Author - Mark Hume

Our final installment of Know What You Own is a perfect illustration that you cannot make assumptions based on the title of a fund.

You can’t find a less expense or more simplistic equity fund than an S&P 500 index fund.  The two tickers above, SPY & VOO do just that:  Mimic the S&P 500 index.

That same newsletter from Part 1 just published another article.  This one was on the real estate market. 

And while it was not as misleading as the Nasdaq vs tech fund issue, it did completely gloss over the largest sectors of this asset class.

We recently received a free trial for a Substack newsletter on finance.  I was browsing a recent post and a headline caught my eye: “How do I find a lower cost alternative to Nasdaq ETF QQQ?”

The proposal:  Deposit a dollar into your 16yo child’s Roth IRA for every dollar they earn at their first job up to $6,000.  Do this through the year they graduate college.

A question: How much tax-free money does this provide them at age 70 assuming 8% annualized returns?

The answer:  $2.3M

Helping our clients implement “tax-smart” strategies is where I believe we provide a substantial amount of value. Anyone who is a DIY investor can open a Vanguard account and fund an S&P 500 Index Fund on a regular basis. Many of those that do this think they have just equaled the work of a financial advisor and saved themselves a lot of money in fees.

Most of the rhetoric that you hear in financial media is typically melodramatic. So, when there is an economic crisis caused by a health crisis you can expect it to be even worse. And it is.

After 10 years of underperformance, gold is back near its all-time high achieved in 2011. Gold is a unique asset in the public investing world. In the past, it was tied to currency. Some investors still consider it a store of value and a place to put their money during times of uncertainty.

The SECURE Act has taken away the ability to stretch an inherited IRA out over someone’s lifetime. What happens when you lose your flexibility?

In the case of inheriting a Traditional IRA, you are required to concentrate your tax liability. The new law requires you to distribute all assets from the inherited account within 10 years.

Tax-Loss Harvesting is like the magician pulling the rabbit out of the empty hat.  That rabbit you didn’t see comes as a reduction in taxable income.  And you keep your investment strategy intact if you have a similar alternative to rotate into.

I want to own the casino.

I know that against the best players I will win about 50.5% of all hands and against the masses I will win 52% of the time. If I’m playing every single hand in the building 24/7/365, I’m going to make a lot of money. I want to own the casino.