Coming Up For Air

Today's Newsletter:

• My Latest

• Coming Up For Air

• Emotions and Investing

• A Money Question

My Latest

Taxes are a lifetime game.

One of my favorite strategies to reduce your lifetime tax bill is Roth conversions.

In my latest, I discuss everything you need to know about:

• What they are

• When to consider them

• How to execute on them

You can check it out here ⬇️⬇️⬇️

Coming Up For Air

I grew up with two brothers, and we went to the lake constantly.

One of our favorite games was seeing who could hold their breath the longest.

Honestly, the most “fun” part of the game was talking about the upcoming game.

In reality, if you have tried to hold your breath underwater ~ it is not fun.

You have to go a good while until you start to feel the effects of it.

Then once you feel those effects, you realize this sucks.

You just want to come up for air and take a break.

Well, investing is much the same in this sense:

• In theory, just do it for a long time.

• In reality, you have weeks (or days) like this past week.

It isn’t a ton of fun to sit there and just hold your breath.

***Oh, in case you missed it, the stock market took a nose dive last week on the tariff announcement.

In today’s newsletter, I am going to share how I balance investment theory with the reality of investing.

Let’s dive in…

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Emotions and Investing

Investing on the surface seems easy.

Buy a diversified set of investments, rebalance strategically, and wait a few decades.

Yet the reality of investing looks nothing like that.

This week, my portfolio was down somewhere around $1,000,000. I can’t tell you the exact amount because I stopped looking.

I have been doing this investing thing for 15 years, and it still doesn’t feel good when the market turns south.

I share this because one of the unique advantages I have as a financial planner to my clients is that I feel it just as much as they do.

I see a lot of “investment people” who like to stand on their soapbox and preach theory.

They say things like:

• “Ignore the noise.”

• “Just stay invested.”

• “The market will bounce back.”

Now, let me be clear, I believe in all those cliches above.

I am a long-term investor, but there are times when you just need to come up for air.

Yet to do that, you need to build a portfolio in the good times that lets you come up for air in the bad times.

Here are three ways our team has built portfolios and actions we took this week to help every client stay engaged, sleep well at night, and still come up for air.

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Review the War Chest

The war chest is our cash or cash-like equivalents.

When we help clients build out portfolios, we almost always start with a less aggressive stance than they could take.

We do this for one reason ~ our goal is to earn the highest rate of return over the longest period possible.

The only way we fail is if we can’t stay invested.

So the war chest for our clients serves two purposes:

• Softens the blow of market downturns

• Allows us to come up for air in those same downturns

This allowed clients to sleep well at night, knowing they have dry powder to invest in things that are now on sale and cash to continue living their lifestyle.

A win (stayed engaged) - win (peace of mind) - win (bought on sale).

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What Isn’t Down

Everyone has heard ad nauseam the power of diversification.

Yet for the last decade, many investors (including myself) have questioned it.

We have seen one segment of the market (U.S. Large Cap Growth) outperform nearly everything.

It has led to some claiming that you should just ignore entire sectors of the market (looking at you, International Stocks).

Yet this year has been a great reminder of the power of diversification.

While segments of the market have seen 15-25% drops from their peaks, other segments of the market have not been hit as hard.

That diversification buffer is the extra breath investors need to stay invested in the most uncertain times.

Oh, and those things that have been beaten down ~ you get to rebalance back into them on sale.

This is why I preach against two or three-fund portfolios.

Yes, they can be simple, but they do not allow for the flexibility in real life that allows you to take advantage (and stay invested) in the market.

Remember when the market drops 10% a week, theory is not going to make you feel any better.

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Tax Loss Harvesting

No one wants to "lose" money in the market, but tax loss harvesting is a great tool to set up a future tax asset.

It works like this:

• Sell your current position

• Immediately rebuy an equivalent position

• Capture the “tax loss” on paper to use in the future

That loss creates a future tax asset that we can use to offset ordinary income (up to $3,000 per year), but more importantly, future capital gains.

These “paper losses” have helped our clients:

• Optimize for big purchases

• Reduce taxes on business sales

You cannot ignore the connection between your investment portfolio and your life.

We look at this on a client-by-client basis to determine when, where, and why it might make sense.

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Investment theory and investing in real life are two different things.

My goal with our clients is to balance staying invested, sleeping well, and generating the highest rate of return.

To do that, you need a portfolio that allows you to come up for air.

Until next time, my friends!

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A Money Question

How did you optimize your portfolio and future financial plan this week?

I reviewed my cash position and invested much of my excess cash in positions that were on sale.

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3 Ways I Can Help You

💰 Schedule an introductory call with Moment. We help athletes, entrepreneurs, and key employees build and protect wealth.

📹 Check out my YouTube channel. A safe place to get smarter with your money.

📷 Interact with me on Instagram. Where I provide bite-sized daily content to level up your money game.

Moment Private Wealth, LLC is a Registered Investment Advisor, located in the State of Missouri. Moment Private Wealth provides investment advisory and related services for clients nationally. Moment Private Wealth will maintain all applicable registrations and licenses as required by the various states in which Moment Private Wealth conducts business, as applicable. Moment Private Wealth renders individualized responses to persons in a particular state only after complying with all regulatory requirements, or under an applicable state exemption or exclusion. Nothing in this content is intended to be, and you should not consider anything in this content to be, investment, accounting, tax, or legal advice.