I often discuss the current, temporary challenges facing the stock market, BUT today I’m going to discuss an opportunity provided by challenged stock markets.
For retired clients, I often use Roth conversions as a way to maximize the after-tax value of their wealth and retirement income. Stock market corrections can make those conversions even more valuable! Continue reading “SILVER LINING: Tax Planning Opportunity!”
The most recent COVID relief bill was signed by President Biden yesterday. In one year’s time our government (two different administrations) has passed about $6 trillion worth of stimulus. We’re so used to “trillions” being thrown around I believe we’ve become numb to the mind-blowing magnitude of it all so I’ll try to put it in perspective:
- $6,000,000,000,000 (that’s twelve zeros) divided by a population of 330 million is about $18,000 for every man, woman and child.
- The average household is about 2.5 people (130 million households) so $6 trillion of stimulus is about $46,000 for every household on average. For our family of five, it’s about $90,000 (no, we didn’t get any of that).
Continue reading “Putting $6 Trillion “Stimulus” in Perspective”
It’s not what you make that matters but what you keep!
This is a great opportunity to talk about tax-loss harvesting.
We’ve just experienced the fastest 30% decline from an all-time high in history. It took only 22 days. “The second, third and fourth fastest 30% declines all occurred during the Great Depression era in 1934, 1931 and 1929, respectively.” – Yun Li, CNBC
That means many investors probably now have positions with significant unrealized losses. This is a great opportunity to harvest those! Continue reading “A Great Time to Talk About Tax Loss Harvesting”
At the end of last year Congress passed the SECURE Act, which had a pretty significant impact on individual retirement accounts. The one change I want to focus on in this brief letter is the impact of the new law on Required Minimum Distributions (RMDs). Continue reading “SECURE Act: Changes to Required Minimum Distributions (RMDs)”
There are a few folks I’ve been speaking with over the last couple months that are interested in working with me but are hesitant to move forward because they don’t want to sell any investments. This is largely due to the large capital gains they have embedded in some of their long-held investment positions.
Before I discuss the potential problem with this line of thinking let me express that (1) I am very sensitive to taxes when managing portfolios and (2) I do manage around concentrated positions with large capital gains when appropriate using a variety of methods (e.g. options strategies).
The problem with this line of thinking is that you’re letting the tax tail wag the investment dog. The best way to illustrate what I’m talking about is with a simple example. Continue reading “Don’t Let The Tax Tail Wag The Investment Dog”