Taxes and Investing: Understanding the Complexities

FORE! The Connection Between Golf and Investing

You may either be an armchair golfer watching The Masters or an avid league player about to tee it up at your local course. Either way, there are lessons that can be taken from the golfing world which can be applied to your investment and retirement planning strategy.

Have a Strict Routine: Great golfers have a consistent and disciplined routine before taking every shot. Investors that create and follow a similar path are also poised for success. Contributing to your 401k and brokerage account each month is a perfect example!
Seek Good Advice: Serious golfers have coaches to help them achieve peak performance. Serious investors are no different. Finding someone that can look for your swing faults and correct them is crucial to accomplishing both your golf and financial goals.
Ignoring The Noise: “I didn’t hear the crowd noise” is a common line you’ll hear from professional golfers. Investors also need to tune out the noise, which includes market swings, advice from untrained family and friends, or panic-driven news reports.
Bad Shots Will Happen: All golfers know that bad shots will always happen during a round. Adjusting your swing mechanics after a bad shot is a recipe for failure. Elite golfers have developed the mental toughness required to focus solely on the next shot. Experiencing market volatility is like hitting a bad shot. You never want to make rash decisions when it comes, since you’re likely to buy and sell at the wrong times.
Everyone Has a Different Swing: No two golf swings (or retirement plans) are alike. Don’t let generic advice you see on TV or the internet alter your path. What works for one person, won’t necessarily work for the nex

If you need an experienced and disciplined financial coach in your corner, please contact us for a free consultation. Golf lessons are optional.

Index Benchmarking (is) for Dummies

No, you’re not really a dummy. We just needed a catchy title! We actually discuss index benchmark performance with our clients all the time. Despite the problems of using indexes as a measure of investment portfolio success, the feedback from clients is often the same: “But how did we compare to the S&P 500, NASDAQ, Dow Jones, etc.?”.

So, while we cater to client demand to show index benchmarks, we also disclose the numerous problems with it:

Diversification: If your portfolio is properly diversified across all stock and bond sectors, it’s nearly impossible to benchmark. There are 11 sectors of the stock market and 4 sectors of the bond market, each with underlying asset classes. If you own 100% U.S. large cap stocks, then there’s a case for benchmarking vs. the S&P 500. Otherwise, you can forget about it.

Benchmark Weighting: The NASDAQ is a stock index made up of the largest 100 tech companies. The largest 7 companies now make up FIFTY PERCENT of the index!

The Dow Jones Industrial Average only contains 30 stocks: If you have a solid financial game plan and own a diversified risk-appropriate portfolio, then there shouldn’t be any need to compare to the indexes.

There’s no need to compare!: If you have a solid financial game plan and own a diversified risk-appropriate portfolio, then there shouldn’t be any need to compare to the indexes.

If you’re in need of a financial game plan, or want to know if you’re properly diversified, contact us for a free consultation.

How Elections (pretty much don't) Affect The Stock Market

Rational people understand that stock market performance will be based on sound economic fundamentals such as corporate earnings, interest rates, inflation, and GDP.

Irrational people believe the opposite: that political agendas, campaign promises and hypothetical policies will.

We want to set the record straight: There’s a mountain of evidence going back to 1950 that proves that presidential elections have had very little impact on the market. In fact, the data suggest that more volatility happens in the year leading up to presidential elections than it does after the elections. To us, that’s a clear sign that a decent percentage of investors are using emotions and personal agendas in planning for something that will likely never happen.

We hate to break it to you: There are huge discrepancies between ideas pitched on the campaign trail and actual policy changes that take place after election day. With that in mind, why would investors continue to make decisions now based on future hypotheticals? (Pssst…remember that 2nd line about irrational people?)

Of course policy changes happen. But they happen in both directions. So it’s crucial that you come to terms with this, set aside politics, and focus on what’s most important: the long-term financial well-being of you and your family.

If you need a rational voice to help you out, contact us for a free consultation.

How to Win by Losing: The Tax Loss Harvesting Game

Have you ever felt like you’re paying more taxes than you should? Well, you’re not alone! Uncle Sam has a way of making even the most profitable investments feel like a loss. But what if there was a way to ease your tax burden on these winners? That’s where tax-loss harvesting comes in, a strategy that allows you to offset your gains with losses.

Think of it like this: imagine you’re a farmer and you’ve had a bad year. Your crops have withered and you’ve lost a lot of money. But then you remember that you have a giant pile of manure sitting around. So, you decide to sell the manure to a fertilizer company. Now, you’ve turned your loss into a gain!

Tax-loss harvesting is similar. You sell your losing investments to offset your winners, lowering your taxable income. And just like the farmer, you’ll have more money in your pocket to do with as you please.

Here are a few tips to get you started:

Identify your losing investments. Take a look at your portfolio and see which investments have lost money this year. These are the ones you’ll want to sell for tax-loss harvesting.
Consider your tax bracket. The amount of money you save by tax-loss harvesting will depend on your tax bracket. The higher your tax bracket, the more you’ll save.
Don’t sell your investments just for the tax break. Make sure you still believe in the long-term potential of your investments before you sell them.

If you’re not sure how to get started with tax-loss harvesting, contact us for a free consultation.

Happy Harvesting!

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