Years ago, I bought blinds for my downstairs bedrooms. Home Depot had a special where I could get blinds that open from the top and bottom for the same price as standard ones that only come up from the bottom. The saleswoman couldn’t believe that I didn’t want the fancier ones. The way the sun hits those windows, I would never need to have the top part of the window exposed and bottom part covered. You see, sometimes simpler is better. Getting the fancier ones just meant one more thing that could break.

The same principal holds in financial decisions. Complex financial products rarely improve people’s lives. Let me give you an example. Are you considering a major charitable gift? You might get sold the idea of a charitable remainder trust. Here’s the pitch. You give appreciated assets to charity. You get income payments back for the rest of your life. Ultimately the charity gets the remaining money from the trust.

They don’t tell you that you’ve just made your taxes more complicated (and more expensive). You’ve also made the charity wait until you die to be able to use the money. That probably wasn’t your intention. You likely could have accomplished all your charitable goals in a simpler fashion by just donating appreciated stock. That way the charity gets to use the money today. You avoided paying capital gains on selling the stock and you get a very nice tax deduction (without really complicating your taxes). Nice work!

About the Author:

John has more than ten years experience as an Investment Advisor. He focuses on devising and maintaining portfolios that meet individuals’ needs, investment research, and investment strategy. John has been recognized as a “FIVE STAR wealth manager” by Twin Cities Business Magazine 2016-2020.

Legal Disclaimer: These posts do not constitute an offer or recommendation to buy or sell any securities or instruments or to participate in any particular investment or trading strategy. They are for informational purposes only. CTW gathers its data from sources it considers reliable. However, CTW makes no express or implied warranties regarding the accuracy of this information or any opinions expressed by the author and may update or change them without prior notification.