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April 1, 2013

All Work and No Play


BloombergBusinessweek recently had an article about why one shouldn’t work while flying.  It listed the following physical reasons (“Eight Reasons Business Travelers Shouldn't Work on Planes” by Keenan Mayo, March 21, 2013):

You can’t concentrate,
You’re forgetful,
You’re thirsty,
You’re stressed,
You’re headachey,
Your heart is pumping harder,
You feel like you might puke,
You feel depressed.

If you’re interested in learning why and how all these things are incorporating to make your work efforts less than satisfactory, read the article - and then just relax and enjoy the flight.

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March 22, 2013

Now You See It, Now You Don't


A recent article in The Wall Street Journal’s Money section entitled “Lost Inheritance” (March 8, 2013) talks about the “shirtsleeves to shirtsleeves in three generations” phenomenon of families of wealth--even great wealth.  Citing real examples, suppositions and statistics, the article concludes that the greatest reason for lost family money is poor or no education of future heirs.  This not only causes an inability to understand the machinations of the investments, gifts, etc., but it also leads to squabbling among the family members, both of which can lead to poor decision-making.

Here are a few statistics the article presented:

•    70% of family money has “evaporated” by the end of the second generation and ninety percent by the end of the third.

•    Additionally, 25 percent of the time, the reason for the loss is the families’ failure to prepare heirs for their pending prosperity.

•    More than half of high-net-worth boomer parents had not fully disclosed their wealth to their offspring, while another thirteen percent kept completely mum.

If these statistics concern you or if you have questions about your wealth, please call and talk to one of our Certified Financial Planners®.

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March 8, 2013

Then and Now


On October 9, 2007, the Dow hit an all-time high; it did it again on March 6, 2013.  Zerohedge presented this interesting list of "then and now" comparisons of market variables showing what a difference the ~5 1/2 years made.  To view the entire article, go to http://www.zerohedge.com/news/2013-03-05/last-time-dow-was-here.


    Dow Jones Industrial Average: Then 14164.5; Now 14164.5
    Regular Gas Price: Then $2.75; Now $3.73
    GDP Growth: Then +2.5%; Now +1.6%
    Americans Unemployed (in Labor Force): Then 6.7 million; Now 13.2 million
    Americans On Food Stamps: Then 26.9 million; Now 47.69 million
    Size of Fed's Balance Sheet: Then $0.89 trillion; Now $3.01 trillion
    US Debt as a Percentage of GDP: Then ~38%; Now 74.2%
    US Deficit (LTM): Then $97 billion; Now $975.6 billion
    Total US Debt Oustanding: Then $9.008 trillion; Now $16.43 trillion
    US Household Debt: Then $13.5 trillion; Now 12.87 trillion
    Labor Force Particpation Rate: Then 65.8%; Now 63.6%
    Consumer Confidence: Then 99.5; Now 69.6
    S&P Rating of the US: Then AAA; Now AA+
    VIX: Then 17.5%; Now 14%
    10 Year Treasury Yield: Then 4.64%; Now 1.89%
    USDJPY: Then 117; Now 93
    EURUSD: Then 1.4145; Now 1.3050
    Gold: Then $748; Now $1583
    NYSE Average LTM Volume (per day): Then 1.3 billion shares; Now 545 million shares

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February 5, 2013

Death and Taxes


There are a few 2013 taxes topics that may be of interest to our clients.  For example, did you know that:

the maximum tax rate on long-term capital gains and dividends received by an individual shareholder from domestic and qualified foreign corporations went from 15% in 2012 to 20% this year?

the marriage penalty is alive and well?  For example, unmarried individuals’ top income-tax bracket is 39.6% on taxable income over $400,000.  That rate for married couples is reached at only $450,000.  (If there were no marriage penalty, that rate for married couples would be $800,000.)

that unmarried individuals with taxable income over $250,000 and married joint filers with income over $300,000 (yes, another marriage penalty) actually lose as much as 80% of their itemized deductions via phaseout?  There was no phaseout in 2012.


there is good news with regard to gifts and estates?  The amount an individual can give away while alive and at death actually went up to $5,250,000 (from $5,120,000) but, alas, the tax rate in excess of that exempt amount also went up from 35% to 40%. 

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January 21, 2013

A Real-Life Fairytale


Once upon a time there was a beautiful, young girl (well, not SO young) who worked for a wealth management firm whose specialty was working with inheritors of large sums of money.  This girl (we’ll call her Abbey) had worked at the company long enough to know firsthand how clients of this firm often experienced unique and complex emotions when they suddenly found themselves responsible for a bunch of money.  Abbey sympathized with them; she could understand how it was a big responsibility.

One day, after a long, drawn out, contentious and complicated battle, Abbey suddenly received a certain amount of money in a lump sum.  It was nowhere near a fortune, but it was substantial in her life.  Everyone was so happy for her:  “You must be so relieved,” they said.  “You must be so happy!” they said.  “Now you can do anything you want,” they said (not knowing how much or how little it was).  “Let’s go out and celebrate!” they said.  Unbelievably, one person actually asked her how much she got!

Abbey realized she had begun to shy away from her well-wishers.  She felt anxious and unsettled.  What was going on?  This was something she had expected and hoped for for a very long time.  Why wasn’t she jubilant?  What exactly were her feelings?

First of all, she thought, I have this weird feeling of scarcity.  Wow!  What is that all about?  This is more money than I’ve ever had.  It’s more money than most of my friends can hope for.  And, it’s also all the money I’m ever going to get—both my parents are gone, and there are no rich relatives waiting in the wings to leave me money.  WHAT IF I LOSE THIS MONEY?!?!  I am not SO young anymore; how would I ever recoup it?  What if I mismanage it?  What if I don’t understand how to preserve it or possibly grow it?  What if I make a mistake with it?  I don’t understand it:  I don’t understand if I can spend any of it or how much; I don’t understand if I can have a monthly disbursement from it; I don’t understand how far it will go and how long it will last.  Despite having done preliminary planning with an assumed amount, Abbey still could not quell her runaway what-ifs.  What if my friends and family members are jealous?  What if they want to borrow money?  What if they expect me to pay for everything when we go out?  What if they talk about me and tell other people that I got this money?

Another feeling came upon her:  a sense of loss.  Huh?!  I should have a sense of gain, she argued, and a sense of relief from the stress of dealing with this year after year.  But now I can’t use the not-having it as an excuse to not live my life:  “I can’t go to Europe/update my house/buy a new car/yaddayaddayadda until I get the money.”  Talking it over with her therapist, she realized that she was feeling the loss of “normal” and now had to come to terms with a new normal that required taking responsibility for her life, in full.  Yikes!

Underneath all these unexpected emotions, though, Abbey was very grateful and happy.  After some time had passed, she realized that she had come to accept her good fortune with a sense of peace.  For sure, there is work to be done now that the amount is known:  meet with her planner to revise the preliminary plan; meet with her CPA; revise her estate plan, etc., and Abbey is ready to deal with it now.  She also has learned skills to enable her to feel comfortable not responding to well-meaning people who tell her what she can and should do now that she has “all this money.”

Will Abbey live happily ever after?  Well, that remains to be seen:  how she lives her life is up to her.   Abbey is fortunate to work at a wealth management firm where she could talk over her feelings and be understood and supported by people knowledgeable about sudden wealth.  You are fortunate to be able to tap the same resource—The Wealth Conservancy.  We are at your service.

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The material on this website is made available by The Wealth Conservancy, Inc. for general information and educational purposes only to give a general view of issues relative to wealth and inheritance. This information is not financial/investment advice and should not be construed as such. You should not rely on any information in this website without first obtaining advice from a financial/investment advisor. You understand that using this website does not constitute a client relationship between you and The Wealth Conservancy, Inc.