My wife & I during a visit to Washington D.C.

What I Do

My wife & I during a visit to Washington D.C.

My wife & I during a visit to Washington D.C.

“You are essentially who you create yourself to be and

all that occurs in your life is the result of your own making.”

– Stephen Richards

 

I get asked a lot of questions. The question I’m asked most often is; “What are you doing with your money?”. That’s a very good question, so let me answer it for the world to see.

 

First, I’m a big believer in “eating our own cooking”, so I invest right alongside my clients. Because we use block-trading models, my allocations & my assets are exactly the same as my clients. I do not own anything they don’t own and they don’t own anything that I don’t own.

 

  1. Budget

I have a household budget. It accounts for everything, including a Miscellaneous Category to cover spending I hadn’t planned on. I know what I’m spending, where I’m spending it, and how often that expense recurs.

  1. Planning

I have a written financial plan. It covers our personal financial goals, time horizon, and resources. I follow my financial plan to the letter, because my wife & I are serious about reaching our goals.

  1. Professionals

I have a Certified Public Accountant (CPA) who prepares my tax returns and advises me on tax matters. If I have a question or an idea, I contact him and take his advice. If he has a recommendation, I listen to him, ask questions, and take his advice. I also have an estate planning attorney who prepared our estate documents. Just as with our CPA, we ask him questions, listen to his recommendations, and take his advice.

  1. Insurance

We maintain high deductible policies on everything; vehicles, home, healthcare, dental, etc … And we only use reputable insurance companies. Insurance has become very expensive and the lower the deductible, the more expensive it becomes. It is less expensive for us to pay deductibles out of pocket and since we rarely file a claim, we rarely have to pay the deductible. Our policies include a Comprehensive Liability policy aka Umbrella Policy just in case we are ever sued (vehicle accident, slip & fall at our home, etc …).

  1. Health Savings Account (HSA)

Because we own high deductible health & dental insurance, we have to pay for most healthcare needs out of our own pocket. We can’t deduct 100% of medical expenses from our income, but we can deduct 100% of HSA contributions. So we contribute to an HSA and use the HSA to pay for our healthcare expenses.

  1. Long Term Care Insurance

We both know & understand that barring an accident, we probably have a long lifespan ahead of us. Longevity usually results in large long-term healthcare expenses. We both have long-term care insurance policies to cover those future expenses.

  1. Cash Savings

I have cash savings. We call it our Emergency Cash Account. We keep enough cash to cover reasonably expected emergencies, but not any more than that. I don’t want to have to borrow or charge when something happens (and something always happens) and I don’t want my hard-earned money laying around doing nothing for me.

  1. Retirement Savings

My wife & I both have retirement accounts. We fund our retirement accounts every month and we fund them before we consider placing money anyplace else. Retirement is our #1 Financial Goal, making it our priority. I also operate a business retirement plan. It provides higher contribution limits, greater income tax deductions, and allows us to attract & retain the best talent, all while pursuing our retirement goal.

  1. Non-Retirement Savings

When it is possible for us to save more than we are permitted to sock away in retirement accounts, we fund a non-retirement investment portfolio. We may add in a little extra fun, such as a short, unplanned vacation or a purchase we’ve been wanting to make, but we mostly save & invest all the extra we have when we have it.

  1. Review & Management

I only look at our financial plan 1x/year. I only look at our investment accounts 1x/year. Each year in late December, I block-out some time to review my personal financial plan, evaluate our progress, our needs, etc … and review our investment accounts. I only make changes if our goals change or if applicable laws change. Our account statements are unopened & filed away just in case we ever need them. The only statement that’s ever opened is our checking account statement, because it has to be opened in order to be balanced.

 

Actions speak louder than words.

I hire professionals to advise me in areas outside my area of expertise. And not just any professionals. I hire the best I can find. What does that tell you about purchasing generic online legal documents and do-it-yourself tax preparation?

I know Hollywood makes it seem as though I should be trading every few minutes, or at least daily, but I don’t. What does that tell you about my thoughts on frequent trading?

I know several advisors propose highly complex strategies and have reams of paperwork to try & bolster their ideas. I understand those strategies completely, but I believe straightforward is best. What does that say about my opinion on complex investment strategies?

I know several advisors recommend complex investment vehicles, but I believe plain vanilla investment vehicles are best. What does that tell you about my opinion of complex investment vehicles?

I save and investment the same amount every month, socking away extra money when I have it available. What does that say about the value of systematic investing?

I only review my accounts 1x/year. What does that say about looking at your accounts daily, weekly, or monthly?

I only review my financial plan 1x/year, only change it if my goals change or applicable laws change, and stick to it religiously? What does that say about changing or discarding your financial plan?

 

People seem to think that as a professional, I’m doing something for myself that I’m not doing for them. They seem to think I’m using some uber complicated, flashy, strategy that I’m not using with them. Those people couldn’t be more wrong.

 

Sapiat Asset Management is an independent registered investment advisor, specializing in financial planning based, asset management for Gen X Individuals & Families and their Trusts & Businesses.

 

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