In long-awaited final rules, the IRS finally “clarified” the controversial 10-year rule for inherited individual retirement accounts (IRAs). The new guidance, set to take effect in 2025, addresses a key question that has puzzled many advisors, accountants, attorneys and beneficiaries since the passage of the original SECURE Act five years ago.
“Return on hassle” refers to the concept of evaluating the time and effort required for a financial decision in addition to its expected financial return. Hedge fund manager Bill Ackman has another name for this idea: “Return-on-invested-brain-damage.” If the return isn’t high enough to justify the brain damage or hassle, move on. For real estate investors, this includes the mental and physical labor involved in finding tenants, maintaining properties, and managing debt, among other responsibilities. These are “hassles” that traditional investments like stocks and bonds don’t typically entail. An obsession with tax avoidance is perhaps my favorite topic when considering the “return on hassle.”
Awareness is the bedrock of financial planning. Awareness of incoming and outgoing cash flows, of risks and returns, of various investment vehicles, of economic conditions, of goals. Awareness. After awareness comes control. Controlling cash flows by directing them in the right investment vehicles at the right time over a long time-horizon to achieve those goals. For perhaps 70% of our lives this is what we are doing. We are saving, investing, and accumulating. Part of accumulating wealth is keeping our burn rate in check. As NYU Stern Professor Scott Galloway says, “Rich is having passive income greater than your burn. People on a path to money focus on their earnings; people on a path to wealth also focus on their burn.”
At Howe & Rusling, we read a lot. I just picked up Joe Wilson and the Creation of Xerox by Charles Ellis. The book is a walk down memory lane, especially if you are from Rochester. For those that know the story, after graduating from the University of Rochester and Harvard Business School, Joe Wilson, inherited the struggling Haloid Company from his father. Haloid teetered constantly on the verge of irrelevance and bankruptcy. Over the course of two decades after World War II, Joe Wilson poured nearly every personal and company dollar into the R&D that eventually led to “dry coating xerography”—a method that used electricity, physics, and dry materials to create copies rather than the traditional methods that relied on “wet chemicals” controlled by Eastman Kodak.
Land navigation, in Army jargon, is the act of navigating from one point to another over long distances in varied terrain using a map, protractor, and compass. Every major selection event in the Army (Ranger School, Special Forces selection, etc.) has a graded land navigation component as part of the larger selection event.
In this episode of StreetSmarts, Dylan Potter, Vice President and Wealth Manager at Howe & Rusling, delves into the intricacies of Section 72(q)/72(t) of the tax code, which provides a distribution method that will allow you the flexibility to draw on retirement accounts, penalty-free, before the age of 59 ½.
This newsletter is going to come across a bit disjointed. There are a couple different topics I wanted to touch on, so I thought I’d do a bit on each topic running through my head in quick fashion.
Tiger Woods’ journey to becoming a golf maestro carries an additional layer of significance in the context of his early golf career. Contrary to the conventional pursuit of mastering the longest drive off the tee, Tiger consciously chose to prioritize an aspect of the game often deemed less glamorous – putting.
Dylan Potter, CFP®, VP and Wealth Manger, delves into the reasons why you should steer clear of personal finance advice from billionaires and focus on your own financial plan. These insights are rooted in the principles of self-control, understanding your own risk tolerance, and avoiding undue influence from high-profile investors.
While known risks like recessions are widely discussed, the most consequential risks may be those not currently on our radar. Dylan Potter, Vice President and Wealth Manager at Howe & Rusling, shares a story from his time as a U.S. Army Ranger detailing how the most perilous risks often go unnoticed and how this applies to your portfolio.
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