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Proper Prior Planning Prevents Poor Performance

13 December 2017

As House and Senate members meet this week, in the joint conference committee to try to reconcile their respective versions of the tax bill, with the last day both chambers are slated to be in session being this Thursday, I want to share with you a little-known provision in the Senate tax bill.

Under the Senate bill, individual investors would lose the ability to specifically identify what shares of stocks and mutual funds they can sell to reduce a position. Instead, investors selling a partial position would have to sell their older shares first, a selling methodology known as “first-in, first-out.” Many times, this will result in a larger gain than under the specific identification method for individual investors.

By waiting until the last minute, in my opinion, Congress is rushing this bill, which may result in significant tax increases on many investors’ holdings which are held outside their retirement accounts, beginning in 2018.

This reminds me that “proper prior planning prevents poor performance.”

This was one of the key notes I learned from a friend, Carl Davis, some 20 years ago. He taught me this lesson as I was leaving him; it was raining, and he handed me an umbrella, with his business card taped around the handle. Carl told me to bring his umbrella back – and, if I forgot whom I had borrowed it from, the business card would remind me. And, next time, I should bring my own umbrella when the weather is threatening.

This is a lesson that has served me well – and helped me serve my clients, too. Thinking ahead, planning ahead. It doesn’t always work perfectly, and it isn’t a guarantee or panacea, but, filling my gas tank when it’s half full, paying bills before their due date, and being 5 minutes early, has worked out well for me. I can’t think of an exception, when it didn’t.

Again, proper prior planning prevents poor performance. Perhaps Congress should think about this, as its members rush to hammer out a workable tax compromise. It might serve them well, too, going forward.

Take care of things, before they take care of you!

Until next Wednesday –



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