Let’s find some money!! The overture of the Trump Administration has become DOGE, the Department of Government Efficiency, playing this piece fortissimo. Across all departments of the federal government the process of efficiency has begun. The quest to eliminate the waste, fraud and abuse and reprioritize how the government is spending its money, or rather OUR money has taken center stage. It’s important as I do seem to recall, as many of you might, large deductions in my bank account each quarter last year … something coded IRS TREASURY.
We’re not intending to get political or into specifics here about how much was going to what cause in what country. What we do want to highlight is Culture and The Quest for Marginal Improvements. The way the Indiana Jones series is trending that might be the next movie title. But that nomenclature doesn’t bother us a bit here. We’re not trying to be flashy like Hollywood. We’re trying to be substantive, efficient and productive.
In financial services, The Quest for Marginal Improvements means efficiency essentially takes one of two forms: reduction of expenses or creation of income. Get down in the weeds with us here for a moment. We’re going to get some (metaphorical) dirt under our fingernails today.
As far as the reduction of expenses goes, there’s a reason why we insist on our clients creating a budget if they have not done so already. For us as your fiduciaries, our mission to change your financial world extends beyond the bounds of the allocations and investments we manage for you. The process of budgeting by its nature will identify some areas you are spending money on that are unnecessary. Maybe it’s a Hulu subscription for $9.99 per month you never use. Maybe it’s a $100 per month gym membership to an out-of-the-way gym that you never seem to get to. Or maybe it’s a $6 per month Oura ring subscription when you just maybe don’t like wearing jewelry in the first place. Perhaps it’s 20 trips a month to Fivebucks for premium coffee in the morning. We used to call it Fourbucks, but you know … inflation.
We’re not saying to cut out all the joys in life but take those Fivebucks trips for example. Five trips to Fivebucks per week is $25 times 52 weeks, which is $1,300 per year times 10 years = $13,000 on coffee over a decade. Whew! That adds up. I spent less on my last car, granted that was more than a few years ago. If you think that’s being cheap – you’re right! We practice what we preach here. We urge everyone to take an hour of your life and look over your bank or credit card statements. The improvements from cancelling a subscription or two are hugely impactful to your bottom line and your chances of success in retirement when viewed over decades.
Often the creation of income, the other way to become financially efficient, comes from a labor of love. Our Investment Committee yesterday spent hours on our Monthly Cashflow Fixed Income portfolio, one of two strategies we manage that takes all the dividends and interest earned during the month and ships the total of those directly to your bank account at the end of each and every month (unless you re-invest them). Our committee was trying to identify strong, stable ETFs that paid out the most yield for our clients. In other words, we were trying to find MORE MONEY for you! After examining a galaxy of ETFs in 14 different fixed income categories, we improved the yield of the portfolio from 6.18% to 6.38%! We realize no one is applauding here, because after all, it doesn’t sound very exciting. We’re talking about a 0.2% difference here, a marginal improvement.
On closer inspection though, it’s not insignificant. On a $300,000 allocation to our Monthly Cashflow Fixed Income portfolio (which is fairly common for our clients who are in the world of distribution) that 0.2% increase equals $600 per year, which equals $6,000 per decade or possibly $18,000 for a 30-year retirement period. But take the $600 per year for a moment – that buys 30 trips a year to Chick-fil-A for a couple … unless of course one of you gets the fruit cup instead of fries.
The Quest for Marginal Improvements is all about our value of Continuous Improvement. We promise to keep finding ways to improve your financial lives. It’s not always fun. Combing through 14 categories of Fixed Income ETFs can be mind-numbing even for us who love investments. But here at WTA you’ve found a culture dedicated to making marginal improvements. We don’t always get there, but we never stop trying.
So keep your ears open in your meetings for mentions of our Monthly Cashflow Portfolios. They are a product of our culture of making marginal improvements. They are a product of our squeezing every drop of juice we can from the retirement oranges you give us. For you they may represent a way to maximize the hard efforts you poured in over your working years to grow and cultivate those oranges. When it comes time to harvest your fields, please give us a call and let’s talk. If you listen to us, we’ll change your financial world …
Sincerely,
The WTA Investment Committee
