The Retirement Detective

Alternative Investments Pt. 4: Private Equity

Episode 35

In this episode, we continue our series on alternative investments by talking about private equity.  Private equity is a vehicle by which investors can invest in smaller non-public securities in a diversified manner.  Private equity is riskier than investing in public markets, and also requires your investment to be effectively locked-up for many years. That said, for investors that are sophisticated and can withstand these risks, private equity can be an attractive asset class.  We'll also discuss other risks, fees, and more in this episode.

Alternative Investments Pt. 3: Commodities

Episode 34

In this episode, we continue our series on Alternative Investments with an introduction to commodities.  Commodities include things like oil & gas, grains, livestock and metals.  We discuss the unique aspects of investing in commodities and some of the challenges.

Alternative Investments Pt. 2: Real Estate

Episode 33

In this episode, we disucss the first alternative investment type for this series: real estate.  Real Estate can be invested in through a number of different formats and vehicles and we discuss those in this episode.  We discuss investing in real estate debt (ie. mortgages) and real estate equity through a vehicle like a REIT.  We also discuss some of the pros/cons of investing in real estate.

Alternative Investments Pt. 1: Factors to Consider

Episode 32

In this episode, we set up our multi-part series on alternatives by discussing some of the factors to consider when investing in alternative assets or asset classes.  These would include costs, liquidity concerns, due diligence challenges, and challenges in benchmarking alternative investments. 

The Basics of Correlation and Why We Own Multiple Asset Classes

Episode 31

In this episode, we walk through the basics of correlation, a statistics concept that explains how two data sets, or variables, might be related.  This has important implications for portfolio construction and sets up some upcoming episodes on alternative investments.

How to Reduce Mutual Fund Expenses Through Share Class Exchanges

Episode 30

In this episode, we walk through how to do a process called a share class exchange to change from an expensive share class of a mutual fund to a less expensive one.  When done correctly, such exchanges can often be tax-free.  However, there are areas to watch out for and those are discussed as well.  

If you have a large position in a legacy mutual fund in an expensive share class, and hefty capital gains that prevent you from selling it, a share class exchange could be a way for you to reduce your fund expenses while retaining the holding.

Check out our website: https://www.retirementdetective.com/

5 Financial Wellness Tips for Back-to-School season

Episode 29

The back-to-school season is a great time to do a check-up and re-assessment of your own financial condition... whether or not you actually have kids or grandchildren headed to school.  In this episode, we walk through 5 quick tips to accomplish some mid-year housekeeping.

1.) Check-up on education savings for kids and grandkids.

2.) Take stock of your personal savings accounts and rates.

3.) Do an overall rebalance of your investment accounts.

4.) Check-up on debt, rates, and assess if payoffs make sense.

5.) Begin tax planning for 2024.

Check out our website: https://www.retirementdetective.com/

Investigating I-Bond Buyers Remorse

Episode 28

Over the last 24 months or so, lots of investors purchased I-Bonds... a type of treasury bond that has an inflation adjustment to its interest rate. With inflation cooling, some investors are starting have buyers remorse.  In this episode, we explore why that is, what investors and do about it, and generally touch on the characteristics and things to consider when selling or redeeming an I-Bond.

Check out our website: https://www.retirementdetective.com/

Calculate the value of your I-Bond: US Treasury I-Bond Calculator

The Case of the US Credit Rating Downgrade

Episode 27

In this episode, we discuss and analyze the recent downgrade of the United State's credit rating from AAA to AA+ by Fitch.  Fitch is one of the three major credit rating bureaus in the United States.  Fitch is not the first to downgrade the U.S. as S&P downgraded the U.S. from AAA to AA+ in 2011.  We compare and contrast the two downgrades and what all of this is likely to mean for investors and retirees.

Check out our website: https://www.retirementdetective.com/

Investigating Beneficiary Designations

Episode 26

In this episode, Philip Mock, CFA, CFP(R), dives into beneficiary designations. Beneficiary designations are a simple and free update you can make to your estate plan to make sure accounts with named beneficiaries are set up properly. Typically accounts like retirement accounts and assets like insurance policies will require designated beneficiaries to receive those accounts and assets if the account holder passes away.

Often beneficiary designations are set up when the account is opened, and then forgotten.  As life happens with births, deaths, divorces, and marriages, the beneficiary designations can quickly become stale and outdated.

We discuss in this episode why it is so important to set your beneficiary designations correctly, and we discuss some pitfalls to avoid when naming your designated beneficiaries.

Check out our website! https://www.retirementdetective.com/

Analyzing Trading Costs and How to Reduce Them

Episode 25

In this episode, we cover the basics of trading costs and some tips on how to reduce them. Trading costs are the costs associated with making trades in your investment portfolio. Some costs are explicit like commissions, transaction charges, taxes, etc., and other costs are implicit such as bid-ask spreads, market movements, etc. 

All else equal, it is prudent to reduce trading costs when managing your portfolio and making trades. However, compared to more frequently-discussed topics like advisor fees and mutual fund / ETF management fees, transaction costs are not as frequently discussed. Nonetheless, they are an important component of your portfolio management costs to mitigate, and over time can add up to be significant.

Check out the website: https://www.retirementdetective.com/

Investigating How to Take a Charitable Deduction Even if You Take the Standard Deduction

Episode 24

In this episode, we'll examine how using the Qualified Charitable Distribution provisions of the tax code can allow you to effectively take a charitable deduction even if you use the standard deduction, as opposed to itemizing deductions on your tax return.  With recent changes in the tax laws, the standard deduction is much larger than it was several years ago, and as a result many taxpayers that once itemized deductions no longer meet the threshold to itemize.

For those over age 70.5, the QCD represents an opportunity to further reduce your taxable income in addition to taking the standard (or even itemized) deduction.  The QCD strategy does have some quirks though, so tune in to learn all of the details.

Our website: https://www.retirementdetective.com/

Please consult your tax advisor before implementing any new tax strategy.

Examining Social Security Benefits Part II: Factors to Consider on Benefits from Spouses

Episode 23

The episode is the second part of a two-part series on Social Security benefits. In this episode, we discuss filing strategies and considerations for individuals based on benefits derived from others: spousal benefits, ex-spouse benefits, and survivor benefits. 

While Social Security filing strategies are a commonly discussed and written-about topic in financial planning, it is nonetheless important and I wanted to share my thoughts.  We'll discuss the basics of filing dates and the nuances around filing for spousal benefits, ex-spouse benefits and survivor benefits. 

Most importantly, you must keep in mind that analyzing Social Security benefits is a very individualized decision.  There is not a rule-of-thumb that works for everyone.  So, this episode walks through some of the issues for you to consider, but will not be the recipe that necessarily suits your individual needs and circumstances.

Social Security Website: https://www.ssa.gov/

Our website: https://www.retirementdetective.com/

Examining Social Security Benefits Part I: Factors to Consider on Your Benefits

Episode 22

The episode is the first part of a two-part series on Social Security benefits. In this episode, we discuss filing strategies and considerations for individuals' own benefits based on their earnings history.  Next week, for Part 2, we'll discuss strategies and considerations for benefits based on other's earnings/situation: survivor benefits, spousal benefits, and ex-spouse benefits.  

While Social Security filing strategies are a commonly discussed and written-about topic in financial planning, it is nonetheless important and I wanted to share my thoughts.  We'll discuss the basics of filing dates and the importance of understanding the trade-offs and rewards for taking benefits early vs. late, respectively.  

Most importantly, you must keep in mind that analyzing Social Security benefits is a very individualized decision.  There is not a rule-of-thumb that works for everyone.  So, this episode walks through some of the issues for you to consider, but will not be the recipe that necessarily suits your individual needs and circumstances.

Social Security Website: https://www.ssa.gov/

Our website: https://www.retirementdetective.com/

Investigating How You Should View Asset Allocation

Episode 21

In this episode of the Retirement Detective Podcast, we discuss the importance of analyzing your investment portfolio from an asset allocation perspective. We start by looking at the overall asset allocation, which includes cash, equity, fixed income, and alternatives, and breaking down each pie piece further.

We discuss three ways to analyze your equity portfolio: size perspective, country exposure, and sector perspective. For fixed income, we discuss analyzing the portfolio based on fixed income sectors, credit quality, and a maturity/duration standpoint.

It is important to analyze your investment portfolio from an asset allocation perspective and to understand what you own. By doing so, you can make informed decisions about reallocating and rebalancing your portfolio to achieve your retirement goals.

Check out our website! 

https://www.retirementdetective.com/

Solving the Mystery of Money Market Funds: How They Work and What to Expect

Episode 20

In this episode of the Retirement Detective Podcast, we discuss the risks and benefits of money market funds as compared to other relatively safe liquid investments such as cash, CDs, and US treasuries. We start by explaining the differences between these investments. 

We then delve into the safety and liquidity of these investments. The safety of CDs and treasuries depends on the FDIC limits and the government's ability to pay, respectively.  That said, money market funds invest in a broad basket of short-term securities, inherently offering diversification.  Plus, with daily liquidity, they do not have the lock-ups to maturity that CD's and Treasuries possess.  Money market funds have objectives to remain stable and keep the price at $1.00, through buying high-quality securities, remaining diversified, and keeping the maturity profile of the underlying investments rather short.

Lastly, we discuss the risks, and namely that they are not exactly the same as cash and can experience a lack of or delay of liquidity during times of crisis.  This is detailed in the prospectus, which is recommended reading prior to investing in money market funds (or any funds for that matter).

Check out our website! https://www.retirementdetective.com/

Episode 19: Cracking the Code of Financial Advisor Designations

In this episode of The Retirement Detective Podcast, I dive into the varying levels of rigor among financial advisor designations. With over 200 different designations being "claimed" out there, not all of them are created equally. Some designations are extremely rigorous and take years to complete, while others may only require a short test after a short webinar. I stress the importance of investors understanding what these designations mean and assessing whether they are satisfied with their advisor's designation.  In this episode, we walk listeners through some of the most common designations and provides insight into their levels of rigor and what they may indicate about an advisor's expertise.  The designations discussed in this episode include:  the CDFA, CTFA, ChFC, CPA, CFA, CFP, AAMS and AIF, but as noted, there are many more out there.

I believe that it's crucial for individuals to understand the different designations when working with an advisor or when interviewing potential advisors. We'll lastly discuss a tool that individuals can use to look up what designations mean and assess whether it's the sort of designation they're happy with their advisor having. 

Links mentioned in episode:

Check out our website! https://www.retirementdetective.com/

FINRA Broker Check: https://brokercheck.finra.org/

SEC IAPD: https://adviserinfo.sec.gov/

FINRA Professional Designation Search: https://www.finra.org/investors/professional-designations

In this episode, we investigate two tax "loopholes" within the estate and gift tax laws to give gifts that exceed the annual exclusion amount, but don't eat away at your lifetime gift and estate tax exemption.  For those with potentially large estates that could be taxable, a common strategy is to try to "reduce" the size of your estate.  However, a consequence of this is that it typically reduces the amount of your estate gift tax exemption to give gifts that exceed the annual exclusion amount.  That said, there are two options written into the tax code to avoid this predicament, and we examine them in today's episode.  Of course, since this is tax related, please discuss with your accountant and estate tax attorney before considering this strategy.

In this episode, I share my thoughts on the current debt ceiling debacle.  We'll take a brief look at the quasi-default in 1979 as well as the US credit downgrade in 2011 as reference points for how a default might look today. 

Inflation remains a hot-button topic in the news today.  However, there are lots of different measures of inflation running around out there.  In this episode, we will examine the two major inflation measures: Consumer Price Index ("CPI") and Personal Consumption Expenditure ("PCE"), as well as the "core" variants of each in an effort to help you better understand how inflation is measured.  The two measures are not identical and the media tends to prefer to report CPI.  However, the Federal Reserve tends to prefer to watch PCE, specifically "core" PCE.  You'll learn in today's episode how all of these measures are different and why that matters.