Wealth

Flash Report - What’s Your High-Net-Worth Personality?

Here’s why you need to know:

As a successful person with big goals, you require truly valuable financial advice that maximizes your ability to achieve your most important personal and professional financial objectives.

That means you need to work with professionals who connect with you. Who relate to you. Who understand you well enough to really “get” what you want your money to accomplish and why.

To get advice that works, it’s important to understand your own high-net-worth personality so you can select and work with advisors who are an ideal match.

What is a high-net-worth personality, anyway?

High-net-worth (HNW) psychology is all about understanding what the affluent want from the professionals they work with, as well as the “how” and “why” behind their attitudes and decisions about their money. Developed in the late 1990s, HNW psychology has been verified through the study of thousands of wealthy individuals. It’s also been adopted by elite, forward-thinking financial advisors and other professionals serving affluent individuals and families.

 

Click here to read more:

What’s Your High-Net-Worth Personality-Flash Report

 

Robert J. Pyle, CFP®, CFA is president of Diversified Asset Management, Inc. (DAMI). DAMI is licensed as an investment adviser with the State of Colorado Division of Securities, and its investment advisory representatives are licensed by the State of Colorado. DAMI will only transact business in other states to the extent DAMI has made the requisite notice filings or obtained the necessary licensing in such state. No follow up or individualized responses to persons in other jurisdictions that involve either rendering or attempting to render personalized investment advice for compensation will be made absent compliance with applicable legal requirements, or an applicable exemption or exclusion. It does not constitute investment or tax advice. To contact Robert, call 303-440-2906 or e-mail info@diversifiedassetmanagement.com.

 

The views, opinion, information and content provided here are solely those of the respective authors, and may not represent the views or opinions of Diversified Asset Management, Inc.  The selection of any posts or articles should not be regarded as an explicit or implicit endorsement or recommendation of any such posts or articles, or services provided or referenced and statements made by the authors of such posts or articles.  Diversified Asset Management, Inc. cannot guarantee the accuracy or currency of any such third party information or content, and does not undertake to verify or update such information or content. Any such information or other content should not be construed as investment, legal, accounting or tax advice.

Maximizing your wealth: “Should I pay cash or finance my cars?”

In an earlier BizWest article, “Investors shouldn’t take the path of least resistance,” I shared several scenarios in which the easy way isn’t always the best way to maximize your wealth. I’ve got one more scenario to cover today: If you’ve got the money available, it’s easier to buy your cars with cash instead of on credit. But which is the wiser way for your wallet in a low-rate environment?

Contrary to your initial “neither a borrower nor a lender be” instincts, the current answer is likely to be: Take the credit … especially if it’s available at zero percent. One need only scan the car dealers’ ads to see that zero percent financing is a frequent incentive these days for basic and luxury vehicles alike.

Before we consider the choice empirically, think about it theoretically. If someone is offering you anything at zero percent, you’re basically being invited enjoy whatever it is you’ve purchased before you have to pay for it. As long as you have the discipline to let those dollars earn a little interest or a few investment returns until payment is due, when would that not play out in your favor?

With that in mind, let’s explore a few scenarios and make sure the numbers jive with the logic.

A typical (simplified) choice current car buyers face is as follows: Do you want to pay cash upfront in exchange for a discounted sticker price? Or would you rather take a zero percent or low-interest loan instead of the discount?

The specific dollar amounts don’t really matter. Whether the choice involves tying up $10,000, $50,000 or $100,000 in an automobile … or keeping the same amount in your pocket to save or invest during the time you own the vehicle, the math and its relative outcomes are the same.

The essential question thus becomes: At what points do the scales tip one way or the other between cash or credit? I’ve done some math on that, assuming a six-year timeframe for all comparisons. That is, each loan is a six-year loan, and the saving/investment periods are eight years. Cars are replaced every 8 years over the next 32 years.

Scenario One: A zero percent loan with kept assets invested at 6%. Let’s imagine you took a zero percent loan and invested the cash that would otherwise have gone to the car purchase into the stock market. Fortune smiles on your investments and you earn 6% annualized market returns across the next six years. For paying upfront cash to be the better bargain, the dealer would have to offer you at least a 30% discount on the car purchase.

Scenario Two: A zero percent loan with kept assets saved at 2%. Let’s say you weren’t so keen to invest the assets earmarked for car costs. After all, if those dollars will eventually be needed to pay off the balance on the loan and you happen to invest just prior to a market downturn, you could just as readily lose instead of gain 6% annualized on your investments. What if you instead put the reserved assets in a CD or similar savings account, offering a lower but more dependable 2% annualized return? You’ll still come out ahead taking the loan until the dealer offers you at least an 11.5% discount to pay cash.

Scenario Three: Three percent financing with kept assets invested at 6%. Admittedly, the zero-percent loan incentives are unlikely to last forever. So what if auto loans are in the range of 3%? It still may pencil out in favor of keeping the cash and investing it in the market. Assuming 6% annualized market returns, the dealer would have to offer you at least a 23% discount before it would make sense to pay cash upfront instead.

Scenario Four: Three percent financing with kept assets saved at 3%. But again, that 6% annualized market return isn’t guaranteed. But if loan rates rise, you’ll probably also earn more interest in a CD or savings account too. That said, here, the scales begin to even out. Assuming you could earn 3% returns in your savings account, if the dealer is willing to offer you at least a 9% discount to pay cash, then the cash up front may become your better choice.  

Still weighing your options? If you’re willing to take a deeper dive, here’s one more illustration, offering a more detailed analysis of financing new cars versus paying cash for them.

Here, we’ve looked at purchasing $50,000 luxury vehicles versus more basic, $25,000 models, assuming a replacement cycle of every eight years across 32 years. (That is, you buy a new car every eight years.) We’ve assumed zero percent financing for the cars with a 6% annualized market return on the money not used to purchase them. The calculations also include:

  • A 10% down payment if you were financing the cars

  • A 5% discount if you instead pay cash

  • A 15% annual depreciation on the cars

  • A 3% inflation rate when replacing cars

  • A sufficient starting amount of investable cash (about $160,000), to cover paying for a luxury vehicle with cash every eight years

The following graph shows the residuals:

car financing.png

As you can see, the results vary wildly based on the scenarios. In the worst-case scenario, you would be left with about $27,000 after 32 years of purchasing a luxury vehicle for cash in a zero-interest-rate environment.

Mathematics aside, I get why families may still choose to pay cash for their cars. There’s less paperwork, no ongoing obligation, and that unquantifiable sense of satisfaction in knowing that what’s yours is yours. On the other hand, if you do decide to let the numbers be your guide, in a zero-interest-rate environment, I hope I’ve demonstrated how likely you are to end up with more money in your pocket for future car purchases if you let the lender be your friend.

 

Robert J. Pyle, CFP®, CFA is president of Diversified Asset Management, Inc. (DAMI). DAMI is licensed as an investment adviser with the State of Colorado Division of Securities, and its investment advisory representatives are licensed by the State of Colorado. DAMI will only transact business in other states to the extent DAMI has made the requisite notice filings or obtained the necessary licensing in such state. No follow up or individualized responses to persons in other jurisdictions that involve either rendering or attempting to render personalized investment advice for compensation will be made absent compliance with applicable legal requirements, or an applicable exemption or exclusion. It does not constitute investment or tax advice. To contact Robert, call 303-440-2906 or e-mail info@diversifiedassetmanagement.com.

 

The views, opinion, information and content provided here are solely those of the respective authors, and may not represent the views or opinions of Diversified Asset Management, Inc.  The selection of any posts or articles should not be regarded as an explicit or implicit endorsement or recommendation of any such posts or articles, or services provided or referenced and statements made by the authors of such posts or articles.  Diversified Asset Management, Inc. cannot guarantee the accuracy or currency of any such third party information or content, and does not undertake to verify or update such information or content. Any such information or other content should not be construed as investment, legal, accounting or tax advice.

Flash Report - The Billionaire Money Rules

What our research shows about how the self-made Super Rich build their wealth.

If you are like nearly every other successful person, you’re not ready to rest on your accomplishments. You want to build on your success so far to create even more wealth and more value. In fact, according to our research, 94 percent of successful business owners want to be wealthier. (And even if you don’t own a business, you are effectively the CEO of your family, so this all applies to you, too.)

Why you need serious wealth

You’re not driven by greed or after wealth simply for wealth’s sake. Instead, you probably want to grow your wealth substantially to achieve goals that are deeply meaningful to you.

As the chart below shows, these goals likely include taking care of your family and other loved ones, supporting the causes you care deeply about and perhaps even changing the world for the better. 

Click here to read more:

The Billionaire Money Rules- Flash Report

 

Robert J. Pyle, CFP®, CFA is president of Diversified Asset Management, Inc. (DAMI). DAMI is licensed as an investment adviser with the State of Colorado Division of Securities, and its investment advisory representatives are licensed by the State of Colorado. DAMI will only transact business in other states to the extent DAMI has made the requisite notice filings or obtained the necessary licensing in such state. No follow up or individualized responses to persons in other jurisdictions that involve either rendering or attempting to render personalized investment advice for compensation will be made absent compliance with applicable legal requirements, or an applicable exemption or exclusion. It does not constitute investment or tax advice. To contact Robert, call 303-440-2906 or e-mail info@diversifiedassetmanagement.com.

 

The views, opinion, information and content provided here are solely those of the respective authors, and may not represent the views or opinions of Diversified Asset Management, Inc.  The selection of any posts or articles should not be regarded as an explicit or implicit endorsement or recommendation of any such posts or articles, or services provided or referenced and statements made by the authors of such posts or articles.  Diversified Asset Management, Inc. cannot guarantee the accuracy or currency of any such third party information or content, and does not undertake to verify or update such information or content. Any such information or other content should not be construed as investment, legal, accounting or tax advice.

 

10 Small Towns With Big Millionaire Populations

Here is a nice article provided by Dan Burrows of Kiplinger:

 

By Dan Burrows, Contributing Writer | June 2017

 

Just 5.5% of the households in the U.S. qualify as bona fide millionaires. That means they have investable assets of $1 million or more, excluding the value of real estate, employer-sponsored retirement plans and business partnerships. Not surprisingly, the majority of these 6.8 million wealthy households can be found in big cities such as New York, Los Angeles and Chicago.

 

But it turns out some millionaires prefer to avoid the hustle and bustle of major metropolises. Phoenix Marketing International, a firm that tracks the affluent market, ranked 915 urban areas, both large and small, based on the percentage of millionaire households in each. Here are the 10 smallest cities and towns boasting the highest concentration of millionaires in the U.S.

 

Estimates of millionaire households provided by Phoenix Marketing International. This list is limited to so-called micropolitan statistical areas, which are defined as having at least one urban cluster with more than 10,000 residents but less than 50,000. Investable assets include education/custodial accounts, individually owned retirement accounts, stocks, options, bonds, mutual funds, managed accounts, hedge funds, structured products, ETFs, cash accounts, annuities, and cash value life insurance policies. Data on household incomes and home values are from the U.S. Census Bureau.

 

10. Gardnerville Ranchos, Nev.

 

Millionaire Households: 1,445

Total Households: 20,566

Concentration of Millionaires: 7.0%

Median Income for All Households: $58,535 (U.S.: $53,889)

Median Home Value: $272,000 (U.S.: $178,600)

 

Gardnerville Ranchos is a favorite hiding place for millionaires because of its proximity to Lake Tahoe, which has long been a getaway for the rich and famous. With everything from ski resorts to beaches, the Lake Tahoe area offers year-round activities for well-heeled tourists and full-time residents alike. Adding to the appeal for residents, Nevada is one of the most tax-friendly states in the U.S. thanks to no state income tax and modest property taxes. Carson City, capital of the Silver State, is just 20 miles to the north of Gardnerville Ranchos, and high-rollers can reach Reno’s casinos in an hour.

 

9. Truckee-Grass Valley, Calif.

 

Millionaire Households: 3,007

Total Households: 42,612

Concentration of Millionaires: 7.1%

Median Income for All Households: $54,177 

Median Home Value: $383,400

 

You’ll find the Truckee-Grass Valley area on the California side of Lake Tahoe, with Truckee proper situated near the shore of the famed lake itself and Grass Valley sitting farther to the west. Multiple bodies of water including Donner Lake, where the Donner Party met its gruesome demise, make the entire area a recreational haven for water sports. And the long, snowy winters are perfect for the numerous ski resorts in the vicinity of Truckee and Grass Valley. Another appealing aspect of the area for millionaires: It’s a straight shot down Interstate 80 to reach Sacramento, the state capital, and San Francisco. Less appealing: California ranks as the single worst state in the U.S. for taxes.

 

8. Concord, N.H.

 

Millionaire Households: 4,136

Total Households: 57,844

Concentration of Millionaires: 7.2%

Median Income for All Households: $68,566 

Median Home Value: $220,400

 

The New Hampshire state capital is home to a horde of state, county, local and federal agencies -- and the law firms and professional agencies that support them. Concord is also a major distribution, industrial and transportation hub. Tourism is a key contributor to the local economy, thanks to the nearby New Hampshire International Speedway, as is the state's increasing emergence as a center of high-tech manufacturing. Concord also benefits from being within easy reach of Manchester, the state's largest city, which is only about 15 miles to the south. And well-off residents seeking a break from quaint New England living can drive to Boston in less than 90 minutes. 

 

7. Vineyard Haven, Mass.

 

Millionaire Households: 589

Total Households: 7,995

Concentration of Millionaires: 7.4%

Median Income for All Households: $64,222 

Median Home Value: $660,800 

 

No surprise here. Vineyard Haven is a town on Martha's Vineyard. This island off the coast of Cape Cod is one of the most desirable summer vacations spots in the Northeast and has long been a favorite of the rich, the famous and the powerful. Indeed, former presidents Bill Clinton and Barack Obama have summered there. Jacqueline Kennedy Onassis long maintained a home on the island. Naturally, this tony locale is not easy on the wallet, as evidenced by the exorbitant real estate prices. It also can get a bit crowded. Martha's Vineyard has 15,000 or so year-round residents, but the population swells to more than 115,000 during peak summer months.

 

6. Easton, Md.

 

Millionaire Households: 1,190

Total Households: 16,006

Concentration of Millionaires: 7.4%

Median Income for All Households: $58,228

Median Home Value: $319,500

 

Tiny Easton, on the Eastern Shore of Chesapeake Bay, prides itself on its out-of-the-way feel, with country farms mixing with lavish waterfront estates. It has long been a retreat for the well-to-do of the Mid-Atlantic seeking antiques shops and solitude. Easton's proximity to the beach, abundance of parks and good schools make for an idyllic small-town experience for residents. At the same time, the town offers easy access to several major cities. It's only 30 minutes from Annapolis, the state capital, and Washington, D.C., and Baltimore can be reached by car in about 90 minutes (traffic willing). Maryland has the most millionaires per capita of any state in the U.S., according to Phoenix Marketing International.

 

5. Fredericksburg, Texas

 

Millionaire Households: 837

Total Households: 11,244

Concentration of Millionaires: 7.4%

Median Income for All Households: $54,859

Median Home Value: $238,300

 

It's not hard to understand the allure of Fredericksburg, since it's smack-dab in the middle of Texas Hill Country. This beautiful region of the Lone Star State has plenty to offer for both outdoorsy types and aesthetes alike. Residents can explore a landscape of rolling hills, spring-fed rivers and lakes, and vast fields of wildflowers. But they can also partake in fine dining, wine tasting, concerts and art shows. A good example that combines the two, while giving a nod to the area's rich history, is the LBJ Ranch Tour and Wine Tasting. (To be clear, LBJ stands for Lyndon Baines Johnson, 36th president of the U.S., not LeBron James.) Fredericksburg also benefits from its proximity to Austin, capital of Texas and a hub for high-paying tech companies, about 90 minutes away.

 

4. Edwards, Colo.

 

Millionaire Households: 1,520

Total Households: 19,685

Concentration of Millionaires: 7.7%

Median Income for All Households: $72,214

Median Home Value: $419,400

 

You can sum up the appeal of Edwards in one word: skiing. The nearby world-class resorts of Vail and Beaver Creek draw big-spending skiers hoping to see and be seen all winter long. But the area offers much more than pricey lift tickets and celebrity spotting. Fly fishing, hiking and whitewater rafting draw folks to town in the summer months. Either way, high-end restaurants, plush lodges and spas are just some of the ways millionaires can pamper themselves. But it's Colorado's status as a tax-friendly state for both retirees and working residents that helps make Edwards a good deal for year-round living. It’s a good thing, too, considering the high price of homes in the area.

 

3. Williston, N.D.

 

Millionaire Households: 1,166

Total Households: 14,913

Concentration of Millionaires: 7.8%

Median Income for All Households: $88,013

Median Home Value: $201,400

 

The city of Williston expanded rapidly in the first half of this decade, according to the Census Bureau, driven by the explosion in shale oil drilling that once gave North Dakota the fastest-growing economy in the nation. Located in the center of the oil-rich Bakken Formation, Williston soon found itself the home of millionaires minted by the fracking revolution. But it doesn't look like it will be making more soon. North Dakota has seen oil booms and busts before, but the prolonged downturn in prices has turned cities like Williston upside-down. Wages are down and jobs have dried up. Some folks reportedly are just pulling up stakes, taking a bite out of the local tax base. If there's a silver lining for Williston's remaining millionaires, at least North Dakota is one of the nation's more tax-friendly states.

 

2. Torrington, Conn.

 

Millionaire Households: 5,995

Total Households: 74,673

Concentration of Millionaires: 8.0%

Median Income for All Households: $70,667

Median Home Value: $248,300

 

Torrington is the largest town in Litchfield County, which has long been a popular retreat for Manhattan's wealthy and chic looking for a remote, mountainous retreat. (It’s an in-state draw for all the millionaires from Stamford, too.) As Vogue magazine says of the area: "There’s something for everyone: art galleries, outdoor activities, shopping, great food. With its covered bridges, forests, and rivers, the scenery is gorgeous. In fact, every season challenges the next for which is more beautiful." Although Torrington might be hidden in the northwest corner of the state, millionaires can't escape Connecticut's onerous tax bite. Real estate taxes are among the highest in the country, and the state has not only a gift tax but also a luxury.

 

1. Juneau, Alaska

 

Millionaire Households: 1,109

Total Households: 12,986  

Concentration of Millionaires: 8.5% 

Median Income for All Households: $85,746

Median Home Value: $323,500

 

Like Anchorage, another Alaskan city with a high concentration of millionaires, everything is more expensive in Juneau. Chalk it up to the remote location of Alaska’s capital, which is tucked away in the southeast corner of the state hard against the Canadian border. Groceries alone cost one-third more than the U.S. national average, according to the Council for Community and Economic Research's Cost of Living Index. And while it helps to be a millionaire to live in Juneau, it's increasingly hard to become one. Much of Alaska's wealth is tied to the energy business, and a prolonged slump in oil prices is taking a toll. Indeed, Alaska is in the midst of its worst recession in three decades. On the plus side, Alaska is one of the most tax-friendly states in the union. Not only is there no state income tax, but the government actually pays residents an annual dividend.

 

Robert J. Pyle, CFP®, CFA is president of Diversified Asset Management, Inc. (DAMI). DAMI is licensed as an investment adviser with the State of Colorado Division of Securities, and its investment advisory representatives are licensed by the State of Colorado. DAMI will only transact business in other states to the extent DAMI has made the requisite notice filings or obtained the necessary licensing in such state. No follow up or individualized responses to persons in other jurisdictions that involve either rendering or attempting to render personalized investment advice for compensation will be made absent compliance with applicable legal requirements, or an applicable exemption or exclusion. It does not constitute investment or tax advice. To contact Robert, call 303-440-2906 or e-mail info@diversifiedassetmanagement.com.

 

The views, opinion, information and content provided here are solely those of the respective authors, and may not represent the views or opinions of Diversified Asset Management, Inc. The selection of any posts or articles should not be regarded as an explicit or implicit endorsement or recommendation of any such posts or articles, or services provided or referenced and statements made by the authors of such posts or articles. Diversified Asset Management, Inc. cannot guarantee the accuracy or currency of any such third party information or content, and does not undertake to verify or update such information or content. Any such information or other content should not be construed as investment, legal, accounting or tax advice.