Single Point of View

Single Point of View is our way to occasionally share planning ideas relating to personal finance. Our goal is to pass along concepts that you may not be exposed to on a daily basis.

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Stock-picking Mutual Funds die hard… for now

The ability of traditional Mutual Fund stock-pickers to deliver out-performance has been decaying for 2 decades. A recent WSJ editorial by renowned finance scholar Burton Malkiel sites the most recent stats published by Standard-&-Poor's and they are absolutely ugly. •“More than 90% of active US managers under-performed their benchmark indexes over a 15-year period.”  •“Over 85% of small-cap managers under-performed the S&P Small-Cap Index.” •“Since 2001, 89% of actively managed International funds had inferior performance. “ •“Even in less efficient Emerging markets, index funds outperformed 90% of active funds” The total value of US public stocks is worth 25 Trillion dollars, and though active stock-picking funds still dominate with market share at around 67%, over the last 5 years their share has declined by 12%.  In terms of new money flows, the Market-Tracking index products have been taking 75-80% of the available dollars. This is partly a reflection of younger investors’...
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Making Your Estimated Tax Payments Online

With tomorrow being June 15th, we wanted to update this post from last year as a reminder to pay your quarterly tax estimates.  Below are the links to simplify things and make these payments online. For many of us who have income that is not subject to tax withholding (for example: earnings from self-employment, interest, dividends, rents, alimony, etc.) April 15th, June 15th, September 15th and January 15th represent a day of writing checks to the IRS. These are known as estimated tax payments.  If you've ever found yourself scrambling to find your vouchers, or, the address to mail them to on the due date there is a simpler way.   Did you know you could make these payments to the IRS using their "Direct Pay" service? For Federal payment, use this link for the IRS site: http://www.irs.gov/Payments/Direct-Pay   If you are in MA, you can also make your estimated state...
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Who is an Aging Life Care Professional, and What Do They Do?

As financial planners, we are often tasked with answering the question of how our clients will fund their advanced care needs later in life.  However, who is helping you make the choices on how, and by whom, that care is provided?  In this Guest Blog Post, Kate Granigan (CEO) & Anna Pollard (Dir of Clinical Services) of Life Care Advocates outline to us what an Aging Life Care Professional is, and the role they play in helping you plan. Who is an Aging Life Care Professional, and What Do They Do?  By: Kate Granigan & Anna Pollard May is Aging Life Care Professionals (ALCP) Month!  Who, you may ask, is an Aging Life Care Professional, and what do they do? An ALCP is a highly experienced health care professional, usually a social worker or nurse, but also includes mental health professionals, physical therapists, occupational therapists, and others.  Many have had experience...
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Markets are not always efficient, nor right

Of the 46 previous declines of -10% or more in the stock market (S&P500), a little more than a third (19) became bear markets, defined as a drop of at least -20%.  Most of the -10% pull-backs – as sharp and painful as they are - turned out to be just false signals and momentary detours as the market resumed its upward march within months.  The Market at times becomes divorced from fundamentals, and over-obsessed with ‘headline’ risk.  Over-interpreting the ‘signal’ from these pullbacks is almost always a losing proposition.  Discipline in the face of noise is essential to long term out-performance. I have also observed that every now and then different asset markets go through bouts of over-pessimism or over-optimism. You may hear that a certain asset class (e.g. high-yield bonds) or sector (e.g. pharma) is ‘trading on sentiment’ rather than fundamentals; or that its price reflects an implausibly negative...
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Big Planning Opportunity with Health Savings Accounts

In short: fund it and invest it, don't use it.   Potentially, the best way to use your Health Savings Account (HSA) is to maximize the funding of it, but, instead of using the funds year-by-year to cover your out-of-pocket health care expenses, invest the funds and allow them to grow for the future.  The reason this strategy makes sense is the unique tax benefits of HSA's:  tax deductible contributions, tax-free growth & tax-free distributions.  Do you know what other types of accounts have all of these long-term features? NONE! IRAs & 401ks are tax deductible in the year you make the contribution, but you are taxed when you take the money out. Roth IRAs grow tax-free and are tax-free upon distribution, however, you do not get a tax-deduction when you make the contribution. The HSA combines the tax benefits of these two types of accounts. In fact, a good retirement...
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