You may have noticed Amazon founder Jeff Bezos is leaving Washington state for Florida. Pay no attention to the change in Washington State's tax on capital gains. He just wants to be closer to family. Sure. Washington’s legislature passed a new cap gains tax (Engrossed Substitute S.B. 5096), which was signed by Gov. Inslee on May 4, 2021, and took effect in Jan of this year. Capital gains that exceed $250,000 will be taxed at 7%. It used to be a tax-free transaction. Welcome to Miami! Action Line: Money travels to where it’s respected. If you're looking for respect for your … [Read more...]
“Hey, Survival Guy, What about a Beach House?”
“Hey, Survival Guy,” he said. “I see you spend some time in Newport, RI and North Conway, NH. My wife and I are thinking about buying a beach house here in Cali. What’s your take?” “Have you looked at Your Survival Guy’s Super States?” I thought to myself. “You know how I feel about California,” I said. “If you can live with the politics, taxes, cities on fire, etc., it’s a beautiful place. It’s hard to leave the water, I appreciate that, but make sure it’s right to be a buyer as opposed to renting, especially today.” The problem with second homes—and there are many—is they make sense … [Read more...]
Another Word about Your Survival Guy’s Money: Spending
Last week, Your Survival Guy wrote to you about his money. Here’s a recap: save a third, spend a third, and pay taxes with a third. Own your home. Stay out of debt. And invest for dividends, dividend increases, and income. Keep what you make and live to fight another day. But this is a more laid-back piece for you today. Today, let’s talk about spending and the importance of living your life to keep you young. Because it makes all the difference in the world. Within reason, of course. Your Survival Guy and Gal recently celebrated our 25th wedding anniversary in Anguilla. Located in the … [Read more...]
Are You Guided by the Prudent Man?
In the September 2015 issue of Richard C. Young's Intelligence Report, Dick Young wrote: The Prudent Man Rule is based on common law stemming from the 1830 Massachusetts court formulation Harvard College v. Amory. The Prudent Man Rule directs trustees "to observe how men of prudence, discretion and intelligence manage their own affairs, not in regard to speculation, but in regard to the permanent disposition of their funds, considering the probable income, as well as the probable safety of the capital invested." Since I started our family investment management firm in 1989, I have operated … [Read more...]
A Word or Two about Your Survival Guy’s Money
Your Survival Guy wants to share a word or two about my money. For one, I eat my own cooking. I don’t hope for my money to do something for me. I don’t bet on markets. I don’t gamble. I don’t use leverage. I don’t look at prices. I basically look at my account here and there, see the income coming in, and that’s it. Sometimes, my portfolio is higher than the last time I looked, and sometimes, it’s not. I have a consistent investment plan in place, one I’ve had my entire adult life. It’s simple. I save a third, spend a third, and pay taxes with a third. I don’t have any debt. I own my … [Read more...]
Investing Habits of the Fairly Wealthy: #4 “So far…”
Your Survival Guy and Gal recently celebrated their 25th wedding anniversary. Before we were married in Key West, surrounded by family and friends in the southernmost state, we were anxiously watching the tail end of hurricane season. Right before the big day, Tropical Storm Mitch hit, rerouting some flights to Miami, making the drive south on Route 1 far from beautiful as causeways were closing left and right just after crossing. Somehow, everyone made it in time for our rehearsal dinner. And the next day was one of those days after the storm, beautiful. That made everyone even happier, … [Read more...]
Meet Our Dog Louis, We’re One of Those…
Our dog Louis is 12 years old going on two. I have a theory. You see, Your Survival Guy and Gal are empty nesters—both kids away at college—we’re home alone (not to be confused with economically free). And then there’s Louis. The house all to himself. No kids to take the attention away from him. He couldn’t be happier or more needy. He rules the roost and loves it. When we walk him, we’re often asked what kind of dog he is. “Australian Labradoodle,” I say. “Oh, you’re one of those people,” they yell. Kidding. They don’t say that, but I know they’re thinking it. “What makes him … [Read more...]
Gobble, Gobble, Gobble the Rule of 72
Savvy investors are gobbling up these yields. Because you don’t need to compound big numbers to have big success. To double your money, you could do it with T-bills paying more than five percent today, compounding them for 15 years. But the key is, will they stay at five percent? Think about the Rule of 72. The math. Dividing 72 by a compound interest rate tells you how many years it takes to double your money. But it’s tricky. Because T-bills have a short lifespan. They provide comfort for three months at a time. It’s why investors are gobbling them up. They’re hard to pass up. But I … [Read more...]
Risk and Reward: An Efficient Frontier
Originally posted July 26, 2018. The Efficient Frontier, created by Harry Markowitz in 1952, measures the efficient diversification of investments that delivers the highest level of return at the lowest possible risk. Investors must consider the trade-offs between risk and reward in their portfolios. You can see on the chart below an efficient frontier line representing risk vs. reward for a portfolio allocated between different proportions of stocks and bonds using data back to 1977. On the vertical axis is the return earned by the portfolios, and along the horizontal axis is a measure … [Read more...]
Buy Fixed Income Rates Not Seen in 22 Years
You hear it all the time today. “I’m getting an incredible rate on my money,” or “I can get you this on your money.” And so on and so forth. Yes, Your Survival Guy can see it, too, especially with rates at levels we haven’t seen in around 22 years. Opportunities are everywhere for the fixed-income investor. But that doesn’t mean you dump all your existing positions. That’s throwing the baby out with the bathwater. Because when you sell an existing bond for pennies on the dollar, just to buy a higher yielding one, you’re making more interest on less dollars than what you initially started … [Read more...]