CW Newsletter July, 2021



Inputs, Outputs, and Results

A few years ago, I attempted to swim the English Channel. Having just completed an Ironman triathlon, I was at one of my leanest points, my weight hovering around 165 lbs. I was also seeking an athletic goal way beyond my comfort zone. I concluded that swimming the English Channel – nearly 30 miles point to point sans wetsuit – fit my criteria. I learned quickly that I was going to have to recreate the insulation associated with wearing a wetsuit during the Ironman swim, only this time I had to use my own body to survive over 10 times the distance and much colder water. It was time to put on some fat; make that a lot of fat.

Despite swimming two to sometimes six hours a day, my weight ballooned to nearly 215 lbs. over the next six months due to my intentionally lax diet and massive consumption of calories. I recall the whispers at the local pool as my girth expanded weekly from a 6 pack to something that more resembled the belly of a walrus on a cold Alaska day. Finally, a girl I had been training next to for months asked me sheepishly, “I see you here all the time – can you tell me what your diet is, because I want to make sure I don’t follow that.”

To be sure, no matter how much I worked out, I was never going to be able to overcome a bad diet.

In the world of finance, many people are monetarily ‘fat’ in that they try to out earn, or in many cases ‘out trade’ a bad budget, or diet to complete the analogy. The reality is, it is much easier to cut the inputs – the calories or expenses – than it is to cut the outputs – the exercise or income in this case. Sure, always look for ways of increasing your value at work such that you are receiving what you are worth, and work with a prudent Financial Advisor so that you are earning returns consistent with your financial plan and goals over time. However, rather than trying to squeeze the incremental gain through risky (and not-likely-to-succeed) trading schemes, look at your expenditures as the place to balance your budget. There is often a lot of ‘fat’ that can be trimmed; low hanging fruit, to mix metaphors.

To be sure, unless you are a fast-growing teenager on the high school cross country team, it is very unlikely you will ever ‘out workout’ a bad diet. The same is true with your financial budget – look first and foremost at reigning in your expenditures as a way to live a healthy, fit financial life.




How Much is Enough? Metrics to Consider When Planning for Retirement.


When planning for retirement, how do you know when you’re financially ready? More specifically, how much money is enough to retire? In most cases, it’s an impossible question to answer with certainty. Not only are there myriad variables to consider (not least of which is expenses as outlined above) but many of the variables change over time (i.e. unexpected healthcare costs) or are simply not predictable (i.e. future market returns).

Some industry recommendations include saving 12-15x current salary as a basis for retirement and assuming a 70-80% income replacement ratio in retirement (assuming you’re not commuting anymore, or contributing to an employer sponsored retirement plan, etc.). These are broad recommendations that don’t answer anyone’s specific needs, wants, or goals.

Caveats aside, we recommend a goals-based approach to address common fears and concerns such as healthcare costs, outliving your money and the best time to file for Social Security benefits. Here are a few benefits of working with a financial professional to build a comprehensive retirement plan:

  • Create a complete and current financial picture.

  • Identify financial goals (needs, wants, and wishes).

  • Identify resources to fund these goals.

  • Calculate a confidence score of success by running a Monte Carlo Simulation of 1,000 scenarios.

  • Make any necessary adjustments to the plan to improve the results.

Unfortunately, the future is uncertain. Fortunately, a comprehensive retirement plan can help navigate the complexities and unknowns.



Is Homeownership All That it’s Cracked Up to Be? The Pros and Cons of Owning Vs. Renting.


For much of my adult life, owning a home has been a goal. I’ve always thought it better to pay my own mortgage so to speak. That said, I never really ran the numbers.

In real estate, each market is unique. San Diego is completely different from Manhattan… and they are both completely distinct to Boulder or Pittsburgh. While homeownership is generally a great idea given the potential for capital appreciation and tax benefits, it’s important to run the numbers and weigh the disadvantages. For example:

  • The opportunity cost of a down payment of a home purchased a year ago is the return on equity markets (assuming that’s where it was invested), which have been fantastic.

  • The flip side of capital appreciation is leverage in a potentially declining market.

  • Liquidity. The transaction cost of selling a home down the road is a broker fee which, by definition, is leveraged in the same fashion as your purchase.


Financial planning can be complex, nuanced, and ever changing. It is very far removed from TV commentators screaming “BUY” or “SELL” when a viewer poses a question about a given stock. Market investing is one aspect of the financial planning process, but there are typically dozens of variables from considering home ownership (and appropriate mortgage levels), to determining when to retire, to assessing the appropriate levels of annual spending, and myriad other near and-long term considerations.

A knowledgeable, patient, and well-trained Financial Advisor can help you determine which financial related goals are most important to you, and set forth a near and long-term plan to get there. Very few successful people in life go at it alone – most have coaches, mentors, third party professional and other sources of support along the way. The journey to financial freedom and success is a long and bumpy one; make sure you are working with the right people to heighten the probability that you arrive safe and sound.

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