Though I haven't worked on tax returns that aren't mine in quite some time, there is a very real part of my CPA brain that can't help thinking a lot about taxes this time of year. And one of the things I think about is...
Two of the most important aspects of a good investment philosophy can be summed up by the following questions. 1) Is this strategy likely to work? 2) Will I be able to stick with this strategy for long periods of time throughout the inevitable ups and down of the stock market? At Beacon, we have a thoughtful, well-defined investment philosophy that we think answers both of the above questions in the affirmative.
Source: “What Do Data on Millions of U.S. Workers Reveal about Life-Cycle Earnings Risk?” by Guvenen, Karahan, Ozkan & Song[/caption]
If you've been reading our Brief for any length of time you may have seen the term "lifestyle creep" come up once or twice. It's a fascinating concept with an equally emotive name, and it has all sorts of implications in the practice of long-term financial planning. Lifestyle creep is, more or less, the natural but potentially dangerous rising standard of living that occurs over the course of a lifetime as salaries increase with age (to a point). It's potentially dangerous, because if it creeps too much, then retirement becomes prohibitively expensive to fund at the level of your creeped up lifestyle, since your rate of consuming dollars will by definition have outstripped your rate of saving dollars.