Investment Newsletter for the End of July, 2019

Posted on by November 24, 2019
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July was a very flat month. The Dow Jones is up approximately half a percent, which is insignificant. In today’s newsletter, we will discuss 2 things about the stock market. 1. Its value to you and 2. Its purpose to society.

The stock market is composed of companies that via the stock market you are able to buy into. When you buy Apple stock, you are buying equity in the Apple company, and your investment over the long run will track the growth of the company. In the short term, investing is volatile, but in the long term, a broad index like the S&P 500, is, at its essence, a reflection of the economy. When you invest in the S&P 500, you are betting on the continued growth of the United States’ economy. In our opinion, that is a good bet to make. If you disagree, do you believe the same about the economy of England, Canada, Mexico, etc. The stock market is a global marketplace. Investing in the stock market will enable you to keep earning money long after you retire, so any financial burdens you have in the future are reduced. As retirement involves a reduction of income, any reduction in your financial burden is essential. The stock market is one of the most effective wealth builders in the world. Over the last 35 years, the Dow Jones has grown at annualized rate of about 9%. Due to the power of compound interest, that’s huge. If you invested 50,000 dollars into the Dow Jones in 1985, you would have over 970,000 dollars right now. That is a level of return that vastly exceeds inflation and is statistically superior to other methods of investment. There is an incredible amount of wealth being created all over the world, the stock market is a way for you to share in that wealth.

The purpose of the stock market is to raise money. In order to grow, companies sometimes need more money than they are willing to obtain through borrowing or internal fundraising. They might need money to hire more people, to buy equipment, research and development, etc. The companies thus sell part of their equity to others in the Primary market and those buyers in turn if they need money can sell that equity to us on the Secondary market. Without the stock market, companies would be forced to grow much slower and there would likely be a lower quality product offering for us to purchase.

We sincerely hope you got value from this newsletter. We appreciate your business and trust.

Dan and Eli

As I’m writing these to help my readers, I would be very appreciative of any input in regards to what I should write next. If you want me to write about a particular topic, please contact me. Please contact me if you would like to submit a post to my blog.

If anything that I mentioned above interests you, please consider downloading my free e-book. The book contains my thoughts on investment management and some information that I think everyone should know. You can also download it below.

E-Book Download

Questions for the comments

Did my newsletter make sense? Do you agree or disagree with what I said?

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Investment Newsletter for the End of June, 2019

Posted on by November 24, 2019
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While it has been a little volatile, the market has been really good this last month. The Dow went up by more than 7%. It didn’t seem so nice when we were living it at that moment, but that just proves that sometimes you can’t see the whole forest when you’re stuck in the trees. Sometimes you need to take a larger perspective and not get bogged down in the day to day dramas.

The main point of this newsletter will be cash. In particular, what it is and why it you should not keep too much of your assets in the form of it. Cash is a medium of exchange. It is simply a tool used to make the free market more efficient as cash is vastly superior to barter. What is important to know here is that cash has no inherent value. The value is only what you can buy with it. If you double your cash but everything becomes 4 times more expensive, then you are poorer even though you have more cash. That increase in cost of living is known as inflation and it’s critical to financial planning. When you keep cash in the bank and earn some piddly zero or almost zero rate of interest, you are losing buying power and potential quality of life. The reason is that the cost of everything you want to buy is likely going up at a higher rate than the interest you are earning. You need to keep enough cash on hand to cover your spending needs and a little extra to cover any unexpected emergency, beyond that amount, any extra cash is a mistake. It is an investment with a negative rate of return.

There are many ways to get a better rate of return than holding your wealth in cash. You can invest in the stock market, real estate, or if you are wealthy enough any of the myriad of investment options exclusive to wealthier individuals. You can also invest in bonds, which tend to not give you as nice of return as other investment options but they are still vastly superior to cash. For many people, the wealth they accumulate is the wealth they are going to live on in retirement. A 1% difference in annual return compounded for enough years could be the difference between comfort and destitution. Given the stakes, we feel it is essential to create the best financial plan possible. That financial plan likely has less cash in it than you are anticipating. We always are available to discuss these concepts further. It is your money and we will never do anything you are uncomfortable with. We want to give you the intellectual tools necessary to make the best decisions possible. It will always be your choice.

We sincerely hope you got value from this newsletter. Always at your service.

Dan and Eli

As I’m writing these to help my readers, I would be very appreciative of any input in regards to what I should write next. If you want me to write about a particular topic, please contact me. Please contact me if you would like to submit a post to my blog.

If anything that I mentioned above interests you, please consider downloading my free e-book. The book contains my thoughts on investment management and some information that I think everyone should know. You can also download it below.

E-Book Download

Questions for the comments

Did my newsletter make sense? Do you agree or disagree with what I said?

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Investment Newsletter for the End of May, 2019

Posted on by June 17, 2019
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May was a poor month for the markets. All indexes and your portfolios are down. The prior month April was very good. The market fluctuates a lot. It is hard to read much sense into it on a short-term basis.

So, why does it go up and down? There must be a reason. The talking heads on tv and the other commentators (we will call them the “experts”) declare a reason for every day’s movement. Some days they may have several reasons depending on the time of day. The reality is the declared reasons are bunk. No one really knows but the audience will not accept that answer.

We just had a bad month. Is the reason the China tariff fight, the Mexico proposed tariffs, general fear (Chicken Little: “The sky is falling”), computer trading by the big hedge funds, random noise, or some other factor? It is probably some combination of the above but we can never find out. So, we take our best guess.

We choose to follow a plan rather than have the talking heads tell us what to do. Our plan is based on percentage allocations based in turn on your risk profile. We do not like reacting to fear and greed. Incidentally, we are watching the decline closely and will likely be rebalancing (by buying more stock/stock funds) if the market declines more.

We have introduced large cap dividend stocks to many clients. About fifteen portfolios now include a collection of these companies. So far, clients have been very pleased with this inclusion. We have identified six or seven very large companies with long established dividends in the neighborhood of 5%. Shell Oil, Phillip Morris, IBM, Haines Brands, AT&T, etc. have been in business for many years without missing a dividend payment. Our typical pattern is to identify five or so of these stocks that you have no personal objection to (hello Phillip Morris) and allocate 2% to each. We then reduce the bond allocations some and the stock allocations some. These stocks are riskier than stock funds but a lot less risky than regular stocks. They also pay much better than bonds/bond funds. We include these stocks in the allocation plan. We buy and sell when they go out of allocation. Discipline always. No exceptions.

Please let us know if you are interested in knowing more concerning these stocks and how they could be useful to you

Dan and Eli

Investment Fee Schedule

Rate Assets Under Management
1.44% Below $125,000
1.00% Between $125,000 and $750,000
.85% Between $750,000 and $1,250,000
.80% Between $1,250,000 and $1,750,000
.75% Between $1,750,000 and $2,500,000
.70% Between $2,500,000 and $3,250,000
.65% Between $3,250,000 and $4,250,000
.60% Above $4,250,000

A single rate is applied to the whole account. I will waive personal tax return fees for accounts over $1 million. For accounts that are above $5,250,000, we’ll need to discuss a custom rate.

As I’m writing these to help my readers, I would be very appreciative of any input in regards to what I should write next. If you want me to write about a particular topic, please contact me. Please contact me if you would like to submit a post to my blog.

If anything that I mentioned above interests you, please consider downloading my free e-book. The book contains my thoughts on investment management and some information that I think everyone should know. You can also download it below.

E-Book Download

Questions for the comments

Did my newsletter make sense? Do you agree or disagree with what I said?

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Investment Newsletter for the end of April, 2019

Posted on by May 14, 2019
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It was a great month. All of you made a lot of money. It was also a great year to date. Many of the indexes are now at all time highs. Remembering back to how this last December looked, with its sharp decline, it would have been easy to panic but you did not. We have only one thing to say. Thank-you.

The topic of this newsletter will be how we (Dollinger Management) choose stocks. Dan has discussed with many of you the idea of allocating some of your portfolio towards dividend and/or value stocks. We think it would be valuable for us to explain how we pick the stocks we invest in. There are two main factors we consider, the quality of the company and the cost of the stock.

In regards to the first point, remember that a share of stock represents partial ownership of the company that issued that stock. If a company has 100 shares of stock and you own 1 of them, then you own 1% of the company. You own 1% of their cash, their debt, their equipment, etc.

While there is the occasional exception, for the most part to find a good stock you first need to find a good company. In order to determine if it’s a good company we look at factors such as whether the company is making money, is it producing a product that people want, has the company been around for a while, does it pay a consistent dividend, etc. Ultimately, we want a company that has made a lot of money for many years. Many companies could have 1 or 2 good years due to factors beyond their control such as a strong overall economy, but no company by luck can have strong consistent profits for 100 years. If a company thrived during the Great Depression, then the company is probably strong. We want at least ten years of consistent profits and great dividends.

The second factor we consider is the cost of the stock. By cost we don’t mean, whether the shares costs 1 dollar a share or 500 dollars a share. We mean, for every dollar we spend how much value do we get. We want a bargain price for what we receive. Remember that a stock represents ownership in the company. If you own 1% of the stock of a company, you own 1% of all that company’s stuff.

There are many ways to measure if the stock price is cheap compared to we are receiving. The price to earnings ratio is the most common metric we use when evaluating the cost of a stock. It is the most common metric because we believe that ultimately it is a company’s earnings that drives a company’s growth and thus is the good proxy for its intrinsic value. We also pay attention to price divided by book value, dividend yield, and the financial statements. We particularly in the financial statements look at debt load, where the cash is being spent, and general safety issues. Dan has personally prepared over 12,000 financial statements over the last 30 years. Reading one is not a problem.

As the market has reached a new high, we will be rebalancing in the near future. Thank-you again for your business and trust.

Dan and Eli

Investment Fee Schedule

Rate Assets Under Management
1.44% Below $125,000
1.00% Between $125,000 and $750,000
.85% Between $750,000 and $1,250,000
.80% Between $1,250,000 and $1,750,000
.75% Between $1,750,000 and $2,500,000
.70% Between $2,500,000 and $3,250,000
.65% Between $3,250,000 and $4,250,000
.60% Above $4,250,000

A single rate is applied to the whole account. I will waive personal tax return fees for accounts over $1 million. For accounts that are above $5,250,000, we’ll need to discuss a custom rate.

As I’m writing these to help my readers, I would be very appreciative of any input in regards to what I should write next. If you want me to write about a particular topic, please contact me. Please contact me if you would like to submit a post to my blog.

If anything that I mentioned above interests you, please consider downloading my free e-book. The book contains my thoughts on investment management and some information that I think everyone should know. You can also download it below.

E-Book Download

Questions for the comments

Did my newsletter make sense? Do you agree or disagree with what I said?

Learn About My Business

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Investment Newsletter for the end of March, 2019

Posted on by April 5, 2019
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A lot of volatility in the stock market this month, but in the end it didn’t go anywhere. The Dow ended the month a few points up compared to the beginning of the month. The quarter, however, was fantastic. The biggest lesson to take from this is try to freak out about daily fluctuations and swings. What happens day to day has no significance at all when it comes to long term movements.

The first main thing discussed in this newsletter will be a reminder to file your tax return. The reason is that being forced to pay a bunch of penalties and interest for being late will hurt your financial health and wellbeing. The deadline is April 15, or you can file for an extension. Either file your tax return or file for an extension as soon as you can.

The second main thing discussed will be how to calculate income taxes owed. Income taxes means that you pay a percentage of how much you’ve earned during the year to the government. However, the level of income used for the calculation will be smaller than the amount of income you actually earned because of something called a deduction. Deductions are subtracted from your reported income. For example: Let’s say you earned $50,000 during the year. If you have $13,000 worth of deductions, the amount of your income that is subject to tax is $37,000.

There are 2 broad categories of deductions. You get to use the larger of the two. They are itemized deductions and a standard deduction. The standard deduction varies based on marital status and age. You cannot use both on a tax return but you are allowed to use one method on the federal and a different method on the state. Itemized deductions are in response to behavior that you do such as giving to charity, paying mortgage interest, property tax, paying medical bills, etc. You and/or your accountant can figure out the category that reduces your tax bill the most. There is also something called credits that directly reduce your tax bill. These are also in response to behavior. For example: if you originally owed $5000 in tax and you use a $1000 credit, you now owe only $4000 in tax. You can get a complete list of deductions and credits that are available from the internet. You can also call Dan and ask. He does most of your tax returns.

The United States has a progressive tax structure. That means the more you earn, the higher percentage you pay. The higher percentage is only applied to the little piece of income earned above a cutoff number. The lower percentages are used for the portion of the income below the cutoff. Let’s now put everything learned in the newsletter together in a final example. Let’s say you earned $52,000 during the year. You decide to use the $12,000 standard deduction (the standard deduction available to most single people). Your taxable income is now $40,000. Because of the progressive structure, you pay 10% on the first $9700, 12% on the next $29,775, and 22% on the final $525. You owe $4658.50. You apply a $1000 credit and your final tax bill is $3658.50.

Dan and Eli

Investment Fee Schedule

Rate Assets Under Management
1.44% Below $125,000
1.00% Between $125,000 and $750,000
.85% Between $750,000 and $1,250,000
.80% Between $1,250,000 and $1,750,000
.75% Between $1,750,000 and $2,500,000
.70% Between $2,500,000 and $3,250,000
.65% Between $3,250,000 and $4,250,000
.60% Above $4,250,000

A single rate is applied to the whole account. I will waive personal tax return fees for accounts over $1 million. For accounts that are above $5,250,000, we’ll need to discuss a custom rate.

As I’m writing these to help my readers, I would be very appreciative of any input in regards to what I should write next. If you want me to write about a particular topic, please contact me. Please contact me if you would like to submit a post to my blog.

If anything that I mentioned above interests you, please consider downloading my free e-book. The book contains my thoughts on investment management and some information that I think everyone should know. You can also download it below.

E-Book Download

Questions for the comments

Did my newsletter make sense? Do you agree or disagree with what I said?

Learn About My Business

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Investment Newsletter for the end of February, 2019

Posted on by March 8, 2019
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The market went up over 730 points in February. It is a very nice result and it means that most of you made money. A real question is why it went up so much. We don’t recall any significantly good news that justifies it. The economy is about where it was before. There are more hopes about a trade deal happening between the United States and China, but there is also a lot of pessimism in the news about the economy in 2019. We figure those two items should be a wash. In the end February’s gain is as inexplicable as December’s fall. That leads to the first point of this newsletter. Movements in the market often don’t make sense. While we know that stock prices are affected by news, we often don’t know by how much and in what direction. Our advice when you see something bad in the news is to not worry about it. It may hurt the stock market but it might not. The government shutdown was certainly a large piece of negative news, but the stock market grew throughout.

The second point of this newsletter is the importance of data measurement. In order to progress and advance yourself in any endeavor you need to know where you stand. It applies to losing weight, to cooking, etc. It also applies to finance. Pop quiz: How much money did you spend during the month of February? How much money did you earn? To the people who can’t answer those questions, I recommend that you start tracking those things. You should track those things in order to prevent negative surprises. You don’t want to suddenly find out that you can’t pay the bills that are due that day. Glance through your expenses and see if anything is unnecessary. Now what is or is not necessary varies on the person, but decide if any expenses are unnecessary to you. Check if you are spending more money on something than you wish. Perhaps in the end you are happy with everything you spend money on, but for your sake it’s important for you to know that for certain.

Another important example of data measurement is a personal balance sheet. It is a record of the monetary value of what you have and the monetary value of what you owe. Try to maximize the former and minimize the latter. Knowing your balance sheet is essential for your retirement or any time that your income level drops. If you can’t count on new money entering your bank account, you need to know your ability to survive without it.

Hopefully you got some value from this newsletter. We appreciate your business and trust.

Dan and Eli

Investment Fee Schedule

Rate Assets Under Management
1.44% Below $125,000
1.00% Between $125,000 and $750,000
.85% Between $750,000 and $1,250,000
.80% Between $1,250,000 and $1,750,000
.75% Between $1,750,000 and $2,500,000
.70% Between $2,500,000 and $3,250,000
.65% Between $3,250,000 and $4,250,000
.60% Above $4,250,000

A single rate is applied to the whole account. I will waive personal tax return fees for accounts over $1 million. For accounts that are above $5,250,000, we’ll need to discuss a custom rate.

As I’m writing these to help my readers, I would be very appreciative of any input in regards to what I should write next. If you want me to write about a particular topic, please contact me. Please contact me if you would like to submit a post to my blog.

If anything that I mentioned above interests you, please consider downloading my free e-book. The book contains my thoughts on investment management and some information that I think everyone should know. You can also download it below.

E-Book Download

Questions for the comments

Did my newsletter make sense? Do you agree or disagree with what I said?

Learn About My Business

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Investment Newsletter for the end of January, 2019

Posted on by February 4, 2019
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What a nice month! The profits in January almost made up the entire loss from December. The panic in December was intense. We received several phone calls but almost all of you held tight to the plan. We actually re-balanced and bought more at the depth of the pit. The fear or program trading (or both) were obviously overdone. It did not feel overdone at the time. It felt like disaster. We (Dan and Eli) trust the system (the plan) that we set up more than the fear. We held and you are all winners as a result.

Tax season is upon us. Most of you will have lower taxes this year because of the new tax bills. There are several planning issues to be aware of.

The biggest change for most of you is the huge increase in standard deduction. There is also a $10,000 limit in state tax deductions and an elimination in equity line of credit deductions. As a result, most of you will no longer itemize deductions for federal. Oregon, California, and Arizona clients will still itemize for state. If you have a mortgage on your home, think seriously about paying it down or off if you can. Rental property and business interest are still fully deductible. If you are generous with your charity, think about donating double every other year.

The IRA rules are unchanged. There is a minimum distribution required the year after you are 70.5 years old. We recommend that you start the same year you turn 70.5. If you wait until the next year, you have to do a double distribution. Contribution limits are up a little because of inflation. You still cannot take a distribution until you are 59.5 without a penalty (a few exceptions).

Ok, not a tax issue, but do not buy real estate right now. Wait until the crash and snap up the bargains when everyone says you are stupid. The real estate market rolls over and dies every ten or fifteen years on the west coast and particularly so in Oregon and Washington (and likely Arizona). On a personal level, we are right now accumulating our resources. We will know we are getting close when our real estate agent tax clients take clerical jobs to support themselves and/or when our contractor tax clients are living on their third credit card. Both of those things happened in 2008. Real estate right now is flat but has not yet crashed.

We like real estate as an asset class. Most of you have REIT funds at five or ten percent of the portfolio. It is part of the plan. Our problem is that buying real estate directly is a concentrated position. Risk is very high. If you have a $300,000 rental property and $300,000 in a portfolio, real estate is now half your total wealth, ignoring your house.
We appreciate your business and trust.

Thank-you,
Dan and Eli

Investment Fee Schedule

Rate Assets Under Management
1.44% Below $125,000
1.00% Between $125,000 and $750,000
.85% Between $750,000 and $1,250,000
.80% Between $1,250,000 and $1,750,000
.75% Between $1,750,000 and $2,500,000
.70% Between $2,500,000 and $3,250,000
.65% Between $3,250,000 and $4,250,000
.60% Above $4,250,000

A single rate is applied to the whole account. I will waive personal tax return fees for accounts over $1 million. For accounts that are above $5,250,000, we’ll need to discuss a custom rate.

As I’m writing these to help my readers, I would be very appreciative of any input in regards to what I should write next. If you want me to write about a particular topic, please contact me. Please contact me if you would like to submit a post to my blog.

If anything that I mentioned above interests you, please consider downloading my free e-book. The book contains my thoughts on investment management and some information that I think everyone should know. You can also download it below.

E-Book Download

Questions for the comments

Did my newsletter make sense? Do you agree or disagree with what I said?

Learn About My Business

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Investment Newsletter for the end of December, 2018

Posted on by January 3, 2019
Reply

This month and quarter were very poor. The markets were substantially down not just in the US but also worldwide. The result was painful losses in your portfolios. We believe these losses will reverse into gains for you but cannot tell you when. The market goes in and out like the tide but less predictable.  Our purpose today is to discuss what causes these swings. There are several reasons.

Dan has argued for years that the crowd of investors is irrational. They rush in with greed and they panic over the cliff with fear. The result is stock prices that swing too high with good news and swing too low because of bad news.

A second cause is the computerized trading formulas that some hedge funds and other big/similar players use. These trading algorithms (computer programs) move millions of shares without human interaction. They can trade many times per second. When the market starts moving sharply, the algorithms can order immediate buy or sell orders that swamp the market. The result is like gasoline on a fire. A much sharper drop. A far faster rise.

These two causes are not mutually exclusive. They both can exist. The algorithms can order a sell off. Then people panic and sell out. Then the algorithms order more sell offs, etc. 

We cannot ignore, of course, several other causes. A politician may say something or not say something. The wrong group may win here or somewhere else in the world. Some piece of economic news may be unexpected. There are many reasons for uncertainty. Any or all can be critically important to some people.

We recognize that we have our own biases. We (Daniel and Eli) cannot and should not discount any of these as invalid. The truth is that all of these causes and perhaps more play into the market movements. The second truth is that no one really knows how all these things fit together. What is the dollar effect on the market of a government shutdown? We don’t know either. Does the irrational panic account for 2%, 5%, 10%, etc. of the drop? No one knows how to put a number on it. Did the algorithms really order a sell off? It will take the academics six months to figure it out which is six months too late to be useful to you.

As investors, all we can do is try to control our own emotions and educate ourselves as much as we can. To quote the great investor Warren Buffet, “Be greedy when the market is fearful and be fearful when the market is greedy.” As you all know, our use of allocations is basically contrarian. We are always facing the other direction from the market swings. A few days ago, we rebalanced almost all of your accounts. We bought equities and sold bond funds.  Hopefully, we purchased at the bottom of the melt down and your profits on the recovery will be even higher as a result. Sticking to the plan leads to higher long-term profits.

Dan and Eli

Investment Fee Schedule

Rate Assets Under Management
1.44% Below $125,000
1.00% Between $125,000 and $750,000
.85% Between $750,000 and $1,250,000
.80% Between $1,250,000 and $1,750,000
.75% Between $1,750,000 and $2,500,000
.70% Between $2,500,000 and $3,250,000
.65% Between $3,250,000 and $4,250,000
.60% Above $4,250,000

A single rate is applied to the whole account. I will waive personal tax return fees for accounts over $1 million. For accounts that are above $5,250,000, we’ll need to discuss a custom rate.

As I’m writing these to help my readers, I would be very appreciative of any input in regards to what I should write next. If you want me to write about a particular topic, please contact me. Please contact me if you would like to submit a post to my blog.

If anything that I mentioned above interests you, please consider downloading my free e-book. The book contains my thoughts on investment management and some information that I think everyone should know. You can also download it below.

E-Book Download

Questions for the comments

Did my newsletter make sense? Do you agree or disagree with what I said?

Learn About My Business

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Investment Newsletter for November, 2018

Posted on by December 3, 2018
Reply

The common wisdom (an oxymoron) is that we had another ugly month. Major downswings, panicked phone calls to your favorite investment advisor. The reality, however, is that the market was up for the month. You all made money.

I have mentioned before that I am not against stocks if we can get them to fit into a disciplined plan. I am particularly ok with high dividend stocks as a replacement for some of the bond funds. The bond funds pay very low interest and have very low risk. I use them to moderate the risk from the stock funds. The 2% interest really hurts, however.

My son and I have identified six (so far) high dividend stocks from very long-established big companies. These companies have typically only had small range between high and low for the year (in other words, not much fluctuation). As an example, Royal Dutch Shell is an international conglomerate that has almost no chance of going out of business. The company has been in existence since about 1810. It also has a 6% dividend. There is still some fluctuation even though it is small. The bond funds of course have no fluctuation. The fluctuation is part of risk. Therefore, the higher return.

My own portfolio was about 60% stocks and 40% bond funds. I have now put in my personal model each of the six stocks at 3% each and reduced the 40% bond funds to 22%. I am taking a little more risk but substantially juicing up my return.

The key here is that I am putting the dividend stocks in my model. If a stock goes substantially off the 3%, I will rebalance. I will either buy or sell an amount to bring the item back to roughly 3%. I am still using this dividend stock as a shock absorber to partially moderate market risk.

If you are interested, we should address these stocks (or others) in our next planning meeting. Or give me a call. I will do some planning right away with you on the phone. The percentages have to be right for your situation. To keep the overall risk the same, I may recommend a reduction in the allocation to stock funds. You also may object to owning a certain stock for personal reasons. We need to talk.

All of you know that my son has worked for me for many years. Eli’s work is increasingly becoming valuable to the practice. The dividend stocks, in fact, were originally his idea. He recently obtained professional investment licensing. Effective January 1, 2019, I am transferring to him 10% ownership of Dollinger Management, Inc.

Thank-you for your business and your trust.

Dan

Investment Fee Schedule

Rate Assets Under Management
1.44% Below $125,000
1.00% Between $125,000 and $750,000
.85% Between $750,000 and $1,250,000
.80% Between $1,250,000 and $1,750,000
.75% Between $1,750,000 and $2,500,000
.70% Between $2,500,000 and $3,250,000
.65% Between $3,250,000 and $4,250,000
.60% Above $4,250,000

A single rate is applied to the whole account. Compared to my old fee structure, under the new fee structure the cost for a $1 million account would be $500 lower per year and the cost for a $1.5 million account would be $1,500 lower per year. I will still waive personal tax return fees for accounts over $1 million. All services stay the same. I am just lowering my upper end fees. For accounts that are above $5,250,000, we’ll need to discuss a custom rate.

As I’m writing these to help my readers, I would be very appreciative of any input in regards to what I should write next. If you want me to write about a particular topic, please contact me. Please contact me if you would like to submit a post to my blog.

If anything that I mentioned above interests you, please consider downloading my free e-book. The book contains my thoughts on investment management and some information that I think everyone should know. You can also download it below.

E-Book Download

Questions for the comments

Did my newsletter make sense? Do you agree or disagree with what I said?

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Investment Newsletter for the end of October, 2018

Posted on by November 2, 2018
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This month’s stock market was extremely ugly. The fear turned into a stampede. There were no news events. The US economy was a roaring success. Trade and tariff battles went quiet. But heck, let’s not let facts get in the way of a good panic. Sometimes the forces of fear win the battle. Sometimes the forces of greed win instead. Investing is about long-term allocations.

Today, I want to discuss the financial planning process. Financial planning is the prediction of how to allocate your financial resources to best match your needs. There are two relevant questions: what are your resources and what are your needs?

Of course, there are many guesses. Planners call them assumptions. We have to guess your future income, how long you will live, future investment returns, future inflation, future expenses, etc. There is very little value in fine tuning these guesses. Putting detail on a wild guess does not make the result more accurate. A better solution would be to make your best guess and update the plan every year. By revisiting the process, I get smarter.

Your financial resources include your anticipated income, investments and cash on hand, anticipated inheritances, divorce settlements, etc. It is essentially a list of your assets less your debts. Notes:

  1. All assets are listed at fair market value.
  2. I include future income as a resource. I am 59 years old. I have more or less 10 working years left. Hopefully more. 10 years of future cash flow has a value today.
  3. I do not include your personal home as a resource. Yes, it has significant value. But you spend money for your comfort not for the resale value. My landscaping makes me happy not rich.
  4. For this conversation, needs and goals mean the same thing. It is what you want to achieve and when. Common goals could be “ability to retire,” “not to run out of money before I die,” “accumulate money for Junior’s education,” and so on. The time frame matters. Retiring in one year is different than retiring in 30 years. You would have a different amount of time to accumulate resources. Risk would be very different as the young person would have much more time to fix mistakes.
  5. Because of the planning process, we can make incremental changes in life style. We can raise or lower spending, delay retirement, etc. These changes are the whole point of the process.
  6. Insurance is a good way to reduce the risk of failure. It is not, however, the only way. And insurance, generally, is a very poor investment choice.

I have worksheets set up for you to use. They are “A Very Simple Statement of Financial Condition” and “A Simple Statement of the Future.” I would be happy to send them to you. Send me an email.

Dan

Investment Fee Schedule

Rate Assets Under Management
1.44% Below $125,000
1.00% Between $125,000 and $750,000
.85% Between $750,000 and $1,250,000
.80% Between $1,250,000 and $1,750,000
.75% Between $1,750,000 and $2,500,000
.70% Between $2,500,000 and $3,250,000
.65% Between $3,250,000 and $4,250,000
.60% Above $4,250,000

A single rate is applied to the whole account. Compared to my old fee structure, under the new fee structure the cost for a $1 million account would be $500 lower per year and the cost for a $1.5 million account would be $1,500 lower per year. I will still waive personal tax return fees for accounts over $1 million. All services stay the same. I am just lowering my upper end fees. For accounts that are above $5,250,000, we’ll need to discuss a custom rate.

As I’m writing these to help my readers, I would be very appreciative of any input in regards to what I should write next. If you want me to write about a particular topic, please contact me. Please contact me if you would like to submit a post to my blog.

If anything that I mentioned above interests you, please consider downloading my free e-book. The book contains my thoughts on investment management and some information that I think everyone should know. You can also download it below.

E-Book Download

Questions for the comments

Did my newsletter make sense? Do you agree or disagree with what I said?

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