Here is a press release about a recent post on the fiscal cliff:
http://www.free-press-release.com/news-fiscal-cliff-and-lucky-charms-1356923512.html
http://www.free-press-release.com/news-fiscal-cliff-and-lucky-charms-1356923512.html
Sunday, December 30, 2012
We have finally reached the end of the fiscal cliff drama. Tomorrow
is the last day, or so we are told. this fiscal cliff is nothing more
than an opportunity for ego driven politicians to get on TV. It is a
manufactured crisis that draws the nation’s attention to the
politicians, rather than where it usually resides like the Dancing with
the Stars finals or the latest Kardashian rumor.
I think the best course of action for the country is to go over the cliff. Why? It all has to do with Lucky Charms. I was the type of kid who would eat the grains in my Lucky Charms and leave the colorful marshmallows to the end. My sister, like most kids, would eat the Lucky Charm marshmallows first and then try to get out of eating the “bad stuff.” Mom always made her finish the grains even if she sat at the kitchen table for an hour. While I enjoyed my colorful, marshmallow ending, my sis gagged down the soggy wheat globs (if you ever let cereal sit in a bowl of milk for an hour you know what I mean by wheat glob). I could delay gratification while my sister could not. As I look at the fiscal cliff, my Lucky Charm behavior emerges: take a little pain now and enjoy the ending. The politicians, and most Americans, want their marshmallows now. Their hope is the wheat bits can be avoided altogether. Unfortunately for them, the economy, starring as Mom in this instance, forces you to eat the wheat at some point.
But the media says the fiscal cliff will cause a recession
It might, but it might not. To understand the ramifications, let’s look at the cliff and the two opposing plans out there today (graphs courtesy Agora Financial). If we ride over the cliff, we will experience a $607 Billion event in 2013 ($504 in tax increases and $103 in spending cuts). Our economy is just over $14 Trillion. The cliff amounts to 4.3% of our GDP. Certainly, we would be eating some wheat now as this could retard economic activity, but a $14 Trillion economy won’t be waylaid by a 4% event.
The current plans offered by the President and Republicans are certainly less taxing on the economy today. President Obama wants $1.8 Trillion in tax increases and spending cuts over the next 10 years while the Republicans call for $2.2 Trillion over the same ten year period. Both plans derive the vast majority of spending cuts from Medicare/Medicaid savings. History has shown that these savings never appear. Projected cuts to doctor payouts, thesignificant savings in both plans, are usually overturned at the last minute. So the spending cuts by both plans probably won’t emerge.
If the President and Republican plans would spare the economy in 2013 more than the fiscal cliff, why would I want to recklessly drive over the cliff. It has to do with Lucky Charms. I prefer the whole grains now while they are crunchy, rather than later when the grains are soggy glumps.
Learn From History or Repeat It
In This Time Is Different: Eight Centuries of Financial Folly, economists Ken Rogoff and Carmen Reinhart examined 800 years of debt fueled financial crisis. Every single case of currency collapse, high or hyper-inflation, or government defaults happened when a government breached these two metrics: borrowing 40% or more of annual government spending and government debt to GDP of 100% or more. It doesn’t happen immediately upon reaching these levels, but if governments do not alter behaviors shortly after surpassing these metrics, calamity has always ensued. Today, the US government violates both of these metrics.
While the fiscal cliff may harm the economy today, it would reduce our annual deficit from $1.2 Trillion (40% annual borrowing) to $600 Billion (20%). To put this in perspective, a $600 Billion annual deficit would have been a record before 2009. As if I haven’t depressed you enough, Social Security and Medicare spending will strain our budget no matter what in the coming years as the baby boomers retire in mass. The President and Republican plans maintain trillion dollar deficit levels even if the Medicare savings magically appear. A recession today would certainly hurt. However, a normal downturn today certainly trumps a default or currency crisis down the road. We can eat our whole grains now or wait until they turn into a soggy, disgusting mess.
Kirk Kinder, CFP® is the Founder of Picket Fence Financial, a fee-only financial planning and investment management company dedicated to saving folks from Wall Street. Picket Fence Financial does this through a few different ways. One, our fee-only approach ensures our advice is tailored to our clients needs and not driven by commissions. Two, we minimize costs for clients by utilizing low cost Exchange Traded Funds (ETF) and aligning our internal operations to keep our company costs down (and passing this along to our clients). Third, we offer a la carte planning, which means our clients decide how they want to work with us. Rather than forcing clients into our model of planning, we offer hourly, retainer, or asset management options (or a combination thereof).
All information on this site are the opinions of Kirk Kinder, CFP® and should not be construed as investment, tax, estate or insurance advice. Please consult your own specialist for personal assistance.
I think the best course of action for the country is to go over the cliff. Why? It all has to do with Lucky Charms. I was the type of kid who would eat the grains in my Lucky Charms and leave the colorful marshmallows to the end. My sister, like most kids, would eat the Lucky Charm marshmallows first and then try to get out of eating the “bad stuff.” Mom always made her finish the grains even if she sat at the kitchen table for an hour. While I enjoyed my colorful, marshmallow ending, my sis gagged down the soggy wheat globs (if you ever let cereal sit in a bowl of milk for an hour you know what I mean by wheat glob). I could delay gratification while my sister could not. As I look at the fiscal cliff, my Lucky Charm behavior emerges: take a little pain now and enjoy the ending. The politicians, and most Americans, want their marshmallows now. Their hope is the wheat bits can be avoided altogether. Unfortunately for them, the economy, starring as Mom in this instance, forces you to eat the wheat at some point.
But the media says the fiscal cliff will cause a recession
It might, but it might not. To understand the ramifications, let’s look at the cliff and the two opposing plans out there today (graphs courtesy Agora Financial). If we ride over the cliff, we will experience a $607 Billion event in 2013 ($504 in tax increases and $103 in spending cuts). Our economy is just over $14 Trillion. The cliff amounts to 4.3% of our GDP. Certainly, we would be eating some wheat now as this could retard economic activity, but a $14 Trillion economy won’t be waylaid by a 4% event.
The current plans offered by the President and Republicans are certainly less taxing on the economy today. President Obama wants $1.8 Trillion in tax increases and spending cuts over the next 10 years while the Republicans call for $2.2 Trillion over the same ten year period. Both plans derive the vast majority of spending cuts from Medicare/Medicaid savings. History has shown that these savings never appear. Projected cuts to doctor payouts, thesignificant savings in both plans, are usually overturned at the last minute. So the spending cuts by both plans probably won’t emerge.
If the President and Republican plans would spare the economy in 2013 more than the fiscal cliff, why would I want to recklessly drive over the cliff. It has to do with Lucky Charms. I prefer the whole grains now while they are crunchy, rather than later when the grains are soggy glumps.
Learn From History or Repeat It
In This Time Is Different: Eight Centuries of Financial Folly, economists Ken Rogoff and Carmen Reinhart examined 800 years of debt fueled financial crisis. Every single case of currency collapse, high or hyper-inflation, or government defaults happened when a government breached these two metrics: borrowing 40% or more of annual government spending and government debt to GDP of 100% or more. It doesn’t happen immediately upon reaching these levels, but if governments do not alter behaviors shortly after surpassing these metrics, calamity has always ensued. Today, the US government violates both of these metrics.
While the fiscal cliff may harm the economy today, it would reduce our annual deficit from $1.2 Trillion (40% annual borrowing) to $600 Billion (20%). To put this in perspective, a $600 Billion annual deficit would have been a record before 2009. As if I haven’t depressed you enough, Social Security and Medicare spending will strain our budget no matter what in the coming years as the baby boomers retire in mass. The President and Republican plans maintain trillion dollar deficit levels even if the Medicare savings magically appear. A recession today would certainly hurt. However, a normal downturn today certainly trumps a default or currency crisis down the road. We can eat our whole grains now or wait until they turn into a soggy, disgusting mess.
Kirk Kinder, CFP® is the Founder of Picket Fence Financial, a fee-only financial planning and investment management company dedicated to saving folks from Wall Street. Picket Fence Financial does this through a few different ways. One, our fee-only approach ensures our advice is tailored to our clients needs and not driven by commissions. Two, we minimize costs for clients by utilizing low cost Exchange Traded Funds (ETF) and aligning our internal operations to keep our company costs down (and passing this along to our clients). Third, we offer a la carte planning, which means our clients decide how they want to work with us. Rather than forcing clients into our model of planning, we offer hourly, retainer, or asset management options (or a combination thereof).
All information on this site are the opinions of Kirk Kinder, CFP® and should not be construed as investment, tax, estate or insurance advice. Please consult your own specialist for personal assistance.
Friday, December 7, 2012
Christmas and Economics - What Could Be Better?
Here is a humorous take on economic theory wrapped in a Christmas carol (h/t Daily Capitalist). The parody attacks the claims that wealth is created by consumption – a common misnomer preached by Keynesians like Paul Krugman. The reality is wealth is created through savings, investment and improvements in productivity. Think about it for a second. Does your personal wealth increase when you buy TVs, iPads, and clothing or when you invest in stocks, bonds, and real estate. Many Keynesians claim that on the individual level savings increases wealth, but it doesn’t work on a macro level. Huh? Isn’t the macro simply a compilation of the micro? Anyway, this will be enjoyed by those of you who are as boring as me and find economics fascinating (yes, I just said I find economics fascinating).
Kirk Kinder, CFP® is the Founder of Picket Fence Financial, a fee-only financial planning and investment management company dedicated to saving folks from Wall Street. Picket Fence Financial does this through a few different ways. One, our fee-only approach ensures our advice is tailored to our clients needs and not driven by commissions. Two, we minimize costs for clients by utilizing low cost Exchange Traded Funds (ETF) and aligning our internal operations to keep our company costs down (and passing this along to our clients). Third, we offer a la carte planning, which means our clients decide how they want to work with us. Rather than forcing clients into our model of planning, we offer hourly, retainer, or asset management options (or a combination thereof).
All information on this site are the opinions of Kirk Kinder, CFP® and should not be construed as investment, tax, estate or insurance advice. Please consult your own specialist for personal assistance.
Kirk Kinder, CFP® is the Founder of Picket Fence Financial, a fee-only financial planning and investment management company dedicated to saving folks from Wall Street. Picket Fence Financial does this through a few different ways. One, our fee-only approach ensures our advice is tailored to our clients needs and not driven by commissions. Two, we minimize costs for clients by utilizing low cost Exchange Traded Funds (ETF) and aligning our internal operations to keep our company costs down (and passing this along to our clients). Third, we offer a la carte planning, which means our clients decide how they want to work with us. Rather than forcing clients into our model of planning, we offer hourly, retainer, or asset management options (or a combination thereof).
All information on this site are the opinions of Kirk Kinder, CFP® and should not be construed as investment, tax, estate or insurance advice. Please consult your own specialist for personal assistance.
Saturday, October 6, 2012
Kyle Bass Interview - Must See
If you scroll through previous posts, you will I am a big fan of hedge
fund manager, Kyle Bass. In fact, once I even called him a man crush.
The reason is he is able to take the 30,000 foot view. He isn’t the
typical pundit-clown you see on financial news extrapolating one data
point to push his or her investment view. Of course, I may like him
because my view coincides with his. Psychologists call this confirmation
bias where we tend to identify with like minded folks. It can be
dangerous if ignore other well reasoned, but contrary, points of view.
However, as I continually read and challenge myself, this is the
viewpoint I see as most plausible. Timing is impossible, but the overall
trend will probably play out. If you believe that thirteen bankers
behind closed doors can devise plans to magically negate any debt build
up, then this view will be contrary to your thinking. This is certainly
worth a few minutes of your time.
Kirk Kinder, CFP® is the Founder of Picket Fence Financial, a fee-only financial planning and investment management company dedicated to saving folks from Wall Street. Picket Fence Financial does this through a few different ways. One, our fee-only approach ensures our advice is tailored to our clients needs and not driven by commissions. Two, we minimize costs for clients by utilizing low cost Exchange Traded Funds (ETF) and aligning our internal operations to keep our company costs down (and passing this along to our clients). Third, we offer a la carte planning, which means our clients decide how they want to work with us. Rather than forcing clients into our model of planning, we offer hourly, retainer, or asset management options (or a combination thereof).
All information on this site are the opinions of Kirk Kinder, CFP® and should not be construed as investment, tax, estate or insurance advice. Please consult your own specialist for personal assistance.
Kirk Kinder, CFP® is the Founder of Picket Fence Financial, a fee-only financial planning and investment management company dedicated to saving folks from Wall Street. Picket Fence Financial does this through a few different ways. One, our fee-only approach ensures our advice is tailored to our clients needs and not driven by commissions. Two, we minimize costs for clients by utilizing low cost Exchange Traded Funds (ETF) and aligning our internal operations to keep our company costs down (and passing this along to our clients). Third, we offer a la carte planning, which means our clients decide how they want to work with us. Rather than forcing clients into our model of planning, we offer hourly, retainer, or asset management options (or a combination thereof).
All information on this site are the opinions of Kirk Kinder, CFP® and should not be construed as investment, tax, estate or insurance advice. Please consult your own specialist for personal assistance.
Saturday, September 22, 2012
Alternative to Paltry Money Market Yields
Admit it. You hate bankers. It’s ok – I admit it. Banks assume a
massive amount of risk yielding enormous profits. When the risks
implode, the banks get a bailout. How do they repay us? They give us
sub-1% yields on our money. I am not saying all banks are bad. I love
credit unions and community banks that avoided the dangerous tactics
undertaken by the To Big to Fail Banks (TBTF). Over the next couple
weeks, I am going to examine a few ways to kick those bankers to the
curb without taking on loads of additional risk. If you are tired of
earning pennies on your balances, these might be better ideas.
The first idea is peer-to-peer lending. Why would you want to look at peer-to-peer lending? Let’s face it. Banks are nothing more than glorified middlemen. They take your money and pay you a whopping sub-1% return. The banks take your money and loan it as mortgages, business loans, auto loans, and credit cards at substantially higher rates. You get 1% while the banks get 5% or more. Peer-to-peer lending cuts out the banks. You get a higher return while the borrower pays a lower rate than the banks charge.
I focus on two premier peer-to-peer lenders, Lending Club and Prosper, which have both been around for five years or more. These two companies have loaned over a billion dollars since inception through 112,000 loans. Essentially, these companies created a platform that brings lenders and borrowers together. The beauty is Lending Club and Prosper do a credit analysis on the borrowers using FICO scores and other proprietary methods. Borrowers deemed a solid credit risk can usually borrow from 5% to 8% while the riskiest borrowers get high double digit rates. These two companies review thousands of borrowers and turn down those they estimate are unlikely to repay. As a lender, you can review the borrower’s profile and decide to invest (or not) with that borrower. You can invest as little as $25 for each borrower. With $1,000, you can diversify into 40 loans. For those who would rather not go through numerous borrower applications, Prosper and Lending Club have a tool that lets you set initial criteria such as desired credit risk or interest rates then they invest the money for you.
Lending money to people you don’t know or taking money with an FDIC backing to an alternative without this guarantee may scare you – and rightfully so. However, the companies have years of data to give investors a solid understanding of the default rates. At both organizations, the most creditworthy borrowers default less than 2% of the time while the riskiest borrowers default about 13% of the time.
Let’s assume you invest $1,000 into 40 loans at $25 per loan evenly across the highest to medium creditworthiness. If the numbers provided by the companies is true, you could expect a 5% default, meaning you only receive $950 of your initial principal back upon maturity. However, over the course of the loan (the options are usually 12 or 60 months), you would earn approximately $78 per year on that $950, which is an 8.2% return. That sure beats the 1% you receive from the bank.
One downside is the liquidity of the loans. You can sell them, but you have to use the Folio Trading platform. No guarantee is made that you will find a buyer or that you will get the full value of the loan. Also, the companies are not registered yet in every state. You need to determine if your state is registered. Even with no FDIC, a default risk, and lack of liquidity, peer-to-peer lending is an excellent alternative to money markets and CDs.
For full disclosure, I have a Prosper ad on this site so I can receive compensation from Prosper if you click on my link and sign up. If you think peer-to-peer lending is right for you, I would love for you to click on that link. My kids are getting close to needing braces. LOL
Kirk Kinder, CFP® is the Founder of Picket Fence Financial, a fee-only financial planning and investment management company dedicated to saving folks from Wall Street. Picket Fence Financial does this through a few different ways. One, our fee-only approach ensures our advice is tailored to our clients needs and not driven by commissions. Two, we minimize costs for clients by utilizing low cost Exchange Traded Funds (ETF) and aligning our internal operations to keep our company costs down (and passing this along to our clients). Third, we offer a la carte planning, which means our clients decide how they want to work with us. Rather than forcing clients into our model of planning, we offer hourly, retainer, or asset management options (or a combination thereof).
All information on this site are the opinions of Kirk Kinder, CFP® and should not be construed as investment, tax, estate or insurance advice. Please consult your own specialist for personal assistance.
The first idea is peer-to-peer lending. Why would you want to look at peer-to-peer lending? Let’s face it. Banks are nothing more than glorified middlemen. They take your money and pay you a whopping sub-1% return. The banks take your money and loan it as mortgages, business loans, auto loans, and credit cards at substantially higher rates. You get 1% while the banks get 5% or more. Peer-to-peer lending cuts out the banks. You get a higher return while the borrower pays a lower rate than the banks charge.
I focus on two premier peer-to-peer lenders, Lending Club and Prosper, which have both been around for five years or more. These two companies have loaned over a billion dollars since inception through 112,000 loans. Essentially, these companies created a platform that brings lenders and borrowers together. The beauty is Lending Club and Prosper do a credit analysis on the borrowers using FICO scores and other proprietary methods. Borrowers deemed a solid credit risk can usually borrow from 5% to 8% while the riskiest borrowers get high double digit rates. These two companies review thousands of borrowers and turn down those they estimate are unlikely to repay. As a lender, you can review the borrower’s profile and decide to invest (or not) with that borrower. You can invest as little as $25 for each borrower. With $1,000, you can diversify into 40 loans. For those who would rather not go through numerous borrower applications, Prosper and Lending Club have a tool that lets you set initial criteria such as desired credit risk or interest rates then they invest the money for you.
Lending money to people you don’t know or taking money with an FDIC backing to an alternative without this guarantee may scare you – and rightfully so. However, the companies have years of data to give investors a solid understanding of the default rates. At both organizations, the most creditworthy borrowers default less than 2% of the time while the riskiest borrowers default about 13% of the time.
Let’s assume you invest $1,000 into 40 loans at $25 per loan evenly across the highest to medium creditworthiness. If the numbers provided by the companies is true, you could expect a 5% default, meaning you only receive $950 of your initial principal back upon maturity. However, over the course of the loan (the options are usually 12 or 60 months), you would earn approximately $78 per year on that $950, which is an 8.2% return. That sure beats the 1% you receive from the bank.
One downside is the liquidity of the loans. You can sell them, but you have to use the Folio Trading platform. No guarantee is made that you will find a buyer or that you will get the full value of the loan. Also, the companies are not registered yet in every state. You need to determine if your state is registered. Even with no FDIC, a default risk, and lack of liquidity, peer-to-peer lending is an excellent alternative to money markets and CDs.
For full disclosure, I have a Prosper ad on this site so I can receive compensation from Prosper if you click on my link and sign up. If you think peer-to-peer lending is right for you, I would love for you to click on that link. My kids are getting close to needing braces. LOL
Kirk Kinder, CFP® is the Founder of Picket Fence Financial, a fee-only financial planning and investment management company dedicated to saving folks from Wall Street. Picket Fence Financial does this through a few different ways. One, our fee-only approach ensures our advice is tailored to our clients needs and not driven by commissions. Two, we minimize costs for clients by utilizing low cost Exchange Traded Funds (ETF) and aligning our internal operations to keep our company costs down (and passing this along to our clients). Third, we offer a la carte planning, which means our clients decide how they want to work with us. Rather than forcing clients into our model of planning, we offer hourly, retainer, or asset management options (or a combination thereof).
All information on this site are the opinions of Kirk Kinder, CFP® and should not be construed as investment, tax, estate or insurance advice. Please consult your own specialist for personal assistance.
Saturday, September 15, 2012
Press Release on Estate Planning Webinar
Here is the recent press release regarding the recent estate planning
webinar featuring Dax Nelson, J.D. LL.M, of Dax Nelson law.
http://www.free-press-release.com/news-five-common-estate-planning-mistakes-1347761529.html
http://www.free-press-release.com/news-five-common-estate-planning-mistakes-1347761529.html
Five Common Estate Planning Mistakes
In a recent podcast, which can be found here, Dax Nelson, J.D. LL.M, discusses the five most common estate planning mistakes he sees people make. Among the routine errors, misunderstanding the asset protection provided by revocable trust is the most common. Other errors are choosing the wrong people to administer your estate, not updating your estate plan, and issues with medical issues.
Dax Nelson practices law in Tampa, Florida. His website is http://www.daxnelsonlaw.com.
Picket Fence Financial saves people from Wall Street with its fee-only approach, use of Exchange Traded Funds (ETF), education of clients, and flexible service options for clients.
Dax Nelson practices law in Tampa, Florida. His website is http://www.daxnelsonlaw.com.
Picket Fence Financial saves people from Wall Street with its fee-only approach, use of Exchange Traded Funds (ETF), education of clients, and flexible service options for clients.
Monday, September 10, 2012
Press Release on Picket Fence Financial
Kirk Kinder, CFP of Picket Fence Financial was featured in an article by
ETFdb, an organization that teaches individuals and financial advisors
how to use ETFs. A press release for the article can be found here.
Saturday, September 8, 2012
ETFdb Features Picket Fence Financial
A recent ETF Insights by ETF Database featured a Q&A with me. I
talked about my experiences with Exchange Traded Funds (ETF) as well as
where I think the industry is heading. You can view the article here.
All information on this site are the opinions of Kirk Kinder, CFP® and should not be construed as investment, tax, estate or insurance advice. Please consult your own specialist for personal assistance.
Kirk Kinder, CFP® is the Founder of Picket Fence Financial, a fee-only financial planning and investment management company dedicated to saving folks from Wall Street. Picket Fence Financial does this through a few different ways. One, our fee-only approach ensures our advice is tailored to our clients needs and not driven by commissions. Two, we minimize costs for clients by utilizing low cost Exchange Traded Funds (ETF) and aligning our internal operations to keep our company costs down (and passing this along to our clients). Third, we offer a la carte planning, which means our clients decide how they want to work with us. Rather than forcing clients into our model of planning, we offer hourly, retainer, or asset management options (or a combination thereof).
ETFs have found their way into countless portfolios as investors of all walks have embraced these vehicles as the preferred means for achieving low-cost, diversified exposure to virtually any asset class. While the product lineup continues to grow every week, with the total number of ETPs now approaching the 1,500 mark, many still feel hesitant to jump aboard or are perhaps intimidated by the sheer variety of offerings available at their fingertips. Kirk Kinder, founder and President of Picket Fence Financial, recently took time out of his schedule to discuss what he feels remains a roadblock to ETF adoption rates as well as his personal experiences and observations regarding the development of the industry as a whole.
ETF Database (ETFdb): Why do you think many financial advisors have generally been slow to embrace ETFs in their practice?
Kirk Kinder (KK): I think a couple reasons exist as to why advisors haven’t embraced ETFs in their practice. The first is education. It requires the advisor to become educated on how ETFs function, the landscape of the industry, and how the underlying benchmarks are created. It also requires educating clients, which is quite a task. Clients know mutual funds. Making the move to ETFs can raise the concern flag with clients. I made the move to ETFs in 2003 and 2004. The ETF universe was really getting started then so it was an undertaking teaching clients about ETFs. In fact, a client with about $2 million with our firm scheduled a meeting to essentially fire us due to our move to ETFs. He didn’t feel comfortable with them compared to mutual funds. He had other advisors who weren’t using ETFs and apparently frowned upon them. The day before the meeting, he read an article in an AARP publication about how ETFs were an institutional tool and the future of investing. We went from the firing line to being seen as cutting edge and sophisticated.
The second reason the move is slow is commissions. A large percentage of advisors are still paid with commissions, and ETFs don’t offer that 5% upfront payday for advisors. Hopefully, these advisors will become fewer and fewer over the years. Let’s also not forget that the mutual fund industry is going to put up a fight to keep their gravy train running. Not many ETFs would survive with the expense ratios of mutual funds. So I expect the fund universe to keep bad mouthing ETFs.
ETFdb: ETFs have received some bad press over the past few years. Have you had any bad experiences with ETFs that turned you off?
KK: I haven’t had a bad experience. Even the flash crash of May 2010 had no effect since it corrected itself. I don’t use limit orders so that kind of event shouldn’t affect my clients. One big complaint I hear from advisors is low volume in certain ETFs. Even in this situation, advisors can work with specialists that help market makers create or redeem the shares. It is the liquidity of the underlying holdings that is important, not the ETFs. This is one area of ETFs advisors are still ignorant.
ETFdb: Are there additional ETFs that you’d like to see launched? Or is the current lineup sufficient for your clients’ needs?
KK: I would like to see more precise bond ETFs. We are starting to see it already as iShares launched bond funds focusing on industrials, utilities, and other sectors. I would like to see the ability to buy a segment of the bond market such as short term utility company bonds or Australian long dated government bonds. I know this is difficult with liquidity of the bonds, but I am hoping that we continue to see the bond market(s) parsed in ETFs. On the equity side, I have enough ETFs on the market to satisfy the needs of my firm.
ETFdb: How long have you been using ETFs for? Do you see this product structure as the preferred means for building diversified, low-cost, long-term portfolios?
KK: Absolutely! I have been using ETFs almost exclusively since 2003. These vehicles are the best option for diversification, low-costs and tax efficiency. After 2008, I showed several prospects who were in mutual funds how they coughed up hundreds or thousands of dollars in capital gains even though their mutual funds were down 30% or more. It is eye opening for clients and prospects when they see this happen.
ETFdb: Aside from the well-known benefits offered through the ETF wrapper, what do you personally embrace about this product structure?
KK: I think transparency is the best trait of ETFs beyond the known low cost, diversification, and tax-efficient characteristics. People don’t trust Wall Street today. Having a product that is completely transparent as to how it operates, is valued, and its holdings is critical. People want to know a defined system exists for its operation, not activity behind a curtain.
ETFdb: What do you expect in terms of ETF adoption going forward? What types of investors have been slow to adopt or are potentially major beneficiaries of embracing ETFs?
KK: I expect ETF adoption to continue to explode. As the RIA community continues to take assets from the traditional brokerage world, ETFs will see an increase in assets under management. I also expect advisors to continue adopting ETFs. Numerous avenues exist to learn about ETFs that an advisor almost has to have his or her head in the sand not to pick up information on ETFs. One area that has been slow to adopt ETFs, in my opinion, is retirement plans. While tax efficiency wouldn’t apply in a 401(k) or 403(b) plan, the low cost and diversification benefits will appeal to these plans. With the new Department of Labor rulings requiring disclosure of fees starting this fall, I expect fees to take center stage in the retirement plan world, and companies offering ETFs will see a considerable uptick in business.
ETFdb: What are your thoughts on how the industry has evolved in the last few years? Going forward, what do you see as the potential growth areas for ETFs?
KK: The industry seemed to start as a boutique then grew into an experimental phase. By that, I mean ETFs started out with very broad based index products with only a few providers. Once assets accumulated, the experimental phase began with several ETF providers coming on scene with a multitude of ETFs. It felt like providers were throwing ETFs into the marketplace just to see which ones stick. While I think ETFs will still have some growing pains as each provider creates an identity, it seems like niches have been identified for providers. Product launches are also better thought out. I have had a few ETF providers talk to me about what I am looking for in ETFs and bouncing product ideas off of me.
We could still see another explosive experimental period if actively managed ETFs start to garner assets. That is an area for potential growth. From the consumer perspective, I think we will see more ready-made portfolio companies like Betterment that attract assets to ETFs. Also, the retirement plan arena will be another growth area for ETFs.
Bottom Line: The exchange-traded product structure will continue to attract self-directed investors and professional money managers who have been hesitant to change their ways as the ongoing education effort picks up steam and makes the cost, diversification, transparency, and tax efficiency benefits more well-known and better understood.
All information on this site are the opinions of Kirk Kinder, CFP® and should not be construed as investment, tax, estate or insurance advice. Please consult your own specialist for personal assistance.
Friday, August 31, 2012
Picket Fence Financial Profiled in Thumbtack
Thumbtack recently profiled my firm, Picket Fence Financial, on its site. Thumbtack interviewed me asking the ways that Picket Fence Financial is different than other firms and how I help clients. If you would like to see what they did, you can check it out here:
Financial Planning
Financial Planning
Saturday, July 21, 2012
LIBOR Scandal
This is a great video featuring Matt Taibbi of Rolling Stone regarding
the LIBOR scandal. This is a big deal. It is fraud - plain and simple.
In order for a free market to work, information must be available and
accurate. When you have parties blatantly manipulating data, this needs
to be punished. Taibbi does a nice job of explaining it. If you prefer
humor to understand this scandal, I included Jon Stewart from the Daily
Show.
| The Daily Show with Jon Stewart | Mon - Thurs 11p / 10c | |||
| International Banking Actuality Part 37 - Libor Fallout | ||||
| ||||
Kirk Kinder, CFP® is the Founder of Picket Fence Financial, a fee-only financial planning and investment management company dedicated to saving folks from Wall Street. Picket Fence Financial does this through a few different ways. One, our fee-only approach ensures our advice is tailored to our clients needs and not driven by commissions. Two, we minimize costs for clients by utilizing low cost Exchange Traded Funds (ETF) and aligning our internal operations to keep our company costs down (and passing this along to our clients). Third, we offer a la carte planning, which means our clients decide how they want to work with us. Rather than forcing clients into our model of planning, we offer hourly, retainer, or asset management options (or a combination thereof). All information on this site are the opinions of Kirk Kinder, CFP® and should not be construed as investment, tax, estate or insurance advice. Please consult your own specialist for personal assistance.
Tuesday, July 3, 2012
Cartoon Explains Healthcare
Why does it take a cartoon to provide clarity on an issue where the
traditional media outlets and white papers can't. This cartoon looks at
the problems with healthcare, including the Obamacare program. I have
said this before and will continue to hound on this. The problem with
our healthcare is two-fold: one, we don't have the free market forces
working in healthcare and two, we have a medical reimbursement plan, not
health insurance.
Areas of healthcare exist where free markets dictate, but it isn't the typical healthcare sections. It is areas where insurance doesn't reign such as plastic surgery and veterinary medicine. Plastic surgery use to be only for the wealthy. Today, average folks can afford those tummy tucks, eye lifts, and breast enhancements (which pleases the fellas) due to the same market forces that drive computer prices down. The same for your pet. You can take Fido or Mr. Bigglesworth to the vet and get a complete workup including X-rays or scans in one visit without a long wait - no primary care permission, two hour waits, and three weeks between each procedure. Both of these industries have cut costs and provide better service because they compete for your dollars without insurance company influence.
Most people say market forces can work here because no one goes in for an emergency boob job, but people do need emergency open heart surgery, which is costly. I concede that, but this is where insurance should emerge. Insurance was created to insure against risks you can not afford to take yourself so you pool assets to guard against these anomalies. This is why I advocate for high deductible policies that only kick in for the big stuff. All routine medical items should be paid out of pocket. This ensures insurance works as it should and brings the same market forces to routine medical procedures just like plastic surgery and the vet's office did.
The big cry for healthcare reforms like Obamacare are the 40 million uninsured. To that I say, it isn't that big of a problem. Most of the 40 million are not uninsured for the full year. They are between jobs so they pick up insurance once they begin their new job. According to FactCheck.org, almost 40% of this number are adults between 18 and 34. These folks usually self-insure since it makes the most financial sense. FactCheck also claims almost 12 million of the uninsured are eligible for Medicaid, Children's Health Insurance Plan or a state sponsored plan. Many don't sign up because they don't know they are eligible or prefer to just visit the emergency room for medical treatment. Another 6 million are illegal immigrants. In those cases, I am hard pressed to pay for their premiums.
Insuring low income folks, which are clearly about 25% of the quoted uninsured number, would be easy. Create high deductible policies and then pay for the high deductible with tax credits. The cost would be marginal and can be administered through the tax return. Anyway, enjoy the cartoon and throw your two cents on the comments section.
Kirk Kinder, CFP® is the Founder of Picket Fence Financial, a fee-only financial planning and investment management company dedicated to saving folks from Wall Street. Picket Fence Financial does this through a few different ways. One, our fee-only approach ensures our advice is tailored to our clients needs and not driven by commissions. Two, we minimize costs for clients by utilizing low cost Exchange Traded Funds (ETF) and aligning our internal operations to keep our company costs down (and passing this along to our clients). Third, we offer a la carte planning, which means our clients decide how they want to work with us. Rather than forcing clients into our model of planning, we offer hourly, retainer, or asset management options (or a combination thereof).
All information on this site are the opinions of Kirk Kinder, CFP® and should not be construed as investment, tax, estate or insurance advice. Please consult your own specialist for personal assistance.
Areas of healthcare exist where free markets dictate, but it isn't the typical healthcare sections. It is areas where insurance doesn't reign such as plastic surgery and veterinary medicine. Plastic surgery use to be only for the wealthy. Today, average folks can afford those tummy tucks, eye lifts, and breast enhancements (which pleases the fellas) due to the same market forces that drive computer prices down. The same for your pet. You can take Fido or Mr. Bigglesworth to the vet and get a complete workup including X-rays or scans in one visit without a long wait - no primary care permission, two hour waits, and three weeks between each procedure. Both of these industries have cut costs and provide better service because they compete for your dollars without insurance company influence.
Most people say market forces can work here because no one goes in for an emergency boob job, but people do need emergency open heart surgery, which is costly. I concede that, but this is where insurance should emerge. Insurance was created to insure against risks you can not afford to take yourself so you pool assets to guard against these anomalies. This is why I advocate for high deductible policies that only kick in for the big stuff. All routine medical items should be paid out of pocket. This ensures insurance works as it should and brings the same market forces to routine medical procedures just like plastic surgery and the vet's office did.
The big cry for healthcare reforms like Obamacare are the 40 million uninsured. To that I say, it isn't that big of a problem. Most of the 40 million are not uninsured for the full year. They are between jobs so they pick up insurance once they begin their new job. According to FactCheck.org, almost 40% of this number are adults between 18 and 34. These folks usually self-insure since it makes the most financial sense. FactCheck also claims almost 12 million of the uninsured are eligible for Medicaid, Children's Health Insurance Plan or a state sponsored plan. Many don't sign up because they don't know they are eligible or prefer to just visit the emergency room for medical treatment. Another 6 million are illegal immigrants. In those cases, I am hard pressed to pay for their premiums.
Insuring low income folks, which are clearly about 25% of the quoted uninsured number, would be easy. Create high deductible policies and then pay for the high deductible with tax credits. The cost would be marginal and can be administered through the tax return. Anyway, enjoy the cartoon and throw your two cents on the comments section.
Kirk Kinder, CFP® is the Founder of Picket Fence Financial, a fee-only financial planning and investment management company dedicated to saving folks from Wall Street. Picket Fence Financial does this through a few different ways. One, our fee-only approach ensures our advice is tailored to our clients needs and not driven by commissions. Two, we minimize costs for clients by utilizing low cost Exchange Traded Funds (ETF) and aligning our internal operations to keep our company costs down (and passing this along to our clients). Third, we offer a la carte planning, which means our clients decide how they want to work with us. Rather than forcing clients into our model of planning, we offer hourly, retainer, or asset management options (or a combination thereof).
All information on this site are the opinions of Kirk Kinder, CFP® and should not be construed as investment, tax, estate or insurance advice. Please consult your own specialist for personal assistance.
Monday, June 25, 2012
Is Gold in a Bubble?
http://www.squidoo.com/is-gold-in-a-bubble-research-from-swim-upstream-to-wealth
Here is a recent post on Squidoo about my recent webinar material, "Is Gold in a Bubble."
Here is a recent post on Squidoo about my recent webinar material, "Is Gold in a Bubble."
Tuesday, June 19, 2012
Bernanke Two Step Webinar Reminder
Just a reminder that my webinar, the "Bernanke Two-Step" will be
tomorrow at 1pm EDT. This will be particularly timely as the Fed will be
announcing its meeting notes about the same time as the webinar so you
can find out how this will affect your portfolio. Also, I will review
the first idea of how to make a higher yield on your cash without taking
a great deal more risk. For the next three months, I will focus on a new way to get you more than the sub 1% yield from the banks.
Space is limited to 100 participants.
Reserve your Webinar seat now at:
https://www3.gotomeeting.com/register/875462382
Kirk Kinder, CFP® is the Founder of Picket Fence Financial, a fee-only financial planning and investment management company dedicated to saving folks from Wall Street. Picket Fence Financial does this through a few different ways. One, our fee-only approach ensures our advice is tailored to our clients needs and not driven by commissions. Two, we minimize costs for clients by utilizing low cost Exchange Traded Funds (ETF) and aligning our internal operations to keep our company costs down (and passing this along to our clients). Third, we offer a la carte planning, which means our clients decide how they want to work with us. Rather than forcing clients into our model of planning, we offer hourly, retainer, or asset management options (or a combination thereof).
All information on this site are the opinions of Kirk Kinder, CFP® and should not be construed as investment, tax, estate or insurance advice. Please consult your own specialist for personal assistance.
Space is limited to 100 participants.
Reserve your Webinar seat now at:
https://www3.gotomeeting.com/register/875462382
Kirk Kinder, CFP® is the Founder of Picket Fence Financial, a fee-only financial planning and investment management company dedicated to saving folks from Wall Street. Picket Fence Financial does this through a few different ways. One, our fee-only approach ensures our advice is tailored to our clients needs and not driven by commissions. Two, we minimize costs for clients by utilizing low cost Exchange Traded Funds (ETF) and aligning our internal operations to keep our company costs down (and passing this along to our clients). Third, we offer a la carte planning, which means our clients decide how they want to work with us. Rather than forcing clients into our model of planning, we offer hourly, retainer, or asset management options (or a combination thereof).
All information on this site are the opinions of Kirk Kinder, CFP® and should not be construed as investment, tax, estate or insurance advice. Please consult your own specialist for personal assistance.
Sunday, June 10, 2012
The Reason for the Current Market Volatility
In this month's client newsletter, I take a look at why the market
always seems to tank in the summer after a strong fall/winter. I think
it is by design of the Federal Reserve. Fed Chairman Ben Bernanke has
two objectives: higher stock market and low mortgage rates. The problem
is these are opposing forces. Usually, when one does well, the other
suffers. So Uncle Ben undertakes the Bernanke Two-Step, which you can
read about in the newsletter.
Second, one complaint most folks have about our investing climate is the paltry yields offered at banks. In the newsletter, I offer a new option for your cash that may give a higher yield without any additional risk. I will feature a new option in the next couple newsletters.
You can download the newsletter by clicking here.
Or, you can listen to my upcoming webinar on these topics to get a more in-depth presentation on the issues and ask me questions. Here are the webinar details:
Title: Bernanke Two-Step and Alternative to Money Market
Date: Wednesday, June 20, 2012
Time: 1:00 PM - 2:00 PM EDT
Space is limited.
Reserve your Webinar seat now at:
https://www3.gotomeeting.com/register/875462382
Kirk Kinder, CFP® is the Founder of Picket Fence Financial, a fee-only financial planning and investment management company dedicated to saving folks from Wall Street. Picket Fence Financial does this through a few different ways. One, our fee-only approach ensures our advice is tailored to our clients needs and not driven by commissions. Two, we minimize costs for clients by utilizing low cost Exchange Traded Funds (ETF) and aligning our internal operations to keep our company costs down (and passing this along to our clients). Third, we offer a la carte planning, which means our clients decide how they want to work with us. Rather than forcing clients into our model of planning, we offer hourly, retainer, or asset management options (or a combination thereof).
All information on this site are the opinions of Kirk Kinder, CFP® and should not be construed as investment, tax, estate or insurance advice. Please consult your own specialist for personal assistance.
Second, one complaint most folks have about our investing climate is the paltry yields offered at banks. In the newsletter, I offer a new option for your cash that may give a higher yield without any additional risk. I will feature a new option in the next couple newsletters.
You can download the newsletter by clicking here.
Or, you can listen to my upcoming webinar on these topics to get a more in-depth presentation on the issues and ask me questions. Here are the webinar details:
Title: Bernanke Two-Step and Alternative to Money Market
Date: Wednesday, June 20, 2012
Time: 1:00 PM - 2:00 PM EDT
Space is limited.
Reserve your Webinar seat now at:
https://www3.gotomeeting.com/register/875462382
Kirk Kinder, CFP® is the Founder of Picket Fence Financial, a fee-only financial planning and investment management company dedicated to saving folks from Wall Street. Picket Fence Financial does this through a few different ways. One, our fee-only approach ensures our advice is tailored to our clients needs and not driven by commissions. Two, we minimize costs for clients by utilizing low cost Exchange Traded Funds (ETF) and aligning our internal operations to keep our company costs down (and passing this along to our clients). Third, we offer a la carte planning, which means our clients decide how they want to work with us. Rather than forcing clients into our model of planning, we offer hourly, retainer, or asset management options (or a combination thereof).
All information on this site are the opinions of Kirk Kinder, CFP® and should not be construed as investment, tax, estate or insurance advice. Please consult your own specialist for personal assistance.
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