financial planning

Should Investors Have a Very High Allocation to Stocks?

There is an idea floating around in the investment world that one can take on a very high amount of risk in equities because (allegedly) stocks always go back up a few years after a crash so all a retiree needs to do is to have enough cash to go several years without selling their stocks to pay for living expenses. Thus, allegedly, a wealthy retiree with $10million can have an equity allocation of 80% or 90%, instead of only 30%. Traditional financial planning theory is that one should allocate bond ownership in proportion to one’s age. For example, a 30 year old should have 30% in bonds, 70% in stocks and a 65 year old should have 65% in

2017-01-10T23:32:53-08:00 August 17th, 2016|mayflowercapital blog|Comments Off on Should Investors Have a Very High Allocation to Stocks?

How Should Human Capital Be Integrated Into One’s Investments?

   Investment theory says that one should hold bonds so as to diversify from risk-on assets and be able to buy stocks during a crash by selling bonds. Some financial planners claim that the nature of human capital (a person’s ability to earn income from working) is like a bond if they have a secure, reliable job. Thus some advisors claim that the bond-like nature of someone with highly secure job means that the investor can afford to have a higher than average allocation to stocks because of the bond-like nature of his personal “earned” income from working.     However, I disagree. For this to be true the worker must be willing to cavalierly abandon long term goals of retiring

2017-01-10T23:33:12-08:00 October 21st, 2015|mayflowercapital blog|Comments Off on How Should Human Capital Be Integrated Into One’s Investments?

Top 10 Financial Planning Strategies for 2014: A Contrarian View

  Every year someone publishes something like “Top 10 Financial Planning Strategies for the New Year”. Typically these are filled with well-intentioned standardized clichés like “max out your 401k contribution” but these top ten clichés can be inappropriate for some people. Here’s a contrarian opinion about the Top 10 Financial Planning Strategies: 1.      Max out annual 401k contributions: In some cases it may be a mistake to contribute to a 401k. If the 401k makes long term capital gains then when those profits are withdrawn they are taxed as ordinary income. 2.      Contribute to a 529 Plan: This could backfire because funds in a 529 plan can only be reallocated once a year so if the day after you reallocated

2017-01-11T19:52:05-08:00 January 7th, 2014|mayflowercapital blog|Comments Off on Top 10 Financial Planning Strategies for 2014: A Contrarian View