Comprehensive Financial Planning | Preserve Wealth Management

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We've been keeping up with the latest headlines...
here are two of our favorites worth sharing.

Your Money

The dreaded mutual fund capital gains season is right around the corner. This is when mutual funds distribute gains to their shareholders, a taxable event even though investors didn't sell any shares themselves. As an aside, this is one of the biggest reasons we invest client taxable accounts into ETFs (exchange traded funds) instead of mutual funds.

This year, mutual fund investors may face unprecedented capital gain distributions driven by historic outflows. Many fund managers need to sell securities to raise cash to meet investor withdrawals, which in turn creates a gain and forces a tax distribution to the remaining shareholders. Rest assured, we are taking steps to monitor all the legacy fund positions to be ahead of unwelcome tax impacts to client accounts.

Examples of US open-end mutual fund and ETF net cash flows
and the resulting tax distribution

Year 2008
Max monthly outflow: -$106 billion
Russell 3000 stock market return: -37.3%
Average capital gain distribution: 8%

Year 2018
Max monthly outflow: -$136 billion
Russell 3000 stock market return: -5.2%
Average capital gain distribution: 11%

Year 2020 (thru 9/30/20)
Max monthly outflow: -$336 billion
Russell 3000 stock market return: 5.4%
Average capital gain distribution: ????

A Perfect Storm?
by Russell Investments

Your Life

Renowned Life Planner, George Kinder, has a different approach in helping clients create their financial plans. It's a completely different approach and we kind of like it because it dives right into your deepest values. Rather than having the numbers drive the conversation, we focus on THREE questions that may make you look more comprehensively at your life and your ultimate goals:

I want you to imagine that you are financially secure, that you have enough money to take care of your needs, now and in the future. The question is, how would you live your life? What would you do with the money? Would you change anything? Let yourself go. Don’t hold back your dreams. Describe a life that is complete, that is richly yours.
This time, you visit your doctor who tells you that you have five to ten years left to live. The good part is that you won’t ever feel sick. The bad news is that you will have no notice of the moment of your death. What will you do in the time you have remaining to live? Will you change your life, and how will you do it?
This time, your doctor shocks you with the news that you have only one day left to live. Notice what feelings arise as you confront your very real mortality. Ask yourself: What dreams will be left unfulfilled? What do I wish I had finished or had been? What do I wish I had done? Did I miss anything?

Ultimately, this is to help set your priorities, financial and otherwise, so that you can live the life you really want. Be sure to let us know if this exercise helped you clarify things or even refocus entirely. We're also happy to facilitate this conversation for you.

3 Questions
by George Kinder

Complexity Simplified

To escape the tired and hopeless feelings from COVID-19, I like to plan future trips. That said, I am taking this opportunity to learn how to pack more efficiently. Truth be told, packing is the part of a trip that I dread the most. Inevitably, I always feel (and generally do) forget something I need. It's never the end of the world but I prefer not to forget anything.

Did you know that there are theories to packing? The rolling method or the folding method? For determining how many clothing combinations you can have for packing, use this formula: days of trip = (# of tops) x (# of bottoms). For this to work, it's important to pack as much neutral clothing as possible so it can match in any combinations. P.S. One "fancy" outfit can be an extra.

The Ultimate Travel Packing List
by Eagle Creek

Trivia

A: Gwen Stefani
Q: Fissures, vents and plugs are all associated with which geological feature?

Back in 1995, this song reached #1