A MYGA is a Multi-Year Guarantee Annuity. It is also called a Fixed-Rate Annuity and behaves somewhat like a CD. There is a fixed rate of return for a set term, typically 3-10 years. At the end of the term, you can walk away with your money or reinvest it into another annuity or something else. Today’s MYGA rates are in the mid-5% range, the best they have been in a decade. Annuities are one of the most confusing insurance products for consumers because there are so many varieties. In addition to MYGAs, there are Variable Annuities, Fixed Index Annuities, and Single Premium Immediate Annuities ..read more

This month marks 20 years as a financial advisor for me. A lot has changed in that time. When I started, we had to hand-write trade tickets, on blue paper for Buy and salmon for Sell, and fax them to the back office. We would photocopy account applications for our file, fax it in to our custodian, and then mail the original signature. But a lot has not changed. Markets are still volatile. Timing doesn’t work. Investors still have biases. And good habits build wealth over time. I am happy to celebrate this milestone, and incredibly grateful for the clients who have trusted me with their finance ..read more

The chart below highlights the perils of performance chasing versus the benefits of diversification. This chart from JP Morgan shows the annual performance of major investment categories from 2008 through 2023. It includes US Stocks (large and small), Developed Markets, Emerging Markets, Fixed Income, Cash, Real Estate, and even Commodities. The results are all over the place. What is often the best investment in one year turns out to be the worst investment the next year. Consider: Commodities were the best category in 2022 and the worst in 2023. Real Estate Investment Trusts (REITs) went fr ..read more

Each year, I rethink our portfolio allocations and today I am sharing our Investment Themes for 2024. We don’t time the market, nor do we try to predict how the market will perform. I think this is not only impossible, but also likely to cause more harm than good. We remain globally diversified, use index funds, and maintain a buy and hold philosophy. We have a target asset allocation for each investor and rebalance positions when they drift from our targets. But that doesn’t mean we are completely passive. No, each year we slightly adjust our portfolio models in two ways. First, we look at cu ..read more

With the 30 year mortgage rate at 7.50% today, it’s time we revisit home mortgage strategies. Loving your home is an undeniable part of the Good Life. In the past couple of months, we’ve had several clients who have moved or looked at buying a second home. Understandably, the 7.5% mortgage rate is giving many people anxiety about this decision. And that is exactly what the Federal Reserve wants. To slow housing inflation, they needed to drive out buyers and reduce speculation to cool an overheated market. With home affordability problems in many areas, it may be a good thing to slow the rapidl ..read more

Since we moved to Paris in February, we’ve become much more familiar with taxes living abroad. This may be of interest to anyone who is thinking of living or retiring to another country. I will share the situation for me as a US citizen living in France, but the basics will apply to most countries. If you thought US taxes were complex, things get really difficult when you add in a foreign tax system and then have to figure out how they will interact together. Given this complexity, this article should be considered just a primer on basic terms and not used as individual tax advice. You need a ..read more

Yields have risen on bonds this year and for many investors it may now make sense to increase their bond exposure. Eleven months ago, I wrote how bond yields had actually crossed above the expected return for stocks. At that time, we could find A-rated bonds with a 6 percent yield. And that compared favorably to the 5.7% expected return of stocks, as projected by Vanguard over the subsequent 10-years ahead. This past month, we bought some new 10-year government agency bonds with a 7% yield. Now it looks even better to be adding bonds and maybe even reducing some of your stock market exposure ..read more

Many investors are unclear about exactly what is the estate tax in the United States. Thankfully, very few people currently have exposure to the estate tax. However, for wealthy families, the estate tax can be significant. Even if you are not currently subject to the estate tax, you might be in the future, and you need to read this article. Here’s what you need to know about the estate tax and key planning strategies to reduce a future estate tax liability. Estate Tax in 2023 Today, for 2023, the estate tax exemption is $12,920,000 per person. This is the amount that you can pass on to other p ..read more

Twice a year, Standard and Poors updates their comparison of Index Funds vs Mutual Funds, called SPIVA (S&P Index versus Active report). I have written about SPIVA a number of times, and it is worth repeating, because the data is remarkably consistent. The majority of actively managed funds do worse than a benchmark or index. The newest report was published today, covering all US Funds through June 30, 2023. When we look at long-term returns, here are the percentage of active mutual funds that performed worse than their benchmark: Category 5-yr 10-yr 15-yr 20-yr All Domestic Stock Fun ..read more

With all the noise in today’s markets, it is easy to miss the big picture about growth. 2022 and 2023 have been two of the strangest years in a generation for investors. As a result, it is easy to feel uncertain about investing right now. And that uncertainty often leads investors to make bad choices. So, we are going to step back and look at the 30,000 foot view of what really matters for investors. In 2022, we saw inflation rise to 9% and the Federal Reserve start the process of slowing the economy. As the Fed raised interest rates, stocks dropped 20%, briefly entering Bear Market territory ..read more