Submitted by Patrick Cote on January 31, 2018
Most of us have been impacted by the new tax law. You have probably already heard of the major provisions, such as lower rates overall and the reduced ability to deduct state and local taxes. If you are a business owner, particularly of a pass-through like an LLC, there are more significant changes that are quite relevant.
At AssetGrade, taxes play a critical role for most of our clients, so we work very closely with our clients and their CPAs to maximize their after-tax investing performance.
At 1,097 pages, the new tax law is a large document - realistically, it will take a while for everyone to absorb and think through the implications. There are already some immediate implications emerging for 529 accounts and Roth IRAs that we will be addressing shortly.
We are dedicating a new section of our website to keep all of the key information and investing ideas/implications we develop or come across from other people. We encourage you to check in on it from time to time, as we will keep adding to it throughout the year.
Submitted by Kate Hennessy on December 12, 2017
As a parent I appreciate the saying “they grow up so fast.” When I was on maternity leave in 2010, I remember how excited I was to fund our daughter’s 529 plan and plan for her future.
Selecting the right 529 plan can be as intimidating as determining how much to contribute each year. In working with my clients, I have identified several types of 529 plans and funding schedules to meet their needs.
Submitted by Patrick Cote on August 23, 2017
How to avoid “shirtsleeves to shirtsleeves in three generations”
Congratulations! You are on track to accumulate enough wealth to consider yourself wealthy (or maybe you are already there)! Now what? If you have kids (or nieces and nephews), one of your biggest concerns is likely to be to ensure that they, as well as future generations of your family, are able to benefit from the wealth in a positive manner. Even if you don’t think the amount you will leave to future generations is going to be that substantial, many of the tips below will still help.
At AssetGrade, we have had a number of clients ask for help with multiple generations of their family. In particular, we are focusing on ensuring that the priorities and goals of each generation are aligned where possible. We have seen our clients be most successful when they have kept the multi-generation goals specific and manageable.
For most folks who are the original creators of wealth for their family, whether they are HENRYs (High Earners, Not Rich Yet) or already wealthy, they want to see their children and future generations benefit from the family wealth by getting a great education and helping them with a head-start to lead fulfilling, productive lives. They want to avoid scenarios in which the wealth becomes a negative influence on the family. A good financial plan can help define these specific goals for your family.
Submitted by Susan Powers on June 6, 2017
When you can retire is more dependent on how much you’re spending than how much you’re earning. Here’s why:
With interest rates low and people living longer, the correct rule of thumb says you’ll need to save 33x the amount you spend annually to reduce the risk of running out of money.
First figure out your monthly expenses. For example, if they run $10,000-$15,000 a month, that’s $120,000 - $180,000 a year you’ll need to fund in retirement. However, you may live in a part of the country where the cost of living is much higher.
A married couple (both collecting their maximum Social Security benefit) will collect about $30,000 each annually. That leaves them a gap of $60,000 to $120,000 annually to cover from other sources.
With interest rates and people expected to live longer, the correct rule of thumb says you need to save 33x that amount (that’s $2 million-$4 million) to reduce the risk of running out of money.
Don’t panic. Instead, take these three steps now to avoid being forced into difficult decisions later.
Submitted by Patrick Cote on January 16th, 2017
One of the questions we get asked all of the time is “Can you tell me whether my investment advisor is doing a good job? I am not hearing or seeing much from him about my investments.”
If you have any uncertainty about your current investment advisor, it definitely makes sense to get an independent review. Many firms will do one at no charge and in a confidential manner, so there is little downside to doing it.
We sometimes hear that investors are afraid to dig deeper because they are worried about what they might find. It is worth the potential discomfort because you probably worked hard for the money in your portfolio, or inherited it from a loved one that worked hard for it. Perhaps you are lucky and do not have any of the issues below (less than 10% of the portfolios we reviewed had none of the five issues below). If you do have any of the issues below, letting them linger can hurt your chances of achieving your financial goals.
There are five different problems to watch out for:
Submitted by Pat Cote on December 14th, 2016
I was fortunate enough to chat recently with Karen Finerman. You may know her from CNBC's Fast Money or from Metropolitan Capital Advisors, the hedge fund she founded and runs in NYC.
With Karen's background, she has had the chance to get to know many highly successful folks that most people would consider to be ultra wealthy.
With AssetGrade's focus on HENRYs (High Earners, Not Rich Yet), I was curious to see whether Karen might have some insights that could be shared from her experience with the ultra wealthy. It turned into a fascinating (and entertaining!) discussion that yielded some surprising similarities and intriguing differences from the rest of the population.
Submitted by Susan Powers on November 15th, 2016
According to the IRS, cash balance plans are the fastest growing type of retirement plan in the United States.
What makes them attractive?
If you are a business owner, you can put up to $53K (or $59K if you are over age 50) each year into a 401(k). If business owners are interested in saving more than their 401(k) limit, cash balance plans may let them save up to an additional $237K on a tax-deferred basis each year.
The December 31st deadline to establish a cash balance plan is quickly approaching but you still have time if they are attractive for you.
The ideal retirement has evolved over time. There are a growing number of people who want a mix of work and play, especially if they are able to do so at a younger age.
James Fine has been able to do what many people dream of: setting up his business so that he can take several months off periodically to sail the Pacific. James runs Téléciné, a media company specializing in digital signage. If you have been to London City Airport or the Bloomberg headquarters in NYC, you will have seen spectacular examples of giant, customized screens streaming online data that James and his team design and implement
As any business leader knows, it takes a lot of energy to run a business. James was starting to feel burnt out after the downturn in 2009 and knew he would need to take some time off. He spent two years preparing Téléciné for his first sabbatical to ensure that the business would be OK with James being completely out of touch for an extended period. He knew that sailing would be one of the few scenarios in today’s world in which he really would be out of touch.
When most HENRYs (High Earners, Not Rich Yet) first come to us, their investments are spread across many accounts at multiple companies. They might have old 401(k), IRA and brokerage accounts they set up years ago. They often just receive a hard-to-read account statement each quarter, sometimes still on paper. They typically do not have a good sense of whether their investments are set up appropriately to reach their goals, which can be a source of anxiety.
As part of the financial planning process we go through with our clients, we clean up their accounts, often consolidating them into a smaller number of accounts. We also line up their accounts with their goals in a tax-efficient manner.
Last month, we rolled out our new mobile-friendly client portal. As we have been going through it with each client, we often see a dramatic moment as they realize that all of their accounts are now linked and they now have the ability to address their questions quickly and easily.