Wealth Management v/s Financial Planning

The terms - wealth management and financial planning are often used interchangeably and interpreted as the same. However, there are some key differences.

1.Meaning

1. Wealth Management
   • In simple words, Wealth is an accumulated resource or the value of existing assets a person own. Generally, Net worth is a measure of wealth of an individual. Wealth management is all about managing one’s wealth/ Net worth.
   • As part of wealth management, investors often actively try to identify and take advantage of profit-making opportunities.
2. Financial planning
   • While Financial planning is a comprehensive assessment of your financial situation and your future goals. It involves creating a financial plan to help you answer important questions such as: How much do I need to save for retirement?
   • In short, Financial planning is the establishment of a process for attaining your financial goals by a thorough evaluation of your current financial status and exploring opportunities to improve it.

2.Objective

1. Wealth management is an Opportunity-oriented personal finance management. It predominantly deals with preservation, growth and further accumulation of the existing wealth.
2. On the other hand, Financial planning is Goal-oriented personal finance management. It mainly deals with building/creating the strategies to create wealth and meet financial goals either short-term or long-term.

3.For Whom

1. Wealth mangement is basically meant for the high net worth individuals. Thus, wealth management is undertaken by wealthy people who have already achieved or fulfilled their basic financial goals.
2. Financial Planning is for every individual who are yet to meet their financial goals It is for anyone who wants to make the best out of the money they have, through personal finance, to meet their financial goals; be it short-term or long-term. Financial planning does it by taking your income, expense and savings into account and balancing them. 

 4.Comprises of

1. Wealth management comprises of :
   • Wealth Assessment
   • Risk Tolerance Assessment
   • Asset Allocation
   • Wealth Preservation Strategy
   • Wealth Growth Strategy
2. Financial planning comprises of :
   • Cash-flow management
   • Investment Planning
   • Tax Planning
   • Debt Management
   • Retirement Planning
   • Risk Management

5.Type of Management

• Wealth Management is a Active wealth management process. Here, a wealth manager will make decisions based on your portfolio, your risk tolerance and your preference for wealth preservation or wealth growth. The wealth manager will execute the asset allocation by investing in various asset classes based on your risk profile.
• On the other hand, Financial planning is a Passive wealth management process. In this, a financial planner will make and suggest a plan based on income and the financial goals. The financial planner suggests the asset allocation based on your risk profile.

6.Financial Decisions/ Recommondations are Based on

• In case of wealth management, wealth manager takes financial decisions by considering only your investment portfolio. Alternative assets such as private equity, real estate might also be considered.
• While in case of financial planning, financial recommondations are given considerating the financial goals and the time horizon for realising those goals.

Conclusion

• A holistic plan will help you identify your risks, fix your income leakages, set measurable goals, and create wealth in the process. Financial planning does not require you to have sufficient wealth. As you execute the plan, you will be able to create an investible surplus, cover your risks through insurance and make investments suiting your risk profile. You can create your free financial plan by visiting our website- https://investyadnya.in/
• On the other hand, wealth management comes into picture when you have created wealth and need professional help to grow, preserve and enjoy your wealth. It requires the active monitoring of the wealth manager to identify the right mix of investments for you. Having a financial plan in place is the first step to create wealth.

 

tax numbers for a semi-retired life

The assumptions about this couple are:
• They file taxes as married filing jointly with no dependents
• Each individual earns a full-time equivalent of $90,000/year
• Taxable investments create $12,000 per year of qualified dividends
• Taxable savings create $1,200 a year in interest
• While working, each spouse may contribute to a 401(k). Neither is over 50 so not eligible for a $6,500 catch-up contribution.
• Health insurance is provided through one employer
• The couple is not eligible to contribute to an HSA
• Taxes are based on the 2020 tax code

In our first scenario, both spouses are working full-time. Total earned income is $180,000. Total taxable income with investments is $193,200.
The maximum contribution to a 401(k) account is $19,500 per person. Since both partners are working, the couple’s total contribution is $39,000, which lowers adjusted gross income (AGI) to $154,200.
Subtract the standard deduction of $24,800 to arrive at a taxable income of $129,400. Subtracting the $12,000 of qualified dividends gives $117,400 of income taxable at ordinary income tax rates.
The first $19,750 is taxed at 10% for $1,975. The next $60,500 is taxed at 12% for $7,260. The final $37,150 is taxed at 22% for $8,173. The total is $17,408.
Qualified dividends are taxed at 15% for married couples earning between $80,000 and $496,600. The dividends generate an additional $1,800 of taxes.
The total federal income tax paid by this couple is $19,208 on $193,200 of total income. Their effective tax rate is 9.9%.

The impact of cutting back work

The second scenario reflects the impact of one earner cutting back hours. After the birth of our daughter, my wife cut back to 30 hours per week.
Cutting back one spouse’s earnings by 25% reduces the household pretax income by 12.5%. But that income would have been taxed at the highest marginal tax rate, so what does this do to after-tax income?
The couple’s total earned income in this scenario is reduced to $157,500. Total income with investments is $170,700. Subtracting $39,000 for 401(k) contributions lowers AGI to $131,700.
Subtracting the standard deduction of $24,800 leaves $106,900 of taxable income. After subtracting the $12,000 in qualified dividends, it leaves $94,900 taxed as ordinary income.
The first $19,750 is again taxed at 10% for $1,975. Then next $60,500 is taxed at 12% for $7,260. Only $14,650 is now taxed at their marginal rate of 22% for $3,223. The total is $12,458.
The qualified dividends are again taxed at 15% for an additional $1,800 of taxes.
Their total federal income tax owed is $14,258 on $170,700. Their effective tax rate drops to 8.3%.

The impact of one spouse retiring

The third scenario reflects the impact of the full-time spouse retiring fully and the other spouse continuing to work 30 hours a week. This is what happened when I left my career in 2017. When married filing jointly, you can obtain a similar outcome if each partner worked 15 hours per week.
Total earned income in this scenario is $67,500. Adding in investment income brings it to $80,700. Since only one spouse is working, they can only contribute $19,500 to a 401(k), lowering AGI to $61,200.
Subtracting the standard deduction of $24,800 leaves $36,400 taxable income. After subtracting the $12,000 in qualified dividends, it leaves $24,400 taxed as ordinary income.
The first $19,750 is again taxed at 10% for $1,975. Only $4,650 is taxed at the lower marginal rate of 12% for $558. The total is $2,533.
Qualified dividends are taxed at a rate of 0% for couples married filing jointly if taxable income falls below $80,000. Thus no tax is owed on this $12,000 of investment income.
The total federal income tax in this semi-retired scenario is $2,533 on $80,700 of total income. The effective tax rate is 3.1%.
Read:This first year of early retirement has been one of the hardest of my life

The tax code is much friendlier to low earners

Semi-retirement allows you to earn a substantial amount of income and pay little in federal income taxes. You keep about seven cents more of every dollar you earn when compared to working full-time, everything else being equal.
Semi-retirement also provides more time for your investments to grow. During this time, you eliminate tax drag on qualified dividends and long-term capital gains.
The 0% long-term capital gains rate provides the opportunity to harvest capital gains, meaning more of your future income could be tax-free with good planning.
Creating this apples-to-apples scenario is great for comparison. But life can sometimes be messier.

What about kids?

Kids don’t affect the calculations. They simply provide a $2,000-per-child tax credit.
Just multiply $2,000 by the number of children you have. Then subtract that number from the tax you calculated to get your final tax cost.

专业交易者每天真正要做的事情

今天，汇商君把一位欧洲交易员的真实一天工作展现给大家，我们可以看看专业的交易员是如何安排每日作息的。

7:00 AM —咖啡唤醒一天

终于迎来星期一了。欧洲市场在一个小时内就会开放。习惯了每日清晨一杯咖啡，能提升我一天的活力和对市场的注意力，这对交易者来说是完美的。好了，喝完一杯咖啡，我准备坐到交易桌前了。

上午7:05 —早盘准备

我会督促自己避免关注太多的头条新闻。很多都是老的新闻。如果我对所有事件都有所反应，那么我肯定会赔钱。

相反，我需要“预测”未来，所以我启动了我的秘密武器：FinTwit：Twitter上一个孤立但开放的金融社区。金融专业人员可以在该社区中公开分享见解和想法，Twitter上的投资价值大大被低估了。

其实从银行业精英到对冲基金亿万富翁和金融顾问，他们都会在FinTwit上自由地分享他们对市场和投资的看法。我会跟随领先的投资人士，甚至与他们互动。

成功的金融专业人员-比如Raoul Pal， Danielle DiMartino Booth，Grant Williams等。我很快就会从这些可靠的来源中建立自己的交易思路。

接下来，我将浏览过去24小时内发布的所有新闻，来更新自己的查阅列表。同样，我会考虑有效的交易思路。

之后，我将通过Trading Economics上免费在线查阅最新的经济数据：从美国住房数据到中国国家统计局制造业采购经理指数。

我认为这些都是需要了解的。

以此为基础，我将更新有关增长，通胀，情绪，流动性和政策反应的预测模型。

上午7:50 —欧洲市场

我打开交易平台并检查隔夜交易的任何实时商品或实时货币头寸。如果我想开任何仓位，我会计算所需的数学运算—止损，止盈，风险回报等。

确切在上午8:00，欧洲市场开放，我的电脑屏幕开始点亮。但是，最重要的是避免将太多时间浪费在盯图表上。

9:00 AM —暂停时间

尽管欧洲市场是开放的，但我认为最值得等待的就是美国市场的开放，但距离我们还有六个半小时。因此，该放松一下了，并专注于其他事情。

我通常会进行学习。我最近在看 Mandelbrot’s Misbehavior of Markets的第六章。我正在改善自己对现代市场风险的看法。

同时，我在看Jim Rickards撰写的《 Aftermath 》的第七章，着重强调了发生问题时备份计划的重要性。

也许我还会阅读NiklasGöke，Jessica Wildfire，Tom Kuegler等不同领域顶级作家的精彩故事。

我还在学习编程。我正在创建一个Web应用程序，该应用程序使用JavaScript和Node.js来自动更新我的交易模型。

12:00 pm —午餐

我第一餐：四个鸡蛋，三个培根条，一个牛油果和一小块干酪-都是有机的。这一切都是为了让我感到饱腹感。饥饿容易使人分心。

1:00 pm —为美国市场开放做准备

资产价格变动的主要驱动力：增长，通货膨胀，政策和情绪。我多年来创建的每个交易模型都会以此来做更改和微调。市场一直在变化，你必须随之变化。

首先，我打开彭博检查行业表现，以查看市场在任何一天的买卖情况。然后该是检查市场内部的时候了：情绪，波幅，交易量。

下午2:30-美国市场开放

现在，我会更改自己的有效头寸，在适当时机添加新交易，添加对冲以锁定利润或管理风险，并设置止损进行交易。我通常会根据市场波动情况每月更改投资组合约十次。波动越少，机会就越少。

开市两分钟后，我完成了当天所有必要的交易。通常，接下来我会看看推特，或者偶尔看看交易视图以寻求灵感。

下午4:30 —欧洲市场收盘

收盘时，市场安静。欧洲市场收盘价和美国市场收盘价之间的交易量是最低的，我也到了用餐时间：7杯沙拉，一块有机肉或鱼，芹菜杆和花生酱-也许是一盘或两盘深色的巧克力，只是为了让我理智。

到目前为止，世界已经发布了大部分经济数据。因此，该更新我的交易模型了。

5:00 pm —市场研究

现在市场仍然处于困境，真正的艰苦工作开始了。如果你要成为一名成功的交易员，则需要每天创建新的想法。

这是困难的部分：我必须考虑市场的发展方向以及每种资产类别的表现。检验昨天的思想为我今天提供了哪些新的视角。

我看涨和看跌的资产清单-以下是一个简化的示例。

看涨：黄金，白银，美元，政府债券。

空头：股票，铜，石油，欧元，公司债券。

当涉及类别中的特定资产（例如特定股票或商品）时，我将围绕这些特定资产创建一些想法并将其添加到我的监视列表中。

以下是当前研究笔记的摘录：

沙特与俄罗斯的油价大战是否会启动油轮的新牛市？

铜，石油和其他大宗商品带动股市走势。我们该放下脚吗？

晚上8:30 —为美国市场休市做准备

突然之间，在过去的半小时内，市场活跃起来。现在大多数的每日交易量是随着人们获利并决定是否持仓过夜的情况下发生的。我要做的就是平仓任何达到我的止损或达到利润目标的头寸。

9:00 pm –美国市场关闭

现在，是时候关闭市场了，但是学习才刚刚开始。如果我对Netflix的内容感到无聊，那么将打开Realvision的“金融Netflix”，观看最伟大的思想家的采访。

今天，这是对布伦特·约翰逊的采访，他在其中解释了他的「美元奶昔理论」（Dollar Milkshake Theory）。之后，是1994年传奇投资者Peter Lynch的演讲。

上午12:00 —亚洲期货市场开放

尽管我很少在亚洲市场交易（我曾经购买过任天堂的一些股票），但我会打开彭博，看看期货市场的现状。我需要了解全球所有金融市场的事，毕竟这是交易员的事情。

上午12:30 —上床时间

在我关闭笔记本电脑之前，会对自己一天的交易开仓做个简要复盘和思考。

7:00 AM —第二天早上

这是新的一天，是时候重复该过程了。

12 Reasons to Buy Amazon and Never Sell

1. Ideal corporate culture

Amazon's culture is one of invention and pioneering. Rather than be content with being an online bookseller, founder and CEO Jeff Bezos expanded the business into music and then general merchandise. But Bezos's ambitions didn't stop there. Amazon expanded overseas, developed the third-party marketplace business, invented the Kindle e-reader, and launched Amazon Prime.
Over time, it expanded into an array of businesses and venture-type projects including global logistics, drone delivery, and healthcare, and has created new industries, including the Echo smart speaker and the Amazon Web Services ("AWS") public cloud computing business.
None of these remarkable successes were achieved without the risk of failure. In fact, Amazon has failed at many things. High-end jewelry, online travel, and the Fire phone are just a few examples. But Amazon tolerates failure because it knows it probably isn't being innovative enough if it isn't failing at something from time to time.
That's what makes Amazon's culture truly special, and has been the key enabler of its jaw-dropping value-creation machine over time. In contrast, most companies stick to their core business and lack a culture that tolerates broad experimentation, innovation, and risk-taking.

2. Long-term e-commerce growth

It may surprise some, but e-commerce in the U.S. still only accounted for 11% of retail sales last year. That will increase substantially over time as the population changes toward more people who grew up with online ordering. That will continue to put pressure on physical retailers, which will continue to close, which drives more spending to online channels.
Bank of America's Justin Post estimates Amazon's market share of U.S. e-commerce is about 44%. If Amazon has a 44% share of the e-commerce market, which itself has an 11% share of U.S. retail sales, Amazon would have about 5% market share of U.S. retail sales. That will almost certainly increase over time, and there's a lot of upside just in 5%.

3. Core e-commerce business has a massive moat

While Amazon has many online retail competitors, it's virtually impossible to penetrate Amazon's e-commerce moat. One of the largest components of that moat is Amazon Prime, which has over 150 million members globally and an estimated 100 million or more in the U.S. The brilliance of Prime is that it provides members with free two-day, and increasingly free one-day, shipping. Since members have already paid for it, they tend to want to get their money's worth, which makes Amazon the first place they go for most online purchases.
The company's buying power, fulfillment and delivery infrastructure, and enormous third-party marketplace, which accounts for over 50% of units sold, further widen Amazon's moat.

4. Long-term public cloud growth

AWS is already a $41 billion annual revenue run-rate business, still growing 33% year over year, but it's just getting started. AWS boss Andy Jassy believes the business is addressing the $3.7 trillion global IT market, of which only 3% of has migrated online so far. That implies massive long-term opportunity ahead.

 

5. AWS has a scale-driven moat

Public cloud computing is a scale business. If a competitor doesn't have substantial revenue scale, it's impossible to justify the massive investments in data centers and engineering talent required to rapidly innovate and add features to delight customers. That's why the public cloud market has consolidated to three players: No.1 player AWS, No.2 Microsoft Azure, and No.3 Alphabet's Google Cloud Platform. 

6. Just getting started in digital advertising

Alphabet and Facebook have dominated the digital ad market, but Amazon is now the clear No.3 player in the U.S.  Amazon's Other net sales line, which is mostly made up of its ad business, grew from under $3 billion in 2016 to over $14 billion last year. And it grew an impressive 44% year over year last quarter. eMarketer estimates the global digital ad market size at $384 billion last year and $518 billion by 2023. This is clearly a big market, and Amazon has been gaining market share.

7. Accelerating shipping speeds

Last year, Amazon began converting Prime's shipping benefit from free two-day shipping to free one-day shipping. That investment cost the company billions, depressing current profit margins, but it's likely to pay off in a big way. There are many situations where people who need something are willing to wait for one-day shipping, but would go to the store if it would take longer. That was beginning to drive faster e-commerce sales growth over the last few quarters.
Amazon now also offers free same-day grocery delivery from Whole Foods in an increasing number of markets around the U.S. and has been overwhelmed by demand due to the COVID-19 pandemic. That's driving trial of Whole Foods delivery, and some of those customers will remain active customers after the pandemic is over.

8. Groceries

In Brad Stone's best-selling book about Amazon, The Everything Store, Jeff Bezos is quoted as saying: "In order to be a two-hundred-billion-dollar company, we've got to learn how to sell clothes and food." Food, in particular, is a massive market in the U.S. According to the U.S. Census, food and beverage stores were a $746 billion market in 2018 -- over 14% of the $5.3 billion of retail sales.
That explains Amazon's interest in acquiring Whole Foods in 2017 and its other grocery store initiatives, including Amazon GO Grocery.

9. Global logisitics

Amazon has grown to a scale where it made sense to lease its own cargo jets, deploy its own trucking fleet, sail its own container ships from Asia, and increasingly fulfill its last-mile deliveries with its own delivery vans. These efforts lowered the company's variable costs, which frees up cash for it to reinvest in other initiatives. Amazon also quietly began offering its delivery infrastructure as a service by shipping third-party parcels in direct competition with carriers UPS and Fedex.

10. Healthcare

Amazon has big ambitions in healthcare as well. One of its first efforts came in 2018 when it acquired online pharmacy business Pillpack for $753 million. It also has a major healthcare cost savings initiative underway in partnership with Berkshire Hathaway and J.P. Morgan.
On Amazon's first-quarter conference call, management mentioned it was investing several hundred million dollars in COVID-19 testing capabilities for its employees. But knowing Amazon, it'll likely look for an opportunity to leverage those capabilities to offer testing as a service to others.

11. Long-term margin potential

Amazon has tremendous potential to improve its profit margins over time. This is because its margins have been depressed at a lower level for longer than perhaps any company in history. That's because Amazon reinvests huge sums back into its own businesses and venture-type initiatives.
It has been aggressively reinvesting in fulfillment centers, sortation centers, geographic expansion, including billions in India, category expansion, faster shipping speeds, a wide variety of devices, drone delivery technology, artificial intelligence, machine learning, smart speaker technology, data centers, and constant hiring of new employees. On top of that, Amazon is almost certainly investing in all sorts of initiatives we don't know about yet. Much of that investment spending runs through Amazon's income statement, reducing reported profits and profit margins.
As Amazon harvests this investment spending over time, its margins should improve. But counterintuitively, the more Amazon reinvests and for longer -- and consequently depresses its near-term margins -- the larger and more valuable it's likely to be over the long term.
There is also a favorable mix shift toward its high-margin advertising and AWS businesses, which are growing faster than the overall company.

12. Jeff Bezos is in charge

It's remarkable what Jeff Bezos has done turning a start-up online bookseller into the global giant Amazon is today. Especially impressively, Amazon has come to dominate two completely different businesses -- e-commerce and public cloud computing. Warren Buffett has even called Bezos "the best CEO in America" and he's absolutely right. That's just another reason investors should buy Amazon shares and never sell.
 

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