Advisors

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Year-End Tax Saving Strategies

Lupe Camargo, financial plannerNow is a perfect time to check for any remaining opportunities to help minimize your tax bill before 2017 comes to a close. There are many year-end tax saving strategies for you to consider.

At Perspective Financial Services, we take a proactive approach to minimize our clients’ tax bills through a variety of investment strategies. Selling a security in a taxable account at a loss and replacing it with another security of the same asset class can help offset some of your capital gains tax; this is referred to as tax loss harvesting. We also research mutual funds that may generate a capital gains distribution before making end of year purchases; this helps avoid unnecessary capital gains taxes on new investments.

There are additional things you can do, with the help of your financial planner. Here is a checklist of things to think about.

When possible be proactive about the timing of your income. This can make a significant impact on your tax bill.

  • Defer a bonus or a sale of appreciated property to the following year when it becomes advantageous to avoid the income this year.
  • Pay expenses this year, such as fourth quarter state income taxes or medical expenses. This helps especially when next year’s income will be less than this year.
  • Increase your federal income tax withholding to soften the blow of a significant tax bill.

Take advantage of the vehicles that not only help you plan for the future, but give the added bonus of reducing your income taxes.

  • Max out your IRA contributions, and take advantage of the catch-up if you are over 50 years old.
  • If you are over 70 1/2 years old, or you have an inherited IRA, do not forget to take your required minimum distribution. The penalties are very steep if you do not.

If you are planning to gift money to family or charities, do so before the end of the year.

  • Give $14,000 per individual annually in federal tax-free gifts.
  • Make planned charitable contributions and take advantage of the charitable rollover provision if you are over 70 1/2 years of age.
By |December 4th, 2017|Advisors, Charitable Giving, Taxes|

Managing Expectations

This month, the U.S. stock market hit an all-time record-high of over 22,000 in the Dow Jones Industrial Average. This rise represents a 20 percent return since November 2016 and a more than 300 percent return since a low of about 6,600 in March 2009. Managing expectations, as an investor during such a strong bull market can be difficult.

Stock market investors have enjoyed a string of steady positive returns for the better part of two years now without any meaningful correction. A meaningful correction would be a pullback in the 8 percent to 10 percent range, which from the current levels would constitute a fall of about 2,000 Dow points. As shocking as that sounds, a correction or pull back of any level would be a natural occurrence in the financial markets.

The reality is financial markets do not usually march straight upward without some type of bump or hiccup that would cause it to drop and pull back for a rest. It’s normal to experience some kind of volatility or downward movement in the course of investing. Likewise, the recent stretch of market appreciation, while welcome, is not typical.

When the inevitable and natural occurrence of a market decline takes place, remember the following things to help you manage expectations through the downturn:

  • Stay diversified. Even if it doesn’t feel right, history shows that this strategy works.
  • Avoid jumping in and out of the market. It is virtually impossible to time the market.
  • Invest regularly. The potential to buy investments at discount prices can only happen if you are involved when things look bleak.
  • Market corrections, no matter how painful, are a natural part of an economic cycle.

Finally, stay in communication with your advisor as changes take place in your life or even if you just want some perspective on market movement. An important role we play in our clients’ lives is managing expectations, or being an “emotional surge protector,” when these unavoidable declines take place.

By |August 28th, 2017|Advisors, Current Affairs, Investing|

Seasons of Investing

In many ways, tending a portfolio is like tending a tree, according to Jim Mailliard. One must know how much to water it, when to prune and when to harvest. There are seasons of investing, and a well-balanced portfolio can grow and blossom through those seasons.

In this brief video, we explain the analogy in more depth.

By |August 14th, 2017|Advisors, Video Blog|

Your Investment Portfolio Pyramid

Building a strong investment portfolio is like building a pyramid. In this brief video, Certified Financial Planner™ practitioner Mike Larriva shares his reasoning for this analogy.

Your Investment Portfolio Pyramid

By |June 5th, 2017|Advisors, Investing, Video Blog|