Enjoy the current installment of "weekend reading for financial planners" - highlights this week include a number of articles on new investment vehicles coming down the pike, some interesting investment discussions from two of my favorite investment writers, John Hussman and John Mauldin, an interesting article suggesting perhaps we need to give clients MORE performance reporting information instead of less, and a white paper on implementing internships. Happy reading!Read More...
Investors in the U.S. have become increasingly numb to the reality of investing here - a world where stocks pay a dividend barely over 2%, and short-term bonds or CDs give a yield barely more than 0%. Accordingly, we have few options for return aside from investing in risk-based assets to seek - or at least, hope for - capital appreciation. Yet the ultra-low returns on everything in the U.S. - necessitating a significant amount of appreciation just to generate a reasonable total return - is not the norm for U.S. investing historically, nor even currently around the world outside of the U.S., as I was reminded during my recent trip to Australia. In fact, I was somewhat shocked while I was there to wonder: how would investing in the U.S. be different if we, too, could get local short-term bank CDs that paid nearly 6%!?Read More...
Psychologists Daniel Kahneman and Amos Tversky won the Nobel prize in economics for developing a theoretical framework to show how we make often irrational decisions when faced with real life economic trade-offs. As a part of their prospect theory research, they showed that we are naturally loss averse; this means we experience more negative feelings associated with a loss, than we do positive feelings for a comparable gain. For instance, we feel worse about losing $100, than we feel happy for winning $100. Yet despite the recognition that this research has received, are we ignoring it in the financial planning world? Simply put: If our clients feel worse about a loss than they feel good about a comparable gain, shouldn't we be more proactive about protecting them from losses, even at the risk of giving up more gains?Read More...
The FPA NorCal regional conference ran as it usually does, on the Tuesday/Wednesday following Memorial Day weekend at the Palace Hotel in San Francisco. Pulling over 600 attendees from across the country, the event is on par with any national conference in the financial planning space. Here are the highlights from Day 1, as broadcast from the incredibly active Twitter stream on the #FPANorCal hashtag!Read More...
As prices of almost everything on the grocery store shelves seems to creep higher, we seem to get a bigger buzz than ever by saving money in the checkout line. Coupon use is on the rise, and this week was the series premier of TLC's "Extreme Couponing" television show.
Yet while it's nice to save a little money when you reach the cash register, and every bit of savings helps a little bit in the long run, let's keep it all in perspective: clipping coupons, a little or even a lot, is not the key to a comfortable retirement. When we talk about the importance of saving for long-term wealth accumulation, it's about the savings that you invest, not the discounts at the cash register. The road to long-term financial success is not paved with coupons!Read More...
The personal finance space has no shortage of tips to managing your spending, from bag lunches in lieu of eating out at work to home-brewed coffee instead of the morning Starbucks routine. Yet the reality seems to be that in so many situations, we dig ourselves a tremendous spending hole because of our big purchases, and then worry tremendously about the small stuff trying to make up the difference. If you really want to change your financial reality for the better, though, it's the big stuff you really need to focus on - where you live, and what you drive.
We often find great value and pride in owning things - yet the reality is that in many situations, we actually don't get a lot of use out of much of what we own. Which starts to beg the question - maybe we should spend more time renting stuff we want to use (loanership) when we want to use it, rather than buying it (ownership).
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To preserve the ability to stretch IRA distributions for a beneficiary, that individual must start taking withdrawals based on his/her life expectancy in the year after death. If those required withdrawals don't start on time, can you still rectify the situation to preserve the tax deferral?
The good news is that recent private letter ruling 200811028 (and more recently, IRS Information Letter 2016-0071) indicates the answer is "yes."
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