If It’s Exciting, You’re Not Doing it Right

Managing your investments should be boring. It should be a lot more like watching Greco-Roman wrestling than watching the WWF (now called the WWE?). If you watch real wrestling, you might think, “these people are probably good at what they do but I don’t fully understand it and would prefer to watch just about anything else right now.”

If you watch the WWE you might think, “OMG this is drama, it would be a fun bucket-list thing to go see this circus when it’s in town and spend a bunch of money on beer and food while getting caught up in the soap opera - I wonder who will betray who?!”

While the WWE performers are certainly athletic and could toss me across the room if they wanted to, one thing you’re not going to think if you’re older than 11 years old is, “This storyline is real and the outcome of this match is not already decided.” You know it’s entertainment, and it can be riveting. But it’s not real.

It’s All Just a Show

It appears that many people don’t realize that the things we see on CNBC or read in “research reports” are also just marketing tools designed to get you to spend money. You see, when most people hear “investing,” they think of trying to outguess the market or chase hot tips. Let me assure you that the person on TV in a suit trying to “sell you how to be rich” is there because they are not rich and have to work; and their work entails convincing people to give them money to manage for a fee, rather than trading in their own ideas to grow wealth quickly. The company writing the “research report” is marketing to prospective clients. This very blog is marketing for God’s sake!

The lucky few who are in a position to trade their own money and actually compound it consistently are not out there sharing their secrets! In fact, they probably won’t take your money at all.

For us mere mortals, even BigLaw attorneys, the real value may lie not in chasing returns—but in maintaining a well-built investment plan. While popular media tends to focus on the “alchemy of outperformance,” promoting flashy strategies and expensive products that often overpromise and underdeliver, consistent investment maintenance may be far more impactful than any attempt to beat the market.

Here’s how we think about investment hygiene for BigLaw households:

The Portfolio is at the Household Level — Not Just One Account

Instead of trying to force every account to match a precise allocation, we evaluate your accounts in aggregate. This means:

• We look at and manage your investment accounts (401(k)s, IRAs, HSAs, and brokerage accounts) together, as a whole. Even if we can’t direclty manage the money, we help you coordinate it all.

• We allow for natural drift in the allocations and only rebalance when there’s a meaningful deviation from the long-term risk target.

• We strategically place your different types of investments (stocks and bonds) into different types of accounts (401k, Roth IRA, brokerage) to take advantage of the differences in tax efficiency of the investments and tax treatments of the accounts.

This approach coordinates all of your accounts, helps to manage taxes, and reinforces strategic decision making — while keeping your overall investment strategy intact.

Use Cashflows to Stay on Target via Purchasing Rather Than Selling

Rather than automatically reinvesting interest and dividends into the same funds, we typically let those earnings go to cash within the investment account. Why? Isn’t reinvesting dividends and interest critical to long-term returns? Yes, it is!

However, that cash can be redeployed more strategically—into parts of the portfolio that are underweight or in need of rebalancing. This often allows us to buy out of favor things without selling high-performing investments just to rebalance. The result may be:

• Fewer taxable capital gains from selling profits

• Lower transaction costs from fewer trades (one purchase as opposed to one sale and one purchase)

• Smarter cash flow management within the portfolio

It’s About What You Keep, Not What You Make

In taxable investment accounts, we look for opportunities to realize investment losses on paper and then reinvest in similar assets. This is known as tax-loss harvesting, and it may:

• Offset capital gains taxes from gains elsewhere in the portfolio

• Offset a limited amount of taxable ordinary income

• Defer paying taxes on gains until a later date

Done properly, tax-loss harvesting doesn’t mean selling when you’re down — it means staying invested in a tax-aware manner when the market gives you lemons.

You Know You Know This

You’ve been told this before. You’ve seen the stats. It’s okay to watch and read the drama if you understand that it is for entertainment purposes only, but don’t be the person who thinks Randy Savage and Hulk Hogan really are fueding over Miss Elizabeth and who makes a real-life investment decision because of it…Just buy the beer and enjoy the show if it’s your thing.

You don’t have to be a market genius to be a smart investor. With good hygiene and steady maintenance, BigLaw attorneys may improve long-term outcomes while avoiding unnecessary stress (and hype).

Get in Touch: Contact@ConcertPlanning.com

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