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Semantics

Written by Brandon Grundy, CFP®.

There's been a war of words in the media lately about whether recent tariff headlines coming out of Washington and Beijing constitute a trade war, a trade spat, battle, skirmish, or other descriptive word. While we love to name things, at some level what we call it doesn't really matter. The bottom line is we're in a period of escalating tensions with the world's second largest economy and little about it is good.

This obviously impacts markets in the short-term. According to Bespoke Investment Group, almost all the market's larger down days in the past few months have been related to tariff news.

This was also true of the market's performance yesterday, following the Trump administration upping the ante by proposing limits on investment by China into US corporations. The idea here is to thwart the ability of Chinese investors and companies (many of which are indirectly controlled by the Chinese government) to gain access to our most important technologies and, presumably, to take them home and copy them.

But who has the upper hand in this game of tit-for-tat trade-related chicken? Let's review the situation from both sides of the Pacific to get a feel for who is likely to blink first.

The first view is from excerpts of a recent Wall Street Journal article. The second is from Andy Rothman, an investment strategist at Matthews Asia, a highly-regarded mutual fund company based in San Francisco. I've heard Andy speak on several occasions and his first-hand experience yields beneficial insights.

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Who Do You Trust?

Written by Brandon Grundy, CFP®.

There are many crimes that turn my stomach. Being a father, perhaps most of all it's crimes against children. But a close second is crimes against the elderly. Both involve the vulnerable being preyed upon and usually occur in private, with the effects often showing up only after the fact.

Elder abuse, physical, emotional, and financial, is a large and growing problem in our country, impacting about 1 in 10 Americans over 60, according to the National Council on Aging.

Family members, friends, close associates, caregivers – they can all attempt to profit from the perceived weakness of an elderly person. It's terrible to hear about but it happens more often than the numbers indicate. The Council estimates only 1 in 14 cases are reported to authorities and a family member is the perpetrator almost 60% of the time.

This issue has garnered more attention recently due to the legal issues of Stan Lee, age 95, creator of Marvel Comics characters like Spider Man, Iron Man, and Black Panther. Lee is assumed to possess about $50mil in assets and supposedly earns an annual salary of $1mil, which seems fitting for a prolific creator and comic icon. (Full disclosure – I'm not really into comic books but can still appreciate Lee's lifetime of work and contribution to popular culture.)

Unfortunately, Mr. Lee seems beset by vultures, according to numerous articles and, specifically, one from The Daily Beast referenced below. After losing his wife of 67 years last year, there have been stories coming out that should serve as a warning for anyone who hasn't done meaningful longer-term planning.

Here are a host of planning issues everyone should be aware of:

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The Neuropsychology of Saving

Written by Brandon Grundy, CFP®.

One of the things I enjoy most about my profession is continuing to learn. It's required at the regulatory level, with a certain number of hours of continuing education being mandated by the CFP Board, for example. But the broader reality is that with so much changing all the time continuing my education isn't just required, it's necessary.

One area that is gaining more prominence in continuing education coursework is behavioral finance. I've written previously about this field and its importance in understanding the how's and why's of one's relationship with money.

These topics are important because if we can understand our internal thought processes and biases regarding money, we can hopefully make better financial decisions.

Last week I attended a two-day conference in San Francisco put on by the NorCal chapter of the Financial Planning Association. There were several behavioral finance-related options, a change from recent years where there may have only been one.

One of the sessions I attended was The Art of Saving Money and it examined, among other things, the neuropsychology of saving. The content was interesting, so I thought I'd share some of the concepts with you, along with some added commentary.

The art of saving money, it turns out, has more to do with how we manage our impulses and internal biases then it does with how much money we make. We all know people who make a lot but seem to spend it all, right? Savers tend to have these common traits:

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That Darn Mortgage

Written by Brandon Grundy, CFP®.

Should I pay off my mortgage before retiring? This is a common question for folks planning to retire, and for others who would prefer to not have any debt. While I've written about this previously, the recent tax law created some new wrinkles to consider.

I'm a firm believer that there's no one right answer to questions like this. What's right should always be based on one's own situation. But the new higher standard deduction will crowd out the ability for many to see their mortgage as a tool to save on taxes. For these folks, starting this year, owing money on their house could seem to have no benefit.

Understandably, many will want to simply be done with having a mortgage and will try to pay it off as soon as possible. But is this the best financial decision?

Here's an explanation of one of the ways I think about this question.

Relative Interest –

Assume your mortgage is at 4.5% per year for 30 years and you find out you can't deduct your interest. If you could deduct the interest, you'd reduce this number by your highest marginal tax bracket. But since we're assuming no deduction, your interest expense is just 4.5%

Now assume you want to get rid of this debt. Where will you get the money from? Maybe you have a lump sum sitting in cash and are wondering what to do with it. Or, maybe you need to sell investments.

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Rickety Rails

Written by Brandon Grundy, CFP®.

Following the theme of last week's post, one of the things I find interesting about the Social Security program is how similar the fundamental funding issues are to those faced by folks planning for, and living in, retirement. Even the methods used for long-term analysis are similar. So, let's dig a little deeper into the Social Security funding conundrum and look at some of the key issues from a retirement planning perspective.

While there is lots of information available regarding Social Security, my preference is to go right to the source. Fortunately, it's easy to find information right on www.ssa.gov, such as The Future Financial Status of the Social Security Program, a good descriptive piece written by the program's chief actuary. The language is a little dense and dated (from 2010), but the content is good and important. Another is the annual report to Congress from the trustees of the Social Security program.

The sense I get from reading both documents is something like watching a slow-motion train wreck. But it's not all doom and gloom since there are known solutions to the problems.

I'm going to include some quotes from the 2010 document and excerpts from last summer's trustee report, so this post might be a little longer than usual. Links to each of these documents are below if you're looking for a little light reading.

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