A Dynasty Trust is a long-term trust formed to transfer wealth from one generation to another without incurring estate and gift taxes. The Dynasty Trust’s key characteristic is its duration. Assuming you take advantage of the laws of a state that has repealed the Rule Against Perpetuities, the principal will never be subject to estate or inheritances taxes.
Most people would argue that living in a digital world, with instant access to an endless stream of information has made us smarter and more empowered than past generations. Investors believe that it has “leveled the playing field”, enabling them to make investment decisions based on the same information once only available to the investment professionals.
When we let the endowment effect influence our investment decisions, the result is often a portfolio of assets that have outlived their usefulness or are no longer appropriate for our financial situation. This is especially true as people near retirement and continue to hold on to positions they’ve owned for extended periods of time.
Increased accessibility to higher education. Evolving technological and medical sciences. Growing private companies. Greater entrepreneurial opportunities. Robust capital markets...and let’s face it, many local companies such as Facebook, Tesla, Apple, Visa, Genentech, LinkedIn, Google, Gilead and Twitter have enriched many of their employees.
What happens when the disposition effect erodes your investment plan? When you always sell your winners but hold on to your losers, you end up with a basket of, well, losing investments. Like many habits, understanding the how’s and why’s of the disposition effect can help you lessen its impact on your financial plan.
What happens when your portfolio returns 2 percent a year instead of 8 percent? Such a dramatic difference in return assumptions can leave you with a shortfall right at a time when you may need the resources most, such as retirement. How should you invest in a low-return environment? What changes you should make in your investment portfolio or financial plan?
The reasons donors give to charities are as diverse as the donors themselves. In a study by the National Philanthropic Trust, it was found that 62% of high net worth donors cite “giving back to the community” as their chief motivation for giving. There are also many tax based reasons for charitable giving. In order to claim a deduction...
Managing your finances can be a challenging task. To help you, there are a number of free online tools that can offer guidance and insight. Explore the tools below to get assistance in organizing your financial life.
Even as the equity market approaches new highs, retirement savers, still shell-shocked from the extreme volatility of recent years, are slow to wade back into equities. Smaller investors tend to ignore the history that shows that the market eventually rewards those who can withstand the fluctuations and stay the course through the various market cycles.
Every generation has different assumptions about how the world works. But could these differing views affect how each generation plans for retirement? These two topics may seem disjointed, but generational experts think they could be connected. Tamara Erickson, author of “Retire Retirement: Career Strategies for the Boomer Generation,”...
In the past, the combination of an individual retirement account and a trust were like dynamite. In the hands of well trained professional, dynamite literally can be used to move a mountain. In the wrong hands, the potential for a large-scale disaster is almost a certainty. In 2005, the Internal Revenue Service issued Private Letter Ruling 200537044. A private letter ruling, or PLR, is a written statement issued to...
Life can be expensive; add in major costs like student loans, medical bills, and pursuing your dreams, and it can all seem overwhelming. Many people across the country, and around the world, are getting the financial assistance they need—not through awkward money conversations with family and friends, but through crowdfunding.
There are many different reasons to give to charity: be it for tax benefits, leaving a legacy or supporting a cause you care about. Whatever your motivation may be, it’s important to think through your philanthropic and financial goals to develop a giving strategy that works for you. Here are five steps to help you set up your giving strategy...
As anyone would have expected, the extraordinary convergence of extreme stock market volatility, low interest rates, declining home values, diminished retirement savings accounts, and chronic economic sluggishness has taken a severe toll on the American psyche. For many investors, it may have forever altered the way in which risk is perceived and managed.
A lot goes into a wedding; but a lot more goes into a marriage. When planning your big day, don’t forget to take time to talk with your partner about the realities of life that come after the “I do’s”—especially your finances. The truth is that money-related issues are often the cause of disagreement (and ultimately, arguments) between married couples.
If you’ve ever seen it, it’s one of those things you’ll never forget – the mass migration of hundreds of thousands of wildebeest moving across the plains of Africa in search of a fresh feeding area. It’s magnificent to watch. Of course, we know why animals herd together – it’s because there’s safety in numbers. If a wildebeest wanders off by itself, it is more likely to be taken by a predator.
Television can provide all types of entertainment, but if you watch closely, they can also teach you a number of valuable lessons—including how to save and spend wisely. Consider the financial lessons explored in the following five shows:
Amidst the more obvious lingering effects of a sluggish economy, such as slow job growth, decreasing incomes, low interest rates and shaky consumer confidence, there lurks a more insidious threat which has largely been ignored. Inflation or the prospect of its resurgence has somehow remained under the radar; perhaps because the official measure, the Consumer Price Index (CPI), is still below historical averages, or perhaps because the government has done such a good job in convincing the public that inflation is not a real threat at the moment.
Take 225 million monkeys, 225 million bananas and 225 million coins—add some basic rules — and you end up with one of the most noted investing theories of all time. It works like this: Each day, the monkeys flip the coins once, calling heads or tails. If the monkeys call it correctly, they win a banana from those who called wrong. The losers drop out, and the next day, all of the previous day’s banana winnings are put on the line.
Although many investors are familiar and comfortable with traditional valuation parameters such as earnings per share (EPS) and return on equity (ROE), these tools may only provide a partially accurate picture of a company’s value. Investors may want to familiarize themselves with another measurement called “incremental return on capital.”
Living a comfortable retirement means planning for how much you will need now, when you have the ability to put away the money to do so. What is your picture perfect retirement? Are you…
• Living on a boat, seeing the world one coast at a time… • Travelling, seeing all of those places you have imagined over the years… • Spending time at home with your grandchildren, enjoying friends…. • Starting a business or investing more time in a lifelong hobby.
Dream road is littered with great ideas that were going to solve everything. Many proposals were so sure to be successful that money fell out of the sky to fund them. In sports, talent at times can be so dominant that any opposition is a futile. Remember when the New England Patriots were so dominant that the New York Giants had no chance in the SuperBowl?
The world around us has many risks that we cannot control, so we plan accordingly. Essentially, you give yourself some room for error — or a margin of safety in the event something unexpected occurs or your assessment is overly optimistic. In the investment management process, there’s also a margin of safety. While the term may have many different connotations in finance, the most common usage occurs in security analysis, where it refers to the amount by which a security is priced (or “available for purchase”) below its intrinsic value.
Why do investors fall in and out of love with stocks at exactly the wrong time? Strong recent performance (“momentum”), fleeting fads and promises of huge growth potential are irresistibly compelling to inexperienced investors as they push their valuations up to unsustainable levels.
The importance of saving for retirement cannot be overstated. In addition, no matter how much money you are setting aside for retirement, you may also have credit card debt. Even those with expansive investment accounts and retirement funds able to support them for years, are still paying costly credit card debt. Does this make sense? Is there a way to break the debt cycle that has you putting away less than you could be and paying more than you need to?
Your long-term goals and medical condition will dramatically impact the true cost of retirement. In the past, it was common for people to enter retirement facilities such as nursing homes when they were too old to care for themselves or their home. Today, most people intend to stay in their home as long as possible but are willing to consider alternative living arrangements such as retirement communities and assisted living facilities to provide them with sense of community and assistance they need.
In 1960, American corporate executives earned approximately 12 times the wage of an average employee. In 1980, the multiple had grown to 42 times the average employee. Today, according to Mercer Human Resource Consulting, executive salaries are over 550 times an average salary.
The bear stock market of 1980-1982 (Dow 776) ended in the fall of 1982. A short time before, BusinessWeek issued a cover story proclaiming: “The Death of Equities”. That’s how America felt then, because risk-taking had become so out of favor. Investment expectations had become so low. A short time later, the greatest bull market in history began!
Getting off on the right foot is nowhere more important than in retirement. This is true in general, but especially about portfolio returns. The better the portfolio returns in the early years of retirement, the better the chance of having the picture book retirement scenario we all strive to create. If this is so, why do so many portfolio illustrations use an average rate of return of 8%?
“Almost” is a word full of frustration. It just sticks it to you. No reasonably sensible person engages in any activity to almost finish. Whether it is a marathon, a tree house, or trying to think of the perfect lyrics for the last line of your song, you have to finish the deal. As investors, we don’t enter the markets to purposefully earn below average returns. Nevertheless, many fail to achieve the desired returns they first had in mind.