How Using a Bookkeeper Can Help Grow Your Business

Business owners wear many hats. The newer the business, the more “jobs” we do while we grow our businesses. Can a bookkeeper help grow your business? I believe so. The more time we can concentrate on what we are best at the better. That means less time diving into spreadsheets and running our books. But bookkeeping is an essential part of any business. So much so I believe that a bookkeeper can help grow your business. So I ask:

Do you run a successful business but you are doing your own books?

Are you doing your own books because you are a solo entrepreneur?

Is Your CPA also your bookkeeper? I would think twice about that.

The terms “bookkeeper,” “accountant,” and “CPA” are often used interchangeably. But they are definitely not the same. These three professionals are very different in their scope of work, their licensing and professional status, and their standing with the Internal Revenue Service. But, many business owners try to lump them together and fine someone who can handle all three.

I think that is a mistake.

I set out to get some answers from Parker Stevenson. I have known Parker for a while now. Parker is a managing partner and the Chief Business Officer at Evolved Finance… a bookkeeping firm in California specializing in helping online entrepreneurs build a more profitable and stable online business.

Check out this interview in its entirety as we discuss how to handle bookkeeping as a small business owner.


Colin Exelby, CFP®

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What is an I Bond and Are They a Good Investment?

What are I Bonds?  How do you invest in I Bonds?  Are I bonds even a good investment? 

For the better part of the past 30 years, the answer has been no.  But, that may be changing. I bonds, also called Inflation-Linked Bonds are issued by the United States Government and are designed to protect the value of your cash from inflation.

How do they work?  Stick around and I’ll explain the ins and outs of I bonds and whether they may deserve a place in your portfolio. If you would rather watch a short video. I put that together on YouTube called How to Earn 7.12% Interest with This Government Bond. You can access that here.


Every night when I turn on the news there is a piece on inflation and how it is hurting the pocketbooks of Americans.  It’s almost comical how often inflation is mentioned on the news, But it’s true… and it’s on people’s minds.

The annual rate of inflation in the United States hit 6.8% in November 2021.  This is the highest rate in more than 30 years as measured by the Consumer Price Index (CPI).

If you have money sitting in checking accounts, savings accounts or even high yield savings accounts your money is probably earning close to 0%.  That is a steep price to pay for having access to cash and the FDIC insurance that goes along with traditional bank accounts.  If the cost of things you buy is increasing at 6-10% and your idle cash is earning 0%, you are guaranteed to lose 6-10%.  Let me say that in a different way.

“Inflation is the most devastating tax because you don’t realize it is happening.”

You may have the same amount of money in your checking and savings accounts but it is buying 6-10% less.  Uggh.

What if I told you that there is a little-known US government-backed bond that would currently pay you 7.12% annualized on your money? It’s true and It’s called an I-Bond. Investors are becoming more and more interested in stock and bond market alternatives that may be higher returning, lower-risk investments and this bond has the potential to do just that. Today’s 7.12% annualized yield is far higher than any other government-guaranteed interest rate that I have seen.

What is an I bond?

I-bonds come from the same family of bonds as the much more popular but much lower-yielding series EE bonds. I-bonds are a unique, low-risk investment issued by the U.S. Treasury to protect your money from losing value due to inflation.  Because I bonds are issued by the U.S. government they have nearly zero risk of default making them a very safe investment.

How is the interest calculated?

I bond interest is calculated by combining a fixed interest rate and an inflation-adjusted rate.  I’ll discuss that more in a moment.  I bonds earn the interest monthly, but you don’t get access to the interest payments until you cash out the bond.  The interest payment is automatically added to the bond’s value twice a year.  This means the principal can compound semi-annually as the interest earned then pays interest.  Wow, that’s a feature most bonds don’t have.

I bond interest consists of 2 parts, a fixed rate set at purchase and an inflation rate that changes every six months, typically November 1 and May 1.  You may not have heard of these I bonds because for decades they paid next to nothing. But, in 2021 as inflation has ramped up so have the payments.

The November interest payment credited is an annualized rate of 7.12%. It represents a fixed interest payment of 0% and a semiannual interest rate of 3.56%.

That means, for the six months after purchase you would earn a return of 3.56%. Then the interest rate is reset at whatever the government stated inflation rate is at that time.  If inflation is the same at that time, you would earn another 3.56% for the next six months making an annual return of slightly more than 7.12% because of the compounding effect.

How are I-Bonds taxed?

The owner of the I bond has the option to pay the Federal tax on the interest annually or when the bond is cashed in.  Essentially, they could act just like a non-deductible IRA contribution does where you don’t pay any tax on the IRA assets until they are withdrawn.

Additionally, Series I bonds are exempt from state and local taxes on interest.  This makes them even more attractive in high-tax states like California and New York because your tax-equivalent yield could approach 8%.

When do I bonds mature?

I bonds have a stated maturity of 30 years but don’t worry you don’t have to hold them that long.  That is just the point that they stop paying additional interest.

An I bond must be held for a minimum of 12 months after purchase.  But, after that can be redeemed at any time.  There is a catch though.  If you redeem an I-bond between years two and five, the prior three months of interest are forfeited. But, at today’s low-interest rates, that penalty would most likely still yield you more than sitting in a checking or savings account.

How to purchase an I bond

You can invest in an I bond electronically online at the TreasuryDirect website.  Amazingly, the government website is pretty easy to use. Just answer a few simple questions, link your bank account and make your investment. There is not a secondary market for these i-bonds so you can’t resell them, you must redeem them directly through the U.S. government.

What are the I Bond purchase limits?

Digital I bond purchases are limited to $10,000 per social security number per calendar year. You must have a social security number and either be a U.S. citizen living anywhere in the world or a U.S. resident.

As a parent, you can also invest in I Bonds on behalf of a minor child. For example, a married couple with 2 children could invest up to $40,000 each calendar year into I bonds.  $10k for each spouse and $10k for each child.

If you have a trust, you can invest in I-bonds via the trust. But, you cannot invest corporate or partnership money in I bonds.

It is extremely difficult to invest via an IRA or Roth IRA. Technically, it appears you could find a custodian willing to invest the money on your behalf if you self-direct the IRA, but the hoops may be significant.  Additionally, you would lose out on one of the main benefits of I-bonds, the tax deferral, since retirement accounts already have that benefit.

In summary, if you have money sitting in checking or savings accounts that is not earmarked for growth investing, and will not be needed in the near future, I think it makes sense to take a hard look at investing in I bonds.  I realize that every person’s financial situation and risk tolerance is different.  This is not investment advice.  Do your own due diligence and discuss I bonds with your financial and tax advisors.

Interest rates are subject to change.  Inflation could come back down and a year from now these bonds might not pay much of anything. Or… inflation could persist and they could continue paying interest above other comparable investments.  The future is unknowable but for the next six months, we know that these bonds will pay 7.12% annualized.


Colin Exelby, CFP®

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The Top 5 Reasons a Solo 401(k) is Better than a SEP IRA

If you are a business owner AND you have a SEP IRA, don’t invest a dollar more until you read this post on the best-kept retirement plan secret in the industry. As we close in on year-end and start preparing for 2022, I wanted to talk about retirement plans for small business owners. The top retirement plan used by solo entrepreneurs has long been the SEP IRA. But, why? A lesser-known retirement plan called the solo 401(k) or individual (k) may in fact be a much better option for many small business owners. Let’s check out the top 5 reasons a Solo 401(k) is better than a SEP IRA for small business owners.

I almost want to call this retirement plan a secret, because so few business owners, CPAs, financial advisors, or attorneys really know about what it is and what a benefit it can be. So stay tuned, and I will discuss my 5 Reasons a business owner should consider the Solo 401(k) for their business.

In my opinion, one of the most exciting trends in the small business world is the growth of million-dollar, one-person businesses.  In fact, The U.S. Small Business Administration reports according to the most recent census data that the number of small businesses with no employees increased from 15.4 million in 1997 to 25.7 million!  Do you know what’s crazy?  40,000 firms with only one employee do over $1 million in revenue!  If you are looking for a great book about this trend, check out this book by Elaine Pofeldt.  It’s truly eye-opening.

Look… For decades, the go-to retirement plan for a solo entrepreneur, sole proprietor, or single-member LLC has been the SEP-IRA.  It’s easy to implement, easy to understand, and easy to administer.  

But, in 2002, major changes to the Solo 401(k) from the Economic Growth and Tax Reconciliation Act (man that’s a mouthful) made this new option extremely attractive.

The solo 401(k), sometimes also called the Individual (k) or Single (k) has all the attractive features of a large corporate 401(k) plan, but with a few advantages specifically designed for the self-employed.

*Are you the type of person who is always rushing around at the last minute to get to a cocktail party? 

*Are you often late to family functions? 

*Are you the person who misses the 30-day free period and gets charged a full year for a new app? 

Then you are a SEP IRA type of person.  

On the other hand, Is arriving on time for a meeting, 15 minutes late? 

Do you plan your travel ahead of time with Waze? 

Do you get preferred seating on flights and dining because you plan ahead? 

Then you are a Solo 401(k) kind of person.

It’s still amazing to me, that in 2021 there are still so many business owners, CPAs, attorneys, and financial advisors who don’t understand these plans.  So, I decided to put together a short cheat sheet of my Top 5 Reasons to consider the solo 401(k) if you haven’t already.

#1  You can put a TON of Money into a Solo 401(k), potentially more than a SEP IRA

Often small business owners run into the limits that say you can only contribute up to 25% of your compensation.  What If you want to contribute more?  You can often contribute more in a Solo 401(k) than with a SEP IRA significantly reducing your current tax bill.

If you are the business owner, you wear two hats.  You own the company AND you are an employee of your company.  In a Solo 401(k) You can contribute as an employee AND as an employer.  That’s right.  The solo k allows you to contribute up to the annual 401(k) limit ($19,500), plus the age 50 catch up as an employee ($6,500), plus profit-sharing contributions as an employer.  In 2021, those totals can get you up to $58,000 if you are under 50 and up to $64,500 if you are over 50.  These numbers typically are adjusted upward somewhat each year by inflation. 

In addition, the solo 401k can be used for your spouse if they work AND earn income in the business.  Theoretically, if you and your spouse are both working in the business you could get $129,000 into this plan as a husband and wife in 2021!

#2 Solo 401(k)s are Simple to Set Up, much simpler than a corporate 401(k) that can take months to establish

…but they have deadlines associated with them.  Up until 2020, you had to get your account established by December 31, but the SECURE ACT of 2020 gives solopreneurs until the business tax deadline of April 15th to set it up.  S Corps and LLCs have until March 15th to be set up.  HOWEVER, if you set up a plan after December 31 you cannot make employee deferrals for the previous year, only profit sharing.  This is what I mean by planning early.  You don’t want to lose out on that benefit.

#3  You Can supercharge a Roth contribution to a Solo 401(k).

You can tailor a Solo 401(k) to your tax situation each year by having a Roth and a Traditional Component.  Many business owners are highly compensated and would be ineligible for a Roth IRA or have to jump through hoops to perform a back-door Roth conversion.  But, there aren’t any income limitations for a Roth 401k. You can take advantage of the current low tax brackets by electing to defer taxes in one year by using the traditional 401(k), and the next you may elect to pay tax now and then never get taxed again on the earnings by contributing to the Roth.  Or you could do both!  It’s completely up to you.  I love the flexibility.

#4 Are you over age 50, The Catch Up Contribution is Higher in the Solo 401(k)

Business owners over the age of 50 have an added contribution advantage. In 2021, 401(k) participants can add an extra $6,500 into the plan. This amount is typically raised every few years to allow even more. The catch-up contribution applies to solo 401(k) plans but is not available in SEP IRAs. This catch-up contribution can be extremely powerful and is a clear advantage and one of the primary reasons a solo 401(k) is better than a SEP IRA.

#5 You can borrow against the balance

A SEP-IRA cannot allow borrowing, only premature distributions that often result in taxes and penalties.  But, you can put provisions in a Solo 401(k) that allow you to borrow against the funds like a traditional 401(k). This can provide much-needed penalty-free access if an unforeseen need like medical expenses arise.

Solo 401(k) vs SEP IRA

Bottom Line, if you are a solo entrepreneur or small business owner and your CPA or financial advisor hasn’t considered a solo 401(k) I suggest you take a hard look. For more information, I contributed to a great article in Forbes that Christopher Carosa wrote called  Is A Solo 401(k) Or An SEP-IRA Better For A Small Business With No Employees?

Look, running a business is hard work.  Make sure you are taking advantage of the perks of being a small business owner to reduce your taxes now and in the future,

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Should You Borrow to Invest?

I often get the question of whether you should borrow to invest. So… this week I decided to put together a short video on the topic. Borrowing money today to invest in the future is a strategy many people use to reach their personal and financial goals — whether it’s buying a house, paying for an education or starting a business.

Borrowing is a difficult subject because every financial situation is different. What is relevant for one family may not be for another but the math is true for everyone. When you borrow to buy a home, a business, or make an investment you are leveraging other people’s money.

One of the considerations is what interest rate you are paying for access to that money but also what you intend to do with it and the costs involved. Typically, you would want an opportunity where the cost to borrow the funds is less than the potential return earned. But that isn’t the only consideration.

Leverage can work for you or against you depending upon the situation so understanding what you are doing, the risks involved and the potential benefits is smart. I hope this primer helps you be better informed when you decide to borrow.

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Apartment Rents Head Higher… Again

Apartment rents continue heading higher. According to a new report from Apartment List, the national median apartment rent has increased 13.8% since January! Pre-pandemic, average annual growth from 2017-2019 was 3.6%. Solid, but not spectacular. This growth rate is more than double the stated U.S. inflation rate.

Average rents for an apartment across the United States increased again in August by 2.1%. They were up 2.5% in July. This has been a consistent theme in 2021.

In August, the Supreme Court rejected the Biden administration’s latest moratorium on evictions, ending a political and legal dispute that has lasted over 18 months. It’s no wonder rents have increased. Supply for quality apartments like everything else is low, albeit artificially. This has pushed rent for available apartments higher.

Interestingly, some of the biggest increases have come in formerly moderately priced places. Many of the mid-sized markets are booming. For instance, rents in Boise, Idaho are now up 39% since March 2020!

But, on the other side of the ledger, rents are still below pandemic levels in San Francisco, Oakland, San Jose, Fremont, Minneapolis, Seattle, Jersey City, and Washington, DC.

For those looking for a place to live, who are priced out of buying a home, apartment living is taking a bigger bite out of the paycheck. Just another way Americans are seeing their expenses rise.

For rental owners, this is good news, to help offset the rents they have been unable to collect during the moratorium. Now, that it has ended, it will be interesting to see if a flood of evictions shows up in suddenly available apartments.

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What is Your Human Capital and How Best to Protect It

In addition to making investments in your career to maximize your value, it makes a lot of sense to make investments to protect your ability to grow and maximize your earning potential. There are numerous videos and social media articles on the best ways to produce more leads, market more efficiently, reduce your debt… but I have seen very few with an emphasis on protecting what you are building. For that reason, I decided to produce this video.  In it explain what human capital is and how best to protect it.

Look…Young people today, and by young I mean under 35, can expect to have by some estimates upwards of 10 different career steps by the time they eventually retire. Early in your career you often have a small amount of savings, the beginnings of a retirement account, and debt acquired from schooling and furnishing an apartment or home. A traditional balance sheet would show minimal net worth. However, those basic balance sheets don’t take into account the biggest financial asset you possess… a 30+ year stream of labor income often called human capital. An individual who has just completed schooling and is venturing into the workforce should try to grow and protect that income stream.

For practicality, let’s look at the following example…

No alt text provided for this image

An individual graduates from a four-year school at age 22 and achieves the average salary for a college graduate in 2015. According to NACE’s Fall 2015 Salary Survey, that number is $50,651. Let’s now assume that individual increases their income by 5% annually. Let’s further assume they work until age 67 and their average effective tax bracket during their lifetime is 25%. If we assume a 3% annual rate of inflation, the after-tax inflation-adjusted present value of their cumulative income is $2,613,559. If you earn more, grow faster, or work longer that number is even larger.

The biggest risk to that individual is a major accident that dramatically or completely reduces the ability to produce and grow their income. Fortunately, there is a way for us to protect that future income stream so that you reduce the risk of bankrupting yourself and your family.

Long-term disability insurance is a product that is designed to replace a significant portion of your future earnings power.

Long-Term Disability Insurance

Long-term disability insurance should be in place until you permanently decide to stop working. Your future labor is often the most lucrative and important asset you will have. Your ability to work, grow your skillset, and provide a living for yourself and your family should be of primary importance.

As a financial advisor, I believe every working adult should have long-term disability insurance appropriate to protect the cumulative after-tax value of their future income.”

However, most Americans do not. In fact, according to the Social Security Administration, 68% of private-sector employees do not have long-term disability insurance. I used to be one of those. It took me a while to think about my future income as a financial asset. The more I invested in myself the larger the present value of that future labor became. I began to wonder, what if I had an accident while skiing? What if a drunk driver hit my car while coming home from work? What if I caught a debilitating disease?

One out of every four 20-year-olds will become disabled before they retire. Additionally, medical problems were a primary reason for 62% of all personal bankruptcies filed in the GFC (Great Financial Crisis) of 2007-2008. In my opinion, if you are going to invest in growing your future income, you should be willing to protect it from catastrophe.

Insurance isn’t to protect against average, everyday mishaps.

It is to protect against an unforeseen catastrophe. I don’t want to think about it, but if an accident happened and I was unable to work and I didn’t have disability insurance the following would ultimately happen. First, my income and business would be gone. Second, my wife would either have to quit her job to care for me and lose her income too, we would have to hire help or my elderly parents would have to care for me. Each of those scenarios puts not only my immediate family but also my extended family at financial risk.

Disability insurance is the one form of insurance that each working adult should have. If you would like to discuss this topic in more detail as it relates to your financial plan please do not hesitate to reach out at

Colin Exelby owns Celestial Wealth Management, LLC where he lives and works in Towson, MD. Mr. Exelby has appeared in The Wall Street Journal, CNBC Grow, US News World and Report, Fortune, Business Insider, Student Loan Hero, and many more. Find him at

This material contains only general descriptions and is not a solicitation to sell any insurance product or security, nor is it intended as any financial or tax advice. Guarantees are based on the claims-paying ability of the issuing company.

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What is the Worst State for Taxing Retirement Income?

Being able to live where you want during retirement is one of the great discussions a family can have. COVID-19 has made that conversation even more top of mind. What is the worst state for taxing retirement income? Those that are retired should look out for three types of taxes to help determine whether a state is retirement-tax friendly… social Security and Pension taxes, property tax, and sales tax.

Shane Murphy over at MoneyWise just penned a great article that outlines The 15 Worst States for Taxing Your Retirement. Here is the list of the 15 worst states for taxing retirement.

  • 15. Massachusettes
  • 14. Ohio
  • 13. Maryland
  • 12. Maine
  • 11. California
  • 10. New York
  • 9. Illinois
  • 8. New Jersey
  • 7. Rhode Island
  • 6. Vermont
  • 5. Minnesota
  • 4. Wisconsin
  • 3. Kansas
  • 2. Connecticut
  • 1. Nebraska

Interestingly, outside of California, the list is comprised of the NorthEast and MidWest.

If you are considering retirement or have family who is considering retirement in one of the listed states, check out how they tax your retirement here. Make sure to include these assumptions in your retirement plan. Keeping more of what you make can help you efficiently, maximize retirement.

Thanks for checking out the blog. 2020 sure has been an interesting year filled with twists and turns. I hope some of the posts here have been able to help you plan for a better future. Here’s to a profit filled, happy and healthy 2021!

Get Clear. Be Clear.

Colin B. Exelby, CFP®

* The information here is for educational purposes only. You should consult with your tax advisor before making any financial decisions related to taxes.

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How to Inflation Proof Your Portfolio

Did you know that bacon costs 11.1% more this year than last? Virtually everything we consume has seen price increases over the last year.  Of course, last year we were in the middle of a lockdown, and demand for most things fell significantly. It’s reasonable to have a little snap back right?  Maybe, but to this degree? Today I will explain what inflation is, its effects on your cash flow and how to invest your money to potentially inflation proof your portfolio. Don’t invest your hard-earned savings until you watch this video!  Join me on YouTube as I explain what I think is the best investment strategy.

Let’s get back to those bacon prices.  Man, up 11% in one year.  And let’s not even talk about the prices for Steaks or Even chicken wings!

What is Inflation?

Inflation is a term used to describe the increase in prices of goods and services that we need to live.  It is also the byproduct when government policy collides with supply and demand. The government has continued to create U.S. Dollars to fund all of the different stimulus packages aimed to get the country back on its feet. As more and more dollars enter circulation and are put into the hands of Americans, those dollars are chasing the same or in some cases fewer goods and services. It increased the prices for many things we use on a day-to-day basis.

The most recent inflation report for July of 2021 showed that overall headline inflation increased 5.4% over this time last year.  It’s the highest 12-month increase since 2008.

Note: The current recession’s end date is undetermined. Source: Bureau of Labor Statistics By Ella Koeze

It’s no wonder that on Google Trends, searches for inflation in 2021 have gone through the roof compared to the previous fifteen years.

Here are some specific price increases I pulled from the report.

  • The average price of a used car sale increased a whopping 41.7% from last year!
  • The average price of a hotel room jumped 24.1% over last year
  • Gasoline prices are up 41.8%
  • Utility priced gas is was up 19%
  • Car and Truck rentals up 73.5%

Most everything else was up in the 3%-7% range.

What is clear to most people is that it is more expensive to live today than it was twelve months ago.

What can you do?

If your cash flow isn’t increasing, your purchasing power is decreasing. It’s as simple as that. Finding and acquiring assets to add to your portfolio that typically perform well when costs are increasing is a much different strategy than when prices are stable. For instance, high-growth companies often underperform because the value of their future cash flows gets diminished. But, companies with high-quality, dependable dividends often get rated higher because of the consistency of their current cash flows.

Fixed-rate bonds, cash, and CDs often lose purchasing power as costs rise. But, real estate that throws of rental income typically does well when inflation rears its ugly head. That’s because those rents can be adjusted upward as costs escalate.

Additionally, investing in things that if you dropped them on your foot would hurt (commodities like gold, silver, lumber, aluminum, and copper for example) often outperform when inflation picks up.

Investing in international companies, especially those in emerging markets can provide benefits due to the exchange rates. Historically, investing overseas has the potential to help portfolios of U.S. investors when inflation is picking up.

While none of these strategies are guaranteed to work, and past performance is no guarantee of future success, these strategies may have the potential to help your portfolio if our cost of living continues to rise.

If you have any questions on how you could potentially employ these strategies book a meeting with me at my website or speak with your financial advisor.

Till Next time!

Colin Exelby, CFP®

This post is not intended to provide personal investment advice and it does not take into account the specific investment objectives, financial situation, and the particular needs of any specific person. Investors should seek financial advice regarding the appropriateness of investing in financial instruments and implementing investment strategies discussed or recommended in this post and should understand that statements regarding future prospects may not be realized. Any decision to purchase or subscribe for securities in any offering must be based solely on existing public information on such security or the information in the prospectus or other offering document issued in connection with such offering, and not on this post. This post should not be regarded by recipients as a substitute for the exercise of their own judgment and readers are encouraged to seek independent, third-party research. Investments in general and, derivatives, in particular, involve numerous risks, including, among others, market risk, counterparty default risk, and liquidity risk. No security, financial instrument, or derivative is suitable for all investors. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. • The fast price swings in commodities and currencies may result in significant volatility in an investor’s holdings. Securities and other financial instruments discussed in this report are not insured by the Federal Deposit Insurance Corporation and are not deposits or other obligations of any insured depository institution. 

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The Worst Mistake When Investing is Giving in to Your Emotions

We are all emotional. Some of us more so than others. We are pre-programmed with protective reactions designed to keep us alive. However, those same protections can cause pure havoc on your investing strategy. Wall Street has an old saying that the market is driven by just two things… greed and fear. You can do all the analysis in the world, or have the best investment strategy, but if your investment decisions are driven by your emotions you are in trouble. The worst mistake when investing is giving in to your emotions. It’s incredibly hard for many and downright impossible for some. Since the COVID-19 fueled stock market crash in 2020, we have been on a non-stop, low-volatility rebound. IN fact, the COVID recession was just officially marked as the shortest recession in U.S. history! Is a period of heightened volatility on the way? If so, make sure you check your emotions at the door.

Greed. Fear. Envy. Jealousy.

There has been much written in financial academia about this topic known as behavioral finance, which is devoted to the topic of understanding market psychology. I even wrote a blog post back in 2018 with some helpful books addressing this very issue. Keeping a cool head and sticking to your strategy is fundamentally important to achieving long-term investment success. Unfortunately, it’s also challenging.

In fact, Charlie Munger, who has been Warren Buffett’s partner at Berkshire Hathaway since they were kids, spoke about the worst mistake when investing during a speech to Harvard Law School back in 1995. During the speech, titled “The Psychology of Human Misjudgement,” Munger picked out “bias from envy/jealousy” as one of his 25 leading causes of human misjudgment.

Well, envy/jealousy made, what, two out of the ten commandments? Those of you who have raised siblings you know about envy, or tried to run a law firm or investment bank or even a faculty? I’ve heard Warren say a half a dozen times, ‘It’s not greed that drives the world, but envy. Here again, you go through the psychology survey courses, and you go to the index: envy/jealousy, 1,000-page book, it’s blank. There are some blind spots in academia, but it’s an enormously powerful thing, and it operates, to a considerable extent, o­n the subconscious level. Anybody who doesn’t understand it is taking o­n defects he shouldn’t have.

-Charlie Munger

Most of us will suffer from envy or jealousy.

Seeing a neighbor make a killing through some stock that you didn’t own is grueling. Seeing a co-worker’s daughter become a millionaire investing in some digital currency you never heard of is rough. Envy and jealousy are part of the human brain and can be avoidable. If it’s unavoidable, we should do our best to be aware of it, embrace it, try to catch ourselves, and take action to stop these emotions driving decisions.

When we succumb to greed, envy, and jealousy we tend to take more risks than we normally should. We act with less research and less thought and that is the foundation for poor decision making. That is often when we begin to pay the “Tax on Stupid”, as I like to call it. Because, more times than not, making investment decisions out of greed, envy, and jealousy come back to bite us in the ass.

The converse is also true. Panic selling has turned many millionaires into thousandairs. (Is that even a word?) Panic selling has ruined retirements, caused undue stress and anxiety. But, it’s also natural. The number of posts I have seen making fun of people who invested their savings in Bitcoin at its $63,729 all-time high in 2021 and then panic selling at a loss now that it is trading under $30,000 is insane. Cryptocurrency seems to be the current prime example of greed, fear, jealousy, and panic.

Whenever volatility in the financial markets increases more investment mistakes occur.

By now, you have probably seen the famous Wall Street studies about what your returns would be if you missed the 10 best days in the market each year. It’s one of the most common statistics spewed by the buy-and-hold crowd. What Wall Street fails to tell you is what your returns would be if you missed the 10 worst days in the market each year. For those inclined, here is one of the best papers written on this topic, called Missing the 10 Best.

Once analyzed, the data pointed to the fact that your returns increased substantially if you missed the 10 best days or the 10 worst days, but if you missed all 20 days your returns were even better, with LOWER volatility and more nights with good sleep! Further, those 10 best and worst days often clustered together during periods of heightened volatility as the financial markets already started declining when investors tend to let their emotions get the best of them. The conclusion was that it may be impossible to devise an investment strategy that could profit by missing either-or, but there are investment strategies that aim to take advantage of the “clustering” of up and down days by avoiding them altogether. If you would like to discuss those strategies, send me a message or feel free to book a call with me at


Greed, Fear, Envy, and Jealousy are inherent in most of us and are dangerous emotions for investors.
The stock market has historically risen roughly two-thirds of the time.
After rising for a prolonged amount of time with low volatility, investors typically take more risk than they realize.
The stock market’s return occurs when the market is already uptrending.
Volatility is much, much higher when the market is already declining.
Most of the best and worst days in the market occur when the market is already declining.
Fear takes over in a declining market exacerbating the volatility.
The Worst Mistake When Investing is Giving in to Your Emotions
Keeping a rational, level head in times of greed and fear is hard but a necessary part of successful investing.

Til Next Time, Get Clear. Be Clear.

Colin Exelby, CFP®

The post The Worst Mistake When Investing is Giving in to Your Emotions appeared first on See The Forest Through The Trees.

What is the Best Investment Strategy?

You can do all the research in the world and find the best returning portfolio but that strategy may not be the best strategy for you. Maybe you just started investing, or you are reassessing your investment strategy.  One of the most widely searched investment phrases is, “What is the best investment strategy?” Don’t invest your hard-earned savings until you watch this video!  Join me on YouTube as I explain what I think is the best investment strategy.

OK, maybe you just started investing, or you are reassessing your investment strategy.  One of the most widely searched investment phrases is, “What is the best investment strategy?” You can add whatever you like to the end of that search term, like…

  • In 2021
  • for young investors
  • for retirees
  • today
  • for me
  • for the long term

As a Certified Financial Planner™ Professional, I get asked that question all the time. It’s important to remember that I am not specifically endorsing any of these strategies and that factors such as your own personal financial situation should play a significant role in your investment approach.

Often, one of two approaches is made toward figuring out the best investment strategy.  On one hand, you have the quantitative analysts and professional money managers.  They will point to decades of performance and risk adjusted returns of different asset classes, trading strategies, or fund managers.  On the other hand you have the approach that you can’t beat the markets and that a better strategy is to buy and hold for the long-term.

What if I told you that there is a third strategy that may work even better?  Don’t worry, I’ll get to it, but first let’s talk a little more about these first two approaches.

What is the Best Investment Strategy: Factor Investing?

Over time, it has been shown that there may be certain risk premiums available in the market, often called factors.  These factors are the foundation for numerous quantitative and qualitative investment strategies.  These strategies assume that markets are not always efficient at pricing securities and that participants in the market are not always rational in their decision-making.  Here are the six most common factors used in investment strategies

  • Value. Stocks that have low prices relative to their fundamental value have historically outperformed the market and were made popular by Benjamin Graham and Warren Buffet. This is commonly tracked by price to book, price to earnings, dividends, and free cash flow. 
  • Size.  Historically, portfolios consisting of small-cap stocks exhibit greater returns than portfolios with just large-cap stocks but also have more volatility. Investors can capture size by looking at the market capitalization of a stock.
  • Momentum. Stocks that have outperformed in the past tend to exhibit strong returns going forward. A momentum strategy is grounded in relative returns from three months to a one-year time frame.
  • Quality.  Quality is defined by low debt, stable earnings, consistent asset growth, and strong corporate governance. Investors can identify quality stocks by using common financial metrics like a return to equity, debt to equity and earnings variability. 
  • Low Volatility.  Empirical research suggests that stocks with low volatility earn greater risk-adjusted returns than highly volatile assets. Measuring standard deviation from a one- to three-year time frame is a common method of capturing beta.
  • Illiquidity.  Studies over time show that investing in private markets such as venture capital and private equity can provide returns above public markets for extended periods of time.

Theoretically, building a portfolio adjusted for risk tolerance and time horizon comprised of some or all of these factors could be put together to provide better risk-adjusted returns than the overall market.  Back-testing has shown that to be the case over specific periods of time, but past returns are no guarantee of future success.  For those looking for a deeper dive into factor investing, there is a great five-part webinar created by Rob Arnott’s team at Research Affiliates.

Typically, there is a recent winner, whose strategy has outperformed all others in the recent past.  As I write this, the winner de jour is Cathie Wood and her Ark Invest conglomerate.  She is currently celebrated in the media for her unorthodox approach toward investing in companies that are “disrupters” and she has built an investment empire with legions of fans.  In order to beat the market, you obviously need to invest differently from the market and she definitely invests differently.

But, if you go back in history decade by decade, you will find an investment manager or strategy that was hot at the time that fizzled out in the years after.  If you were able to get in early, ride the wave, and get out in a timely manner you did great, if not….  Well, you were often out of luck.

What is the Best Investment Strategy: Buy and Hold Indexing?

The second approach has its champions as well.  Most notably, Jack Bogle of Vanguard.  This approach states that markets are inherently efficient and consistently pricing in all available information.  It also states that participants are rational, always taking calculated risks.  This approach aims to capture the long-term returns available in the global market by owning all the investable securities of a given index, the good, the bad, and the marginal because it is impossible to segment them into “winners and losers” in a cost-effective way.

Again there are numerous studies that show during specific periods of time very few active strategies will outperform the markets as a whole.  Proponents of this approach will argue it is a waste of time to implement other strategies.

So, which is it?  Which is a better way to invest?  What is the best strategy?

But are we even asking the right questions?

Studies have shown that over time, in the public markets, the small-cap value stock asset class has the highest returns.  It also has the highest volatility.  Private equity and Venture Capital have been shown to have even higher returns over time but require you to lock up your money without access for years, even decades.

If you base your investment strategy on what has provided the highest returns in the recent past or even over the long-term, in many cases you will be disappointed.

What is interesting to me is that many investors are asking the wrong questions.  There are plenty of pros and cons of each type of strategy.  The real question to ask is what is the best investment strategy for me.  Every individual situation is different.  Every family’s goals are different and what is the best strategy for one family may not be for another.

In my opinion, the best investment strategy for you is the third option.

I believe the best investment strategy is one that you will stick with.

What is the point of having the highest returning, most efficient portfolio if you take too much risk when times are good and panic sell when times get tough?  This happens more than you would think.  It also happens more often with larger sums of money when we get closer to life events, like retirement because the volatility of an employed strategy becomes too much to withstand.

The “Tax on Stupid”

While understanding historical returns, expenses, and tax efficiency are very important, all things being equal, the more important question is what strategy should I employ that will keep me from paying what I like to call the “tax on stupid”.

The “tax on stupid” is what I like to call the penalty for making an emotional or uninformed decision.  It’s the decision we realize in hindsight was made out of panic, greed, or not doing enough due diligence.  You know the ones.  

  • Investing too much in one company only to see it plummet in price or even go bankrupt.  (Enron and Eastman Kodak come to mind)
  • Panic selling stocks in 2003 as the technology bubble burst
  • Buying expensive real estate in 2007 because real estate “never declines”
  • Panic selling stocks in 2008 as the financial crisis amplified
  • Panic selling gold in 2013 as it fell swiftly from it’s all time high
  • Panic selling stocks in 2020 as the COVID pandemic reared its ugly head

When times are good, people often underprice risk and become too greedy.  When times are tough, people often overprice risk and become too fearful.  Its unfortunate, but it’s human nature, especially when it applies to your hard earned savings. 

In my opinion, there are many approaches that can work for your long-term goals.  What is more important is having a strategy that fits your risk tolerance, goals, and time horizon AND is one that you will stick with.  That is where a good financial advisor can add value.  In fact, Vanguard believes that too.  They put together research that shows how good financial advisors can add roughly 3% annually over time for many families. I believe that coaching is one of the great keys to success.  Working with someone who is disconnected from your money, who puts your interests first, and can help coach you through your financial life can add significantly to your net worth. 

TIl Next Time,

Colin B. Exelby, CFP®

The post What is the Best Investment Strategy? appeared first on See The Forest Through The Trees.

Privacy Policy


Collection of your personal information

Celestial Wealth Management has adopted this privacy policy with recognition that protecting the privacy and security of the personal information we obtain about our customers is an important responsibility. We also know that you expect us to service you in an accurate and efficient manner. To do so, we must collect and maintain certain personal information about you. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do.

Through this policy and its underlying procedures, Celestial Wealth Management attempts to secure the confidentiality of customer records and information and protect against anticipated threats or hazards to the security or integrity of current and former clients’ records and information. We want you to know what information we collect and how we use and safeguard that information.

Information We Collect:

We collect certain nonpublic information about you (“Customer Information”). The
essential purpose for collecting Customer Information is to allow us to provide advisory services to you. The types of personal information we collect and share depend on the product or service you have with us. This information can include:

  • Identifying information such as your name, age, address, and social security number
  • Information that you provide on applications, forms, and software. This customer information may include personal and household information such as income, spending habits, investment objectives, financial goals, statements of account, and other records concerning your financial condition and assets, together with information concerning employee benefits and retirement plan interests, wills, trusts, mortgages and tax returns.
  • Financial account balances, holdings and Information about your financial transactions with us, or others (e.g., broker-dealers, clearing firms, or other chosen investment sponsors).
  • Information we receive from consumer reporting agencies (e.g., credit bureaus), as well as other various materials we may use to provide an appropriate recommendation or to fill a service request.


How does Celestial Wealth Management protect my personal information?

We restrict access to your nonpublic personal information to those employees who need to know that information to provide products or services in furtherance of the client’s engagement with Celestial Wealth Management. We maintain physical, electronic and procedural safeguards that comply with applicable federal or state standards to protect your nonpublic personal information.


How does Celestial Wealth Management collect my personal information?

We collect your personal information, for example when you

  • Sign an investment or financial planning advisory agreement
  • Open an Account
  • Request financial planning or investment advice
  • Tell us about your investment portfolio

What information can Celestial Wealth Management Disclose to affiliates and non-affiliates?

We may disclose the client’s information for our everyday business purposes:

  1. To individuals or entities not affiliated with Celestial Wealth Management, including the client’s other professional advisors and/or certain service providers that may be recommended or engaged by Celestial Wealth Management in furtherance of the client’s engagement with us (i.e., attorney, accountant, insurance agent broker-dealer, investment adviser, account custodian, record keeper, proxy management service provider, etc.) and then only to those persons necessary to provide the authorized services
  2. For marketing and offering products and services to you
  3. To persons assessing our compliance with industry standards (e.g., professional licensing authorities, consultants, etc.)
  4. To our attorneys, accountants, and auditors
  5. As otherwise provided by law

We are permitted by law to disclose the nonpublic personal information about you to governmental agencies and other third parties in certain circumstances (such as third parties that perform administrative or marketing services on our behalf or for joint marketing programs). These third parties are prohibited to use or share the information for any other purpose. Celestial Wealth Management only authorizes employees who have signed a copy of the Privacy Policy to have access to client information. Employees violating Celestial Wealth Management’s Privacy Policy will be subject to our disciplinary process. In the event there were to be a material change to our privacy policy regarding how we use your confidential information, we will provide written notice to you. Where applicable, you would be given an opportunity to limit or opt-out of such disclosure arrangements.


If you have questions about this privacy notice or about the privacy of your customer information call (443) 438-7211 or visit and ask to speak to the Chief Compliance Officer

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