Estimating Investment Portfolio Returns and Values
Evergreen Small Business
by Stephen Nelson CPA
3w ago
Over the last few months, I’ve encountered investors, advisors and even some financial writers struggling to make or suggest good estimates of future investment portfolio returns. No easy answer exists. But these inputs matter for planning. And so maybe predictably, people fall into the habit of just extrapolating the past. Maybe assuming they, their clients or readers will enjoy the historical average return on stocks or on a balanced portfolio. Starting with the historical average? That’s probably an okay place to begin. But I’m going to argue you and I want to make several adjustments to av ..read more
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Monte Carlo Safe Withdrawal Rates for Low Expected Returns
Evergreen Small Business
by Stephen Nelson CPA
2M ago
I read Antti Ilmanen’s book recently, “Investing Amid Low Expected Returns.” Ilmanen, like many other observers, expects low real returns from stocks, bonds and many other assets going forward. Those low returns raise interesting questions. But one that matters a lot to retirees? How much can you safely draw if, going forward, stocks, bonds and other assets deliver a real return roughly half their historical average. So maybe for stocks something like 3 or 3.5 percent rather than 7 percent. The Problem with Historical Data A great question. But a question hard to answer. And for a simple reaso ..read more
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BOI reports and Your Small Business
Evergreen Small Business
by Stephen Nelson CPA
3M ago
You’ll soon need to file a Beneficial Ownership Information report, or BOI report, about your small business corporation or LLC with the U.S. Treasury’s Financial Crimes Enforcement Network, also known as FinCEN. This new bit of red tape stems from Congress’s concern about money laundering and other financial crimes. And it’ll cause some small business entrepreneurs and investors to go nuts. Essentially a BOI report identifies the individuals who own 25 percent or larger chunks of the corporation or LLC and then also individuals who have substantial control (like corporate officers and directo ..read more
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Monte Carlo Simulations Show How Bonds Dampen Investment Risk
Evergreen Small Business
by Stephen Nelson CPA
3M ago
Figuring out how much bonds dampen investment risk? Sometimes tricky. You hear people offer bromides. Like “bonds provide ballast.” Or “bonds smooth returns.” But those truisms don’t really help you or me think objectively. So this idea: Try plotting investment outcomes in a line chart that compares a portfolio that holds 100% stocks… to a portfolio that holds a balance of stocks and bonds. Say 70% stocks and 30% bonds. You can then visually see if and how much difference bonds make. If you’re interested, I’ve got a free, downloadable Microsoft Excel spreadsheet that lets you this. But let me ..read more
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Wealth Building Insights from Latest Federal Reserve Study
Evergreen Small Business
by Stephen Nelson CPA
5M ago
The Federal Reserve’s newest Survey of Consumer Finances provides at least a couple of big, actionable, wealth building insights. Ironically, much (most?) of the news coverage of the survey misses or ignores these insights. So, I want to talk about them here. Wealth Building Insight #1: A College Degree A first big insight from the survey: A college degree makes a huge difference to both your and my income and our net worth. I want to quote an actual statement from the survey: …families in which the reference person had a college degree had twice the median income of those with some college b ..read more
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How EV Credits Work
Evergreen Small Business
by Christian Block CPA
6M ago
Do you plan on purchasing a new vehicle within the next ten years?  If the answer is yes, and good chance it is, you want to know how EV credits work. Really, the correct term is “Qualified Plug-In Electric Drive Motor Vehicle Credits,” which is quite a mouthful.  For purposes of this blog post, I’m going to call them EV credits. Admittedly, I have not personally owned an EV or seriously shopped for one. However, electric motor and battery technology is improving rapidly, the charging network is growing, and the incentives are great, if you can make them work. I’m going to discuss ho ..read more
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Why Bonds Matter for Your Portfolio
Evergreen Small Business
by Stephen Nelson CPA
7M ago
A couple of times recently, I’ve encountered people who argue you or I should not invest any part of a portfolio in bonds. Or who argue only a small percentage of a portfolio should go into bonds.  Except if we’re retired. Or close to retirement. But can I challenge that idea? Argue (politely) bonds matter in some cases? And then because it’s pretty obvious to me a number of vocal investors and even investment advisors don’t understand the math? Would it make sense to quantitatively show both how bonds help and hurt? I think so. So let me keep going… The Big Bond Misunderstanding I’m not ..read more
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The Qualified Family-Owned Small Business Deduction
Evergreen Small Business
by Stephen Nelson CPA
9M ago
If you own or invested in a Washington state small business, you want to know about the qualified family-owned small business deduction. And here’s why: Washington state now levies a seven-percent capital gains tax on (1) the net long-term capital gains residents realize and (2) the Washington-state-y net long-term capital gains that nonresidents realize. But if you’re a small business owner or entrepreneur? You can probably avoid the capital gains tax on the sale of a small business.  Because the law includes a qualified family-owned small business deduction. A warning though: Washington ..read more
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Vacation Home Rental Tax Traps
Evergreen Small Business
by Stephen Nelson CPA
9M ago
You want to learn the vacation home rental tax rules if you rent, own or are considering renting or owning a second home. Here’s why: Vacation home rentals present some tax traps for unwary owners. Some big ones. But learn where the traps are? And how they hurt you? You can limit the damage. In same cases, you can even avoid getting blindsided or beat up. This article reviews the rules. The General Vacation Home Rental Tax Rule: Proportional Allocations A chunk of tax law called Section 280A describes the basic rule regarding accounting for vacation homes. You need to calculate the percen ..read more
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Washington State Houses of Worship All Qualify for Employee Retention Credits
Evergreen Small Business
by Stephen Nelson CPA
10M ago
Did your Washington state church, mosque, synagogue or temple suspend services due to Governor Inslee’s “Stay Home Stay Healthy” proclamation? I have some good news for you. Your faith community almost surely qualifies for employee retention credits. Big ones. And that’s even if you’re a small group. Why Houses of Worship All Qualify Employers qualify for employee retention credits in a variety of ways. But one way? When a government order either fully or partially suspends operations. So what that means? Well, you qualify. Probably. The March 23, 2020 proclamation from the Washington State Go ..read more
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