Adam Smith Advisors create monthly investment letters on current wealth management issues and topics on interest. Author Keith Tufte, (CIO of ASA) has more than 25 years of successful investment management experience as a Wall Street Analyst, Mutual Fund Portfolio Manager, Director of Equity Research for a major mutual fund firm, Hedge Fund Portfolio Manager, and Wealth Management Advisor.
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HEALTH SAVINGS ACCOUNTS (HSAs) —TRIPLE TAX-FREE SAVINGS
Health savings accounts (HSAs) are a very attractive tool to save for your current and future medical costs. They offer “triple tax-free” savings because you get a tax deduction for the contribution into the account, the money grows tax-free while in the account, and it comes out of the account tax-free if used for healthcare expenses. As arguably the most tax advantaged account available, why doesn’t everyone contribute to an HSA? …. >more
STOCKS ARE HIGH, WHAT SHOULD I DO?
After many years of excellent gains, U.S. stocks are definitely not cheap. This does not necessarily mean that stocks are likely to crash anytime soon. Stock price levels could also just stay about where they are for the next five years to correct for the current high valuations. Unfortunately, no one (including us) can predict the near-term direction of the stock market with any consistency…. >more
GET OUT OF DEBT, STAY OUT OF DEBT
No one wants to be in debt. Giving your hard-earned money to your lenders each month instead of keeping it for yourself is downright frustrating. Imagine the freedom of having zero credit card debt, no student loan payments, no mortgage…what would you do with all of that extra cash? Perhaps some of you are already there! It’s not easy to become debt-free, but well worth the journey…>more
WHAT IF I LIVE TO BE 100?
Have you ever wondered how long you are likely to live? The average life expectancy for people in the U.S. keeps increasing, thanks to continued improvements in healthcare and technology. According to the Social Security Administration, the life expectancy for the average 65 year old man is currently age 84.3, and for a women it is age 86.6… >more
FOUR PRINCIPLES FOR INVESTING SUCCESS
Vanguard (a large investment firm) just published a white paper on “Principles for Investment Success.” It is excellent, and right in line with our own investment philosophy and strategy. Vanguard stresses four main principles for investment success: financial goals, portfolio balance, low cost, and discipline. Below are highlights of this Vanguard report, as well as some of our thoughts on the topic. >more
BUFFETT’S MILLION DOLLAR BET (AGAINST ACTIVE MANAGEMENT)
Warren Buffett is so confident in index-based funds that he offered to wager $1 million that the S&P stock index could outperform a group ofhedge funds chosen by an investment professional over a 10-year period. He got one person to take that bet, a hedge fund manager named Ted Seider. >more
VALUE STOCKS—GET MORE FOR YOUR MONEY
I really love a sale. When gas is below $2 a gallon, it brightens my day. When I buy last year’s model of anything from an iPhone to a new car, I feel better knowing that I saved money. Many of you can relate to that same joy. What you may not know is that you can get it from the stock market too. >more
CREATE YOUR OWN PENSION PLAN
Very few people have the good fortune of having a pension plan these days. Pension plans have been replaced by 401(k) type plans by nearly all employers. The risk of providing a secure retirement has been transferred from the employer to the employees. The lack of a reliable and steady income source (like a pension plan) has caused many people to worry more about how they will maintain their lifestyle in retirement. >more
FINANCIAL FITNESS AND PHYSICAL FITNESS
Many people make New Year’s resolutions to get in better physical shape by exercising more, and/or going on a diet to lose a few pounds. Others commit to financial fitness by trying to save more (and spend less) in the coming year. >more
CAN I RETIRE YET?
We get asked this question often by clients. Perhaps a better question and goal for many people is, “Am I financially independent yet?” Being financially independent means you can retire if you want, but if you enjoy working you can keep working because you want to, not because you have to. >more
THE JOY AND BENEFITS OF GIVING
Wealthy families can do three things with their money in the end: give it to the IRS, give it to charity, or empower (or ruin) their children and grandchildren. Careful planning can help direct how much goes to each. >more
SOCIALLY RESPONSIBLE INVESTING—INVESTING WITH YOUR HEART AND YOUR HEAD
The socially responsible investing (SRI) trend has been growing rapidly over the past 10 years. According to Kiplinger Magazine, there are now 493 socially responsible funds with assets of $569 billion. >more
SELLING YOUR BUSINESS? THINGS TO CONSIDER
Business owners and executives have many things to think about before, during, and after the sale of a business. There are personal, financial, tax, family, psychological and business factors to consider. >more
REACHING FOR YIELD IS DANGEROUS
In 2016, low interest rates have caused investors to take greater and greater risks in reaching for yield. They are doing this to keep their investment income from dropping and to obtain better returns. Financial author, Jason Zweig, says “recently the reach for yield has become a reckless lunge.” Interest rates on “safe” bonds have dropped to 2% or less, which is not enough for many investors. >more
ELECTRONIC FRAUD AND CYBERSECURITY
Criminals have gotten very good at stealing information and money from millions of people and businesses electronically. It is much easier to do, more lucrative, and much lower risk than robbing people and banks the old fashioned way. Many people have been affected by credit card fraud, identity theft, click fraud, financial account fraud, fake antivirus software, ransomware, tax refund fraud, invoice fraud, and fraudulent money transfers. >more
TAX SMART RETIREMENT STRATEGIES
Many people are focused on reducing income taxes after they retire, because they don’t have as much money coming in each month and they have more free time to think of ways to reduce their taxes. Your income tax rate will likely be lower once you retire, when you no longer have wage income. In retirement, you are still subject to income taxes on your interest and dividend income, capital gains, retirement account (IRA, 401K, 403B) withdrawals, Social Security income, etc. >more
The movie The Big Short does a fairly decent job of telling the story of the 2008 financial crisis. The stories, although embellished, are very interesting. It is also sad to hear about all of the people who had taken out complicated mortgages on their homes, mortgages that they did not understand. We know how that ended. Millions of people lost their homes. Our economy ground to a halt. >more
ADVICE FOR PERSONAL REPRESENTATIVES OF AN ESTATE
Being named the Personal Representative (Executor in some states) of someone’s estate is a big responsibility. In many cases, the Personal Representative (PR) is going through the estate process for the first time. Are you named as the Personal Representative of someone’s estate? Who is the Personal Representative on your estate? In our business we have helped many families go through this process. >more
HUMANS ARE HORRIBLE INVESTORS
The average investor ends up with only about half the market returns over long periods of time. The U.S. stock market return (Standard & Poor’s 500 index) has been 9.85% per year over the past twenty years through 2014. The average equity mutual fund investor’s actual return over that same time period has been only 5.19% per year, according to Dalbar, Inc. How can investors be so bad? >more
THE JANUARY 2016 GLOBAL STOCK MARKET PLUNGE
This month’s letter is “The January 2016 Global Stock Market Plunge.” In this letter we discuss the factors the market seems to be concerned about, some offsetting positives to keep in mind, what might stop the decline, and how investors should react to the drop. Please take a look. >more