Tag Archive for: finance

Quality Questions Yield a Quality Life

It’s been said that quality questions create a quality life. Successful people ask better questions, and as a result, they get better answers. With better answers, they are better equipped to solve the problems or pursue the opportunities that lie in front of them on their path toward a life of significance.

With the stock market down more than 20% for only the second time in nearly 15 years, anxious investors are naturally starting to ask more questions. It’s in these times of worry that the quality of our questions becomes even more important because our emotions like to hijack our ability to reason. Here are some quality questions and answers investors should be discussing with their advisors.

Just how bad is it?
The first half of the year has seen a confluence of events that we really haven’t seen before – four-decade high inflation, war, a pandemic, Fed tightening, supply chain issues, and labor shortages. The combination of these economic and geopolitical challenges has driven the stock market into its longest bear market since 2008, while bonds have suffered a double-digit decline for the first time in decades. If the S&P 500 closed the year at its current level, it would be its sixth-worst year ever. With stocks and bonds both down year to date, it feels like there’s been no safe haven for investors. If you’re feeling uneasy, it’s understood. We haven’t experienced losses this severe for this length of time for well over a decade.

Despite this heavy dose of negative reality, the market outlook is not all doom and gloom when considering market fundamentals. There are many bullish indicators for our economy that give us hope:

  • Job openings remain near an all-time high1
  • Unemployment is near a 50-year low
  • Household debt as a percentage of income is at a 40-year low

The average U.S. consumer balance sheet remains healthy. Adding more hope to our outlook is the expectation that corporate earnings should grow by 10% for 2022, in line with the market’s long-term earnings growth rate.2

Is this market decline different?
It is and it isn’t.

Yes, this bear market is different than previous ones caused by events that are unique to this time we are living in. Not many saw a prolonged war coming in Ukraine, or expected global supply chain issues, both of which are contributing to our inflation woes that have pushed us into a bear market.

But it’s really a swap of one set of unknowns for another which makes this bear market similar to others. No one knew when tech stocks bubble would bottom, the housing market would end its freefall, or when the 2020 pandemic-induced market decline would cease.

Looking back at previous bear markets, none of them looked exactly like the one we are experiencing. But no two bear markets are exactly the same.

How do market returns look following bear markets?
With the S&P 500 down more than 20%, the bear market is already here. It’s a sunk cost. So, let’s look forward to what investors might expect moving forward. Analyzing eleven instances when the U.S. stock market suffered a double-digit yearly loss provides some important insights that investors should note about future returns following the worst years:

  • 1-year returns were positive 6 of 11 times while averaging just over a 6% return
  • 3-year returns were positive in all but one case during the Great Depression with an average cumulative return of 35%, or 10.5% annualized return
  • 5-year returns were positive 100% of the time with an average cumulative return of almost 80%, or 12.4% annualized return3

While the current market environment has left many investors a bit unnerved, history suggests there’s plenty of reason for long-term investors to feel hopeful when considering future market returns.

What actions should I be taking right now?
Investors would be wise to start by asking their advisor quality questions. Avoid questions that can’t be known, such as how long will this market decline last or how far will stocks fall. Instead, ask your advisor if your financial plan is still on track to achieve your goals? Ask if market declines like this one are factored into the plan that was created for you? Depending on your goals, ask your advisor if you have the right investments in your portfolio to keep pace or outpace inflation? By asking these quality questions about your financial plan, investors focus on what they can control, which is a key to creating quality outcomes.

Given the market volatility, another area of control for investors is the balance of their portfolios. Spend time strategizing with your advisor to make sure you own the right allocation of stocks and bonds aligned to your comfort with risk and the milestones you have set for your investment portfolio.

The solid returns following the worst years ever for the U.S. Stock Market should serve as a good reminder for long-term investors with cash on the sidelines to consider a plan that puts their money to work.

What actions should I avoid right now?
In times of turmoil, humans have a tendency to trade in their plans for panic. That’s why when America was first sending astronauts to space, the primary skill they were trained on was the art of not panicking. Panic causes people to ignore rules, make mistakes, and deviate from well-crafted plans.

Investors could learn a lesson or two from astronauts.

  • First: Trust your plan. Your advisor has worked with you to develop a financial plan that is well-constructed and meticulously developed to help you achieve your goals over time. Even so, during times of market chaos, it’s hard to ignore that tingling feeling urging us to throw it all out the window. It’s why Warren Buffett once said, “investing is simple but not easy.” It’s not easy because it takes discipline. Disciplined investors have been rewarded time and again by staying the course with their plans after market declines.
  • Second: Remain calm. Investors should stay focused on what they can influence, not worry about what they can’t control. Investment advisor Charley Ellis makes this point clear: “Forecasting the future of any variable is difficult, forecasting the interacting futures of many changing variables is more difficult, and estimating how other expert investors will interpret such complex changes is extraordinarily difficult.” Often, understanding what you don’t (or can’t) know is more valuable than what you do know.

Investors should be wary of anyone predicting when this market slide will end or when some of the current market factors such as war and high inflation will subside. These are unknowns that simply can’t be answered in the present.

How do I navigate this market decline?
While the current market storm has left investors understandably unsettled, we’d encourage long-term investors to remember that we’ve been through these types of worrisome markets before. While no one likes the recent volatility, it is the tradeoff investors make for returns over time that far exceed cash.

During past steep market declines, we’ve helped our clients successfully navigate these unchartered waters by focusing on what they can control, avoiding panic, asking quality questions, and sticking to their plans. Speaking of quality questions, what do lower stock prices mean for long-term investors? It means higher future expected returns. That’s a quality answer investors should appreciate.

Now is a good time to reach out to your financial advisor for a meaningful quality question and answer session.

 

Sources: 1 https://tradingeconomics.com, 2 Factset, 3 awealthofcommonsense.com, Mosaic calculations

by JOHN FISCHER, CFA®, CFP®
John is the Chief Investment Officer (CIO) at Mosaic Family Wealth. He leads the firm’s Investment Committee which shapes the firm’s investment philosophy and strategy for client portfolios. He also serves on Mosaic’s Leadership Team. A 20-year industry veteran, John is most passionate about helping people understand how emotions relating to investments can be more important than the investments themselves in achieving financial goals.

_______________________________________

Please note that nothing in this content should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing in this content is intended to be, and you should not consider anything in this content to be, investment, accounting, tax, or legal advice. If you would like investment, accounting, tax, or legal advice, you should consult with your own accountants or attorneys regarding your individual circumstances and needs.

The views expressed in this commentary are subject to change based on market and other conditions. These documents may contain certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Any projections, market outlooks, or estimates are based upon certain assumptions and should not be construed as indicative of actual events that will occur.

All information has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy, reliability, or completeness of, nor liability for, decisions based on such information, and it should not be relied on as such.

Past performance shown is not indicative of future results, which could differ substantially. Index returns are unmanaged and do not reflect the deduction of any fees or expenses. Index returns reflect all items of income, gain and loss, and the reinvestment of dividends and other income. You cannot invest directly in an Index.

Mosaic Family Wealth, LLC is a Registered Investment Adviser. Advisory services are only offered to clients or prospective clients where Mosaic Family Wealth, LLC and its representatives are properly licensed or exempt from licensure.

Beyond The Shiny Gloss of Cryptocurrency: What Investors Need To Know

Bitcoin. NFTs. Blockchain. There’s a new vocabulary taking center stage recently, all revolving around a new digital currency system called cryptocurrency. Barely a decade old, this decentralized digital currency has moved from dark web discussion threads to mainstream conversations. It has the full attention of institutions and investors alike, making this the right time to get up to speed on what all the commotion is about.

THE BIRTH OF DIGITAL CURRENCIES
The idea was to devise a system that would allow individuals to hold, send, and receive value-holding items without a trusted intermediary such as a bank or payment processor in the middle. The concept came to life thirteen years ago when a cryptography-based system called blockchain was developed that enabled the creation of digital or virtual currencies secured by encryption techniques that control the creation of monetary units and verify the transfer of funds. Bitcoin was the first digital currency, or medium of exchange, that now makes up the broader cryptocurrency universe. A Bitcoin has no physical presence. It is a string of numbers and letters called a hash that indicates the value you now hold, recorded on a global network of computers called a blockchain.

The cryptography-based blockchain network, which is a distributed ledger (think of it as a massive spreadsheet), is the backbone of digital currencies. It enables the recording of information using a chain of complex, decentralized data blocks, that makes it difficult or nearly impossible to change, hack, or cheat, while still being accessible worldwide to anyone. The ledger is not controlled by any singular institution or government entity, offering ownership guarantees that previously didn’t exist in the digital world.

Bitcoin is the first and largest cryptocurrency, although thousands of different cryptocurrencies have since been created. The value of all available bitcoins is roughly $750 billion while the global crypto market cap is just under $2 trillion. As a market leader, Bitcoin is often used as a benchmark when evaluating the impact of all cryptocurrencies.

SHOULD BITCOIN BE CONSIDERED A CURRENCY?
One of the key components of a currency is that it serves as a store of value, essentially making it an asset or commodity that can be saved, retrieved, and exchanged in the future without deteriorating in value. Bitcoin can certainly be saved and retrieved but even its biggest advocates are not confident in its ability to be exchanged in the future without risk of its value deteriorating significantly. History has demonstrated this volatility.

In November 2021 Bitcoin reached an all-time high above $67,000. Less than 3 months later, its value plummeted to $35,000, a decline of nearly 50%. This significant volatility wasn’t a one-time occurrence. Bitcoin has experienced at least six different drawdowns of more than 70% since its inception in 2009. Can you imagine being paid by your employer in November and three months later the compensation you received only allowing you to buy half of the goods it could three months prior?

By contrast, the U.S. dollar has tremendous credibility globally as a trusted currency for commerce because the value of what it can purchase on any given day changes very little over time, even in other countries.

Beyond its volatility, it’s important to realize as well that any expenditure or sale of Bitcoin or any cryptocurrency holdings triggers a tax bill. The IRS considers cryptocurrency to be property for tax purposes, which means your virtual currency is subject to capital gains taxes in the same way as any other assets you own, like stocks or gold. So, if Bitcoin holders were to purchase groceries or new clothes with their holdings, not only would they pay sales tax, but they’d also be subject to capital gains tax on the Bitcoin used for their consumption.

WHY IS THERE SO MUCH INTEREST IN CRYPTOCURRENCIES?
For much of the past decade, Bitcoin garnered great interest due in large part to a belief that it could eventually replace traditional currencies. One of its strongest attributes is that the number of available bitcoins is fixed at 21 million digital coins. This hard cap was designed into the algorithm in its source code by Bitcoin creator Satoshi Nakamoto in order to ensure Bitcoins became a scarce commodity, with the hope that this will increase their value in the future. All cryptocurrencies have similar hard caps. Unlike a traditional currency where a government can simply decide to print more dollars and put them into circulation, the total number of Bitcoins cannot be manipulated by any individual, business, or government. The vast majority of even the most ardent crypto fans now agree that replacing traditional currency is unlikely due to the fixed limits and the volatility they represent.

Another great interest driver in Bitcoin is a desire to invest in the future impact of blockchain technology. By owning Bitcoin or other cryptocurrencies, the belief is you can gain exposure to an emerging technology that could change the way the world transfers money. But this thesis is wobbly at best given that blockchain technology has many more use cases than just currency. It can also be used to record emails, contracts, land titles, bond trades, or any type of contract between two parties, which opens up the possibility of peer-to-peer financial products, such as loans or decentralized savings and checking accounts. Even with all this versatility though, this new technology is still far behind existing payment processing systems that are globally used. Keep in mind that the number of payments cryptocurrencies can process per second is less than 1% compared to that of Mastercard or Visa.

Finally, some investors view Bitcoin and other cryptocurrencies as a commodity, or sort of “digital gold” that can be useful as a hedge against inflation or doomsday scenarios. Keep in mind though that although crypto does have some similarities to commodities, in the sense that its value is determined by supply and demand in the marketplace, it is limited by its strictly digital nature. Gold, for example, is a physical raw material that has many use cases from a societal standpoint.

DOES BITCOIN HELP PORTFOLIO DIVERSIFICATION?
Looking at bitcoin’s admittedly short track record of historical returns, its performance has exhibited a low correlation to other asset classes. This low correlation shouldn’t be all that surprising when considering the fundamental factors that drive Bitcoin’s price (i.e. – market adoption, supply shocks, network security, liquidity) are very different than those which drive stocks (i.e. – corporate profits, economic growth, interest rates).

The challenge for investors is how Bitcoin’s low correlation didn’t perk up when they needed it most. In early 2020, the S&P 500 fell by 33% during the onset of the global pandemic. During that same timeframe, Bitcoin fell 37%. Meanwhile, intermediate core bonds lost only 3%, outperforming stocks and Bitcoin by 30%, and reminding investors why bonds have proven to be a great time-tested diversifier of equity risk.

In their whitepaper, Hougan and Lawant illustrate that despite its extreme volatility, a small allocation to Bitcoin would have enhanced the absolute and risk-adjusted returns of a traditional portfolio of 60% equities and 40% bonds since its inception. But investors should note that portfolio benefit is due to Bitcoin’s meteoric rise from a value of $0.05 in 2010 to above $35,000 in just over ten years. Over the past 11 years, Bitcoin has seen a 100%+ return in six of those years. Should investors feel safe to assume similar types of returns moving forward, especially for an asset that unlike a stock or real estate is incapable of generating cash flows? It feels like a dangerous assumption. At the same time, given it remains in the early stages of this technology, Bitcoin’s extreme price volatility is likely to persist in the future.

IF YOU CHOOSE TO OWN CRYPTOCURRENCY, RIGHT-SIZE YOUR BET
Given the infancy of the cryptocurrency sector and its inherent volatility, investors would be well served to view Bitcoin and its crypto peers within the framework of a highly speculative investment and invest accordingly. The market cap of the global stock and bond markets is over $200 trillion. The value of all cryptocurrencies is just under $2 trillion. From an asset allocation perspective, investors who desire to own crypto should consider a portfolio allocation of 1% or less ($2 trillion divided by $200+ trillion).

Before making any investment decision, investors should consider the inherent risks. Don’t ignore the volatility of Bitcoin and your ability to stay invested during its wild market swings. It’s lost nearly half of its value since November and lost 70% of its value six times in its 13-year history. If you can’t stay invested during these deep drawdowns, the potential returns won’t matter.

Beyond its volatility, the risks to owning Bitcoin include the market share impact of other cryptocurrencies, governmental regulation, outright bans of cryptocurrency by countries such as China, the introduction of digital currencies by sovereign nations, new technology, and innovation, to name a few.

Bitcoin’s performance over the past decade has been a homerun for its investors, but its future is unclear. Just because Bitcoin was the first cryptocurrency doesn’t mean it’s the best or the last. It lacks the historical track record of traditional assets such as stocks, bonds, gold, or art. As such, there is a chance that Bitcoin becomes worthless in much the same way flashy internet stocks such as Pets.com did during the bursting of the tech bubble two decades ago.

Most importantly, any potential investment should be considered in the context of your long-term financial plan and your tolerance for risk. If you have a well-crafted financial plan, it’s unlikely that you need a miracle homerun to make your plan succeed and achieve the financial goals you desire… but a strikeout could be quite costly. Given this backdrop, sticking to your current long-term financial plan avoids the inherent risks and volatility of the current crypto investment world. Sitting on the cryptocurrency sidelines and allowing others to take swings in their portfolio seems like a prudent decision.

by JOHN FISCHER, CFA®, CFP®
John is the Chief Investment Officer (CIO) at Mosaic Family Wealth. He leads the firm’s Investment Committee which shapes the firm’s investment philosophy and strategy for client portfolios. He also serves on Mosaic’s Leadership Team. A 20-year industry veteran, John is most passionate about helping people understand how emotions relating to investments can be more important than the investments themselves in achieving financial goals.

_______________________________________

Please note that nothing in this content should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing in this content is intended to be, and you should not consider anything in this content to be, investment, accounting, tax, or legal advice. If you would like investment, accounting, tax, or legal advice, you should consult with your own accountants or attorneys regarding your individual circumstances and needs.

Mosaic Family Wealth, LLC is a Registered Investment Adviser. Advisory services are only offered to clients or prospective clients where Mosaic Family Wealth, LLC and its representatives are properly licensed or exempt from licensure.

 

Skip 2022 Investment Predictions, Check Out 5 Investment Themes Instead

The start of a new year welcomes two time-tested annual rituals: New Year’s resolutions and investment predictions. Even though most people abandon their resolutions after about a month, they often put long-term faith in investment predictions. Wall Street certainly enjoys the attention they get from clients who yearn for insight into what an uncertain future holds.

I’ve recently started a new tradition each January of reading investment predictions from the previous year and comparing them to what actually happened. It’s a really enjoyable exercise for two reasons: first, despite coming from brilliant teams with abundant resources, it’s amazing to see how often these predictions are stunningly wrong. (To be fair, predicting the future is an impossible task!). And second, the wildly inaccurate predictions give my brain freedom to not seek out uncertain futures. After all, how many 2021 predictions pegged inflation at 7% for the year? Most predicted 2-3%, including the Fed. And how many predicted the S&P 500 would have a 27% return for 2021? I couldn’t find one that was even within 10% of the actual outcome.

Instead of predictions that would most certainly be wrong anyway, I thought it would be more worthwhile to share five themes for 2022 that investors should watch.

Market Returns
The S&P 500 returned 27% in 2021, roughly triple its long-term average, marking the 3rd consecutive year of strong double-digit returns by the U.S. benchmark index. Its three-year average annual return since 2019 is 24%, which is the S&P’s best three-year period since the late 1990s.1

Heading into 2022, investors would be well-served to temper their expectations around returns. With the three-year rally, market valuations are above their long-term averages. At the same time, optimism remains for the new year. The consumer makes up roughly 2/3 of the U.S. economy. With low unemployment, rising wages, lower debt levels, and higher savings rates, U.S. consumers are looking healthy and wealthy. Combine that with corporate earnings expected to grow 9% in 2022 and there’s good reason to believe that the current economic expansion can produce a 4th consecutive positive year for the S&P 500 – just don’t bet on 20+% returns in 2022.2

Inflation
After lying dormant for more than a decade, inflation was the hot topic of 2021. During the 2010s, inflation, as measured by CPI, averaged 1.8% per year.3 In 2021, inflation soared to 7%. There were a handful of factors that drove inflation higher, including soaring consumer demand, supply chain issues stemming from the pandemic, fiscal and monetary policy, rising real estate prices, and rising wages.

As investors look to 2022, inflation will likely retreat from its 2021 levels as supply chain challenges are resolved, business inventories are restocked, and consumer demand likely softens without the benefit of government stimulus checks. But rising home prices and wages are two of the stickier components of inflation, so it’s unlikely that inflation will return to its pre-pandemic levels in the near future. Investors should remember that moderate inflation is a sign of a growing, healthy economy and positive for stocks. And most importantly, over time, the best hedge against inflation is a diversified portfolio of stocks.

The Wall of Worry
It happens every year like clockwork: investors look at impending risks to the market and feel a sense of doom and gloom. In 2019, the market stared straight up at U.S./China relations, tariff and trade battles, and Brexit. In 2020, the covid pandemic and U.S. presidential elections created severe investor indigestion. Last year, high market valuations, the pandemic, and the threat of inflation churned investors’ stomachs. Despite those large walls, the S&P averaged a return of 24% over the three-year period and 2020’s worst year performance still generated an 18% return.

Each and every year the stock market faces a wall of worry it must climb. And yet, historically annual market returns have been positive 75% of the time. As we begin 2022, the market doesn’t suffer from a lack of worries: inflation, Omicron variant, the Fed’s speed of removing accommodative policy, mid-term elections, and geopolitical risks. For investors, it’s critical that they understand that this wall of worry is the norm, not the exception when investing.

Volatility
The up and down fluctuation of stocks is supposed to be the price investors pay for the opportunity to earn returns above that of a savings account at the bank. But in 2021, investors managed to have their cake and eat it too. Historically on average, the market has three pullbacks of 5% and one correction of 10% each year. In 2021, the market experienced only one pullback and didn’t have a correction. In fact, the market hasn’t experienced a 10% correction since the bear market in March 2020 at the pandemic’s onset.

Given the aforementioned wall of worries that investors face in 2022 and with volatility running well below normal levels in 2021, investors should prepare for more market volatility in 2022 by making sure they own the right balance of stocks and bonds for their risk tolerance.

The Pandemic
This time last year, many predicted that it was the beginning of the end for the Covid Pandemic with the arrival and broad distribution of vaccinations. Stocks rallied and interest rates climbed in the first quarter of 2021 on the expectation that the economic recovery would get even stronger. And then covid variants struck, putting pressure on financial markets and introducing us to vaccine booster shots.

As the world currently battles the Omicron variant, investors should be mindful that we remain entrenched in the worst pandemic in a century. The last time the U.S. economy dealt with a pandemic of this proportion, TVs, and refrigerators didn’t exist, the Model T was the car to own, and total U.S. GDP rivaled the GDP of Alaska in 2021. No one can predict how long this variant or any other unknown variants will linger and what effect it will have on global economies in 2022. Making accurate investment predictions is impossible in normal years let alone in the midst of a century-worst pandemic.

I expect these five themes to drive financial news headlines in 2022, drawing investors like a moth to a flame. But for investors desiring to achieve their long-term financial goals, it’s critical that they have a short-term memory like that of Wall Street experts making investment predictions. Speaking of predictions, I’ll give in to the seasonal temptation and leave you with just one: investors will be much more successful in staying on course with their financial goals by letting the headlines of their lives dictate any changes to their financial plan, not the headlines in the news. Here’s to a happy and healthy 2022!

by JOHN FISCHER, CFA®, CFP®
John is the Chief Investment Officer (CIO) at Mosaic Family Wealth. He leads the firm’s Investment Committee which shapes the firm’s investment philosophy and strategy for client portfolios. He also serves on Mosaic’s Leadership Team. A 20-year industry veteran, John is most passionate about helping people understand how emotions relating to investments can be more important than the investments themselves in achieving financial goals.

_______________________________________

Please note that nothing in this content should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing in this content is intended to be, and you should not consider anything in this content to be, investment, accounting, tax, or legal advice. If you would like investment, accounting, tax, or legal advice, you should consult with your own accountants or attorneys regarding your individual circumstances and needs.

Mosaic Family Wealth, LLC is a Registered Investment Adviser. Advisory services are only offered to clients or prospective clients where Mosaic Family Wealth, LLC and its representatives are properly licensed or exempt from licensure.

 

Source: 1 Morningstar, 2 Factset, 3 https://www.minneapolisfed.org/

Make a List and Check it Twice

As we all find ourselves in the hustle and bustle of the holiday season and buying those last few gifts, here are a few key strategies & reminders to help you maximize your finances before we close out 2021.

  1. Stocks or cash make great stocking stuffers. Stop racking your brain trying to find the right gift for that hard to shop for person in your life. Consider making a gift of stock or cash from your portfolio. Remember that you may give any person up to $15,000 a year without having to file a gift tax return ($30,000 for married couples), and you may give cash or appreciated securities. There are benefits to gifting appreciated securities to individuals who are in a lower tax bracket than you (kids and grandkids), and you will spark a legacy of investing for the next generation.
  2. Charitable giving makes the season merry. Charitable giving is a great way to have a lasting effect on the causes you are most passionate about while providing important tax benefits. You can give in several ways; writing a check, giving to your Donor Advised Fund, or gifting appreciated securities. As an additional benefit, by giving appreciated securities, you avoid paying capital gains tax on the sale of the security and also receive a tax deduction for the full fair market value of the gift.
  3. Don’t let unrealized losses become a lump of coal. 2021 was a great year for the market, but recent volatility may have created an opportunity for you to offset part of your gains with losses. Keep in mind that you can repurchase any securities you liquidate in 31 days and still realize the loss to help with your 2021 taxes. Don’t want to sit on cash for 31 days? Consider purchasing a similar security to hold during your waiting period to ensure you don’t incur a wash sale, but still, have access to that industry or sector.
  4. Make a child or grandchild’s future jolly with an educational investment account. In addition to federal tax benefits, many states offer state income tax deductions or credits for contributions to a 529 plan. Starting a plan or adding to it in time for the holidays is a great way to celebrate the season while preparing for your child or grandchild’s future K-12 private education or college. For example, in the state of Missouri, a working husband and wife can each contribute up to $8,000 and receive a state tax deduction on those dollars. For a married couple contributing $16,000 to a 529, they would save about $960 in Missouri state taxes. Keep in mind that tax benefits vary state by state.
  5. Take your Required Minimum Distribution or face the Grinch. If you have an IRA or qualified retirement plan and are 72 or older, or if you have inherited an IRA, you need to take a required minimum distribution by 12/31/21. The required distribution is based on the IRA’s 12/31/20 value and the IRS life expectancy tables. Failing to take an RMD on time can incur a hefty penalty. If you need help calculating your RMD or have questions on whether or not you have taken your distribution, make sure to talk to your advisor.

 

The holiday season should be filled with laughter, joy, and memory-making. Your wealth advisors are standing by to help make things right and wishing a Merry Christmas to all, and to all a good night.

by MISSY BROWN, CFP® CPWA®
Missy is a Principal and Senior Wealth Advisor at Mosaic Family Wealth. She oversees the firm’s retirement, estate, tax, and financial planning services. She serves high net worth families, helping them strategize and develop consensus around any situation involving a dollar sign.

_______________________________________

Please note that nothing in this content should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing in this content is intended to be, and you should not consider anything in this content to be, investment, accounting, tax, or legal advice. If you would like investment, accounting, tax, or legal advice, you should consult with your own accountants or attorneys regarding your individual circumstances and needs.

Mosaic Family Wealth, LLC is a Registered Investment Adviser. Advisory services are only offered to clients or prospective clients where Mosaic Family Wealth, LLC and its representatives are properly licensed or exempt from licensure.