BLOGS

As the 2023 tax season wraps up for many of you, it's prudent to start thinking about optimizing your tax situation for the current year and beyond. The best time to begin planning for next year’s taxes is to proactively start now. As surprising as it may sound, the higher inflation rates we have been experiencing may positively impact your 2024 tax planning.

The year started on a strong note for stocks with the S&P 500 posting its best first quarter since 2019. The index is sitting at new all-time highs, being driven by resilient corporate profits, optimism that the economy has avoided a recession, and a continued boom in Artificial Intelligence (AI) spending. International and US small-cap stocks rallied along with their larger peers.

As your income rises, it naturally creates additional complexity in your financial life. As you experience income jumps that are common in your 40s, you need to mind your personal savings gap. Your savings gap is how much of your household income you need to save or invest to reach your financial goals versus what you are saving. 

Understanding your unique financial goals, needs, and attitudes toward money are essential in determining how confident you are about your future finances. A recent study published by Northwestern Mutual examines US adults by generation to understand attitudes and behaviors toward money, financial decision-making, and financial security. 

Starting early, saving as much as possible, and being thoughtful about how you allocate your investment portfolio to balance risk and return are the basics for most investors. As you continue to increase your income and your investments grow, taxes become a critical component of your long-term savings and investment plan. 

At the start of the year, Wall Street strategists were predicting 2023 would see a recession and we would experience a tough year for stocks and bonds. We are glad that the experts missed the mark! The year's final quarter saw a strong rally across all asset classes, capping an excellent year for the markets.

We are less than a year away from the 2024 presidential election. The 2020 election was one of the more contentious elections in US history and the 2024 edition appears to be headed in the same direction. This quarter, the top question we have heard in conversations with clients is, “How will the elections impact my investments?”

Your financial well-being is a vital aspect of your overall life satisfaction. As the year draws to a close, these year-end financial tasks can help ensure you're on the right path to financial success and peace of mind in the coming year. This is also an ideal moment to discuss your financial goals and plans with your financial planner.

From the investor perspective, the changes to the financial advisor model provide more options, transparency, and more services that used to be accessible only to those with a great deal of wealth. The fee-only fiduciary advisor gets paid to provide advice to their clients, whether in financial planning, asset management, or both.

Choosing a health insurance plan can be difficult. Many employers offer PPOs (Preferred Provider Organizations) and HDHPs (high deductible health plans). When considering an HDHP vs. PPO, each option has pros and cons. Since both fully cover wellness visits and annual exams, your decision should reflect your personal needs.

Rising interest rates weighed on stocks and bonds this quarter. The Federal Reserve increased short-term interest rates by 0.25% at their July meeting and left rates unchanged in their September meeting. The September meeting went as expected, the Fed signaled its commitment to keeping short-term interest rates higher for longer.

Passive income presents an opportunity to diversify your income sources. For clients whose income fluctuates due to bonuses, commissions, or the nature of their industry, a stable income stream can be appealing. It's akin to having a financial safety net that helps smooth out the peaks and valleys of certain job types.

Passive income is a buzzword we see on TikTok, YouTube, and other social media sites. This has filtered into a lot of conversations with many of our clients. The concept of passive income is amazing – you don’t have to do anything to earn more money on your money. That sounds pretty sweet, right?  

Despite consistently dwindling inventory and rapidly accelerating mortgage rates, the time houses spend on the market is close to historic lows. The average is 47 days – but there are markets where the list/open house/offer timeline can be less than a week. 

Stocks winning streak continued, marking the third straight quarter of positive performance. The Federal Reserve (Fed) had two meetings in May and June. They increased rates by 0.25% in their first meeting, but elected not to raise rates in their second meeting.

If your extra cash build-up is due to reducing expenses, an increase in income, or a recent windfall, it’s sometimes worrisome to have so much extra cash sitting in the bank without a specific use in mind.

Imagine trying to put a price tag on your home at 4:00 pm EST daily or even every minute all day long. The process, and oftentimes the result, would drive you crazy! Think of the countless small things that could affect the price of your house.  

The current I Bond yield, most recently adjusted in May of 2023, is 4.3%. Since these rates are tied to inflation, we have started to see the new 6-month interest rate offering come down as inflation is easing. 

We’re all familiar with the Roth IRA, an after-tax individual retirement account that permits both earnings and withdrawals (after age 59 ½ of course) to be tax-free. This tax-advantaged investment vehicle is not exclusive to those over the age of 18. A Custodial Roth IRA exists that allows parents to contribute on behalf of their children, assuming the child has qualifying income.  

The 529 College Savings Plan is designed for a beneficiary to utilize the tax-free funds to cover a multitude of college expenses. While this college savings vehicle might be known for its focus on education planning, the Secure Act 2.0 enhances the use of 529 accounts and helps alleviate a few common concerns we regularly hear from our clients.

Reviewing tax returns can be daunting and difficult given the many state and federal complexities that are often changing. We find it most opportune to review your tax returns now, while there is still time to address issues before next year, and while you may have time to amend returns if necessary.  

The markets started the year off on a positive note, with stock and bond prices moving higher despite encountering an unexpected shock in the banking sector. Stocks surged out of the gate in January, hoping that inflationary pressures would subside and the Federal Reserve (The Fed) could stop their rate increases.

Oftentimes, budgeting feels time-consuming and restrictive. Traditional budgeting forces decision-making as if you are a programmable spreadsheet. Rather than focusing on month-to-month expenses and spreadsheet formulas, let’s focus on long-term savings through a process coined “reverse budgeting.” 

If you have contributed the maximum to your 401(k) plan, you may want to consider additional after-tax savings in an IRA. While the contribution will not be tax-deferred, it will grow tax-free and can provide an additional source of income during retirement.

Setting Every Community Up for Retirement Enhancement, the SECURE 2.0 Act expands on the 2019 SECURE Act to make it easier to have a successful retirement. The legislation tackled retirement savings throughout several points on the financial journey, with a provision to facilitate saving and investing for almost everyone. 

Getting laid off from a job upends almost every aspect of your world. Besides the financial impact, there may be emotional, psychological and even physical implications.

 The goal is to turn a loss into a successful transition to the next stage of your career. Having this happen as quickly as possible will alleviate some financial concerns, but it is important to allow yourself time to process the emotional and lifestyle affects.

Inflation has been making every area of our lives more expensive as the costs of the goods and services we use every day have skyrocketed. But there may be a small silver lining. The IRS pegs tax brackets, tax deductions, 401(k), and other tax-efficient vehicle contribution amounts to inflation.

Millions of U.S. college graduates have begun their careers with a crushing student loan debt balance. In fact, 40 million Americans owe more than $1.7 trillion in total loan debt. This equates to more than 50% of students graduating with significant debt.