Contains the notes on the Estate Planning study book material for the CFP Board Exam. Topics cover the many ways to effectively and efficiently transfer wealth regarding probate and around the gift and estate taxes.
Wise Words on Risk Management
The art of long-term investing is about surviving the short run. It’s risk management 101.
This is a friendly reminder that every investment brings the possibility of gain or loss. But when the market’s rising, and everything is great, it’s easy to become complacent and focus less on the downside.
Every investment has a downside, even if you can’t see it. Random things happen. Being wrong is possible. Markets are always changing, and with it, the riskiness of your portfolio.
Prudent risk management starts with the obvious question: what can go wrong? What’s the downside? Now is a good time as any to reacquaint yourself with it.
Because when the market’s rising, and things are going well, it’s the perfect time to test the survivability of your portfolio and make any needed adjustments. Risk management only works if you prepare in advance.
Don’t just take it from me: Continue Reading…
Retirement Planning Study Guide
Contains the notes on the Retirement Planning study book material for the CFP Board Exam. It covers the numerous qualified and non-qualified retirement plan options and additional employee benefits.
The Notes
B. H. Liddell Hart: Why We Fail to Learn from History
B.H. Lidell Hart spent a lifetime writing about the history of military strategy and war. He summarized the many lessons in his writings in a little book called Why Don’t We Learn from History?.
The book is meant as a summary of the history of warfare, but it’s much more than that. It’s easily translatable to lessons on life, business, and investing.
Only Hart presents it with an inverted view of the repeated mistakes throughout history deeply rooted in human nature.
The book is filled with a lot of lessons and great quotes. So I pulled a few favorites out and added my two cents, as it relates to investing, below each: Continue Reading…
Income Tax Planning Study Guide
Contains the notes on the Investment Planning study book material for the CFP Board Exam. It wades through the absurd complexity of the U.S. tax code as it relates to individuals and entities.
The Notes
Bernard Baruch’s Biggest Mistake
Bernard Baruch lived a dual financial life early in his career. He remained cautious and ever-watchful over his client’s money but that conservative nature ended where his own portfolio began.
Baruch tended to overtrade. He also ran a margin account and never left money in reserve. In other words, he liked to bet it all. But since he had little capital, he always put up the smallest margin possible.
In those days, margin accounts allowed anywhere from 10% to 20% margin. So Baruch could buy a stock using his own money to cover as little as 10% of a stock’s price and borrow the other 90%. Which is exactly what he did. Except, having no money in reserve meant a tiny change in price would quickly wipe him out. And so it went.
Anytime Baruch came across a stock or bond he felt sure of, he bet everything he had. Almost like clockwork, the market fluctuated in the wrong direction, and he was broke again. It didn’t help that most of his ideas came from gossip and tips. This process repeated numerous times before he finally realized he needed a little bit in reserve in case the market moved against him.
His big turning point, however, came in the spring of 1897. It was the first time Baruch changed his investment approach. He set his eyes on American Sugar Refining. He could afford to buy shares but before doing so he actually studied the company. Continue Reading…
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