Planalto Financial

26/08/2026

"A majority of life’s errors are caused by forgetting what one is really trying to do.” - Charlie Munger

I have been thinking about this quote a lot recently. The more I think about it the more I see it.

What is it we are really trying to do? At our jobs, for our kids, for our spouses, for our parents, for our community? Is what we’re doing really for others or for ourselves?

I think when we examine our choices and our motivations we all find some misalignment. There are times where we cared more about climbing the ladder than doing what really mattered, times when we cared more about looking good than about being healthy, times where we cared more about our status than providing security and sustenance for our families. Sometimes we focus on the number of the balance, or tax efficiency, or asset allocation, and not what those resources could do for ourselves or others.

It’s important to refocus on what it is we’re really trying to accomplish. One way I try to do that is by thinking about what I’ll regret most five or ten years from now. That has a way of focusing you on what really matters.

What truly brings you joy, fulfillment, and meaning? What things are like a bottomless pit where no matter what you do you don’t feel satisfied? Has fear or ego gotten in the way of something you really want? I think these are the most importantly questions to answer.

24/08/2026

“You were right to push back on that.”

“Knowing what you don’t know is more useful than being brilliant.” — Charlie Munger

I’m sure a lot of you recognize the first phrase. I think it’s a particularly dangerous phrase right now.

You might not have heard of the Gell-Man Amnesia effect. It is when an expert knows that the media is wrong about something within their field of expertise, but then assumes the media is correct about other topics. This post isn’t about media, but about AI.

If you’ve ever seen that first phrase, you probably thought “wow, it’s a good thing I knew better or that could have been bad.” But then, when you ask for an answer about something you don’t know, what then? Do you take the answer at face value? How important is it that the answer you get is accurate? Is it ok if it’s 99% accurate? 80%? 40%? How much time will you spend confirming the answer you get?

To be fair, there has always been misinformation, whether intentional or unintentional. Books, newspapers, TV, social media, all have plenty of information that is incorrect. There’s nothing new about that. But I think people are treating AI as if it will be more reliable about many topics than it actually is. Will it improve? Absolutely. But how will you know when you can rely on it completely? Who pays the price if it is wrong?

These are the questions to think about when thinking about what AI will and won’t replace.

10/08/2026

A recent Wall Street Journal article covered an app that lets users participate in live auctions for collectibles and other items. Everything about the app is designed to bypass people’s judgement and restraint, and encourage them to spend. One man spent over $1 million on the app and lost his job and his marriage.

Auctions have existed for thousands of years, but it seems that with research and technology we have figured out how to hack the brain and keep people coming back, and spending more money and time on auctions, options trading, prediction markets, and sports gambling.

I’m all for innovation, and free markets, and even for spending money on things and experiences that enrich your life. But we have to guard ourselves against apps that are designed to take advantage of our worst impulses.

To be sure, there are probably many people who can use these apps in moderation. But sometimes it’s easier to avoid something 100% than to risk “dabbling” and losing control.

Know thyself. Talk to someone. Be careful out there.

03/08/2026

Culture is a fascinating thing. It’s hard to describe when you’re living in it, but when you go somewhere with a different culture you start to see it.

It reminds me of the story: an older fish swims by two younger fish in the tank and says “the water’s great today, isn’t it?” And one of the younger fish says “what is water?”

Culture is behind many of the decisions, large and small, that we make every day. What to wear, what to listen to, what to eat, of course. But even bigger decisions like what kind of car to get, where to live, what job to get. These are all influenced by culture.

In Brazil, it is more common to: live with your parents until marriage, stay in the city you grew up in, use public transportation or own one small car per family, but throw a big party for birthdays and weddings.

In the U.S., it is more common to move away from your parents for college and thereafter, own two cars, one or both fairly large, per family, and have relatively small get togethers for birthdays (wedding I think are more varied).

When we say buying a house is an emotional decision, it’s also a cultural decision. What will my friends and family think if I don’t have my own home yet? What if I live in an apartment in the city, or a house with lots of land in the country? How many bedrooms do I “need”? The answers depend on culture as well as economics.

It is helpful to be aware of the role culture plays in our financial decisions, and the tradeoffs that requires us to make. A bigger house has higher utility bills, lawn care bills, property taxes, and might require higher gas bills if it is further from the city. Big parties bring people together and create memories, but what really make the event special and memorable? The location and the entertainment or the people and conversations? This is not to judge any cultures but to find what’s meaningful and embrace that, while economizing the things that are less important.

If you have the opportunity, staying somewhere else for an extended period of time, maybe even just a month, gives you a fresh perspective on your own culture and decisions that once you’ve seen it you can’t ignore it.

27/07/2026

Some investors are just waiting.

Waiting for a factor to work, or a trend to reverse.

Waiting for a bubble to pop, or a price to drop.

Waiting for inflation to spike, or an interest rate hike.

Waiting for the dollar to fall, or a margin call.

They are just waiting.

Waiting for the puts to pay off, or the managed futures to lift off.

Waiting to buy the dip, or for a hot tip.

Waiting to pay the taxes, hoping investors aren’t sharpening their axes.

Waiting for a rocket to the moon, or for management to change their tune.

They are all just waiting.

02/07/2026

One of the things I love most about Brazilian culture is that Brazilians are proud, but self-effacing at the same time. Once you’re in on the memes, there’s no going back!

They can be frustrated with politics or the economy, but there are still so many shared cultural experiences, in a way that I think is disappearing in the U.S.

Being in Brazil for the World Cup (as the games take place back at “home”) has been amazing. Before the games, there’s a flurry of activity. The streets and the stores are packed. Everyone in their jerseys. And then… silence. Everyone watching all at once, at home, at the boteco… And then Brazil scores and the whole neighborhood cheers! And no matter what happens, there will be memes.

30/06/2026

Where do corporate earnings actually come from?

Wall Street waits with bated breath every quarter for companies to report earnings, but I think the focus on each company's individual earnings misses the bigger picture. Where do those earnings come from? I think this question is especially relevant today as we see eye-popping earnings from some companies concentrated in certain sectors.

I like to think of the economy as a pie, and that pie is mainly divided between consumers and businesses. The pie can grow or shrink through productivity improvements and government deficits. If consumers are saving more, businesses get a smaller piece of the piece. If consumers are saving less and spending more, businesses get a larger share of the pie. The trend lately has been that consumers are saving less, and government is growing the pie through deficits and an expanding federal debt.

Within the business piece of the pie, the pie gets divided again. At any given time, some sectors are getting more of the pie, while others necessarily are getting less. For example, as oil prices increase, the oil producers likely get a bigger piece of the pie, while other sectors like travel or going out to eat may get less of the pie as consumers cut back to cope with higher gas prices.

This concept is known as the Kalecki Profit Equation: Corporate Profits = Investment – Household Saving + Government Deficits + the Trade Balance.

Occasionally, the market prices these changes in share of the pie as if they will continue indefinitely. Historically, however, these changes sometimes revert to the average. Consumers can't overspend forever, the government eventually needs to address deficits, and businesses often overinvest and create oversupply, leading to more competition and lower margins.

The lesson of the pie is that earnings do not come out of thin air, if earnings are increasing in one area of the economy, they must be coming from consumers, other businesses, or the government. Chasing trending sectors with our investments has historically been challenging, as it is hard to predict when these trends will reverse. It is good to review your portfolio and see if it well diversified across sectors, company sizes, and geographies. We tend to feel more comfortable investing in assets that have recently gone up in value, even if that means future returns are likely lower and risk might actually be higher.

If your portfolio reflects this recency bias, it might be time to rebalance or reallocate. If you'd like a second opinion on your portfolio and your financial plan as a whole, set up a 30-minute free intro call today!

This post is for educational purposes only and does not constitute personalized investment advice. Past performance is not indicative of future results. Planalto Financial LLC is a registered investment adviser in the state of Alabama.

23/06/2026

Have you ever thought about moving to Brazil? Wondering what the cost of living is like? Here are my own monthly expenses for a family of four in Brasília. Bigger cities like Rio and São Paulo will most likely be more expensive, but other cities and more rural areas could be cheaper! I’m using 5 reais per $1 for the conversions below, so note that this is not exact and the exchange rate may vary depending on when you read this or where and how you convert currency.

- Rent for an unfurnished 3-bedroom apartment near the center of Brasília: 3k reais ($600).

Note: you'll need to bring your own refrigerator, stove/oven, and washing machine.

- Groceries: 250 reais per week ($50)

- 2012 Toyota Corolla: 73k reais ($14.6k) — new cars can run 150k-300k+ reais ($30-60k)

- Car insurance: 295 reais per month (~$60)

Note: This is not an apples to apples comparison with an American auto insurance policy

- Gas: ~400 reais per tank ($80)

- Electricity: 80-100 reais ($16-20) per month — most places don't have central air, a clothes dryer, or a hot water heater, so you'll likely use far less than you're used to

- Botijão of gas: 130 reais every 3 months

- Going out to eat: 100-300+ reais ($20-60) depending on the spot — fast food and street stands are closer to 100 reais, full service restaurants closer to 200-300 reais or more

- The best deal in Brazil? A casquinha (soft serve cone) from McDonald's is 3 reais. It was 6 until recently — still worth it.

Our cost of living is definitely lower in Brasília compared even to Alabama, where we're from. That said, it's important to consider the full picture. Brazil and the U.S. do not have a full tax treaty, which can have real implications for Americans living here — worth discussing with a qualified advisor before making the move.

Curious about any other expenses? Drop your questions in the comments! 👇🏼

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17/06/2026

Your net worth is not your value.

I worry that our account balances and net worth statements from planning tools have become our yardstick for success. It has become a measure of our value to our families and society. The number represents our hard work and sacrifice throughout our careers. Seeing the number grow feels good, seeing the number drop - even if it is for spending or giving - can be painful.

With pensions and Social Security, you don’t see “your share” of the fund. You get a check each month or so, and that’s yours to spend. When that’s gone there will be another. Many people feel this is less psychologically painful to use.

The end result is that we give most of the money away when we die, and aren’t around to see the enjoyment of it. In many cases, the kids are already grown, in their peak earning years, they’ve saved for college for the grandkids, or they may even be nearing their own retirement. The charities and religious institutions we cared about have waited years for this funding, and we’re not around to see the results or direct its use.

There are good reasons to keep assets in reserve, of course. We don’t know exactly when we’ll die, what market returns will be, or if we’ll need long term care. A true financial plan can help address these things, especially if you have financial flexibility, and there may be ways to transfer part of these risks to give you even more flexibility.

It’s time to stop looking at our net worth as a scorecard, and start seeing it as an opportunity. An opportunity to make memories, to make our own lives easier or more enjoyable, and to give to others or in some other way make the world a better place.

This content is for educational purposes only and does not constitute investment advice. Planalto Financial LLC is a Registered Investment Advisor registered in the State of Alabama.

03/06/2026

I'm just going to say it... I don't hate annuities.

Annuities, known as previdência privada in Brazil, have a bad reputation — and sometimes deservedly so. But income annuities can serve a specific purpose: longevity risk transfer.

As a fee-only advisor, I don't receive commissions or compensation from insurance companies or annuity providers. My role is not to sell products, but to evaluate whether a particular tool improves a client's overall plan. Many times an annuity isn't necessary, but in certain situations it can meaningfully reduce specific retirement risks.

As I discussed in a previous post, the 4% "rule" is based on U.S. market history — it isn't a law of nature guaranteed to work in the future. When building a financial plan, we have to plan beyond average life expectancy to be conservative. Using the Society of Actuaries Longevity Illustrator, for a male/female couple both age 65, there's a 10% chance one of them will live to age 100.

Through risk pooling and the law of large numbers, an insurance company can plan to the average rather than the outliers. With thousands of people covered, life expectancy becomes more predictable than it is for any one individual. That means they can often provide a higher distribution rate than one would typically recommend from a portfolio of investments alone. It is also a transfer of market risk — the insurance company invests the premiums and is responsible for producing the contractual distributions.

Of course, there are tradeoffs. Distributions are generally not explicitly linked to inflation, whereas the 4% rule assumes increases for inflation. It's also possible to achieve higher returns by staying invested in stocks or bonds. And it can be psychologically difficult to watch your investment account balance decline — even when that value has simply moved into a guaranteed income stream elsewhere.

Some people will have enough lifetime income through pensions or Social Security that an annuity isn't needed. Some are comfortable with investment risk and prefer the flexibility of a portfolio. In these cases, an annuity might not be necessary or desired. And in any case, an annuity is never the complete solution — it is one tool, and one part of an overall plan.

But for those with a strong concern about outliving their assets, income annuities provide a way to transfer some of that risk — and perhaps provide the comfort to spend more freely in retirement. If this sounds like you, I wrote more about this at the link in the comments, or schedule a free 30-minute intro call to see if your plan would benefit from an income annuity. 👇

This content is for educational purposes only and does not constitute personalized investment, tax, or financial advice. All investing involves risk, including the possible loss of principal. Past performance is not indicative of future results. Please consult a qualified financial professional before making any investment decisions.