As we stand on the brink of 2016, I am reminded of the age old story of the 4 Horsemen and would like to offer my commentary on their symbolization.  The four riders are seen representing conquest, war, famine, and death. It seems to me that, financially, this matches up to taxes, mistakes, drawdowns, and interest.

Taxes are a constants of our world but there are strategies to minimize your liability.  That is why we suggest a qualified tax expert to be part of your financial team.

Mistakes, we all make them in life and in our financial life as well. Buying the wrong stock on a hot tip; holding on to an investment for too long; spending time and resources on a bad business deal… the list is almost endless. Having a good financial representative on your team can give you an edge against some or all of these mistakes.

Drawdowns. Investopedia defines it as “The peak-to-trough decline during a specific record period of an investment, fund or commodity. A drawdown is usually quoted as the percentage between the peak and the trough.” Again, this is one of the big challenges that a good and objective financial representative can help you avoid. Many advisors are chasing the big returns and taking big risks in the process. The math is staggering- a 30% drawdown and a subsequent 30% return results in a 9% loss. It actually requires a 42% rebound to break even after a 30% drawdown.

Interest. Albert Einstein is quoted as saying “Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it.” It has devastating effects if it is working against you. Paying the minimum on your credit card is an example of poor behavior that will kill you financially. Making smart choices and understanding the choices you make are essential. 

If you avoid these 4 horsemen in 2016, your financial results will be better.

This commentary on this website reflects the personal opinions, viewpoints and analyses of the Gainplan LLC employees providing such comments, and should not be regarded as a description of advisory services provided by Gainplan LLC or performance returns of any Gainplan LLC Investments client. The views reflected in the commentary are subject to change at any time without notice. Nothing on this website constitutes investment advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Gainplan LLC manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Investments in securities involve the risk of loss. Past performance is no guarantee of future results.