Don’t miss the opportunity to save on your taxesThis time of the year, many people start thinking about year end tax planning. An often-integral part of tax planning involves the potential for tax-loss harvesting in your taxable portfolio. What we are going to discuss below can only be done in taxable accounts (i.e. individual, joint, UTMA’s, Trusts) and does not apply to IRA or other tax deferred accounts.
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On July 13, CRA Financial hosted a barbecue at the Atlantic City Aquarium, catered by Nobil Foods. Starting with a tour of the aquarium, a delicious barbecue and cocktails followed outside overlooking Clam Creek, with a performance by Strawberry Jam Band. Clients of all ages enjoyed the summer night of fun.
CRA Financial, LLC is a comprehensive wealth management firm whose primary objective is to assist clients in accumulating and preserving wealth. They are committed to providing value-added, wealth- enhancing services in a cost-effective manner that remains consistent with their philosophy of putting their clients’ best interest first. These services encompass six comprehensive areas of financial planning: investment, tax, insurance, retirement, education, and estate planning.
This article was originally published in the Summer Edition of NJ Lifestyle. Photos by Eric Weeks.
RALLY: The markets are off to a great start so far in 2017. The S&P 500 closed the second quarter with a strong year-to-date gain of 9.34% (Total return including dividends). Investors saw a market that remained resilient in the face of uncertainty and volatility was kept at bay. Corporate earnings remained strong, global economies have been improving, and major central banks across the world have continued support. Markets shrugged off repeated global terrorist attacks and a seemingly stalled presidency as a gridlocked Congress wrangled with the questions of the government’s appropriate role in the U.S. health care system.
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EARLY SIDE
2016 began as 2015 ended with oil prices and stock prices falling. Oil (WTI Crude Oil) began 2016 at $37.13 a barrel and bottomed on February 11th at $26.21, a decline of 29% in just six weeks. The S&P 500 began the year at 2044 and fell to 1829 by February 11th (yes, the same day oil bottomed), a decline of 11 %. Fortunately, both the oil market and the stock market stabilized quickly and both had reached their beginning of the year levels by the second week of March.
BREXIT
The referendum in Great Britain in June 2016 whether or not Great Britain would remain in the European Union or vote to exit was viewed as either a solidifier of the EU or the first step to its demise. All polls showed a major advantage to the stay vote, but as we would find out more than once in 2016, pollsters did not have the pulse of the voters. The citizens in Great Britain voted against the establishment, against the recommendation of their Prime Minister, and against staying in the European Union. The stock market sold off 6% in two days, but then recovered fully within three days, to finish up just over 4% year-to-date through June 30.
NOBODY LIKES TO SELL AN INVESTMENT AT A LOSS. However, using a strategy of realizing losses to reduce taxable gains, referred to as tax loss harvesting, can help you enhance the after-tax returns of your portfolios. Tax loss harvesting can not only save an investor taxes in the current year, but if done properly, can provide tax savings for years to come. Many investors avoid tax loss harvesting because they want to avoid selling something at a loss and possibly missing a rebound. We advise our clients to maintain their equity exposure even while tax loss harvesting. You can do this by simultaneously selling your asset that has an unrealized loss and purchasing a similarly correlated asset to the one just sold.
Because it is always a timely topic, we thought we would discuss household fiscal responsibility and try to provide readers with some tips for getting their fiscal house in order. As financial planners and CPA’s, we interact with people from all across the financial spectrum. Our experience has taught us that whether a household is in good financial condition or not has less to do with household income and more to do with household spending (Sound familiar, can you say federal government?). We see families who make more than $500,000 annually who can’t borrow a nickel because they are so maxed out with debt. We also see families who make $60,000 annually who have a house, two cars and no debt other than a mortgage. What it comes down to is simple math. You can’t spend more than you make indefinitely. You can do so in the short-term by borrowing to fund the difference, but at some point that option runs out. So, why do so many families find themselves in a financial mess? We believe there are three main reasons:
Retirement Planning is by far one of the most important areas of financial planning and one that we allocate a good portion of our time and resources to address. We break retirement planning up into two distinct phases:
The accumulation phase is simply the phase in which you are still working and gathering assets to fund the second phase, which is the distribution phase. Clients in the distribution phase are typically either retired or semi-retired and are supplementing their pre-retirement income with distributions from their portfolios. In the last newsletter we addressed the accumulation phase. This article is part two of our two-part series on retirement planning and will address the distribution phase.
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Retirement Planning
Retirement Planning is by far one of the most important areas of financial planning and one that we allocate a good portion of our time and resources to address. We break retirement planning up into two distinct phases:
The accumulation phase is simply the phase in which you are still working and gathering assets to fund the distribution phase. Clients in the distribution phase are usually either retired or semi-retired, and are supplementing their pre-retirement income with distributions from their portfolios. This article is Part 1 of a two-part series on retirement planning and will address the Accumulation Phase of retirement planning.
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As Published in the Winter 2016 Edition of NJ Lifestyle
Volatility was the overall theme of the stock market in 2015, but despite the wild swings to the upside and downside, the market finished roughly flat for the year, posting a price only return of -0.73%. The market finally experienced the “inevitable correction” that investors and analysts had been calling for since mid 2013. In May, the S&P 500 hit an all-time intraday high of 2,134. In August, the S&P fell to an intra-year low of 1867, representing a drop in value of 12.5%. After an initial September rally that faded back to market lows, October rewarded investors with a 13% rally, hitting 2116 in early November, before sliding back to 2043 to end the year.
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As published in the Holiday 2015 Edition of NJ Lifestyle
More often than not, when we ask a potential client what they are currently paying in investment fees, we receive one of two answers:
The first answer is understandable, as the transparency of investment fees leaves a lot to be desired, and the second answer is just wrong. Fees come in various forms; including commissions, portfolio management, operating expenses, and 12-b1 fees. Although you may not see the fee, it does not mean you are not paying it.