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Accretive Wealth Blog

Living Trusts Are Living Documents

Wednesday, December 4, 2013

Many of us delay putting together a living trust. Even if we have one, we have a tendency to view it as something we’ve completed, not as something we need to update regularly. In this post, we’re going to ask an estate planning attorney to tell us why a living trust is a very important document and why we need to make sure our living trusts are up-to-date. In future posts, we’ll look at other types of trusts that our clients and friends may find valuable. Continue reading “Living Trusts Are Living Documents” »

Tax Rates Are Going Up—Are You Ready?

Tuesday, November 12, 2013

Some big changes to federal income tax rates went into effect this year. Investors, small-business owners, and high-earners could have a rude jolt when they file 2013 tax returns, so we’d like to explain the changes and suggest some steps you could take to minimize the burden.

Here’s a look at the changes in 2013 tax rates that we think will have the greatest effect on our clients and friends:

  • The federal rate for long-term capital gains has gone up from 15% to 20% for a single person with taxable income above $400,000 or a married couple with income above $450,000. People in a 25% or 35% tax bracket will continue to pay 15%, while those in a 10% or 15% bracket do not have to pay capital gains taxes. Continue reading “Tax Rates Are Going Up—Are You Ready?” »

How Will Obamacare Affect You?

Friday, October 18, 2013

The news is full of stories about the Affordable Care Act—better known as Obamacare—but most of us don’t really understand what the law requires. In this blog, we’d like to give you some basic information about Obamacare.

If you have insurance through your employer, you’ll be able to keep it (and you’ve probably already noticed that some preventive services have been added over the last couple of years). If you’re on Medicare or Medicaid, you can stick with your existing coverage. Continue reading “How Will Obamacare Affect You?” »

Defined Benefit Pension Plans: Worth Considering

Wednesday, October 2, 2013

Employers have various ways to offer retirement benefits to their employees—and to themselves. The amount that a retiree will receive from defined contribution options such as 401(k) and profit-sharing plans is uncertain; all that is certain is the amount that is contributed.

Another option is a defined benefit plan (DB plan). As its name implies, the retirement benefits that an employee will receive are defined by the plan’s formula. Plan formulas vary according to the company, but typically benefits are calculated by using individual factors such as salary and length of employment. Continue reading “Defined Benefit Pension Plans: Worth Considering” »

Is Tax-Loss Harvesting Right for You?

Thursday, September 19, 2013

While we’re all happy to see gains in the value of our portfolios, we’re not so happy to pay capital gains taxes on them. In this post, we’ll discuss tax-loss harvesting, which can help investors reduce their capital gains tax liability. This may be particularly important for high-earners in 2013.

First, let’s examine how much of a burden capital gains taxes can be for 2013: Continue reading “Is Tax-Loss Harvesting Right for You?” »

Islamic-Value Investing: A Closer Look

Thursday, September 5, 2013

Our clients and friends have been expressing a lot of interest in Sharia-compliant investing lately, so this week we would like to discuss the topic in greater depth than we did in our June blog posting.

We know that some Muslims have totally avoided investing in the stock market thereby missing out on the economy’s rebound. Accretive Wealth’s mission is to provide financial planning and investment advice that aligns with each investor’s beliefs and values, and we want to offer our Muslim clients ways to take part in economic growth through the markets without contravening Islamic values. Let’s begin by reviewing the basics. Continue reading “Islamic-Value Investing: A Closer Look” »

European Equities Offer Promise

Friday, August 23, 2013

After all the recent headlines about the European fiscal crisis and the impending doom of the euro, investing in the European equity markets may sound like folly. Taking a closer look at the developed markets of Europe, however, we think we’re approaching a good time to buy their equities. We don’t think these markets are going to turn around overnight, but we do agree with Wall Street powerhouses such as Credit Suisse and Bank of America Merrill Lynch that European equity markets are a good bet for the future.

In this blog post, we’re going to take a look at the international markets represented in the MSCI EAFE Index. “EAFE” stands for Europe, Australia, and the Far East, but the index actually includes only the developed countries in these regions: Australia, Austria, Belgium, Denmark, Finland, France, Germany, Greece, Hong Kong, Ireland, Israel, Italy, Japan, the Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, and the United Kingdom. Continue reading “European Equities Offer Promise” »

Why We Still Like Emerging Markets

Thursday, August 15, 2013

Our clients are concerned about where to invest during these volatile economic times. Should they seek the stable haven of fixed-income securities or should they go into the more volatile equity markets? And if they have the stomach for equities, should they flee from emerging market indexes that have seem to have lost their luster or should they stick with the US equity markets that have posted outstanding returns?

Here at Accretive Wealth, we believe the best long-term strategy for our clients is to remain with the domestic equity market but very gradually begin increasing their emerging markets allocation. We think emerging markets are somewhat undervalued at current levels and have more robust growth prospects in the long run. Continue reading “Why We Still Like Emerging Markets” »

Is Active Management Worth the Cost?

Wednesday, August 7, 2013

Many individual investors wonder whether they should invest in “passive” index funds or in their actively managed cousins. In this post, we will take a look at the differences between them.

Index funds, whether exchange traded (ETFs) or mutual funds, are constructed to reflect the components of a market index, such as the S&P 500 or the Russell 2000. Their goal is not to outperform the selected index but to mirror its performance. These funds provide broad exposure to a market index by including a representative group of securities. Continue reading “Is Active Management Worth the Cost?” »

401(k)- A Path to a Healthy Retirement

Wednesday, July 31, 2013

Whether you’re thinking of retiring soon or whether retirement is way down on your list of your priorities, it’s never too late—or too early—to investigate your options. In this post, we discuss some of the ins and outs of one of today’s most popular retirement plans: 401(k)s.

The 401(k) plan is named after the section of the U.S. tax code that governs it. It is offered through your employer and can provide you with tax-deferred savings, lower taxable income, and, in many cases, matching, or “free,” money from your employer. Continue reading “401(k)- A Path to a Healthy Retirement” »

The Accretive Difference

Wednesday, July 24, 2013

These days, wealth managers are a dime a dozen (perhaps less, when adjusted for inflation).

So why should you turn to Accretive Wealth Management to meet your needs?

First, we pride ourselves on our independence. We answer only to our clients (and, oh yeah, to regulators) when determining financial plans and strategies. We are beholden to no large parent company, we have no ties to proprietary products, and we don’t make markets in stocks or bonds. So you have our complete attention. Continue reading “The Accretive Difference” »

Asset Allocation 101

Wednesday, July 17, 2013

This week we look at one of the key steps in building an effective portfolio strategy: asset allocation.

Allocating your assets effectively simply means building a portfolio across different types of securities in alignment with your situation, goals, and objectives. Investments are typically broken down into these asset classes:

  • Cash (including money market funds)
  • Equities (stocks)
  • Fixed income (bonds and notes)
  • Real assets (metals, commodities, real estate, collectibles, agricultural land, and oil)
  • Alternatives (such as private equity, hedge funds, and master limited partnerships)

Continue reading “Asset Allocation 101” »

Are Stocks the New Bonds?

Wednesday, July 10, 2013

Some of our clients and friends have asked us what strategy they could use in this market to generate income from their investment portfolios. Bond yields are low, and bond risk is rising as issuers take advantage of today’s low rates to extend duration. Fixed-income securities as a source of income don’t look very compelling. What’s an investor to do?

Luckily, there is an option that many investors find attractive: portfolios that focus on growth and income through high dividend yield (HDY). A manager selects the stocks in these portfolios by identifying high-quality companies that offer a higher-than-average dividend yield. An HDY portfolio is characterized by: Continue reading “Are Stocks the New Bonds?” »

Did the Markets Overreact?

Wednesday, July 3, 2013

This week, Accretive Wealth’s CEO Faraz Sattar asked Dan Kern to give us his take on what’s happening in the markets and what he expects in the near future. Dan is president and chief investment officer of Advisor Partners, which provides customized investment portfolios for many of our clients.

Faraz: A few weeks ago, you told us we might see a short-term drop in the market and a rise in Treasury rates, both of which have occurred. Would you discuss the causes?

Dan: We thought the markets were vulnerable to a short-term drop, which is what we saw after the Fed said that it would probably begin to normalize monetary policy as early as September. The Fed news came alongside a troubling spike in interbank rates in China (the rate banks charge each other for overnight funds). Usually the People’s Bank of China steps in to add liquidity when that happens, but they waited this time. We think that was a message telling Chinese banks to become more disciplined and reduce lending excesses. Continue reading “Did the Markets Overreact?” »

Be Smart About Retirement

Wednesday, June 26, 2013

Last week we talked about saving for your children’s education, but it’s even more important to create realistic plans for your own retirement. While you want to do the best for your children, you don’t want to ignore your own interests and jeopardize your ability to live comfortably later on. Retirement lasts longer than it used to: A man who’s 50 years old now is expected to live to be 82, while a woman is expected to reach 85.

Many of us don’t realistically think about our retirement, if we think about it at all. Let’s take a look at some numbers from the National Institute on Retirement Security’s June 2013 report, The Retirement Savings Crisis: Is It Worse Than We Think? (The answer is a resounding yes.) Continue reading “Be Smart About Retirement” »

529 Plans: College Savings with Flexibility & Tax Protection

Wednesday, June 19, 2013

Some of our clients and friends weren’t able to attend our dinner meeting on June 17, when BlackRock VP Vivian Tsai gave an illuminating presentation about 529 plans. In this week’s blog post, we’d like to share some of the information she provided.

Let’s start by taking a look at college costs, which are high now and expected to continue rising. According to Sallie Mae’s How America Saves for College 2013, the cost of attending a four-year college in 10 years is estimated to be $139,028 at a public institution, or $248,878 at a private institution. Clearly, you need to begin saving for your children’s education as early as possible. If you started putting just $200 a month into a tax-free investment vehicle when your baby was born, by the time the child turned 21 you’d have about $120,000 (assuming a 7% annual return, gross of fees). Continue reading “529 Plans: College Savings with Flexibility & Tax Protection” »

Putting Your Money Where Your Beliefs Are

Wednesday, June 12, 2013

We’re excited about our new strategic partnership with the Aperio Group, an alliance that allows us to offer customized Sharia-compliant portfolios to our clients. In the past, investors who wanted to reflect their Islamic values in their investments have had very limited options. To broaden those options, we turned to the Aperio Group, a pioneer in applying enhanced indexing techniques to socially responsive portfolios.

Aperio worked with us to design two new solutions—one is benchmarked to the MSCI All Country World Index (MSCI ACWI) and the other is benchmarked to the Russell 3000 Index. For any Accretive Wealth client who meets minimum requirements, Aperio will create a portfolio of individual stocks managed separately to track one of these index benchmarks. Continue reading “Putting Your Money Where Your Beliefs Are” »

Taking the Market’s Temperature

Wednesday, June 5, 2013

In this week’s post, Accretive Wealth’s CEO, Faraz Sattar, continues his conversation with Daniel Kern, president and chief investment officer at Advisor Partners, LLC, Accretive Wealth’s new partner. They discuss world economic trends as well as market opportunities and challenges.

Faraz: Let’s start with your take on the US economy. Where do we stand?

Dan: The domestic economy is doing okay. It’s certainly not great, but we have come off the bottom. First-quarter earnings actually beat expectations, even though revenue fell a bit short. The housing market is rebounding nicely; employment appears to be improving. We don’t expect the Fed to take any dramatic measures any time soon, although it will likely taper off liquidity measures in the second half of 2013. Continue reading “Taking the Market’s Temperature” »

Advisor Partners–Making It Personal

Wednesday, May 29, 2013

We have exciting news to share with our clients and friends this week. We have just entered into a new partnership that will offer our clients investment strategies with an added level of risk management and analytical sophistication.

Our CEO, Faraz Sattar, has known the president and chief investment officer of Advisor Partners, LLC for 15 years, since his days at Montgomery Asset Management, where Daniel Kern was managing director and principal and Faraz was an analyst. Dan joined Advisor Partners in 2011.

Advisor Partners is an investment management firm that provides a broad range of sophisticated investment strategies to a select group of independent advisors and financial institutions. We are impressed by the level of analysis the company conducts on every investment, by the ways in which the firm can tailor solutions to the needs of each of our clients, and by the considerations that go into portfolio construction. After extensive conversations, we decided that it was in the best interests of Accretive Wealth’s clients to form a partnership. Continue reading “Advisor Partners–Making It Personal” »

Putting the Horse Before the Cart

Wednesday, May 22, 2013

In this post, rather than talk about what you invest your money in, let’s discuss instead how to build a framework for your investments.

Building an investment portfolio before you’ve developed a financial plan is typically not the wisest course. First, know what you want, then figure out how to build the framework you need to reach your goals.

It’s imperative that you factor in your entire financial picture when you make investment decisions. Look at your investments in the context of all your other holdings. Consider every type of account you have—including brokerage accounts, 401(k)s, IRAs, and trusts. Understand what your needs are for the short term, medium term, and long term. Continue reading “Putting the Horse Before the Cart” »