An Odysseus Agreement To Earn Buffett-Like Returns

In the Greek poem, The Odyssey, Homer illustrates an age old flaw in human nature. Odysseus, the hero, is warned by goddess Circe that when his ship is sailing by the island of the Sirens, the irresistible songs of the Sirens will lure him towards the island and destroy his ship.

The sirens are symbolic of the flaws and biases that seem to be a natural part of our brain’s chemistry. Homer suggests a solution to keep these flaws in check. To counter the allure of the Sirens, Odysseus orders his crew to tie him to the mast of the ship and to ignore his future pleas for release until they have passed the dangerous islands. Odysseus commits himself to a rational course of action at a neutral time to ensure that he does not get swayed by emotions during the time of distress. Read the rest of this entry »

Should I Adjust My Portfolio For Bad Governments?

History books are filled with examples of what can happen to investors under the direction of poor national governance. The real challenge is, once we are aware of poor governance, how do I respond as an investor?

Recent events have highlighted the potential for trouble in an investment portfolio. Commonly known as political risk, this may be any event triggered by a government’s executive, judicial or legislative decisions that has the potential to negatively affect the stock or bond holders of that country.

As international investing has become broader and more accessible to investors, these issues have become front-and-center questions for the average investor. A recent Economist article sought to quantify the impact of “bad governments” on that same nation’s investors, and cited some specific examples (Argentina, Iran, and Russia in this research) to study their impact relative to their global peers. Read the rest of this entry »

Fiduciary – An Important Term to Know

• Fiduciary noun. From the Latin fiducia, meaning “trust,” a person (or company) who has the power and obligation to act for another under circumstances which require total trust, good faith, and honesty. (Free Dictionary)

Fiduciary

As a registered investment adviser, we work as a fiduciary when we give advice and manage money.

We often try to approach our blog topics with a light touch and a sense of fun. We believe a little humor helps us communicate important financial issues more effectively. With this in mind, we think many people often feel that having to deal with financial matters is like having to visit the dentist – it may be necessary but not exactly something to look forward to. No disrespect meant to our dentist friends. They understand.

This article, however, is about something we take very seriously: Our fiduciary obligation to you, our client. Put simply, a fiduciary duty is the duty to put your interests ahead of our own in everything we do. It’s a legal standard we follow, but in our view, also a moral obligation we willingly accept.

Not all financial advisors are fiduciaries. As a matter of fact, the majority aren’t. Read the rest of this entry »

The Difference Between Mutual Funds and ETFs

This is a question we get a lot here at Callahan Financial Planning, and with all the recent news and new options, I thought it would be a good topic to revisit.

As a refresher, let’s start with a quick note on what Mutual Funds are:

  • An Investment Company that invests shareholders money in a (usually) diversified portfolio of securities like individual stocks or bonds.
  • Assets are held in custody at a third-party bank, and are subject to regular inspection by the SEC in addition to any independent auditors to the bank and mutual fund. Read the rest of this entry »

The Benefits Of Budgeting

When it comes to personal finance there is one word that makes almost everyone cringe… Budgeting. Most people feel that maintaining a budget means that it will be the end of all of the “fun”. In reality, establishing and following a sound budget does just the opposite. It not only allows you to control your spending, but also is the foundation to achieve the financial goals you truly desire.

Here at Callahan Financial Planning we simply define a budget as providing for your needs within scarcity, which is the limited amount of money available to you. This means living within the amount of money you earn while taking care of your needs. The goal of having a budget isn’t to restrict your spending, but to cover all your necessities and focus any remaining money on what is most important to you. Budgeting forces you to take an in depth look at where your money is currently going and decide if that’s where it should go in order to accomplish your true goals. Read the rest of this entry »

Selecting Investments Or An Investment Advisor

This is the fourth in a four-part series designed to help you determine the best way to proceed with your previous employer’s company retirement plans, including 401(k)s, 403(b)s and more. Part 1 | 2 | 3 | 4

Whether or not you choose to keep your previous employer’s 401(k) where it’s at, roll it over to your current employer or move it to an IRA, you will still be responsible for its management and investment direction.  As discussed in the previous post, that can be a challenge if investing is not your specialty.  Don’t worry – we can help.

Our investment management service ensures that a financial planner can help you identify the advantages and disadvantages to holding your investments in a employer retirement plan or an IRA. Read the rest of this entry »

Should I Rollover My Retirement Account(s) To An IRA?

This is the third in a four part series designed to help you determine the best way to proceed with your previous employer’s company retirement plans, including 401(k)s, 403(b)s and more. Part 1 | 2 | 3 | 4

Now that you understand at the pros and cons of leaving your 401(k), 403(b), or other employer sponsored retirement plan with a previous employer let’s take a look at another option, rolling over your retirement account(s) from your previous employer into an IRA.

The advantages of converting your retirement account(s) to an Individual Retirement Account (IRA) include:

  1. Opening your IRA with a discount brokerage to receive much lower transaction costs.
  2. More visibility of your current investments and more detailed record keeping.
  3. The ability to invest in thousands of different securities instead of just selecting from a pre-selected list of 5-15 options. This allows you to create a specific portfolio designed to fit your unique needs, not just be lumped together with 100’s to millions of other investors.
  4. In most cases much lower administration costs. In a self-directed IRA you may be able to greatly reduce your expenses by removing the extra administration fees present in your previous retirement account. Read the rest of this entry »
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