If you’ve made it through our first two posts on this topic, you’ve learned: ALL investing decisions are “active.” However, the active mutual fund industry doesn’t get the best investment returns for individual investors because it wasn’t designed for that. As David Swensen, the prior chief investment officer at Yale, said: “ The mutual fund industry is not an investment management industry. It’s a marketing industry.”[1] In this post, we’ll discuss: What do we believe is the best way to build wealth? What does our team do differently to pursue that? #1 We believe (and history’s on our sid ..read more

“The mutual fund industry is not an investment management industry. It’s a marketing industry.” – David Swensen (fmr. CIO of Yale & asset allocation pioneer) Why hasn’t active management – and we mean specifically in mutual funds – worked for individual investors? We think there’s actually a very simple answer to this question:  It wasn’t designed to work for individual investors. Because if the active fund industry were designed to give investors good results, we think the industry would look much, much different than it does. But it doesn’t – as the quote above from a very influen ..read more

In recent years, there’s been a considerable debate about which is better, active or passive investing. Most people narrowly define them as the following: Active: Someone, usually a mutual fund manager, picks and chooses investments for you, versus Passive: You just own an existing group of investments (that someone has already picked out) These are fine delineations IF you’ve already decided on an area to invest in. For example, let’s say you want to buy mid and large-sized U.S. companies. The typical choice using the definitions above is to either: Active: Select a mutual fund manager w ..read more

Congratulations! You’ve finally reached the point where you earn a few more dollars than you spend each month. What should you do with that extra cash? Where should it go? Those are the questions we’ll help answer. Why does it matter where you save? You work hard for your money—why wouldn’t you expect your money to work hard for you? That matters to us, and “where to save” is one of the most common questions we help clients answer in our meetings. Being smart about where you save means YOU keep more of those dollars (versus paying tax). You also set yourself up for future success, putting the ..read more

Budgeting Capital Gains for Tax Efficiency Brokerage accounts such as individual, joint, corporate, or trust accounts are often subject to annual taxes because of both income (such as dividends or interest) and capital gains (selling something that appreciated in value). For this post, we’re going to specifically discuss Capital Gains (which occur when selling an asset that’s gone up in value). Note:  Tax-deferred accounts (IRAs, 401ks, 457s, Charitable) do not usually pay tax on income or gains, rather they may owe tax based on annual withdrawals.  First, a quick story about taxes ..read more

The Value of Financial Planning  Congratulations on taking the first step toward securing your financial future! If you’re starting to create a financial plan, you’re already ahead of the curve. Did you know that only one in every three adults in their 50s makes it as far as you? Those with a well-thought-out plan accumulate three times as much wealth as those without one.[1] In this article, we’ll explore the significant benefits of financial planning.   Get the most value out of your financial plan with an advisor 1. Behavioral Coaching Investors often make decisions based on emot ..read more

Our own Chris Johnson recently presented a “Taxes in Retirement” seminar at the Middleton Library. We thought sharing a few of the common questions would be helpful. How do I decide whether to save to my traditional or Roth 401k? It depends! Our tax system is progressive, meaning the last dollar you earn in the year will likely have a higher tax rate than the first. Generally, you want to pay taxes now when you’re in a low tax bracket and pay taxes later when you’re in a high tax bracket. That’s how it relates to the type of account. You pay taxes now on Roth contributions while you pay taxe ..read more

Going to college is exciting! You get to live on your own for the first time, meet new friends, and explore new interests. But, for many, college is also a source of anxiety. Aside from having to develop a new routine in a new area, many students worry about how to pay for college. Getting scholarships can relieve some of that worry. This article outlines how to be a competitive scholarship applicant and it all starts sooner than you might think- freshman year of high school. Things to think about as you enter high school: Join clubs! Aside from fostering friendships and looking good on a res ..read more

Our investment philosophy at JSA is to identify and own “excellence” and avoid “mediocrity.” We construct portfolios of 20-30 reasonably priced stocks of businesses that are responsible, well-managed, competitively advantaged, participate in attractive industries, and don’t take on too much debt. We are in this pursuit together. That’s an important piece of this puzzle. We are in the same boat and will endure losses and enjoy gains right alongside you. We spend a lot of time trying to identify and own “excellence” and avoid all else. That means we’re looking for the rightmost section of the “b ..read more

Welcome to the Financial Life Series! These articles are meant to help every reader make better financial decisions. They are authored by our team, and each person drew from their own experiences to share. We hope you find it helpful and continue the conversation with the people you care about. The post Financial Life Series appeared first on Jacobson & Schmitt Advisors ..read more