Category: Education

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Education Rob

Is a Custom-Fit Financial Plan Right for You?

“The only sensible person is my tailor. He measures me anew each time he sees me.” ~George Bernard Shaw

Author:  Robert Eklund

 

Our lives here in the good ole USA are as varied as ice cream flavors nowadays. (Think Ben & Jerry’s Marshmallow Sky or the tried-and-true Cherry Garcia).

We all enjoy and prefer different hobbies, places to live, and professions. We love different people, drive different cars, and enjoy different vacations and recreations; this variety helps make life exciting!

Thank God we are different; this would be a pretty dull world and nowhere close to the innovative planet we live on today if we all enjoyed the same things. Some people love science, others love art, some like flying planes, while others love finance. And some crazies actually enjoy both!


The Case for Tailored Financial Plans

NEWS ALERT – We are not the same, and never will be! These variations and aspirational differences make us uniquely…us. These differences illustrate why our financial plans should be more than just one-size-fits-all carbon copies. Our plans should be specifically tailored to our ambitions, values, and life goals.

The term tailors use to describe a suit that fits precisely to your body and no one else’s is bespoke. We know there are all kinds of suits differing widely depending on the occasion, size of the individual, the expected weather, and the budget. Nevertheless, there are articles all suits should include, such as pants, a jacket, buttons, a tie, and shoes.

Similarly, our financial plans should be tailored to our circumstances, values, goals, income levels, time horizons, and risk tolerance. However, all competent, professional wealth management should include risk assessments, retirement planning, estate planning, education wishes, insurance needs, etc.

Ideally, everyone would have tailored clothing. However, for many people, a bespoke suit or financial plan is outside of their budget, and an off-the-rack suit or financial plan that fits their circumstances can put them on the right path to accumulating wealth. Once assets grow and circumstances become more complex, a bespoke financial plan may make more sense than the off-the-shelf answer.


Simple Plans for Simple Lives

Let us take a 23-year-old minimum-wage worker living paycheck to paycheck. Let’s call him “Rooster.” Rooster has ambition, is disciplined, and would like to retire at age 67. He wants to live a comfortable but not extravagant life in retirement. At this point, he does not have a family or much in the way of assets or complexity. His plan may look like this:

Step 1. Ensure Rooster has three-to-six months of living expenses in a high-yield savings account.
Step 2. Save 15-20% of every dollar earned in a Roth IRA.
Step 3. Put these dollars to work for Rooster in a low-cost target-date retirement fund for now.
Step 4. After Rooster begins to see the benefits and power of compounding, talk to a fiduciary advisor about how to invest those dollars more deliberately outside of a target date fund.
Step 5. Save for short-to-mid-term goals in a separate taxable brokerage account invested in a money market fund or short-term bond fund.


Complex Strategies for Complex Lives

Now, we will consider a 59-year-old airline captain. Let’s call him Captain Maverick. Now, Maverick is married to a younger bar owner who is 49 years old. You guessed it, her name is Penny.

They have one child they want to put through college and aging parents they will help care for. Maverick will retire at age 65, and Penny will retire at 55. They would like to continue their current lifestyle in retirement and aspire to travel the world. Penny wants a new Porsche 911 in retirement, and Maverick wants a new Kawasaki motorcycle and to fly his P-51 Mustang 10 hours a month.

Maverick is maxing out his airline’s 401k 2023 IRS 415(c) limit of $69,000 plus his $7,500 414(v) catch-up contributions (for folks 50 and older).

Luckily, Penny’s bar does well because of all the drunken sailors. Unfortunately, she feels frustrated because even though her income is significantly less than Maverick’s, her income pushes their joint income into a much higher marginal tax bracket. She wonders if she should even waste her time with the bar since (seemingly) a substantial part of her income is going to the tax man!

Fortunately, Penny learned that she could contribute up to $69,000 to her Solo or Individual 401k because she is a self-employed business owner. The 401k is especially beneficial since Penny can contribute a significant percentage of her self-employed income. Furthermore, she can contribute pre-tax or Roth, just like Maverick!

Additionally, they both max out their after-tax IRA contributions and convert them to Roth including catch-up contributions ($7,000 for Penny, $8,000 for Maverick). They also contribute $15,000 annually to their Schwab taxable brokerage accounts using tax-efficient exchange traded funds (ETF) which can nearly mimic tax-deferred growth if invested correctly.

Maverick’s airline also contributes to a Market-Based Cash Balance Plan for their pilots, approximately $16,100 per year, including 401k spillover. You might have guessed that Maverick has a Navy pension ($54,000 per year) and a military disability benefit of $12,000 per year.


Preparing for a Secure Future

Developing a retirement income plan would help them determine if they are on track and ensure they can prepare for unexpected life changes that come their way.

Furthermore, their plan would be stress tested for potential market declines and evaluate the sequence of return risks and mitigate said risk using the Three Bucket Retirement Income strategy.

Here are other beneficial strategies Maverick and Penny consider helping to simplify the complexity of their financial lives:

  • College planning. What are the best places to save for Maverick (or Penny) Jr.’s education? What if Jr. Decides to skip college and attend a trade school or United’s Aviate program?
  • Long-term care planning. What if one or both has the need for long-term care during their lifetime? How can they help their aging parents in this difficult area?
  • Should they convert pre-tax dollars (401k) to Roth during retirement and before required minimum distributions begin?
  • Tax-loss harvesting strategies may be implemented for their taxable brokerage accounts thus reducing the potential tax drag due to capital gains taxes.
  • Utilize a risk-appropriate, diversified ETF approach to their portfolio to mitigate unseen risks to their investment strategy.
    Perform a thorough audit of life, liability, and health insurance needs.
  • A tax-efficient charitable plan could be developed to maximize their philanthropic contributions.
  • Legacy planning would be thoroughly discussed to help stabilize and solidify not only their financial futures but the future of generations to come.

As you can see the Maverick-Penny Plan is significantly more complex than Rooster’s. Maverick and Penny are likely to have quite a bit of income in retirement and they do not want to risk making a big mistake with their future.


The Value of Personalized Financial Advice

A bespoke financial approach could add tremendous value to Penny and Maverick’s financial lives, reduce their stress, and increase their peace of mind!

If you made it this far and are still awake, I thank you. As you now know, I am a fiduciary and vow to protect my clients’ hard-earned money with the highest devotion to their goals.

If you want to chat further about your personal financial goals or any other subject, please give me a buzz at (719) 624-7055 or shoot me an email at robert@leadgingedgeplanning.com.
Until next time, I hope you have only tailwinds and blue skies!

Please let us know if we can help you on your journey to financial peace and prosperity! Click here to sign up for our newsletter or click here to schedule a time to chat about your circumstances in more detail. Also, check out our Pilot Money Guys podcast, where we regularly discuss these types of financial topics along with some fun airline news updates and interesting guest interviews—even the editor and founder of Aero Crew News – Craig Pieper

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk and there can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this video will be profitable, equal any corresponding indicated historical performance level(s), or be suitable for your portfolio. Moreover, you should not assume that any information or any corresponding discussions serves as the receipt of, or as a substitute for, personalized investment advice from Leading Edge Financial Planning personnel. The opinions expressed are those of Leading Edge Financial Planning and are subject to change at any time due to the changes in market or economic conditions.

Categories
Charlie Education Kevin Pilots

United Airlines Pilot Long Term Disability Explained

United Airlines Long Term Disability

Kevin Gormley, CFP® Andy Christopher, CFA® , lead financial planners from Leading Edge Financial Planning, discuss the details of the long-term disability plan offered by United Airlines.

The key takeaways from the video are:

  • The long-term disability benefit pays out 50% of your pay until you reach age 65, which is the mandatory retirement age for pilots.
  • The benefit is tax-free.
  • The company pays for 75% of the premium, with the remaining 25% being paid by the pilot after tax. There is a cap on the monthly benefit amount.
  • The plan offers some additional benefits such as continued health insurance coverage at the active pilot rate and non-elective contributions to your 401k plan.
  • There are different waiting periods depending on whether the disability is occupational or non-occupational.
  • Pilots who are considering additional coverage on top of the United Airlines long-term disability plan can look into options offered by ALPA.

Kevin and Andy recommend that pilots carefully consider their options and do some budgeting to see if the 50% benefit will be enough to cover their expenses in the event of a disability. They also recommend having an emergency cash fund on hand to supplement the disability income.  

 

Note: Leading Edge Financial Planning is not affiliated with United Airlines.  This video is informational only.  Please consult an expert before making a decision.

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk and there can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this video will be profitable, equal any corresponding indicated historical performance level(s), or be suitable for your portfolio. Moreover, you should not assume that any information or any corresponding discussions serves as the receipt of, or as a substitute for, personalized investment advice from Leading Edge Financial Planning personnel. The opinions expressed are those of Leading Edge Financial Planning and are subject to change at any time due to the changes in market or economic conditions.

Categories
Charlie Education

What is Legacy Planning and Why it Matters to You Now?

Yes, I’m a Tim Mcgraw country music fan. I think at this point, he might be considered old school country music. Nonetheless, when we unpack the subject of planning for our legacy, we conclude with the idea that we must first face our own mortality.  

  • What is it that we really want out of our lives?
  • What purpose or cause are we excited about?  
  • What will we look back on at “the end” that will have truly brought us joy and fulfillment
“Begin with the end in mind.”

One of my favorite sayings is, “Begin with the end in mind.” I don’t know who said it first, but I know it’s the premise of the book “The Seven Habits of Highly Effective People” written by Stephen Covey. 

When we begin with the end in mind, i.e., our own mortality, it gives us the right perspective and context around the decisions we make today. It gives us the passion and urgency to impact those around us in a positive way. It also enlightens us as to what values we would like to pass on to our children. 

 
Legacy Beyond Financial Wealth
I turn fifty years old this July 2024, and I’m starting to feel a sense of urgency about what I am passing on to the next generation. Don’t get me wrong, I’m not concerned as much about how my children will handle gobs of money when I die (not yet anyway!). On the other hand, I’m more concerned about setting them up for success and not passing on certain dysfunctions I have battled through in my life.
I want my kids to be more secure in who they are than I was. I want them to know that in all situations, they are worthy, they are loved, and they are valued. You might say, these are our family values that I want to be intentional about passing on. 
Furthermore, I sincerely believe that I may have been a better military and commercial airline pilot if those values had been part of my natural identity from the start. When I think about creating my family, or community legacy, these are the things I think about.

 

Steps to Create an Intentional Legacy
This is an article about money and finances, so how do our values fit or apply to passing on wealth?  My answer to that question is this: 

If all I do is pass on financial wealth, there is a good chance my money may do more harm than good if the values I believe in are not part of my legacy as well. In essence, if I only pass on money to the next generation, I may actually set them up for failure.

  • Passing on character, values AND financial wealth is a very difficult thing to do. In fact, most millionaires in the United States are first generation millionaires

In a recent article in Business News Daily, author Stella Morrison says it this way:

”...around 68 percent of those with a net worth of $30 million or more made it themselves. Further, a second study by Fidelity investments found that 88% of all millionaires are self-made, meaning they did not inherit their wealth.” 

Let’s face it, airline pilots are earning more money now than ever. Many of you will be able to pass on significant wealth to the next generation or causes you care about. Furthermore, you will leave a legacy whether you know it or not, whether it’s good or bad.  Why not take the time to make it a good one? When you’re facing the end of your time on this earth, what will you value the most? Allow those questions to guide your life right now. 

Below are some practical steps and points to ponder to help you begin to think about how to proactively design your life and legacy. Because if you don’t take the time to be intentional about it, it will happen to you, and you may not like it!


Define the Problem:
You work your butt off to create income, wealth and a good life.  But your children probably didn’t see you overcome the obstacles and the challenges it took to get where you are. Money is not like other areas of our lives where we can expect our kids to pick up on our good habits and characteristics without significant effort and intentionality.

The other day I asked a friend of mine how his son got interested in the weightlifting team at his high school. He shrugged his shoulders and commented that his son must have been influenced by seeing him and his wife work out consistently over the years.

Learning about money and personal finances, on the other hand, is very different. Often families have great money habits, but if these principles and habits are not clearly communicated misperceptions can form.

For example, “my parents don’t spend lavishly, therefore we must be broke.”  In this example you may have excellent money habits but unless your money values and your intentions are clearly communicated you may unintentionally pass on an attitude of scarcity versus an attitude of abundance.


Here are three steps to consider if you want to be intentional about passing on your legacy:
Your children may not see all the hard work and sacrifice you put in to become a high-income airline pilot. All they see is you home three to four days a week trying to catch up on house chores before you pack your bags again. “That’s not so bad…I like this airline stuff!”

 

1. Share your experiences, challenges and struggles with your loved ones.
Consider sharing more of your experiences with your family. At the appropriate time, discuss some of the challenges you overcame to become that highly skilled, highly sought after airline pilot.
  • Your kids may scoff (mine just laugh) at you a little when you share but they will remember you struggled and overcame obstacles.  
  • Hopefully, when inevitable challenges come their way, they will remember that even though you struggled at times, and you were able to overcome obstacles and achieve your goals.  At least they will know enough to not expect the path to always be smooth sailing. 
  • Unfortunately, this means we must be a bit more vulnerable and open about some of our challenges. Personally, I like to make people think it was all a breeze. That would mean that I’m smarter, tougher, stronger than I really am. That’s not what our kids need to see.


2. Communicate with your spouse, significant other or trusted friends.

Often, we are creating a great legacy and positively influencing those around us without thinking about it. It may just come naturally to you.  However, for the rest of us, the first step is to literally say it out loud. What is it you want? Bring the subconscious into the conscience by discussing it with someone. I often forget that my wife doesn’t know what’s on my mind or doesn’t know what I’m trying to accomplish by talking to our kids about “who they are.”

•    Better yet, write it down. There is something very powerful that happens when you write down your goals, vision for your family, or family core values.  If you search the internet, “why is writing down my goals important” you will get a slew of great articles about how you are 42% more likely to achieve your goals if you write them down. 

One article from Inc.com written by Peter Economy, The Leadership Guy says, “writing your goals down not only forces you to get clear on what, exactly, it is that you want to accomplish, but doing so plays a part in motivating you to complete the tasks necessary for your success. The process of putting your goals on paper will force you to strategize, to ask questions about your current progress, and to brainstorm your plan of attack.”


3. Write down what you want people to line up to thank you for on your deathbed.
A little morbid, I know. However, let’s just admit that we’re all going to die someday. And all the toys you’ve accumulated will not be on your mind when that time comes. What will be on your mind? What do you want your epitaph to say?
The next time you’re flying from New York to San Francisco… 
•    Take some time to ponder what the top five things you want to say about yourself before you’re gone.
•    Take some time to plan what you want to be remembered for, forever.
•    Write down what non-financial character traits and values you would like to see in your family passed down for generations.  Is it your faith? Is it something specific to your family such as an attitude of service before self or leadership. Be intentional and plant the seeds now.

 

Values to Pass on to Future Generations
In closing, here are a few of the values we are trying to pass on to our young children.

1.    An attitude of stewardship versus an attitude of ownership. In other words, we’ve been blessed with something (money, health, relationships) and it is our responsibility to take care of them, nurture them and hopefully bless others along the way.

2.   An attitude of generosity. Study after study shows that giving makes us happy. That’s all there is to it, so help them build habits of generosity now.
3.   An attitude of abundance versus scarcity. I believe if our kids are secure in who they are, they will not feel the need to get more for themselves at the expense of someone else.
4.   An attitude of ownership and responsibility. We want to teach our kids that it’s okay to make a mistake or even fail at something.  It’s part of the growth process. I want my kids to know they can fail and overcome the situation or face the consequences and it’s okay. If we shortcut or insulate the struggles our kids may face or go through, we cheat them out of the opportunity to find out what they really want and what they are willing to do to get it.

Final Thoughts
What we do now will impact multiple generations, possibly hundreds of years. Passing on financial wealth is the easiest form of capital to pass on but it can be the most destructive if we haven’t prepared the next generation to handle the responsibility of wealth.

 

Hopefully, you found this article interesting and helpful.
If you have any questions, contact us at 865-240-2292 or Charlie@leadingedgeplanning.com.
Also, please tell us if we can help you on your journey to financial peace and prosperity!
Click here to sign up for our newsletter or click here to schedule some time to chat about your circumstances in more detail. 
Also, check out our Pilot Money Guys podcast where we regularly discuss these types of financial topics along with some fun airline news updates and interesting guest interviews.  Even the editor and founder of Aero Crew News – Craig Pieper!

 

Disclaimer
Leading Edge Financial Planning LLC (“LEFP”) is a registered investment advisor. Advisory services are only offered to clients or prospective clients where LEFP and its representatives are properly licensed or exempt from licensure. For additional information, please visit our website at www.leadingedgeplanning.com.
The information provided is for educational and informational purposes only and does not constitute investment advice, and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor’s particular investment objectives, strategies, tax status, or investment horizon. You should consult your attorney or tax advisor.
The views expressed in this commentary are subject to change based on market and other conditions. These documents may contain certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance, and actual results or developments may differ materially from those projected. Any projections, market outlooks, or estimates are based upon certain assumptions and should not be construed as indicative of actual events that will occur.
All information has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy, reliability, or completeness of, nor liability for, decisions based on such information, and it should not be relied on as such.
 

 

 
Categories
Charlie Education

The Tax Man Cometh – Do Not Be Afraid!

“Intelligence pushes you toward the idea that complex problems require complex solutions”

~Morgan Housel, Money psychology expert*

Paying taxes often causes a visceral reaction. I get it! It is probably the single most painful financial task we have to face on an annual basis. Furthermore, many of you recently received large contract bonus paychecks. For some of you, income taxes will be withheld up front and others may owe a large tax bill, due to under withholding, next April when tax-year 2024 income taxes are due.  

This angry, visceral reaction causes us to go to great lengths to outsmart the tax man. Many of us seek complex solutions to avoid taxes at all costs. Unfortunately this sometimes leads to bad investment decisions or large, unwanted purchases (trucks, tractors, airplanes!) that we may not want or need, all in the name of reducing our tax bill.  Do not let the tax tail wag the dog! This is easier said than done and akin to buying high and selling low in the world of investing.  

While there are effective strategies to reduce our tax burden, we should not do things that reduce our overall wealth and net worth.

Avoid the Complexity Trap

Pilots are known for their type-A personalities and “get ‘er done” attitude. Pilots work hard to solve problems and make things happen under very difficult circumstances. However, it is human nature to spurn the simple solution for the complex. This phenomenon is called the complexity bias. https://fs.blog/complexity-bias/ 

Be aware that complex tax reduction solutions often come with higher IRS audit risk as well as risks of repayment penalties and interest. Extreme cases may even warrant prison time. For some good entertainment while you are waiting on your delayed flight, simply search the internet for, “Airline Pilot Tax Fraud.”  You will find some very interesting characters doing things to evade taxes that might sound familiar and not too far fetched from some of the conversations we’ve had on the flight deck!  

While we are often tempted to overcomplicate our tax strategies, especially with big-ticket purchases, it’s essential to recognize that complexity can lead to costly mistakes. Here are a few key rules to follow:

  • Do not reduce your wealth and net worth in order to stick it to the tax man!
  • Do not seek out complex tax strategies that are high IRS audit risks when there are several simple, audit risk-free strategies to reduce your lifetime income tax burden.
  • Do not spend money on big-ticket items that you do not want or need in order to reduce your tax bill.  This is mathematically equivalent to spending one dollar to save thirty cents. 
  • Reducing your income tax burden over your lifetime may be more profitable than reducing your current tax bill.  
Tax Strategies

Sometimes we have to choose whether to reduce taxes now or invest in strategies that could reduce our income tax burden during retirement. Unfortunately, it’s hard to imagine our future selves and what we will need, which can lead us to decisions that might benefit us today but are very costly in the future.  

Below are four tax ideas that can help you legally avoid paying more taxes than you are  required to pay. But first here are three strategies that require special care and attention to detail in order to avoid gaining the attention of the IRS:


Strategies that Require Special Care
1. Claiming Residency in Another State using your Condo or Crash Pad 

Many high-tax states get very aggressive about going after folks that reside in their state but claim to be residents of another state. Of course there are circumstances where this is absolutely legitimate but use caution and keep extensive documentation. 

You can search the internet for requirements to be an actual residence of each specific state, but here are a few that are standard in most states: 

  • Spend 183 days or more in the state you claim to be a resident of
  • Enroll your children in school there
  • Register to vote
  • Receive your mail
  • No tiny homes…

For example, New York will look at the size of your house in Florida to make sure your residence in Florida is similar in size to your captain mansion in New York. Evidently purchasing a tiny home or small condo in Florida is a tell-tale sign that you don’t spend much time there.

2. Deducting Your Airplane (e.g., because you’re teaching your kid how to fly)

The details of when and how to deduct airplane expenses are very complicated and beyond the scope of this article. However, here are a few things to keep in mind.  

  • You cannot deduct the cost of your airplane (depreciation) unless it is used more than 50 % of the time for your (legitimate) business.
  • It is not a deductible expense because you need to keep your flying ratings current.
  • If at any time during the depreciable life of the airplane, personal use exceeds 50% there will be an immediate depreciation recapture.  (I.e., you will owe a lot of taxes all at once.)
  • All of the excess bonus depreciation is recaptured if the business use of the property falls below 50% and also a portion of the accelerated depreciation (the excess over the straight line) is recaptured if business use falls below 50%. (Updated 09/19/24)
3. Investing in Real Estate to Deduct Losses Against Your Airline Income

Remember rule number one – do not reduce your wealth to save taxes. It is not uncommon to see bad investments in real estate when high-income pilots are desperate to reduce their tax burden. In fact, it seems that we almost feel an obligation to purchase real estate solely for the tax deductions at a certain income level. I have heard many pilots confess that they must not be very tax savvy because they do have a real estate investment…or three.  Here are a few things to know before jumping into real estate investing:

  • Over a certain income level (currently $150,000) you cannot deduct real estate losses against your airline income. For example, if you replace the roof on your rental home and therefore show a loss of $10,000 on your rental property income statement you cannot deduct the loss against your current airline income. (However, the loss can be carried over.)

Note: If you are considered a Real Estate Professional, the above may not apply.  Being a real estate professional is a very high standard set by the IRS and is nearly impossible for an airline pilot to obtain unless they have a spouse, “in the business.”  

  • Real Estate can be a great investment. However, one rule of thumb I read a long time ago is good to keep in mind; In real estate investing you need to make money on three occasions; when you buy, when you rent and when you sell. That is not easy to do!
  • If you do not enjoy being a landlord and managing the business of real estate, I would avoid it altogether. There is no tax deduction worth making you miserable. If you plan on hiring a property management firm to delegate the pain, make sure they don’t eat into your profits too much. Some agencies can charge as much as 30% or more depending on the level of support. There are cheaper ways to invest in real estate if your costs become excessive.  (Publicly traded Real Estate Investment Trusts aka REITs) 
Smart Tax Strategies for Long-Term Savings

Instead of risking your financial future with complex schemes, here are four simple, effective ways to reduce your income tax burden over your lifetime.

1. Backdoor Roth IRA

This strategy is based on the IRS rule that:

  • Anyone, regardless of income, can contribute to an after-tax, non-deductible traditional IRA.  
  • Anyone, regardless of income, can convert a traditional IRA to a Roth IRA if they pay the taxes on the gains (if any) in the traditional IRA.  

There are more things to know before executing the back door Roth IRA, so make sure to consult your tax and investment advisor. 

2. Health Savings Account (HSA)

If you are relatively healthy and only frequent the doctor’s office for preventative care and the occasional sniffles, a high-deductible health plan may be right for you. If that is the case, a Health Savings Account (HSA) is a great tax savings account. It is the only account in existence with triple tax savings: tax-deductible contributions, tax-free growth, and tax-free withdrawals for medical expenses.

3. Taxable Brokerage Accounts (non-IRA, non-401k investment account)

This is the most overlooked and advantageous account once you’ve maximized your 401k and potentially the (back door) Roth IRA. The taxable brokerage account is very flexible. There are no contribution limits and no withdrawal penalties. It is taxed at capital gains tax rates, which for most of you is much lower than your income tax rate. Finally, if you invest in low-turnover mutual funds (index funds) and Exchange Traded Funds (ETFs), you can essentially create your own tax-deferred growth. 

4. Real Estate

Even though I bashed real estate previously, it can be great for rental income and investment diversification. People can be very successful investing in real estate if they enjoy putting in some sweat equity and managing the rentals themselves. Short-term rentals may qualify for cost segregation, bonus depreciation.

Bonus Tip: Electric Vehicle Tax Credit

If you’ve received a contract ratification bonus, consider purchasing an electric vehicle. If your adjusted gross income is below $300,000, you might qualify for a $7,500 federal tax credit.

Tax season doesn’t have to be a burden. By avoiding unnecessary purchases and focusing on long-term strategies, you can reduce your tax burden without compromising your financial future. Stick to these principles and consult a tax professional to ensure you’re on the right track. Smart planning is key.

Resources:

Morgan Housel CNBC article: “Why the smartest people make bad decisions – compared to those with average IQ.”  

How to establish Florida residency? Kiplingers Article

Real Estate Cost Segregation Study

Contact Us:

Phone: 865-240-2292

Email: info@leadingedgeplanning.com

Disclaimer:
The information provided in this blog post is for informational purposes only and should not be considered as financial advice. Please consult a qualified financial professional for advice tailored to your specific circumstances.

Categories
Education Rob

The Fiduciary.

Fiduciary,Duty

The Fiduciary.

The first time I heard the term “fiduciary,” I said to myself, “fidu…what? Sounds fancy.” Then I fell asleep. Admittedly, this topic appears boring and could put my 16-year-old boy all hopped up on Mountain Dew to sleep. But, here is a wake-up call – knowing who is and who is not a fiduciary is the first step in finding someone actually to help you with your money.

So, what is a fiduciary?
A fiduciary is someone who acts on behalf of another person and has a fundamental obligation to put their clients’ interests ahead of their own, with a duty of undivided loyalty and utmost good faith. Fiduciaries are bound both legally and ethically to act in the client’s best interests.  SEC Chairman Jay Clayton defined the fiduciary responsibility this way, “This duty – comprised of both a duty of care and a duty of loyalty – is principles based and applies to the entire relationship between the investment adviser and the client.”

When someone is a fiduciary, it applies to the “entire relationship,” not parts of it. It is the highest standard in the financial world. You may be saying, “Okay. Great! Aren’t all financial advisors fiduciaries?”  I would say, “NO!”  Unfortunately, the term financial advisor is very nebulous and can apply to brokers (registered representatives), IARs (Investment Advisor Representatives), or hybrid advisors who are dual-registered and can act as both a broker and IAR. The bottom line is only IARs who are only IARs (not dual-registered) are fiduciaries always. They must do what is in your best interest, even if it hurts them. They are like financial knights, putting your kingdom before their own monetary gain.

You, “Great Rob, what about Bernie Madoff? Wasn’t he a fiduciary?”  You are absolutely correct!

Yes, Madoff was a fiduciary advisor  (before that, he was a highly successful broker). I am definitely not saying that just because someone is a fiduciary, they will do what is best for you and your money. However, I am saying, by law, they are supposed to do precisely that (Madoff was sentenced to 150 years in federal prison). There are criminals in the world, and you need to take steps to make sure they are not defrauding you. Fortunately, many changes have taken place since Madoff and, perhaps one of the most important was the shift to a custodian system. A custodian system is where your advisor does not hold your money. Instead, a custodian like Charles Schwab retains it, and you can independently check your accounts to make sure it is where you think it is…not off in a Ponzi scheme. So, make sure your fiduciary IAR has a third-party custodian, and they don’t hold your money themselves.

You, “How did you gather this knowledge?”

I have been interested in investing ever since I was knee-high to a grasshopper. However, I acquired this fiduciary knowledge several years ago when I was a newly minted first officer before becoming an IAR and before Reg BI (discussed below). At that time, I began a journey to find a trustworthy financial advisor for myself. As a military officer, money had not been a primary concern, and, to be honest, I didn’t have enough of it to matter. But as I began my major airline career (2013), I realized I would soon have enough money that I had better start thinking about how to manage it.  I knew I needed help. My focus was on learning how to be a First Officer while still juggling my Air Force Reserve career.  Many questions ran through my head. The biggest and most important was, “How can I protect my money?” The money I had worked so hard to accumulate. What I found surprised me.  

Many investment advisors wanting my business were brokers. Some of these brokers were very intelligent and could sell with the best. One problem, they only had a “suitable” duty of care to me and my money.  What does “suitable” mean? It means they only had to put my money into investments they deemed…wait for it…adequate. They did not need to give me advice that was best for me. To be clear, I am sure there are many respectable, ethical brokers out there; I am not saying there aren’t. But, with a suitable standard, they had no legal obligation to do right by me and my money. 

For example, say I had two financial advisors: an IAR (fiduciary) and a broker (suitable in 2013). Let us say they both had the option to put me in one of two identical funds, except one fund has higher fees. The IAR, legally, could not put me in the higher fee fund. The broker could legally put my money into the higher fee fund and likely would if they were getting paid to do so, as long as they deemed it adequate.

You, “Okay, but that was then, right? What about now and Reg BI?”

Regulation Best Interest (Reg BI – effective January 1st, 2020), has attempted to change the relationship and move the ethical bar higher for brokers. Instead of only having a suitable duty, they are now supposed to have a “best interest” duty. The regulation takes several steps to raise the bar (like having to disclose conflicts of interest); however, it does not change the dynamics of how a broker operates. A broker is still paid by a 3rd party to put their client’s money in certain funds. This relationship has not changed. Now, however, the SEC expects them to use the client’s best interest.

You, “How can they do what’s in my best interest if they are getting paid by someone other than me to put my money into particular funds?”

Great question; you are not alone asking this. Some say Reg BI hardly moves the bar; some say it moves it a lot. Here is my take…  The regulation does not and cannot change the dynamics of how a broker operates via a 3-party exchange. The broker will still have the broker, the client, and the entity paying the broker to put the client into their particular funds (3 parties). This higher standard is potentially good, but brokers still get paid by people other than the client. IARs, on the other hand, are fee-only, meaning the client is the only one who pays them (i.e., IARs are not paid by mutual funds or companies to get you to invest with them).  Per the Investment Advisors Act of 1940, IARs have always had a higher fiduciary standard and deal with this 2-party exchange. There is the client and the IAR, that’s it (2 parties). There is no incentive for an IAR to put your money into funds that may not be in your greatest interest.

You, “So how are IARs paid?”

Typically, IARs are paid by you quarterly. They get paid a percentage of how much money they manage for you. In the business, this is called AUM (Assets Under Management). It means, if you do well, they do well (Leading Edge charges pilots 0.85 % up to the first $1 million). So out of every $1,000 you have invested, you will pay us $8.50 per year (paid quarterly – $2.13) or less than 2 cups of Captain lattes per year (This is different from a broker who is paid to sell you a product and gets paid regardless if your money does well or not).

You, “Why would I pay someone a percentage of AUM?”

Well, think about having a wingman, co-pilot, or workout buddy. You are more likely to get where you want to go if you have someone helping you and encouraging you to get there. IARs help you stay the course when times get tough (Extremely wealthy people pay hedge funds similarly, but a much higher percentage of AUM). You do it because of the value you get from it.  Vanguard has studied certain financial advisors’ value and determined that advisors can add 3% to the client’s portfolios. This sounds like a pretty good investment to me!

You, “Okay, so I pay you $8.50 per $1,000, but you can add value of $30 per $1,000?”

Although this is not guaranteed, this is precisely the idea. Generally speaking, if an advisor starts guaranteeing returns, tell them you’ll call them back, but our job is to add value.

You, “How or why is this?”

Morgan Housel (the author of The Psychology of Money) has a great point – Napoleon once said, “a genius is the man who can do the average thing when everyone else around him is losing his mind.” A good advisor is someone who can help you be average when everyone else is losing their mind. If you can do this, you can make a lot of money. Good advisors help you do just that.  Think of being an airline pilot; much of our training deals with emergency training. What is the goal? To get us to do the average thing when most people are losing their minds. IARs can help instruct you through these market emergencies.
Furthermore, IARs give you comprehensive financial planning. Comprehensive financial planning may include Estate Planning, Tax Planning Strategies, Risk Management, College Savings, Employee Benefits Optimization, Insurance Planning, Career Planning, and Financial Independence Planning. These services can help you sleep better at night knowing you have taken care of your future self and loved ones, which in my book is priceless.

You, “So I get access to all of these types of planning with my 0.85% payments?”

Yes, most IARs offer many of these services, included with your quarterly fee. If you are familiar with a retainer, this is similar. You pay quarterly fees and have access to all kinds of advice/planning all year long. At Leading Edge, all of these services, and more, are offered and are included with your quarterly 0.85% payment.
In airline terms, when passengers pay for a ticket, that ticket includes deviations around thunderstorms, ATC delays, de-icing costs, etc. When you pay an advisor, you get almost all of the fixings with investment advice.

You, “Sounds great, but what does fee-only mean?”

Fee-only means you are paying both commission (and other custodial fees) and advisor fees. Simply put, when any trade is made establishing an investment position, there are commissions paid to brokers. Brokers make the trades but are simply the mechanism for buying and selling. In this capacity, they do not act as advisors and are not part of the decision making process. They do not get paid by the IAR and do not pay the IAR. These trades are separate from a broker selling you a product for a fee.  Now brokers giving advice, not acting as fiduciaries, may come up with all kinds of reasons why they are better for you than an IAR. It should only remind you of a quote by Upton Sinclair, “It is difficult to get a man to understand something when his salary depends upon his not understanding it.”  I believe this is what Reg BI attempts to do. It tries to get brokers to act in the client’s best interest, but their salary often depends on him not doing so. I fear that many brokers will continue finding ways to put clients in funds that pay the brokers. Even in the regulation itself, the term “best interest” is ill-defined and very open to interpretation. Time will tell how the SEC enforces Reg BI, but it will not change the dynamics of a 3-party (broker) relationship vs. a 2-party (IAR) relationship.  A fiduciary IAR is the highest standard and likely will be for the foreseeable future.  Reg BI does take steps to ensure brokers disclose conflicting relationships, which is a good thing. However, the fact they have to admit the relationship is irrelevant, in my opinion.  It makes me think of getting hit with a rock by a bully. His parents have come along and told him he has to tell me he is hitting me with a rock before he does it…but he can still hit me with the rock.  Understand, the bully can be quite crafty when explaining why hitting me with the rock is best for me, but I still get hit with a stone at the end of the day. Why would I sign up for that? I wouldn’t, and I didn’t. 

Now, if you have fallen prey to some of these brokers, take comfort in knowing you aren’t alone. Many hardworking people have trusted these people to do what was in their greatest interest, not knowing these brokers had no such obligation. Several studies have shown that most investors don’t understand their financial advisor’s duty (or lack thereof). Many people believed their brokers were always legally bound to do what was best for them. Unfortunately, this was and is not the case. Again, only IARs (Investment Adviser Representatives), who do not wear broker hats ever, have a fiduciary duty to you at all times.

Back to my hunt for an advisor (pre-Reg BI)… Armed with this newfound fiduciary/suitable knowledge, I arranged a meeting with an advisor through my airline company’s 401k plan.  During the conversation, I asked, “Do you have a fiduciary duty to me?”
What should have been a simple yes or no, was instead a bunch of hemming and hawing, but no real answer. Not to be deterred, I asked again. This time I received another vague response, so I asked again. Finally, this advisor told me he only had a suitable responsibility (today, he would have told me he had a best interest responsibility).  Case closed. He may have been a great advisor, but he had no legal obligation to do what was right for me. If he put me in a poor investment and lost all of my money, I had very little to no recourse.        

Today, instead of deeming that same investment “suitable,” there will likely be brokers who find ways to make those same investments “best interest.”  What I wanted was someone who had a legal obligation to me and my money. I wanted my financial advisor to do what was in my highest interest. Furthermore, I wanted someone who had no incentive to put me in a particular fund. For me, the fiduciary is the answer.  

You may be saying, “Great Rob, but how do I find out if someone has a fiduciary responsibility to me?”  This one is easy.

Ask the following question, “If I hire you as my advisor, do you always have a fiduciary duty to me?”If the answer isn’t a fairly quick, “Yes.” I advise looking elsewhere.  If it is, follow it up with, “To be clear, you never put on a broker hat and always have a fiduciary responsibility to me?”  The answer should again be, “Yes.”  Beyond asking, you should also be able to find out by looking at the disclosures on their website or looking at their Form ADV Part 2A/Firm Brochure or the new Client Relationship Statement (CRS) mandated by Reg BI.

When I became an advisor, I knew I wanted to do it the right way and only become an IAR (fiduciary). Thankfully, Leading Edge Financial Planning (LEFP) shares this belief. Our Form ADV Part 2A says this:

Item 10: Other Financial Industry Activities and Affiliations
No LEFP employee is registered, or has an application pending to register as a broker-dealer or a registered representative of a broker-dealer.  LEFP only receives compensation directly from our clients. We do not receive compensation from any outside source nor do we pay referral fees to outside sources for client referrals.

If you have gotten this far and not fallen asleep, I thank you. As you now know, I am a fiduciary and vow to protect my clients’ hard-earned money with the highest devotion to their goals. If you want to chat further about this or any other subject, please give me a buzz at (707) 712-9387 or shoot me an email at robert@leadgingedgeplanning.com. Until next time, I hope you have only tailwinds and blue skies!

Robert Eklund, Financial Planner

Rob is a Southwest Pilot and soon to be retired Air Force Lieutenant Colonel. He grew up working on his family’s ranch in Colorado and went to high school in Alaska.  In 2000, he graduated from the United States Air Force Academy, earning a Bachelor of Science degree in Legal Studies.  Rob has served over twenty years in the Air Force, ten years on active duty, and over ten in the Reserves. During his military career he flew the C-130 while stationed in Germany and the KC-10 in California. Rob has accumulated over 700 hours of combat flying hours and participated in multiple Operations.  He was hired by Southwest Airlines in 2013 and became a staff officer at USNORTHCOM’s Domestic Operations Division in 2016. While holding this position as an Air Planner, Rob helped areas recover from Hurricane disasters; specifically, he was called to active duty to aid in recovery efforts following Hurricane Maria.

While studying at the Academy, Rob discovered his enthusiasm for the study of personal finance and investing.  As his military service comes to a close, he is excited to combine his passion for helping and protecting others with his enthusiasm for personal finance.  This culminated in 2020 with Rob passing the Series 65 Uniform Investment Advisor Law Exam and joining the Leading Edge team as a fiduciary advisor.  A fiduciary’s role comes naturally to him as he enjoys helping people whether that benefits him or not.  Rob knows the tremendous trust clients place in their financial advisors, and it is his goal to grow that trust through the highest level of transparency and integrity.  In his personal life, Rob married up to the love of his life and has been married for 18 years. He is overwhelmingly proud of his son, whom he recently donated a kidney.
Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk and there can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this video will be profitable, equal any corresponding indicated historical performance level(s), or be suitable for your portfolio. Moreover, you should not assume that any information or any corresponding discussions serves as the receipt of, or as a substitute for, personalized investment advice from Leading Edge Financial Planning personnel. The opinions expressed are those of Leading Edge Financial Planning as of 03/18/2021 and are subject to change at any time due to the changes in market or economic conditions.

Categories
Charlie Education

“The Envious Investor”

 

 

“My neighbor invested all of his portfolio in TESLA and now I’m envious!  It feels like I’ve FOREVER missed out.  And I might have less money in retirement because I missed the hot stock, ETF, Mutual Fund, etc.?” 

 

“As an investor, you get something out of all the deadly sins—except for envy. Being envious of someone else is pretty stupid. Wishing them badly or wishing you did as well as they did—all it does is ruin your day. Doesn’t hurt them at all, and there’s zero upside to it.”

 

“If you’re going to pick a sin, go with something like lust or gluttony. That way at least you’ll have something to remember the weekend for.”

 

Warren Buffett

We understand these concerns and feelings because we’re investing for retirement too!  Furthermore, as investment advisors we hear these concerns almost every year.  If you’re a diversified investor, there will always be an asset class, a high-flying stock or mutual fund that has higher returns than your diversified portfolio.   

Does this mean we’ll have less money for retirement than our neighbor who’s ONLY investment last year was TESLA?  Historical evidence says you’ll likely do just as good or better over the long-term.  The “over the long term” part of the sentence presents the challenges.  In other words, it’s really hard to be a long-term investor when it feels like the world is falling apart around you AND your drinkin’ buddies are killing it with their daily newsletter stock picks!   

We all feel the pressure (envy) of missing out on great investments that we should have known were going to do better than all the others.  The good news is that diversification still works.  It’s never really “cool” nor does it ever feel great.  However, we believe, and the evidence supports the fact that your chances of success are better in the long run.  Check out the numbers from the chart below from BlackRock.   

 

Take a look at our short video where Charlie discusses what it was like in 2020 as investor.  How challenging it can be to stay the course and not chase recent returns.  Furthermore, the difficulties of feeling like you’ve forever missed out if your returns weren’t as high as your neighbor who invested in TESLA, Bitcoin, etc.   

Thank you! 

Charlie & the Team at Leading Edge Financial Planning 

 

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk and there can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this video will be profitable, equal any corresponding indicated historical performance level(s), or be suitable for your portfolio. Moreover, you should not assume that any information or any corresponding discussions serves as the receipt of, or as a substitute for, personalized investment advice from Leading Edge Financial Planning personnel. The opinions expressed are those of Leading Edge Financial Planning as of 03/12/2021 and are subject to change at any time due to the changes in market or economic conditions.

 

Categories
Education Retirement

End of Year Checklist 2020!

2020 End of Year Checklist
2020 End of Year Checklist

As we near the end of another year it is always wise to review your financial situation – especially after a year like 2020! Leading Edge has created a checklist to help you evaluate your progress, maximize opportunities, and set goals for 2021. Take this opportunity to do a quick financial self-assessment. Did you meet your financial goals? Did you pay off the debts that you hoped to? Did you keep within your budget?  If not, commit to making those changes for the upcoming year.

As always, we are here to help. Please reach out if we can help answer any questions or concerns. Schedule your free consultation today, 865-240-2292 

Download your copy of the checklist here:  LEFP Year End Checklist 2020

 


Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk and there can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this document will be profitable, equal any corresponding indicated historical performance level(s), or be suitable for your portfolio. Moreover, you should not assume that any information or any corresponding discussions serves as the receipt of, or as a substitute for, personalized investment advice from Leading Edge Financial Planning personnel. The opinions expressed are those of Leading Edge Financial Planning as of 12/23/2020 and are subject to change at any time due to the changes in market or economic conditions.

Categories
Charlie Education

What Lies Ahead? The Top Ten Investing Principles for Getting Through the Next Market Downturn, Pandemic, Recession, etc.

What Lies Ahead?

Not even Hollywood writers could have created a story like we lived out in 2020. In this video, Charlie Mattingly and one of Leading Edge’s newest advisors, Rob Eklund, discuss what this year has taught us, how to better prepare in the future, and thoughts about the markets and economy going forward.   

Leading Edge financial advisor Rob Eklund, a First Officer for a major airline and a retired Air Force Pilot, review what investors can learn from mission planning in the Air Force and airlines.  For example, how can we be proactive instead of reactive? Many times, people may remark how pilots need quick reactions to be successful.  As Rob and I know, if you are frequently reacting as a pilot, it’s a good indication you did not plan sufficiently.  We believe it’s the same with investing and retirement planning.   

Although, it is to prepare prior to a recession or market downturn, there are many things we can do during the event itself. Vanguard posted the following graphic listing just a few of the value-added strategies that are critical to consider during any market decline.  

 

In addition to the checklist above from Vanguard, we believe there are ten essential principles to help all of us remained focused and less stressed during the next market downturn or recession.  

 

Embrace the efficiency of the markets in the long term.   

 

In the short term, the stock market reflects investor phycology (and many other unpredictable factors).  However, over time, equity prices tend to represent the future cash flows of a business.  We can all share in those future profits if we have the discipline to remain invested.

Don’t try to outguess the market. 

Although there is some debate within the finance community on the exact level of impact on investment returns, most will agree that strategic asset allocation and the amount of time in the market (not market timing) have the most considerable influence on investor returns.    

Resist chasing performance.  

Do not select investments based on past returns.  Funds that have outperformed in the past do not always persist as winners in the future.  Past performance alone provides little insight into a mutual fund or ETFs ability to outperform in the future.  

Let markets work for you.  

The financial markets have historically rewarded long-term investors.  We have the opportunity to earn an investment return that outpaces inflation by supplying capital to the companies we invest in. (I.e., stocks, mutual funds, exchange-traded funds) 

Consider the drivers of returns.  

Evidence shows that buying investments at a fair price (value factor), buying companies that demonstrate a consistent trend of profitability (profitability factor), and companies that tend to be smaller (small-cap premium) point to differences in expected future returns.   

Practice smart diversification.  

Diversification helps reduce risks that have no expected return.  Global diversification can prove beneficial over the long term while reducing the short-term volatility of a portfolio.   

Avoid market timing.  

You never know which market segments will outperform from year to year. Time in the market is much more profitable than attempting to time the market.   

Manage your emotions. 

It’s challenging to differentiate the short-term ups and downs of the market from the long-term returns needed to outpace inflation. In reality, the most significant risk we face is losing purchasing power over the long-term, during retirement, versus the risk of short-term losses in the market.   

Look beyond the headlines.  

There will ALWAYS be a news headline that could prevent you from investing in the stock market.  The news headlines will either attempt to scare you out of the markets or lure you into the latest investing trend.  Either strategy increases viewership, which in turn sells more commercials.   

Focus on what you can control.  

As we mentioned at the beginning of the article, just like pilots plan for their missions in great detail, we believe thorough planning is the best way to ensure a successful investing experience plus a fulfilling and prosperous retirement.   

Please don’t hesitate to call or email us anytime.  We’d love to hear from you! 

Charlie Mattingly

Charlie@leadingedgefinancialplanning.com 

865-240-2292 

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk and there can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this video will be profitable, equal any corresponding indicated historical performance level(s), or be suitable for your portfolio. Moreover, you should not assume that any information or any corresponding discussions serves as the receipt of, or as a substitute for, personalized investment advice from Leading Edge Financial Planning personnel. The opinions expressed are those of Leading Edge Financial Planning as of 12/18/2020 and are subject to change at any time due to the changes in market or economic conditions.

Categories
Charlie Education Kevin Pilots

Southwest Airlines Voluntary Pilot Reduction Options: VSP and ExTO

 

Southwest Airlines, in an effort to reduce its workforce, has just offered pilots Voluntary Separation Pay (VSP) and Extended Emergency Time Off (ExTO). Both are generous packages (in our opinion) and an excellent option for some pilots. How do you know if it’s right for you? In this video, Kevin & Charlie discuss what is in each package, how it may affect your overall financial picture, if you can afford to take one of them, and ultimately how to decide if you should be part of the voluntary reduction.

Not only are we financial planners but Charlie is a fellow SWA pilot (senior FO out of ATL). We understand what it’s like to walk in your shoes and we want to be a resource for you when it comes to making this difficult decision. Give us a chance to run your financial situation through our simulations to determine if VSP or ExTO is the right answer for you. Call us at 865-240-2292.

 

(Please pardon our hazy image quality. We wanted to get this important message out to you quickly and used our laptop to film it, instead of our standard video equipment. Thanks for your understanding!)

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk and there can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this video will be profitable, equal any corresponding indicated historical performance level(s), or be suitable for your portfolio. Moreover, you should not assume that any information or any corresponding discussions serves as the receipt of, or as a substitute for, personalized investment advice from Leading Edge Financial Planning personnel. The opinions expressed are those of Leading Edge Financial Planning as of 06/04/2020 and are subject to change at any time due to the changes in market or economic conditions.

Categories
Charlie Education Kevin

Why Not Buy Individual Stocks?

So, you want to be a stock picker? This video may make you think twice. There are stories of someone getting lucky with a homerun stock return but it’s rare.  (More than 50% of stocks do not beat their market). Kevin explains why it’s so difficult to successfully invest in individual stocks and the effect of skew. He also examines the history of investment returns when owning the top 5 stocks individually versus owning those stocks within a diversified portfolio.  The information may surprise you!

Explaining Skewness (from Investopedia.com)
– Skewness, in statistics, is the degree of distortion from the symmetrical bell curve in a probability distribution.
– Distributions can exhibit right (positive) skewness or left (negative) skewness to varying degrees.
– Investors note skewness when judging a return distribution because it, like kurtosis, considers the extremes of the data set rather than focusing solely on the average.

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk and there can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this video will be profitable, equal any corresponding indicated historical performance level(s), or be suitable for your portfolio. Moreover, you should not assume that any information or any corresponding discussions serves as the receipt of, or as a substitute for, personalized investment advice from Leading Edge Financial Planning personnel. The opinions expressed are those of Leading Edge Financial Planning as of 06/08/2020 and are subject to change at any time due to the changes in market or economic conditions.