TPW Trending Today

Are you terrified? If you’ve been paying attention to the world’s economic landscape right now, you might be. With unprecedented inflation throughout the years, coupled with the political uncertainty surrounding the upcoming 2024 U.S. presidential election, it’s hard not to feel some paralysis when considering your financial decisions.  If you are feeling more than a bit unsettled, you’re not alone. Inflation and the economy are at the top of voters’ minds, and it can feel like we’re all just waiting around for something to save us.

Aside from the dwindling effects on your hard-earned dollars, inflation is affecting the REAL return you’re getting on your investments. When general prices increase, the amount of growth you need on your investments to maintain your standard of living and to hopefully retire comfortably also increases. We call this the “hidden tax”, sticking its hands in our already shrinking pockets. 

The bad news is that at Towerpoint Wealth, we believe inflation isn’t going anywhere, while understanding the inflation rate does vary over time. Inflation over the last 3 years is not necessarily a predictor of inflation over the next 3 years.

The good news is that, with some understanding of how inflation plays a role in your investment strategy and some strategic decision-making, you can learn to better manage this hidden tax, and increase the probability you can retire comfortably and live a happier life.

Inflation…what is the “hidden tax”?

We all generally understand that inflation reflects the gradual increase in prices of goods and services over time. This is influenced by monetary policies, supply and demand, production costs, etc. As prices increase, the buying power of each dollar you have starts to diminish. Just think: A postage stamp cost $0.37 just 20 years ago, and today is virtually double the price ($0.73) for the same service!

We call inflation the “hidden tax” because it reduces your ability to spend. Unlike direct taxes, which are visibly deducted from your income or levied on your purchases, inflation subtly, but insidiously, reduces the value of your savings and investments over time.

When prices rise, the same amount of money buys less in goods and services, effectively reducing your standard of living. This loss of purchasing power acts as a “tax” on your financial resources, minimizing the real value of your income and savings.

Inflation doesn’t stop at driving up the price of the goods and services you pay for on a daily basis, as it can create a massive risk to investors if they don’t play their cards right.

So, how does inflation affect my investments?

While a moderate level of inflation is generally seen as a sign of a growing economy – the Federal Reserve aims to keep the inflation rate at a healthy 2% – too much inflation (or hyperinflation) can eat away at the current value of your investments. In other words, the money you’re pouring into your investment accounts has to work harder to maintain the same level of growth in buying power.

If your investment growth does not keep pace with the inflation rate, the real (or “nominal” value of those investments declines.

Say your investment portfolio grows by 4%, but the inflation rate is 5%. While the actual dollar amount of your investments went up, your money has less spending power, meaning the REAL value of your investments has actually decreased.

For investors, inflation’s hidden tax poses a unique challenge to navigate. At Towerpoint Wealth, we urge you to have strategies in place to ensure your investments work harder than inflation in the long run.

What can I do to protect my investments from inflation?

Don’t let your emotions dictate your decision-making.

It’s easy to get scared by painful (but almost always, temporary) declines in the value of your portfolio, and give in to the temptation to panic and sell. Jumping out of a sinking ship makes sense, doesn’t it? While the waves can and will get rough, at Towerpoint Wealth we believe that rough conditions like these, while oftentimes unpleasant, are almost always temporary, and that selling when prices are low, while your investments aren’t performing the way you want them to, is a poor recipe and philosophy, not to mention a sure way to realize the loss.

So, our first bit of advice is to breathe. Many investment strategies can help you in times of high inflation to ensure your investments are set up to protect you from financial distress. As Warren Buffett said:

Rebalance your portfolio

We recommend you be disciplined in systematically rebalancing your portfolio (preferably semi-annually). This allows you to maintain your portfolio diversification, capitalize on gains, and re-examine the valuation of assets that may be over or undervalued. 

Treasury Inflation-Protected Securities

Investing in Treasury Inflation-Protected Securities (TIPS) is one of the most direct ways you can help protect your portfolio against the negative effects of inflation. TIPS are government bonds whose principal and interest payments are tied to the Consumer Price Index (CPI). This means that as inflation rises, the value of TIPS increase with it, helping to maintain your purchasing power over time. 

Although TIPS tend to offer lower returns compared to other investments, their inflation-adjusted returns provide a reliable hedge against rising prices and inflation throughout the years.

Invest in the right equities

Investing in stocks, or equities, provides the potential for the growth your portfolio assuredly needs over the longer term. However, you have to remember that not all equity investments are created equal, especially in an inflationary environment.

Income-generating stocks

Equities that provide income, in the form of dividends, can be a good hedge against inflation and hyperinflation. Dividend stocks tend to perform better than other types of stocks in times of high inflation; however, dividends are never guaranteed. 

You might want to consider stocks of companies that have been successful in prioritizing dividends over long periods of time, as they are usually financially stable, have strong cash flows, and sustainable business models to maintain growth of the dividends being paid.

Dividend income is typically paid in cash, which ensures a tangible return regardless of market conditions, helping to create a natural inflation hedge. Additionally, dividend-paying stocks can still appreciate in value like other stocks, as companies that consistently increase dividends attract investors seeking stable income, which can drive up stock prices.

Price makers, not price takers?

Other equities that may be good options for investors in times of high inflation are companies that are able to pass on price increases to their customers without dramatically affecting the demand for their products. These tend to be companies that have a long-standing history of high performance. 

Companies that can increase their prices along with inflation have the ability to maintain their margins and profits, and increase real value for shareholders.

You may want to consider the stocks of larger companies, since they can demonstrate an ability to weather the storm in different economic conditions, including inflation throughout the years. They have the resources to absorb higher input and financing costs, and the ability to pass some of these higher costs onto their customers, making them a generally more stable investment.

Diversify, diversify, diversify

To help preserve the real value of your investments during inflation, we recommend building a diversified portfolio that includes a mix of major asset classes such as equities, bonds, real estate, alternatives, and even commodities. 

Diversification helps protect you from having all of your eggs (or assets) in one basket when a huge problem or market pullback arises. It helps spread risk across different investment asset classes, reducing the impact of any one of them underperforming. And it helps to smooth out the curve when looking at the returns of your portfolio.

Real assets like commodities and real estate often perform well during inflationary periods. Commodities, in particular, have historically been a reliable hedge against inflation because they are directly tied to the prices of goods and services. By incorporating these into your portfolio, you can better position yourself to withstand the impact of rising prices.

Don’t discount bonds!

As mentioned above, when you think of a well-diversified portfolio, it includes many different types of assets like bonds, stocks, real estate, etc. 

Fixed-income securities, or bonds such as corporate, municipal, and government bonds, and even CDs, provide you with a set percentage of interest income over a stated period of time. The rate at which your bond pays this interest stays the same for the life of the investment, so that rate will not go up or down when the rate of inflation increases (excluding TIPS, as mentioned above!). 

For this reason, many people avoid investing in bonds altogether when there is high inflation; however, with strategic thinking and planning involved, bonds can still be a great part of your investment strategy when inflation is high. 

Although recent increases in interest rates can lead to lower bond prices, you also have the ability to reinvest matured bonds at a higher interest rate and potentially generate more income. It’s important that you don’t rule out bonds in an inflationary environment, as the relative stability, and consistent interest income, are important parts of any properly-diversified investment portfolio.

Work with your trusted financial professional

There is no such thing as a “one-size-fits-all” strategy when developing, implementing, and managing a well-structured and properly diversified portfolio, as everyone has unique personal and financial needs, goals, and circumstances. Here at Towerpoint Wealth, we believe that working with a financial advisor who is a fiduciary, and who understands you and your “unique story,” is the best way to get the coordinated results you’re looking for in the long term. 

When it comes to managing your investment portfolio in times of high inflation, you want to meet with your advisor to avoid making emotional decisions, come up with a solid strategy, decide on your asset allocation, and create a plan for your retirement and withdrawal strategy. You also want to have regular comprehensive review meetings to see when things need adjustment so you can monitor and rebalance when necessary.

Working with someone who takes the time to understand your values and create a personalized plan that is built to weather storms in the long term is paramount. You want to have someone with the expertise to help you make informed decisions and protect your assets no matter what the economic conditions are.

We at Towerpoint Wealth, a Sacramento Investment Advisor Firm, work with clients to create a disciplined plan and strategy in times of stability, to ensure we remain disciplined during times of instability.

The bottom line is…

Navigating the complexities of high inflation, or hyperinflation, can be a daunting task. You don’t want to lose all of your buying power over time, but may feel fearful about pouring your money into the market during unsettled times. We get it, and we’re here to provide you with the right strategies and advice to help you safeguard your assets and maintain financial stability, no matter what lies ahead.

To learn more about inflation and its effects on your investments, check out our YouTube channel!

For more financial advice, check out our blog “Retiring with 2 Million Dollars“ to learn about strategies you can implement to prepare for retirement.

Back in 2013, during an interview with Helaine Olen, University of Chicago social scientist Harold Pollack said, “The best financial advice for most people would fit on an index card.” He then elaborated, stating, “If you’re paying someone for advice, you’re likely getting the wrong advice because the right advice is so straightforward.”

After comments on his blog asked for the real index card with the advice, Pollack jotted down nine special money rules on a 4” x 6” index card, and took a photo of it. The photo and the special money rules immediately went viral, and we believe for good reason!

Whether or not you believe that mastering personal finance can be simplified to just one index card listing nine special money rules, the post went viral for a reason. These guidelines offered clear, actionable steps to manage and grow your wealth, with each money rule encapsulating a critical aspect of financial health, making complex financial concepts accessible and easy to follow.

1. Max your 401(k) or equivalent employee contribution.

This money rule is #1 for a reason – you have to pay yourself first to secure a robust financial future. Contributing the maximum allowable amount to your company-sponsored retirement plan leverages employer matching funds, which essentially provides free money toward your retirement. Additionally, these contributions often come with tax advantages, reducing your taxable income and allowing your investments to grow tax-deferred. By consistently maxing out your contributions, you harness the power of compound interest, significantly boosting your retirement savings over time. Prioritizing this strategy ensures you’re making the most of available benefits, setting a strong foundation for financial independence in your later years.

2. Buy inexpensive, well-diversified mutual funds (such as Vanguard Target 20XX funds).

Investing in inexpensive, well-diversified mutual funds is essential for building a solid investment portfolio. These funds offer broad market exposure at a low cost, reducing the impact of fees on your returns. By spreading investments across various asset classes and sectors, they minimize risk and enhance potential for relatively steady growth. Target date funds such as the Vanguard Target 20XX series automatically adjust their asset allocation as your retirement date approaches, aligning with your changing risk tolerance. This hands-off approach simplifies investing, making it easier to stay on track with your long-term financial goals while benefiting from professional management and strategic diversification.

3. Never buy or sell an individual security. The person on the other side of the table knows more than you do about this stuff.

Avoiding the purchase or sale of individual securities is a key principle in prudent investing. When trading individual stocks or bonds, you’re often up against professionals with more resources, expertise, and information. This imbalance puts you at a significant disadvantage, increasing the risk of poor investment decisions. Instead, opting for diversified investment vehicles like mutual funds or exchange-traded funds (ETFs) spreads risk across a wide array of assets, providing exposure to the market’s overall performance rather than the fate of a single security or company. This strategy mitigates the impact of any one stock’s downturn, promoting steadier growth and protecting your portfolio from the volatility and uncertainties of individual stock movements. By recognizing and respecting the expertise of professional investors, you position yourself for more consistent and reliable financial gains.

Click on the image and read more.

4. Save 20% of your money.

Paying yourself first is a cornerstone of financial stability and long-term wealth building. This disciplined approach ensures you consistently set aside funds for future needs, whether for emergencies, major life goals, or retirement. By prioritizing savings, you create a safety net that can absorb financial shocks, reducing the need for high-interest debt in times of crisis. Moreover, consistently saving 20% allows you to take advantage of compound interest, significantly enhancing your wealth over time. This habit instills financial discipline, encouraging mindful spending and better budgeting, ultimately leading to greater financial security and the ability to achieve your long-term aspirations.

5. Pay your credit card balance in full every month.

Paying your credit card balance in full every month is essential for maintaining financial health and avoiding unnecessary debt. By clearing your balance each month, you eliminate interest charges that can quickly accumulate and lead to significant financial strain. This practice not only saves you money but also helps improve your credit score, as timely payments are a key factor in creditworthiness. Moreover, consistently paying off your balance demonstrates financial discipline and responsibility, fostering better money management habits. It ensures that you live within your means, allowing you to allocate more of your income towards savings and investments, rather than servicing debt.

6. Maximize tax-advantaged savings vehicles like Roth, SEP and 529 accounts.

Maximizing tax-advantaged savings vehicles and accounts offers significant tax benefits that enhance your saving and wealth-building potential. Contributions to Roth IRAs grow tax-free, and qualified withdrawals are also tax-free, providing substantial tax savings in retirement. SEP-IRAs allow self-employed individuals to contribute large amounts pre-tax, reducing current taxable income while building retirement funds. 529 plans, designed for education savings, grow tax-free and withdrawals for qualified educational expenses are also tax-free, easing the financial burden of education costs. By fully utilizing these vehicles, you optimize your tax situation, accelerate your savings growth, and secure your financial future.

7. Pay attention to fees. Avoid actively managed funds.

Paying attention to investment fees and avoiding actively managed funds is essential for maximizing your investment returns. High fees and expenses can erode your gains over time, significantly impacting your overall portfolio performance. Actively managed funds typically charge higher fees due to frequent trading and management costs, yet they often fail to outperform low-cost, passively managed index funds. By choosing low-cost investment options, such as index funds or ETFs, you retain more of your investment growth. This cost-conscious approach enhances your returns through the power of compounding, ensuring more of your money works for you rather than being lost to fees. Prioritizing low-fee investments is a smart strategy for achieving long-term financial success.

8. Make financial advisors commit to the fiduciary standard.

Ensuring your financial advisor commits to the fiduciary standard is crucial for safeguarding your financial interests. Advisors adhering to this standard are legally obligated to act in your best interest, providing advice and recommendations that prioritize your financial well-being over their own profits. This commitment minimizes conflicts of interest, ensuring that investment strategies and financial plans are tailored to your unique goals and circumstances rather than driven by commissions or incentives. By choosing a fiduciary advisor, you gain a trusted partner dedicated to helping you achieve financial success with transparency and integrity, ultimately fostering greater confidence and security in your financial decisions.

Click on the image and read more.

9. Promote social insurance programs to help people when things go wrong.

Social insurance programs play a vital role in providing essential support and security to individuals and families during challenging times. These programs, such as unemployment insurance, disability benefits, and Social Security, act as safety nets that mitigate the financial impact of unforeseen events like job loss, illness, or retirement. By offering income assistance and healthcare coverage, social insurance programs help prevent individuals from falling into poverty or financial distress during periods of hardship. They promote social and economic stability by ensuring that basic needs are met, allowing people to focus on recovery and rebuilding without facing overwhelming financial burdens. Moreover, these programs contribute to a more equitable society, where access to essential resources and services is not solely contingent upon one’s financial circumstances, fostering resilience and collective well-being.

Would you like to discuss these money rules, your own situation further with us, or learn more about our wealth management philosophy and how we help clients build and protect their wealth? Curious how we utilize and integrate digital assets for some of our clients as part of a properly-diversified investment portfolio?

We encourage you to schedule an initial 20-minute “Ask Anything” discovery call with us, as we welcome beginning to get to know you and learning more about your unique personal and financial circumstances.

Click the Wealth Management Philosophy banner image below to learn more about how we help our clients grow and protect their net worth.

2^nd Annual TPW Spring Professional Social Mixer

A fun and prominent group of Sacramento-area financial advisors, professional fiduciaries, CPAs, EAs, mortgage brokers, real estate agents, wealth managers, bankers, and attorneys gathered last Thursday Towerpoint Wealth’s 2^nd annual TPW Spring Social Mixer.

The event, held at The Sutter Club, provided an opportunity for business networking, and engaged a spirit of cooperation and collaboration among attendees, who discussed, yes, banking, real estate, and financial services, but also hobbies, families, and of course, the pleasures of wine.

Click the image below for a quick recap!

What is happening with the Towerpoint Wealth family? Click the banner below to find out!

What Makes Towerpoint Wealth Different?

Click the thumbnail image below to find out exactly what we are doing differently, to help you remove the hassle of properly coordinating all of your financial affairs, so you can live a happier life and enjoy retirement!

We are hopeful you will enjoy this educational video and encourage you to share it with any colleagues or friends who would benefit from watching it.

Click the image below to browse our robust library of other wealth-building and wealth-protecting educational videos.

The CA Taxpayer Protection and Government Accountability Act

In the upcoming weeks, the California Supreme Court will deliberate on whether to remove a measure from the November ballot that aims to impose stricter requirements for tax increases. This case involves a conflict between Democratic leaders and unions on one side and business and taxpayer groups on the other.

The CA Supreme Court faces a deadline of June 27^th to finalize the November election ballot, prompting a timely decision on the fate of the proposed measure.

Learn more by reading this well-written Kiplinger article, as well as the Cal Matters article linked in image below!

State Income Tax Rates

California is known for its relatively high state taxes, which can be perceived as onerous by some residents and businesses. The state imposes progressive income tax rates that can reach up to 13.3% for the highest income earners, making it one of the highest state income tax rates in the nation. While these taxes fund important public services and initiatives, the perceived weight of California’s tax system can sometimes be a point of contention among taxpayers and businesses alike, influencing decisions about residency, investment, and economic activity in the state.

Thanks to the Tax Foundation for the illustration!

In light of how unsettled the economy and markets are, are you concerned or worried about the overall level of risk in your portfolio?

Message us to discuss your circumstances.

While the global 24/7 news cycle churns, twists, and turns, here are a number of fun, local trending events of note:

• May 18 – Boyz II Men – Thunder Valley Resort and Casino
• May 18 – Bike Fest – William B. Pond Park
• May 22 – Paints and Pints – Family Friendly Painting – Porchlight Brewing
• May 24 – Candlelight: A Tribute to Adele – CA State Railroad Museum
• May 23 – 27 – Sacramento County Fair – Cal Expo
• May 27 – Memorial Day Community Event – Sacramento Memorial Auditorium

As always, we sincerely value our relationships and partnerships with each of you, as well as your trust and confidence in us here at Towerpoint Wealth. We encourage you to contact us at any time, or call or email us (916-405-9140, info@towerpointwealth.com) with any questions, concerns, or needs you may have. The world continues to be an unsettled and complicated place, and we are here to help you properly plan for and make sense of it.

Joseph Eschleman
Certified Investment Management Analyst, CIMA^®

Jonathan W. LaTurner
Wealth Advisor

Steve Pitchford
CPA, Certified Financial Planner^®

Lori A. Heppner
Director of Operations

Nathan P. Billigmeier
Director of Research and Analytics

Michelle Venezia
Client Service Specialist

Luis Barrera
Marketing Specialist

 Megan M. Miller, EA
Associate Wealth Advisor

We enjoy social media, and are actively growing our online community!

Follow us on any of these platforms, message us there and let us know your favorite charity.
We will happily donate $10 to it!

Introducing Fiduciary Focus, Towerpoint Wealth’s new newsletter for the fiduciary community. 

Welcome to the first edition of Towerpoint Wealth’s Fiduciary Group’s Newsletter – Fiduciary Focus. Our growing team is excited to share our brand new newsletter and insightful information with the fiduciary community.

At Towerpoint Wealth, our Fiduciary Group brings together 27 years of collective experience in guiding Professional Private Fiduciaries, Third-party Trustees, Conservators, Administrators, and family members through the intricate aspects of Trust Administration, Special Needs Planning, Conservatorships, and Estate Administrations. We are dedicated to helping you meet your fiduciary responsibilities with precision, adhering to the stringent guidelines of the Uniform Prudent Investor Act and California State Probate Code.

And most important, as an independent Registered Investment Advisory firm, we’re bound by the same fiduciary standard as the fiduciaries we work with. Our dedication is to you.

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Fiduciary Finance 101 Tip

The Foundation of Finance – A Fiduciary’s Guide to Diversification

In the complex world of finance, where markets fluctuate and economic landscapes shift, one principle stands as a beacon of stability: diversification. For professional fiduciaries tasked with safeguarding their clients’ financial futures, understanding and implementing diversification is not only paramount, but a requirement outlined in the California Probate Code and Uniform Prudent Investor Act.

“Section 16048. In making and implementing investment decisions, the trustee has a duty to diversify the investments of the trust unless, under the circumstances, it is prudent not to do so.”

Diversification is more than just a buzzword; it’s a fundamental strategy that spreads investment risk across a range of assets, mitigating the impact of volatility in any single investment. By diversifying, fiduciaries help shield their clients from the full brunt of market downturns while positioning them to benefit from potential upswings.

Here are three key reasons why diversification is a cornerstone of financial success:

1. Risk Management: Diversification is the bedrock of effective risk management. By spreading investments across various asset classes such as stocks, bonds, real estate, and commodities, fiduciaries can reduce the overall risk exposure of their clients’ portfolios. When one asset class underperforms, others may hold steady or even thrive, helping to offset losses.

2. Smoothing Out Volatility: Markets are inherently volatile, subject to fluctuations driven by economic, political, and global events. Diversification helps smooth out this volatility by ensuring that a portfolio isn’t overly reliant on the performance of any single investment or sector. Instead, it provides a buffer against market turbulence, fostering stability and preserving wealth over the long term.

3. Maximizing Returns: While diversification is primarily about risk management, it also has the potential to enhance returns. By spreading investments across different asset classes with varying risk-return profiles, fiduciaries can optimize the risk-return tradeoff within their clients’ portfolios. This balanced approach aims to capture upside potential while minimizing downside risk, ultimately working towards the achievement of financial goals.

As fiduciaries, it’s our duty to act in the best interests of our clients, and diversification is a powerful tool in fulfilling that obligation. By incorporating diversification into investment strategies, fiduciaries can help their clients navigate uncertain markets with confidence, laying the groundwork for long-term financial security and prosperity.

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2023-2024 Tax Season Tip

Have your clients made their 2023 Traditional or Roth IRA contributions yet? If not, it’s not too late!

The deadline for both 2023 Traditional and Roth IRA contributions is April 15, 2024. Before contributing, ensure your client’s income doesn’t exceed the following income limitations:

What’s the difference between a Traditional vs. Roth IRA?

• Traditional IRA contributions are made pre-tax or in other words, are tax-deductible. The income and capital gains grow tax deferred until a client withdraws the funds. Withdrawals are taxed at the client’s ordinary income tax rates at time of withdrawal.
• Roth IRA contributions are made post-tax or not tax-deductible. BUT, not only do Roth investments grow tax-free, but they are TAX FREE upon withdrawal making Roth IRAs a powerful retirement tool.

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Focus on this

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Upcoming events

We are excited about the end of the 2024 tax season and our 2nd Annual Spring Social Mixer at Sutter Club Sacramento, and can’t wait to celebrate with you!

RSVP Via Phone (916) 405-9140 or RSVP Via Email

Please check your calendar, reply to this email, or simply click one of the RSVP buttons above to join us for this professional mixer. We welcome having you and a colleague and/or industry friend join us as our guests, and hope to hear from you soon! Please RSVP by April 24th.

• May 9 – SAVE THE DATE – Towerpoint Wealth’s Second Annual Spring Mixer – Join us as we celebrate the end of another successful tax season at the Historic Sutter Club located at 1220 9^th St, Sacramento, CA 95814.
• May 15-17 – 2024 PFAC Annual Conference in San Diego. Jonathan and Megan will see you there!

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As always, we sincerely value our relationships and partnerships with each of you, as well as your trust and confidence in us here at Towerpoint Wealth. We encourage you to contact us at any time, or call or email us at fiduciary@towerpointwealth.com with any questions, concerns, or needs you may have.

We enjoy social media, and are actively growing our online community!

Follow us on any of these platforms, message us there and let us know your favorite charity.
We will happily donate $10 to it!

It’s that time – the 2024 tax season is upon us!

As we embark on the 2024 tax season, many individuals and businesses are gearing up to tackle their financial obligations and maximize their tax benefits. With the ever-evolving landscape of tax laws and regulations, it’s essential to address the top 2024 tax season questions to both ensure compliance and optimize financial outcomes. From understanding filing statuses and deductions to navigating changes in tax brackets and credits, getting answers to these important questions can empower taxpayers to make informed decisions and minimize their tax burden. Let’s delve into the top tax season questions for 2024 and provide insightful answers to better guide YOU through this oftentimes painstaking and complex annual tax labyrinth.

Should I itemize or take the standard deduction?

When completing your tax return, you have the option to decrease your taxable income by either opting for the standard deduction or itemizing deductions.

The standard deduction is a fixed amount determined by your filing status, while itemized deductions comprise expenses incurred in the previous year that can reduce your taxable income. Examples of itemized deductions, as outlined on the IRS website, include mortgage interest, real estate taxes, property taxes, disaster losses, state and local income or sales taxes, charitable donations, and certain medical and dental expenses.

Typically, individuals with higher incomes and substantial deductible expenses from the previous year may benefit from itemizing deductions rather than taking the standard deduction. For instance, owning rental property offers tax-deductible advantages that might surpass what one would receive through the standard deduction.

What is the best tax season software I should use?

Tax season software refers to specialized computer programs designed to assist individuals and businesses in preparing and filing their taxes with government authorities. These software applications streamline the often complex and time-consuming process of tax preparation by providing users with intuitive interfaces, step-by-step guidance, and automated calculations. Tax season software typically offers features such as importing financial data from various sources, identifying eligible deductions and credits, and generating accurate tax forms based on the user’s input.

Moreover, tax season software often includes error-checking functionalities to help users identify and correct any mistakes before submitting their returns, reducing the risk of audits or penalties. Additionally, some software solutions offer electronic filing options, allowing users to submit their tax returns directly to tax authorities online, further expediting the process. Overall, tax season software serves as a valuable tool for individuals and businesses alike, helping them navigate the complexities of tax laws and regulations while maximizing their tax savings and ensuring compliance with legal requirements.

Earlier this year, CNBC Select meticulously assessed 12 tax season software options, scrutinizing them across various criteria such as pricing, user interface, expert tax support, and Better Business Bureau rating. Their recommended tax season software choices:

• Best for user experience: Intuit TurboTax
• Best for DIY filing: H&R Block
• Best free tax season software: Cash App Taxes (formerly Credit Karma Tax)
• Best affordable tax season software: TaxSlayer
• Best for accuracy guarantee: TaxAct

What happens if I miss the April 15 tax deadline for the 2024 tax season?

Missing the April 15 tax deadline can have various consequences depending on individual circumstances. Primarily, failing to file your taxes by the deadline typically results in penalties and interest accruing on any unpaid taxes owed. The penalty for late filing is usually a percentage of the unpaid taxes, increasing over time the longer the return remains outstanding. Additionally, interest compounds daily on any unpaid tax balance until it’s fully paid. These penalties and interest charges can significantly increase the total amount owed to the IRS, making it crucial to file your taxes as soon as possible, even if you can’t pay the full amount owed.

Furthermore, missing the tax deadline may also lead to missed opportunities for tax refunds. If you are owed a refund but fail to file your return on time, you risk delaying the receipt of your refund. The IRS typically has a statute of limitations on claiming refunds, and filing after the deadline could result in forfeiting any refund you might be entitled to. Therefore, it’s essential to file your taxes promptly, even if you’re unable to meet the deadline, to avoid penalties, interest, and potential loss of refunds.

If you anticipate not being able to meet the April 15 tax deadline, you have the option to request an extension from the IRS. This extension grants you additional time to file your tax return, typically extending the deadline by six months to October 15. However, it’s crucial to note that an extension to file does not grant an extension to pay any taxes owed. Therefore, if you expect to owe taxes, it’s essential to estimate and pay as much as possible by the original deadline to minimize potential penalties and interest. Taking an extension can provide breathing room for gathering necessary documentation or seeking professional assistance to ensure accurate and timely tax filing.

If the April 15, 2024 tax season deadline passes, it’s imperative to proceed with filing your taxes promptly. Delaying can result in penalties, especially if you owe taxes, with the penalty increasing the longer you wait. However, if you’re due a tax refund and don’t owe any taxes, you won’t face penalties for filing late. Regardless, it’s advisable to complete your tax filing as soon as possible to avoid any potential complications or delays.

Can I deduct my student loan interest?

Deducting student loan interest can be a valuable tax benefit for many borrowers. The IRS allows eligible individuals to deduct up to $2,500 of interest paid on qualified student loans, even if they do not itemize deductions, except for married taxpayers filing separate returns. This deduction is available to taxpayers whose modified adjusted gross income (MAGI) falls below certain limits, which are subject to change each tax year. To qualify, the loan must have been taken out solely to pay qualified higher education expenses for yourself, your spouse, or a dependent, and the loan must be in your name or jointly with your spouse. Additionally, the loan must have been used to pay for expenses such as tuition, fees, room and board, books, supplies, and equipment required for enrollment or attendance at an eligible educational institution.

It’s important to note that not all student loan interest is deductible. For example, interest on loans from family members or employer-sponsored retirement plans typically does not qualify for the deduction. Furthermore, the deduction begins to phase out for individuals with MAGI above certain thresholds, and it is entirely phased out for those with MAGI above the maximum limits set by the IRS. Thus, while deducting student loan interest can provide tax savings for many borrowers, it’s essential to understand the eligibility criteria and limitations to ensure compliance with IRS regulations.

What filing status should I choose?

The IRS categorizes tax filers based on their household status, which plays a significant role in determining their tax obligations. Choosing a filing status is crucial as it informs the IRS of the specific tax rules that apply to you. There are five primary filing statuses recognized by the IRS: single, married filing jointly, married filing separately, head of household, and qualifying widow(er) with dependent child. Each status carries its own set of rules and criteria, impacting tax rates, standard deductions, and eligibility for various deductions and credits.

Your chosen filing status can significantly influence your tax liability and financial outcomes. For instance, married couples have the option to file jointly, combining their incomes and potentially benefiting from lower tax rates and higher deductions. Conversely, filing separately might be advantageous in certain situations, such as when one spouse has significant medical expenses that could be deductible based on their individual income. Additionally, qualifying as head of household can provide certain tax benefits, including a higher standard deduction and lower tax rates compared to filing as single or married filing separately. To assist taxpayers in selecting the most appropriate filing status, the IRS offers an interactive tool that guides individuals through the process, ensuring they choose the status that best aligns with their circumstances and maximizes potential tax advantages.

How do I know my 2023 IRS tax brackets table and tax rate?

For the 2023 tax year, the IRS tax brackets underwent adjustments to account for inflation. These brackets determine the marginal tax rates that individuals and households are subject to based on their taxable income. The tax brackets are structured progressively, meaning that higher levels of income are taxed at higher rates. In 2023, the tax rates range from 10% to 37%, with seven different brackets based on filing status and income level. The income thresholds for each bracket vary depending on whether the taxpayer is single, married filing jointly, married filing separately, or filing as head of household. Taxpayers should consult the IRS guidelines or a tax professional to determine their specific tax bracket and corresponding tax rate for the 2023 tax year.

The 2023 IRS tax brackets table:

Additionally, understanding the 2023 IRS tax brackets table is essential for tax planning and financial decision-making throughout the year. By knowing which tax bracket they fall into, individuals can estimate their tax liability and take proactive steps to minimize their tax burden, such as maximizing deductions and credits or adjusting their withholding amounts. Taxpayers should stay informed about any changes to the tax brackets and related regulations to ensure compliance with tax laws and optimize their financial strategies in light of evolving tax policies.

At Towerpoint Wealth, we believe that navigating the complexities of tax season can be daunting, but having answers to the top 2024 tax season questions can alleviate much of the stress and uncertainty. Whether it’s understanding filing statuses, deductions, credits, or the latest 2023 IRS tax brackets table, having clarity on these topics empowers taxpayers to make informed decisions and maximize their tax savings. By seeking out reliable information and guidance, individuals and businesses can approach tax season with confidence, ensuring compliance with tax laws while optimizing their financial outcomes. Remember, if you have any further questions or need assistance, consulting with a tax professional or utilizing reputable resources can provide the clarity and assistance needed to navigate tax season successfully.

Would you like to discuss your own situation further with us, or learn more about our wealth management philosophy and how we help clients build and protect their wealth? Curious how we utilize and integrate digital assets for some of our clients as part of a properly-diversified investment portfolio?

We encourage you to schedule an initial 20-minute “Ask Anything” discovery call with us, as we welcome beginning to get to know you and learning more about your unique personal and financial circumstances.

Click the Wealth Management Philosophy banner image below to learn more about how we help our clients grow and protect their net worth.

Happy 1^st Birthday, Thompson!

This past Sunday the whole Towerpoint Wealth team joined our Partner, Wealth Advisor, Jonathan LaTurner, and his wife Katie, in helping the proud parents celebrate their son Thompson’s 1st birthday at Nitty’s Cider in East Sac!

We all had a blast, thank you for the invitation Thompson! 🎉🥳🎊

What is happening with the Towerpoint Wealth family? Click the banner below to find out!

Minimizing Common Investing Mistakes

Minimizing common investing mistakes is extremely important when working to build and protect your wealth and net worth and get your money’s best performance. Do you know what the 20 most common investing mistakes are?

Click the thumbnail image below for Part 2 of our series!

We are hopeful you will enjoy these educational videos, and encourage you to share this valuable information / share the video links with any colleagues or friends who would benefit from watching them.

Click the image below to browse our robust library of other wealth-building and wealth-protecting educational videos.

Returns to Recover Losses

Protecting your downside and minimizing losses during a temporary bear market / market pullback is just as, if not MORE important, than striving for outsized gains.

Thanks to The Investing Beast for the illustration!

In light of how unsettled the economy and markets are, are you concerned or worried about the bonds in your portfolio, and/or the overall level of risk you are taking in your portfolio? 

Message us to discuss your circumstances.

While the global 24/7 news cycle churns, twists, and turns, here are a number of fun, local trending events of note: 

• February 24 – Annual Scottish Rite Crab Feed – Sacramento Scottish Rite Masonic Center
• February 24-25 – Black History Month Expo – SAFE Credit Union Convention Center
• February 26 – Miami Heat vs. Sacramento Kings – Golden 1 Center
• February 28 – An Evening with Branford Marsalis – Mondavi Center
• March 2 – Capitol Beer Fest – Capitol Mall Greens
• March 2-3 – Free Museum Weekend – Sacramento Area Museums
• March 7 – The Marshall Tucker Band & Jefferson Starship – Hard Rock Hotel & Casino

As always, we sincerely value our relationships and partnerships with each of you, as well as your trust and confidence in us here at Towerpoint Wealth. We encourage you to contact us at any time, or call or email us (916-405-9140, info@towerpointwealth.com) with any questions, concerns, or needs you may have. The world continues to be an unsettled and complicated place, and we are here to help you properly plan for and make sense of it.

Joseph Eschleman
Certified Investment Management Analyst, CIMA^®

Jonathan W. LaTurner
Wealth Advisor

Steve Pitchford
CPA, Certified Financial Planner^®

Lori A. Heppner
Director of Operations

Nathan P. Billigmeier
Director of Research and Analytics

Michelle Venezia
Client Service Specialist

Luis Barrera
Marketing Specialist

 Megan M. Miller, EA
Associate Wealth Advisor

We enjoy social media, and are actively growing our online community!

Follow us on any of these platforms, message us there and let us know your favorite charity.
We will happily donate $10 to it!

As markets, regulations, and technologies continue to advance, embracing innovative financial tools becomes not only a choice, but a strategic imperative for those aspiring to build and protect wealth and to achieve and sustain financial success.

Like using a typewriter in a smartphone world, utilizing old technology instead of new wealth management tools may be quaint, but won’t do a great job of helping you navigate the fast-paced world of modern finance.

Understanding, accepting, and perhaps even adopting these new financial tools not only will empower you with real-time insights and automation, but also position you to better adapt to swiftly moving market changes, fostering a proactive and informed approach to financial decision-making.

Tax Optimization Software

Along with costs and expenses, income taxes can represent a significant drag on your portfolio. Fortunately, taxes are a “necessary evil” that we do have some control over, especially if we use the right financial tools.

At Towerpoint Wealth, we utilize Bloomberg BNA Income Tax Planner to generate and compare multiple economic, investment, and tax scenarios, helping us help our clients align their financial moves with tax efficiency, and showcase the most advantageous tax minimization strategies available.

Tax optimization software also transforms the labyrinthine tax code into a navigable roadmap, identifying strategic deductions, credits, and exemptions that might otherwise slip through the cracks. This financial tool helps us help clients swiftly adapt to changes in tax laws, and enables us to stay ahead of regulatory shifts and capitalize on new opportunities, all while saving time and reducing the risk of costly errors.

Fully Customized ESG and Socially-Responsible Portfolios

Most investors are familiar with ESG (environmental, social, & governance) and socially-responsible investment vehicles such as mutual funds and exchange-traded funds (ETFs). However, unlike the one-size fits all approach of these products, Towerpoint Wealth utilizes a customized separately managed account (SMA) via our partnership with Ethic Investments, helping us provide our clients with a more tailored socially-responsible and ESG portfolio via direct ownership of individual companies that qualify as ESG-friendly based on customized screening criteria.

This ESG SMA financial tool grants us greater control and customization over client portfolios, as this level of specificity allows investors to align their values with their investments more precisely. How? They have the ability to exclude or include specific companies (read: stocks) based on their custom ESG criteria.

Digital Assets/Cryptocurrency Separately Managed Accounts

Similar to the ESG SMAs discussed above, a digital asset/crypto SMA is a wealth management tool that affords you the ability to directly own either or both Bitcoin and Ethereum, and to securely hold these crypto positions in cold storage. At Towerpoint Wealth, we have partnered with Eaglebrook Advisors to help us help our clients gain direct access to the digital asset and crypto markets. Unlike a Bitcoin ETF or private fund, Eaglebrook’s tax optimization financial tools and strategies find opportunities to reduce or defer capital gains tax liability, provide higher levels of customization, and also incorporate cutting-edge security measures, addressing one of the primary concerns in the digital asset space, instilling confidence in an environment often plagued by security uncertainties.

Personal Finance Dashboards with Real-Time Portfolio Analytics

Personal financial dashboards, exemplified by platforms like Black Diamond utilized by Towerpoint Wealth clients, are financial tools that have helped to revolutionize the way investors oversee and manage their comprehensive financial landscapes. These dashboards consolidate an array of financial information, providing users with a comprehensive view of their assets, liabilities, investments, and spending patterns in one centralized interface.

Beyond mere aggregation, personal financial dashboards such as Black Diamond offer advanced analytical tools, allowing users to delve into the many nuances and details of their investment portfolios. Investors can track performance metrics, assess risk exposure, and simulate various scenarios to gauge the potential impact on their financial goals. The 24/7 real-time nature of these dashboards enhances financial agility, enabling users to monitor and adapt swiftly to market and economic changes, and make proactive adjustments to their strategies.

Financial News Aggregators

Financial news aggregators are indispensable wealth management tools for the information age, consolidating a myriad of financial news sources into a single, easily digestible platform. These platforms, like Harkster, PiQSuite.com, The Fly On the Wall, and even Yahoo Finance, curate breaking news, market trends, and economic analyses, offering users a comprehensive snapshot of the financial landscape. By amalgamating information from diverse sources, financial news aggregators provide a holistic understanding of market dynamics, allowing for more informed decision-making.

One of the key advantages of financial news aggregators lies in their ability to save time and streamline information consumption. Instead of navigating multiple websites or sifting through various publications, users can access a centralized hub that organizes news based on relevance and importance. These platforms often include customizable features, that enable users to tailor their news feeds to specific industries, companies, or market segments, further enhancing efficiency.

At Towerpoint Wealth, we believe that embracing innovative financial tools and wealth management tools is not just a choice but a strategic imperative in the ever-evolving landscape of personal finance. These tools serve as your ally as you work and plan to properly coordinate all of your financial affairs, not merely keeping pace but leading the way toward smarter, more informed, and ultimately more successful financial decisions.

Would you like to discuss your own situation further with us, or learn more about our wealth management philosophy and how we help clients build and protect their wealth? Curious how we utilize and integrate digital assets for some of our clients as part of a properly-diversified investment portfolio?

We encourage you to schedule an initial 20-minute discovery call with us, as we welcome learning more about you and your unique circumstances and beginning to get to know you.

Click the Wealth Management Philosophy banner image below to learn more about how we help our clients grow and protect their net worth.

It is a Boy!!!

Happy New Year and a big congratulations go out to our Director of Research and Analytics, Nathan Billigmeier, and his wife, Jessica Billigmeier, on their new baby boy, Caleb!

Caleb was born 1/3/2024 at 4:20AM, 6lbs., 15oz., 19 in. Everyone is doing great, and Caleb’s brothers, Ethan and Grayson, are loving having a new baby brother!

What is happening with the Towerpoint Wealth family? Click the banner below to find out!

Minimizing Common Investing Mistakes

Minimizing common investing mistakes is extremely important when working to build and protect your wealth and net worth and get your money’s best performance. Do you know what the 20 most common investing mistakes are?

Click the thumbnail image below for Part 1 of our series!

We are hopeful you will enjoy these educational videos, and encourage you to share this valuable information / share the video links with any colleagues or friends who would benefit from watching them.

Click the image below to browse our robust library of other wealth-building and wealth-protecting educational videos.

2023 Form 1099s

What exactly is a Form 1099, why can they be so frustrating to process, and how do you manage the problem of receiving an amended 1099 in March or April (Hint – don’t file your taxes too soon!)?

CLICK HERE or the thumbnail image below to read an excellent guide written by Steve Pitchford, our Director of Tax and Financial Planning, about to handle the frustrations of Form 1099 with aplomb and alacrity!

Have questions about your upcoming 2023 tax return?

Would you like to review an old tax return for missed opportunities?

Click the banner below to message Steve Pitchford, Steve Pitchford, Certified Financial Planner.

Increasing the Probability of Positive Returns

Investing in the stock market can be volatile. For this reason, we believe it is important to keep proper perspective when stocks rise and fall over shorter periods of time. History has repeatedly shown that the odds of achieving a positive return are dramatically increased the longer the investment time horizon. Thanks to First Trust for the caption and the illustration!

In light of how unsettled the economy and markets are, are you concerned or worried about the bonds in your portfolio, and/or the overall level of risk you are taking in your portfolio? 

Message us to discuss your circumstances.

While the global 24/7 news cycle churns, twists, and turns, here are a number of fun, local trending events of note: 

• January 12-21 – Dine Downtown – Downtown, Sacramento
• January 13 – Second Saturday art walk – Midtown, Sacramento
• January 14 – Renée Fleming, soprano, Gerald Martin Moore, piano – Mondavi Center
• January 18 – Pacers vs. Kings – Golden1 Center
• January 20 – Giants FanFest – Sutter Health Park
• January 25 – John Mulaney – Thunder Valley Casino Resort

As always, we sincerely value our relationships and partnerships with each of you, as well as your trust and confidence in us here at Towerpoint Wealth. We encourage you to contact us at any time, or call or email us (916-405-9140, info@towerpointwealth.com) with any questions, concerns, or needs you may have. The world continues to be an unsettled and complicated place, and we are here to help you properly plan for and make sense of it.

 Joseph Eschleman, Jonathan, Steve, Lori, Nathan, Michelle, Luis, and Megan

We enjoy social media, and are actively growing our online community!

Follow us on any of these platforms, message us there and let us know your favorite charity.
We will happily donate $10 to it!

Buying, selling, and owning individual stocks can be fun for many reasons. Doing so can also be dangerous, and fraught with peril. All of this begs the question – do you want your investing to be dangerous and fun?

Buying, selling, and owning individual stocks can also feel akin to riding a roller coaster – thrilling highs, gut wrenching lows, and big emotional swings. Some might call it investing, others, gambling. What do we believe at Towerpoint Wealth about this important and oftentimes polarizing issue?

Do you believe that successfully picking individual stocks is based on skill, experience, research, guts, and guile? Or do you believe that luck may play a bigger role than many are willing to admit?

The Peril of Buying and Selling Individual Stocks

Even today, with everything we know about the importance of diversification, disciplined money management, and investment risk management, buying, selling, owning, and trading individual stocks is oftentimes still glorified.

There are the bragging rights, the illusion of control, and the emotional rush of picking a winner, watching it climb, and feeling smart.

However, buying and selling individual stocks is also perilous. It can be difficult to discount Burton Malkiel’s random walk hypothesis (the theory that stock prices move randomly), especially when animals have shown a history of doing better at picking individual stocks than their “expert” human counterparts!

• A house cat named Orlando did a better job of picking stocks than a team of professional money managers in 2012.
• A chimpanzee in Russia outperformed 94% of the country’s investments funds in 2009.
• In 2009, lab rats taught to trade in foreign-exchange and commodity futures markets outperformed some of the world’s leading fund managers.

Additionally, in his classic 1973 book, A Random Walk Down Wall Street, Malkiel states:

While the examples cited above may not have perfectly adhered to the scientific method and are meant to be somewhat of a tongue-in-cheek illustration to suggest that successfully buying and selling stocks is extremely difficult, Malkiel’s quote and random walk hypothesis does support our belief that intelligently selecting, holding, and selling individual stocks is a perilous endeavor. Here are four reasons why:

Volatility and Market Whiplash

Stock prices are susceptible to fluctuations influenced by a myriad of different variables and factors, most of which are completely unpredictable. Like a bull in a rodeo, the price of an individual stock can move in sudden, bizarre, and outright delusionary directions, and stock prices can swing wildly in short periods.

Not surprisingly, one of our favorite Warren Buffett quotes here at Towerpoint Wealth sums this concept:

Market sentiment is fickle to say the least, as positive news can quickly catapult a stock to new highs, while negative developments can send it plummeting with equal force. Economic indicators, such as interest rate changes or employment figures, act as unseen currents beneath the market’s surface, influencing the price of an individual stock in ways that even seasoned investors may find challenging to predict. The result is a landscape where calm seas can quickly transform into stormy waters, putting the stability of individual stock portfolios to the test.

Company-Specific Catstrophes and Lack of Diversification

Ever heard the phrase “putting all your eggs in one basket”? With individual stock ownership, that basket is your chosen company. If it falters – be it a scandal, management mishap, earnings miss, or a product flop – your eggs (read: investments) could end up scrambled. Vulnerabilities in a company’s business model are exposed quickly, and changes in the competitive landscape and regulatory environment make owning individual stocks quite challenging. And a single negative event, whether it be a company-specific issue or a broader market or economic shock, can have a disproportionately severe impact when holding specific individual stocks.

Many investors do not have a plan when they add individual stocks to their portfolio, and instead do so for the wrong reasons: they heard a good story, read an interesting article, received a tip from a smart friend, or were given a “recommendation” from a broker. As Joel Greenblatt said:

Emotional Turmoil

Individual stocks can turn you into an emotional yo-yo. The emotional turmoil is not merely a byproduct, but instead an integral part of the individual stock ownership experience. The psychological seesaw involves navigating the peaks of euphoria when your stocks are flourishing, and enduring the valleys of despair during market and price downturns. It is important to internalize and remind yourself:

Staying the course may sound easy, but doing so amid this emotional turbulence requires nerves of steel and a disciplined mindset to avoid succumbing to impulsive decisions driven by fear or exuberance. When buying, selling, and owning individual stocks, emotional fortitude is as crucial as financial acumen. These investors are navigating unpredictable terrain where sentiment can be as influential as market fundamentals.

Warren Buffett, an often-cited expert in more than a few of our earlier Trending Today newsletters, does an excellent job of highlighting one of the main emotional reasons people like buying and owning individual stocks:

Buying Is Fun, Selling Is Not – What’s Your Exit Strategy?

A great company doesn’t mean a great stock. You have to buy the stocks of great companies, but at the right price. Good luck doing so consistently! Additionally, you have to know when to get out. Having an exit strategy is essential, and oftentimes completely overlooked by inexperienced individual stock investors.

Buying individual stocks is exciting, and laced with the optimism of potential gains. However, breaking up is a different story, as emotions can quicky get involved – you don’t want to hold onto a sinking ship, hoping for a miraculous rebound, while ignoring the lifeboats passing by.

Selling also requires admitting you might have been wrong, and humility isn’t everyone’s strong suit. Timing the exit is difficult, akin to attempting to catch a falling knife, and the market doesn’t care about your feelings – it operates on its own schedule.

Warren Buffett says, “A stock doesn’t know that you own it.”

Exiting individual stocks is way more difficult than buying them, and demands a level of discipline that buying often conveniently overlooks.

So do you still want to invest in individual stocks? While potentially rewarding, this is not for the faint-hearted, and it comes with a multitude of risks. And while the allure and thrill of owning individual stocks is undeniable, doing so can oftentimes also be reckless. Are you investing for fun and pleasure, or to intelligently build, grow, and protect your net worth? This is an important distinction, oftentimes correlated with why investors consider owning individual stocks.

Would you like to discuss your own situation further with us, or learn more about our wealth management philosophy and how we help clients build and protect their wealth? We encourage you to schedule an initial 20-minute discovery call with us, as we welcome learning more about you and your unique circumstances.

Towerpoint Wealth Tours Salesforce Building in SF

The world of wealth management is complex and nuanced, as is the technology needed to effectively run a wealth management firm. Fortunately for us and for our clients, we utilize Salesforce as our operational backbone, helping us efficiently and intelligently manage virtually every area of our company as we strive for exceptional client satisfaction and service.

Just last week, our Joseph Eschleman, and Partner, Wealth Advisor, Jonathan LaTurner, visited Dodge Williams at the Salesforce Tower in San Francisco. Understanding the pace of change and innovation in the artificial intelligence and CRM industries, it is essential that we ensure that our partnership is sound and that our Salesforce instance is operating crisply.

Not just a repository for data, Salesforce is truly the “invisible hand” behind the TPW operation, and we are happy to leverage it in amplifying our ability to understand, anticipate, and exceed our clients’ needs and expectations.

What is happening with the Towerpoint Wealth family? Click the banner below to find out!

Understanding the world of investing and wealth-building is filled with opportunity, not only for growth but also for errors, at Towerpoint Wealth we believe our role is to raise awareness and help our clients and friends avoid investing mistakes as they work to build and grow their net worth and move toward a more prosperous financial future.

To that end, we’ve created a special four-part educational video series, focusing on 20 of the most common investing mistakes to watch out for, as identified by the CFA Institute.

Are you aware of, or even making, any of these common investing mistakes?

Find out more – click the thumbnail image below to begin watching our special educational videos!

We are hopeful you will enjoy these educational videos, and encourage you to share this valuable information / share the video links with any colleagues or friends who would benefit from watching them.

Click the image below to browse our robust library of other wealth-building and wealth-protecting educational videos.

CLICK HERE or the thumbnail image below for an excellent resource from Vanguard, discussing Roth IRA conversions. Is an end-of-year 2023 Roth IRA conversion right for you? After you’ve assessed your current and future income tax brackets, the below guide should help you better understand your options.

Have questions about your upcoming 2023 tax return?

Would you like to review an old tax return for missed opportunities?

Click the banner below to message Steve Pitchford, Steve Pitchford, Certified Financial Planner.

The Callan Periodic Table of Investment Returns

The Callan Periodic Table of Investment Returns conveys the strong case for diversification across asset classes (stocks vs. bonds vs. cash), market capitalizations (large vs. small), and global equity markets (U.S. vs. global ex-U.S.).

The Table highlights the uncertainty and change in popularity inherent in all areas of investing. Rankings change every year. Also noteworthy is the difference between absolute and relative performance, as returns for the top-performing asset class span a wide range over the past 20 years.

In light of how unsettled the economy and markets are, are you concerned or worried about the bonds in your portfolio, and/or the overall level of risk you are taking in your portfolio? Message us to discuss your circumstances.

While the global 24/7 news cycle churns, twists, and turns, here are a number of fun, local trending events of note: 

• December 9 – ArtRx – Crocker Art Museum
• December 9 – 23 – The Nutcracker – SAFE Credit Union Performing Arts Center
• December 9 – Sacramento Santa Parade – Capitol Park, downtown Sacramento
• December 12 – Stevie Nicks – Golden1 Center
• December 15 – 16 – Jo Koy – Thunder Valley Resort
• December 16 – Holiday Makers Market – Downtown Commons (DOCO)

As always, we sincerely value our relationships and partnerships with each of you, as well as your trust and confidence in us here at Towerpoint Wealth. We encourage you to contact us at any time, or call or email us (916-405-9140, info@towerpointwealth.com) with any questions, concerns, or needs you may have. The world continues to be an unsettled and complicated place, and we are here to help you properly plan for and make sense of it.

 Joseph Eschleman, Jonathan, Steve, Lori, Nathan, Michelle, Luis, and Megan

 

We enjoy social media, and are actively growing our online community!

Follow us on any of these platforms, message us there and let us know your favorite charity.
We will happily donate $10 to it!

Click HERE to follow Towerpoint Wealth on LinkedIn
Click HERE to follow Towerpoint Wealth on Facebook
Click HERE to follow Towerpoint Wealth on Instagram
Click HERE to follow Towerpoint Wealth on Twitter
Click HERE to follow Towerpoint Wealth YouTube
Click HERE to follow Towerpoint Wealth Podcast A Wealth of Knowledge

A turnover in football. A double-fault in tennis. A personal foul in basketball. A penalty in hockey. A fielding error in baseball. Everybody makes mistakes. And, just as these slip-ups can impede winning and success in sports, committing common investing mistakes can interfere with getting your money’s best performance.

Put differently, minimizing common investing mistakes can be just as important as optimizing performance when it comes to building and protecting your wealth and net worth!

Understanding that the world of investing and wealth-building is filled with pitfalls, potential blunders, and common missteps, at Towerpoint Wealth we believe that raising awareness and helping our clients and friends to AVOID the most common investing mistakes will help you to not only be more self-aware, but also to chart a stronger course toward a more prosperous financial future.

As any athlete knows, the only way to avoid mistakes completely is to not be in the game, and that’s the worst mistake of all!

Found below are 20 common investing mistakes to learn about the top 20 most common investing mistakes to watch out for, as identified by the CFA Institute.

Avoid Common Investing Mistakes

Just like winning in sports, building and protecting net worth requires careful consideration, discipline, guts, strategic planning, and sometime even a little luck. Additionally, never taking your eye off the ball and avoiding the most common investing mistakes plays a huge part in the success you enjoy throughout your longer-term wealth-building journey.

From making emotionally-driven decisions to neglecting due diligence, there are a myriad of common investing mistakes that can hinder the growth of your portfolio. Below, we delve into the top 20 to avoid, with each “pitfall” serving a valuable lesson serving a valuable lesson about how to go the distance with your portfolio. Whether you’re a seasoned investor or just starting out, understanding and sidestepping these common investing mistakes can make a significant difference in achieving your longer-term financial goals.

1. Impractical Expectations: Having realistic return expectations is essential. Measured expectations act as goalposts guiding you toward longer-term stability and avoiding emotional turbulence.

2. Absence of Investment Goals: Rather than being influenced by shorter-term trends and headlines, investors must remain grounded by their vision of their future and their longer-term financial aspirations, from one season to the next.

3. A Dearth of Diversification: Owning a myriad of different investments, and embracing diversification, helps to fortify your portfolio against the possibility that any individual stock, or any singular portfolio component, will shatter its foundation.

4. Short-Sighted Focus: The allure of a home run or long bomb pass is akin to the pursuit of shorter-term gains, but steadfastness to your initial strategy will keep you on course. Shorter-term market fluctuations should never impact a longer-term investment thesis.

5. High Buys, Low Sells: We obviously want to buy low and sell high, but with regular market gyrations and volatility, it’s easy to falter.  Selling low and buying high can send your overall performance into the gutter. As Warren Buffett said:

6. Excessive Trading: Pioneering research from The Journal of Finance reveals that the most active traders trail the U.S. stock market by an average of 6.5% annually. As Jesse Lauriston Livermore said:

7. Fee Avalanche: Investment costs, expenses, and fees have the potential to erode your investments significantly, ruining the “gas mileage” of your portfolio, particularly over the long haul.

8. Tax-Centric Tunnel Vision: While minimizing income taxes is crucial, financial and investment decisions should not be solely tax-driven. Consider taxes only within a more comprehensive economic framework when making financial and portfolio-specific decisions.

9. Infrequent Portfolio Checkups: Review your portfolio, and overall financial, investment, and retirement plan at least semi-annually to ensure you are covering all the bases and adjusting your stance when needed. Don’t micromanage, but don’t fall asleep on the bench either.

10. Risk Misjudgment: Striking the equilibrium between too much and too little risk is the keystone to financial success. Risk is not a bad thing, as you need to take some amount of risk in order to achieve your goals. However, risk should always be justified, quantified, and properly managed.

11. Performance Blindness: Many investors don’t know the actual performance of their portfolio and investments. Evaluating gross and net (inclusive of fees and inflation) returns is an ever-important consideration.

12. Media-Driven Overreactions: Bad news and big headlines sell. While shorter-term bouts of negative news may trigger fear and emotional discomfort, it is important to remember that having a strategy, and being steadfast in sticking to it, should vastly increase your odds of longer-term investment success.

13. Inflation Oversight: Historically, inflation has averaged around 4% annually, slowly gnawing at your nest-egg. Be acutely aware of inflation, and account for it when developing and managing your financial, retirement, and investment plan and strategy.

14. The Illusion of Market Timing: Even a broken clock is right twice a day. Consistently (and accurately) timing the market is akin to chasing a mirage. Remain fully invested, be disciplined, and don’t give in to the temptation to jump around.

15. Neglecting Financial Advisor Due Diligence: Verify your advisor’s credentials and employment history through resources like BrokerCheck. If they have complaints or compliance issues on their record, ask them what happened and why.

16. Advisor Misalignment: Partnering with the right financial advisor is crucial, as they play a pivotal role in shaping your financial journey. A well-matched advisor not only provides sound guidance based on your goals and risk tolerance, but also ensures a collaborative and trusting relationship, fostering a path to and increasing your odds of having longer-term financial success.

17. Emotional Investing: Market, political, and economic events will inevitably stir our stomachs, but investing rationally is the creed during market squalls. As Warren Buffett said:

18. Yield Chasing: High-yielding, high-income investments often have the highest risk; a juicy dividend or lofty interest rate does not automatically make an investment a “good” one.

19. Procrastination: Time is a critical factor in wealth accumulation and compounding returns. Delaying investment decisions and putting off saving and investing can result in missed opportunities for growth, and limit the potential benefits of positive longer-term market trends.

20. Focusing on Things Out of Your Control: Market and economic shifts will always be unpredictable, but investors can increase their odds of success by managing their emotions, consistently saving and investing their money, minimizing expenses and taxes, and only taking as much risk as is necessary.

Steering clear of the 20 common investing mistakes outlined above is paramount for those seeking financial and investment success in the dynamic and unsettled world we live in. From setting realistic goals and maintaining a diversified portfolio, to resisting the allure of market timing and not chasing yield, these lessons serve as a playbook for increasing your odds of successfully building and protecting your net worth and wealth over time.

Fostering the long-term trust and confidence of our clients oftentimes extends outside of the office, and it’s wonderful when important clients become important friends!

Our President, Joseph Eschleman, enjoyed a delicious sushi dinner at Kru earlier this week with two great TPW clients, Craig Richardson and Kelli Richardson.

Here’s to wonderful company, financial peace of mind, great food, trusted partnerships, and growing and protecting wealth.

 

Click the images below to get caught up on some of our most recent trending moments at Towerpoint Wealth you might have missed!

 

A replay of our latest webinar, AI Decoded: Unlocking the Secrets of Artificial Intelligence!, is now available – click the thumbnail image below to watch it!

Thanks to our esteemed panel of guests, Linda Duessel from Federated Hermes, Inc, Chris Gannatti, CFA^® from Wisdom Tree, and Michael Grant from Calamos, the AI webinar was an absolute hit, as we covered a lot of material:

What is artificial intelligence?

✅ What does #machinelearning mean?
✅  AI’s ancient connection with Socrates.
✅ Commercial uses for AI.
✅ The AI user experience started in 1950.
✅ How smart is AI? It can pass the bar exam!
✅ Bias is built into the AI user experience.
✅ Is AI going to take my job?
✅ Will AI replace financial advisers?
✅ Will creativity suffer with AI?
✅  The AI user experience helps financial advisors help their clients.
✅  How do we prevent AI being used for evil purposes?
✅  How to invest in AI.
✅  Embracing the AI user experience!

We are confident you will enjoy this webinar, and encourage you to share the video link with any colleagues or friends who would enjoy this AI information.

CLICK HERE or the thumbnail image below for an excellent checklist that includes some common tax topics that could provide tax planning strategies to consider. While the list is only a preliminary guide, as no one knows with certainty what tax law changes may be coming, consider it a valuable starting place for the current tax law environment.

Click the image below to complete our short form and download Towerpoint Wealth’s 2023 Tax Reference Guide, an excellent resource and tax “cheat sheet” that was designed to help you take advantage of the many tax deductions andopportunities there are to help shave to help shave money off of your tax bill!

Have questions about your upcoming 2023 tax return?

Would you like to review an old tax return for missed opportunities?

Click the banner below to message Steve Pitchford, Steve Pitchford, Certified Financial Planner.

“As we express our gratitude, we must never forget that the highest appreciation is not to utter words, but to live by them.”

– John F. Kennedy

Are you a veteran? If so, CLICK HERE for an excellent guide itemizing the abundant benefits available to servicemembers.

Obtaining linear, straight-line growth in your investment portfolio is generally a very unreasonable expectation.

In light of how unsettled the economy and markets are, are you concerned or worried about the bonds in your portfolio, and/or the overall level of risk you are taking in your portfolio? Message us to discuss your circumstances.

While the global 24/7 news cycle churns, twists, and turns, here are a number of fun, local trending events of note: 

• November 10 – An Evening with Wayne Carini – CA Auto Museum
• November 10 – Oklahoma City Thunder vs. Sacramento Kings – Golden1 Center
• November 11 – Tim Allen – Hard Rock Hotel and Casino
• November 11 – Second Saturday Midtown Art Walk – Midtown Sacramento
• November 16 – Pentatonix – Thunder Valley Casino Resort
• November 22 – Frendsgiving – Drake’s The Barn
• November 23 – Run to Feed the Hungry – CSU Sacramento

As always, we sincerely value our relationships and partnerships with each of you, as well as your trust and confidence in us here at Towerpoint Wealth. We encourage you to contact us at any time, or call or email us (916-405-9140, info@towerpointwealth.com) with any questions, concerns, or needs you may have. The world continues to be an unsettled and complicated place, and we are here to help you properly plan for and make sense of it.

 Joseph Eschleman, Jonathan, Steve, Lori, Nathan, Michelle, Luis, and Megan

 

We enjoy social media, and are actively growing our online community!

Follow us on any of these platforms, message us there and let us know your favorite charity.
We will happily donate $10 to it!

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Click HERE to follow Towerpoint Wealth Podcast A Wealth of Knowledge

 

BAD NEWS. There is never a shortage of it. And unfortunately, a crisis control mindset is essential when it comes to managing your portfolio through periods of great uncertainty, like today. This is by no means easy, but we argue is essential to the longer-term health of your portfolio and financial well-being. Supporting this idea, and in his classic unique, direct, and contrarian style, Warren Buffett makes a paradoxical yet excellent point about how an investor should synthesize bad news.

 

 

Put differently, bad news creates temporary declines in the financial markets, and prudent investors welcome opportunities to buy low.

Between the 2020 coronavirus crash, the Russian invasion of Ukraine in February of 2022, hyperinflation that reached 9.1% in June of last year, extremely aggressive interest rate increases, the ongoing US debt ceiling mess, and now the Israel-Hamas war, there has been no shortage of crisis events over just the past few years for investors to navigate and consider. How is an investor supposed to feel comfortable in an environment like this one?

To be direct, at Towerpoint Wealth, we know that exercising your crisis control muscles early and often makes for stronger positions in times of uncertainty and volatility. As the American businessman and investor Rob Arnott said:

In investing, what is comfortable is rarely profitable.

The scenes of terrorism and war out of Israel and Gaza continue to be horrific. And while we pray we are wrong, we do not expect this deep-seated conflict to end any time soon, nor become any less polarizing. However, and unfortunately, in the ever-evolving landscape of global finance, at Towerpoint Wealth we continue to believe that the unyielding influence of crisis events like this on the financial markets will always been a painful constant. All of which begs the question many investors are currently asking themselves: “What should I do now?” and “What should I be doing differently?”

For starters, click the image below to review an excellent two-page fact sheet from Putnam Investments, exploring how the markets have historically reacted to crisis events, and why any initial negative reaction has always ended up being temporary.

 

 

Continue reading for a small-scale historical analysis of key crises, how financial markets typically react to crisis events, and most importantly, the psychology of fear and overreaction, and how to exhibit “crisis control.”

Historical Analysis of Crisis Events and the Markets

Financial markets have exhibited a range of reactions during times of crisis, reflecting the complex interplay of economic, psychological, and geopolitical factors. During some crises, such as the Great Depression of the 1930s or the 2008 financial crisis, stock markets experienced sharp, prolonged, and yet temporary declines. Investors, gripped by emotion and fear, often engaged in widespread selling, causing significant, but temporary, value erosion across various investment categories.

Conversely, other crises, like the aftermath of the 9/11 attacks or the initial stages of the COVID-19 pandemic, saw sharp initial market declines but relatively swift recoveries. Government intervention, stimulus measures, and monetary policy adjustments played a crucial role in stabilizing markets and restoring confidence. In these instances, investors who remained patient and focused on their long-term objectives were often rewarded as markets rebounded, illustrating the resiliency of financial markets in the face of adversity.

 

 

Based on the chart above illustrating prior geopolitical/crisis events, we have the following:

• The average total drawdown was -4.7%.
• The average time to reach market bottom was 19 days.
• The average time to fully recover losses was “only” 42 days.

In other words, exhibiting crisis control pays – equities have historically held up well during geopolitical shocks, including wars and other military conflicts going back decades. Even the market recovery from 9/11 took only 31 days.

Ned Davis Research (NDR) examined the effect on stocks of more than 50 crisis events since the turn of the 20th century—from the Panic of 1907 all the way to the COVID-19 crash of 2020—and found a crisis control pattern. After falling an average of 7% in the immediate aftermath of a crisis, the Dow Jones Industrial Average rose 4.2% over the next three weeks. Nine weeks later, the Dow had gained 6%, and after 18 weeks it was up an average of 9.6%, according to NDR.

Not every event followed the pattern precisely, and all were subject to larger economic forces. Yet the study shows a remarkable symmetry in market reaction.

These historical examples underscore the importance of understanding that market reactions during crises can vary widely, and that ^1.) remaining disciplined and ^2.) maintaining a longer-term perspective can be a valuable strategy to not only weather the storm, but also to capitalize on eventual recoveries.

The Psychology of Fear and Overreaction

Fear and overreaction among investors are common behavioral responses when crisis events occur. The human psychology of fear often leads to hasty and emotionally-driven investment decisions during times of heightened uncertainty. Investors may become gripped by worry and panic, which leads to a “stop the bleeding” mentality and a desire to protect their assets, which can result in abrupt selling and a flight to safety in investing in perceived safe havens like cash, Treasuries, or gold. This collective emotional response can exacerbate market volatility, leading to rapid and steep declines in asset prices, sometimes far beyond what may be warranted by underlying economic fundamentals. Click below to read an excellent report from Hartford Funds about The Price of Panic.

 

The danger of overreaction becomes evident when investors make impulsive, fear-driven decisions, such as selling off a portfolio entirely, or drastically altering sound longer-term investment strategies. In many instances, such actions can lead to losses that are locked in, missing out on potential recoveries, and impairing long-term financial goals. Remember, if you sell everything to “stop the bleeding,” you have to be right twice with your predictions:

1. That the financial markets continue to move down after you initially sell.
2. To ensure you do not miss out on the inevitable recovery, you then buy everything back close to the bottom of the market (when things seem even darker and more ominous).

If you feel you can accurately predict when to exit, and then when to re-enter, we tip our cap and say “good luck to you!”

To combat overreaction, it is critical for investors to maintain a disciplined approach grounded in a well-thought-out investment plan that accounts for the inevitability of market downturns. Additionally, understanding behavioral biases, such as recency bias (placing excessive importance on recent events) or loss aversion (the tendency to feel the pain of losses more strongly than the pleasure of gains), can help investors make more rational and level-headed decisions during times of crisis. Put differently, exhibit crisis control, have a plan, be disciplined in the face of geopolitical events, and reach out to us with any questions or concerns you might have about your portfolio or overall financial situation.

 

 

 

Curious about AI? Wonder what artificial intelligence (AI) is all about?

JOIN US!

Our upcoming 10/31 webinar promises to be an enlightening exploration into the world of AI, designed to demystify its intricacies and empower you with valuable insights. Join to listen what our three AI experts have to say:

• Linda Duessel, Senior Equity Strategist, Federated Hermes
• Chris Gannatti, Global Head of Research, WisdomTree Asset Management
• Michael Grant, co-CIO, Calamos Investments

Click HERE or the image below to RSVP!

 

 

 

Click the images below to get caught up on some of our most recent trending moments at Towerpoint Wealth you might have missed!

 

 

Four Reasons to Choose T-Bills Over CDs!

Click below to watch our most recently produced educational video, as we delve into the comparison between Treasury bills (T-Bills) and Certificates of Deposit (CDs). Discover why T-Bills might be the superior choice for conservative investors. Learn about T-Bill security features, tax benefits, liquidity, and more.

If you find this video helpful, give it a thumbs up, and hit the notification bell to subscribe to the Towerpoint Wealth YouTube channel for more insightful financial content!

 

 

 

 

Changes to Retirement Account RMDs

Below you will find a summary of how the rules regarding required minimum distributions (RMDs) are evolving under the recently passed Secure Act 2.0 legislation, signed into law by President Biden on December 29, 2022.

SECURE 2.0 is a comprehensive piece of legislation aimed at broadening retirement plan coverage, promoting increased retirement savings, highlighting the significance of Roth accounts, and making significant adjustments to RMD regulations. It builds upon the framework established by the SECURE Act of 2019. SECURE 2.0 introduces notable changes concerning RMDs:

• One prominent adjustment allows specific retirement account holders to further postpone their taxable RMDs. While the SECURE Act of 2019 raised the RMD age from 70 ½ to 72, SECURE 2.0 extends it even further, to age 73 and potentially as late as age 75.
• Participants in Roth employer plans, such as 401(k)s, are no longer required to take lifetime RMDs from these accounts.
• Additionally, the legislation reduces the penalty tax associated with failing to take or taking less than the required RMD for the year.

Certain provisions in the law simplify the statute of limitation rules for specific errors related to your Individual Retirement Account (IRA). These changes represent significant updates aimed at enhancing retirement planning and financial flexibility.

 

 

Click the image below to complete our short form and download Towerpoint Wealth’s 2023 Tax Reference Guide, an excellent resource and tax “cheat sheet” that was designed to help you take advantage of the many tax deductions and opportunities there are to help shave to help shave money off of your tax bill!

 

 

Have questions about your upcoming 2023 tax return?

Would you like to review an old tax return for missed opportunities?

Click the banner below to message Steve Pitchford, Steve Pitchford, Certified Financial Planner.

 

 

 

 

 

Mortgage rates are surging higher since mid-July and are now at their highest point since August, 2000, reducing affordability and home sales.

Thanks to Investopedia for the graph.

In light of how unsettled the economy and markets are, are you concerned or worried about the bonds in your portfolio, and/or the overall level of risk you are taking in your portfolio? Message us to discuss your circumstances.

 

 

While the global 24/7 news cycle churns, twists, and turns, here are a number of fun, local trending events of note: 

• October 21 – Movie Under the Stars (Beetlejuice) – Cathedral Square, downtown Sacramento
• October 21 – Sacramento Kings 2023 Fan Fest – Golden 1 Center
• October 22 – Ironman California – mostly downtown Sacramento
• October 27 – Janet Jackson – Thunder Valley Casino & Resort
• October 27 – Golden State Warriors vs. Sacramento Kings (Kings home opener) – Golden 1 Center
• October 28 – Midtown Halloween Festival and Pooch Parade – James Marshall Park
• October 29 – Frankenstein – Mondavi Center

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As always, we sincerely value our relationships and partnerships with each of you, as well as your trust and confidence in us here at Towerpoint Wealth. We encourage you to contact us at any time, or call or email us (916-405-9140, info@towerpointwealth.com) with any questions, concerns, or needs you may have. The world continues to be an unsettled and complicated place, and we are here to help you properly plan for and make sense of it.

 Joseph Eschleman, Jonathan, Steve, Lori, Nathan, Michelle, Luis, and Megan

 

We enjoy social media, and are actively growing our online community!

Follow us on any of these platforms, message us there and let us know your favorite charity.
We will happily donate $10 to it!

Click HERE to follow Towerpoint Wealth on LinkedIn
Click HERE to follow Towerpoint Wealth on Facebook
Click HERE to follow Towerpoint Wealth on Instagram
Click HERE to follow Towerpoint Wealth on Twitter
Click HERE to follow Towerpoint Wealth YouTube
Click HERE to follow Towerpoint Wealth Podcast A Wealth of Knowledge