Critical Thinking Required LBW Wealth Management

This is our 2024 first-quarter commentary.  Nathaniel discussed 3 main topics: US stock market performance, and why the S&P 500 doesn’t truly reflect the overall stock market; inflation, and how it impacts your investments; and lastly, the 2024 presidential election and how it may affect your financial planning.

If you are planning to have a child, or you just had one, there are some financial preparations that you may find extremely beneficial in the long run:

1. Cash Flow: Create a realistic budget and increase your emergency fund;
2. Estate Planning: Pick your guardians, create a trust, or at least complete the free estate planning templates your state provides;
3. Life Insurance: Now that you have (or are about to have) another person who depends on you, please review your insurance needs.  It's a risk management tool, not an investment!
4. Education Planning: Utilize 529 plans and other useful investment vehicles for your child;
5. Tax Breaks: Talk to your advisor and CPA about child and dependent care credits, FSAs, and other tax benefits.

In this episode, Nathaniel and Tim discussed what the S&P 500 index is, its performance, and does it truly represent the overall stock market.  From January 1 to June 20, 2023, the S&P 500 increased 14.3%.  That's well above the 10-year and 20-year averages through that same time period of 3.6% and 3%, respectively.  "The markets must be doing really well this year then!", you may think.  But why are your 401(k)/retirement accounts not doing as well?  Did you know that the top 9 companies of this index (Apple, Microsoft, Amazon.com, Nvidia, Tesla, Alphabet, Meta Platforms, Berkshire Hathaway, and UnitedHealth Group) accounted for almost 31% of the market capitalization?  And if you exclude these top 9 stocks, the index would be up about 3% in the same time frame, making it a very mediocre year.  Nathaniel talked about what drives the 2023 jump, and the volatility of the short-term market.

In this episode, Tim and Nathaniel discussed estate planning for digital assets.  This is a relatively new concept for older generations.  Most of us are familiar with wills and trusts for cash, real estate, and other investments.  But what about digital assets like Bitcoin, online bank accounts, etc.?  If you are an influencer or work in the media industry, what about your social media accounts, movie/music rights?  Nathaniel and Tim also discussed password management.  We understand that estate planning is always difficult because we don’t want to face our mortality.  But please give it a try, and do the hard work on estate planning, so that your loved ones can focus on mourning your passing and building a meaningful life afterward, instead of stressing out about where everything is.

In this episode, Tim and Nathaniel discussed private investments: what're their qualifications, why they have income/assets restrictions, and how should one view them.  A couple of research filters to go through: define your goals, understand the vehicles, consider the risk, know the management/leadership, and pay the right price.  Nathaniel made a great point: if you have a small business or part-time side business, the best private investment could actually be your own company.  You know the industry well, you understand the product/service, and you are in control of the execution.  When it comes to investments, new and shiny may not be the best option.  Why not put your money into things you know best?!

Threads is Meta’s latest social media app.  It’s a Twitter-like product with short missives you can share with followers.  It lets you post text, photos, links, and videos.  It reached 100 million subscribers in a record time: within 2 days.  In comparison: it took ChatGPT 2 months, TikTok 9 months, Instagram 30 months, cell phones 15 years, and telephones 75 years.  Tim and Nathaniel discussed from an investor’s perspective, what Twitter’s and Thread’s (really Twitter and Meta’s) pros and cons are and what the future may hold for them.