If you are fortunate enough to have a company sponsored 401K plan, you will likely see some new (and potentially confusing) illustrations on your statements in the coming months. The changes are related to the 2019 Secure Act passed by congress. The mandate requires 401k administrators to provide an estimate of “guaranteed lifetime income” assuming your current 401K was completely “annuitized”.
What does it mean to “annuitize” your current 401k balance? Continue reading
Are you setting New Year’s resolutions in pursuit of being a better version of you? Health and finance are two common areas of resolution focus. When it comes to being healthy, people often resolve to sit less (move more), eat more nutritious foods, and of course exercise. On the personal finance side, the most common ideas are to spend less and/or save more. Sounds simple, but how can we make the resolution more intentional and enhance the probability of success… and your long-term financial “journey”?
It is often said that there are just two certainties in life: Death and Taxes. Or how about “the only constant in life is change”? In 2021, it is hard to recall a client conversation where the topic of potential tax policy changes did not arise. Since COVID, government policy was all about huge stimulus and spending; as we shift our attention to the final quarter of 2021 and beyond, the conversation is increasingly about how all additional spending proposals will be paid for (via taxes – both corporate and personal).
Meme stocks, Real-Estate, Initial Public Offering (IPOs), Special Purpose Acquisition Company (SPACs), Bitcoin, and Precious Metals – what do all of these share in common? Each is an example of an investment or asset currently receiving lots of “buzz” and client curiosity. While we do not typically follow these items intimately and prefer the diversification and liquidity of traditional mutual funds, bonds, and ETFs, we do not necessarily have anything against a client owning other assets when the exposure is properly managed. We do encourage anyone exploring ideas that are receiving intense attention from the media or “peers” to proceed with caution as the waters are often dangerous. If we were lifeguards at the beach, we would hang the yellow flag on the chair, “proceed with caution.”
On March 11, Congress passed a third round of COVID-related stimulus via the American Rescue Plan Act (ARPA) with a price tag of $1.9 trillion. This latest package – months in the making – is best known for direct payments of $1,400 to qualifying persons and each of their dependents. A more abrupt income phase-out (adjusted gross income of $75,000 or $150,000 married filing jointly) made fewer people eligible this round. Those who are near that threshold may consider making a deductible IRA contribution for example. But stimulus payment eligibility aside, there are other provisions in the bill that may provide you with some strategic planning opportunities – even for those who do not qualify for direct payments.
In 1967 Ford unveiled a “see the light” marketing campaign for its new Mustang. That campaign utilized a light bulb which was turned on to illuminate the room with the new Mustang model. This symbolized how seeing something in a new light can result in an epiphany moment – the message: “Ford has a better idea”, a different approach.
“Forced Perspective” is a technique employing optical illusions to make objects appear closer/farther, or bigger/smaller than they actually are. Filmmakers would for example place a miniature dinosaur close to the camera so that it would look gigantic in the film. Similarly, many tourists at the Leaning Tower of Pisa take a “selfie” with their smartphone camera, making it appear as though they are preventing the structure from toppling. Reflecting on years of experience it is hard to recall a time where it felt like there was more uncertainty than the present. A global pandemic, social unrest, and a polarizing US presidential contest are presently being placed very close to the “camera” by media, creating HUGE worry – a forced perspective. We cannot recall a time where there were not several big worries simultaneously distracting investors. The chart below provides just some past examples.
1) Set financial goals; 2) Understand where your money is going; 3) Manage your debt; 4) Put your finances on autopilot; 5) Maintain a steady lifestyle; 6) Invest wisely; 7) Obtain knowledge and advice.
At Nvest, our primary goal we strive to achieve with each client is “delivering financial peace of mind.” We believe this goal is best achieved through regular communication; a prudent, time-tested approach to investment management; and via a strong and detailed understanding of how your accumulated assets form the big picture, “financing” you through each stage of your life. In these respects, we are excited to introduce and make available to clients a new tool we call the LIVING LIFE client portal.
No sugar-coating it; the start of this New Year is not what any of us hoped for. Day to day life is highly uncertain, and investments are bruised. While the cause of the current environment is unique and uncharted for every living generation, this too shall pass. Periods like this can cause one to feel paralyzed, with nothing to do but wait it out. However, there are strategies individuals can pursue that will position them to benefit when the storm begins to clear, and simultaneously help you restore a long-term mindset.
Against a noisy political backdrop and busy holiday season, it would be easy to miss a key piece of legislation called the SECURE Act that was signed into law in late-December that touches in one form or another most all investors and current retirees.
We are receiving some questions regarding the act’s passage and would like to call attention to the two sections we believe are of greatest impact. Before we jump to discussing The Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act), we want to remind you that we view it important to stay abreast of changes to laws or rules that could impact your financial future. We monitor them almost as closely as we monitor the markets.