Tag Archives: General

Portfolio Performance Secrets

Portfolio Performance Secrets


Comparing Performance Kills Contentment

Investors often compare their portfolio’s performance to the market’s performance or worse, an individual company’s performance. The issue with this is that investors often are not invested 100% in U.S stocks.

They likely have a mixture of stocks, bonds, and cash in their accounts. As a result, a direct comparison of any time period would not be an accurate representation of their expected performance.

When investing and saving for retirement, we are not trying to get the absolute highest return we possibly can, we are trying to minimize the chance of financial ruin. Doing this could lead to underperformance relative to the market and your co-workers. But do not let this relative underperformance lead to the Fear of Missing Out (FOMO) or discontent with your own situation.

3 “Enough” Questions to ask yourself

Am I saving enough?

We want to use investing as a tool to become incrementally wealthier over time. We never want to do anything that could jeopardize our financial future. With these conditions in mind, you often have to ask yourself questions about what is enough for you.

The amount you save is more likely to be within your control than future market returns. There is no universal “enough” as that will vary from person to person. If you are not saving adequately, you will become increasingly reliant on potential market returns to meet your goals.

Am I taking enough risk?

You invest as a means of reaching a desired future state. Investing involves risks and you cannot guarantee future performance based on past results.

If you are not able to sleep at night because of the fluctuations in your investment portfolio you likely have exposed too much of your portfolio to volatile assets.

When this is the case you will need to reevaluate your goals. Meaning you will have to accept the expected volatility required to give you the best chance of reaching your goals or you will have to adjust some aspect of your goals.

Are my investments performing well enough?

Instead of looking at your portfolio as a whole, compare the individual components to their relative benchmark. This way you have a true apples to apples comparison. From there you can determine if each investment is doing a sufficiently good job or a change needs to be made.

Any investment strategy that attempts to outperform its peers will likely have periods of time where it underperforms. The duration of underperformance can not be known in advance and judgment must be made as any underperformance continues for a significant period of time.

‘If you know your enemy and know yourself, you need not fear the result of a hundred battles.’ (Sun Tzu, The Art of War). 

Everyone Has a Plan Until…

Our experiences shape who we are, especially when it comes to investing. We may think we can handle a certain level of volatility, but have a much different opinion once we experience it firsthand. Knowing what we should do and actually doing it are two different things.

Making a plan you can not stick to is not much better than not having a plan at all. Turning inward and asking yourself what you need instead of looking at others for reference and their returns can allow you to focus on what you can control and not worry about the things you can not.

Feel free to email us at info@westernreservecm.com with any questions you have. If you would like to schedule time with us to discuss your specific situation click here.


Gage Paul, CFP®, RICP®, EA

Gage Paul is a financial planner at Western Reserve Capital Management. He works with the firm’s clients to create sustainable financial plans and investment strategies.

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Claiming your Spousal Social Security Benefit Early


Question

Can a spouse take their spousal benefit before they could take their own benefit?


Answer

The Earliest You Claim a Spousal Benefit

The earliest one can claim their benefit or a spousal benefit is age 62 and doing so will result in a permanent reduction in your benefit based on your full retirement age.  

Below is a table from ssa.gov that shows the reduction of benefits when claiming at age 62

Source: Social Security Administration

In order to claim a spousal benefit, Spouse #2 must wait until Spouse #1 begins drawing benefits on their own record. Spouse #2 must wait until age 62 to claim a spousal benefit even if Spouse #1 is already taking their benefit on their own record.  

*Any early claiming of benefits will result in a permanent reduction in benefits. The only caveat to this is if you are caring for a qualifying child, we mean a child who is under age 16 or who receives Social Security disability benefits could allow you to claim earlier. 

Understanding Deemed Filing

The Bipartisan Budget Act of 2015 made some changes to Social Security’s laws about filing for retirement and spousal benefits. 

If you turn age 62 on or after January 2, 2016, you CANNOT apply only for spouse’s benefits and delay filing for your own retirement benefit in order to earn delayed retirement credits. You are required or “deemed” to file for both your own retirement and for any benefits you are due as a spouse, no matter what age you are.  

Deemed filing means that when you file for either your retirement or your spouse’s benefit, you are required or “deemed” to file for the other benefit as well.  

The rules for deemed filing apply only to retirement benefits based on your own work record and to the spousal benefits (including divorced spouses) you receive based on retirement.

If you receive a spousal benefit because you are caring for a child who is under age 16 or disabled or if you receive spouse’s benefits and are also entitled to disability, deemed filing does not apply and you are therefore not required or “deemed” to file for your retirement benefit. 

Social Security can be very nuanced and claiming strategies should not be made without consideration of the rest of one’s financial plan. Social Security is foundational to most retirement income strategies and when you claim should be personalized to your circumstances. If you would like to schedule time with us to discuss your specific situation click here.

Feel free to email us at info@westernreservecm.com with any questions you have.


Gage Paul, CFP®, RICP®, EA

Gage Paul is a financial planner at Western Reserve Capital Management. He works with the firm’s clients to create sustainable financial plans and investment strategies.

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7 Benefits of Hiring an Expert


Why Gage Hired a Personal Trainer

I recently decided to purchase workout programming from Barbell Medicine after months of slowed progress in the gym. Being a Certified Personal Trainer and regular weightlifter, I have historically written my own workout programs. I felt I had sufficient knowledge with my education and access to free information available on the internet. 

I know from past experience there are many people who call themselves fitness “experts” but have no clue what they are talking about. I eventually found the Barbell Medicine team who do individual and group coaching. They produce a lot of good content and base their recommendations on current research and their experience training clients. 

They also hold impressive credentials that show their commitment to their profession. I am only a few months into this programing but, I am pleased with my progress thus far and attribute these results to the following values they provide: 

The Benefits of Hiring an Expert

Accountability  

Being that I am paying for the programming and have someone to report my results to, I feel much more responsible than I would be if I were to do it on my own. 

Objectivity 

They provide an outside insight into my training and help me avoid emotionally driven decisions that could have negative outcomes. This will hopefully reduce my risk of injury from training. 

Proactivity  

They are aware of where other clients have struggles and anticipate where I may run into similar issues and can adjust my programming accordingly. 

Education 

The program is based on current research as well as experience with past clients. It is presented in a way that is much more in-depth than what I would have put together on my own. They are also constantly researching topics and providing new content relevant to my situation. 

Partnership 

There is a support network I can turn to if I need assistance or have questions. They also encourage me to autoregulate my training, meaning they tell me what level of fatigue I should generate but it is up to me to determine how much weight goes on the bar. 

Organization 

The template provided a plan overview, as well as an excel file to log data. This allowed me to track my training and nutrition in one centralized place and show my progress and see trends in the data. I will also note the spreadsheet they put together is much more detailed than I would have created for myself. 

Reduced Self-Experimentation 

I am confident that I could do it on my own, but I now see the value in professional guidance and know that my time could be better used elsewhere than staying current with the most recent fitness and nutrition research. I also want to not make the same mistakes as someone else, rather try to learn from them. 

Enjoy the Journey

I know fitness is a journey, not a destination and there will be peaks and valleys along the way. Although its level of priority in my life will likely change, I plan to always maintain some level of physical activity throughout my life. 

As I learn more about myself, make mistakes, and adjustments, my goal is to pass on the lessons learned and knowledge gained. 

“A smart person learns from his mistakes, but a truly wise person learns from the mistakes of others.” 

-Ken Schramm 

Feel free to email us at info@westernreservecm.com with any questions you have.


Gage Paul, CFP®, RICP®, EA

Gage Paul is a financial planner at Western Reserve Capital Management. He works with the firm’s clients to create sustainable financial plans and investment strategies.

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What Gage Learned from Riding Porcupine Rim


Adventure Calls

I was on vacation with my family in Moab, UT when I unwittingly decided to do one of the most challenging things thus far in my life.  

I want to start this story by noting I had some previous mountain biking experience in Ohio but am by no means a skilled rider. My brother, on the other hand, is a very experienced and accomplished rider who regularly goes to trails all over the country. 

Earlier in the week, we rode another trail in Dead Horse Point State Park. It was fun and not too challenging. This trail built up my confidence. I was ready to attempt a more difficult trail.  

It Would Be Fun, They Said

My brother rode a different trail, Porcupine Rim, earlier in the week. He completed it in about an hour. This seemed like a good step-up in difficultly for me and I asked him if he thought I could handle it. He replied with a yes. On a side note, Porcupine Rim is considered one of the most technical and dangerous rides in Moab, Utah. It is 14.7 miles long and is marked with a black diamond for its difficulty. The trail begins at an altitude of 6,803’ feet. Mountain bikers from all over the world are attracted to this trail.

I woke up the day of the ride still sore from the previous day. My brother said it would be a good idea if I use my dad’s bike instead of my own since his bike was a “top of the line” mountain bike built for trails like Porcupine Rim. As we were being shuttled up the mountain to the trailhead, I began to realize I was in over my head. We were going up the mountain on a road used only for 4X4 vehicles. The ride up seemed even too treacherous for my personal tastes. 

Once we were dropped off, my brother, noting my apprehension, said if I thought the trail was too difficult, we could exit at any point and call to get picked up. I set my doubts aside, knowing I had an out, and began the ride down.  The trail was much more difficult than I could have imagined! On top of that, my dad’s bike was set up for his height and weight and not my own. This caused the bike to not perform the way it should.

The Point of No Return

After multiple crashes and losing all faith in my riding ability, I asked my brother if we could quit the trail early and be picked up. He called for an early pick-up, and then checked the trail map to take us to the next exit.  To his surprise we were miles passed the early exits and at a point of no return.  I had to complete the trail. 

Knowing I couldn’t bow out early, my brother made some adjustments for me on my dad’s bike and we continued the ride. I am not sure if it was the adjustments he made to the bike or the fact that I knew there was no turning back, but the rest of the ride went significantly better. I did not crash again and actually began enjoying myself and taking in the amazing scenery. It took us (me) approximately 3.5 hours to complete the trail compared to the 1 hour it took my brother earlier in the week. 

My body felt like I had been involved in a serious car crash for the rest of the week, and needless to say, I did not do any more mountain biking in Moab.  

My Key Takeaways from Riding Porcupine Rim:

  • There are levels of difficulty that you cannot appreciate until after you experience them. Your ego could cause you to be overconfident in your ability based on what you have done before. Often things are not incrementally more difficult and that can make it challenging to judge how you will perform. 
  • Be humble or be humbled. 
  • Using “top of the line” equipment can’t make up for the lack of skill or experience needed to succeed at something. 
  • You will likely be surprised at what you can do when there is no alternative but to complete the task at hand. Your mind often finds an excuse for you to quit if quitting is an option.   
  •  Bonus: Always pack snacks because you never know when you will need a boost of energy.  

Let me know your thoughts or any questions you may have gpaul@westernreservecm.com 

Below is a video of a rider much more skilled than myself on the trail.


Gage Paul, CFP®, RICP®, EA

Gage Paul is a financial planner at Western Reserve Capital Management. He works with the firm’s clients to create sustainable financial plans and investment strategies.

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The Signal is the Truth


The Signal and the Noise: Why So Many Predictions Fail-but Some Don’t 

Nate Silver is a statistician, writer, and founder of the FiveThirtyEight blog.  He specializes in analyzing baseball and election data and is a firm believer in Bayesian statistics. 

In his book, Silver describes the methods of building a mathematical model using probability and statistics. He gives a broader picture of probability and statistics using case studies from elections, baseball, weather, poker, and financial markets. Ultimately the underlying principle to all of these issues and statistical analysis itself is trying to separate out the real signals from the underlying noise.  

For those who want some perspective on what we do and don’t know about statistics as it’s applied to real-world problems, Silver provides actionable ways to implement prediction techniques to makes better decisions in investing and in life.

Key Takeaways 

  • The signal is the truth. The noise distracts us from the truth. More data means more noise in relation to the signal.
  • Some situations are particularly difficult to forecast especially when:
    • The event is an anomaly.
    • You are forecasting a dynamic system.
    • Meaning current behavior influences future outcomes.
    • There is a lack of theory in the domain.
  • Correlation does not equal causation
    • Make sure there is logical causation for the mathematical relationship before using it in your predictions.
  • We can become better predictors by:
    • Thinking more probabilistically and articulating a range of possible outcomes.
    • Updating forecast when presented with new evidence.
    • Looking for consensus.
  • Use Bayes’ theorem or think in a Bayesian way when new information presents itself.
    • Bayes’ theorem: the probability of event A given event B has occurred.

Gage Paul, CFP®, RICP®, EA

Gage Paul is a financial planner at Western Reserve Capital Management. He works with the firm’s clients to create sustainable financial plans and investment strategies.

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From Certified Personal Trainer to Certified Financial Planner®


I often joke with Jim when I become interested in something, I go down the proverbial “rabbit hole” and go very deep on a specific subject and try to learn as much as I possibly can. As I look back at my career thus far this holds true. When I became interested in fitness and nutrition, I became a Certified Personal Trainer and when I became interested in personal finance, I became a Certified Financial Planner®.

My fitness journey began when I was training for soccer and high school. I was heading into my senior year and looking to add some muscle to increase my performance on the field. 

As I began to work out, I soon found I liked training more than playing soccer. I diligently researched the optimal training routines to maximize my performance and muscle growth. I meticulously tracked my exercises, sets, and reps. I studied diet and nutrition to understand the amount of protein, carbohydrates, and fats I needed to intake daily. I spent the majority of my income from working at Discount Drug Mart on supplements to enhance my workouts.

After learning so much about fitness and nutrition I decided I wanted to share this with other people and thought I could make a career out of it. I began to train and counsel friends and family and attained my Certified Personal Trainer from the International Sports Science Association. In addition to my personal training certification, I decided to study nutrition at the University of Akron and got a job at the Rec Center on campus, and began seeing clients.

I soon realized that not everyone has the same passion and commitment to fitness and nutrition as I did. This was very discouraging for me, as my clients did not see the results I expected. This was mainly due to only training them for 30 minutes twice per week and having zero control of their behavior outside of the gym. 

As I was training clients, I also discovered there was not a lot of money to be made in the personal training business as an employee. If I wanted to make a career out of it, I would have to open my own gym.

This led me to study finance because I thought people who worked with money would by default make a lot of money and I could then use that money to open a gym. As I got exposure to personal finance and got an internship with a large insurance company, I learned that you were able to help people as a personal trainer or coach would. 

I then began digging into all information related to financial planning and striving to become a Certified Financial Planner®, which I saw as the gold-standard in the industry. It wasn’t until I graduated from the University of Akron and began working at a Registered Investment Advisory firm where I saw the difference between product sales and real financial planning and seeing there was so much left to learn beyond the Certified Financial Planner® designation. I began to dive deeper into specific areas that interested me. The first was taxation, where I decided to get the Enrolled Agent license as a good way to have a thorough understanding of the US tax code. 

Then I was then drawn towards the area of retirement planning once I found out the number of decisions and complexities that surround this time in someone’s life. So, enrolled in the Retirement Income Certified Professional® designation through the American College to explore this area further.  

I will always have a love for fitness and nutrition and I’m more than willing to help anyone who has questions in these areas, but I see this as a passion rather than a career. My transition from fitness to finance has shaped me into who I am today. I look forward to guiding clients through their retirement journeys. Who knows maybe someday I will open a gym to help clients get in great financial and physical shape. 


Gage Paul, CFP®, RICP®, EA

Gage Paul is a financial planner at Western Reserve Capital Management. He works with the firm’s clients to create sustainable financial plans and investment strategies.

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