And we'll be talking about that in depth over the next couple of weeks.
But just while I'm mentioning it, we often at this time of year offer a complimentary portfolio review offering, which we will be doing.
in earnest at the turn of the year into January.
But if you would like to get a jump on that, you're more than welcome to reach out to us.
You can connect to us through our website, amrfinancial.com, or you can reach out and give us a call, 508-771-8900.
But if you send us a correspondence or through the website or whatever, you can
just mention the portfolio offer that you'd like to be included when we do begin that offering of a portfolio review.
We only offer usually about 10 of these.
And so that's what we plan to do is, you know, usually we like for people to have some assets of half a million or more, but that's not rigid.
So if you have some need for help in this regard,
we're happy to help.
So in any case, as we think about this, let's dive into all that's going on because it can be the time of year when you really should think about how should this affect my investments?
So Jeff, where should we begin with all the data that's been coming at us and all the news of the week?
There's a lot here, Chris.
I don't know if it's certainly not December 25th.
But Santa Claus has arrived in the form of a rally, and it's directly related to the data, directly related to the Fed, right?
The Fed was very he surprised a lot of people this week with his comments.
So it definitely was a surprise, right?
We didn't expect to have this kind of forecast that he provided.
I won't spoil it.
You tell them.
Well, for the people who watch the Fed, they know that they have been increasing the short-term interest rates over and over again to the point of five and a quarter to five and a half was the range that they tried to keep the short-term rate at.
And the goal of increasing interest rates by the Fed is to slow the economy down all because of the inflation that we all remember, that we've been suffering with.
last 18 months or so and so to slow the economy down one of the major tools from the federal reserve is to increase interest rates and along with that
every uh not every month but almost every month when the fed has a meeting the chairman comes out and gives his comments and those comments are either ish or dovish meaning hawkish which they have been meaning to keep people guessing i guess or i guess a couple months ago it was longer rates
Higher rates for longer.
Higher for longer.
That was the mantra, right?
And so in my view, I'd love your view, those comments, more than the rates themselves, but those comments of having a sense that we're going to have higher interest rates for longer have put a lid on the market's activity.
I definitely think that the rhetoric that the Fed uses
is almost as important as the actual policy itself, right?
It's trying to move markets by what they say and how they forecast what they say.
And that's what made this announcement somewhat unusual a little bit, where we were expecting that same rhetoric of higher for longer.
know that that changed it's not what we got we got a the the data which will go over in a few minutes is very positive that inflation is more towards their target but chairman powell in his 2 p.m press conference on wednesday i guess it was said yeah we could probably expect three interest rate cuts in 2024. yeah wow and the market
Once everybody did I hear that wrong?
Is he raising raising or people were getting it wrong because we're just so accustomed to him saying rates could go higher, you know?
Yeah.
Well, you know, I mean, I think as you look at this, I mean, let's talk about the inflation for a second, because that's the one that's so interesting and on everyone's mind.
You know, we as consumers, we think about inflation and say, when's it going to go down?
You know, the prices have gone up.
When are they going to go down?
And that's not really what we're expecting when we talk about lower inflation.
We're just talking about a lower rate of increase of prices.
And frankly, we don't really want, I mean, I'm sure there are places where we want prices to go down, you know, go to the grocery store.
Some things that went too high.
Yeah, but.
not now gas prices have seen some of that right they've gone up and come back a little bit um but you know i don't think we're going to see that um really when it comes to uh you know broadly when it comes to groceries and so forth and we don't necessarily want deflation it's a bad thing for the economy it can be a vicious spiraling cycle that can can really uh send an economy um circling in the wrong direction
down the toilet bowl or something.
So we don't want that.
So what we do necessarily want is slower inflation.
And we've been coming down where we had double digit inflation at one point.
You know, as you look at where we are most recently in the threes, you know, was it 3.2, 3.1?
Yeah, the latest CPI, which is the Consumer Price Index, was up one tenth of a percent for November and annualized rate now at 3.1 percent.
Now, the Fed's goal is 2 percent.
Right.
That's their state and core was a little higher, as I recall, too, right?
That wasn't as as appealing.
But so if 2% your goal and 3% ish is where we're at, you know, it seems like we're we're getting pretty close.
I will say that it does seem like historically 3% was a more normal, you know, before the 2000s millennia.
We used to talk about three, three and a half percent as the long term rate of inflation as normal.
But now we've been in this two percent range for or lower really for for a really long time.
So that's kind of what we now envision and aspire to.
And that sounds good.
But even if it stays somewhere between two and three percent, that's that doesn't seem like that's long term problematic for an economy or anything like that.
But a lot of people who are suggesting that the Fed isn't really at two percent, you know, that it's it's a stated goal, just like higher for longer was a stated goal.
Yeah.
Yeah.
But, you know, you were talking about things that are going up and down in that CPI report.
Yeah.
It details if you dig into it.
and there's plenty of info online, but like eggs were down 22%.
And so eggs aren't down 22% from 2019.
They're down from a year ago.
We all saw the eggs and butter and a lot of food items just went through the roof.
So food items were generally down from a year ago.
Fuel oil and gasoline are down.
You mentioned those two.
Yeah.
Those are, uh, those are important things.
These are ways we, we feel it.
Right.
Right.
And, um, energy costs, of course, you know, those are the part they take out because they tend to be more volatile when they talk about core inflation, but, um, it just, you're, you mentioned 2019 and I, I think we might've mentioned this on a previous, um, episode, but, um,
I had seen something, I think it was a podcast I listened to that they had said that since 2019 prices are up about 20% and that's why people feel so.
Yes.
It was a New York times podcast that you would send.
Yeah.
So that's really interesting.
I think, cause when you, you know, okay, it was a big, it's, you know, it's, it's lower today, but when you start saying in a relatively short period of time, four years,
time, you're having a 20% increase in your expenses.
And most people don't have a 20% increase in pay in that same period of time.
It happens so quickly.
That's the psychology of it.
It happened in a real short time period due to supply chains and the infusion of government cash and all the things.
All that stuff.
Yeah.
Right.
So I think the psychology of it is real.
People want it to go back to that level and they think that would be
That would be normal.
Normal would be to have over four years, you know, maybe 8% to 12% inflation.
Yeah.
Not 20%, right?
Right, right.
So, you know, you feel that difference and you walk out of the grocery store and say, how much?
What did I get?
You know, how did that happen?
It's real.
And, you know, groceries and gasoline, fuel oil do hit the people with the lowest income the hardest.
Yeah, you do really notice that, you know,
you know, you can imagine a young family with maybe not their peak income potential yet achieved, right?
And, you know, feeding a family is expensive and driving them all around and, you know, all that kind of stuff and commuting and so forth.
You can see how it would really feel that pinch.
And of course, you talked about this when the student loans started kicking back in and, you know, all these kind of
things that kind of factor in to really feel like there's a pinch.
When you have less margin in your budget, it matters if your groceries are $40 more a week and your gas is $20 more a week.
Yeah.
And now if you're trying to buy a house, costs have gone up and the interest rates on the mortgages are higher, significantly higher.
All these kind of things start to accumulate and it just feels painful.
So I think that's true for people who are at one end of the income spectrum.
They feel it much more acutely.
They do.
Some other things that were down in this inflation report were airline fares, appliances, computers, games, things like that.
Yeah.
Maybe just in time for Christmas.
Yeah.
I was just going to make that same comment.
Yeah.
Good planning for this time of year.
A little travel or maybe a new computer or something.
Sounds good.
Back to the numbers, some other numbers for a minute.
And I think if you listen to these numbers, it's not just the CPI, which is the big headline one that's been in the news.
People understand that.
CPI, Consumer Price Index, it's the inflation gauge that most people look to when they think about cost of goods and services rising.
It's the one that Social Security tends to look to, although they may not look at the exact
CPI.
They have some variation in CPI.
But that's not the Fed's chosen metric, huh?
Well, they certainly look at it, but they also look at things like the producer price index, which is what the producers, the people who make things, right?
What they're doing with their pricing.
And for October, it was down
4 tenths of 1%, and in November, it was unchanged.
So that's six months of either no change or declines.
So, I mean, the theory, which makes sense, is that if producers' costs are less than produced things, you know, at the beginning of the supply chain, I guess,
yeah once they get into expect that to work its way into prices ultimately that's right so that's a positive sign and then the pce which is the core personal consumption expenditure right so the that's the the fed's preferred inflation um gauge but this is the core you're referring to this is the core so we're taking out those things like groceries and fuel and which is
You're right.
You said it perfectly.
This figure, the core, is what the Fed relies on the most, allegedly.
And we don't really know what they rely on.
So that annualized rate is 2.4% based on the last.
That's very interesting.
That's pretty good.
In the twos, yeah.
Well, I think these three numbers, jobless claims are sticking around.
The continuing claims, 1.8%.
million this past week.
It was two hundred and two hundred thousand.
And that's a little less than anticipated.
Retail sales were up three tenths of one percent, showing the consumer is still strong.
Right.
So I think when you take all of these numbers from the week.
If the Federal Reserve Chairman Powell looking at it, they're saying it's pretty good out there.
Maybe we're a little too high and maybe we should
go back next year.
And so that's what he said.
I'm with you in your opening comments that I'm not surprised that we're heading that way with these numbers.
It's almost like the Fed's taking a victory lap here, which maybe they're entitled to do, right?
I mean.
Yeah.
Yeah.
I mean, why not, right?
Right.
I mean, they got so much grief.
What was the early stages of the Fed with the inflation concerns?
Transitory?
Yeah, they took a lot of heat for that.
Well, that was the Treasury Secretary, I think.
But, I mean, they all get lumped into one anyway in the eyes of the citizens here.
So maybe they're taking a victory lap.
Maybe they're just responding to the data.
Whatever it is, I didn't expect him in his press conference to say that.
That rate cuts.
And so what would we see at the end of the week?
We saw bond prices declining quite a bit.
The 10 year was under 4%.
We haven't seen that in a while.
What a move we've had in the 10 year treasury when you think about it.
I mean, it was maybe in October.
We're at 5% on the 10 year.
Right.
So now we've fallen below 4%.
What does that mean for investors though, Jeff, when you think about it?
It depends what you're thinking about for investor.
If you're one of those people who have owned bonds, buying bonds, bond funds or bonds, with the expectation that rates would hopefully go down someday,
you're getting capital appreciation in your bond.
So when the yields go down, which they're heading down, the value of the bonds that you hold go up.
It's kind of a backwards way to look at it.
So that kind of a situation is probably somewhat advantageous for existing bondholders to receive some appreciation, though
Presumably, that will also mean that, you know, income will go down over time, right?
Because bonds mature and get reinvested.
Or at least that's what the bond market seems to be interpreting.
That will mean that based on the movement of the treasury, 10-year treasury that way.
And then that, but that also implies perhaps that just as a side for people looking for mortgages, that implies that mortgage rates are likely to become lower.
They seem to move similar to treasuries, 10 year treasury is kind of a worthwhile bond measure to look at as to directionally what's gonna happen with mortgages.
And then it's also probably,
a favorable implication for stock owners.
Why?
Because if it costs less to borrow money to start a business, to invest in research and development or fill in the blanks, it's that much more viable to invest and grow and get enhanced profitability.
Absolutely.
And for an investor, if you're an investor and you're saying, all right, I can get five and a half percent in a bond or a mutual fund.
I mean, a money market fund without taking any risk.
I'm going to maybe logically put some money into a money market fund and let us sit there.
So a couple of comments on that.
Those opportunities are probably going to be decreasing.
There's going to be less less chance you're going to get those opportunities.
very attractive rates with bond yields going down.
But also, I think it's an important time to say something that we say all the time about people who are day trading or trying to trade in and out of the market.
If last week you said, I'm going to grab some yield in a money market account and wait for an all clear for the market, right?
Yeah.
Which never exists.
But when the market's more settled, I'm going to get back in.
The actions of the past week just indicate very clearly that it's time in the market, not timing the market.
Because if you did that, you missed everything that happened.
recently and it's been over right now i'm not saying you're not going to have a correction here nobody knows is the thing right yeah yeah this is an interesting thing to you know we've talked you and i were talking about this yesterday just um off to the side and you know i think um when you look at valuations they're they're not inexpensive but
Right.
Maybe maybe that, you know, when you look at valuations, we I know it's imperfect, but we often look at the forward looking price to earnings ratio and, you know, that as a shorthand for, you know, valuation for the market.
And of course, I mean, earnings could improve if we've got, you know, this setting where things are getting easier, if you will.
And that that could
That could be favorable for the valuations to be justified, right?
History tells us that.
It doesn't mean it's going to repeat, but the old saying, don't fight the Fed, right?
Yeah, that kind of mindset, right.
So, you know, I think on the one hand, we want to be mindful that we want to buy things when they're, you know, reasonably priced.
At the same time, you've got this changing dynamic that could be favorable for earnings and therefore imply that prices could go higher, which might not make it feel as priced.
I don't even want to say overpriced, but you know what I'm saying?
It's not cheap.
So in any case, I had something else I was going to mention, but we'll come back to it if I think of it.
yeah so my point is that if you try to time these things either way you know get out before they go down or get in before they go back up you often miss opportunities because a lot of the gains in the markets or the declines but you know this week we're talking about gains happen all at once they happen very suddenly yeah they can be explosive of sorts you know and i think that um
You know, that points to trying to also pay attention to where in the market you want to be right now, because there could be opportunities along the way.
Your point about cash, though, I think is also an interesting one because.
You know, at five percent range for money market mutual funds and we've had
some CDs in that range.
Well, clearly that's likely to change direction based on what the Fed is indicating.
And so you may enjoy that cash, but it may not be as attractive as long.
know as you might entertain yeah so you know i guess the the outcome is step back take a moment give some thought to what are the possibilities what's the right positioning to be in whether it's in your stocks or in your bonds or however your portfolio is structured uh now's a good time to um you know as we head toward a year end and a transition of things i think um
Jeff, one of the things we'll want to talk about in another segment, because we're running out of time here, but I think inevitably the thing people have on their mind now is, well, how will next year's political environment
influence my portfolio.
People often think about that in election years.
And I think that's something we'll certainly want to talk more about.
Interesting subject.
I look forward to that.
We should bring our chief investment officer, Brian Regan, in on that one.
He always has a lot to say on that subject.
All right.
Well, with that, we're going to take a break.
Until next time, keep striving for something more.
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Welcome to Something More with Chris Boyd, certified financial planner practitioner and founder of Asset Management Resources, LLC, a registered investment advisor firm.
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Welcome to Something More with Chris Boyd.
I'm Chris Boyd, Certified Financial Planner here with Jeff Perry, both of us of Asset Management Resources.
Thanks for being with us for the show.
Jeff, we're approaching the end of the year.
We are.
And by the way, where it is the holiday season, I did get to enjoy Love Actually one more time.
Gotta love that this time of year, right?
I mean, you know.
Oh, I hope my wife doesn't hear this.
Yeah.
Oh, you're not a fan of that one?
Well, I like to watch movies once, maybe twice.
That's a good holiday one.
It is.
Do you have a favorite holiday movie that you would like to watch more than once?
Well, I don't know if I have one, but I know we do on Christmas Day.
in the background of everything going on we uh i think it's tnt used to do it i don't know if they still do it but we find a christmas story and let it go let it go over and over again and family members are you know reciting the lines with oh that's great yeah so it just brings i know that's one of my sister-in-law's favorites but you know it's i don't think i've ever seen it from start to finish
To us, it's the classic.
It's always been on no matter what house we've been in or who's been there.
That's our tradition.
We can quote it.
Someone in the house can quote it.
We could actually...
a play of it and wouldn't have to rehearse you get it down line for line huh and one of our neighbors one of our neighbors here and for a list of listeners who don't know i'm in florida in port st lucie one of the neighbors in our in our neighborhood just a couple streets over in their garage window which faces the street for that particular house they have created a box you know like a box a shadow box
And they have the lamp, the famous leg lamp.
So if you don't know the movie, but they have it in the window.
So they found it and it's hilarious.
That's very fun.
So I'm not the only one.
An insider's appreciation.
If you haven't seen the movie, sorry.
But if you have, you know exactly what I'm talking about.
That's fun.
So, well, in any case, you know, I started down this path a little rabbit hole.
But you mentioned you're in Florida.
And for those who don't know, I think.
probably would if they've listened to the show, but if you haven't, I'm here in our AMR studios in Hyannis, in our office in Hyannis.
So in any case, we wanted to talk a little bit about tax-related issues as we come into the end of the year.
It's a good time of year to be keeping in mind some of the
the ways in which you could be doing some tax planning.
You know, one of the things you might think candidly, Jeff, at this time of year is, well, how much can you do now?
You know, what's what's the point?
Right.
You know, but maybe we can talk a little bit about it.
Absolutely.
Yeah.
Yeah.
Some of the things that are available and, you know, let's face it, taxes don't usually engender a lot of excitement among
uh, people, but there's, if you can save yourself money and invest, but that's part of what we talk about personal finance, how to improve your financial life.
Well, this is one of those things you can do to ultimately reduce your tax bill, uh, or, you know, things to remember, whatever it may be this time of year, these, these are important.
So we don't want to ignore them either.
So with that in mind, um, let's, let's, let's do that.
Let's jump into, you found, um,
One of us found.
This was you.
You found an article in Barron's, which is a weekly financial newspaper magazine that's been around forever.
Very highly respected.
Yeah.
Yeah.
There was some, you know, it's part of the Dow Jones, you know, group there.
Family.
Yeah.
Yeah.
But yeah, we came across this article and thought this might be a good one for kind of setting up this conversation.
We can jump off and talk about other.
considerations.
I think that you should be tax planning.
We certainly should do it now, but you, you should be doing it all year round and you can take steps, long-term steps, which I don't know if we'll have time for, but you should work with your financial advisor and a good advisor will be talking about tax planning, you know, almost every time that you talk to them and decisions that you're making, because
it's uh there's a lot of opportunities to save long-term taxes and we were just talking with a client uh yesterday i guess it was about some you know not not life-changing strategies but right but but tweaks to their plan could help you know it's not um yeah it's not a game changer for um whether they'll have a successful outcome or not
But it's still something that could save them money or add value to, you know, why not do these things, right?
And especially if you're thinking your legacy and money that will survive after you're not here, there's some real strategies that your advisor should be walking you through.
But there's stuff you can do right now to help this year's tax burden.
Well, let's kind of look at some of those as we start to think about what are some of the things that we might want to consider.
You want to start us off or you want me to find something?
No, I'll start us off.
If you have income that's coming in at the last, you know, some people have a paycheck, which you're going to get every week and you can't do anything about it.
But some of us are self-employed or some of us work with employers who may give bonuses.
So if there's an opportunity and you're in a higher tax situation this year, or maybe you just want to push it off into next year, see if you can defer some of that income this year into 2024.
Yeah, to your point, in this conversation we had, we kind of looked at it's not just your adjusted gross income, but what's your taxable income?
Where does that put you in a bracket?
Right.
And if you're getting to a point where you you might be creeping up on a higher tax rate,
maybe that's a good instance of an instance where if you have that kind of control, where you might opt to either take expenses if you're self-employed sooner to, you know, reduce, pay some bills early, you know, kind of accelerate your deductions, right.
You know, to reduce your, your taxable income, or if you can defer receipts, you know, or, and you, like you mentioned a bonus or something, if you could,
uh have the opportunity to push that into another year those are all you know good examples of things where you know just manipulate the timing it's not so much um anything else you know so a specific example is if you're married um you're a couple and um your your taxable income is 89 400 or less all of your income is in the 12 bracket federally we're talking
So, I mean, that's a pretty common number for people, a couple to be around $90,000 for their income.
So to your point, if you can delay income or add deductions this year, you may be able to keep everything below rather than going up to that next bracket is 22%.
So that's a 10% difference.
Yeah, difference in the cost of that tax.
Right.
So it's worth looking at.
Yeah, you never know exactly...
You know, there are things that are beyond your control, and maybe that's part of what we'll talk about as well.
But, you know, some of the things to be watchful for, pay attention to so you don't have surprises.
But like one of those, for example, is if you have investments in a taxable account.
Right.
You might have, for example, mutual funds frequently will have a capital gains distribution at the end of the year.
And you don't have any control over them.
Sometimes they really can shock you.
So, you know, don't be surprised by that.
Go find out in advance, you know, in this information is available typically around this time where insurance investment companies will start to indicate, you know, hey, this is what we're expecting for our our distribution.
The worst is when you have a down year and a capital gains distribution, you know,
which kind of happens more in mutual funds because people in a bad year, there might be more investors that flee the fund.
But you who stayed in the fund end up with the consequence that some of that tax consequence.
This is why oftentimes we favor the use of exchange traded funds.
They have greater tax efficiencies and issues like these.
They're less likely to have capital gains distributions.
Right.
as compared.
But in any case, let's talk about other items, Jeff.
While you're on that subject of looking at your investments, you may have investments, maybe mutual funds, but maybe specific individual stocks, whatever investments that you can sell now.
and take a loss, if that's what you have, record your loss, record your capital loss.
Yeah.
Those losses can offset some of the gains on maybe mutual funds or other gains that you have, and they will reduce your taxable income, your taxable burden for 2023.
Yeah, this, this, yeah, just a lot of capital gains planning, you know, loss harvesting is a really important, um,
technique that if if you're not doing yourself or if you have a professional they're not doing that as part of their routine for you for your planning um it could really miss out on on some of the ways to help you enhance your returns because it's not it's i mean it's really just manipulating the tax plan you know the tax com you know when you're going to pay the tax but if you can if you can do that postpone some of that taxation
That's appealing.
Let's elaborate, Jeff, what that really is about.
What are we doing when we do that?
So, so let's say you, let's say you have a, just to keep it nice and simple, you have shares of ABC corporation in a taxable brokerage account that is down.
You have a loss.
It's worth less than what you paid for whenever you bought it.
So if you sell it, you're locking in your loss until you have a capital loss and your loss can be
deducted up to $3,000 on your income tax.
Or if you have capital gains also this year, either from other sales of individual stocks or through the mutual funds that you mentioned or other activity, any amount of losses greater than $3,000 can offset any gains that you have.
so the most common question that you get is well i know that abc corporation is down this is a hypothetical i don't know if there is an abc corporation yeah yeah it's probably one somewhere yeah we're just making up letters here yeah so there is an abc corporation we're not intending to right promote this isn't about you this song isn't about you so i mean most investors get that and they go that's probably a good idea but here's the objection and i'd like you to
comment on it is I really like that ABC Corporation I don't want to sell it or I really like that people even have affection to a mutual fund oh I don't want to sell that mutual fund I like it right yeah and so I don't want to sell it even if I'll save money on my taxes so two things um one is you know and we're talking in generalities we're thinking in terms of long-term
capital gains in the way we talk about this generally, but there is nuances of short-term and long-term, and let's ignore that for our conversation here.
Conceptually, we want to be in a position where we can try to offset some of the gains with losses to avoid taxation.
In the case of, oh, I really like that, one consideration is
can buy it back after um you know a wash sale period which is 31 days 30 days 31 days like that so you can you can buy it back uh subsequently if you really want to own it alternatively talk about that because people may not know that term you can't buy it back the next day that's a violation yeah if you do that the next day you're not going to get the benefits of this tax planning you're just going to have headaches
That's basically what it amounts to.
So so you would.
And it's similarly, you know, you you have to think 30 days or in advance as well.
It's you know, you can't say I'm going to buy it, you know, the day before and then sell it, you know, the existing shares the day after.
And, you know, you can't do that.
You got to think in terms of that.
window of time.
The IRS is on to this one.
You can't sell with the right hand and buy with the left hand.
Right.
And different accounts and all that kind of stuff.
It still works against you.
So don't do that.
But let's say, for example, you said, I like my ABC company, which
is a technology company.
Well, you might say, all right, in the meantime, I'm going to buy this technology sector ETF as a way to have related movements to what I might have otherwise had.
Or maybe there's another company that's a close competitor that you think, well, if this one goes up, that one will go up too.
Maybe not dollar for dollar, but you might be able to find a substitution that you could hold for a while.
We often will look at things when we do something in a ETF that we sell for a tax purpose.
Well, there's lots of other ones that might look very similar, might have frankly a lot of the same holdings, but it's not gonna be considered a wash sale if we say, all right, we're gonna sell this one, but substitute it with something that's very similar in many respects.
And we'll hold on to that one in place of the one we sold.
So, and similarly, if it's, you know,
In the case of the stock, but we don't want to find a really great solution.
Maybe there's a sector fund or a sub sector fund that owns that stock in measure that you might say, okay, this would at least be a way to have some reflection of what would happen there.
There are other nuanced ways to do it.
If you dealt with options or something like that, you might have a way to have some opportunity to have exposure and so forth.
But for most people, it's just let's find something that's similar and put it in that way.
Did that address what you want?
Yeah, absolutely.
It's obviously easier with ETFs and mutual funds than individual stocks, but it's something that your advisor should be able to walk you through.
And it's an opportunity.
And I just want to add a little bit more clarity to what I said.
I said you can take a $3,000 loss on your tax.
That doesn't mean if you have a $10,000 loss that the $7,000 is gone.
Oh, yeah, that's a great point.
That carries over for future years.
That's right.
That's there forever.
You can use it next year or the year after.
So next year, if you didn't have capital gains that you wanted to offset, which if you did, you could, you know, if you had $7,000 of capital gains, you'd be fine to use that to offset the gains.
But if you didn't have gains, you could use another $3,000 on your tax bill to, you know, have it as an item that you could use.
reduce your income and so forth.
There's no cap.
There's no cap on taking your losses.
It's just when you can take them.
Yeah, you just don't get to use it all in the same year in that case.
That's right.
Unless it's offsetting gains.
And so that's what we're talking about.
This idea of offset the potential of capital gains activity with if you have losses considered a consolation prize that you can use to reduce your tax bill.
And then find a good substitution to just reposition into a similar holding that will allow you to still have participation, but manipulate the tax timing.
This subject wasn't in the article, Chris, but I think it's worth noting.
One way to reduce your taxes is to avoid penalties as well.
So this is a time of year when a lot of people who pay estimated quarterly taxes are saying, okay, you got my last payment coming up.
in January.
So do some math, you know, project your, not only your income, but your capital gains, as you said, look at your mutual fund holdings as well, and make sure that you make the appropriate quarterly payment to put you in a position where you want to be.
And meaning you've paid enough of your estimated taxes, because if you don't, you know, the IRS, they give a lot of first year grace on some things, but not everything.
So you don't want to be playing that and have a penalty for not paying enough estimated taxes.
Yeah, that's a great point.
And if you have the opportunity to take greater tax withholdings and things like that, there may be times that that would be beneficial.
I don't know about you, Jeff, but I've been in roles in my life where I've had to deal with estimated taxes.
Yep.
I think most people would agree that it's a real pain in the neck.
And there's odd dates.
It's not exactly quarterly that you have these dates that you should do.
So it's something that oftentimes your tax preparer says, okay, and here's your bill and here's your estimates for next year.
And you've got these little coupons and it goes in the drawer and you forget all about it.
You know what I mean?
And you can't do that.
Otherwise, you end up with a big problem next year.
And potentially, even if you think of it during the year, if you didn't put those estimates through at the right time and your income came in throughout the year as opposed to, you know, all at one time in the year.
you can have some problems and they look at that and you don't want that.
So, yeah, they're either you get really, you know, religious about making sure you deal with your estimated taxes.
And that also means if you're a business owner, for example, you need to review how is my income looking?
Right.
You know, maybe a good thing to kind of do a dry run on your tax bill
for this year based on, you know, do we have a good year?
Do we have a bad year?
Do we need to do more in our quarterly estimates?
Can we do less?
You know, that kind of thing.
Don't just go on autopilot, I guess.
This is one of the issues that small business people, especially, I mean, anybody can make this mistake who pay quarterlies, but small business people who are having a gangbuster year or salespeople who have a gangbuster year that really get caught up, you know, innocently, they have increased revenue, but they're not making the increase
tax payments and they can really get caught and get behind and not have the cash to pay them.
And it can really be a mess.
So.
Yeah.
Yeah.
That that's just, um,
It sounds like we both are speaking from the voice of experience there, that this is one of those things you just don't want to have to deal with.
I've had clients who have fallen into this.
It's ugly.
I'll say innocently, but if you're making more money, you should know that the amounts on the coupons need to be adjusted.
It isn't really the number anymore.
That's based on last year's income.
Well, there's nothing worse than your accountant saying, well, you had a great year.
you know, and you're thinking, yeah, that's great.
And then they say, so you need to pay this much more in tax.
And you're like, where am I getting that from?
You know what I mean?
Right.
Sometimes they didn't save it.
Right.
Yeah.
So, um, I mean, it's not, I didn't mean to say nothing worse than you had a great year.
It's the, now you have to pay and you go, Oh, do I have that?
You know?
Yeah.
So anyway, um, let's go on with, uh, this, this was a Barron's article we were talking about and it had a variety of, um,
The title was tax season is around the corner, six ways to lower your tax bill.
We've talked about a couple of them.
Deferring income could be one of those.
Accelerating deductions might be another.
What are some of the, did we talk about that?
Do you think deductions, that's like business expenses and things of that sort?
What are some other examples that we might think of for deductions?
The article closes on talking about began a three year Roth rollover.
Let me just finish this on the deductions and then let's go to that real real tight on time.
So go ahead.
Yeah.
The real quick thing is when it comes to deductions, the article talks about the idea of bundling your charitable tax deductions.
Not everyone wants to do that, but that can be a way if you use most people use standard deduction.
But if you have the opportunity to think about some of those, if you have a year where you have a lot of health issues, you can get itemized deductions for medical expenses or whatever it may be.
So anyway, continue on with your point there, Jeff.
Well, we're running out of time.
I don't think we're going to be able to do the last one justice.
And I'll post this article on the.
We've got we've got we've still got a minute and a half.
Go for it.
Well, the subject is begin a three-year Roth rollover.
I think they mean tax-free conversion.
Not tax-free conversion, but Roth money into Roth conversion.
Take IRA money and put it into a Roth IRA, and that's a tax event.
That's a taxable event, and I think they're talking about three years because that is likely when the Tax and Jobs Act... Tax Cut and Jobs Act, the Trump-era tax bill that
is it had a 10 year clock on it.
So it's due to expire.
As you said, uh, the end of 2025, right at the beginning of 2026, it's a different, it goes, it reverts back to unless Congress does something, it reverts back.
Yeah.
So that means a higher rate, higher, higher tax rates, uh, brackets that start lower.
So you move into those higher rates faster.
And, um,
Yeah, you've got, that's one of the things we talked about with that client, a short window to take advantage of this.
And maybe it's a good time to see if you can do some Roth conversions, even if it's on the edges, choose to pay, for example, a tax rate that's
you know, 2% lower or whatever it might be.
Maybe 10%.
If you're in that, you know, example that we gave earlier in the episode, if you're below as a married couple, $89,400, you may choose to look at the space between where you are, where you are for taxable income up to that next level, the 22% level and say, let's convert that much.
Right.
The 22 and up to the 24, you know, wherever you fall, there's an opportunity to,
maybe uh do a roth conversion for that amount or maybe this year is a low income year and you want to do a big chunk yeah it might be worth thinking about benefiting from these things talk to your your advisor get some help in your planning if you don't have help reach out to us at asset management resources we can be a resource the article went on talk about various charitable giving
techniques as well that can give you some benefit.
We won't get time to deal with those, but if you have questions, you need assistance, certainly reach out to us.
Thanks for going through this with me, Jeff.
And until next time, everybody, keep striving for something more.
Thank you for listening to Something More with Chris Boyd.
Call us for help, whether it's financial planning, portfolio management, insurance concerns, or those quality of life issues that make the money matters matter.
Whatever's on your mind, visit us at amrfinancial.com or call us toll free at 866-771-8901 or send us your questions to radio at amrfinancial.com.
Go back to where we are.
Stephanie, I think I screwed up the timing of that, so you may need to accelerate the whole hour.
Sorry.
The following is paid programming.
Welcome to Something More with Chris Boyd, certified financial planner practitioner and founder of Asset Management Resources, LLC, a registered investment advisor firm.
We call it Something More because we like to talk not only about those important dollar and cents issues, but also the quality of life issues that make the money matters matter.
Here he is, your fulfillment facilitator, your partner in prosperity, advising clients across the country, your host...
Jay Christopher Boyd.
Thanks for being with us for another segment of Something More with Chris Boyd.
And I'm here with Jeff Perry.
We're both of Asset Management Resources.
And, you know, not long ago, we started a checklist a week or so ago, maybe two weeks ago, we started a checklist.
I lose track of time.
Yeah, about some some things people can do as they get ready for retirement or in retirement.
And we got through part of it and ran out of time and said, let's come back to that sometime.
And so here we are, we've got five more.
As promised.
Items to review about good, just good recommendations and thoughts to be ready for as you think about getting ready for retirement.
So Jeff, where should we pick up?
Well, yes, we'll pick up where we left off, right?
So 10 things on your checklist.
There may be more or less for you individually, but
These are the 10 things.
It's a Kiplinger's article, which I'll attach to people listening to the podcast at the bottom after the description of the podcast.
Since you mentioned that, Jeff, I just want to point out to all our listeners, most may be listening by podcast now anyway, but if you're not, be sure to subscribe and follow us wherever you like to listen to podcasts.
We are available in numerous places online.
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subscribe to all these wherever you like to not all of them obviously but wherever you like to listen oh go ahead make sure you get a reminder or it shows up in your feed you know that there's a new episode each each week we've got usually about four episodes a week we typically drop two episodes on Friday and two episodes on Monday so join us there
right and we'd appreciate a uh favorable review if you're so inclined if you don't like the show don't listen to it but no we still like your feedback uh write to us directly you can send me an email at radio amrfinancial.com to help us to see what people do like and what they don't like we have a survey i think on our radio page that you can you can fill out right now so in any case
But we would really appreciate a review and a rating.
It does help people find the podcast as well.
So, Jeff, let's go back to talking about some ideas for people as they approach retirement.
Okay.
Number five.
Well, some apply to everyone and some apply to people.
This next one is really important for people who are approaching age 65.
There's deadlines with Medicare and Medigap.
You can start to apply for your Medicare in four and nine months.
The window opens up.
You have a seven-month period, and it's really important to do that.
And I think people who don't do that are those individuals who,
who are still working and maybe on an employer healthcare plan, um, or self-employed and have other, some type of plan, or maybe they are on, maybe they have a spouse and they're on another plan.
But if you don't join Medicare at, in that seven month window, when you start to take advantage of it, when your premiums will be higher, if you don't initially sign up.
There are some headaches there.
There are.
And you know, what was interesting to me, Jeff, is it rarely comes up, but occasionally I've run into someone who's not eligible for Medicare.
Oh, meaning they haven't?
They haven't been a participant into the process of paying into Medicare or Social Security and so forth.
They might, you know, it's an oddity, but it doesn't happen often.
But there are instances where someone may not be eligible for Medicare, and that's a headache to be dealt with.
I haven't seen any with my clients yet, but it certainly could happen if you just basically, if you haven't worked, you could fall into that.
But so in these open enrollment periods, we just finished one of them for the annual open enrollment period.
Certainly important.
Everyone was bombarded by all those ads and all that kind of stuff.
We sure were.
But there's also, as you said, there's automatic triggers based on age when you approach the eligibility age.
I was talking with someone else who was on social security disability, and there's also a disability eligibility for Medicare as well.
So in any case, and we've done shows on this.
So if you want to listen to a podcast in detail about Medicare, how it works, what is Medigap and all the different, you know, the HSA options and so forth, there's a variety of
um, things to learn and you may want to go back and, uh, you know, search on our podcast for some helpful.
Absolutely.
Um, uh, we also have done, um, webinars for our clientele and those are posted on our website, uh, on this topic.
So it could be a useful resource for either one of those.
Well, this, while this particular issue is simple, meaning you have to do this, so you're going to be penalized later.
um other issues related to medicare and social security sign up and all those are much more complicated so it's easy to get this one right and not pay a penalty later and forever by the way yeah higher premium yep the next one on the list um is
Planning for long-term care, and I'll say, back to Medicare for a second, many people have the misconception that if you go into a nursing home and you don't have assets to pay for the nursing home yourself or insurance, which we can talk about, that Medicare pays for that, and that's not true, or it's partially true.
They pay for rehabilitation services for up to 100 days, so
I think this is much more well understood today than it was a decade or even 20 years ago.
There was a much different misconstrued expectation of what will Medicare cover.
To your point, there are instances where Medicare will cover some costs at the early stages of long-term care.
However, the obligations going into that
to have had a three-night stay um which these days hard to do right um to stay in a hospital for any length of time these days they try to get you out so fast to be admitted which is a whole different admitted that's right in a hospital but not be admitted excellent point um and then when you are um in this rehabilitation or you know in a you know a setting that might be um
someone might consider a nursing home or something like that, but this rehabilitation situation, you have to have progress.
And if you stop progressing in your recovery, that could be an instance where Medicare would not continue to pay.
The first 20 days of coverage are different from the remaining 80 days of coverage, which again, you may not get the entire 100 days in that instance.
There's a whole slew of things.
Don't plan on Medicare being your coverage for long-term care, because again, Medicare is really hospitalization, doctor's visits.
It's intended for a different purpose.
It's for acute medical coverage.
It's not intended for prolonged long-term care needs.
Long-term care is really about an inability to perform
Some activities of daily living, these ADLs, activities of daily living is typically what it's talked about.
And those might be things like bathing, dressing.
Think about the things you do when you get out of bed.
One, you get out of bed.
Mobility, ambulatory, whatever you want to refer to that.
Two, you go to the bathroom.
Toileting is one.
You oftentimes will shower.
Bathing is another.
Right.
Maybe you get dressed and you go downstairs or whatever and you have breakfast, you know, so there you go.
Feeding yourself like all of these kind of things are the typically the things that are the activities of daily living and
If you're unable to perform, typically two of these is when an insurance policy would be triggered if there is an insurance policy, but it could be that insurance isn't part of the equation, but these are the kinds of issues that you might deal with when having needs for long-term care.
There's also cognitive impairment considerations that people start having concerns that if you're left alone, you might be a danger to yourself or to others.
That is a common trigger for people to think about having a long term care need, whether that's just the care itself and the costs for this.
These are things you need to plan for.
And Jeff, I think most people, if they feel as though if they do the projections, they do the planning and there's sufficient resources to be able to absorb those costs.
they might be less inclined to get insurance as a tool to mitigate the risk.
But insurance could still be a tool they might want to entertain in order to mitigate the risk.
But that being said, if they have the funds, they might be less inclined to insure for it, whereas it's really those people who are in the middle that it's so difficult to figure out the best plan for.
If you don't have enough, you may have limited assets,
and a long-term care would just impoverish you, let's face it, long-term care insurance isn't gonna be really affordable and probably not a good option for that person.
And they might be best served by planning to actually use Medicaid, the state welfare system to kind of plan for how to cover these costs.
Someone who has sort of in the middle though, it's really challenging.
It may not be ideal to fully insure because the cost might actually be damaging to your projections.
You might not have enough.
On the other hand, you might want something to help mitigate the risk and limit the impact of that, or at least buy you time for the idea of how to manipulate assets or where to hold them or whatever it might be.
And care can be received in so many different ways, right?
Good point.
You know, what would be covered for certain kinds of issues is in a nursing home that's going to be paid for by Medicaid.
But assisted living or home health services, these typically are not covered by Medicaid.
But covered by insurance usually.
In terms of health insurance.
No, long-term care insurance.
They would be covered by long-term care insurance.
Sorry, I misunderstood your point.
So it could be your preferred way of receiving care is to be at home, let's face it, most people, and have help in that process.
So in any case, certainly an important thing to think about and do some planning around.
It's just not easy.
This is one of those issues that is so dynamic, meaning it has so many different
components to options available and impact on your financial plan, that it's really prudent to get some advice on this issue.
I mean, if you're working with a fiduciary, a financial advisor, this is one of the ones that they're talking to you about.
They should be, um,
But if you are doing your own investing or maybe you don't have an advisor, this particular issue is worth talking to someone.
And I'm not talking about someone who's going to sell you.
They may sell you a product, but not someone who only sells long term care insurance.
They're going to give you the answer that you need long term care insurance.
It's not a slight.
If you go to a Toyota dealer and ask, say you- What's the best car for me?
They're going to sell you a Toyota.
I would suggest- That's a good analogy.
Modeling this out in the context of your financial plan with a financial advisor who has your best interest at heart.
there's so many options we're just touch we've done entire episodes segments on this topic we're just touching the surface here it's a much deeper and very independent on your individual circumstances and your assets your debts your legacy desires all this is to your point um if people who might be looking to listen to a podcast on this we have done uh several actually but
We've had some great guests to talk about the complexities, different kinds of solutions for how to help mitigate these risks, both when it comes to estate planning and when it comes to long-term care insurance structures and different types of products.
Check those out on previous podcast episodes.
Let's move on to the next topic on this checklist that we're doing.
Number seven on the list of 10 is simplify your financial life.
You know, I'm totally on board with this, too.
This is a routine thing that we talk about.
How can you simplify things?
People tend to have bank accounts in three different banks.
And really, maybe there's an opportunity to simplify.
Maybe you have retirement accounts spread from past employers around here, there, and everywhere.
Maybe that's an opportunity to simplify.
Maybe you have multiple accounts that could either be, instead of having several individual accounts between a couple, maybe you want to have
a joint account or a trust account, or maybe there's reasons you have different accounts and that can be still honored, but maybe it'd be better to have it under one brokerage setting where you'd have the opportunity to keep control of it a little better, be able to assess it a little easier.
there's a variety of ways you can bring simplification into your financial life those are just a couple of ideas off the top of my head did you is there something that we didn't cover you think no i'll just add one personal experience from someone that i helped out um a husband passed away and i'm sure that he had a specific reason for all these different accounts i mean this gentleman married couple husband took care of the finances literally had over 30 different accounts
If you add it, I'm talking about bank accounts, brokerage accounts, mutual.
And I'm sure, and his wife said he had a reason for all that and she didn't know what they were.
Yeah, yeah.
It's a great point, but you got to think about who's coming in behind you.
Right.
That may be manageable for you now, but one, as you age, it might get more cumbersome.
Well, it actually wasn't manageable for him.
He made, I don't want to speak ill.
He lost control of what he had working probably his whole life very successfully, but he lost his handle on it.
I think that's the thing you got to think about.
As I age, is this going to be easily maintained?
Am I going to be able to keep up with this?
Number one.
Number two, is the person coming in behind me, whether it's wife or kids, husband, whatever, that kind of scenario where someone's coming in behind you, are they going to
it's overwhelming for people, particularly in most families, one spouse does have an interest and one spouse typically does not.
Or if it's the kids and they have to deal with probate and all this kind of stuff, it can be cumbersome.
Streamline where possible.
Another example, Jeff, that I didn't think of is
people who have individual securities, individual stocks, own them in a brokerage account.
If you have them at, you know, computer share or whatever it might be, BNY, Mellon or whatever, you know, all these are, you know, it's great for the drip programs and all that kind of stuff, but it's really cumbersome for someone.
If you're not the person doing it, they need all these signature guarantees.
tedious process it is and sometimes they're lost i mean or it might not be known about right right um yeah great point so anyway this is one of those that um
it's it seems um kind of easy and it seems obvious but it can be um tedious and overwhelming but it's a lot easier to do one while you have your faculties and your health and you're um alive you know for someone to deal with it after you it's a much more cumbersome process yeah so simplify where you can
And if you're starting to lose control, you feel you need some help, your advisor should be more than willing to help you figure this out.
To your point, this is something we make so much easier for people when they come in.
We help do all the legwork, and they just have to sign some forms.
That's right.
And if as much as possible, anyway, we can make it easy.
And sometimes those, I know we're belaboring it, but sometimes the family member will actually bring in a child or other family member to start to show them, all right, here's my plan, here's my stuff, which is very helpful as well.
That's a great topic, Jeff.
We should really think about just as a segment sometime, how much do you tell family?
When do you tell them?
Why do you tell them?
When not to?
Why not to?
you know, the whole idea of family meetings or that notion.
And it's a really challenging one, I think sometimes.
And but one that is worth talking about some of the the things to consider as to how to
how to communicate some of these issues.
It's on the list.
It's on our list.
For the listeners who don't know, we have a list.
We have a long list of ideas and topics.
And feel free to write in and ask us questions or topics like you'd like to have on our list.
Some of our best shows have been on listener questions.
We love the mailbag, so to speak.
So just general topics, specific topic, anything that's on your mind, we'd love to hear from you.
You can do that
either through our radio show website, somethingmorewithchrisboyd.com, or you can just send us an email, radio at amrfinancial.com.
And that would be a good way to do it.
All right.
So number eight.
Plan to retire to something, not from something.
Oh, that's really good.
And I completely agree.
When I decided to retire from the public sector that I was working in,
Um, my wife, Lisa, and I was, Lisa was retiring as a paralegal and we were very intentional, not only about our financial planning and your help was included in that, but also like, you know, where do we want to live?
What do we want to do?
Uh, you know, bucket list stuff, but even like the day to day, where do we want to, do we want to work?
If we work, what do we want to do?
Um, you know, both of us wanted to do something where we felt like we were helping some people, not just, you know,
cog in the wheel right that we actually were helping people and then uh temperature travel pets um social circles activities make it a fun process as you're getting closer to retirement talk about if you're alone talk to friends and neighbors if you're with a spouse or significant others talk to them and dream about it make a plan and make sure if you're with somebody that you're actually on the same plan you know we joke about the topic of travel
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