stellarnomadco

Paying attention to macro economics and international relations is somewhat foolhardy (but fun!).

Its not that it doesn’t matter, its just extremely difficult to be right. The world is a complex place and predicting what will happen let alone what that means for your investments is so difficult you probably shouldn’t even try.

Sometimes, however, the large moving pieces like sovereign debt, demographics, and economic growth send such a strong signal that it is difficult to ignore.

Pundits have been yapping for years about the unsustainable sovereign debt growth. They have been wrong only in timing, and every year that passes brings us closer to the day that the debt matters.

Facing low economic growth, high sovereign debt loads, and high inflation, we may be in a period of stagnation. It is a particularly difficult investment regime.

The real return of bonds is crushed by inflation, equities

Governments, faced with crushing debt loads and diminished tax receipts, need

What is financial repression

A model portfolio

Many people are capable of handling their own investments. It requires some education and a certain personality.

But even if you are capable, should you?

Behavioral finance teaches us that there is a difference between knowing what to do and actually doing it. Also, the investing landscape is understandable but still fairly broad and complex. It might take time (years?) for you to gain the confidence and skill to manage your own money. A beginner can easily make mistakes that easily trounce the cost of a financial advisor.

How financial advisors are paid

The old way (still extremely common) of getting paid is a yearly fee as a percentage of your assets (typically 0.5-2%) and even additional fees on top of that for . Even if you believe that charging old ladies 1% for what amounts to a standard 60/40 portfolio is fair (it isn’t), the common kickbacks for each fund purchased (passed along to the investor as a “sales load” and other obfuscated bullshit fees) should be considered criminal.

But there is another way

Fee only advisors charge a cash fee, paid directly out of your pocket. It is transparent and aligns their incentives with your own.