Modern Portfolio Theory is about diversification: combining multiple investments (stocks or bonds) that zigs with another that zags, and possibly a third that zogs. Believers in MPT investing believe that diversification is your very best friend. Modern Portfolio Theory is the key to maximizing return with minimal risk. What the theory says is that…(Read More)
While the numbers can get complex, interchange-plus pricing is simple. The pricing model consists of two parts: an “interchange” and a “plus.” “Interchange” is the percentage of the transaction that must be paid to both the issuing bank and the credit card association. Because your credit card processor has to pay this charge, they…(Read More)
A merchant on tiered pricing schedule is overpaying for their credit and debit card processing. Tiered pricing means the merchant account provider states a low base rate (say 1.49% + a $0.25 transaction fee) for processing. The low base rate is generally meant to be enticing. However, the under-the-breath caveat for the…(Read More)
Our clients are always asking: Why don’t we deploy all cash immediately? Why do we hold a larger cash reserve than most other investment advisors? We believe our clients will do better if they wait for investments to come to us rather than chasing after us. We tend to get better buys if we…(Read More)
SITUATION: Owning his own practice for 5 years, Dr. Jones, an orthopedic surgeon, thought he built a very successful practice, but did not understand why he did amass greater wealth looking at his tax returns. His CPA never proactively assisted him or answered his questions. After some thought, he recognized that he needed someone to…(Read More)
SITUATION: In late 2014, an existing client founded a management consultancy firm specializing in bio-pharmaceuticals. In six months, the firm was financially strong, and was seeking ways to minimize exposure on their taxable business income. Our client’s tax professional who specialized in self-employed professionals only knew about SEP IRAs. Thus, our client…(Read More)
SITUATION: Since 2000, a successful independent technology consultant had his retirement investments managed by another investment advisor who acted as investment manager. Every year, the consultant had been informed by this investment advisor that his IRA assets had been doubling every 7 years, but in early 2014, the consultant started to question that premise. He…(Read More)
SITUATION: An orthodontist founded his own dental practice in 2004, and soon after, established a 401k profit sharing plan. Over time he started to learn about ERISA fiduciary responsibilities and soon realized that he may not have been fulfilling all duties as the plan sponsor/administrator of his 10-participant retirement plan. He decided to…(Read More)
SITUATION: After selling his private dental practice in 1999, Dr. Smith, a periodontics, amassed a significant amount of liquid wealth spread across multiple investment and retirement accounts. In 2003, he recognized that he needed someone to help him invest his retirement nest egg with the objective of maintaining his pre-retirement lifestyle even if he…(Read More)
The cash level in the portfolios we manage has never ceased to be a topic of conversation with potential clients, given the recent run-up of the stock market after Brexit and after the 2016 presidential election. We tell potential clients that the cash reserves have played a strategic role in our firm’s investment…(Read More)