Monetary and Fiscal Policy… Helping the Economy or Slowly Drowning it?
In the first segment of the program this week I talk about the potential impact of the unprecedented use of monetary policy to support global economies. How does it impact the global economy and what impact does it have on the average consumer?
In segment two, I provide my experiences with Uber as I travel on business around the country. I use Uber as a good example of how a disruptive technology/business model has upended the somewhat monopolistic stranglehold that traditional cab companies had on transportation.
What is often overlooked is how lower costs, more supply and competition has actually increased demand and improved the level of service. Another overlooked reality is how the average cost of licensing a cab adds $30,000 to $50,000 per year that is passed on to the consumer. Uber and its ride sharing competitors can offer lower prices because the licensing structure in place for traditional transportation companies is avoided. The cost of a taxi medallion to operate in NYC has for many years has been about $1 million. Uber and other ride sharing drivers do not have this requirement.
In segments three and four, the focus is turned to retirement vehicles. The segment covers some of the differences regarding pretax and after-tax considerations. The idea is to give you a better understanding of where to save rather than what to invest in.
As always, I hope you enjoy the program.Thank you for listening to my program on KNBR. – Gary
On the program this week, I preview a new educational presentation we have been working on for a while. The presentation covers ten important decisions that help investors target long-term wealth accumulation in the capital markets. While the presentation is not currently completed, the information seemed very timely as financial markets took another deep around the globe last week.
I have noticed an uptick of investor anxiety as we have seen more volatility in capital markets in recent months. The increase in tensions highlights the need for a prudent investment strategy that investors can utilize through good times and bad. A prudent strategy, conviction, discipline and a strong dose of confidence goes a long ways towards generating a positive investment experience.
In this program, I was able to cover nine of the ten major investment decisions needed to develop and implement a prudent investment strategy. However, I was not able to cover investment decision number ten this week. That will be covered at the beginning of my show next week.
When the presentation is completed, we will release it and make it available to everyone online. We are currently working on some of the illustrations and completing the voice tracks. So look for that release in the near future.
In the first segment of the program, I spend time chatting about taxes from a strategic perspective. Often investors are encouraged to think short-term about taxes instead of strategically. In many cases, tactical tax planning does not solve the underlying issues.
I hope you enjoy the show this week.
Remember to subscribe or follow my blog if you would like to receive updates about when new podcasts become available. Here are the materials from this week’s show.
Segment 1: Strategic versus tactical investment tax planning
Segments 2-4: Pursuing A Better Investment Experience
It was one of those shows when I covered a lot of ground in a short amount of time. It started with my boredom over the Super Bowl week being dominated by footballs with slightly lower pressure. From there it was a quick discussion about the Croatian Super Bowl connection (my most popular blog post ever) and then a quick look at the California DMV and its quick turnaround concerning commercial plate requirements for ride sharing vehicles.
From there, we spent time discussing, 529 College Savings Plans and the President’s proposal to phase them out. By the way, he must have been listening… two days later he withdrew the proposal. From there it was off to a big picture discussion about tax revenue and spending habits in Washington. Look out folks, those pesky folks in Washington DC may be after your ROTH IRA accounts too!
The bottom line is simply a mathematical problem. The easy tax revenues for government have already been accessed. Now it appears that government is going to have to learn to budget better or more wisely in the future. It will become harder and harder to add new programs or significant spending without raising taxes on the middle class. It will be hard to go after more of the middle classes’ income, so the likely targets are their savings. And the ROTH accounts have a bulls-eye on them right now.
Finally, a short segment on my daughter Rachel and her experience at the giant home show. Grandma gave her $20 to spend and she learned several lessons on her own as she dealt with the concept of limited money and so many choices to spend it on.
As a parent, it was great to watch her grow as she came to grips with the idea of spending. Rachel learned how to budget for the day and limit her spending. I only wish it was that easy for Washington DC to curb its spending habits. Or maybe they can just learn to spend it more wisely!
Every investor whether they know it or not, is taking some type of risk in order to generate a potential return. However, too often, people spend all of their time focusing on the potential reward, while ignoring or downplaying the risk. Unfortunately, all of us need to understand that investment results (returns) by definition are random. There is no way to predict with any certainty before it happens what the stock market will return over any given period of time. It is this uncertainty that every investor must live with and learn to embrace in order to be successful.
On this program, I focus on what you should spend most of your time focusing on. Focusing on what you can control as an investor makes more sense than searching for an answer to something that cannot be. Therefore, investors should focus on those items you can control, in order to put the odds in your favor.
The following, in my opinion, are three items that can provide investors with a solid path towards success. On the surface, it seems simple and straight-forward. While there are nuances, it is this simplicity and discipline that provides elegant sophistication and success.
Three controllable investment practices:
1) Manage risk
2) Control expenses
3) Pay attention to taxes
It does not sound like much, but it is the heart and soul of investment success. I hope you enjoy this program.
HOLIDAY GREETINGS FROM ME TO YOU
It is the holiday season and I want to take a moment to thank each of my listeners for supporting my program over the past seventeen years. Thanksgiving is a time for being thankful and there is no doubt that my relationship with KNBR and my listeners over the years has been a wonderful experience. I hope that every one of you has a blessed holiday season, much happiness and a very prosperous and healthy 2015.