The Ultimate Guide To “TRUSTS”

If your concerned with after life or just need to keep assets in a safe place for a time being? This list should be your go to guide for TRUSTS to choose from. Trusts usually are ensuring, Safety of Assets, continuity of Funds, Property, and Investments. This List of “TRUSTS” will help you decide with your Investment Advisor and Estate Planning Attorney which to choose.

Revocable Living Trust -This is a trust that allows you to make changes to it, while you are living.
Grantor Trust -A Grantor is an individual who creates the trust, and this type of trust allows them to place money, assets, or whatever it may be into a trust in order to streamline things.
Irrevocable Trust -Once you’ve placed money into the trust, it stays there. You can’t change your mind about this one. There are many types of revocable and irrevocable trusts, and we are going to go over them as we continue.
Testamentary Trust -Most often, a testamentary trust is created by the will and specifically outlines what assets are going to be utilized upon the death of the grantor. If you’re not careful, this could create some problems, tax-wise, for your business. So be sure to have your attorney take a close look at your last will and testament when setting up a testamentary trust.
Minor’s Trust -As the name implies, this is a trust that provides money to a child that is under the age of eighteen. It is usually created before you pass away, but it could be a part of the testamentary process as well. A minor’s trust will require the appointment of a trustee to manage the funds until the minor child comes of age.
Spendthrift Trust -A spendthrift trust is a great option for leaving money to someone who may not be the best at dealing with their finances. The spendthrift trust gives an independent trustee the full authority to make decisions as to how the funds may be spent. I recently told you about a client that has a child with some addiction issues. This would be a great trust for someone in such a situation.
Blind Trust -I first heard about blind trusts in an episode of Law & Order. Basically, it allows the trustee or anyone with the power of attorney to handle the assets without the beneficiary’s knowledge. The most common reason for this is to stave off contention between beneficiaries.
Discretionary Trust -Discretionary trusts don’t have a constant, or fixed, allocation of assets. The beneficiaries and the payments can be adjusted throughout the length of the trust by the trustee, based upon the criteria outlined within the trust document.
Intentional Defective Grantor Trust -This one is a bit more advanced. An Intentional defective grantor trust freezes some of the grantor’s assets for tax purposes. Essentially, the grantor intentionally creates a problem within the trust document that guarantees they must pay income tax on the income, decreasing the value of their estate. So you would use the estate asset to pay the taxes on the trust that is outside of your estate. Thus, allowing the trust assets to continue to grow without the erosion of taxes.
Credit Shelter Trust -The credit shelter trust allows married people to avoid estate taxes by allowing the assets specified in the trust to be transferred to the beneficiary. Usually, this is the grantor’s children. This allows the spouses to maximize their estate exemption. These are commonly listed in the last will and testament and used in conjunction with trust number eleven.
Marital Trust -Instead of shifting the proceeds of the trust to your children, as in the credit shelter trust, a marital trust moves them to your spouse. When the first spouse passes away, they leave the assets to the second spouse and, through the marital trust, they aren’t included in the second spouse’s estate.
Qualified Terminable Interest Property Trust -Qualified terminable interest property trusts or QTIP trusts provide for the surviving spouse but allow the grantor to remain in control after the death of the surviving spouse. These are useful in second marriages or to prevent predatory marriages.
Qualified Personal Residence Trust -If you need to remove your home from your estate, a qualified personal residence trust is a great way to do so. You would transfer your house to a QPRT trust in order to remove it from your estate and it can be considered a gift. Under the terms of the trust, you would allow the beneficiary to live in the house for a certain number of years, rent-free.
Generation-Skipping Trust -Let’s say you want to leave all of your assets to your grandchildren because you have already provided your own children with a means for success. A generation-skipping trust does exactly what it sounds like. It allows you to skip a generation in order to provide for the next one.

Before I move on with the list, did you catch my Article on “Pooled Investments and what you need to know? HERE!“

Charitable Trusts

Charitable Trusts -Now we will explore the charitable trusts. As their category implies, these trusts offer a variety of charitable benefits. Additionally, these are a great vehicle for mitigating tax liabilities. Don’t worry, there’s nothing wrong with benefiting from your giving.
Charitable Remainder Annuity Trust -The first is called the charitable remainder annuity trust or CRAT. With a CRAT you place your assets into the trust, which then pays back a fixed amount each year. Once you die, the remainder goes to charity.
Charitable Lead Annuity Trust -The charitable lead annuity trust is very similar to the CRAT, however, it works inversely. Instead of receiving a fixed annual payment and then giving the remainder to charity, a CLAT pays the annual benefit to the charity and then leaves the remainder to a beneficiary of your choosing, once you’ve passed.
Charitable Remainder Unitrust -A Charitable Remainder Unitrust, also known as CRUTs, is an irrevocable trust that is created under the authority of the internal revenue service. It pays a fixed percentage of the assets to your beneficiary — or to yourself — and then transfers the assets to a charity after your death.
Charitable Lead Unitrust -Charitable Lead Unitrusts or CLUTs allow a donor to give a varying amount each year, for a fixed amount of time. When the term of the trust is met, the remaining assets are given back to the donor or to the beneficiary.
Shark-Fin CLAT -The most aggressive type of CLAT allows small payments to be made into the trust for the first few years. However, a very large payment must be made in the last year, or two. By increasing payments over time, the assets in the trust have more time to grow.

Complex Trusts

Unlike simple trusts, complex trusts are a type of trusts that must retain some of their income rather than distributing all of it to their beneficiaries, distribute some or all of the principal to the beneficiaries, or distribute funds to a charitable organization. The name may be a little misleading, however. Complex trusts aren’t necessarily more complicated than simple trusts. They simply allow the trustee greater discretion.

Irrevocable Life Insurance Trust -This is one that I personally have. Basically, I’ve set the trust to buy life insurance and when I pass away, the trust shifts the proceeds to my wife and kids.
Crummey Trust -Some will argue that the Crummey trust isn’t a trust, but rather, a provision. Technically it is a trust, however. It’s based on the 1968 Crummey case and essentially allows you to take advantage of the gift tax exclusion when you transfer cash or assets to another person. With a Crummey trust, you retain the right to place limitations on when the recipient can access the funds.
Buildup Equity Retirement Trust -Buildup equity retirement trusts, allow a spouse to give a gift to their spouse, using the annual gift instead of the unlimited marital deduction. In doing this, the assets are exempt from both the gift and the estate taxes.

Grantor Type Trusts

These trusts have a few key takeaways. For starters, the individual who creates the trust is the owner of the assets and property for income and estate tax purposes. However, grantor trust rules can apply to a variety of trusts and are a useful tool for minimizing taxes.

Grantor Retained Unitrust -GRUTs are irrevocable trusts that allow the grantor to place assets into the trust and receive a variable amount of income during the term of the trust. Let’s say it’s a twenty-year trust, the grantor can receive a fixed or a varied income for the length of that twenty-year term, or the life of the grantor.
Grantor Retained Income Trust -Being a Southern boy, I am particularly fond of a good batch of grits but that’s not the type of GRITs I am referring to when I talk about GRITs: grantor retained income trusts. This is the same basic concept as a GRUT but in this case, the grantor places an asset in the trust and retains the right to receive income from those assets for a period of time.
Grantor Retained Annuity Trust -These allow the grantor to make a large contribution, as a means to avoid gift taxes, and then set up an annuity through the GRAT. This creates an annuity payment for a fixed period of the term. Afterward, the remaining assets go to the beneficiary as a gift.
Dynasty Trust -This one is where your attorney will earn his money, as some states do not allow these types of trust. Dynasty trusts are irrevocable and give the grantor the right — as long as it is within the law — to set stringent rules on how the money is to be distributed and how it is to be used by the beneficiary. Because it is irrevocable, a dynasty trust can’t be altered by the grantor or their beneficiaries. These are typically used by wealthy grantors to ensure that they are leaving their financial legacy to generations rather than individuals.

Asset Protection Trusts

This class of trust is often used to shield an individual’s assets from creditors. These are the strongest protection you can find from creditors, lawsuits, or any judgments against your estate. However, you should always consult a qualified financial advisor to see if this type of trust is right for you.

Domestic Asset Protection Trust -This is a simple way to protect your assets from creditors. That is, literally, the simplest term available to describe a DAPT.
Offshore Asset Protection Trust -While it might sound like something the incredibly wealthy super-villain in a movie would have, in order to shield their holdings from the scrupulous eyes of the hero, in reality, they’re pretty common. Essentially, you create a trust in a non-domestic jurisdiction to protect your assets from seizures, judgments, or creditors.
Totten Trust -We discussed these in the last article, but basically, it is a form of trust in which the grantor places money into a bank account or security. Upon the grantor’s death, the assets in the account pass to a beneficiary.
Illinois Land Trust -Illinois land trusts are for non-profit entities for the purpose of conservation. If you had a piece of wooded land or a farm and wanted to have it maintained for the benefit of someone else, you would create a land trust.
Gun Trust -A trust that isn’t so well known is the gun trust. It allows its creator to acquire a class-3 weapons holder — you must have a license — in order to transfer a gun into the trust. This is especially useful for collectors and enthusiasts that may have several (Legally obtained) automatic firearms, suppressors, and things of that nature. There are a lot of laws that surround gun trusts though, so it’s best to speak to your attorney when setting one up.
IRA Trust -Individual Retirement Account Trusts are often set up by the courts. You are essentially setting up a retirement account for the beneficiary, usually your kids, and placing it into a trust.

Special Needs and Elderly Care Trusts

As you might expect, this group of trusts is designed with the long-term care of individuals with special needs in mind.

Special needs planning is unique from typical estate planning when you have beneficiaries with unique challenges and perhaps who also participate in means-based government programs, such as developmental disability (DD) services, Medicaid, or Social Security Supplemental Security Income (SSI). Special needs planning allows you to:
Provide a legacy for your special needs loved ones,
Designate someone to manage the trust for their benefit,
Handle any unexpected inheritance or personal injury lawsuit funds,
Protect them from creditors and predators, and
Protect their eligibility for benefits.

First-Party Special Needs Trust -These trusts can be set up by an individual with special needs, in order to maximize their social security or Medicaid benefits.
Medicaid Trust
Medicaid Trusts are income-only trusts that help seniors avoid tax issues and probate problems when they are living in a nursing home and pass away. It’s a way to protect assets, but there are some clawback issues. You will need to speak with your experienced estate-planning attorney.
Qualified Income Trust -Also known as the Miller trust, the QIT protects the assets of an individual that has applied or is applying to Medicaid. If the individual has too much money to qualify for Medicaid, they could place their assets into a qualified income trust in order to meet the financial requirements. Personally, I have ethical issues with this type of trust, but feel free to form your own opinion.
V.A. Eligible Trust -The V.A. Eligible trust is similar in concept to the Miller trust. Once again, you are placing money outside of what the government can track, in order to make way for the Veteran’s Association to help you with in-home care or nursing home care.
Spousal Testamentary Special Needs Trust -Spousal testamentary special needs trusts combine two different trusts to help the surviving spouse be counted eligible for Medicaid.
Pooled Trust -Finally, we’ve come to the end of our long list with the pooled trust. It is designed to allow people with disabilities to become financially eligible for public assistance benefits like Medicaid home care.

Using Trusts for Tax Mitigation

The goal of most of the trusts that we’ve covered is to minimize the amount of income tax you will be responsible for. Now, that’s not to say that this should be used as a means of dishonesty, but rather that there are allowances and exemptions — if you know where to look — that will allow you to protect your assets and sustain them for the people you love the most. It is important to speak to your attorney when planning and creating your trusts, in order to make sure that you utilize all of the tools available to you, while also keeping within the guidelines of the law.

In Conclusion

The following list of Trusts was meant to give you a better understanding of the TRUSTS that you can use for you family, personal or group needs. It provides all types of options for safety of Assets, Securities, Medical Care, and Financial Planning and Developing a long legacy. I hope you found value with this list, and hope you work with your Attorney, Tax Accountants, Investment Advisors, and other Financial Professionals to make this list work for you.

Godspeed.
JS

Investing

Math All Finance Professionals Should Master

Today’s Post will be a ongoing project that is focused on Math All Finance Professionals need to master. I feel I do need to share this next part. This Post is not meant to be a Mathematicians Whiteboard. Not the best written. Just the way I communicate. TIA.

This page is ongoing so please check back periodically for more math.

The First Calculation I would like to introduce is “Total Return”.

Total Return

Let’s complete a Formula on Total Return,

One Thousand shares of P&G are purchased at $32 dollars per share and Sold back into the Market at $28 dollars per share. A Cash dividend was paid to you the investor of $3 annually. What is your Total Return?

Take $32 – $28 = -4

Then we will take our -$4 and then add our Dividend of $3 which Equals = $1

Then We take our $1 and divide by / our original $32 which equals? = 0.03125

For Keeping things simple we also need to take our answer of 0.03125 and multiply by 100 for our answer.

Equals? = Negative -3.12% is our Total Return. ” You Lost Money”

Easy Enough? Good!

Current Yield

Current Yield is what you take Home vs. What you spent on the Bond Investment.

Let’s say you buy 1 one 8% Insight Corp. Corporate Debenture / Bond, it’s trading at 102. (YOU SHOULD KNOW ALL BOND’s START AT PAR. PAR=$1000 investment) So that means you spent $1000 on your bond.

The Bond is trading at 102 on the Secondary Market.

Your Annual Coupon (Annual Coupon = Yearly Payment for buying Bond) is $80.

Annual Coupon 80 then we divide by our 102 (102 = PAR plus 20: 1020) 1020.

Our Current Yield is?

80/1020 = (7.8%)current yield

SHARPE RATIO

Named after American economist, William Sharpe, the Sharpe Ratio (or Sharpe Index or Modified Sharpe Ratio) is commonly used to gauge the performance of an investment by adjusting for its risk.

The higher the ratio, the greater the investment return relative to the amount of risk taken, and thus, the better the investment. The ratio can be used to evaluate a single stock or investment, or an entire portfolio.

Sharpe Ratio Formula

Sharpe Ratio = (Rx – Rf) / StdDev Rx

Where:

Rx = Expected portfolio return
Rf = Risk-free rate of return
StdDev Rx = Standard deviation of portfolio return (or, volatility)

To Be Continued…..JS

Business Articles, Wealth Management

“Basic Asset Allocation For Portfolio Management”

What is Asset Allocation? How do Portfolio’s take shape with investment choices? And how do Investment Advisors, CFP’s, and Wealth Management, Asset Managers, Fund Managers use Asset Allocation? All good questions! Todays article is for you. This is a very broad topic. And there are many moving parts. This post is meant to give you a better top down view into how “Financial Advisors, and Asset Managers Allocate Assets to Fictional Portfolios. And the process” This post should not be used as personal or professional Investment Advice.

Interestingly I am learning a ton as I continue to study the fine art and processes of Wealth Management, and earning my License as a Independent Financial Advisor. One of the latest Youtube Channels I have been listening to is Family Office Club, they do touch on Asset Allocation and so do several Podcasts I have listening to in my spare time.

Investment Advisor Podcast

Back to me listening to Podcasts. One of the Podcasts I highly recommend is Money for the Rest of Us. Hosted by experienced Institutional Investment Advisor J. David Stein. In all this content you can be sure to hear Tax Optimization, Retirement, Investing Smart, and Asset Allocation for large and small family portfolio’s and a ton more. In todays article I am going to demystify a bit “How Financial Advisors grow, protect, and leverage investment opportunities while deciding “How much and where to Invest their Capital?”

Another Podcast which is a Favorite? My Friend Andy Flattery who is a CFP in Kansas City who operates Simple Wealth Planning. His Podcast? “The Reformed Financial Advisor”

Blackstone Investment Choices For Investment Advisors

Before I continue, I would like to introduce Blackstone’s Investment Vehicles for Investment Advisors Clients. Blackstone Alternative Investments for Investment Advisors Clients Portfolio’s is a very smart choice. Blackstone’s investment products and Investment Vehicles continue to produce above normal returns. And this fact is one of several reasons why Blackstone is my go Alternative Investment Product list.” Here Joan Solotar to share more about why Blackstone’s Portfolio Investment Vehicles just makes since.”

“How do Financial Advisors Allocate Capital For Investments?”

If your reading my article? I am positive I know what your thinking? “How do Financial Advisors Allocate Capital and make Investment Choices?” This is where working closely with a Licensed Financial Advisor starts to pay dividends.

Maybe your a Entrepreneur that has had a recent liquidity event? Maybe your a Executive that has had a Exit Opportunity moving towards you on your professional Horizon? Or Maybe? Your a NFL, NBA, or a Music Artist who needs to know your options and what comes next? And you have questions. Well this post should help you with your questions, and will delve into “How Financial Advisors Manage, Grow, Diversify, and Protect your Portfolio. For the Sole Purpose of Preservation of Wealth”.

First what we would generally do? Meet face to face and learn more about each other. Maybe play golf, go on a Offshore Fishing Trip, or Ski Trip, or even you invite us to travel with you as you continue to work. After your thoroughly acquainted with the advisor of your choosing and have interviewed several other Advisors? You decide who you can trust and who is capable of protecting your assets while giving you room for growth and let’s not forget providing concierge style of extraordinary service.

Later after we begin to explore what are the most important things? Here are some questions that get us heading in the right direction. Usually we would sit down and talk about a list of questions to consider. Examples? Do you have any appetite for risk? On a scale of 1-10 “How important is preserving your principle?” On a scale of 1-10 do you require Income from your Capital? On a scale of 1-10 are you seeking to grow your capital? “What is the time horizon we need to consider?”

“Financial Advisors & Client Objectives and Recommendations”
Did you know? “Financial Advisors develop a Plan based on your goals and objectives? It’s how we begin to develop a plan as Fiduciary’s and how we consider Suitability of Securities and Investments.

Allocation of Capital

Most Investment Advisors have a list of Investment Opportunities they can allocate capital to for your Portfolio. This list is sort of unique to each Financial Advisor. Because they have done their due diligence on the offering or security. This list is unique and usually is one of the many reasons “Why” High Net Worth Families and Individuals have sought out the services of a Investment Advisor. In order for a Allocation of Capital to Happen? Financial Advisors first need to finish the financial plan to get you and your Assets into a Portfolio that has a purpose and objective. In simple terms? “We look at it like placing you into a car and getting you from Point A to Point B. We must have a financial destination.” And this is where our list of Investment Vehicles comes into the picture.

“Portfolio Asset Allocation”

Ok once we have asked Hard Questions and developed a Plan we can now begin to allocate capital to investment vehicles that have specific goals and objectives.

BONDS & CREDIT MARKET SECURITIES

Example: We may allocate 40% of your capital for Municipal or Corporate Bonds after we have carefully considered your Tax Bracket. The main reason we would use Bonds? Is because they offer a excellant opportunity to generate Income as an Investment Vehicle. Make sense? Excellent.

STOCKS

Another Example of making a Asset Allocation in our fictional Portfolio? If we have had a conversation about introducing an Equity portion into your portfolio with calculated Risk? We would begin to carefully consider using Stocks as an Investment Vehicle. Meticulously making sure we are using tools that could minimize risk of big swings in market volatility to your Stock positions. Yes we have tools that can do this. However if we are properly diversified? This can be a fantastic way to use Growth Stocks as investment vehicles to grow your Portfolio and capital.

Investment Vehicles Used For Asset Allocations By Investment Advisors

Since Asset Allocation is a complex subject. We honestly do not have enough time to write about all the Investment Vehicles and Securities we use for Client Portfolios. However here are some additional Choices we use for Asset Allocation. CDs, money market accounts, high-yield savings accounts, government bonds, and Treasury bills, Real Estate Investment Trusts, Mutual Funds, Index Funds, Exchange Traded Notes, Investment Funds by Direct Participation Programs, and much more.

Asset Management Goal? Preservation and Capital Growth

Bottom line up front, I genuinely hope you learned a few things during todays Post of Asset Allocation? Todays post was meant to give a brief view for anyone who was curious how Financial Advisors and Wealth Managers divide up capital and build a fictional portfolio. This is a very general topic. Not in depth. The width of this topic is very wide. But if you ask me? One constant should always be placed a the forefront of Asset Management. “That is the Preservation of Capital” In the Grand Scheme of Investing? That is all that matters. I do hope you learned and discovered a few things today. And please reach out if you feel I could be helpful.

Thank you
JS

Business Articles, Finance Articles, Financial Products, Real Estate, Securities

“Asset Backed Securities”

What are Asset Backed Securities? “Why every Finance Professional Should Know All the Asset Classes and “How they impact our Community and Business’s.”

Asset-backed securities (ABS) finance pools of familiar asset types, such as auto loans, aircraft leases, credit card receivables, mortgages, and business loans. In one way or another, these asset types represent contractual obligations to pay.

These contractual obligations to pay often rank senior to a borrower’s traditional debt obligations, reducing ABS investors’ exposure to the borrower’s financial health. ABS also have many other investor-friendly features that may help protect against loss and improve liquidity, such as traunching (SEGMENTS) of risk, over-collateralization, and diversity of payers in each underlying pool. Despite these and other strengths discussed in this report, some ABS and other forms of structured credit continue to offer higher yields than similarly rated corporate or municipal bonds. ABS investors’ principal job is to analyze the cash flows from these obligations to assess value and the possibility of loss, rather than relying solely on the current market prices of hard assets, the reputation of a sponsor, or the presence of an investment-grade rating.

Guggenheim

What is a RMBS? (Residential Mortgage – Backed Security)

Residential Mortgage – Backed Security is exactly what it sounds like. A Home or Residential Building Mortgage Contracts packaged and registered by a Investment Bank Institution placed into a folder with other Residential Mortgages and Packaged as a Security product by the Investment Bank for the purpose of trading and Investing within the Public Markets.

LARRY FINK – BLACKROCK

1970 to 2000

It is with great enthusiasm that I am able to introduce the Man who pioneered Mortgage Backed Securitization. Mr. Chairman of BlackRock Larry Fink. According to Wikipedia’s Profile on Fink? Larry started his career in 1976 at First Boston, a New York-based investment bank,^[13] where he was one of the first mortgage-backed security traders and eventually managed the firm’s bond department.^[14] At First Boston, Fink was a member of the management committee, a managing director, and co-head of the Taxable Fixed Income Division; he also started the Financial Futures and Options Department, and headed the Mortgage and Real Estate Products Group.^[15]

Fink added “by some estimates”^[3] $1 billion to First Boston’s bottom line. He was successful at the bank until 1986, when his department lost $100 million due to his incorrect prediction about interest rates.^[3] The experience influenced his decision to start a company that would invest clients’ money while also incorporating comprehensive risk management.^[3]

In 1988, under the corporate umbrella of The Blackstone Group, Fink co-founded BlackRock and became its director and CEO. When BlackRock split from Blackstone in 1994, Fink retained his positions, which he continued to hold after BlackRock became more independent in 1998. His other positions at the company have included chairman of the board, chairman of the executive and leadership committees, chair of corporate council, and co-chair of the global client committee.^[3][15] BlackRock went public in 1999.

For more info on Mr. Fink please refer and read Blackstone – Mr. Scwarzman’s Book “What it Takes“.

Continuing with Asset Backed Securities.

Did you catch and watch my latest Youtube Channel Video on Derivative Contracts Below?

Commercial Mortgage Backed Security

(CMBS)

A commercial mortgage-backed security (CMBS) is a type of fixed-income security. It is backed by real estate loans. These loans are for commercial properties. They might include office buildings, hotels, malls, apartment buildings, and factories.

Learn more about CMBSs, how they work, and what they mean for individual investors HERE.

In 2008 WallStreet’s Lehman Brothers Investment Bank was overly exposed by backing, and registering TOXIC Securities, otherwise known as Subprime Mortgage Backed Securities.

Watch as Warren Buffet shares and explains more about the Financial Crisis that happened in 2008 Below.

CDO SWAP Derivative – Collateralized Debt Obligations

According to my friends at the Corporate Finance Institute: A Collateralized Debt Obligation (CDO) is a synthetic investment product that represents different loans bundled together and sold by the lender in the market. The holder of the collateralized debt obligation can, in theory, collect the borrowed amount from the original borrower at the end of the loan period. A collateralized debt obligation is a type of derivative security because its price (at least notionally) depends on the price of some other asset.

Historically, the underlying assets in collateralized debt obligations included corporate bonds, sovereign bonds, and bank loans. A CDO gathers income from a collection of collateralized debt instruments and allocates the collected income to a prioritized set of CDO securities.

Similar to equity (preferred stock and common stock), a senior CDO security is paid before a mezzanine CDO. The first CDOs comprised cash flow CDOs, i.e., not subject to active management by a fund manager. However, by the mid-2000s during the lead up to the 2008 recession, marked-to-market CDOs made up the majority of CDOs. A fund manager actively managed the CDOs.

Finishing out this month’s post on Corporate Finance and Investing, I genuinely hope this article and post was of value to you. Did you know I began learning all about the depths within Corporate Finance only few years ago? This has been a difficult road. But I am having a Blast learning and becoming a Professional Investor and Corporate Finance Professional. There have been times learning all these Financial Products has been Challenging. Especially learning the exact details of Markets, Contracts, and the growing list of Sophisticated Financial Products. But I can say with certainty all my efforts and has been worth the effort. And I do hope you will share the Post. And until next time? We will see ya. Thank you for reading.

Godspeed.
J.S.

Business Articles, Investing

How to grow a Business’s excess Cash?

Business Executives and Private Company owners do you know that you may be missing out on growth potential while allowing your cash reserves to sit in a stagnant Bank Account? Let me show you “How Warren Buffett Grows Cash! This investing tactic is so incredible the growth rates will always out pace any bank account and their stagnant interest rates.

Warren Buffett has shared he has used Dollar Cost Averaging as a investing tactic. Reinvesting cash profits from Dividends and also other passive income profits or quarterly checks back into a index funds. He does this instead of allowing the cash profits to be stagnant in a Bank Account. Which is compounding GENIUS!

“Dollar Cost Averaging”

According to Investopedia’s Website Description: “Dollar-cost averaging is the practice of systematically investing equal amounts of money at regular intervals, regardless of the price of a security.”

The above video reflects “How to do the Math of Dollar Cost Averaging.” The Benefits and advantages of Dollar Cost Averaging your way over time into a Index Fund far outweigh trying to time the market. It’s a fantastic way to invest. And I had to share this Investing Tactic.

I hope you found good value from this Wednesday Post. I am seeing the market continue to cause chaos on WallStreet from the obvious market recession.

Godspeed.

THIS IS NOT INVESTMENT ADVICE. ONLY HIGHLIGHTING A FAMOUS INVESTOR AND HIS TACTICS FOR OUTSIZED GROWTH. THIS SHOULD NOT BE INTERPRETED AS PROFESSIONAL INVESTING ADVICE. YOUR PERSONAL INVESTMENT ADVISOR OR FINANCIAL ADVISOR PROFESSIONAL IS ONLY ABLE TO OFFER INVESTMENT ADVICE. Thank you.

Investing, Investment Adviser Arizona

Pooled Investments: What you need to know?

Today’s post will be fairly quick about Pooled Investments, Unit Investment Trusts “UIT’s”, Open End Funds, Closed End Funds, thier Management companies, ETF’s Exchange Traded Funds and REIT’s.

On my road to obtaining my Series 65 Investment Advisors License I have been learning and polishing my skills within Investment Funds. Today’s post is a quick need to know for Investors who have been curious and have been search for more detailed information about Pooled Investments? What are their uses, and how they work and more? Today’s post is what you have been searching for!

Unit Investment Trusts

In U.S. financial law, a unit investment trust is an investment product offering a fixed portfolio of securities having a definite life. Unlike open-end and closed-end investment companies, a UIT has no board of directors. A unit investment trust UIT is one of three basic types of investment companies. The other two types are open-end funds (usually mutual funds) and closed-end funds. Exchange-traded funds (ETFs) are generally structured as open-end funds, but can also be structured as UITs.

Open End Funds

Open End Funds are usually recognized as “Mutual Funds” and used as Pooled Investments. According to the SEC Website:

Mutual funds generally sell and purchase their shares on a continuous basis, although some funds will stop selling when, for example, they reach a certain level of assets under management.
Investors purchase shares in the mutual fund from the fund itself, or through a broker for the fund. Investors cannot purchase the shares from other investors on a secondary market, such as the New York Stock Exchange or Nasdaq Stock Market. The price that investors pay for mutual fund shares is the fund’s current net asset value (NAV) per share plus any fees that the fund may charge at purchase, such as sales charges or loads.
Mutual fund shares are redeemable. This means that when mutual fund investors want to sell their fund shares, they sell them back to the fund or to a broker acting for the fund. Investors sell their shares at the current NAV per share, minus any fees the fund may charge at redemption, such as deferred sales loads or redemption fees.
Mutual funds are registered with the SEC and subject to SEC regulation. In addition, the investment portfolios of mutual funds typically are managed by separate entities known as investment advisers that are also registered with the SEC.

Mutual Funds are also SEC Registered Securities and traded on the Open Primary Stock Market.

Closed End Fund

Closed End Funds are also known as Closed End Investment Management Companies like Blackstone, Morgan Stanley, Vanguard typically offer their funds to Accredited Investors and Institutional Investors. According to the SEC Website:

There are many varieties of closed-end funds. Each may have different investment objectives, strategies, and investment portfolios. They also can be subject to different risks, volatility, and fees and expenses. Fees reduce returns on fund investments and are an important factor that investors should consider when buying shares.

Exchange Traded Funds ETF’s

The SEC Investor Website classifies ETF’s as

Exchange-traded funds (ETFs) are SEC-registered investment companies that offer investors a way to pool their money in a fund that invests in stocks, bonds, or other assets. In return, investors receive an interest in the fund. Most ETFs are professionally managed by SEC-registered investment advisers.

Some ETFs are passively-managed funds that seek to achieve the same return as a particular market index (often called index funds), while others are actively managed funds that buy or sell investments consistent with a stated investment objective.

ETFs are not mutual funds. But, they combine features of a mutual fund, which can only be purchased or redeemed at the end of each trading day at its NAV per share, with the ability to trade throughout the day on a national securities exchange at market prices. Before investing in an ETF, you should read its summary prospectus and its full prospectus, which provide detailed information on the ETF’s investment objective, principal investment strategies, risks, costs, and historical performance (if any).

REAL ESTATE INVESTMENT TRUSTS or REIT’s

REIT’s are also pooled investments. Real Estate Investment Trusts are a “EQUITY SECURITY” and the Shares are whole shares and never fractional shares. However REIT’s are not classified like Mutual Funds. As the Investors of REIT’s typically only receive “INCOME” from their investment in the form of Rent and Mortgage Income. REIT’s are traded in the Open Stock Markets. That Tax is attractive to most and REIT’s usually have low management fee’s since they are Passively managed Assets.

Pooled Investments are all required to offer investors access to a Prospectus. And Pooled Investments are Regulated under the Securities Act of 1933 and the following Securities Act of 1934. Some are Private Investments and some are Initial Public Offerings. However this post today will not dive deeper into these topics. Later on I will writer more about IPO’s and Private Placement Memorandums and more. Stay tuned I will also be “NET ASSET VALUE” the formula to calculate Net Asset Value per share and more.

Becoming a Investment Advisor Arizona & Kansas City

I do hope you learned a little today by reading up on Pooled Investments, I am working hard towards obtaining my Series 65 NASAA Investment Advisors License and feel it’s my duty to educate other Investors and qualified individuals about the different investment opportunities out in the market place.

Thanks for stopping by and reading some of my required Investment Advisor Information I must digest. Godspeed.
JS

Business Articles, Loan Originator, Real Estate

Learning About Loan Originators, Mortgage Brokers, and Commercial Lenders

Recently I connected and met with Mr. Jim Moore an Army Ranger who served in Vietnam, and Jim has been incredibly successful as a Licensed Loan Originator in Scottsdale and Phoenix Arizona. Jim and his Mortgage Broker Team at Counsel Mortgage Group in Scottsdale are genuinely the community leaders in Arizona when it comes to Real Estate Mortgage Lending. The good service Jim and his team mates at Counsel Mortgage Group are providing the community and it’s residents in Phoenix area is truly note worthy and heart warming. Like for instance recently this team has been helping Disabled Veterans qualify for Veterans Benefits and qualify for home loans improving these Veterans lives. That is admirable on so many levels.

Starting as a Loan Originator

How did I decide to start the Loan Originator Path? I began the journey of learning more about Mortgage Brokers and Loan Originators after taking the Guidance and listening to the Good and Great Larry Ackman talk to Son Bill about his early years of Building Ackman Ziff. Listening to Larry Ackman’s personal story and guidance while talking about Structured Finance in Real Estate. This had a profound affect on me. Added with the fact Jon Gray the President of Blackstone messaged me some good uplift and cheer recently. And there you go, I said “Im gonna do this!” Now I am earning my Licenses in Arizona, New York, Kansas, Washington D.C. and Florida.

I must share as a Mergers and Acquisitions Transaction hunter it’s your job to disqualify or dismiss most of the opportunities or Deal Flow you come across. And in the mean time you find yourself with a ton of free time. So in all fairness it’s good to have a second career that can fill in the gaps of long periods of blank space. So I took the suggestion of Bill and Larry and began my journey going down the Loan Originator career route.

I do recognize I am currently studying to sit for the Series 65 Investment Advisors Exam, however that will be just an added skill and bonus to my already colorful background of learning new useful skills. I am laughing. Because this is just like me. After awhile of looking at the men I admire within Commercial Real Estate, I began to notice something. Most of these heavy hitters within Commercial real estate began and started their careers as Loan Originators. I can not help but to admit I am definitely on to something here. Here is a great example below.

Commercial Lenders

Gary Bechtel is the CEO of Red Oak Capital Holdings, this is a Company that raises funds to deploy for the purpose of short term Mezzanine Debt for Commercial Real Estate Projects and Transactions. Its a niche that took a beating during the COVID Pandemic, However Mr. Bechtel is charging ahead as one of the leaders in this niche of Real Estate Lending. Mr. Bechtel has been incredibly generous and supportive of my move into Loan Origination and for this reason? I call him a friend and community leader I could call. I hope he knows I am always available if I can be of use or helpful to his team of professional problem solvers. He is certainly someone I genuinely take guidance and leadership advice from.

If your investment committee is searching for short term commercial real estate lending? RED OAK CAPITAL HOLDINGS is your go to firm for Commercial Lending.

How do you become a Licensed Loan Originator?

The first step in this journey is to study and take a 20 hour Course and then sit for the Nationwide Mortgage Licensing System Test. (NMLS TEST) After this course of action you begin learning on the Job how to go out and spearhead opportunities. There is much more to add to this. However if you would like to learn more about Loan Origination? I would highly suggest watching Dustin Owen on the Loan Officer Podcast I have been devouring in my off time at night on the road here in the Southwest United States.

In all fairness I do recognize this path will likely take 2 years to fully develop. And I am good with that. And if you are looking to make a career out of Loans Origination or be a Bank Loan Officer? You will likely have different journeys. Here in Arizona according to state law I must spend at least 3 years working with a Local Mortgage Broker before I am able to move up to becoming a Mortgage Broker and open my own shop. In all fairness I can see why and I am good with that. So stayed tuned I will be posting a lot more on this subject as I begin building a book of business and finish my corse work and pass my NMLS test for licensing.

I highly suggest you visit the resources in this post. I am so lucky to find these people and be associated with a few.

Godspeed!

Business Articles

Henry Kravis KKR | Conflict, Integrity, Collaboration

The Angel of Truth always finds a way.

You know who is a master in the Business environment when it comes to Conflict Mastery?
Henry Kravis!

Henry is one of the Founders of KKR and who’s story is told in the movie Barbarians at the Gate

Guard Your Integrity With Your Life

Henry Kravis was a master at collaboration. Furthermore, this post will be about how a Good Man in my life personally challenged me as a fellow Entrepreneur. Motivating me to drive 19 hours driving time across country and spend countless hours developing a solution to a problem that could have meant certain failure but ended up making me look within myself and grow.

After consulting time and time again with a buddy who is a Big 4 Partner I finally had my A-Ha Moment! This post is all about the different personalities that you need to consider when a conflict or hard situation, or conversation needs to happen. Read carefully. The lesson’s in this post, most certainly will give you a formula to use so you can have the best chance at a predictable good outcomes. Especially when it seems someone is trying to compromise your integrity out of fear and passive behavior.

Watch Henry Kravis Movie – Barbarians at the Gate Movie – HERE

Ok Let’s get started, let’s say your evaluating a transaction for a Company and you meet resistance or a possible intractable challenge intended to prevent you from making the Transaction? Your team has prepared, the accountants, investment bankers, and Corporate Attorneys are all scratching their heads how to negotiate a Problem that looks like its likely to end the sell of the Company. But all of a sudden the one of the owners silently feels the transaction should not continue. And begins passive – aggressively not answering your emails. Won’t pick up the phone. And this leads to the entire transaction failing due to sabotage. What do you do????

Let it go, and allow the person space to figure it out on their own?
Do you fire off a email that is full of thoughts and beg the person to come see you?
Do you go track them down and confront them?

Here’s how I was taught to smoothly handle bumps in the road like this during Transactions by a Big 4 Partner who was the Lead Advisor for Transactions in Tech World. My buddy is a Prince of a Man and I admire and love him like a brother for all his help and guidance. 100%

It’s time for me to pass on a little of His time honored personal guidance.

The Three types of Responses to Conflict in the Professional Space.

The Mule (STUBBORN CLOSED MINDED) There’s no way come HELL OF HIGH WATER I will ever allow Dat Dat Dat…!
The Avoider ( Avoids Difficult Conversations & Situations at all costs) If a problem develops? They run or say nothing.
The Accommodator ( Agree’s with whatever is being said on the other side of the table. Never adds a solution.)
The Compromiser (Starts off as a Accommodator, but when things seem too difficult? Will shift to a weaker or less comfortable position in a negotiation even if it harms their own position.)
The BEST Response is learned and is…..? “The COLLABORATOR!” (Unafraid of difficult conversations and situations, will not settle until all sides are moving forward in a positive direction. And can inject a discernment that is sensitive, or empathetic to the other side of the table. This is the Ideal method to resolving difficult or hard situations. HENRY KRAVIS and his Wife were fantastic and very talented at this method in the 1980’s.

All of this I learned from my Buddy who has advised, and taught me to be a better Collaborator. If you choose to be passive-aggressive in a hard conversation or a difficult situation? It’s likely you will have to compromise your Integrity and Faith for the other sides comfort. This is a NO GO FOR ME! It’s just not realistic to my personality. Id rather share the uncomfortable truth in a sensitive way than allow someone’s passive aggressive behavior to compromise my Faith, and Integrity. And so should you.

Corporate Attorneys are literally terrible negotiators. They literally do not use empathy. They use brut force and time to their advantage. And in the process damage a clients position, or future business prospects.

Choose who how you treat people wisely. Because playing petty power games with people will end very fast one day unexpectedly with a Proverbial knife in your back or a lost, or sabotaged Transaction.

I hope you learned something from this post. Study the Greats like Henry Kravis. And I promise you will become better and smarter when searching for collaborative answers and predictable outcomes.

GODSPEED!

Business Articles

How to Calculate Future Value of a Investment

Do The Math!

The last few weeks have been insane with the amount of Math and Calculation in Finance I am learning and devouring. Sharpening your Finance knowledge is serious business and why learning this makes you a Professional as Investment Advisor. Here is a Finance Calculation that can calculate the Future Value of a Investment as long as you know A. The Present Value. B. The Rate of Return and C. The time involved for the return.

VIDEO – How to Calculate Future Value of a Investment with a basic calculator.

(EASY NASAA/FINRA TEST HOW TO) – Not Semi Annual Calculation

Here is the Calculation to follow to Find the Future Value of a Investment

The present value of $87,500 with receipt of the funds being taken 3 years (t) from today. The desired interest rate of return (r) for these funds is 9%.

To calculate this we will follow this order of operations.

Present Value (PV) = Future Value (FV)

PV = FV (1+interest rate or return)-n

Use Math Order of Operations

PV 87,500 / (1+ .09)3rd power

PV 87,500 / (1.09)3rd power

PV 87,500 / 1.295029

Equals = $67,566.55 Future Value

If you find yourself having trouble? Watch the video on my youtube channel.

I hope you found this Mathematical Formula useful on your way as a Wealth Management, Investment Advisor, or if your just evaluating a Investment to invest in as a Everyday Joe! Im positive this formula will be useful to many.

Godspeed – JS

Business Articles

FINRA Series 65 Exam Registered Investment Advisor

It’s time for me to go get the FINRA Series 65 Registered Investment Advisors Exam out of the way. Im all in.

It’s Sunday July 31st 6am, Have you seen the incredible fall in the Markets? Are we in a recession or are we not in a recession? It seems the current Administration that decides Fiscal Policy is unable to agree. I genuinely hope you are capitalizing on the correction in the markets as we continue to spiral into a recession.

Goals Keep The Talented, Strong & Courageous Seeking Excellence

Interestingly Ive decided since I find myself devouring content and books about the Series 65 Exam? And after looking at the challenge and rewards? Its time I take the initiative and have the courage to prove to the awesome Mr. Marty Bicknell CEO of Mariner Capital Management. That I can crush the the Series 65 Exam. Becoming a licensed and registered Investment Advisor Representative like himself. Marty is the leader of a very special Financial Services Firm in Overland Park, Kansas.

The really interesting thing about Marty Bicknell and Partner Cheryl Bicknell? They are Entrepreneurs like myself who Consolidated the Money Management sector. I genuinely admire their Grit and Commitment to their mission. They have made a name for themselves. And that track record is impressive.

You find that those who have passed the Series 65 are a cut above most entrepreneurs and this adds a level of sophistication and professionalism that Investors take seriously. It can do nothing except improve my life at this time.

What is the Series 65 Exam?

According to Kaplan Financial,

The Series 65 license, known as the Uniform Investment Adviser Law Examination, qualifies individuals to provide investing and general financial advice to clients. Passing the Series 65 exam qualifies individuals as Investment Advisor Representatives (IARs).

Obtaining the Series 65 license is important for representatives who provide advice on ERISA-regulated retirement accounts.

Why I decided to add Investment Advisor to my list of Qualifications?

Along my journey of Mergers and Acquisitions, and also learning to become a detailed oriented Value Investor like Warren Buffett and building a track record of positive 39.1 % in annual growth. I find myself being asked questions about Investing and money by many Tradesman like Roofing Contractors, Electricians, and even many White Collar Professionals.

“How should we invest for the Future? And “How can I grow my money?”

All incredibly important questions. Legally I am disqualified and unable to provide Investment Advice for Payment without first passing the Series 65 exam and registering with the State and SEC. But first we need to do a bit of educating and bringing you up to speed about Financial Literacy.

I have found 95% of Americans have absolutely no clue what I am talking about when I get in the details of Corporate Finance, and financial strategies inside Investing? It’s like I am talking Greek. But Good News. I find it very interesting to sit and listen to peoples financial plans and futures. That develops into some very interesting Coffee Talk. It’s incredibly clear underperforming assets are on the mind of Investors and Wealth Mangers alike.

Since these Professionals are calling on me and asking for direction to serve them on future investments or ideas? I find, I might as well make myself useful in the name of Community Service and take the Series 65 Exam and build a Financial Services Firm or business from my growing experiences in Investing, and Corporate Finance. In all honesty? I could always use the cash to fund Community service Projects as a Non Profit. Or grow my own Investment Fund. Which is the goal.

A Registered Investment Advisor is your Strategic Investment Partner and Financial Services Firm Professionals

Wealth Management

When we look at the growing opportunities within the Credit Markets, S&P Index Funds, or New York Stock Exchange? We see lots of opportunities for Professionals to invest and leverage the growth for their Retirement options. After all strategically investing to receive a Monthly Payment from a Mutual Fund, or Customized Strategic Investment is very smart.

More individuals, Professional Tradesman like Electricians, Contractors, Professional Basketball Players, Baseball, Football, and even Attorneys who can start preparing accounts that can grow organically from the Stock Markets rise and fall. It’s important to point out and zero in on this point. If you are having doubts about investing in the Stock Market? You absolutely SHOULD!!! For to long Asset Management Firms have become so large and lazy the just do not care about maximizing the investments they hold for you.

However with a personable trustworthy relationship with Investment Advisor Representative managing your families wealth or strategically investing assets? You will have an edge when Investing. You have your own personal customized investment professional who can use experience and strategy to build a future of Portfolio Earnings and Gains without suffocating tax penalties that follow most investments. Investing in a private placement fund or strategically investing in a Index is an idea many add to a strategic portfolio. But before I am able to elaborate? I must first pass the Series 65 to have these conversations and establish a professional relationship with anyone.

When your thinking about your future? You need to know what are some of the choices you have for investing. This short list is some of the most common investment vehicles Registered Investment Advisors use to grow your principle investment.

Types of Investments

Stocks.
Bonds.
Mutual Funds and ETFs.
Bank Products.
Options.
Annuities.
Retirement.
Saving for Education.

In conclusion? Many people I have talked to who have passed the Series 65 Exam tell me “It’s difficult! And I barely passed.” All things considered? I do not work for a Financial Services Firm. Which makes the reason I want to take the test all that much more interesting. I want to pass this test because Id like the opportunity to expand my professional skills. And serve the community professionally. Yes I am a Entrepreneur. However I feel I have alot to give. And getting this test out of the way? Does create more opportunities for me as a entrepreneur and as a servant to the community. I plan on taking the test ASAP. And before the FALL. The sooner the Better.

Being passionate about Finance and Investing is an advantage. I plan on using my Geeky curiosity to benefit my Family, Friends, and Community and build a business along the way. Thank you for reading. Im absolutely positive I will have fantastic news to report very soon from taking the FINRA Registered Investment Advisor Series 65 Exam.

Godspeed.