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September 2025 Issue 6
September 2025 Issue 6
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September is a great time to reset your financial game plan and make your money work with purpose. In this guide, we cut through noise and hype to focus on the fundamentals that actually compound—clear goals, smart diversification, tax efficiency, and disciplined behavior.
Welcome to Issue 6 of Wealth Wisdom!
🧠 Investing 101: A Clear, Confident Playbook for Building Wealth
🧠 Investing 101: A Clear, Confident Playbook for Building Wealth
Introduction
Goals, Time Horizon & Risk Capacity
The Risk–Return Tradeoff (and Sequence Risk)
Diversification & Asset Allocation
Build the Core with Index Funds & ETFs
Taxes, Accounts & Asset Location
Costs, Liquidity & Frictions
Rebalancing, Contributions & Withdrawals
Behavior, Checklists & Staying the Course
Sample Model Portfolios (Illustrative, not advice)
Funding Order (Typical, Adjust to Your Situation)
Your September Action Checklist
🧭 Introduction
🧭 Introduction
September is a great time to reset your financial game plan and make your money work with purpose. In this guide, we cut through noise and hype to focus on the fundamentals that actually compound—clear goals, smart diversification, tax efficiency, and disciplined behavior.
Whether you’re just organizing accounts or sharpening an existing strategy, you’ll find practical, research-grounded steps you can implement today.
Let’s build a simple, rules-based system you can trust in any market.
🎯 Goals, Time Horizon & Risk Capacity
🎯 Goals, Time Horizon & Risk Capacity
Start with purpose, not products.
Define the job of each dollar. Short-term cash needs (0–2 years) belong in cash-like vehicles; medium-term goals (3–7 years) can blend conservative bonds and a smaller equity sleeve; long-term goals (7+ years) can lean into equities.
Risk tolerance vs. risk capacity: Tolerance is psychological—how you feel during drawdowns. Capacity is financial—how much risk you can take without jeopardizing goals. Plan to the lower of the two.
Write an IPS (Investment Policy Statement): One page is enough: objectives, target allocation, rebalancing rules, funding order, and when you’ll reconsider the plan (life events), not just market noise.
📈 The Risk–Return Tradeoff (and Sequence Risk)
📈 The Risk–Return Tradeoff (and Sequence Risk)
Understand the engine before you press the gas.
Equity premium: Stocks historically compensate investors for accepting volatility and occasional deep drawdowns. There are no guaranteed returns, only compensated risks.
Bonds’ role: Bonds are the shock absorbers. Duration approximates interest-rate sensitivity; higher duration = larger price moves when yields shift.
Sequence of returns: Early losses matter more when you’re withdrawing. Pre-retirees and recent retirees should pair equities with a bond/cash buffer or dynamic withdrawal rules to reduce “bad sequence” risk.
🧺 Diversification & Asset Allocation
🧺 Diversification & Asset Allocation
Don’t predict—prepare.
Core building blocks: Global stocks (U.S. + international developed + emerging) and high-quality investment-grade bonds.
Diversify across drivers: Geography, company size, industry, term (bond duration), and credit quality. Diversification works on average and over time—not every year.
Factor tilts (optional): Some investors add small/value, quality, or momentum tilts. Only tilt if you understand the rationale, can implement cheaply, and will stick through long droughts.
🧱 Build the Core with Index Funds & ETFs
🧱 Build the Core with Index Funds & ETFs
Implementation beats intention.
Simplicity wins: A total U.S. market fund + total international fund + a core bond fund will outperform most complex menus after taxes, fees, and behavior.
Passive vs. active: Active selection can outperform, but persistence is rare and fees/taxes are real. If you use active, treat it as a satellite, not the core.
ETF vs. mutual fund: ETFs often offer lower expense ratios and (in taxable accounts) better tax efficiency. Mutual funds can be friendlier for automatic investing. Either can work—choose based on costs, convenience, and tax profile.
🧾 Taxes, Accounts & Asset Location
Keep more of what you earn.
Account types:
Tax-deferred (401(k)/403(b)/457/traditional IRA): pre-tax contributions, tax-deferred growth, ordinary income on withdrawals.
Roth (Roth IRA/401(k)): after-tax contributions, tax-free qualified withdrawals.
HSA: triple tax advantaged when used for qualified medical expenses.
Taxable brokerage: flexible access; optimize for tax efficiency.
Asset location: Place tax-inefficient assets (e.g., taxable bond funds, REITs) in tax-advantaged accounts when possible; tax-efficient stock index funds often fit well in taxable accounts.
Tax management: Use specific-lot ID for sales, consider tax-loss harvesting (mind wash-sale rules), and be aware of capital-gain distributions from mutual funds in taxable accounts.
Roth vs. traditional: Weigh current vs. expected future marginal tax rates. Many investors blend both to hedge future tax uncertainty.
💸 Costs, Liquidity & Frictions
💸 Costs, Liquidity & Frictions
Small edges compound.
Expense ratios: Favor low-cost index funds/ETFs; every basis point saved is permanent alpha.
Spreads & premiums: With ETFs, check bid–ask spreads and avoid trading at the open/close when spreads can widen.
Turnover & taxes: High turnover can create taxable distributions. Prefer low-turnover core funds in taxable accounts.
Cash management: Keep enough true cash for near-term spending and emergencies. Consider a high-yield savings account or T-bills for the reserve.
🔄 Rebalancing, Contributions & Withdrawals
🔄 Rebalancing, Contributions & Withdrawals
Make maintenance mechanical.
Set bands: Example: rebalance when an asset class drifts ±20% of its target weight (or ±5 percentage points, whichever you prefer).
Use flows first: Direct new contributions or dividends to underweight assets; sell only if needed.
Cadence: Annual or semiannual is fine for most. More frequent isn’t necessarily better.
Withdrawal strategy: In retirement, draw first from cash, then rebalance by trimming overweight assets. Coordinate with taxes (capital gains brackets, RMDs, Roth conversion windows).
🧠 Behavior, Checklists & Staying the Course
🧠 Behavior, Checklists & Staying the Course
Your edge is discipline.
Pre-commitment: Automate contributions. Decide in advance how you’ll respond to bear markets, rate spikes, or headlines.
Noise filter: Price moves aren’t news; changing fundamentals are. Maintain a “do nothing unless one of these three pre-defined events occurs” list.
Common pitfalls: Performance chasing, concentration risk (single stocks), leverage without a plan, and abandoning strategy after a cold streak.
Review rhythm: Quarterly glance to confirm nothing broke; annual deep-dive to update goals, savings rate, and allocation.
🔧 Sample Model Portfolios (Illustrative, not advice)
🔧 Sample Model Portfolios (Illustrative, not advice)
Use low-cost, broad-market index funds/ETFs to implement.
Growth (80/20):
48% U.S. Total Stock
32% International Total Stock
14% Core Investment-Grade Bonds
6% TIPS (Treasury Inflation-Protected Securities)
(Totals = 100%)
Balanced (60/40):
36% U.S. Total Stock
24% International Total Stock
28% Core Investment-Grade Bonds
12% TIPS
(Totals = 100%)
Conservative (40/60):
24% U.S. Total Stock
16% International Total Stock
42% Core Investment-Grade Bonds
18% TIPS
(Totals = 100%)
Optional satellites (small allocations if desired): U.S. small-value, global quality, short-term Treasuries for ballast, or a minimal allocation to REITs. Only add satellites you understand and can hold through underperformance.
🧭 Funding Order (Typical, Adjust to Your Situation)
🧭 Funding Order (Typical, Adjust to Your Situation)
Employer plan match (free money)
HSA (if eligible)
Roth or Traditional IRA (based on current vs. future tax rate)
Max remaining workplace plan
Taxable brokerage (for flexibility and extra savings)
Opportunistic Roth conversions in low-income years / bracket management
✅ Your September Action Checklist
✅ Your September Action Checklist
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Bonus Material
Bonus Material
Estate planning might not be at the top of your list of things to do, but it's an essential step in ensuring that your assets are distributed according to your wishes. Having a will is crucial, regardless of your marital status or whether you have children.
A will provides a clear, legal framework for what happens to your property after you die. Without a will, the distribution of your assets is left to the state's laws, which might not align with your intentions. In this blog, we'll explore why it's essential to have a will and the risks of dying without one.
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If you have any questions, thoughts, or comments you'd like to share, I'm always happy to hear from you - just send a message to info@westeggliving.com
I'm here to help!
Thank you for joining us for this edition of Wealth Wisdom! We hope you found valuable insights and encouragement as you take steps toward a stronger financial future. It’s an honor to walk alongside you as you grow in financial knowledge, confidence, and peace of mind. Remember, you’re not alone on this journey—and we’re here to support you every step of the way.
Stay tuned for next month's issue packed with more tips, insights, and motivation. Until then, be kind to yourself and keep moving forward — you’ve got this!
The content provided on this West Egg Wealth is for informational and educational purposes only and should not be considered financial, legal, or professional advice. Always consult with a qualified professional before making any changes to your personal finances. Individual results may vary and West Egg Wealth makes no guarantees regarding specific outcomes.
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I love the video on this one.
I will try dinking water every hourr like I am trying to go 250 steps each hour.. Encouraging idea.
This is great information. I love the new layout. I cannot wait for the next edition!!!
Thanks Riaan.
Great article!