MZ Capital Management
Michael Zhuang is founder and principal of MZ Capital, a fee-only registered investment advisor firm located in the Greater Washington D.C. metropolitan area.
Michael earned dual Master Degrees in Mathematics and Quantitative Finance from Carnegie Mellon University. He was also a PhD candidate for Financial Economics. After completing all training and exams, he decided his true calling is not in academia. The PhD training taught him how to think rigorously and research thoroughly.
From 1999 to 2000, Michael worked as a financial engineer for Societe Generale, the biggest French banking group.
From 2000 to 2003, Michael was hired by PG&E National Energy Group to launch their weather derivatives trading business. Within 2 years, he became one of the top 3 traders in the field. Nevertheless, he saw first hand the crooked ways of the financial industry where everything goes to make a buck. That experience motivated him to launch MZ Capital.
Michael's investment approach is based on the Nobel Prize winning research of Eugene Fama. He is also deeply influenced by three people: Warren Buffet on value-orientation and patience, David Swensen on multi-asset-class investing and decision framework, and John Bogle on minimization of costs for clients and stewardship of clients' money.
Michael is active in the community. He twice sponsored Melodic Impact, a musical fundraiser for kids with cancer. He volunteered as an instructor for Toastmasters International's Youth Leadership Program. He was on the board of Special Love, Inc., a non-profit devoted to kids suffering from cancer. Recently, he also completed Leadership Montgomery.
Michael is married with two children. His favorite past time is stand-up comedy and storytelling. He was nominated as Top Ten Storytellers in Virginia. He has also won multiple Story League contests in DC and Best Storyteller in Philadelphia's Story Slam. He performed clean comedy regularly in corporate, charity and association events.
MS, Finance and Economics, Carnegie Mellon University
MZ Capital Management Story and Value
Wow. $15,000 a year income is barely a living wage. One thing I can tell you is that there is no portfolio of any kind that can solve your money problem. Your best investment is not in stocks, but in yourself, which I presume you are doing by going to school. Instead of trying to build a portfolio, make sure you learn marketable skills, and also learn to market your skills. One last thing, learn storytelling. This is a powerful tool. I hired my first employee because he told me a story that touched me. People will open doors for you when they empathize with you.
Since you are only 44 years, if you cash it out now, you will pay taxes and a 10% penalty. I am sure there are better ways to payoff your car and go on a vacation. Maybe you can get your husband to moonlight for Uber. Just FYI, if you cash out when you are 59.5, you will still pay taxes, but at least there is no penalty.
Also you may want to rollover to an IRA that you have full control over. Rolling over to your current 457(b) could be an option as well if the plan has good investment options. Don't leave it with your old employer for simplicity and safety's sake. I have a client whose old employer went bust, and his 401(k) money was frozen for 2 years as the court sought out the wreckage. You don't need that.
The best way to learn how to invest is to read a few good books about investment. I recommend these few books: 1) 'Investment Made Simple' by Mike Piper; 2) 'If You Can: How Millennials Can Get Rich Slowly' by William J Bernstein; 3) 'The Little Book of Common Sense Investing' by John Bogle.
Now, once you learn the basic knowledge of investment which is in fact quite simple, the harder part is controlling your behaviors. You can learn from Professor Terry Odean, many research papers about behavioral biases that cost investors much more money.
You can contribute to both an IRA and 401(k). Assuming you are not yet 50 years old, you can contribute up to $18,000 to a 401(k), and $5,500 to an IRA if you fall under the income limits.
The safest way to invest in high-yielding dividend stocks is to use the index approach. There is a fund company that specializes in that, its name is Wisdom Tree.
Take for example one of its ETFs called DHS, or Wisdom Tree high dividend fund, it invests in the 30% of companies that pay the highest dividend yields and it uses a fundamental weighting approach. The weight of a particular stock in the fund is determined by its dividend yield, not its market cap.
High dividend stocks are extremely volatile during a prolonged bear market. I did a study in which I held a portfolio of top 30% high dividend yield stocks during the Great Depression, when the market dropped 86%. This portfolio recovered in 3 and half years while the overall market did not recover until 12 years later. See a summary of study here: