Advice is one thing. Education is another. Welcome to our area dedicated to highlighting Sensenig Capital’s perspective on private wealth management, unbiased investment advice, and comprehensive financial planning. You’ll find articles designed to inform and enlighten. Spend time browsing through the topics to learn more about our approach and what we believe.
Jeremy recently had the privilege of presenting on the topic of his career to several elementary school classes. Hmmm, how best does one keep the attention of a bunch of 7-9 year olds on the topic of money and investing for 30+ minutes? We explained to the kids that we help people make smart decisions with their money. We teach them how best to save, how to make a plan for their money, and also how to invest so that it grows over time.read more
Whether it’s the recent destruction wrought by Canada’s Fort McMurray oil sands wildfire, a potential June “Brexit” from the European Union, or uncertainty surrounding this year’s US presidential election, there is plenty of risk to go around as we swing into another busy summer. Is investing riskier than usual these days? In our experience, probably not.read more
Charitably minded and holding significant assets in an IRA? If you are thinking about making a donation to charity, consider a qualified charitable distribution (QCD) from your IRA. A new law finally makes these transfers a permanent planning option.read more
By design and intent, we are and will remain an independent, fee-only Registered Investment Advisor firm, dedicated to advising our clients on how to best manage their wealth – all of their wealth – according to their own cherished goals. We are dedicated to being transparent and caring and fiduciary. With or without any regulatory requirements, this is what we do; it’s who we are. It’s bred in our bone. As the DOL rule begins to (hopefully) improve on the retirement planning advice that all investors receive, we welcome any questions you may have about its impact on your own interests. In the meantime, if you notice other firms mimicking us as a result of the new requirements, you might want to ask them: What took you so long?read more
As we’ve discussed in the first two parts of this three-part series, we do not recommend turning to dividend-yielding stocks or high-yield (“junk”) bonds to buttress your retirement income, even in low-yield environments. So what do we recommend? Today we’ll answer that question by describing total-return investing. Part III: Total-Return Investing for Solid Construction If you think it through, there are three essential variables that determine the total return on nearly any given investment: Interest or dividends paid out or reinvested along the way The increase or decrease in underlying share value: how much you paid per share versus how much those shares are now worth The damage done by taxes and other expenses Total-Return Investing, Defined Instead of seeking to isolate and maximize interest or dividend income – i.e., only one of three possible sources for strengthening your retirement income – total-return investing looks for the best balance among all three, as they apply to your unique financial circumstances. Which strategy is expected to give you the highest total return for the amount of market risk you’re willing to bear? Which is expected to deliver the most bang for your buck, in whatever form it may come? If you’re thinking this seems like nothing but common sense, you’re on the right track. Last we checked, money is money. In the end, who wouldn’t want to choose the outcome that is expected to yield the biggest pot given the necessary risks involved? Why would it matter whether that pot gets filled by dividends, interest, increased share value, or cost savings from tax-wise tactics? In Total-return investing: An enduring solution for low yields,” Vanguard describes the strategy as follows: “Many investors focus on the yield or income generated from their investments as the foundation for what they have available to spend. … The challenge today, and going forward, is that yields for most investments are historically low. … We conclude that moving from an income or ‘yield’ focus to a total-return approach may be the better solution.” And yet, many investors continue to favor generating retirement cash-flow in ways that put them at higher risk for overspending on taxes, chipping away at their net worth and weakening the longevity of their portfolio. We’re not saying you should entirely avoid dividend-yielding stocks or modestly higher-yielding bonds. With total-return investing, these securities often still play an important role. But they do so in the appropriate context of your wider portfolio management. Let’s take a look at that next. The Related Role of Portfolio Management The tool for implementing total-return investing is portfolio-wide investment management. Decades of evidence-based inquiry informs us that there are three ways to manage your portfolio (the sum of your investment parts) to pursue higher expected returns; more stable preservation of existing assets; or, usually, a bit of both. The most powerful strategies in this pursuit include: Asset allocation – Tilting your investments toward or away from asset classes that are expected to deliver higher returns … but with higher risk to your wealth as the tradeoff Diversification – Managing for market risks by spreading your holdings across multiple asset classes in domestic and international markets alike Asset location – Minimizing taxes by placing tax-inefficient holdings in tax-favored accounts, and tax-efficient holdings in taxable accounts By focusing on these...read more