Tag: Cars

Lug Nuts

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John Wooden is the greatest college basketball coach of all time, winning ten NCAA championships as the head coach of the UCLA Bruins. The Wizard of Westwood paid attention to small details, especially socks and shoes.

Each season, Coach Wooden instructed his players on how to correctly put on their socks and tie their shoes because if a player had trouble with their feet, they would not play well. He wanted to eliminate blisters and untied shoes that slowed down his players.

In the book Wooden – A Lifetime of Observations and Reflections On and Off The Court by John Wooden and Steve Jamison, he talks about how all the parts are needed for a car to run correctly, but if it had loose lug nuts, the wheels would fall off. Lug nuts are cheap and cost about $45 for a box of 24, and I doubt anybody ever considers them when buying a new car, but they’re a vital component for a functioning automobile. Coach Wooden had star players like Bill Walton and Kareem Abdul-Jabbar, but if the other players on the court did not play well and support each other, the team would lose. Bench players, substitutes, and lug nuts help complete the process and make things work.

Successful investors must pay attention to small details, like fees and expenses. Review your advisor fees and expense ratios on your funds. Try to cut the number of funds you own as well. Your funds have significant overlap if you own a few dozen or more, and you don’t need four or five large-cap mutual funds. A quick search on Yahoo! Finance can help you research your fund’s allocation, holdings, and fees. The ADV highlights your advisor’s costs.

Also, check your spending and budget. Can you eliminate recurring payments or reduce nuisance fees?

Your 401(k) is another detailed battleground. If you own a retirement target date fund, you don’t need to own anything else. A key component in your plan is the employer match, and it’s paramount that you match the match. For example, if your employer offers a 5% match, contribute 5% of your pay to the plan. If your plan offers automatic rebalancing, select the annual option. An annual rebalance keeps your risk tolerance in check.

If you pay attention to the small details, they will add up to big wins.

Failing to prepare is preparing to fail. ~ John Wooden

May 4, 2023

Bill Parrott, CFP®, is the President and CEO of Parrott Wealth Management in Austin, Texas. Parrott Wealth Management is a fee-only, fiduciary, registered investment advisor firm. Our goal is to remove complexity, confusion, and worry from the investment and financial planning process so our clients can pursue a life of purpose. Our firm does not have an asset or fee minimum, and we work with anybody who needs financial help regardless of age, income, or asset level. PWM’s custodian is TD Ameritrade, and our annual fee starts at .5% of your assets and drops depending on your asset level.

Note: Investments are not guaranteed and do involve risk. Your returns may differ from those posted in this blog. PWM is not a tax advisor, nor do we give tax advice. Please consult your tax advisor for items that are specific to your situation. Options involve risk and aren’t suitable for every investor. Prices and yields are for today only and are subject to change without notice.

Next Week         

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Stocks are getting crushed, and investors want to know when they will recover. The S&P 500 is down 20% so far as investors react to rising interest rates, inflation, and war in Ukraine. Since 2000, there have been five bear markets with an average decline of 36% and a duration of 192 days.[1] When will this bear market end?

My Jeep is stuck at the dealership waiting for a new part. I’ve been waiting since May, and when I inquire about my car, they tell me it should be ready next week, and they have said next week for the past six weeks. In addition, I’ve been waiting for a new car, and due to supply chain issues, there is no official delivery date. Frustrating.

River rafting guides love to tell rafters that the next stop will be around the next bend, and if you’ve been rafting, you know rivers constantly bend, twist, and turn. The next bend could arrive in the next few minutes or hours, and no one knows, not even the guide.

When I was growing up, my mom’s standard answer was soon. When is dinner? Soon. When will we arrive? Soon. When can I open my presents? Soon. I was in the dark.

In short, no one knows what will happen in the future. The markets could recover next week, next month, or next year. I wish I had a better answer, but I don’t. I do know, however, that stocks ultimately recover. In the meantime, follow your plan, diversify your assets, invest often, and think long-term.

Rivers know this: there is no hurry. We shall get there someday. ~ A.A. Milne

July 6, 2022

Bill Parrott, CFP®, is the President and CEO of Parrott Wealth Management, located in Austin, Texas. Parrott Wealth Management is a fee-only, fiduciary, registered investment advisor firm.

[1] https://my.dimensional.com/dfsmedia/f27f1cc5b9674653938eb84ff8006d8c/39602-source/bulls-bears-and-long-term-benefits-of-stock-investing.pdf

What’s Under The Hood?

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The gear heads at my high school loved to pop the hoods of their muscle cars and gawk over the engines. Most were pristine on the outside but lousy on the inside; it was impossible to tell until the hood was agape. Likewise, it’s similar to investment models – on the outside, they all look the same, but when you look under the hood, they’re radically different.

The standard asset allocation model is 60 percent stocks and 40 percent bonds, but what does it mean? What constitutes the sixty percent, and how is the remaining 40 percent invested? Investment models vary from firm to firm and are not equal.

Our sixty – forty models hold funds managed by Dimensional, Vanguard, and Blackrock, and sixty percent of the portfolio invests in stocks diversified by size, type, sector, category, and country. The funds own thousands of companies, including Exxon, Pfizer, Amazon, Apple, Amgen, Dollar Tree, and Matador Resources. Technology is our largest allocation, followed by financial services and industrials. The United States accounts for most of the assets, followed by Europe, then Asia.

Our forty percent bond allocation is split evenly between corporate and government bonds with an average maturity of eleven years. We recently extended the bond maturities because of rising interest rates, which is counterintuitive. The last time we adjusted our bond holdings was March 2020, during COVID, when we sold most of our long-term bonds and bought short-term bonds with an average maturity of two to three years. It was a profitable trade because interest rates were falling, and we preserved capital with our short-term bonds as rates started climbing. Hopefully, we’re correct again – time will tell.

We use TD Ameritrade’s iRebal platform and screen our portfolios weekly, looking for changes to our allocations because we don’t want to get too aggressive or too conservative at the wrong time. We aim to maintain a close relationship with our benchmarks to keep our client’s risk tolerance in check. If we find portfolios that deviated from our pre-set tolerance bands, we rebalance them back to their original allocation.

As you invest and build your portfolio, check your fund holdings, allocation, and fees to ensure they align with your financial plan and goals.

The cars we drive say a lot about us. ~ Alexandra Paul

June 3, 2022

Bill Parrott, CFP®, is the President and CEO of Parrott Wealth Management, located in Austin, Texas. Parrott Wealth Management is a fee-only, fiduciary, registered investment advisor firm. Our goal is to remove complexity, confusion, and worry from the investment and financial planning process so our clients can pursue a life of purpose. Our firm does not have an asset or fee minimum, and we work with anybody who needs financial help regardless of age, income, or asset level. PWM’s custodian is TD Ameritrade, and our annual fee starts at .5% of your assets and drops depending on the level of your assets.

Note: Investments are not guaranteed and do involve risk. Your returns may differ from those posted in this blog. PWM is not a tax advisor, nor do we give tax advice. Please consult your tax advisor for items that are specific to your situation. Options involve risk and aren’t suitable for every investor.