Tag Archives: Steve Thorpe

Investing Book Review: Jim Otar’s Unveiling the Retirement Myth

This is a guest blog by By Steve Thorpe.

(Part two of this review, Steve Thorpe’s compilation of the best advice and insights from Unveiling the Retirement Myth by Jim Otar, will run tomorrow.)

For individual investors planning for retirement, basing those plans on averages just doesn’t cut it. For example, one might estimate an investor’s expected life span, future investment returns for a given asset mix, inflation rates, etc. But the investor may live longer than average, the sequence of future investment returns could easily go against him or her, likewise inflation effects can be enormous over time. Bad luck in any of these areas can easily deplete a retiree’s investment portfolio to zero during his lifetime. Unfortunately we are unable to change the luck factors that can so profoundly affect a retiree’s future income stream – or lack thereof.

Jim C. Otar, a financial advisor, Certified Financial Planner, and engineer, clearly explains these topics and more in his book Unveiling the Retirement Myth: Advanced Retirement Planning based on Market History. This review contains only a sampling from this fine body of work; accordingly I’d recommend that you pick up a copy if you want to understand all the details.

Most Research and Many Strategies Are “Just Plain Garbage.”

He covers a lot of ground in the book including: diversification, rebalancing, optimum asset allocation, warning signals of potential diminishing luck, flaws of investment simulations, budgeting for retirement, determinants of a portfolio’s success, and many others. This review will focus mainly on two core insights. First, that luck plays a remarkably large part in how well any retirement plan holds up. Second, that lower withdrawal rates, not savvy asset allocation, is the best defense against bad luck. Continue reading

Arguing with Mark Cuban on Asset Allocation

After reading Mark Cuban’s January post on his well-read “blog maverick” painting asset allocation as Wall Street hucksterism, I wondered if others had responded to his arguments. I found several interesting pieces, one that took Cuban’s tirade as a jumping off point for a discussion of the importance of understanding and believing in your allocation on My Money Blog and another on Darwin’s Money that made its point of view clear in its title: “Mark Cuban is Dead Wrong.” Continue reading

How to Pick an Investment Advisor

It’s a question financial experts get all the time: how should I chose an investment advisor?

The number of people offering some form of financial advice is growing fast. According to Smart Money, “the ranks financial planners, college aid advisers, mortgage brokers and more are expected to increase by 30% by 2018, to 271,200” per the Bureau of Labor Statistics.

Obviously some of those 271,000 people will be better than others. So how do you find the right advisor? Continue reading

Tax Loss Harvesting: Making Lemonade from Lemons

This is a guest post by Steve Thorpe

Would you invest a few short hours to reduce this year’s taxes by $1,000 or more?  For investors with taxable investment accounts, this is often possible by taking advantage of tax loss harvesting (TLH). This perfectly legal strategy makes lemonade from lemons, allowing Uncle Sam to share part of the pain of the losses inevitably experienced by investors at some points during their investing career

Between now and the end of the year is a good time to review your portfolio to see if any of your holdings are in the red. If so, you might be able to use those losses to help lower your 2010 tax bill.

In this article I’ll review:

  1. How to harvest a tax loss and under what circumstances you might want to.
  2. Why you need to keep track of what your investments cost in the first place.
  3. How to properly rebalance your portfolio after a sale, without triggering undesirable tax consequences.
  4. The way investments look from a tax perspective: short-term losses can be more valuable than long-term losses. But hold onto gains at least a year and a day.

Continue reading