The Investment Scientist

Archive for the ‘Life’ Category

images-83As 2014 draws to a close, my wife and I have sprung into action to save on our 2014 taxes. Here are a few things we do. We are no CPAs, so what we do is pretty easy to mimic.

Donate all the garbage. I couldn’t believe how many items in my household we literally didn’t touch, not even once, in the whole of 2014. Things like that are immediate candidates for donation. Things that fall into this category could be electronics, furniture, books, clothes, kitchenware, bedroom sets, used toothbrushes, etc. Ok, maybe not used toothbrushes, but just about anything you don’t use, you can find a better home for, and get a tax deduction for doing so. In some years, we’ve gotten $10,000 worth of deductions. Read the rest of this entry »

images-82Recently, a doctor nearing retirement age approached me with the question of how to maximize his social security income. He is 62, and his wife is 4 years his junior. He made substantially more money than his wife, and as a result, his PIA is $2400, and his wife’s PIA is only $1000.

PIA, or primary insured amount, is the monthly amount a retiree would get if he or she retires at the normal retirement age, currently 66. For every year earlier (or later) that one retires, one would get 8% less (or more). The youngest one may retire is 62 and the oldest is 70.

I’ve found over the years that many people give very little thought to maximizing their social security income, and they jump at the first opportunity when they turn 62 to claim their benefits. But in so doing, they could be leaving nearly half a million dollars on the table. Read the rest of this entry »

1398912_10152119934156756_1775782914_oSome of you may have already known that my hobby is improv comedy. Here is what happens during a performance. I go on stage with my fellow actors, we ask for a suggestion from the audience, and then we create a comedy play from scratch using that suggestion.

It just so turns out that many lessons I learn in improv are totally applicable to real life. Since after all, life is a just a big improv show. Nobody wakes up with a script in hand for how to live the day.

So allow me to summarize the top three lessons I’ve learned.

  1. First things first; be a great listener.

Read the rest of this entry »

images-65 A client of mine bought a fixed rate annuity a few years ago. She was told by the agent that it’s just like a savings account, only with a higher interest rate of 3%.

Recently, we took the money out in favor of a better investment, and boy was she in for a shock! There was a $17k surrender charge and nearly $3.6k in tax withholdings. All the interest she supposedly earned in the annuity went to the surrender charges, and now she has to pay income taxes on that interest!

Here is why a fixed rate annuity is nothing like a savings account.

1. A savings account is FDIC guaranteed, in other words, it has the full faith and credit of the US government behind it. A fixed rate annuity is NOT FDIC guaranteed, it only has the credit of the issuing company behind it. Think AIG! Read the rest of this entry »

ImageA few days ago, my wife came home telling me the story of a sweet old lady she had met at her army clinic.

She is a 75 year old lady from Thailand, married to an American veteran for 40 years. Her husband just passed away a few months ago at the age of 92.

She couldn’t stop telling my wife how much she missed her husband, that he had married her despite the fact that she was a divorced woman with kids and that she could barely speak English. She went on and on about how he had treated her like a queen, buying her all the pretty things women like and so on and so forth.

Now everytime she passes by her husband’s picture, she still cries; and yet the memory of her husband is all she’s got left, now that she has no income and the home she has lived in for 40 years is being foreclosed.

What happened?

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  1. ImageIn the past year, my business has grown by 40.7% as measured by the AUM. This comes from three sources: new clients, existing clients adding assets and client asset growth.

  2. My newsletter “The Investment Scientist” is read by over 4,500 people, representing a growth of 41.5%. This portends well for future growth of the AUM.

  3. I am grateful for the people who support my business, especially Nicole my assistant, Vanessa my editor, John my programer and the Fidelity support team.

  4. I am grateful for this year’s Nobel Economics Prize winners, especially Eugene Fama, upon whose theory I’ve built the investment approach that has served me and my clients so very well.

  5. I have started the process of ghostwriting a book on Physician Wealth Management, as well as redoing my website with a sharpened marketing message around the science of investing.

  6. I have won three storytelling contests in DC and Philly, and have failed to win at least the same number of contests.

  7. I have performed standup comedy to standing ovations as well as stoic reactions in corporate, charity and political events.

  8. I have found a new challenge and passion in improv comedy. I am thankful to my teachers Shawn Westfall and Anna Marie Trester, and my many classmates.

  9. My parents and in-laws stay with my wife and I for extended periods of time, helping us to take care of the kids, allowing me time to indulge in my passions.

  10. My kids are growing up strong, healthy, smart and caring, thanks to their mom who is also my wife. I couldn’t be more proud of them.


What are you thankful for in 2013? Share it with us in the comment section.

images-37Today I sat down with a bunch of professionals for our quarterly wealth management meeting. As the talks turned toward the implementation of the Affordable Care Act, I realized the mal-functioning website is the least of its problems.

In our group there is a professional, Andrea, who specializes in helping small to mid-sized businesses procure group health insurance. Andrea said insurance companies are cancelling old plans and giving their customers “upgraded” plans that cost more and provide less benefits.

This hasn’t just been happening in isolated cases, but is rather wide-spread. Why? For one, the ACA has many mandates, such as covering reproductive health. So if a man’s insurance plan does not cover a pap smear, he just lost his plan! OK, I made this up for comedy, but Andrea did mention a 55 year old woman losing her plan because it did not have maternity benefits.

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Author

Michael Zhuang is principal of MZ Capital, a fee-only independent advisory firm based in Washington, DC. He is also a regular contributor to Morningstar Advisor and Physicians Practice. To explore a long-term wealth advisory relationship, schedule a discovery meeting (phone call) with him.



You may also get his monthly newsletter, or join his Facebook page for regular wealth management insights. Michael's email is info[at]mzcap.com.

Twitter: @mzhuang

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