Deva Panambur, CFA®, CFP® is the founder of Sarsi, LLC. Sarsi, LLC is an independent, fee only, Registered Investment Advisor, serving individuals- successful professionals and business owners. We primarily provide the following services: 1.Financial Planning: Overall financial situation of the client including cash flow, debt management, risk management/insurance, estate planning and tax planning. 2. Investment strategy 3. Asset allocation and risk management 4. Manager/Investment product selection 5. Investment monitoring and reporting.
Prior to founding Sarsi, LLC in 2010, Deva was a Senior Vice President/Partner at Executive Monetary Management (EMM), a wealth advisor with over $2Bn in assets that was a part of Neuberger Berman, before being spun off into an independent firm in 2009. At EMM, Deva led manager selection and due diligence and had joint responsibility for economic analysis, strategy analysis, portfolio management and risk management pertaining to investments of ultra high net worth clients and institutions.
Prior to joining EMM, he was a portfolio manager at the alternative strategies group of Merrill Lynch; a research analyst at Chesapeake Capital Corporation- a hedge fund; and a risk and business analyst at Deutsche Bank Asset Management where he supported various investment groups. He began his career at International Seaports Pte. Ltd. in international project finance in the Far East and the United States.
Deva earned a Bachelor of Technology from the Indian Institute of Technology, India, a Master in International Management from the Indian Institute of Foreign Trade, India, and an MBA from Thunderbird School of Global Management, Glendale, AZ. He has been awarded the Chartered Financial Analyst designation and is a CFP® professional.
He regularly provides expert advisory services to top consulting firms and asset management companies regarding the business and investment aspects of the investment industry. He is an Adjunct Professor of Personal Finance at Montclair State University in New Jersey and in his spare time trains candidates appearing for the CFA exam.
MBA, Finance, Thunderbird (Arizona State University)
BTech, Metallurgy, Indian Institute of Technology
Fee only. Asset based and/or fixed.
Sarsi LLC (“Sarsi”) is a Registered Investment Advisory Firm regulated by the State of New Jersey in accordance and compliance with applicable securities laws and regulations. Sarsi does not render or offer to render personalized investment advice through this newsletter. The information provided herein is for informational purposes only and does not constitute financial, investment or legal advice. Investment advice can only be rendered after delivery of the Firm’s disclosure statement (Form ADV Part II) and execution of an investment advisory agreement between the client and Sarsi.
Sarsi, LLC Introduction
If you have dependents, then having insurance is extremely important. Pure insurance (Term life) is the cheapest form of insurance and if you get it for an appropriate amount and appropriate duration, then it should take care of your requirements. Whole life insurance adds an investment product to the pure life, and you get the benefit of tax deferred (Not tax free- more on that later) investment option. Personally, I am not an advocate of whole life, but I do understand that there are some benefits, the biggest being that it forces you to save, although you can do that using retirement products such as a 401 (K).
To see it makes sense for you consider the following:
1. Based on your numbers, it seems your whole life insurance will give you about 4-5% rate of return over about 30 years. If you think you can do better than that then obviously it is not for you.
2. Taxes: Have you maxed out your 401(K) to which you can contribute $18,500 or $24,500 over the age of 50? If you are self-employed, you can sock away up to $55,000 into retirement products such as a SEP IRA or a Solo 401 (K). These accounts give you the same tax deferred status as a whole life insurance (i.e. if you use it as an investment and not for your dependents- in the latter case there is not capital gains or income tax although there maybe estate taxes).
3. The dividends and cash value you receive from whole life are not taxed up to the amount or premiums you have paid. Anything over that is taxed as ordinary income.
4. Estate planning: Lifetime estate tax exemption is $11.2 MM for the next 7 years and will revert back to 2017 level of $5.49MM adjusted for inflation. The amount is double for a married couple. Your estate does not have to be through a life insurance to derive this benefit- in fact insurance proceeds are included in the estate if owned by the deceased. The point being you don’t necessarily have to buy whole life insurance for estate planning.
5. If you take withdrawals from the whole life then the death benefit is reduced by that amount.
6. Liquidity: Fees in life insurance are usually front end loaded which means you will be penalized if you withdraw or surrender early- moreover, your cash value only accumulates to a meaningful amount over several years. If you need more liquidity then you may want use other options
There are several differences but the biggest I would say, is that hedge funds operate mostly in the public markets i.e. they make investments in securities such as stocks and bonds that are publicly traded in exchanges. On the other hand, private equity funds make private investments or buy publicly traded companies and take them private. (There are exceptions to the above, and some hedge funds do buy private investments and some private equity purchase public investments.)
There are other differences many arising because of the above difference: Hedge funds usually have a shorter time frame when making investments, their clients have a higher liquidity i.e. they can take their money out faster than from a private equity fund, hedge funds usually buy only a fraction of a company whereas private equity funds usually buy entire companies then improve their operational and financial performance, hedge funds may have a slightly different fee structure than private equity funds etc.
Here is a presentation on introduction to hedge funds that I made: Click here
Hello, the exact nature of the strategies to manage taxes will depend on the details of your situation and the plan. In general, some of the strategies you can use for non-qualified deferred compensation plans are:
If your plan allows it, stretch the distributions over several years. The thing to note is that as a participant in a non-qualified deferred compensation plan, you are an unsecured creditor to your company so, this strategy is only recommended if your company is stable and has a high credit rating. Taking distributions in installments could also be advantageous as you may be paying state taxes based on state of residence during retirement and not the state of residence during employment. So, if you move to a low or no tax state, you will end up saving on state taxes.
You can bunch tax deductions to reduce your taxable income. For example, if you are planning to give to charity over a few years, you may want to bunch it together into one year. Using donor advised funds for this could be a good strategy as I wrote in this article.
Keep in mind most non-qualified deferred compensation plans do not let you change the distribution strategy once you choose it.
The biggest difference is the stage at which their target is in. Venture capital firms, for the most part buy stakes in companies that are young, usually pre-IPO including day one or even pre-operational. Private Equity firms usually purchase firms that are slightly more mature and established and have operations- they can be either private firms or public firms.
I once read an interesting quote on the difference between the two: “In Private equity you start with the numbers and then make everything else into the number. In Venture Capital you start with the people and then see what numbers you can make"
If you have a long-term horizon, which it seems you do then invest it in a portfolio of stocks and bonds. I would recommend a majority in stocks since you are young and if you are able to ignore/tolerate the volatility of stocks then you will do well over time. In addition, if you plan to add money to the account periodically, then over time, you will also be dollar cost averaging. In general, invest as you would in real estate- for the long term, without looking at the account balance often and adding more money over time (As you would if you had a mortgage)
You will also have to decide how you invest in stocks - i.e. what vehicles, market capitalization, geography, value, growth etc. Some areas of the market are quite expensive while others are cheap, and your portfolio will have to take that into account.
This exercise needs a lot of initial and ongoing work and if you are not able to do it or devote the time, you should hire a financial advisor.