Mutual funds make a taxable distribution at year end of their profits from their “realized” capital gains. During the top of the market cycle mutual funds may have large amounts of low basis appreciated stock and when a crash comes then investors redeem their mutual fund shares, forcing the fund to sell appreciated stocks which triggers a taxable distribution. So when a bubble top bursts then the stocks held by a mutual fund go down and at the same time capital gains taxes maybe incurred. If an investor recently bought a mutual fund at the top of the market and …Read More
Prior to the economic downturn of 2008, clients were eager to take investment risks. They wanted double-digit returns and appeared relatively unfazed by short-term fluctuations in their portfolio. When explaining the impact of volatility and portfolio risk, I often had to tell them that that it’s better to aim for singles and doubles rather than swing for home runs.
When I was illustrating a sample portfolio with 5, 6, or 7 percent net return, one particular client wondered if he should take on additional risk to generate a higher return, even when his financial plan suggested that a lower return …Read More
As people approach retirement, they often take a look at their projected retirement income and the expenses, scrutinize their findings, and then heave a sigh of relief. Unfortunately, all they have really gotten from that exercise is a false sense of security. While at first blush, it looks like they will have enough income to enjoy a comfortable retirement, in reality they may not, because most folks greatly underestimate two important factors!
Overall inflation usually runs at about 3.5% over long periods of time. Yes, we are in a low inflation period now but that can and probably will …Read More
I am shocked at how many of our clients do not have a working knowledge of the financial circumstances and legacy goals of their parents. Nor have many of my clients shared any of their wealth plans with their adult children. Sure, many of our clients hold regular family social gatherings, meet for the holidays or have reunions and even participate in family business partnership meetings, but that is where it ends.
I propose one way to remedy this information void is to hold formally structured family meetings. In addition to opening lines of communications between generations these meetings can …Read More
No matter what scientists say about the actual start of summer, for many people, Memorial Day is the beginning of the summer season. Lots of magazines and TV shows will tell you that if you haven’t already planned a summer vacation, it is not too late. This is certainly true and you may be able to snag a last-minute deal. However, a financial advisor might caution you to look before you leap. This does not mean that you shouldn’t get a vacation but that you shouldn’t ignore the principles of financial planning as you contemplate your summer getaway.