What You Need to Know About the New Tax Policy Proposals in Washington

The House Ways and Means Committee released its tax policy proposals on Monday, September 13 with many differences from President Biden’s proposals and some items previously suggested by Senators.

At this point, these are merely proposals under consideration that may change. We are still in the early stages and don’t know which provisions are likely to make it through the legislative process into law.

As we closely watch these developments and begin to form strategies around the potential changes, the high-level takeaway right now is that two groups of people in particular should anticipate and begin planning with their financial advisor for tax increases:

• Individuals with estates exceeding $6 million and couples with estates exceeding $12 million
• Individuals with annual incomes exceeding $400,000

The most likely tax changes figure to come in form of increased rates for corporate taxes and capital gains.

The higher estate and gift tax exemption was already scheduled to sunset after 2025.  This most recent proposal is moving that sunset forward to expire after 2021.

All the different plans have proposed tax increases on those earning more than $400,000 to pay for other government expenditures. There seems to be agreement on increasing the top marginal tax bracket rate and increasing the top rate on capital gains, but not the exact rate or income level.

One other highly anticipated and relevant topic that was not mentioned among the proposals was the limitation of state and local tax (SALT) deductions. A separate press release went out stating that any changes on this front still need to be negotiated, so we still currently lack an indication of how that may turn out.

There seems to be more agreement about increasing corporate tax rates from the current 21% level (with pushback from some), but now there are disagreements about how much to increase those rates, with both tiered rates going up to 26.5% and a flat 28% rate in the proposals.

What we’ve mentioned here is only the tip of the proverbial iceberg. The many details and nuances of these proposals are still fluid. It’s difficult to even project an anticipated timeline for the legislative process, but we can use 2017 as a point of reference with negotiations lasting through mid-October and the final bill being signed just before Christmas. There is pressure on Congress to come to an agreement earlier because there is also a separate infrastructure bill that needs to be approved, but there are still many disagreements between the House and Senate members that need to be reconciled.

We will continue to monitor the tax news coming out of Washington and notify you of anything that requires additional planning. Please don’t hesitate to contact your financial advisor if you have any questions about how this news impacts your specific financial situation.

© 2021 Moneta Group Investment Advisors, LLC is an SEC registered investment advisor and wholly owned subsidiary of Moneta Group, LLC. Registration as an investment advisor does not imply a certain level of skill or training. These materials were prepared for informational purposes only based on materials deemed reliable, but the accuracy of which has not been verified. Given the dynamic nature of the subject matter and the environment in which these materials were prepared, they are subject to change as additional legislation and government analysis come forth. This is not an offer to sell or buy securities. You should consult with an appropriately credentialed professional before making any financial, investment, tax or legal decision. Past performance is not indicative of future returns. These materials do not take into consideration your personal circumstances, financial or otherwise.

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Moneta in the News: August 2021

Our team’s been busy the past month offering readers, listeners, and viewers their perspective on various timely topics top-of-mind for our clients.

See below for a roundup of August’s media highlights with our experts’ insights:

Fortune: Your credit score might be fluctuating. What to know before you freak out

• James Chalmers, CFP®, AIF® and Senior Advisor, discussed the danger of “buy now, pay later” tools in reporter Amena Saad’s article regarding recent credit score fluctuations. James explained how emotions come into play when the opportunity to pay in smaller increments is presented.

Money: Freezing your eggs can cost up to $15,000. Here are strategies to help pay for it

• In this article, CFP®, CPA and Advisor Trevor Stone offered tips for navigating the financial implications of various fertility treatments.

Bloomberg Radio: The outlook on real estate (podcast)

• The Delta variant of COVID-19, inflation and ESG investing are all major players in recent market movements. Our Chief Investment Officer Aoifinn Devitt explained how in this segment. *Aofinn joins at 20:53

NBCNews.com: The U.S. now has more job openings than any time in history

• Following the release of the June jobs report, NBCNews.com turned to our Chief Investment Officer Aoifinn Devitt for her perspective on how wage increases could cause even further inflation.

Barron’s Advisor: Kids turning 18? Here’s what advisors say parents need to know

• D., AEP®, CFP® and Partner Julie Thomas Sward provided strategies for parents to consider when preparing for their children’s transition into financial adulthood in this piece written by reporter Cheryl Winokur Munk. Julie suggests parents keep an open dialogue with children and schedule meetings with an advisor to go over financial wellness best practices.

U.S. News & World Report: Are brokerage accounts taxed?

• As a CPA, CFP® and Advisor, Matt Erker has extensive knowledge behind the tax guidelines of different brokerage accounts. That’s why reporter Coryanne Hicks turned to him for expert insight on how the accounts are taxed and strategies to minimize it.

Barron’s Advisor: What to do if you got a child tax credit — but didn’t want it

• The child tax credit rollout drove an abundance of client questions. CFP®, CPA and Senior Advisor Cynthia Kirkpatrick shared her three-pronged approach to helping clients navigate the tax implications of the credit in reporter Sabrina Escobar’s article.

GOBankingRates: What tax implications do you need to look into when a family member dies?

• Our CFP®, CPA and Partner Nicole Bailey offered her insight in reporter Gabrielle Olya’s article about how to help family members navigate the financial aspects of losing a loved one.

Fox 2 News: How to always have an emergency savings fund prepared

• Travis Freeman, CFP® and Partner, explained how much money individuals should set aside for an emergency fund and how to kick-start saving on Fox 2 Now news.

Financial Planning: Lessons from the brink

• Aoifinn Devitt, our Chief Investment Officer, shared key investing strategies for advisors drawn from her extensive background in the space. A few tips include performing regular portfolio cleanups, building inflation protection and staying true to the broader mission.

CheddarTV: Investors concerned over Fed rate hikes following a record-breaking week from S&P 500

• In this segment, our Chief Investment Officer Aoifinn Devitt shared her perspective on how various current events throughout the globe are impacting market sentiment.

Stay up to date with Moneta company news by visiting us on LinkedIn, Facebook and Twitter.

© 2021 Moneta Group Investment Advisors, LLC. All rights reserved. Moneta Group Investment Advisors, LLC is an SEC registered investment advisor and wholly owned subsidiary of Moneta Group, LLC.  Registration as an investment advisor does not imply a certain level of skill or training. Moneta is a service mark owned by Moneta Group, LLC. These articles do not individually or collectively constitute an offer to sell or buy securities, nor does any statement contained herein represent any specific recommendation.

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source https://monetagroup.com/blog/moneta-in-the-news-august-2021/

CWCJ Newsletter Q2 2021

The post CWCJ Newsletter Q2 2021 appeared first on Moneta | Fee Only Financial Planning | Investment Advisors | Clients Nationwide.

source https://monetagroup.com/blog/cwcj-newsletter-q2-2021/

CWCJ Newsletter Q1 2021

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source https://monetagroup.com/blog/cwcj-newsletter-q1-2021/

Morgan Housel: Psychology of Money

Investing is not the study of finance – it’s the study of human behavior.

That’s how award-winning columnist Morgan Housel framed it while hosting the second Moneta University Speaker Series event of 2021 with a webinar on “The Psychology of Money.”

Housel used storytelling to explore how investors make decisions around risk, fear, greed and uncertainty. His goal was to discover how we can think about risk in a more productive way.

The Wright Brothers: Timing is meaningless, but time is everything

In hindsight, it’s hard to overstate how important the first flight was to human history. Nothing was the same afterwards. You don’t need scientific expertise to hold a childlike wonder at the sight of a large metal machine soaring through the air.

Yet, in the moment, news of the Wright Brothers’ accomplishment was hardly news at all. The only newspaper that did eventually cover their endeavors did so out of sympathy for their “silly little flying machine” with the headline “Dayton Boys Solve Problem.”

Housel’s lesson: patience is a competitive advantage.

While most investors consider themselves to be in it for the long term, they often define that as only 3-5 years – sometimes as little as a single year.

Housel contrasted this to the fact that 99% of Warren Buffet’s net worth was earned after his 75^th birthday. His secret has largely been time horizon.

When progress is measured generationally, results shouldn’t be measured quarterly. The central problem investors fall for is underestimating the amount of time needed to put the odds of long-term success in their favor.

Stephen Hawking: Stop moving the goalposts

Stephen Hawking was asked how he could remain so happy despite the extremely unfortunate circumstances of living with a disease that slowly paralyzed his body. His response was remarkable, as usual. “My expectations were reduced to zero. Everything since then has been a bonus.”

Housel’s lesson: expectations are more powerful than circumstances.

Many people identify the 1950s as America’s best economic time period even though it is very easy to prove that it was no better than today.

Now our incomes are doubled, but our expectations more than doubled. We’re never going to be satisfied with any amount of money if our expectations grow faster than our wealth.

“Enough” is most important word in managing money. It’s different for everyone, but you need to clearly define it for yourself.

Harry Houdini: Real risk is what you don’t see

Known for his daring escapes, Harry Houdini’s other trick was stomaching a gut punch from the largest man in his crowd without even flinching. When a skinny college kid hit him while he wasn’t expecting it, however, it injured him in a way that eventually resulted in his death.

Housel’s lesson: how risky something is depends on whether you are prepared for it or not.  Our biggest economic risk is what no one is talking about because if no one is talking about it then no one is prepared for it. If no one is prepared for it, the damage will be amplified when it arrives.

We spent all our time talking about Obama and Trump, but it was COVID that ended up being the real risk. Unforeseen events such as September 11 and Pearl Harbor made similar impacts.

Earthquakes: Everyone has a different view of the world

When people think about risk, they don’t do it in analytical way – they do it in cultural way.

Californians can’t predict when their next major earthquake will come, but they are always prepared for one. The state is constantly reminded of this risk by frequent small earthquakes, which makes it easier for voters to approve safeguarding measures.

People in the state of Washington face the same threat of a major earthquake. However, they experience smaller earthquakes at a much lower frequency than California. Without that persistent reminder of the bigger risk, Washington has proven to be much less proactive in safeguarding against it.

Housel’s lesson:  nothing is more persuasive than what you’ve experienced in your own life. We become prisoners to our own past and personal experiences.

People who make different decisions than you are not always crazy, they are merely acting on different experiences. Personal finance is more personal than it is finance.

ABOUT MORGAN HOUSEL

Morgan Housel is a partner at The Collaborative Fund and a former columnist at The Motley Fool and The Wall Street Journal. He is a two-time winner of the Best in Business Award from the Society of American Business Editors and Writers, winner of the New York Times Sidney Award, and a two-time finalist for the Gerald Loeb Award for Distinguished Business and Financial Journalism. He has presented at more than 100 conferences in a dozen countries.

ABOUT THE MONETA UNIVERSITY SPEAKER SERIES

To elevate our client experience at Moneta, we launched the MonetaU Speaker Series in 2020 to help us all stay connected and learning together while social distancing during the pandemic.

As we re-emerge from what was such an unusual, stressful year for so many, we are renewing the MonetaU Speaker Series with three more topical webinars given by high profile guests in 2021:

• Celeste Headlee (May – How to have conversations that matter)
• Morgan Housel (August – The Psychology of Money)
• John O’Leary (November – Being out of bed doesn’t mean you’re awake)

We hope these evenings of wisdom, encouragement and inspiration help revitalize your outlook and re-engage with some sense of normalcy. We all need this for ourselves and for each other.

© 2021 Moneta Group Investment Advisors, LLC. All rights reserved. Moneta Group Investment Advisors, LLC is an SEC registered investment advisor and wholly owned subsidiary of Moneta Group, LLC.  Registration as an investment advisor does not imply a certain level of skill or training. Moneta is a service mark owned by Moneta Group, LLC. The opinions of those presented by the Moneta University Speaker Series guests do not necessarily represent those of Moneta.

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source https://monetagroup.com/blog/morgan-housel-psychology-of-money/

Summer Edition

How to Prepare for the Death or Incapacity of You, a Spouse or Parent    David Breckenridge , CFP®

One can never fully prepare for the emotional aspects of the death of a spouse or parent, but we can do certain things in advance to help the survivor cope with the financial aspects of that loss.  Here are a few questions to ask and things to consider.

• Bills and Banking. How are bills paid? Bills arrive almost daily and it is of enormous help to know how the household bill payer takes care of those. Here are some questions you should ask in advance. Do they write out physical checks and mail them? Do they use their banks online bill paying service? Do bills come by U.S. mail or by e-mail. Are they auto-debited from accounts? Where are the bank accounts? Is there overdraft protection? Can bank accounts be consolidated to simplify the mechanics? Are there safe deposit box or boxes? Can you add another party to ease access to the box?
• Passwords. Does your spouse keep a master list of passwords? Where is that list and is it safe-guarded from unwanted eyes? Does it include website addresses, user names and passwords? Do they use a password manager? Who has access to that and how?
• Organization. Encourage your spouse or parent to get organized. Collect important documents by category and file in one place. Imagine how much easier it would be to step into a person’s financial shoes if there was a file cabinet and inside were folders labeled: auto insurance, tax information by year, homeowner’s association, etc. Have them show you where those files are and how they are organized.
• EP documents. Who has the originals and where are they located? If they are in a safe-deposit box, who has access to the box? Should a trusted family member or friend be added to access the box?
• POD/TOD. I know we talk about this in our Moneta review meetings, but it is an easy step to miss. Transfer on death and or Payable on Death designations for cars, boats and bank accounts saves having to go through probate, which in turn saves time and money.
• Pre-arranged funeral services. Although absolutely no one likes to do this, it is a big relief to the survivors not to have to make these decisions in the time of grief. It is an act of love to take care of this in advance and have it planned the way you want it planned, not the way someone thinks you wanted it.
• Just in case. Tell a family member or friend or who you named agent or trustee where all the above information is located, along with a key to your house. If you and your spouse should die together in an accident, someone will need to have access to this information.

Your Moneta Team helps to organize, prepare and be successor to the primary financial overseer in your family, but there are still items, some listed above, that we cannot do for you. Although this is by no means an exhaustive list, it serves as a guide to how well you have prepared for this possibility.

© 2021 Moneta Group Investment Advisors, LLC. All rights reserved. These materials were prepared for informational purposes only. You should consult with an appropriately credentialed professional before making any financial, investment, tax or legal decision. Past performance is not indicative of future returns. These materials do not take into consideration your personal circumstances, financial or otherwise.

What’s Going On With Inflation?

Ask A Professional, Daniel Wacker

Inflation has dominated headlines of late and, consequently, investors have reacted – as they naturally do to stimuli. A rather simple concept, inflation is merely a general rise in the price level of goods and services. Yet, it remains a widely debated topic and often misunderstood by the masses. We hope to give perhaps a different lens to look at the topic through.

If you open any economics textbook, you will likely find the following relationship: Money Supply (M) x Velocity of Money (V) = Price Level (P) x Nominal GDP (Y)

Alternatively, rearranging this same relationship yields the Price Level (Inflation): P=(M x V)/Y

In English, the number of times money changes hands via transactions for goods and services in conjunction with the supply of money must grow at a faster rate than the actual output of said goods and services for inflation to persistently tick upwards.

Pundits and average Joes alike will talk about the Federal Reserve printing money and increasing the supply through its asset purchase program. The natural response to these policies is to cite the imminent threat of inflation. The more of something (money) there is, the less value (purchasing power) it has – right? 

It is certainly one piece of the puzzle, but it does not paint the whole picture. To illustrate, consider a hypothetical economy in which the money supply, let’s say, triples but – for whatever reason – consumers are not willing to spend a dime. Without the demand for goods and services, price levels will actually decrease. Below is a simple, but fun graphic from the Federal Reserve Economic Data’s (FRED) interactive website, with shaded areas representing economic recessions. The chart plots the percentage change from a year ago in M2 money supply and velocity of M2.

Beginning May 2020, M2 consists of M1 plus (1) small-denomination time deposits (time deposits in amounts of less than $100,000) less IRA and Keogh balances at depository institutions; and (2) balances in retail MMFs less IRA and Keogh balances at MMFs. Seasonally adjusted M2 is constructed by summing savings deposits (before May 2020), small-denomination time deposits, and retail MMFs, each seasonally adjusted separately, and adding this result to seasonally adjusted M1.

I think this tells a powerful, but naturally intuitive story. The general trend when money supply skyrockets (typically during recessions as the Federal Reserve intervenes) is for the corresponding velocity to fall off a cliff. I think most, if not all of us, can agree it makes sense for economic transactions to stagnate during a recession.

So, you might ask, what does it mean today? The transactional demand for goods and services has, and likely will continue, to resurge as the economy opens back up. Another interesting prism through which to look at the situation through is how the market actually prices expected inflation into securities. Treasury Inflation Protected Securities (TIPS), as the name would suggest, offer protection against inflationary environments. Furthermore, the difference in yield between a nominal Treasury bond and a TIPS bond can serve as a proxy for inflation. For reference, below is a breakdown of both at various maturities using data from early June provided by our Investment Department:

You may note that each TIPS maturity currently offers a negative yield. Furthermore, taking the 5 year maturity as an example, inflation would have to exceed 2.497% over the next 5 years for the TIPS bond to outperform a standard Treasury bond. It’s hard to justify, particularly given the negative yields, building out an allocation to TIPS in portfolios at this time.

Alongside our Investment Department, our team is always assessing economic data and its impact on markets. As always, we are more than happy to discuss further or answer any questions you may have. Easy ones to me; difficult ones to everyone else!

NEW EMPLOYEE SPOTLIGHT

Anna Medley

I joined Moneta this past April with this being my first full time job out of college. I graduated this May with a degree in Mathematics from Saint Louis University. Before I moved here for college, I was born and raised in Louisville, KY. However, once in STL, I knew I couldn’t leave quite yet. I started searching for jobs in the area and that’s when I came across Moneta. Prior to joining the Breckenridge Team, I interned at a reinsurance company for the past two years. With that said, I am fairly new to the wealth management and advising industry. That makes it slightly more challenging, but even more rewarding and exciting to be starting a career in a new field. I am most excited to be transitioning into working with our clients this summer!
Aside from work, I love to travel, so feel free to send me any recommendations! I recently traveled to Mexico and Napa Valley for some graduation trips with my friends. Before that, I was lucky enough to spend four months studying abroad in Madrid. For the rest of the summer, I am planning on settling into my new apartment in Clayton and spending the weekends at the Lake of the Ozarks. I already love Clayton and am excited to keep exploring all the restaurants, parks, and shops it has to offer.
I’m looking forward to being able to develop my career here at Moneta and look forward to meeting each and every one of you!

WHAT ARE WE UP TO?

Mike and his family headed Northeast to spend time in Cape Cod.
As you can tell, his girls loved the vacation!

Logan has spent countless hours over the past year studying for the CFP® exam. He took the exam in early July and PASSED. Congratulations, Logan!

Our Mission Statement

We are a high-performing, collaborative group of colleagues and friends who support each other’s growth and success, while providing personal financial advice and exceptional service to enrich the lives of the successful, multi-generational families under our care.

Kevin and Lizzie celebrated their one-year anniversary in Michigan surrounded by their family and friends.

One of the greatest joys of our business is meeting new people and learning about their unique situations. Please know we are always open to “no expectations” conversations with prospective clients and will always be respectful in all communications and encounters with friends, family and colleagues of yours. We appreciate your continued trust and confidence in our team.

The post Summer Edition appeared first on Moneta | Fee Only Financial Planning | Investment Advisors | Clients Nationwide.

source https://monetagroup.com/blog/breckenridge-team-newsletter-summer-2021/

Ask the CFP: Should I be worried about inflation?

 

Hello everyone and welcome to this month’s Ask the CFP segment. This month’s question is, “Should I be worried about inflation?” Before we cover this topic, let’s remember that inflation, which is the gradual increase in prices for goods and services, is healthy for an economy. Inflation is needed, but only to a certain extent. The opposite effect is deflation, which means prices are declining over time. Imagine if the price of a car was expected to decline a year from now. You would be motivated to postpone that purchase since it would be less expensive. Systemic deflation wouldn’t be good for our economy.

So should you be worried about inflation? The Federal Reserve Bank has a goal of maintaining a 2% rate of inflation over time. Not only does inflation entice people to make purchases today instead of waiting, increasing prices on goods or services allow companies to potentially increase profits and give employees raises. These are normal conditions in a healthy economy. However, inflation deteriorates the purchasing power of money. You may know that a cup of coffee cost about 25 cents in 1970, but it’s certainly much more than that today. This devaluing effect of inflation is one of the primary downsides.

When a central bank, such as our Federal Reserve Bank, increases the supply of money through stimulus programs, it can decrease the value of our money. Since there’s more money in the system, it creates greater demand for goods and services, thus helping an economy that may be in a weak cycle. Greater demand leads to higher prices and you can then see the dots connect to higher inflation. For someone that owns assets that can appreciate, such as stocks, commodities and real estate, inflation may lead to gains on those assets. For someone with more cash assets such as CDs, money markets and bonds, inflation may lead to less purchasing power.

Overall, the Federal Reserve Bank has tools in their toolbox to fight inflation if they feel it’s too high. If you’re concerned because you have large amounts of cash assets, it may be time to speak about ways to hedge the risk. If you have a question about this topic or have a question for next month’s video, please send it to DTroyer@MonetaGroup.com. Thanks for watching and we’ll see you next month.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Please speak with a qualified tax or legal professional before making any changes to your personal situation.

The post Ask the CFP: Should I be worried about inflation? appeared first on Moneta | Fee Only Financial Planning | Investment Advisors | Clients Nationwide.

source https://monetagroup.com/blog/ask-the-cfp-should-i-be-worried-about-inflation/