A traditional Thanksgiving custom has people go around the table, pausing amidst the craziness of everyday life, to share the things for which they are thankful. Many people express gratitude for family, friends, and good health. In that vein, though befitting a personal finance column, I’d like to share some of the areas of investing, financial planning, and living in a market-based economy for which I’m thankful today, and every day.
Investments: I am thankful that the U.S. stock market is the most transparent market in the world. I can buy a stock in the morning and track its exact value throughout the day. I can also sell a stock and have my cash back in my checking account within a few business days. Many markets around the world are far less liquid and this process is far more cumbersome.
I am also thankful that, from the comfort of my office in New York, I have the flexibility to choose from a myriad of investment products. I’m not limited to a specific firm, product type, or investment strategy and can even easily, and cost effectively, access investments globally.
Speculation: I am thankful that I have the freedom to speculate on various more arcane areas of the market such as cryptocurrency, meme stocks, SPACs, and opaque real estate deals. Furthermore, I’m at liberty to utilize leverage if I so choose. While these riskier investments may not work out, no one is stopping me from taking big risks to possibly realize large returns.
I am also thankful that we have a well-established system for handling bankruptcy just in case an investor overextends themselves on any speculative investments. Most people deserve a second chance after they learn from their mistakes.
Simplicity: I am thankful for simple strategies that allow me to seamlessly build wealth over time. This includes dollar-cost averaging, automatic escalation and default investment options in 401(k) plans, diversification, and rebalancing, to name just a few. These strategies are not reserved for the rich and famous. Rather, they are readily available to many investors of average means.
Retirement: I am thankful for 401(k)s, IRAs, and other tax deferred accounts that give me the control over my own retirement. I further appreciate my Traditional and Roth retirement options so I can choose when I want to be taxed.
College Savings: I am thankful for 529 college savings accounts so I can start preparing for my kids’ higher education in a tax efficient manner when they are first born. I appreciate the flexibility of these plans that allows me to easily move funds between related beneficiaries. That’s a huge benefit in the event that one child gets a free ride to school while another goes to the most expensive school in the country.
Insurance: I am thankful for various types of insurance that can protect my loved ones if I, chas v’shalom, die or become disabled at a young age. This includes term life insurance so I can get the coverage that I need without significantly impacting my cash flow. It also includes disability insurance, which will help provide my family with a stream of income should I be unable to work or perform the same job function in the future.
Tax Planning: I am thankful for tax loss harvesting, which is an important silver lining when the market tanks, like it has in 2022. It helps minimize my tax bill and the pain of a challenging market. I am also grateful for a favorable long-term capital gains tax rate. This encourages investors to buy and hold investments instead of day trading, which tends to have adverse tax consequences and usually doesn’t work out over the long-term.
Economy: I am thankful that the U.S. economy is the most diversified in the world and has remained resilient when many other global markets have been stagnant for years.
I am thankful that I live in the country with one of the safest and best run banking systems in the world. If my cash is in any regulated bank, I have a high degree of confidence that it will not disappear.
I am thankful to live in a market-based economy where anyone with a good idea, willingness to work hard, and a bit of luck can be successful.
Even our politicians with socialist leanings, like Bernie Sanders, are actually multimillionaire capitalists who inherently appreciate our market-based system. As much as they criticize our current way of life, they have benefitted from it. When push comes to shove, they (hopefully) won’t allow this country to turn into the Soviet Union. They have too much to lose.
On this Thanksgiving weekend, take a minute to express hakarat hatov for all the things that Hashem has bestowed upon your family and our great nation, including a wonderful financial system ripe with opportunities.
Happy Thanksgiving to all!
Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment Advisory Services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Shenkman Wealth Management is not affiliated with Kestra IS or Kestra AS. Investor Disclosures: https://www.kestrafinancial.com/disclosures.
Readers are encouraged to ask their personal financial questions, which may be quoted from and addressed in a future column, by emailing Jonathan@shenkmanwealth.com.