FINANCIaL
FIELd NOTES
Direct Indexing Explained
While most investors focus on their gross return (the number on your statement or custodial website), the most important number is your net after-tax return. If two investments earn the same rate of return but one is taxed at a higher rate, we know who is coming out ahead. For the right client, direct indexing can significantly improve after-tax returns.
Typically, when you buy an index fund, you own one investment, and inside it are several hundred companies. Direct indexing gives you those same companies, except you own the shares themselves, weighted so the whole thing behaves like the index. On your statement, you will see each stock you own (i.e Apple, McDonalds, etc)…
Some Scares Turn Into Market Crashes and Others Don't
As the stock market stays near all-time highs, it’s normal to feel like a market downturn is around the corner. There are always new fears, some warranted and others not so much.
Right now, it’s a mixture of unsustainable earnings, scary AI scenarios, and unsustainable government debt. Staying up to date on all those concerns can help you understand what investors are thinking, but it doesn’t tell you what to do about it (hold steady or sell) or when to do it (now or later)…
The Importance of “Trusted Contacts” On Your Financial Accounts
Most estate planning assumes you are either completely coherent and in charge of your money, or someone else has legally taken over through a power of attorney. However, real life is messier than that. There is usually a long stretch in between, sometimes years, where someone is still handling everything themselves and mostly doing fine. Nothing has been diagnosed, and by every legal measure that person is still perfectly in charge of their own affairs…
Where Do Bonds Go From Here
Nobody is excited to own bonds right now, and for good reason. Bonds are supposed to be the boring part of the portfolio and instead they have delivered the worst stretch in the history of the asset class. In fact, we were recently updating Investment Policy Statements for clients and had to put “N/A” for the “length of recovery” in the bond market benchmark because we are still technically in a drawdown from the 2022 selloff…
How Being Present Increases Happiness in Retirement
Over the years, I’ve reshared this blog post with special moments when I’ve noticed people being especially present. There was the couple, surrounded by people on their phones, staring at Rory during The Open Championship. There was David Beckham, watching on as Messi took the field, after years of work putting together the MLS club Inter Miami…
Is a Record $1.2 Trillion in Credit Card Debt a Conern?
Americans now owe a record $1.26 trillion on their credit cards. You may have probably seen some version of that headline on the news. It sounds alarming, and it is meant to. A number that big, sitting all by itself, does exactly what it was built to do. It makes you a little nervous about the state of the world and a little more likely to click.
As I’ve written before, most of the figures cited in the news are a single stand-alone number. “The Dow Sheds 500 points, ”Over 1,000 violent crimes reported in Northern Virginia,” and “US Household Credit Card Debt Hits $1.2 Trillion“ all lack perspective. If the Dow Sheds 500 points, what is the total Dow? If there were 1,000 violent crimes, is that crime figure higher or lower than last year? If credit card debt hit $1.2 trillion, what percent of household net worth is it?