In today’s issue:

• Shrewd Investor Alert - Moody’s Downgrades US Debt… what next?

• Financial Planning Hacks - Asset protection 101…

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WISDOM

SHREWD INVESTOR ALERT

Moody’s Downgrades U.S. Debt

What are the smart moves?

For the first time since 1917, all three major credit agencies have downgraded U.S. debt. Moody’s cited $36 trillion in federal debt, rising deficits, and political gridlock. Wall Street didn’t love it.

📉 Stocks dropped—tech led the fall.

📈 Yields spiked—30-year Treasuries topped 5%.

🏠 Mortgage rates ticked up.

But while headlines screamed panic, shrewd investors saw opportunity.

What the Smart Money Did:

1. Bought the Dip (Selectively):

Broad-market ETFs like $VOO and $QQQM got cheaper. Pros bought quality, not hype.

2. Rebalanced Risk:

Sold high-flyers. Tightened stop-losses. Raised cash for flexibility.

3. Leaned Into Treasuries (Yes, Really):

Ironically, Treasuries often rise during chaos. Safe-haven flows can drive yields back down.

4. Hedged Smartly:

Options, inverse ETFs, and global diversification kept portfolios nimble.

💡 What Now?

✅ Zoom Out: S&P downgraded U.S. in 2011. Markets recovered.

✅ Use the Volatility: Temporary dislocations = buying windows.

✅ Grab the Yield: 5% Treasuries are rare. Lock it in.

✅ Stay Strategic: Fear sells headlines. Wealth builds quietly.

⚡️ Shrewd Lightning Round:

📊 Market Pulse: Selloff = opportunity for long-term buyers.

💡 Quick Tip: Run a stress test—how exposed are you to higher rates?

📌 This Week’s Move: Add intermediate Treasuries to lock in yield.

Smart money isn’t running. It’s repositioning.

FINANCIAL PLANNING HACKS

Overwhelmed by a $3 Million Inheritance

Fabien’s Success Story

Meet Fabien. He never expected to inherit a substantial portion of his grandpa’s estate. When he eventually did receive $3 million after the old man’s passing, Fabien was floored. The poor man faced questions he’d never had to answer before:

• “Should I hire a financial advisor?”

• “How much taxes do I owe?”

• “Do I jump into my neighbor’s hot startup investment?”

• “What if someone comes after my money with a lawsuit?”

Fabien felt overwhelmed, partially because of his disgruntled relatives. He didn’t want to get tied down by frivolous lawsuits filed by dissatisfied creditors and others who thought he owed them money. Stories of lottery winners and heirs who lost it all haunted him. He knew this money could change his life, but he also understood the risks of getting into a legal quagmire.

So, here are some steps that he took as per his financial advisor’s suggestions. It helped Fabien secure his wealth and manage his assets from lawsuits (taken from the ultra-rich playbook):

10 Tips for Protecting Your Fortune (to be Shared With Would-Be Heirs)

1. He pretended the money wasn’t there for a while and kept living his life as before. (He was told not to make major purchases for at least 6 months.)

2. He paid his taxes first by setting aside what he needed for these obligations before he made any other plans. (He was told to learn the ultra-wealthy’s tax secrets as well.)

3. He immediately paid off his high-interest debts like credit cards and car loans.

4. He maxed out tax-advantaged accounts (IRAs, 401(k)s, HSAs, etc.) while considering 529 plans for his (yet-to-be-born) kids (and grandkids).

5. His finance guy told him, “If your mortgage rate is below 4%, keep it. Above 4%? Then consider paying it off. If it helps you sleep better, do it regardless of the math.”

6. He chose a fee-based advisor who prioritized low fees & transparency. (He subscribed to our newsletter as well for free guidance on money management for the affluent.)

7. He read foundational guides like The Bogleheads’ Guide to Investing and learned about accredited investor opportunities & alternative assets.

8. His focus remained on a safe withdrawal rate by spending less than 4% of his portfolio in a given year.

9. He always kept enough in cash, money market funds, short-term bonds, etc., to meet his short-term needs.

10. He learned that inherited wealth was a massive transition, so he allowed himself enough time to grow into the role of a wealth steward.

Now, let’s talk about protecting what you’ve built (or inherited). The wealthier you get, the more vulnerable you become to frivolous lawsuits. The ultra-rich don’t just hope for the best; they use a proven playbook to bulletproof their legacy.

These 4 tips will help you safeguard your wealth and protect it from predators. Keep lawsuits at bay and don’t let anyone claim what’s rightfully yours!

Tip #1: Make It Someone Else’s Problem (Umbrella Insurance)

Why it works? Lawsuits are like magnets for anyone with visible wealth. It’s no secret that the rich get sued more often than the poor. Jim Justice is a cautionary tale. That’s why you should use a large umbrella insurance policy as your 1st line of defense. This will bring a very powerful insurance company (with top legal teams) into the battle, deterring time-wasting suits outright! It works like this:

• Call your broker for an umbrella policy that matches (or exceeds) your net worth.

• Review your auto, home, and professional liability coverage for gaps.

Remember: This is your “first layer” of defense, not your only one. You must also follow the rest of our tips to make sure that your wealth is as safe as Fort Knox!

Tip #2: Adjust Your Structure (Trusts & FLPs)

Why it works? If you don’t own it, it can’t be taken. A Cook Islands Irrevocable Trust owning an FLP or Family Limited Partnership remains a gold standard. It costs you around $6,000 annually (in most cases) and protects your wealth from legal threats globally. Here’s how you play it:

• Set up an FLP and transfer family assets into it (real estate, major investments, business interests, etc.).

• Establish a Cook Islands Trust as the FLP’s owner.

• You manage the FLP (control without direct ownership).

• Distribute limited partnership interests to family members.

Now, here’s how it protects you. US creditors will need to sue in the Cook Islands, which can be an expensive and slow process, rarely successful if ever! Since the trust is irrevocable, all your assets are shielded from lawsuits, divorce, creditors, etc. You retain control over investments as well as distributions. Put 5,000 miles between your wealth and vengeful creditors.

Pro tip: Consult an experienced asset protection attorney. These structures should be set up before any legal trouble appears.

Tip #3: Use Your Home’s Full Protection (Homestead Exemption)

Why it works? In certain states (like Florida and Texas), your primary residence stays protected from creditors, no matter the lawsuit. In other words, your home CANNOT be sold to satisfy a creditor’s claims. So, Kansas, Iowa, and Oklahoma offer this protection, while Pennsylvania & New Jersey don’t. Here’s how you can play it:

• Check your state’s homestead exemption laws.

• Maximize your exemption by titling your new home correctly and documenting it as your primary residence.

• Consider relocating if your state offers little or no protection.

Example: OJ Simpson famously moved to Florida and bought a mansion before his civil suit, living off its value for the rest of his life, untouchable by creditors.

Tip #4: Keep A Low Profile (Lifestyle Privacy)

Why it works? In the end, it’s all about laying low. Bernard Arnault’s net worth is $147 billion. Carlos Slim Helu is $91-billion rich. How often do you hear about them in the news? Success is bound to attract unwanted attention. Take Elon Musk as an example, who lost $135 billion once he entered politics. Shrewd investors realize that “quiet money” is safer money. So, you can:

• Live in neighborhoods where you’re not the richest person on the block.

• Enjoy luxury, but don’t flaunt it locally.

• Keep your home modest, but take amazing vacations and enjoy experiences elsewhere.

• Teach your children about privacy and discretion.

Bonus Tip: Divorce-Proof Your Legacy

Worried about your kids’ future spouses? The ultra-wealthy often set up divorce-proof trusts for their children. By gifting assets to a trust (not directly to your child), you ensure that wealth stays in the family, even if your child’s marriage doesn’t (don’t be like Jeff Bezos in this situation!).

Also, talk to your estate planner about setting up a trust that distributes assets to your kids, not their spouses. This sidesteps awkward prenuptial conversations and keeps gold diggers at bay.

The Shrewd Investor’s Checklist: Protecting Wealth & Preserving Legacy

• Get real about your risks: Lawsuits, divorce, business disputes, & accidents are more common than you think.

• Upgrade your insurance: Start with an umbrella policy.

• Build legal walls: Use trusts, FLPs, and LLCs to separate yourself from your assets.

• Maximize state protections: Know your homestead laws and use them.

• Live smart: Keep a low profile and avoid unnecessary attention.

• Plan for the next generation: Protect your kids with divorce-proof trusts.

• Review and update regularly: As your wealth grows, so should your protection.

Remember, the ultra-wealthy don’t wait for lawsuits to happen; they build defenses early. Every layer you add is another barrier between your family and financial disaster. Take action today to not only protect your assets but also build a legacy that lasts for generations.

P.S. If you’d like us to break down your portfolio or ask a question, submit yours here: https://shrewdinvestor.com/roastme

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The content provided in this newsletter is for informational purposes only and should not be considered as specific advice for any specific individual. The information is prepared by knowledgeable individuals and is not written by certified tax professionals or investment advisors. For personalized advice tailored to your unique financial situation, consult with a qualified tax professional, financial advisor, or attorney.

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