Successful Behavior

  1. Investors do not get investment returns they get investor returns, which tend to be substantially less. Investors do not merely underperform the market; they underperform their own investments.
    • Average annual return, with dividends reinvested, of the average U.S. equity mutual fund, 1996-2015 – 8.19%
    • Average annual return, with dividends reinvested, of the average U.S. equity mutual fund investor, 1996-2015 – 4.67%
    • Cost of inappropriate behavior – 3.52%
  2. The gap between investment returns and investor returns is fully and completely explained in 2 words: inappropriate behavior.
  3. As an investor, you cannot control investment performance, but you can control investor behavior.
  4. Avoid the 8 Great Mistakes:
    • Overdiversification – 5 categories, close to 5 funds will do it.
    • Underdiversification – Chasing the hot trend.
    • Euphoria/Overconfidence/Greed – The loss of an adult sense of risk. The perception of risk as ‘someone else getting a higher return’. Getting caught up in the success stories.
    • Panic/Get me out at any price now – Inappropriate temperament.
    • Leverage/Margin – Intellectually okay, behaviorally will not work.
    • Speculating instead of investing – Not seeing that you’ve crossed the line.
    • Investing for yield instead of for total return – Timing the market. Sure road to failure
    • Letting cost basis/tax considerations dictate investment decisions – “But I’ll have to pay taxes”. Be thankful.
  5. If you are successful in your investment behavior, our fund recommendations still may not, at any given time, outperform your neighbors’ funds, but, in the long run, you will surely outperform your neighbors.
  6. Most importantly FOLLOW THE LOVE. Who do you love and what do you want to do about it?

Review Your Beneficiaries

If you’ve recently married, divorced, remarried, lost a spouse or close relative, had a child, had another child, or had a grandchild, it’s worthwhile to review the beneficiaries of your IRAs, 401ks, life insurance and annuities.

Tedious, yes, but worthwhile.

W-2 and 1099 Deadline for 2018 Tax Filing

Attention All Business clients that we prepare 1099’s and W-2’s for!

All W-2’s and 1099’s are due January 31, 2019.

If you have paid $600 or more to an individual or LLC from your business or rental properties for services, you are required to send a 1099 MISC to each recipient.

Please be aware starting in 2019, the IRS will impose stiff penalties if required 1099’s are not completed and filed.

Please get us your information ASAP.

Possible Retirement Outcomes

Retirement has 2, and only 2, possible outcomes:

  1. Your money outlives you, creating a dignified and independent life.
  2. You outlive your money, creating a miserable and dependent life.

It’s the choice between equities vs bonds along the way, and how you behave towards that investment decision, that decides the above.

Volatility VS Risk

Often mistaken for twins, volatility and risk couldn’t be more different.

Risk can be defined as putting 100% of your money in pork bellies and hoping for the best.

Volatility, correctly defined, simply refers to the regular, sometimes large, sometimes small, unpredictable movements of the equity market both above and below its permanent uptrend line.

Note the phrase ‘permanent uptrend line’.

Risk = Placing a firecracker in your nose and lighting it.

Volatility = Tolerating the ups and downs of the market.

Our current market is volatile, not risky. Let it run its course.

Buffet Quote on Investing

It is a terrible mistake for investors with long-term horizons – among them, pension funds, college endowments and savings-minded individuals – to measure their investment ‘risk’ by their portfolio’s ratio of bonds to stocks. Often, high-grade bonds in an investment portfolio increase its risk.

-Buffett, annual shareholder letter, page 13, emphasis in the original

NJ Tax Law for Rent of Transient Accommodations

If you rent property for less than 90 days, the new law could affect you!

As of October 1, 2018, a new law imposes Sales Tax and the State Occupancy Fee on charges associated with the rental of “transient accommodations”. The law also authorizes certain municipalities to amend and impose various additional taxes, the tax and rate depends on the municipality.

Definition of “Transient Accommodations” means a room, group of rooms, or other living or sleeping space for the lodging of occupants, including but not limited to residences or buildings used as residences (90 days or less).

This definition includes rentals made through “transient space market places” (such as an Air B&B; VRBO), as well as rentals that are made directly by the homeowner through classified listing sites, local newspaper ads, referrals from friends/family, or placing a sign on the home, etc.

Who is subject to the new law:

  • If you are renting accommodations yourself, for a period of less than 90 days.
  • If you are using a Marketplace to advertise, where the advertisement contains homeowner’s contact information and the customer pays the homeowner directly.
  • You do not meet all the criteria listed below for exemptions.

The following are NOT considered transient accommodations:

  • The sale is executed by a real estate broker licensed by the New Jersey Real Estate Commission, the keys or other means of physical entrance to the property are provided to the lessee at the location of the offsite real estate broker, the rental property is private residential property, and the lessor does not provide common hotel services such as maid service, room service, or linen changing service.
  • The occupancy occurs for at least 90 consecutive days (permanent resident exemption).
  • The occupant is an entity that has been granted exempt status by the Division and has been issued an Exempt Organization Certificate (Form ST-5).

If you are using the type of transient Marketplace online service such as Air B&B or VRBO, where the Marketplace is collecting the rental fee, then they are also required to collect all applicable taxes from the customer and remit them to the Division of Taxation. In that case you are not required to register separately.

More detailed information, can be obtained from the NJ Department of Taxation website:

NJ 2018 Tax Amnesty

If you owe back taxes to NJ from the period of February 1, 2009 until September 1, 2017 a New Amnesty program has been implemented by Governor Murphy.

The amnesty program begins November 15th, 2018 and ends on January 15th, 2019.

During this period, taxpayers have the opportunity to file past due tax returns and/or pay back taxes with half the interest and NO penalties.

If you do not take advantage of the program, NJ will add an additional penalty of 5% non-abatable if the debts are not resolved.

We strongly urge you to take advantage of the opportunity to resolve past due taxes and liabilities during the Amnesty period.

Visit the New Jersey Tax Amnesty Website to Review Eligibility Requirements