Gratitude is such an empowering and satisfying emotion, it deserves more than one day on the calendar. And we have so much to be thankful for, both personally and professionally. This is especially true in the investment world. From the perspective of modern investors, here are three things that we can all be thankful for in the spirit of Thanksgiving.
…for investment abundance
We live in an amazing time of investment abundance. Innovation in capital markets and communication have created near limitless investment opportunities for would-be investors of all sizes.
Brokerages like Fidelity provide instant access to 10,000+ global securities. Aggregators like iCapital and CAIS provide small ticket access – $50,000 minimums – to private equity investments once reserved for the ultra-wealthy. Nearly all of your investment property research can be completed on publicly available services like Zillow. Angel investors can easily form groups and share deal flow or investment ideas. Even companies like Coinbase make it seamless to buy cryptocurrencies via your iphone. The result is that today very few investments are truly exclusive.
…for compound interest
Interest that earns interest. From Warren Buffett to Einstein, wise men hail compound interest as one of the most powerful forces in investing and even call it “the eighth wonder of the world.” They’re right. Allow your interest or investment income to be reinvested rather than paid out and you too will experience this magical multiplying effect. As dividends get reinvested, 100 shares of AAPL turn into 101 shares of AAPL, which produce more dividends in turn. Rinse, repeat and rejoice. When you spend less than you make and avoid tapping into your investment portfolio unless absolutely necessary, time and compounding give your investments space to multiply.
…for the psychology of giving
We are wired to enjoy the gift-giving process. Consider the needs of underprivileged youth, the crown jewel of your city’s artistic identity or a medical group that helped save the life of someone you know. Giving a gift is often more pleasurable than receiving one due to a bond-forming social psychology effect that lets us rediscover that “we’re all in this together.” Giving awakens our instinct for empathy, allowing us to momentarily see the world from someone else’s perspective. Giving creates empathy and empathy creates happiness.
Since we’re rapidly approaching the end of the tax year, it’s a good time to address end of year giving. If you plan to give any larger gifts, anything over $5,000, consider donating taxable assets with large capital gains. When we donate a stock with a capital gain three things happen:
1. The charity is allowed to keep the full asset value pre-tax.
2. We can write off that full value against our annual income.
3. We both avoid the capital gain tax.
AAPL stock has been a favorite for donations over the past few years due to large embedded capital. There are certain limits and the details matter. We’ll go into more detail next week when we write specifically about Charitable Gift Funds. Until then…
Happy Thanksgiving from Osbon Capital Management!
delivered to your inbox
This communication may include forward-looking statements. All statements other than statements of historical fact are forward-looking statements (including words such as “believe,” “estimate,” “anticipate,” “may,” “will,” “should,” and “expect”). Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. Various factors could cause actual results or performance to differ materially from those discussed in such forward-looking statements.”
“Historical performance is not indicative of future results. The investment return will fluctuate with market conditions.
Past performance is not indicative of any specific investment or future results. Views regarding the economy, securities markets or other specialized areas, like all predictors of future events, cannot be guaranteed to be accurate and may result in economic loss to the investor.
Investment strategies, philosophies, allocations and holdings are subject to change without prior notice.
This communication is intended to provide general information only and should not be construed as an offer of specifically tailored individualized advice.
While the Adviser believes the outside data sources cited to be credible, it has not independently verified the correctness of any of their inputs or calculations and, therefore, does not warranty the accuracy of any third-party sources or information.
Adviser does not endorse the statements, services or performance of any third-party vendor.
Unless stated otherwise, any mention of specific securities or investments is for hypothetical and illustrative purposes only. Adviser’s clients may or may not hold the securities discussed in their portfolios. Adviser makes no representations that any of the securities discussed have been or will be profitable.
Any IPO alerts are purely informational and should not be construed as recommendations to invest.
Adviser is not licensed to provide and does not provide legal, tax or accounting advice to clients. Advice of qualified counsel or accountant should be sought to address any specific situation requiring assistance from such licensed individuals.
Any case studies or hypothetical client profiles are for demonstration purposes only. They illustrate the breadth and depth of the many clients we represent at various life stages. Any similarities to actual Adviser’s clients past or present are strictly coincidental. Individual advice and results will vary based on each client’s circumstances, objectives and prevailing economic conditions.