To say that there have been a lot of changes in Washington could be the understatement of the decade; but one change that should be beneficial to taxpayers, in the short term, is the new Tax Reform Act that was passed by congress in December 2017. Not only is this going to lower the corporate tax from 35 percent to 21 percent indefinitely, but it will also be lowering individual and joint marginal income tax rates, as well. Although the tax cuts for individuals sunsets in 2026*, it should provide a well-needed shot in the arm to the American Middle Class.
Tuesday April 17,2018: the last day that we can file our income taxes on our 2017 individual earnings. That is, of course, without filing an extension. We also have from now until that day to make our contributions into an Individual Retirement Account. Many are asking whether the new tax law is going to affect what type of retirement account they should be using. In short, it is very much dependent upon the individual’s situation and goals; but, it is also a function of their household income level and whether they are being covered by an employer-sponsored qualified plan.
So many people I run into lately seem to be in a complete state of confusion regarding our current economy and the overall stock market. They can’t understand why the markets “feel okay” about such a politically incorrect, volatile and sometimes downright vile person in the Oval Office. My response to this sentiment lies in something that I’ve never done before; I’m going to quote myself from my November 2017 My City article: “The possibility of pro-economic growth policies could inspire animal spirits in the markets for hope of a brighter economic future.”
I hope all of My City’s readers had a wonderful Thanksgiving, as we all have much to give thanks for. As we move into the Christmas season, we often feel an urge to give a little extra during this time of the year, as it is a season revolving around the giving and receiving of gifts. One other thing that a lot of older investors associate with the year end, is what is called the Required Minimum Distribution. The Required Minimum Distribution (RMD) is a required amount that people who have attained the age of 70.5 need to withdraw from their retirement accounts. For some investors, this RMD has become very substantial, to the tune of tens of thousands of dollars. Many investors don’t really even want to take these distributions, and the main reasons for that is that are: 1) they don’t need the money at that point in time, and 2) they have to pay taxes on these funds that they don’t want in the first place.
As we roll into the one-year mark since the 2016 Presidential Election, we have much to be thankful for. The stock market as measured by the S&P 500* recently closed at its very highest level ever recorded. The unemployment rate is at 4.2% as measured by the Bureau of Labor statistics. Genesee County’s housing market has returned to pre-financial crisis levels. Clients ask me if these stats really have to do with our current President or not, and my response is often, “It doesn’t hurt that the only thing President Trump cares about is business and the economy.” I won’t give him credit for everything; but, I do believe that the American capitalists have had their animal spirits awakened and are making business decisions based on the new reality that businesses and the economy will remain the Trump Administration’s primary focus. Whether this administration lasts six more months, three more years, or seven more years, it’s almost a sure thing that President Trump hopes to be known as the “most pro-business President” in history.
Do you know where your Pension Plan is? Many people know they have a pension plan, but they’re not quite sure how it works, how stable it is, or exactly how their money is invested. The details are often hazy.
Markets continue to baffle investors as mediocre news, lunacy in Washington D.C., and threats of nuclear war with North Korea seem to be hitting the headlines on a weekly, if not daily basis. One would think that with these types of events going on, the markets could easily be in free-fall; but for the time being, it seems the exact opposite is happening. Per bigcharts.com, the markets continue to grind to all-time highs on the Dow Jones Industrial Average to higher than 22,000. In previous writings, I eluded to the possibility that the next great crash probably won’t come until everyone stops asking about the next crash. We may need to be wary of getting too comfortable with the markets parading higher.
I don’t know about you, but I’ve had a pretty great summer! As of this writing, we have had rather reasonable weather; not too hot and not too cool – kind of a Goldilocks summer … just right. With the season in full swing, and the end around the corner as we head back to school, I think it’s time to re-visit the subject of budgeting. Many people often wonder, “how much of my income should I be spending on my mortgage? Or my cars? Or my food?” Although there is no hard line in the sand on these questions, there are guidelines to help us spend less than we earn.
Since we may have been conditioned to expect crashes, here is my “two cents” on the situation. Crashes rarely ever come when most people are asking about them. For example, how many people were asking about the looming housing crash in 2005? In fact, most of my clients were asking why we weren’t riding the real estate boom and what funds are available to invest in that specialized in real estate. People tend to forget that leading up to the tech bubble of 2000, lots of people were quitting their jobs to become day-traders in this new sector called internet commerce. Etoys.com (no longer in business) was going to revolutionize Christmas shopping and people HAD to have that stock. What could go wrong?
To say that the Trump Administration has been a volatile one would be sugar-coating it. I would estimate that when President Trump was elected, about 55% of U.S. citizens were devastated, 25% were curiously optimistic, and 20% were elated. That last group included what I consider to be the 5% of those who are diehard capitalist and the people who “run the money” when it comes to the markets. The stock markets, in general, have reacted very positively to this new administration.
The weather is breaking and spring is in full bloom – people are starting projects to update and freshen up their homes. Over the last two months, I’ve made numerous trips to Home Depot in my own attempts to “do it myself.” DIY projects are usually a result of trying to save time or money, or utilize your skills. Some jobs we may choose to take on ourselves; others need a professional’s help. No matter the project, we generally assess the task to determine whether we can DIY or need assistance. I see finances in the same light, and ironically, it comes down to roughly the same three questions. Do I have the time to put in the research? Am I willing to pay advisory fees? How difficult is the financial task I’m trying to accomplish? The following is a list with regard to your finances which, in my opinion, could be DIY – or, they may require investment in expert help.
