Empirical Papers

 

This series includes all papers, recaps, and newsletters published by Empirical.

Tax Minimization Through Roth Conversions and Asset Location

It is our advice and practice that we manage investments by addressing issues in order of their importance. We make this determination by understanding which areas of planning give us the greatest opportunity to influence a client’s specific situation. Many professionals and individual investors fail to heed this advice and focus on issues that seem relevant yet have proven to be both uncontrollable and largely irrelevant to long-term success. An example is allowing short-term market movements and daily financial news to guide investment decision making. On this topic, one of Warren Buffet’s mentors, Benjamin Graham, had the following to say:

Basically, price fluctuations have only one significant meaning for the true investor. They provide him with an opportunity to buy wisely when prices fall sharply and to sell wisely when they advance a great deal. At other times he will do better if he forgets about the stock market and pays attention to his dividend returns and to the operating results of his companies.

It will be no surprise to our long-term clients that we believe the three main factors relating to long-term investment success are diversification, asset allocation and discipline. After these three activities, the next most significant opportunity to influence our clients’ investment outcome is through tax minimization. For the full paper:

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