Will the death of this "law" impact you?
Enjoy this week's edition of the Planner's Beta
Beta (n) - climber's jargon that designates information about a climb This digest's purpose is to share observations, ideas, and treasures found this week which you may also find insightful. Sharing does not mean it's an endorsement. I am endorsing the pursuit of knowledge and exploration.
Becky and I made it up to Mirror Lake this weekend. We almost made a push to the adjacent mountain. But we were running out of light and feared we would not make it for the sunset. The lake still offered some nice shots, with it being mostly frozen over. Have a great Thanksgiving!
Can Clients Become More Frugal Over Time? (DataPoints) - As a financial planner, I continually investigate new ways to help clients. Much of my work focuses on the foundations - managing spending and income. Research shows that those who are conscientious and frugal have a much greater success rate in transforming their income into wealth. Research also indicates that personality remains stable over time, and changing personality traits can be incredibly difficult. And from what I have observed, sometimes, personality can get in the way of reaching financial goals. However, DataPoints suggests there are three scenarios when people can change their nature. The first is by experiencing a life-changing event. A life-changing event can challenge our emotions and lay the groundwork for personality changes. The second is that personality, albeit is stable, can change as we age. Research shows that our behaviors can vary because of life experiences and the influence of those around us. And third is when people stage an intervention. Research shows that a concerted effort to engage with a coach or an education process can yield positive outcomes. It is essential to note personality and habits are not the same things. Habits can be hard to change, but altering character is more complicated.
Moore's Law Is Ending. Here's What That Means for Investors and the Economy. (Barrons) - In a previous life, I worked as a cost analyst for one of the leading development semiconductor fabs. Working close to the manufacturing process allowed me to observe what it takes to make computer chips that power much of our economy. During my tenure, it was clear the speed of innovation and technological progression declined for my employer and the industry. Much of this is because semiconductor manufacturers are counting the number of silicon atoms that sit across a transistor. Economically creating such small structures that work consistently is getting harder because firms are now battling physics on the quantum level. As this article points out, the death of what we understand to be Moore's Law (which is an observation that the number of transistors in a given space will double every two years) may dramatically impact economic growth. Will it and how much? Future innovations in architecture, software, transistor design, or quantum computing may surprise. And with those innovations, a new computing law may be born (or the old resurrected). But for a new paradigm to take hold, firms will likely need to invest in research and development as they did in eras past.
Monthly Financial Planning Item
The end of the year provides many planning opportunities and issues. Year-end items to review include tax planning, investment and retirement accounts, charitable giving, cash flow and savings, insurance, and estate planning. This checklist (link in image below) covers several planning issues that you should consider before the end of the year, including:
Review issues concerning investment and retirement accounts, including matching capital gains against any investment losses in taxable investment accounts.
Review tax planning issues regarding strategies dependent upon your potential for higher or lower income in the future. You will also want to review where you sit relative to your tax bracket, as this is an excellent time to make moves to "fill up" tax buckets for the current year.
Several strategies will also help reduce tax liability that can be considered based upon their situation for those who are charitably inclined.
For those who own a business, tax reform created some opportunities surrounding pass-through income. Accelerating or deferring business expenses presents another planning opportunity for some business owners.
It's wise to review your cash flow situation as the year comes to a close to see if you can fund a 529 plan for children, know if you can save more in your retirement plan like a 401(k), or place earmarked money aside for other goals. It's also good to review retirement accounts to see if you have contributed too much for this current year.
This comprehensive checklist covers the types of year-end planning issues we likely have already discussed in our meetings. However, take the time to consider the items on this list to uncover any items we may have missed. Having a systematic process helps you better identify planning elements that could benefit you this year and beyond. If needed, feel free to place time on my calendar.
Quote of the Week
"One always speaks badly, when one has nothing to say." - Voltaire
Have something on your mind? Schedule a free call with Nate.
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