Eccliastes 11:2

The opinions voiced in this material are general, are not intended to provide specific recommendations, and do not necessarily reflect the views of LPL Financial.

All investing involves risk including the possible loss of principle. No strategy ensures success or protects against loss. Dividend payments are not guaranteed and may be reduced or eliminated at any time by the company. Asset allocation does not ensure a profit or protect against loss. 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.

Mountaineering offers many opportunities for regret, especially the young climber’s formative years. The man who chased his pack into a 2,000 foot deep crevasse on Mt. Denali on May 15, 2017, surely regretted not clipping it to his harness. Years ago I regretted not putting my snowshoes on and stubbornly post-holing for two hours in deep snow, as I later shook uncontrollably from hypothermia caused by excessive perspiration. Poor choices produce painful results for retirees, too, which are generally felt when little or nothing can be done to change them. Consider the following retirement regrets, and the means of avoiding them as you plan for your own golden years.

• Regret #1: Not saving enough. A recent study published by the National Bureau of Economic Research (NBER) showed 57% of retirees regret not having saved more money.¹

  Solutions: have a retirement plan in place and follow it. Make conservative planning assumptions with rates of return, taxes, and inflation. Capitalize on tax-advantaged retirement accounts, especially those matched by your employer. Work longer and consider a part-time job in the early years of your retirement.

• Regret #2: Inadequately preparing for health care costs. The recent NBER study revealed 40% of retirees regret not more carefully planning for health and long-term care costs.²

  Solutions: assume future health and long-term care costs increase faster than other budget items in your planning. Take great care of yourself with daily sunshine, nutrition, exercise, and sleep. Formulate a plan for your late-life care and share it with your children.

• Regret #3: Retiring too early. Thirty seven percent (37%) of respondents to the NBER study felt they left the workforce too early.³

  Solutions: while working longer is the obvious solution to such a regret, the benefits go well beyond better finances. The intellectual and relational engagement a job or career provides is often critical to a person’s well-being. For the same reason, make sure your inspirations and talents continue in full function to the benefit of others when you do retire, which will be a blessing to you.

• Regret #4: A poor decision with Social Security. The NBER study indicated 23% of retirees wished they had filed for Social Security later.⁴

  Solutions: have a detailed retirement income plan at least 10 years prior to retirement, including Social Security optimization. Work part-time for the first 3-5 years of your retirement so you can delay Social Security payments, which will reduce or extinguish reductions for taking it prior to Full Retirement Age, and enlarge those payments for life.

Think about it, Shaun.

“Where there are no oxen the manger is clean, but abundant crops come by the strength of the ox.” ~Proverbs 14:4

 1,2,3,4 Financial Planning, “4 big retirement regrets – and how to avoid them”, by Nathan Place, January/February, 2023

The opinions voiced in this material are general, are not intended to provide specific recommendations, and do not necessarily reflect the views of LPL Financial.

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.

Methodical wealth building (MWB) may be defined as the accumulation of wealth, or net worth, at a pace faster than inflation. It is a Biblical concept, a practical endeavor, and a noble enterprise, as the effort of one invariably blesses the lives of many. MWB prioritizes not the accumulation of money, but good stewardship, and often chooses a course with slower accumulations due to principle. The only reliable means of MWB is the consistent application of financial principles over time, as a manner of living; the tortoise beat the hare because it stuck to the plan, and the hare lost because it didn’t! While persistent high inflation makes MWB elusive, the means, as a rule, prevail, giving every partaker a high probability of success.

The practices of methodical wealth builders are simple, but often defy both the natural appetite and our profligate culture, so don’t confuse ‘simple’ for ‘easy’:

• Methodical wealth builders work hard and live simple, frugal lives. They spend less than take home pay each month, saving and investing the difference. While a miser forsakes all for more gain, wealth builders enjoy the fruits of their labor, but with discretion. A fancy automobile is viewed not as a status symbol, but as an imprudent disposition of capital. The dispensation of every resource is weighed on a scale of prudence and scarcity, as with accountability.

  “Aspire to live quietly, and to mind your own affairs, and to work with your own hands, so that you may be dependent on no one.”  ~1Thessalonians 4:11-12  

• Methodical wealth builders manage debt with scrutiny. They understand the danger of debt in certain circumstances, that leveraged investments do not match unleveraged investments in profitability, and that debt only makes financial sense when the borrowed money is invested productively (net of interest paid, after tax return exceeds inflation). They always carry a miniscule debt/equity ratio, and never fully retire with any debt at all. “The borrower is the slave of the lender.”  ~Proverbs 22:7

• Methodical wealth builders dispense capital carefully and productively. They understand prices are negotiable, and consider the value of a thing before tendering an offer. They know a company’s reported revenues and earnings can deceive investors, and that dividends and free cash flow can’t. They invest primarily in boring businesses which dominate their respective industry, have a moat of protection against competition, earn steady cash flows, and pay (and increase) dividends systematically. They speculate sparingly with minimal capital, and keep individual position sizes small. They are judicious in the deployment of their hard-earned capital. ”Precious treasure and oil are in a wise man’s dwelling, but a foolish man devours it.”  ~Proverbs 21:20  

• Methodical wealth builders are generous, and give freely to those in need, understanding this is the one instance where returns are non-financial. They give not to enable, but to empower and bless, and that “you give a child enough to do something, but not enough to do nothing”. They seek to forget every gift immediately. “God loves a cheerful giver.”  ~2Corinthians 9:7         

May these principles and practices be a blessing to you and others, Shaun.

The opinions voiced in this material are general, are not intended to provide specific recommendations, and do not necessarily reflect the views of LPL Financial.

All investing involves risk including the possible loss of principle. No strategy ensures success or protects against loss. Dividend payments are not guaranteed and may be reduced or eliminated at any time by the company.

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.

Mountain climbing, like investing, inherently involves risk. Packing a survival blanket to withstand hypothermia, and a second pair of goggles to prevent the blindness of frozen eyelids, and establishing multiple camps on big mountain adventures, to which you may flee and recover from injury, all offer the dividend of living to climb another day. The financial benefits associative to income investing, or owning investments which pay a present stream of income (‘Income’), as opposed to none, are commensurate with such critical climbing principles, and include:

• ‘Income’ provides a margin of risk reduction with your investment. ‘Income’ paid today replaces a pure reliance on growth, which is often speculative and risky.

• ‘Income’ accelerates the compounding of investment returns (over reinvesting capital gains alone) and increases share ownership.

• It is our opinion ‘income’ fights inflation more effectively than growth because inflation places a premium on ‘income’, and discounts its absence.

• ‘Income’ can give you a raise without depleting the principle of your investment, even when growth is elusive.

• A portfolio containing ‘income’ investments likely equates to less overall risk and higher average portfolio quality, and it is our opinion only established, competitive companies can meet the promise of a consistent dividend through periods of recession and bear markets.

• ‘Income’ investments simplify the investment process and potentially decrease portfolio expenses because the average hold time far exceeds that of non-‘income’ investments.

Doc Eifrig, a successful and well-known ‘income’-focused investor at Stansberry Research, suggests we are in a ripe period for ‘income’ investing today, following the Fed’s aggressive rate hike campaign in 2022, and lays out three simple principles for successful ‘income’ investing:

• Buying dividend stocks alone isn’t enough. To consistently maximize both income and returns, investors must a) utilize bonds, REIT’s, MLP’s, ETF’s, annuities, and Treasury bonds, b) understand the environment in which each ‘income’ investment thrives, and c) act at the appropriate time. It won’t help a climber who responds to frozen hands by putting their helmet on!

• Always be a value investor when purchasing ‘income’ investments. Have strict ‘buy’ parameters, and stick to them like a tick on a dog. Never overpay for an ‘income’ investment. Never chase prices.

• Never accept less interest on cash savings than the market will safely give you, even on your emergency fund, especially in a high inflation environment.¹

An elite winter climbing day above tree-line, and ‘income’ investing in today’s pristine rate environment both come with three charges; the former: pack carefully, fuel up, and enjoy the adventure!; the latter: recognize the benefits, apply the means, and enjoy the financial blessing.

Think about it, Shaun.

“Our favorite holding period is forever”. ~Warren Buffet

“Price is what you pay. Value is what you get”. ~Warren Buffet

“Never depend on a single income. Make an investment to create a second source”. ~Warren Buffet

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

1 Stansberry Research, Daily Wealth, “We’re in a Rare Age for Income Investors”, by Dr. David Eifrig, April 12, 2023

The opinions voiced in this material are general, are not intended to provide specific recommendations, and do not necessarily reflect the views of LPL Financial.

All investing involves risk including the possible loss of principle. No strategy ensures success or protects against loss. Dividend payments are not guaranteed and may be reduced or eliminated at any time by the company.

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