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The secret to MAXIMIZING your retirement income.

Two of the most common questions I get when it comes to financial planning is…

When can I retire, and how much income will I have in retirement?

The honest answer to those questions is…it depends.

There is really two components to figuring out the answers to these questions.

1️⃣How much money will you have?

2️⃣How much can you safely and comfortably take out?

These two principals fit in with the investing strategy at my firm.

1️⃣Lose less than everyone else when the market stinks.

2️⃣Do a little better than everyone else when the market is good.

So, what are the benefits of maximizing your retirement income?

  • Have more money in retirement 💰
  • Retire earlier 💪
  • Have more confidence and peace of mind when you retire 🧘
  • Leave more behind to those you care about 💸

Watch here to learn how to create the most income possible in retirement.

👇👇👇👇👇👇👇👇👇👇

5 ways and investment manager can add to your bottom line.

When thinking about how a fiduciary can help you in your life a lot of people think it is about money.

While we do have a rule here at my firm, namely, our clients do better with us than without us, at the end of the day every client tells me it is the peace of mind that makes the biggest difference in their life.

One client said “if the money ain’t right, nothing is right”.

Fiduciary financial planners are actually pretty rare.  Here in the Sammamish area (Issaquah, Bellevue, North Bend, Snoqualmie, Maple Valley) there are surprisingly few.

Once you find someone you can trust with your financial life (in my process, we use DPT, Diagnose where you are, Plan for where you want to be, Treat your finances with the right tools) the final step is to let that financial planner get you invested the right way.

This investment management is like the medicine a doctor prescribes you you are sick.  If you don’t take the medicine, you don’t get better.

For example.  When a client says “I would like passive income when I retire” I may prescribe an investment that pays a 9% dividend.  This passive income then solves my client’s pain point of needing to replace their earned income.

Note, I do NOT consider buying a “well diversified basket of mutual funds” investment management.  I tell every client, if that is what you want, I will help you set it up on your own, don’t pay someone to do that.

Anyhow.  Here is 5 WAYS AN INVESTMENT MANAGER CAN ADD TO YOUR BOTTOM LINE.

!!!High income earners with large stock grants reduce your #taxes!!!

ATTN: High income earners with large stock grants.

One strategy to reduce your overall taxes ⏬ and avoid concentration risk is tax loss harvesting.

I did a portfolio review with a client who works at a local tech company who wanted help balancing 🧘‍♂️ his portfolio.

He was in the following position:

1️⃣ Annual income: $250,000
2️⃣ Company stock (from ESPP and grants): $700,000
3️⃣ A “junk drawer” of old 401ks, IRAs: $700,000
4️⃣ Short and long term realized capital gains.

When I looked at his portfolio I noticed he had short term capital losses and long term capital losses in his portfolio.

Unfortunately a lot of his company stock was granted near the company’s all time highs 🎢 . His company then reported less than enthusiastic earnings and took a 10% correction.

By using tax loss harvesting of his unrealized short and long term capital gains we were able to save him $7,000 in income tax and $13,000 in capital gains for the year.

While this is a common practice for high net worth individuals it can apply to anyone to help avoid paying unnecessary taxes 💸

hashtagfinancialadvice hashtagtaxes

How much does a financial advisor cost is the wrong question.

How much is a financial worth is a better question to ask.

No, 9% passive income isn’t “too good to be true…”

Man, when I tell people they can have over 9% passive income with some decent safety, I get my feet held to the fire.

 

I won’t say the words “too good to be true” were thrown around, but they kind of were.

 

I recently was talking with some folks who had their retirement accounts with a big box planner.  They said:

 

“Two grand kids live in California and two grand kids live in Missouri….we gave xxxxxx xxxxx $500,000, and it has turned into $460,000!  We really want to travel but we don’t feel like we can without taking some money out, and now we don’t want to do that!”

 

I built a custom income note (see my email from last week) that generated to many quesitons I thought I would make a quick explainer, check out the YouTube video below 👇to see how this investment works.

 

Market timing is a bad idea, but you can “beat the market.”

If you are 55+ years old and nearing or in #retirement

With the market a blood bath 🔻 🤮 again for this week, I thought it a good time to poke Wall St in the eye by addressing one of the biggest reasons I have seen people lose money.

Unquestionably WORSE: The TIME⌛ AND PEACE OF MIND 😟 people lose.

The reason? TIMING THE MARKET (and why this is always a bad idea.)

The solution: You can actually “beat the market” in 2 distinct ways (mathematical and the feels.).

I have three people currently considering coming aboard my practice.

1️⃣ A great guy managing his own money. “I buy and hold the S&P500, because the market always comes back.” After a little trust was built, he admitted “I currently am in cash, I usually work on gut feeling.”

2️⃣ A couple with a big Wall St firm that said “we’re tired of losing but want to make back some losses before we move.”

3️⃣ A couple who sold their house and turned $500,000 over to a Wall St firm because a friend who “has done very well” gave them a referral…(more on this, which is a timing issue.

Three points on market timing.

1️⃣ It is almost impossible. First you have to be right. Then you have to be right all the time. Just because you successfully buy high, you then have to know when to sell, then when to buy ad infinitum. Consider that, according to Barron’s JUST 7% of professionally managed funds have “beaten the market” in the last decade. These are “experts” who wake up every day, with all the most expensive research and insider knowledge, and they fail 93% of the time.

2️⃣ Its a no win scenario. Let’s say you time it right. “I want to wait till the market comes back”. If you are right and the market rebounds, but then drops (a “bull trap”) you lose everything you just made back. You also lose time. And was it a lot of stress free “fun” waiting for the market to come back? If you are wrong and the market keeps tanking 🔻 how long are you going to wait for it to come back? Consider: The S&P 500 took ❗ 12 YEARS ❗ to “come back” from the peak of the 2002 tech bubble. Do you want to put your plans off 12 years?

3️⃣ Its not worth it. Why would you put your plans, your peace of mind, your time with your family, and your money at risk when you don’t have to? If it were a matter of “sit in cash” and “buy and hold” I get it…maybe there is an argument there. But with #investments that limit or eliminate loss, but can still make double digit returns if the market rebounds available, there is no reason to try and “time the market.”

Below is an example of 2 ways to “beat the market….”

1️⃣  The first way is mathematical.  I was the first DIY investor I know.  I started by buying a single stock (TRMB if you want to know) using paper route money through my great-grandmother when I was 12.  Since then I have day traded, bought and sold options, traded futures, done the “10 stock portfolio”, 60/40, read every blog (I was a Boglehead) and mirrored Warren Buffet.   Then I started managing client’s money using one simple principle.  Reduce unnecessary risk without giving up the reward.  By using these institutionally available investments I started to notice my clients were way outperforming my personally money.  Since I have started doing for myself what I do for my clients I have a far better ROI and lost far less sleep over money.

2️⃣  The REAL way you beat the market is this.

INVEST SO THAT IT DOESN’T MATTER WHAT THE MARKET DOES.

INVEST SO THAT YOUR PEACE OF MIND HAS NOTHING TO DO WITH “THE MARKET COMING BACK”

 

Don’t listen to anyone who says they know what the market will do.

Weird thing of the day to hear from an investment advisor.

I don’t care about money.

I care about the time people are losing as their money slips away.

It’s weeks like this where my “imposters syndrome” goes away and I get motivated to help more people. Conveniently it’s weeks like this where I get the most people asking for help.

I was just talking to a prospective client about his #retirement #financialplan.

He was worried about the market being down for so long. But the other side of the coin is this: DIY investors (and people generally) do NOT like to turn the keys over to someone else when it comes to their money.

“I think I am fine buying and holding the S&P500” he said.

“Cool, the market will probably come back, keep doing that.” I told him.

“Well, how long before it does?” He asked.

“I have no idea, is that why we are having this conversation?” I asked.

As he let his guard down he admitted “yes, I sold all 1.4 million of my retirement assets to cash. I can’t stand losing any more, but I don’t want to miss out if the market recovers.”

This ☝ is why I focus on removing unnecessary risk without giving up the reward. By not doing what Wall St tells me (“tell them to buy and hold, don’t catch a falling knife, trust the institution!”) and actually putting in the work I save my clients the stress of watching their plans, their time, and their peace of mind slip away.

By having investments that both protect from the downside without giving up the upside, my clients can ignore the market and get a full night sleep knowing if the market is down 📉 they are losing less than everyone else and if the recovers 📈 they aren’t going to miss out.

It take REAL DIVERSIFICATION to make sure you retire on time.

Bad news I break to those nearing and in retirement ⛴ all the time.

“You have the illusion of “#diversification“, but unfortunately your investments didn’t protect you the way you thought.”

“But I have a 60/40 stock bond portfolio!”

“But my target date fund was supposed to protect me!”

The worst part is not that people lose money they aren’t expecting to.

The worst part is that they lose time with their family 👨‍👩‍👧‍👦 .

The worst part is they lose peace of mind 😟 .

The worst part is they lose confidence they can retire 💼.

In the video below 👇 I talk about two types of real diversification that I use in my practice to help keep #retirement on track.

1️⃣ Tax Diversification

2️⃣ Asset Class Diversification

There are investments that beat inflation, and a down market.

High #inflation got your #invesments down? If you are near retirement you know this pain well. Even now, some younger investors (who have known nothing but an up-trending market their whole lives 📈 )are starting to realize its not all fun and games.

 

BUY THE FAANG STOCKS AND HODL shouts the millennial! 🎢

MY BOND FUND WAS SUPPOSED TO PROTECT ME shouts the almost-retiree! 🤯

 

There is a way to beat inflation and a schizophrenic market.

 

At its most recent meeting the Fed signaled it expects inflation to persist. In my view the American investor wants the pain of the inflation bubble over so bad it has self medicated with that most powerful of drugs.

 

Hope.

 

After pumping 2-3 trillion into the economy I am surprised that anyone is surprised that inflation will persist. With inflation “only” up 3-4% year over year, people have also forgotten that is +3% over the already +20% from previous years.

 

So really, the self talk of “the market always comes back” should be rephrased “I hope the market always comes back.” Will it? Over a long enough period of time…sure.

 

The question isn’t if the market will come back. The question is, especially for those nearing and in #retirement, how long? Moreover, how does making those retirement plans or distributions feel with a down market also pulling money from that account rather quickly (and ceaselessly).

 

How mcuh confidence do you have that you won’t have to spend less, trade off that trip to see your daughter’s soccer game, or put off that trip with your grand kids to Disney Land (right when they’re the best age for that)?

 

For wealth accumulators and HENRYs (high earners not rich yet) and the investing public generally, how much farther away is that vacation, vacation house, or being able to reduce your hours to spend time with your family?

 

As I tell all my clients “hope is not a #financialplan.” I have stared at an investment account and hoped as hard as anyone has hoped before, and it didn’t turn the market green.

 

So what do we do? All good #financialplans do two things (okay, three things).

 

1️⃣ Grow your #investments when the sun shines 📈

2️⃣ Protect your #investments when it starts to rain 📉

3️⃣ Give you peace of mind that no matter what happens, you’ll be ok.

 

Ironically, its the #inflation and market volatility that actually makes this possible.

 

There are investments that actually get much better when #inflation is up and the markets are a roller coaster (doesn’t matter, up or down, its the volatility that makes them better.)

 

Investments that most off the shelf DIY investors, typical 401ks, and standard Wall St investment firms don’t use (or don’t have access to) have much better terms during these times.

 

This is because those investments use options as a hedge against a down market and a leverage tool with a good market.

 

For instance, I just had a client and we needed to create #passiveincome.

 

I was able to structure an investment that had the following.

 

1️⃣Doesn’t lose a penny unless the S&P500 is down over 40% at the end of 5 years (very little chance of this.)

2️⃣Pays him 8.45% interest on his money.

 

I have another set or clients within 2 years of #retirement.  I put them in an investment that

 

1️⃣Is guaranteed never to lose.

2️⃣Can make up to 10% if the market is good.

 

 

My favorite thing to do in my practice is the unexpected.  Most clients at some point utter “I bet you are like everyone else.”  To be honest, I used to have imposter’s syndrome and quietly agreed with them.

 

By using investments that remove unnecessary risk without giving up the reward it is in times like these that these strategies have really paid off, and I have the happiest clients in the world.

 

Want a better life and the ability to enjoy the important things?

The analogies between what I do and what my physical therapist did for me are crazy.

After 20 years in the Marines I have had 2 back surgeries. I was in chronic pain, acute pain, lie on the ground for days pain.

I tried to work it out myself, saw an off the shelf PT, and finally went to see Dan.

Chronic pain and not having a #financialplan are the same. An underlying unease, a sense that something major can go wrong at any time, and every now and then, debilitating pain.

Worst of all, it sucks the joy out of almost everything. When you don’t know if you can bend over to tie your shoes, and the one time a day your 5 year old daughter (now 10) wants a hug is when you get to carry her to bed, the lack of confidence (and fear of yelping like a whipped dog) rob you of that peace of mind.

Just like doing PT from the internet, or getting a strip mall #financialadvisor, basic PT or financial advice might be ok to help you along, but you don’t know what you don’t know.

When I finally got a diagnosis from a professional (I told my physical therapist what I thought was wrong, he watched what I was doing…chuckled, and set me on the right path) I realized that what I thought I knew, and the actual truth were two different things.

Once he diagnosed me and gave me a treatment plan, the chronic pain is gone, and most importantly, I don’t have the worry I had, and I have confidence that I can actually go on living a normal life.

To bring the analogy full circle, and this happens often in my #financialplanning practice….I actually had to do what was recommended.

For a while I took the information, tried to do it on my own, modify it, and I got the results I had always had. When I did what Dan told me to do, things got better. Now I can enjoy the things that matter.

The same thing happens in my practice. Potential clients often have a junk drawer of investments, follow some internet advice, or have their banker run their accounts. Once I diagnose their financial plan (or all too often, create one) and go through some treatment recommendations, the truth of investing comes out.

I believe this is what my clients want and deserve. Nothing complicated, nothing fancy. People just want a better life. I don’t know if Dan knows the impact he has on people, and a lot of times I have imposters syndrome and sell myself short in my own head. But when a client calls me and thanks me because they got to enjoy something that has nothing to do with money, it is a good reminder to keep on keepin’ on helping people.