Insights

Intellectual Capital

Poinciana is committed to staying up to date with the latest financial trends and academic research. We have strategic relationships with some of the most preeminent individuals in academia and leverage our relationships to provided best-in-class institutional research for our clients

Women continue to fight unique financial and life headwinds in planning for a secure retirement. Larry Swedroe and Wealth Advisor Katie Keary explore the impact of 12 specific challenges that women face, and offer financially empowering solutions to them.
The day has come. Your little baby has grown up and is now ready to leave the nest. He or she has graduated high school and the next big step is awaiting. Whether it’s college, a gap year, a year abroad or any other life adventure lies ahead, this time can be filled with much emotion for you and your child. As departure day gets closer, you’re probably focusing on last-minute shopping lists and feeling overwhelmed with trying to get everything done in time. Of course, you have already visited Walmart, Target and IKEA for the dorm room basics, purchased the new computer (yes, that is a 529 College Savings Plan qualified expense), figured out the move-in logistics, and coordinated with the roommate about who will bring what. Congratulations, you are well on your way. However, you might not be finished just yet. The following are six important tasks you may have overlooked.
In my book, “The Only Guide You’ll Ever Need for the Right Financial Plan,” there’s a detailed discussion on how investors can choose the right asset allocation for them, with the focus being on determining one’s ability (capacity), willingness (tolerance) and need (the rate of return required to achieve a goal) to take risk. To help with issues surrounding the willingness to take risk, risk tolerance questionnaires have become a very popular. Unfortunately, as Joachim Klement showed in his article, “Investor Risk Profiling: An Overview,” published in the June 2018 CFA Institute Research Foundation brief “Risk Profiling and Tolerance: Insights for the Private Wealth Manager,” the “current standard process of risk profiling through questionnaires is found to be highly unreliable and typically explains less than 15% of the variation in risky assets between investors. The cause is primarily the design of the questionnaires, which focus on socioeconomic variables and hypothetical scenarios to elicit the investor’s behavior.”
Is that you? Are you fortunate enough to be in the tiny minority of people who don’t have a financial care in the world? If not, I’ll bet you know that person who, to the best of your knowledge, lacks nothing. You probably even have a picture of them in your mind right now. They’re financially independent. They have all the material possessions they could want, take all the vacations they want, dine wherever they want. They live where they want, in the house that they want, with all the upgrades they want. And they certainly drive the car they want. All earthly goals … CHECK!

Rediscovering the Size Effect

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The first major anomaly to the first formal asset-pricing model, the capital asset pricing model (CAPM), was the size effect. The size effect is the phenomenon that small-cap stocks on average outperform large-cap stocks over time. The size premium is the average annual return achieved by being long small-cap stocks and short large-cap ones.
With a strong economy, investors are becoming even more worried about rising interest rates and the effect they could have on equity (and bond) valuations. So what, if anything, should investors do with their equity portfolios in response to rising rate risk? As always, to answer that question, Larry Swedroe turns to academic evidence and financial theory, rather than some guru’s opinions.
Households that build up more net wealth may be better able to smooth consumption in retirement, and financial literacy enhances the likelihood people will contribute to their retirement savings. Compounding the problem of lower savings is evidence that less financially literate households experience lower risk-adjusted returns.

Tax Planning Basics

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For years it was assumed that tax planning was reserved for the wealthy. While wealthy individuals will see the most benefit from tax planning, with big changes looming for the 2018 tax year, even middle-income earners can reap the benefits of tax planning.  

Basic tax planning starts with your AGI...

A Summary of 2018 Tax Changes

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The Trump administration’s new tax reform bill was signed into law in December of 2017, representing the first major tax change in over 30 years. The changes are significant and are likely to affect nearly everyone in some measure; some positively, while others may find themselves with a higher tax...

The Human Resources representative asked you to review a stack of paperwork before your new employee benefit orientation meeting. Understanding that this is your first of what research indicates will be about twelve jobs, you figure now would be a good time to learn what you can about Group Life Ins...