Optimism in the Face of Economic Turmoil

Jim MailliardThe year 2022 has been rough for investors.  Even relatively conservative portfolios are down about 15 percent. A huge culprit has been red hot inflation, currently running at about 8 percent, according to economic consensus. Food and gas are running even higher. That contrasts with a long-term U.S. average inflation rate of 3.3 percent going all the way back to 1914. Inflation this high creates the expectation of higher interest rates, which we are now seeing across the board. That is historically bad for economic growth, stock returns, and the bond markets. Is it possible to maintain one’s optimism in the face of economic turmoil?

Despite this dreary synopsis, investors would be wise to stick with their long-term written plan, unless something significant has changed with their financial goals and circumstances. Successful bond money managers believe inflation is cooling at least a little. That would mean the Fed could slow their aggressive rate hikes, which would eventually be good for the bond market and provide investors with some relief.

As for stocks, there is also reason for optimism. John Lynch of Comerica Bank points out that since 1950, in the 12 months following a mid-term election, the S&P 500 index of large company U.S. stocks has risen an average of 15 percent with no down years.

The charts here contain monthly data from the Dow, S&P, and Nasdaq indices. You can see that, while the markets are down overall for the year, each received a nice bump up in October. This illustrates the importance of maintaining a consistent investment strategy.

Those who remain invested over the long-term historically reap the benefits of the anticipated upturn in the markets. Those who panic during a downturn and sell out of the markets often miss that opportunity.

Optimism in the Face of Economic Turmoil
Yahoo! Finance data; past performance does not guarantee future results.
By |2022-11-24T17:49:34-07:00November 29th, 2022|Current Affairs, Investing|

Vacation Goals and Financial Planning

Mike McCannWhat story do you want to tell about your next vacation? What could make your next trip amazing? How do vacation goals and financial planning intersect? The answers could lie in this year’s travel trends. In 2022, people planned getaways that weren’t so much focused on where they went, but rather on what they experienced.

2022 Travel Trends

  • Friendcations: After missed milestones and months (or years) of Zooming since 2020, friends are reuniting for the first time in a while and they’re traveling in bigger groups to do it. That’s one reason why bookings for party spots that are great for big groups – like Vegas, the Caribbean, and Ibiza – exploded in 2022, according to a CNBC report.
  • Pet Travel: Forbes recently reported more people are taking their pets with them on leisure and business travel. And more hotels and airlines are becoming pet-friendly, finding ways not only to accommodate pets but to also treat them as guests. One unique aspect to this trend is how some folks are integrating into other trends – like taking workcations or bringing pets on extreme adventures.
  • Extreme Adventures: Many folks, after feeling cooped up and bored, were ready to adopt a thrilling new adventure or physical challenge as their dream vacations. Safaris, deep sea dives, and extreme hiking were among the favorites, according to Conde Nast Traveler. Some even signed up for sophisticated “space camps” for a truly out-of-this-world vacation experience.

vacation goals and financial planningTravel trends come and go, but the benefits of getting away can last a lifetime.

It’s a chance to unplug, destress, recharge, and create memories. Vacations have even been shown to provide physical health benefits, too, like lower blood pressure and lower risks of heart disease, according to . Simply put, vacations are good for us. They are an important piece of the financial planning process and of creating a truly rich life.

Are you ready to get away? Your advisor can help you achieve your vacation goals. That’s the value of #lifewithPerspective.

By |2022-11-20T14:37:39-07:00November 8th, 2022|Financial Planning|

Year End Tax Tip – Prepay Education Expenses

year end tax tipHere’s a quick year end tax tip or two.

If you’re the parent of a college student, you may be able to lower your 2022 tax bill by prepaying some 2023 tuition. The American Opportunity Tax Credit is worth up to $2,500 for each student in their first four years of undergraduate study. This is a tax credit, not a deduction, so you don’t need to itemize to take advantage of the opportunity.

The Lifetime Learning Credit is another way to reduce your tax bill if you plan on taking classes yourself in 2023. By prepaying the January bill before the end of 2022, you can claim up to 20 percent of your costs for tuition, fees, and books, up to $2,000. This credit is not limited to undergraduate expenses, nor to full-time students.

For both credits, married couples filing jointly with modified adjusted joint income (MAGI) of up to $160,000 can claim the full amount. Those with a MAGI of up to $180,000 can claim a partial amount.

Want another year end tax tip? Read our article about tax loss harvesting.

Source: Sandra Block, Senior Editor, Kiplinger’s Personal Finance.
Photo courtesy of Andrea Piacquadio via
By |2022-10-20T12:50:06-07:00October 25th, 2022|Taxes|

Smooth Sailing Tax Strategies

smooth sailing tax strategiesThe boat you stand in rocks and sways as the waves roll and churn and crash across the stern. That’s how it can feel when tax rules are up in the air, soon to change, or recently changed. If you’re a high earner or have a sizable portfolio, this unsteady feeling intensifies. Wouldn’t it be great to have smooth sailing tax strategies?

Many people make the mistake of leaving things “as is” when laws change,  leaving potential tax savings on the table. They don’t realize that there often are small adjustments  they can make before new rules take effect to lock in savings.

What if you viewed changes to tax law as an opportunity? The wealthiest Americans tend to embrace tax changes and find hidden savings as the tax tides ebb and flow. They ask questions.

  • How much of my income and which of my investments will be affected?
  • How can I use the current unpredictability around taxes to my benefit?
  • Are my investments still aligned with my tax strategies?
  • Is there a way to lock in savings now before rules change?

At Perspective, we ask and answer those questions for you. We recommend and help you implement solutions that best fit your unique situation. We do all this because being proactive can steady your tax strategy and provide greater peace-of-mind.

Smooth Sailing Tax Strategies

In the final three months of 2022, we’ll be focusing on tax-loss harvesting, portfolio rebalancing, and other techniques to help ensure you get the most out of your income and investments.

By |2022-09-23T15:22:38-07:00October 11th, 2022|Investing, Taxes|

What is in the Inflation Reduction Act? 

Patrick EngWhat is in the Inflation Reduction Act?  A staggering brew of green energy spending and corporate taxes, as well as major changes to Medicare. Will new Medicare laws help retirees? And will the new laws help the economy? Maybe. Or maybe not. When it comes to massive legislation, the future is always a bit hazy.

The timeline below details some of the major Medicare law changes that are planned. Since health care is one of the biggest unknown costs in retirement, lowering drug costs and making spending more predictable for Medicare recipients could absolutely have a positive impact on millions of people. The new rules also could mean premium changes as insurance companies figure out their models.

Whether the overall bill will live up to its name, lower inflation, and have a net positive impact  on the economy also remains to be seen. Some economists project the bill will end up modestly reducing inflation and trimming the federal budget over the next decade. Others are concerned about the impact of the new corporate tax rules written into the legislation.

Legal challenges or post-election changes could end up altering much of what’s in the new legislation. Much depends on the actual execution of the new rules. As is usually the case, only time will tell.



What is in the Inflation Reduction Act

By |2022-09-23T15:02:02-07:00September 27th, 2022|Current Affairs, Health Care|