maximizing returns

Time Machines or Time Capsules?

Both could serve their purpose, but which sounds more useful, more versatile: a time capsule or a time machine? Well, the two might have something to teach us about our investment vehicles. More on the blog.


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Time Machines and Time Capsules

Both could serve their purpose, but which sounds more useful, more versatile: a time capsule or a time machine? Well, the two might have something to teach us about our investment vehicles. More on the blog.


Want content like this in your inbox each week? Leave your email here.

Checking the Couch Cushions

It’s been a while, but I do remember scrounging for change—flipping over couch cushions, checking the slot at the vending machines, walking a parking lot for anything that’d been dropped or forgotten.

A paper route and other gigs soon changed my focus, and I discovered the power of steady income. Whether we’re talking about one-off opportunities or streams, there are plenty of ways to check for change in the couch cushions.

Maybe you’ve heard someone advise you, “Don’t leave money on the table.” It often comes up in negotiations or sales situations, but there are scrounge-worthy lessons for many areas of our financial lives. Some ideas we love?

  • Knowing what you need—and not just what you want or could use. This self-knowledge provides great perspective. When we keep the basics in mind, we know where the bar is. Anything above the bar is extra, bonus, a cherry on top. The practical implication is that awareness makes us more patient. If a purchase or expenditure is not an immediate need, we know we can afford the time to wait for a sale, a deal, a change of season, or any other more opportune moment. This is saving your scrounging for the right time.
  • Asking for what you’re after. You know we believe in the practice of transparency: there’s not much to be gained by withholding our goals or expectations. It gives the other parties involved—a boss considering your next raise, a mentor, a new financial advisor?—a chance to do their best for you. And if people still aren’t in alignment, wouldn’t you rather know sooner than later? This is a method of scrounging for time to work toward your goals.
  • Remembering you don’t know what you don’t know. This could be a productive conversation starter for anyone in your circle you trust. It’s something you could ask your tax professional, your employer’s human resources department, or even our office: “In your experience, what’s something I may not know that I don’t know?” There could be opportunities people wouldn’t know to think of! This is scrounging for possibilities.
  • Maximizing those matches. Yes, you know this is a favorite of ours: take full advantage of any employer match on retirement contributions. It’s more bang for your literal buck. It’s free dessert for eating a balanced meal.

We should note that we believe in leveraging opportunities: we do not believe in abusing any system to the detriment of the community. (Many of us learned our lesson in childhood: our siblings’ rooms are not fair game for scrounging the way the couch cushions are!)

There are, however, plenty of aboveboard strategies for scrounging. Opportunities abound. Which are worth it?

Clients, when you’d like to explore this topic—or anything else—write or call.


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Higher Returns, or Minimize Taxes?

© Can Stock Photo / joebelanger

In the course of our research, we recently came across a survey of investors published by a large investment organization1. It contained an example of a technique that might be used to manipulate investors into a less-than-optimal path.

Would you rather minimize taxes, or achieve the highest investment returns? Many people might think that this is a straightforward question: the survey reported that 61% of baby boomers preferred to minimize taxes. In our opinion, it is indeed straightforward—just not in the way they think it is.

We pondered that question, and wondered why there was even a choice between minimizing taxes and going for higher returns. Generally, an investor comes out better off if she or he aims for the highest after-tax returns.

Peddlers of financial products know that if they can get a prospect to focus on taxes, then it doesn’t matter whether the investment is really any good or not. It merely needs to meet that very important objective of minimizing taxes. A tight focus on taxes takes the spotlight away from the actual investment and its performance.

We think a better approach is to include the potential impact of taxes in our investment decision-making. You may hate taxes, but it would make no sense to go for 1% tax free instead of 6% taxable (all other things being equal)—the higher rate would leave you better off even after you paid the tax.

Some of you are more concerned about income taxes than others. It doesn’t matter what your object is, we need to agree that seeking the highest after-tax returns is a more sensible goal than either minimizing taxes or achieving higher returns. In our reality-based approach, we can integrate both objectives to work towards a more sensible plan.

Each of you is free to make whatever decisions you would like to, with your money. (We never forget whose money it is.) If you bring it us, we are never going to focus on just minimizing taxes, or just focus on achieving high returns. That is a false choice, and a seller who presents that to you may be trying to manipulate you.

We seek to achieve the best after-tax returns—that is the path that potentially leaves you with the biggest bucket. No guarantees, of course. Clients, if you have questions about this or any other pertinent issue, please email us or call.

1 2016 U.S. Trust Insights on Wealth and Worth survey, U.S. Trust Bank of America Private Wealth Management


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific situation with a qualified tax advisor.

This is a hypothetical example and is not representative of any specific situation. Your results will vary. The hypothetical rates of return used do not reflect the deduction of fees and charges inherent to investing.

All investing involves risk including loss of principal. No strategy assures success or protects against loss.