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Five Financial Observations Since The Start Of The War

Updated: 04/11/2022 by Financial Samurai 42 Comments

Russia has invaded Ukraine. Unfortunately, there’s nothing much you or I can do except give our moral and financial support to the Ukrainian people and organizations trying to help.

If you’re looking for a donation idea, check out World Central Kitchen, which is providing warm meals to Ukrainian refugees. Let us hope there is a quick end to the unnecessary bloodshed.

If you haven’t realized it by now, black swan events happen all the time. They happen so often we might as well get rid of the term altogether. Please try and adopt some humility when it comes to investing and life overall.

Financial Samurai was born out of a black swan event, the global financial crisis of 2008-2009. Therefore, this site’s DNA will always contain a cautionary strand or two. If you’ve ever lost a lot of your money and your livelihood, you will never want to repeat that experience again.

As an ongoing student of finance, here are five financial observations since the start of the war. These financial observations may help you better protect your way of life.



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How To Hedge Your Bets Once You’ve Realized A Mistake Was Made

Updated: 04/04/2022 by Financial Samurai 39 Comments

Like it or not, we are all bettors. To make things sound better, we like to call ourselves investors. But either way, we’re all constantly taking risks in everything we do.

The other day a Financial Samurai reader named Jim challenged me to a $5,000 bet. Surprising!

I was going to go back to Jim with a more friendly-sized bet of $100. However, after giving the wager some thought I decided what the heck. Jim said he owns a lot of warehouses and commercial property, so he most likely can easily afford the wager he offered. Further, I had conviction.

If you don’t take action by betting what you believe to be true, then what’s the point? Talking about something without any skin in the game is a waste of time.



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How To Avoid Financial Fraud And Protect Your Investments

Published: 02/09/2022 by Financial Samurai 7 Comments

Are you aware of the risks you take online? Nearly half the U.S. population was impacted by identity fraud and financial fraud in 2020, responsible for $56B in losses. And the truth is, you’ve never been a bigger target.

Technology is woven into our lives. From remote work to shopping to banking, we can send/receive money and share sensitive information at the touch of a button. But behind the convenient reality of the digital age lurks a dark underbelly of hackers and sophisticated con artists. 

Everyone wants to protect their children, families, and financial assets from scammers. Unfortunately, modern-day con artists have grown to become more advanced. With various types of manipulation style phishing and brute force password attacks, hackers don’t need much to steal your data, access your online accounts, and wipe out your finances.

Avoiding financial fraud isn’t easy, but it’s achievable. It’s time to get familiar with what you’re up against. Read on to find out how to avoid financial fraud and protect your investments.

The following is a guest post from Aura, a leading identity and financial fraud protection company.



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A Stock Split Doesn’t Change Fundamentals But Could Boost Share Price

Updated: 04/04/2022 by Financial Samurai 10 Comments

Are you excited about a stock split? Don’t be. A stock split is simply financial engineering. Some retail investors get tricked into thinking they’re getting a better deal than they really are.

I still remember one of my VPs at Goldman making fun of an Associate one morning. The Associate excitedly shouted out to the team that a stock was on sale by 80% and that we should all buy!

Little did the Associate know the shares had just gone through a 5:1 stock split. Instead of trading at $50 a share, it was now trading at “only” $10 a share. The Associate got a good ribbing for the rest of his time at the firm.



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Why Invest In Private Funds Even Though They Charge Higher Fees

Updated: 04/16/2022 by Financial Samurai 45 Comments

Recently, I decided to invest in two private funds: 1) Kleiner Perkins 20 (KP20), and 2) Kleiner Perkins Select2.

KP20 is an $800 million venture fund focused on early-stage investments in enterprise, consumer, hard tech, or fintech, and healthcare companies. Select2 is a $1 billion fund that extends its core investment strategy to focus on high inflection investments across those same five areas.

Investing in these private funds does not come cheap. The management fee is 1.5% – 2.5% (fades over time) and the funds charge 20% – 30% of profits (increases after a return hurdle has been met). If you want to make a lot of money, I highly recommend being a venture capitalist!

These fees are much higher than your favorite Vanguard ETF or index fund. The average Vanguard mutual fund expense ratio is only 0.10%. Meanwhile, the industry average mutual fund expense ratio is about 0.6%.

So why invest in these private funds even though they charge much higher fees? Let me share some of my reasons. Some are obvious, while some are not so apparent.



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Personal Capital Review 2022: Best Personal Finance Tool

Updated: 04/04/2022 by Financial Samurai 61 Comments

I’ve been using Personal Capital’s free financial tools to track my net worth, manage my cash flow, and optimize my investments since 2012. Let me share with you the most thorough and honest Personal Capital review about their free financial application.

From 2013 – 2015, I was also a consultant for the firm. Therefore, I have intimate knowledge of their people, their technology, and their product. I still keep in regular contact with all the senior management.

It’s my belief that Personal Capital is hands down the best free financial tools you can find online. It helps you manage your finances and achieve a more secure retirement. I’ve tried everything from Excel, to Mint, a plethora of other financial apps, and nothing comes close to Personal Capital’s tools.

With Personal Capital, you can do the following things for free:

  • Automatically track your net worth
  • Analyze your investment portfolios for excessive fees
  • Analyze your investment portfolios for proper asset allocation
  • Track and manage your income and expenses
  • Run various retirement planning calculations to ensure a better financial future

Personal Capital currently manages over $15 billion in managed client assets. They also track over $950 billion in assets for over 2.2 million registered users for free. This amount is a testament to their money management capabilities and product offerings.

Their competitive advantage is that they built their company from the ground up with technology at its core. As a result, they are much more flexible in tailoring offerings to meet consumer demand. Let’s move onto the detailed Personal Capital review.



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5 Things To Do With Lower Expected Returns Going Forward

Updated: 04/11/2022 by Financial Samurai 50 Comments

With stock market volatility back, lower expected returns are a good possibility. Since 2009, investors have been able to make lots of money relatively easily. However, to expect double or triple-digit annual returns going forward is not wise.

In August 2020, when I came out with the Financial Samurai Safe Withdrawal Rate Formula = 80% X 10-year bond yield, I was largely ridiculed (review the 370+ comments).

As someone who went through uncertainty and doubt after I left my finance job in 2012, I encouraged new retirees to play it safe the first couple of years as they got used to change. The change can often be very jarring as you search for a new identity and adjust to a new routine.

A guest post I had written about my new safe withdrawal rate formula for another site was taken down as the host was pressured by his readers because my suggestion was considered too extreme. Meanwhile, another blogger called me unflattering names in his rebuttal.

I was disappointed, yet fascinated at the same time about how difficult it was for some people to think differently. As an investor and financial freedom seeker, it is always good to think about multiple scenarios.

The base case scenarios should be: Realistic, Blue Sky, Bear. From there, you can model out your finances to increase your chances of living your best life.



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How To Feel Better About Losing Lots Of Money In The Stock Market

Updated: 04/04/2022 by Financial Samurai 58 Comments

If you invest in the stock market, you’ll eventually experience emotions of euphoria, greed, fear, uncertainty, and self-loathing. The more emotionally weak you are, the less likely you’ll enjoy investing in stocks and holding on for the long term. Losing money stinks.

Given I spent my career working in equities from 1999 – 2012, I witnessed plenty of highs and lows. From people making millions to losing it all, I’ve seen enough. And given I left in 2012, I also missed out on many good years.

Therefore, I never got the courage to go all-in on stocks after the age of 35. The volatility bummed me out. Instead, I’ve diversified my net worth into real estate, venture debt, venture capital, and alternatives, while keeping my equity exposure to 35% of net worth at most.



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The Right Contribution Order Between Your Investment Accounts

Updated: 04/04/2022 by Financial Samurai 25 Comments

With so many tax-advantaged and taxable investment accounts, it may be hard to figure out the right contribution order. Between our family of four, we’ve somehow managed to open up 14 investment accounts over the years! Thankfully, technology has enabled us to keep track.

If you’re on the path to financial freedom, it’s not good enough to only contribute to a 401(k) and/or Roth IRA. You should also be contributing to a taxable brokerage account and other taxable investments.

After all, it is these taxable investments that will generate the passive income to enable you to leave work before the traditional retirement age.

Without having enough investment income to cover my basic living expenses, I probably would not have left work in 2012. Instead, I would have experienced the one more year syndrome for another five years or so.



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Titan Review: A Modern Way To Invest Your Money

Updated: 04/04/2022 by Financial Samurai 30 Comments

Looking ahead, the investing landscape seems more difficult, especially after three robust years of equity returns. More capital preservation strategies should be considered. At the same time, corporate earnings are still growing. Further, the long-term trend for stocks is up and to the right.

What is a person who doesn’t want to actively manage their money, but who also wants to hedge against downside risk to do? Find an investing platform that does these things.

In 2021, I was introduced to Titan Global Capital Management (Titan) by an old VC friend of mine, Mark G. He was an early investor in Personal Capital and acted as their CMO for several years. Mark and I actually overlapped at Personal Capital for a couple of years while I did some consulting.

Given Titan was founded only three years earlier in February 2018, I decided to see how they’d do for another year before sharing their work. I’m happy to say they’ve grown tremendously. Further, I think the timing is right to talk about their product now as the markets get more volatile.

Titan is an investment platform bringing premier, active investment management to everyone. Here’s Titan sharing their value proposition in their own words.



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