Month: October 2022

The Stability Tax: A Smoother Ride to Foregone Gains

photo shows a road with the sign BUMPS AHEAD

One school of thought about investing holds that ups and downs are the same as risk itself. A related belief: the role of a professional advisor is to minimize this volatility, to select investments and products and strategies that are more “stable” in the short term than traditional long-term investments, such as stocks. 

We have a different view, one that says the ups and downs are an integral, inseparable part of seeking long-term investment returns. In striving to grow long-term money over the long term, we work diligently to communicate the attitudes and strategies of effective investing. (It’s why you’ll hear us repeat ad nauseum, “It goes up and down.”) 

But don’t mistake us for pessimists. One of the attitudes of effective investing, we believe, is to embrace the idea that we get paid to endure volatility. Volatility is just the inevitable short-term wiggling, in our view. It’s not the same as risk if it’s just part of the ride. 

There are plenty of quizzes out there to “measure” one’s aversion to risk. Many produce a “risk number.” But one of the realities of investing is that risk and reward are related. So the higher a person’s “risk number,” the greater their potential returns. The lower the number, the less wiggling—and the stymied potential returns. There is a trade-off. 

We disagree with the notion that wiggling is a good measure of risk for long-term money, and it’s worth pointing out the consequences of this approach. Let’s do the math. 

Over an extended period, the foregone returns of a less-wiggly portfolio are, in effect, a stability tax. A lump sum invested for 25 or 30 years might only grow to half as much as a more effective portfolio that embraces that longer time horizon. 

For instance, imagine a person starting to invest for retirement at age 40: a monthly investment of $1,000 to reach their desired goals in an effective long-term portfolio would take $1,500 monthly in a less wiggly portfolio! All things being equal, less volatility would be nicer, maybe—but if this were you, would you take $500 every month from the rest of your budget to pay a stability tax?  

Put this way, the cost of avoiding some uncomfortable volatility is actually quite a burden! Half your future wealth? It’s a lot to pay to smooth some bumps now. 

Clients, that is why we work with you to determine if you can live with volatility on some fraction of your money. Instead of pandering to the fear of wiggling, it is more gratifying for us to strive to be effective long-term investors. We’re all about trying to grow the bucket, not giving you a smoother ride to a likely-poorer future. 

To be clear, this isn’t for everyone, and it is not suitable for short-term goals. But when you would like to talk more about avoiding the drag of stability on your long-term investing, please email us or call. 


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The Stability Tax: A Smoother Ride to Foregone Gains 228Main.com Presents: The Best of Leibman Financial Services

This text is available at https://www.228Main.com/.

Should You Get a Tattoo?

Should you get a tattoo? It’s quite a commitment. But the idea makes me wonder: what are the images and messages that matter most to us? What guides our choices?


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On Getting a Tattoo

graphic shows the word "REMEMBER" etched into a stacked stone wall

Friends, maybe you could have guessed this about me… but I don’t have any body art. (I seriously doubt this topic has ever crossed your mind, but here we are.) 

I’m considering the idea of a tattoo—just the idea. A tattoo is a somewhat permanent endeavor: that ink becomes a part of your human body, so it’s as permanent as any other part of these mortal vessels we have. 

To some, it’s a huge commitment. It’s etching a message that travels with you, for the rest of your life! I suppose it’s not something to take too lightly. 

But I can appreciate what a powerful tool it might be across someone’s lifetime. A tattoo may not be for everyone, but we certainly understand the impact that a phrase or image or saying can have on a person. 

As an alternative, you could also consider getting yourself a “mind tattoo.” This idea appears in Jennifer Pastiloff’s book On Being Human, and it was important to her as she worked to change her life. She chose guiding words—anything that helped open her up, when she felt like shutting down.  

So what would you pick, if you could get a key idea inked into your mind, a reminder that was always there when you needed it? 

The nice thing about a “mind tattoo” is that it can be your own little source of strength. No need to shout it from the rooftops or fight about it on the internet, huh? 

So may something helpful become etched in your mind. Keep an ear open for that mantra, any words that help you breathe more deeply when you’re feeling overwhelmed. 

Who knows what might stick with you?


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The Longevity Discount of Investing

Stability is no bargain. A lump sum invested for 25 or 30 years in a less wiggly portfolio might only grow to half as much as a more effective portfolio that embraces that longer time horizon. The longer we can tolerate volatility, the better off we may be.


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It’s Second Look—and Second Opinion!—Season

graphic shows the words "'Tis the Season" inside a magnifying glass

Clients, the markets are at a low point. It’s a prime time to revisit our holdings! Let’s take a second look. 

To be clear, portfolio reviews are part and parcel of our regular business. But these times of churn and change are a great opportunity to look more closely—and try to make sense of everything given the context. 

Conversations with some of you lately have inspired some changes. Could it be time to garner tax losses and take a different approach with some of your resources going forward? 

Our goal at 228 Main is to grow your buckets. We believe the better off you are, probably the better off we will be down the road. That’s enough for us to review and comment on your plans and planning, as well as your investment holdings and accounts. 

While it’s Second Look Season for us in the shop, could it be Second Opinion Season for anyone in your life? It could be you know folks who are paying fees for investment management when their investments don’t seem to be managed at all. Does anyone in your life have long-term investments stuck in stagnant short-term holdings? 

I often say I’m in business to talk all day. If you have questions about your holdings, I might as well be talking to you and your loved ones! And clients, please know that we have nothing to lose by your seeking a second opinion of your own. All the power to you: you are the boss of what you do with your wealth. (We seem to get all the business we deserve, and none that we don’t.) 

No matter where our resources land, remember that the markets go up and down. We won’t tell fairy tales about “minimizing risk” or getting market returns without enduring the inevitable fluctuations. We will not ignore that the price of so-called “safety” is often the loss of potential future gains. 

But we do believe in striving for long-term total returns. So we live with volatility. No waves, no voyage. No rain, no flowers. 

Clients, when you have questions about your situation, please write or call. If you know someone who would like to chat with us, let them know Second Opinion Season is in full swing, now through year-end! 

Thank you all, for everything. 


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Play the audio version of this post below:

It’s Second Look—and Second Opinion!—Season 228Main.com Presents: The Best of Leibman Financial Services

This text is available at https://www.228Main.com/.

A Guess as Good as a Plan

Sometimes new clients visit our office with apologies ready: they don’t exactly know what they want or what they might need in the future. And that’s okay. Plans and hunches and visions… It’s all welcome.


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When a Hunch Is Good Enough: Invest Wisely, Spend Well (Whenever)

It’s a new school year for so many of our children, grandchildren, and neighbors. Maybe you’ve enjoyed the flood of perennial back-to-school photos. Some families have their children hold up chalkboard signs, to record the details—their new teacher’s name, their favorite color right now, and even what they’d like to be when they grow up. 

I can’t help but imagine what surprises are in store for some of these little ones! Who among us could’ve known exactly what form of work would find us in the future? Bike courier, hotel manager, a director of photography who specializes in making food look good in commercials—did any of these folks call their shot as kindergarteners? 

It’s an interesting question, and maybe we should keep asking it. What do I want to be when I… reach my next birthday? Or the one five or ten years hence? 

What do I want to have in the next chapter of my life? 

What doors would I like to keep open? 

These might sound like daydreams, but even the hazy hunches of children can be revealing, if not instructive. Sometimes new clients visit our office with apologies ready: they don’t exactly know what their goals are, they don’t know what to ask for, or they can’t begin to imagine what will be possible down the road.  

And that’s okay. Just like the question on those little chalkboards, a hunch is good enough. Memoirist Katrina Kenison wonders, “Who knows, really, where dreams begin?” Maybe we’ve been on a certain winding path since we were children. Maybe we discover what we’re about later in life. Maybe our circumstances change, and we get dealt a hand we didn’t imagine we’d ever be playing. 

A friend of mine used to tell their children, “This is the plan… until it isn’t.” And that’s life, right? 

It’s okay to settle on a general direction, even in your financial life. Growth, an eye on sustainability: these are worthy plans all by themselves. You don’t have to know the destination of every penny. Such a privilege means that you’re buying your future self some options. Resources bring flexibility. 

You can always invest wisely, now; the “spend well” part can wait. And what a journey that will be! We’re glad to be here with you.


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An IRA for All Seasons

Maybe you’ve heard the phrase “kiddie IRA”: it’s not a technical term. It refers instead to the use of a Roth IRA to help a young person start their investing career. Never too young?


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