Forget Gravity. Inflation and Taxes Are Keeping You Down.

If you think it's hard for a space ship to battle gravity and frictions to reach escape velocity...

You ain't seen nothing yet.

Inflation and taxes... you can't ESCAPE.

But you can MANAGE them.

Here are some insights that might help.

You have endless challenges on your way to better investment outcomes.

Things like:

- Constant uncertainty making it near impossible to decide what's "productive worrying" and what's just spinning your wheels.

- A market hell-bent on giving you unbearable FOMO at the worst of times (I see you, 🚀...) and then making you want to scream "get me out of here" (🐻📉 = bear market) when opportunities finally abound.

- Financial "innovations" that often seem designed to innovate new ways to transfer wealth OUT of your pocket above all else.

With time and practice, you can pretty much wrap your arms around all of these.

→ Have RISK MANAGEMENT practice that allows you to be risk-aware but not stuck in the agony of fear and paralysis.

→ Have structure and partners on this journey to manage the EMOTIONAL LOAD of investing your assets.

→ Have a clear understanding of where RETURNS come from *and* what the INCENTIVES are in the business of asset management.

But inflation and taxes are different animals.

They're baked in.

They're forces you can't escape.

→ They're the gravity and friction that EVERY investor must deal with.

Where you are on the spectrum of wealth determines what weapons you go to battle with to overcome the impact of taxes and inflation.

If you're predominantly a WAGE earner:

• You know the bite of taxes all too well (income is taxed higher than capital gains)
• But you can move a reasonable fraction of that wage income into tax-advantaged accounts to soften the blow.
• Accounts like 401(k), IRAs, or HSA accounts.

Once the money is in there, you've suspended the effect of taxes, for now anyway.

The job is made more straight forward (though not easy).

It's down to one mission:

→ Beat inflation, as much as markets will let you.

→ If all else fails, don't let inflation make you "slow-poor."

There are a lot of potential ways to go about it, but...

Sitting in cash for years and years and years probably ain't it.

If you have significant TAXABLE assets:

Sure, there are good news: Hopefully you can be more patient.

Play the LONG game.

→ Allow wealth to compound with a lock-box mentality.

→ Let time turn highly taxed SHORT-TERM gains into hopefully larger and more lightly taxed LONG-TERM capital gains.

That may part of the answer, for sure.

But it also gets trickier...

You tend to end up with massive unrealized gains that threaten to turn your portfolio into a fossil.

→ Your portfolio ends up locked into more concentration than you may have wanted.

→ Your emotional response to concentration isn't always healthy...

Everything from:

- Feeling that you're playing with "HOUSE MONEY" to

- Living in fear of seeing those "FOUND DOLLARS" vanish.

What Can You Do?

→ Manage the timing of taxes to retain degrees of freedom. The race is never fully run, think about the next mile as much as you focus on the results from the last mile you just ran.

→ Be wise in your use of potential inflation-fighters. Yes, they have a nasty habit of being taxed relatively poorly, but remember the job is two-dimensional... Grow wealth net of taxes and net of inflation.

Nominal dollars going up in your account aren't the answer if their value is going down out in the world (where you live and consume things).

→ Once in a while, a true innovation comes along that may create a novel pathway to manage taxes and inflation. When that happens, it's helpful to have enough education and experience to know what's REAL, what's a MIRAGE, how things WORK, and what could go WRONG...

But hey, that's to be expected...

Remember, beating inflation and taxes was never going to be easy.

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Disclaimer: Treussard Capital Management LLC is a registered investment advisor. This content is for educational purposes only and does not constitute financial advice. Investing involves risk, including potential loss of principal. Please consult a professional before making decisions. Any statement that may be seen as forward looking is not a prediction, but exploring a scenario, which may or may not happen in the future. Nothing here or anywhere we share via social media is a recommendation for a specific action or investment decision, all purely education and insights. For more information and full disclosures, go to www.treussard.com.