Portfolios & Back Pain

Have you ever had back trouble? Boy can it be a pain in the ### (pun intended). Recovery is usually possible by seeking – and taking – proper advice and treatment. Believe it or not, there is a way to relate the recovery process from back pain to the recovery and durability of investment portfolios. Stay with me here!

I will credit my excellent physical therapist, who knows very well my profession as a CFP®, for coming up with the concept. He said to me, “like your advice about my 401k allocation, the physical strength work a person does for years can make recovery from back trouble much swifter and even easier.” Hooray! While the recovery process for a person’s back can take several weeks to several months, the recovery process for properly positioned investment portfolios has been actively taking place for over 12 months and could continue over the life of a portfolio.

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Quick 401k Tax Tip Video

From the January 2021 archives of TGIF 2 Minutes – a relevant 401k tax tip video. Remember, the 2020 tax filing deadline was delayed until MAY 17TH, 2021. Considering this extra time, it is never too late to plan for the rest of 2021 and beyond. Enjoy this quick video.

Click the PLAY button above.

Thank you for watching, stay safe and TGIF!

The 401k Trap: Contact me for a copy at kdebbs@msfsolutions.com

Quick 1Q Wrap-Up

In the interest of the upcoming Easter and current Passover holidays today’s edition will be quick. Similar to the 1st Quarter of 2021 which seemed to FLY BY!

Market – and my clients’ portfolio – performance was strong to start the year. There is caution in the air, however, as 10-year US Treasury yields climbed to levels not seen since early 2020 before the pandemic began. The swiftness of the rise in bond yields warrants caution in the overall stock and bond markets.

The swiftness of the rise in bond yields warrants caution in the overall stock and bond markets.

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The $1,100 Cell Phone…Again!

From the Archives of TGIF 2 Minutes… read on for 2021 updates. Originally sent, April 2019.

Cash flow. Wouldn’t you like to have more of it around tax time? Well then, it may be time to delay or reconsider that new cell phone purchase.

Recently [in 2019] this “sticker shock” issue came to the forefront when I forked over $1,100 for my new Samsung Galaxy Note cell phone. OK, you may say, “Why didn’t you go with the zero-interest payment plan?” or, “Where have you been, Kerrie?” To which I would respond,

Having in place a stash of cash savings, “rainy day” fund, or emergency fund is one of the first things I discuss with all of my clients, no matter their income.

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Last Year’s Paycheck

Believe it or not, lots of people do not know how much they get paid. That is, in terms of total compensation. Of course, there are that handful of people who know exactly what they make – and most people know precisely their “net pay” that gets deposited into their bank account periodically. But in my years of discussing total compensation with my clients (who typically make a fair amount of money) a great deal of the time they do not know accurately enough how much they made in a given year.

Believe it or not, lots of people do not know how much they get paid.

January is an ideal time to take a closer look at a print-out of last year’s year-end pay stub to learn valuable details and information. Why is this important?

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The 401k Trap

The real title of this edition is: The 401k Trap – Have a 401k Strategy.

It has become clear that there is more to saving in a 401k than…simply saving in a 401k. Last year, amidst no travel and not being able to see clients and friends face-to-face, two colleagues and I took 5 months to write an actionable guide to the critical need – due to potentially higher taxes in the future – for a strategy around 401k saving TODAY. For Everyone. The name of the paper is: The 401k Trap.

The 401k Trap: Contact me for a copy at kdebbs@msfsolutions.com

For those who are just getting started saving in a company 401k or 403b, the strategies we suggest could make a huge difference in 10 years and beyond; for those who have been saving in a 401k for 15-20 years or more, a strategy may be even more urgent.

The key reason is taxes. It is true that no one knows for sure where tax rates will be in 5-10-20 years from today. But with history as a guide and the fact that tax rates on the federal level are near all-time lows, the conclusion can be drawn that tax rates will only be higher in the intermediate- and long-term future. This state of affairs will punish those who have done the hard work of saving large balances in pre-tax 401k and IRA accounts.

Here is the Table of Contents – please email me at kdebbs@msfsolutions.com for a copy of the paper.

  • Oh, How Times Have Changed!
  • Longevity
  • 401k Today
  • Risk of Increased Government Spending
  • An Aging Population
  • Dirty Little Secret
  • Historic Tax Brackets
  • Surprise
  • The Earlier the Better
  • The Debt Clock
  • The Wake-Up Call
  • Bonus Checklist

Thank you for reading, stay safe and TGIF!

Tax Traps, Part 1

Talking taxes on a Friday is a lot easier than talking taxes on a Monday! Believe it or not, at this time of year it is smart to be talking taxes no matter what. Preparation and planning are the name of the game.*

The issue of higher FUTURE taxes is critical to clients of all income levels – especially those in higher tax brackets – and all ages. You will hear me repeatedly hammering home this “tax trap” issue – with the research and collaboration from my sources to back it up.

Here is some “good” news when it comes to taxes and tax strategies: the Roth IRARoth IRA conversion and Roth 401k are alive and well for now. The “good” part is that for nearly ALL reading this, you ARE eligible for both the Roth IRA conversion and the Roth 401k (if your company offers a Roth 401k) even if you are in the higher/highest income brackets or own a business! And these strategies can be employed NOW for 2020 and 2021.

The issue of higher FUTURE taxes is critical to clients of all income levels, especially those in higher tax brackets
Photo by Karolina Grabowska on Pexels.com

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The Elephant in the Room

“Elephant in the room,” “ticking time bomb”…whatever you wish to call it, there is an issue currently present but not talked about nearly enough. The issue hits a nerve with nearly everyone – investor/saver or not. The issue is taxes – more specifically future taxes on retirement savings. Unfortunately, the issue has become so politicized that its true impact has almost been forgotten.

 Tax rates and total taxes paid may be higher or the same as today for lots of savers in retirement.

Back in 2016, I discussed part of this topic in TGIF 2 Minutes. (Click Death & Taxes to read.) At that time, the focus was soaring healthcare costs.

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Goals Gut Check

From the TGIF 2 Minutes Archives earlier this year PRE-coronavirus…

Earlier this year in February things were GOOD! The economy was cranking, unemployment was low, wages were up, and it was a somewhat perfect time of the year to set goals. Think: it was pre-tax filing time and after the holidays.

Fast forward to today… the world has changed. Our savings have been tapped in the pandemic — and new savings and other goals need to be reset! While the kids may now be going back to school (followed by maybe not??) using this precious time to set just a handful of goals can pay off toward achieving those goals.

silver and gold coins
Give yourself a “Goals Gut Check” with this precious time before things potentially go a little haywire.

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