Jane, a 35-year-old highly successful graphic designer in the advertising industry, had long felt she was missing out on opportunities to grow her wealth due to her busy schedule. She sought the assistance of a financial planner to help her plan and prioritize her financial goals.
Jane’s primary challenge was the difficulty in planning her finances while juggling her frequent projects and deadlines. Due to the inconsistencies in her income, she struggled to keep tabs on her finances effectively. She also needed someone to help guide her on investments and financial planning and provide her with the keen insights she wasn’t accustomed to receiving.
With our financial planning guidance, Jane now has a clear understanding of her financial health, allowing her to make more informed decisions, including investments. She has met her savings target, and her investment portfolio is performing exceptionally well, more than she had hoped for.
Our approach helped Jane save more money and provided a step-by-step guide on how Jane should invest her funds. With this guidance, Jane can rest assured that she is gradually growing her wealth, all while staying focused on her work.
Film & TV Writer
John, a 41-year-old professional residing in Los Angeles, approached our financial planning firm seeking expert advice on managing his finances, including his salary of $450,000, Non-Qualified Stock Option (NQSO) grants, and Incentive Stock Option (ISO) grants. With a net worth of $1,000,000 and maximum contributions to his Roth 401k, John sought guidance on integrating an anticipated inheritance, estate planning, aggressive savings for future goals, and optimizing his stock options in light of an upcoming IPO.
John’s financial situation presented several challenges, including optimizing his stock options, maximizing savings to achieve his financial goals, and planning for an anticipated inheritance. Furthermore, he needed to minimize estate taxes by strategically using GRATs and CRUTs while ensuring adequate funding for his wedding and future travel plans.
Leveraging our expertise, John successfully met his financial objectives via a long-term strategy that combined tax-efficient stock option plans and retirement savings. This was tailored to align with his future financial needs, including an anticipated inheritance, early retirement, and extensive travel plans.
48 & 44
Real Estate Investors
Benjamin (48) and Miriam(44) are a married couple investing in real estate for the past 10 years. They own several short-term rental properties in Miami and have successfully generated passive income from their investments. However, they are now looking to expand their portfolio and are seeking professional financial advice to help them achieve their goals.
Benjamin and Miriam are facing several challenges in their real estate investment journey. They are looking to sell one of their properties to fund the purchase of a larger property, but they are concerned about the tax implications of the sale. They are also interested in exploring 1031 exchange opportunities to defer taxes on the sale of their property.
We were able to work with Benjamin and Miriam’s CPA to successfully navigate the complex tax laws surrounding real estate investments. They were able to sell their property and invest in a larger property without incurring significant tax liabilities. The 1031 Exchange and Opportunity Zone Fund helped them achieve their investment goals and expand their real estate portfolio.
Volatility drag, often unnoticed by many investors, plays a significant role in the performance of investment portfolios, especially in markets characterized by high volatility. Understanding volatility drag is crucial for making informed investment decisions and managing long-term investment performance.
Volatility drag refers to the negative effect of investment volatility on compound returns over time. It occurs because losses have a more significant impact on portfolio value than gains of the same magnitude. For example, if an investment loses 10% one year and gains 10% the next, the investment will not return to its starting value due to the mathematical asymmetry between gains and losses. This phenomenon underscores the importance of minimizing large fluctuations in investment value to protect long-term returns.
The mathematical principle underlying volatility drag is relatively straightforward but profound in its implications for investors. The key concept is that percentage gains and losses are not symmetrical. A 50% loss requires a 100% gain to break even, not a 50% gain. This asymmetry means that volatility (up and down movements in price) can erode the compound growth rate of an investment, even if the arithmetic mean of the returns seems healthy.
Consider an investment with the following annual returns: +20%, -15%, +10%, and -5%. While the arithmetic mean of these returns might suggest a modest positive performance, the compound annual growth rate (CAGR) would tell a different story, factoring in the volatility drag and showing a lower effective return than the arithmetic mean would suggest.
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