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Minimizing the Necessary Evils of Building Net Worth – Taxes and Investing Costs 11.18.2022

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The markets, politics, and economy are uncontrollable and unpredictable. However, income taxes and investing costs, while unpleasant for sure, are omnipresent and forever.

As you work to build and protect your net worth, investing costs, fees, and expenses are virtually unavoidable. And owning investments inevitably means you will be subject to income tax obligations as well. The bad news? These two “necessary evils” are inevitable and unavoidable when working to grow and protect your net worth. The good news? With intelligent and proactive planning, we DO have some control over reducing and minimizing both!

Be it taxes or investment costs, it’s not what you make but what you keep. Let’s take a closer look at both necessary evils, and what can be done to reduce and minimize each of them.

Necessary Evil 1 – Taxes

Are income taxes dragging you down, ruining the “gas mileage” of your portfolio, and bringing down its real return? While financial and investment decisions should never be primarily driven by taxes, evaluating opportunities to reduce and minimize the income tax drag of your portfolio should always be top of mind.

Things to consider:

1.  The location of your investments matters: If you have a “regular” taxable account and also a tax-deferred retirement account, understanding which account to hold which of your investments in makes a huge difference. Knowing how to leverage, and what to hold, inside of IRA and 401(k) accounts can have a significant influence on your net, after-tax

2.  When to buy and sell your investments matters: Tax-loss harvesting and the strategic realization of capital gains can make a huge difference when reducing the overall tax drag of your portfolio.

3.  Which accounts to trade in matters: Should you buy and sell in your tax-deferred IRA or 401(k) account, or would it be better to take advantage of the long-term capital gain and/or return of principal opportunities that a “regular” taxable account offers?

4.  The type of investments and funds you own also matters: Certain funds trade less and have lower turnover, tending to be inherently more tax efficient, as compared to funds that do a lot of active buying and selling, which can generate unwanted income and capital gain distributions.

5.  Which accounts you make withdrawals from matters: When taking money from your portfolio, being mindful of the type of account you decide to draw from matters, as does your personal income tax bracket at the time these withdrawals occur.

Necessary Evil 2 – Investment Costs

Four out of 10 investors don’t know how much they are paying in fees and investment costs, according to a study by Consumer Reports. And one of the easiest ways to bolster your returns and to better grow and protect your net worth is through expense, fee, and cost reductions.

Things to consider:

1.  Consider low-cost index funds and ETFs over actively-managed funds. While you don’t receive a bill in the mail to physically write a check to pay the internal costs and expenses of your diversified investment funds (these are paid directly out its returns), it is essential to be aware of, and work to reduce, this necessary evil.

2.  Reduce/eliminate account custodial fees and trading commissions/costs. Use a custodian or brokerage firm that doesn’t charge for these things. This is simple, and an absolute no-brainer. Towerpoint Wealth has partnered with Charles Schwab as our custodian, and our clients do not pay any account custodial fees, nor any stock/ETF trading commissions.

3.  Do not pay a “load” when investing in a mutual fund. A “load” is another word for commission. Don’t pay them, and instead seek out no-load and institutional funds, and financial advisors who recommend them.

4.  Pay attention to hidden fees within your company-sponsored retirement plan. Ask to see the summary plan description, also known as the plan document. If your menu of investment choices is a limited selection of high-expense/high-fee funds, ask your plan administrator why, and what lower-cost options are available to you.

Reducing and minimizing investment costs and income taxes is a significant responsibility of properly managing, protecting, and growing your net worth. There is no question that the drag created by these two necessary evils reduces the overall “gas mileage” of your portfolio, but fortunately, you do have direct control over the application and implementation of the above-mentioned strategies. As Warren Buffett said:

Have questions or concerns? Let’s talk.

Message us to schedule a no-strings-attached initial conversation.


Click the Wealth Management Philosophy thumbnail image below to learn more about exactly how we help our clients build and protect their net worth

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Trending Today In Case You Missed It

Keeping our professional saw sharp! Click to read more

After two years of having to host the conference virtually, the 2022 Charles Schwab IMPACT conference, aka the “World Series of Investment Conferences,” was back in full effect in Denver, CO this month.

Among the more than 5,000 invite-only attendees were our Director of Research and Analytics, Nathan Billigmeier, our Director of Tax and Financial Planning, Steve Pitchford, and our Partner, Wealth Advisor, Jonathan LaTurner

From live keynote presentations from some of the biggest names in business, finance, wealth management, and politics, to intimate and interactive breakout sessions throughout the three-day event, the conference is a one-of-a-kind and fully-immersive experience for attendees.

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Are you aware of your ability to align your investment portfolio with your personal values?

Watch an interesting and insightful conversation between our President, Joseph F. Eschleman, CIMA®, and Jay Lipman, co-founder at Ethic Investments, a global leader in ESG investing who helps empower wealth advisors and investors to create sustainable and socially-responsible portfolios.

Joseph and Jay specifically touch on:

  • What is ESG, sustainable, and responsible investing?
  • Why demand for ESG, sustainable, and responsible investing has exploded over just the past 18 months.
  • Why returns and growth no longer need to be sacrificed when utilizing and implementing an ESG and sustainable investment philosophy.
  • Why utilizing a customized separately managed account (SMA) is a much more effective way to develop and implement a inclusionary and exclusionary ESG-focused portfolio, as opposed to an ESG ETF or open-end mutual fund.
  • How the pandemic and COVID-19 accelerated the growth and focus on ESG investing.
  • What the future of ESG, sustainable, and responsible investing looks like.

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Trending Today TPW Taxes

Have you heard of an exchange fund? Are you aware of how an exchange fund can help you diversify your holdings and defer capital-gains taxes?

Exchange funds, also known as swap funds, pool large amounts of concentrated shareholders of different companies into a single investment pool, allowing large shareholders of a single stock to exchange this concentrated stock holding into a share in the pool’s more diversified portfolio.

Each exchange fund investor receives a share of partnership units commensurate with their contribution. The fund then employs its strategy, and usually after seven years, you have the option to redeem your units. When you do, you typically receive a pro-rata share of some or all of the stocks in a fund’s portfolio, depending on the policy of the individual fund. Or, you can continue to stay invested in the partnership on a tax-deferred basis.

Have more questions? Contact us or click below to message our Director of Tax and Financial Planning, Steve Pitchford, to request a complimentary analysis.


Have you considered specific 4Q, 2022 tax-planning and tax-reduction opportunities, before December 31 comes and goes?

Steve Pitchford, CPA, CFP® Director of Tax and Certified Financial Planning
News You Can Use Trending Today

Useful and interesting content we’ve read over the past two weeks:

1. Republican Infighting Roils Congress As Midterms Fallout Continues

Washington Post – 11.15.2022

Republicans in both chambers of Congress mounted challenges to their leaders Tuesday as disappointment over their lackluster performance in the midterm elections manifested in infighting and instability at the Capitol.

2. CNN, ABC News Cuts: TV News’ Belt-Tightening Era Begins

Hollywood Reporter – 11.16.2022

As CNN, ABC News, and others grapple with an advertising downturn and lower linear (non-streaming) viewership, the new mandate is to trim costs and find savings however they can while staffers weather the storm.

3. Yankees Ready to Pay Top Dollar to Keep Aaron Judge

NY Post – 11.15.2022

Hal Steinbrenner sounds prepared to do what it takes to keep Aaron Judge a Yankee – to a point. The Yankees’ managing general partner said Tuesday he told Judge he wants him to stay in the Bronx and indicated money won’t prevent that from happening.


If you speak with someone who is concerned or unsettled about their investments or advisor, we welcome talking with them.

Chart of the week Sacramento Financial Advisor

The below chart reflects the material range of possible outcomes, depending on whether or not a tax-smart approach was taken. Whether investing for short-term or long-term gains, a failure to follow a tax-sensitive strategy can significantly impact your financial security.

Broken record: Let us help you keep as much of your growth and returns as possible. 


If you speak with someone who is concerned or unsettled about their investments or advisor, we welcome talking with them.

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Trending Today Our Community

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


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 reach out to us at any time (916-405-9140info@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, Jonathan, Steve, Lori, Nathan, Michelle, and Luis

Towerpoint Wealth Thank You For Trusting

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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The 2022 Midterm Election – Cause for a Market Correction? 11.05.2022

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Many investors are asking: “If the (insert: REPUBLICANS or DEMOCRATS) win the 2022 midterm election, should I change my investment strategy?”

2022 Midterm Elections

Be it a bear, a bull, a donkey, or an elephant, investors tend to place a significantly greater amount of attention on political outcomes than is necessary, at least when it comes to their investment portfolios.

Given the relative stability of our economic system, US history has shown that there is not a “preferred” political party for the overall stock market. While electoral developments at the federal level may create shorter-term volatility, who ultimately sits in Congress matters less than you think. And regardless of which party wins the House and Senate next week, the historical performance of the stock market after the 2022 midterm election may end up being very good.

At Towerpoint Wealth, we believe that good, well-run, and profitable companies will almost always remain good, well-run, profitable companies, regardless of which way the political winds are blowing. Regardless of whether the White House and Congress are unified or divided, the stock market tends to march higher over time. However, what is also true is that volatility tends to elevate during midterm election years, even if temporarily.

equity market volatility

Sound like 2022 so far? Understanding this data, we believe that 2023 can’t get here fast enough!

Putting aside the market and investment implications of the upcoming 2022 midterm election, below is what has happened historically in Congress.

Here at Towerpoint Wealth, we witness it firsthand every two years – a cross-section of clients who lean Democrat tend to become more worried, uneasy, and concerned about their investments after a Republican win, and conversely, certain Republican clients have the exact same feelings after a Democrat victory. Either way, we recognize it can be difficult to be fully rational during this period of heightened political discourse and rhetoric.

Image of Warren Buffet and his quotation

We have seen that politics can oftentimes distract an investor from focusing on and ultimately achieving longer-term financial goals. While there is no question that government policy can have an impact on economic growth, and can also affect specific stocks, bonds, and sectors, for most long-term investors, it makes more sense to focus on economic and market fundamentals rather than the upcoming midterm election poll results.

Two important reasons we have this viewpoint:

  1. Investment returns over the longer-term correlate directly to the economic cycle, which has less to do with who’s in office as compared to other factors that drive growth. Many economic and technological trends are much larger than politics.
  2. Economic policy is difficult to evaluate and often works with a lag. For instance, while corporate tax cuts may result in a short-term jump in the stock market, the true economic benefits occur over years and decades.

There will ALWAYS be pundits and “talking heads” on both sides of the aisle, predicting doom and gloom based on the other party’s proposals. And while there are policies that can promote long-term investment spending and job growth, the record shows that it’s incredibly difficult to accurately predict the shorter-term economic impact of any particular proposal.

John Kenneth Galbraith and his quote

It is paramount to focus on fundamentals in an uncertain environment like the one we are in today. The Towerpoint Wealth Investment Committee anticipates that the economic and market conditions that have fueled the volatility we have experienced this year will remain in place for some time after the last votes are counted, and the “noise” from the 2022 midterm elections subsides. However, we encourage you to not get too low, as the 4th quarter of 2022, and 2023 as a whole (the third year of President Biden’s term), could and probably will be quite different than what has happened so far in 2022, as evidenced by the two charts below.

Average 4th quarter US stock performance
Post Elections 2023 Strong Year

Have questions or concerns? Let’s talk.

Let’s talk – message us to schedule a no-strings-attached initial conversation.


Click the Wealth Management Philosophy thumbnail image below to learn more about exactly how we help our clients build and protect their net worth

Wealth Management Philosophy page on Towerpoint Wealth

Trending Today In Case You Missed It
Cathedral of the Blessed Sacrament in Downtown
Watch the short video montage of our morning!

The Towerpoint Wealth team donated and handed out close to 100 brown bag lunches to the unhoused and other people in need at the footsteps of the Cathedral of the Blessed Sacrament in Downtown Sacramento two Tuesday’s ago.

During this Community Volunteer Day, the TPW team connected with this underserved sector of our community, directly helping unhoused people in dire need of basic necessities like food, water, clothing, and in some instances, pet food.

While the recent surge of the unhoused population in our region has split community leaders looking for solutions, we at Towerpoint Wealth were proud to do our small part in helping meet the basic needs of the most in need, at least for one day.

To find out how you can help and to learn more about this program, please visit https://www.cathedralsacramento.orgministries and refer to the Brown Bag Lunch Ministry.


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Restricted Stock Units and stock options | What is an RSU?
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Are you a technology director, VP, or engineer? Are you receiving restricted stock units, or RSUs, as a meaningful component of your overall compensation package?

Click below to watch our brand-new educational video, featuring our President, Joseph F. Eschleman, CIMA®, who discusses in detail how to manage RSU compensation packages for technology directors, VPs, and engineers.

Joseph specifically touches on:

  • How to reduce the risk of receiving and holding your restricted stock units.
  • How to structure a tax-efficient RSU “unwind” strategy.
  • How to best manage the capital gains consequences of selling your RSUs.
  • How to protect against becoming too “concentrated in your employer.”
Trending Today TPW Taxes
How distributions are taxed

If you consciously decide to hold – and not sell – shares of a mutual fund you hold in a “regular,” non-retirement account such as an individual, joint, or trust account, then you don’t have to pay capital gains taxes, right? For better or worse, sometimes the answer is WRONG!

You may be dealt an unexpected tax bill in 2022 that you may not be ready for and certainly did not ask for – a short or long-term capital gain distribution, which is a taxable event resulting from the fund’s manager selling shares or securities held within the fund.

Before it is too late (many funds make these distributions in early or mid-December), contact us or click below to message our Director of Tax and Financial Planning, Steve Pitchford, to request a complimentary analysis of your potential 2022 capital gains tax exposure.


Have you considered specific 4Q, 2022 tax-planning and tax-reduction opportunities, before December 31 comes and goes?

Steve Pitchford, CPA, CFP® Director of Tax and Certified Financial Planning
News You Can Use Trending Today

Useful and interesting content we’ve read over the past two weeks:

1.Recent commentary and news stories
about the midterm elections (in some cases, not for the faint of heart!)
RealClearPolitics – 11.3.2022
Democrats Aren’t Lauging at Dr. Oz Anymore
Why Republican Attacks on Crime are so Potent
How Low Can the Herschel Walker Campaign Go?
Friendly Reminder: Sen. Warnock Has a Lot of Baggage
The Missing Factor in the Election Story: Turnout
Battle for the Senate 2022
2. What Do Thieves Do with a Stolen iPhone?
iMobie – 9.28.2022
It is quite annoying if the iPhone was stolen which could release your privacy and also cause some losses. Therefore, you have to know what to do if your iPhone was stolen in time which may help you to get back your iPhone and protect the data. For example, you may need to know how to locate a lost cell phone even when it’s turned off, how to use Find My, etc. Besides, This article will discuss what will happen to the stolen iPhone.
What Do Thieves Do with a Stolen iPhone
3.Texas Goes Permitless on Guns. Police Face Armed Public
NY Times – 10.26.2022
Many sheriffs, police leaders and district attorneys in urban areas of Texas say there has been an increase in people carrying weapons and in spur-of-the-moment gunfire in the year since the state began allowing most adults 21 or over to carry a handgun without a license.
At the same time, mainly in rural counties, other sheriffs said they had seen little change, and proponents of gun rights said more people lawfully carrying guns could be part of why shootings have declined in some parts of the state.
Guns Police Face Armed Public

If you speak with someone who is concerned or unsettled about their investments or advisor, we welcome talking with them.

Chart of the week Sacramento Financial Advisor
equity performance 12 months after inflation peaks

Have we reached peak inflation?

The stock market has historically rallied after inflation peaks (as measured by the CPI).

Since 1927, the average return for the S&P 500 in the 12 months following a peak in CPI was +11.5%.

Was June’s CPI figure of +9.1% the peak inflation rate for this current inflationary cycle? Based on the chart below from Blackrock, we are hopeful the answer is yes.

Concerned about inflation? At Towerpoint Wealth, we can help you – let’s talk about it!


Brene Brown quote

If you speak with someone who is concerned or unsettled about their investments or advisor, we welcome talking with them.

Click here to Introduce Us
Trending Today Our Community

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


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 reach out to us at any time (916-405-9140info@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, Jonathan, Steve, Lori, Nathan, Michelle, and Luis

Towerpoint Wealth Thank You For Trusting

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 TPW on LinkedIn
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Holding Cash is No Longer Trash! 10.10.2022

“Everybody’s doing something. We’ll do nothing!”

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– George Costanza, “The Pitch”, Seinfeld, Season 4, Episode 3

George Costanza, “The Pitch”,

Holding cash in your investment portfolio, aka not investing it, is akin to “doing nothing.” Historical arguments against holding cash in an investment portfolio cite that it is boring and unproductive to do so, and an extremely defensive position to take.

However, considering the afflictions facing today’s financial markets, could holding cash be just what the doctor ordered?

Depending on your unique financial plan and investment strategy — and the current and expected state of the economy and financial markets — doing nothing could be a sound strategy or a foolish one that, in the long term, will be detrimental to the health of your nest egg.

It was only a little more than three years ago when we wrote about the possibility of banks paying negative interest rates on savings and money market accounts. Today, the economic and market environment is certainly quite different:

banks paying negative interest rates on savings

Arguments have historically been made that holding cash in an investment portfolio is boring, unproductive, and extremely defensive.

holding cash in an investment portfolio

At Towerpoint Wealth, we have always believed that having a small allocation to cash – and cash’s cousin, cash alternatives – within a properly diversified portfolio is appropriate, for three main reasons:

  1. Holding cash provides stability and insulation to a portfolio during times of market weakness.
  2. Maintaining a small allocation to cash protects an investor against having to sell other investments at an inopportune time if an unexpected withdrawal need arises.
  3. Cash acts as “dry powder” during a time of market weakness, giving investors the ability to buy low when prices are temporarily low, without having to sell other securities in their portfolio.
Warren Buffet Quote Cash Priceless Holding Cash

And now that interest rates have quickly moved up in 2022, and are expected to increase even further before the year is out, holding cash balances that are relatively larger is not as unproductive as it was even a few years ago.

Do you currently have cash in a checking account, savings account, money market account, or as part of your investment portfolio? Is it too much? Not enough? Is it working as productively as it can be for you?

Let’s talk – message us to schedule a no-strings-attached initial conversation.


Click the Wealth Management Philosophy thumbnail image below to learn more about exactly how we help our clients build and protect their net worth

Wealth Management Philosophy page on Towerpoint Wealth

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Are you really a long term investor?

Or do you say you are, but sometimes tempted to behave more like a trader or a gambler, and fail to apply long term investment strategies to your portfolio?

Watch our President, Joseph F. Eschleman, CIMA®, discuss exactly what it takes to truly act and behave like a long term investor, and what specific long term investing strategies and philosophies need to be developed and internalized to be a successful long term investor.

Watch our educational video on YouTube!

long term investing strategies and philosophies
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Trending Today TPW Taxes

There is never a bad time for tax planning – especially right now!

The October 15 deadline for 2021 income tax returns on extension is right around the corner.

The December 31 deadline for many 2021 tax planning opportunities is also right around the corner.

We encourage you to click below for an excellent two-page guide that summarizes the current “lay of the land” regarding 2021 tax rules and deadlines, and remember, the lower your tax bill, the lower the drag on your overall investment portfolio

2021 tax rules and deadlines
Click here to download Trending today

Have you considered specific 4Q, 2022 tax-planning and tax-reduction opportunities, before December 31 comes and goes?

Steve Pitchford, CPA, CFP® Director of Tax and Certified Financial Planning
News You Can Use Trending Today

Useful and interesting content we’ve read over the past two weeks:

1. For Pelosi and McCarthy, A Toxic Relationship Worsens As Elections Approach
NY Times – 10.5.2022
The hostility between the speaker and the man in line to succeed her should Republicans win control of the House has only intensified as the decisive moment nears.
For Pelosi and McCarthy, A Toxic Relationship
2. Keep It or Toss It? ‘Best Before’ Labels Cause Confusion
Associated Press – 10.4.2022
As awareness grows around the world about the problem of food waste, one culprit in particular is drawing scrutiny: “best before” labels.
Best Before’ Labels Cause Confusion
3. US National Debt Tops $31 Trillion For First Time
The Miami Herald – October 5, 2022
America’s total national debt surpassed $31 trillion for the first time on October 3, according to newly released Treasury Department data. Though the debt had been growing steadily in recent years, the rate of growth increased substantially throughout the pandemic.
US National Debt Tops $31 Trillion

If you speak with someone who is concerned or unsettled about their investments or advisor, we welcome talking with them.

Chart of the week Sacramento Financial Advisor

Have we reached peak inflation?

The stock market has historically rallied after inflation peaks (as measured by the CPI).

Since 1927, the average return for the S&P 500 in the 12 months following a peak in CPI was +11.5%.

Was June’s CPI figure of +9.1% the peak inflation rate for this current inflationary cycle? Let’s hope so.

Concerned about the upcoming midterm elections? At Towerpoint Wealth, we can help you – let’s talk about it!

peak inflation and stock market

shelby collum davis quote

If you speak with someone who is concerned or unsettled about their investments or advisor, we welcome talking with them.

Click here to Introduce Us
Trending Today Our Community

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


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 reach out to us at any time (916-405-9140info@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, Jonathan, Steve, Lori, Nathan, Michelle, and Luis

Towerpoint Wealth Thank You For Trusting

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 TPW on LinkedIn
Click HERE to follow TPW on Facebook
Click HERE to follow TPW on Instagram
Click HERE to follow TPW on Twitter

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With Inflation and Rates Sky High, Should You Consider Bonds to Buy? 09.23.2022

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2022 is well on its way to being one of the worst years in modern history for bond (also known as fixed income) investors, ushering in the worst bond market returns since 1973

Bond Losses Mounted with Rising Interest Rates

This begs the question: Are there any decent bonds to buy? Since 1976, bonds have provided a positive annual return in 42 of 46 years. Unfortunately for bond investors, 2022 has been a huge anomaly. 

Bloomberg U.S. Agg Annual Returns Intra Year Declines

Prior to 2021, we experienced an unprecedented 30+ year period of low inflation and declining interest rates here in the United States. 

Low Inflation Declining Interest Rates

However, 2022 has been a stark reversal, as the worst inflation we have experienced in nearly 40 years has forced global central banks to aggressively increase interest rates in an attempt to combat rising prices and overheated economies. The United States Federal Reserve (“the Fed”) has been an active participant in this “tightening,” taking its benchmark federal funds rate from 0.25% at the beginning of the year to 3.25% today, after it boosted it again by 0.75% on Wednesday, the third straight ¾ point increase in 2022. 

Federal Reserve Graph Inflation

Greg McBride, chief financial analyst at Bankrate, said recently: “The Fed has been delivering a ‘tough love’ message that interest rates will be higher, and for longer, than expected. The Fed will continue to hike rates until it actually restrains the economy and intends to keep rates at those restrictive levels until inflation is unmistakably on its way to 2%.”

The result of this Fed “tightening” has been interest rate increases that have caused pain for many bond investors. Typically, bonds are thought of as a hedge against stock market volatility, providing a relatively steady return and a relatively steady income stream. 

10 Worst Years For Stocks and Bonds Chart

All of this begs the questions: Are there any decent bonds to buy? Is investing in bonds no longer an integral part of a well-diversified investment portfolio? 2022’s rising interest rate environment has been met by bond investors with as much enthusiasm as a root canal, and we have seen it lead folks to forget the reasons why they hold bonds in their portfolios. For some, it has even caused them to reconsider their long-term asset allocation and diversification choices.

Long Term Financial Plan

This Too Shall Pass…

So why should investors consider remaining loyal, and look for bonds to invest in, even as rates rise?

Though recent interest rate hikes have led to lower bond prices this year, as bonds mature over time and are reinvested at higher interest rates, their ability to generate income can increase.

The raw interest paid by bonds can also be reinvested at higher rates. Because of this, if rates rise steadily and modestly over time, investors may be better off than if rates had remained at previously low levels.

We are confident that bonds will return to being a historical counterbalance against volatility in the equity markets, and that investors shouldn’t give up on looking for bonds to buy in building out a properly-diversified portfolio. 

If you think diversification isn’t a compelling enough reason to consider owning an asset class, talk with investors who were “all in” on equities in 2002 or 2008, and discovered they were walking a high wire without a net as the winds of volatility started to gust!

Investors looking to dump their fixed-income investments as rates rise may want to take a step back to avoid missing the forest for the trees. It’s important to remember that the shorter-term challenge of interest-rate increases generally doesn’t supersede the longer-term reasons for holding bonds in your portfolio.


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

Wealth Management Philosophy page on Towerpoint Wealth
Trending Today In Case You Missed It

What are alternative investments? Is it important to have exposure to “alts” in your current portfolio?

Is it bad if you do not own any alternatives? What are the risks and benefits of adding alts to your investment strategy?

Do you have any of these questions? Well, we have some answers for you!

If you would like to learn more, click the thumbnail to watch our recently-produced webinar about alternative investments.

alternative investments forum
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Be Kind & Reel Rewind

So much of being a great team is trusting one another! 

The whole Towerpoint Wealth team went to iFly Sacramento, and in this crazy vertical wind-tunnel, we took a trust fall and flew (with the help of an amazing flying coach)! If you aren’t familiar with the term, a trust fall is when a person allows themselves to fall, deliberately, trusting that someone will be there to catch them.  

In addition to being a great team-building event, it reminded us how Towerpoint Wealth clients entrust us with their hard-earned money, and we are obligated (by our ethics as well as by law) to work in partnership with them to do everything in our control to help them build wealth and protect wealth so their futures are secure. 

We all truly enjoyed this experience, and what a great reminder to surround yourself with people you trust! 

Be Kind & Reel Rewind Luis Barrera I Fly
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At Towerpoint Wealth, we believe it may be time trust cryptocurrency.

In the newly-produced educational video found below, our President, Joseph Eschleman, CIMA®, addresses a number of common concerns about the cryptocurrency future, discusses mainstream crypto adoption trends, and also defines what DeFi —decentralized finance—is.

Joseph also discusses why cryptocurrency can be a very good alternative investment to diversify your portfolio, understanding that more than 220 million people owned digital assets as of June of 2021. We believe all of this bodes well for the cryptocurrency future.

Click the video to watch Joseph’s video on YouTube!

Why Crypto is Here to Stay and Not Going Away
Trending Today TPW Taxes

When you reach age 72, you are required to take annual required minimum distributions (RMDs) from your non-Roth retirement accounts. If you do not take them by December 31, you will owe a 50% (!) penalty of the RMD amount!

It does not matter if you take your RMD via a one-time, lump sum withdrawal, or a series of systematic distributions, as long as the minimum amount is distributed by 12/31.

While using an RMD calculator to help you determine your 2022 required minimum distribution is usually a straightforward activity, properly accounting and planning for this increase in taxable income is a more nuanced and strategic exercise.

While RMDs can be an unwanted by-product of contributing to and investing in retirement accounts such as 401(k)s, IRAs, 403(b)s, etc., there are impactful and proactive tax planning strategies that can materially lessen the tax sting of an RMD.

What are RMDs, and how should an individual plan for them within the context of a tax-efficient retirement strategy? Click the image below to learn more about RMDs, and specifically, three actionable RMD strategies worth evaluating to better keep Uncle Sam at bay.

Required Minimum Distributions

Are you unclear about what your RMD will be in 2022,
 or how to best take it before the end of the year?

Steve Pitchford, CPA, CFP® Director of Tax and Certified Financial Planning
News You Can Use Trending Today

1. I Wish I Was a Little Bit Taller

GQ – 9.15.2022

A growing number of men are undergoing a radical and expensive surgery to grow anywhere from three to six inches. The catch: It requires having both your femurs broken. GQ goes inside the booming world of leg lengthening.

2. Gavin Newsom is ‘Unequivocally’ Running for President in 2024 if Biden Doesn’t

TheWrap – 9.19.2022

The California governor, who’s already running ads in other states, is poised to challenge Vice President Kamala Harris.

1. The Rise of Mobile Gambling is Leaving People Ruined and Unable to Quit

Vice – 9.6.2022

Financial catastrophe is now only a few clicks away, a problem that is showing quiet signs of becoming a crisis. “I can’t just get rid of my phone,” one problem gambler says.

Chart of the week Sacramento Financial Advisor

What do the upcoming 2022 midterm elections mean for investors?

Republicans need only to recapture five seats to regain control of the House, which has a 71% likelihood of occurring, according to FiveThirtyEight. The Senate is more of a tossup, with Democrats being favored by 71% to win the Senate. The chart below shows the very best scenario for stocks (based on historical precedent) is a Democratic President and a Republican controlled Congress. Should the Democrats retain control of the Senate, the scenario of a Democratic President and split Congress is quite strong for stocks as well. 

Concerned about the upcoming midterm elections? At Towerpoint Wealth, we can help you – let’s talk about it!

Financial chart of the week | Stock Performance based on congress makeup
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If you speak with someone who is concerned or unsettled about their investments or advisor, we welcome talking with them.

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Trending Today Our Community

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


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 reach out to us at any time (916-405-9140info@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, Jonathan, Steve, Lori, Nathan, Michelle, and Luis

Towerpoint Wealth Thank You For Trusting

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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Hold On… You Have No Alternative Investments In Your Portfolio? 09.09.2022

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For many investors, 2022 has been a challenging and frustrating year, as persistently high inflation has resulted in an environment of quickly rising interest rates, leading to a “double-whammy” of twin selloffs across both stocks and bonds this year. After increasing more than 31% in 2019, 18% in 2020, and 28% last year, the S&P 500 (an often-cited proxy for the stock market) has declined more than 16% this year. And to make matters worse, the bond market, as measured by the Bloomberg U.S. Aggregate Bond Index, has declined by more than 11%. Put differently, investing in conventional stock and bond asset classes has not worked very well so far in 2022.

Not surprisingly, these declines have led to an increase in demand for “supplemental” investment opportunities outside of these traditional areas, and have led some people to ask themselves “Why are there are no alternative investments in my portfolio?”

no alternative investments
No alternative investments? Alternatives, Cash, Bonds, Stocks Pie Graph

But what are alternative investments? What role might they play in a properly-allocated investment portfolio? And why would an investor want to add them to their current diversification strategy?

Put simply, an alternative investment is any financial asset that does not classify as a traditional stock, bond, or cash. While they can vary widely in their accessibility and structure, alternatives can provide an opportunity to 1.) boost returns, 2.) generate income, 3.) provide potential tax benefits, and 4.) reduce risk in a portfolio. Institutions like pension funds and endowments have been utilizing them for years, and today, more and more individual investors are questioning why they have no alternative investments, and whether they should change their plan to include them.

No alternative investments in my portfolio?

At Towerpoint Wealth, we selectively utilize alternatives for a number of clients and for a myriad of reasons; primarily, we find alternatives attractive due to the low correlation they have to traditional asset classes such as stocks and bonds. This means that the value and price of alternatives does not necessarily move in the same direction when market and economic conditions change, strongly enhancing portfolio diversification.

strongly enhancing portfolio diversification

Here are eight types of alternative investments you should know about, in no particular order:

  1. Private equity – ownership in private businesses and non-publicly traded companies.
  2. Private credit – non-bank lending and ownership of privately negotiated loans and debt financing.
  3. Commodities – tangible goods that can be used as they are, or used to make other goods, including precious metals, wheat, oil, beef, coffee, etc.
  4. Collectibles – fine wine, art, coins, stamps, trading cards, comic books, or vintage cars.
  5. Cryptocurrency – any form of currency that exists digitally or virtually, and uses cryptography to secure transactions.
  6. Hedge funds – a limited partnership that pools investors’ money and invests it by making use of higher-risk and more complex trading methods.
  7. Venture capital – a subset of private equity, it is financing provided to startup companies and small businesses that are believed to have long-term growth potential.
  8. Real estate – a very long list – REITs, DSTs, QOZs, raw land, co-working spaces, farmland, manufactured homes, mobile home parks, and private real estate partnerships and syndicates.

In addition to these eight, other investments that can be classified as alternative include timberland, NFTs, crowdfunding, cannabis, tax liens, oil and gas, air rights, prop bets, and bankruptcy claims. Take a few minutes to read through this list of 150 types of unusual (alternative) investments, as there sure are some interesting, esoteric, and wild ones!

Of course, we would be remiss if we did not also highlight a number of the key risks and constraints that alternative investments inherently have:

  • They oftentimes are unregulated by the U.S. Securities and Exchange Commission (SEC)
  • They can be illiquid, and can be difficult to sell and turn into cash
  • They can have high minimum investments and fewer opportunities for non-accredited investors
  • They oftentimes have high (and sometimes hidden) fees and operating expenses

Is it bad if you have no alternative investments in your portfolio? Are you curious about “alts” and want to learn more? If you are an accredited investor, or serve accredited investors in a professional capacity, we welcome having you join us at Sacramento’s beautiful Sutter Club on September 21!

Click on the invitation below to RSVP!

f you are an accredited investor, or serve accredited investors

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

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What's Happening At TPW - Trending today

Our President, Joseph Eschleman, recently connected with a very good and long-time client, Charlotte Strand, for a comprehensive semi-annual financial, investment, and retirement review meeting at her home.

You are in good hands, Charlotte – glad to see you are doing well, and that you feel confident that all of your financial affairs are properly coordinated!

Our President, Joseph Eschleman, recently connected with a very good and long-time client, Charlotte Strand

While the Sacramento Republic unfortunately fell short in its dream-run pursuit of the US Open Cup on Wednesday night, it certainly wasn’t due to the lack of support from the greater Sacramento-area community.

Click below for a funny and creative video produced by our Marketing Specialist, Luis Barrera, highlighting the Towerpoint Wealth crew taking full advantage of Mayor Steinberg’s “doctor’s note” authorizing us to leave the office and watch the game!

Funny and creative video produced by our Marketing Specialist, Luis Barrera

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TPW Taxes Taxing Student Loan Forgiveness

While more than 40 million Americans could see their student loan debt cut or eliminated under President Joe Biden’s plan, his student loan debt forgiveness plan has raised many questions: How much will it actually cost? Who will it benefit the most? How will it contribute to inflation? Does the President even have the legal authority to implement this forgiveness?

Another very important question: Whether or not residents of certain states will owe up to several hundred additional state tax dollars on their forgiven loans. While borrowers will not owe federal taxes on student debt relief, they should unquestionably check how this debt cancellation is treated at the state tax level. While it is an evolving issue, and many states have yet to decide, Arkansas, California, Indiana, Minnesota, Mississippi, North Carolina, and Wisconsin all appear to be on track to tax forgiven student loan amounts, according to the Tax Foundation, an independent tax policy 501(c)(3) nonprofit.

The official White House fact sheet on President Biden’s student loan relief contains additional details.

Are you confused about certain aspects of completing your tax return?

Sacramento Certified Financial Planner | Steve Pitchford, CPA, CFP® Director of Tax and Financial Planning
News You Can Use

Useful and interesting content we’ve read over the past two weeks:

1. Women Are So Fired Up to Vote, I’ve Never Seen Anything Like It – NY Times – 9.3.2022

Women Are So Fired Up to Vote, I’ve Never Seen Anything Like It

Once the Dobbs decision came down, everything changed. For many Americans, confronting the loss of abortion rights was different from anticipating it. In my 28 years of analyzing elections, I had never seen anything like what’s happened in the past two months in American politics: Women are registering to vote in numbers I never witnessed before.

I’ve run out of superlatives to describe how different this moment is, especially in light of the cycles of tragedy and eventual resignation of recent years. This is a moment to throw old political assumptions out the window and to consider that Democrats could buck historic trends this cycle.

2. Republicans Have Unlikely Allies in their Fight to Restrict Abortion at the State Level: Democrats – CNN – 9.6.2022

Republicans Have Unlikely Allies in their Fight to Restrict Abortion at the State Level: Democrats

A CNN analysis of legislative records and reported party affiliations shows that the Republicans passing increasingly strict abortion bans around the country have been joined by scores of unlikely allies: Democrats.

More than 140 Democrats from eight of the roughly dozen states with the most restrictive abortion laws voted in favor of the bans, and the vast majority of these state lawmakers were men.

3. Americans Have ‘Tip Fatigue‘ – CNBC – 9.1.2022

Americans Have ‘Tip Fatigue‘

Tipping 20% at a sit-down restaurant is still the standard however, consumers are less inclined to give as much for a carry-out coffee or take-away snack.

“Part of it is tip fatigue,” says Eric Plam, founder and CEO of Uptip. “Since everything got more expensive, we’ve seen a decline in tipping.”

Towerpoint Wealth Chart Of The Week

Below is a simple overview of prior drawdowns and recoveries over Bitcoin’s 13-year history. Bitcoin has had drawdowns of greater than 70% on four different occasions, including this current period.

Quoting https://www.bitcoinisdead.org/, Bitcoin’s story cannot be told without the inclusion of both its strongest believers and disbelievers. Healthy skepticism of revolutionary technology is vital because it speeds up development and adoption.

Bitcoin's story

Are you curious about cryptocurrency, and/or wonder if it should be part of your diversified investment portfolio? Let’s talk about it.

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Quote of the Week

Queen Elizabeth II
April 21, 1926 – September 8, 2022
Rest in Peace

Queen Elizabeth II quote

If you speak with someone who is concerned or unsettled
about their investments or advisor, we welcome talking with them.

Click here to Introduce us
Trending Today Towerpoint Wealth Financial Advisor

As the 24/7 news cycle churns, twists, and turns, a number of trending and notable events have occurred over the past few weeks:

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 reach out to us at any time (916-405-9140, info@towerpointwealth.com) with any questions, concerns, or needs you may have. The world continues to be an extremely unsettled and complicated place, and we are here to help you properly plan for and make sense of it.

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

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 TPW on LinkedIn
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Celebrating 5 Years of YOUR Trust and Confidence 08.26.2022

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Wait, how’d that happen so quickly? 5 years already?

Towerpoint Wealth Team-Rivercats 5 year Anniversary

Understanding a full 50% of businesses do not survive their first five years made Tuesday evening’s party and picnic celebration all the more poignant for us, as it was an amazing feeling (at least after the sun went down!) to be joined by 150 of our closest clients, colleagues, and friends to celebrate our 5-year anniversary as a legal fiduciary to each of our clients as a fully-independent wealth management firm

We humbly recognize that our clients and colleagues are our lifeblood, and that we assuredly would not be where we are as a firm today without your sincere trust, confidence, and loyalty.

We feel honored to be partnered with each of you, respect the duty and responsibility we have to you, and offer a heartfelt thank you for entrusting us!

Click the thumbnail image below to watch a very well-produced 2-minute video highlighting the party and evening together in the Home Run Terrace at the Sacramento River Cats baseball game with our clients, colleagues, friends, kids (and Dinger)!

Home Run Terrace at the Sacramento River Cats baseball game with our clients, colleagues, friends, kids

Don’t forget to click the THUMBS UP button to ‘like’ the video, and
the SUBSCRIBE button to subscribe to our YouTube channel!

A huge thank you goes out to our new Marketing Specialist, Luis Barrera, for his help and expertise in assembling this video!

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

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What's Happening At TPW - Trending today

Here’s our Director of Operations, Lori Heppner, and our Client Service Specialist, Michelle Venezia, hard at work putting the final touches on our 5-year anniversary celebration guest party favors!

5-year anniversary celebration guest party favors

In addition to the behind-the-scenes work involved in pulling off our big 5-year anniversary and client appreciation celebration party, plenty of “real” work continues to take place on a daily basis at Towerpoint Wealth.

Our President, Joseph Eschleman, connected with an excellent long-time client (and gardener), Terry Eager, for a comprehensive financial review meeting late last week.

Terry and Joseph have worked together for many years (including a number of pre-TPW years), and being the kind and thoughtful person he is, Terry will oftentimes bring the office a bundle of his gorgeous home-grown tomatoes. THANK YOU, TERRY!

Terry and Joseph Comprehensive Financial Review

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TPW Taxes K-1s

The US tax code allows certain types of entities to utilize “pass-through taxation.” This effectively shifts the income tax liability from the entity earning the income to those “relevant individuals” who have a beneficial interest in it.

Upon receipt of a Schedule K-1, a taxpayer has a very low chance of self-preparing their tax return correctly. Issued to beneficiaries of trusts and estates, to partners in a business partnership, and to shareholders in S corporations.

K-1s are different depending on what entity has issued it, can be difficult to understand and confusing, and can complicate (and oftentimes delay) the preparation of a tax return.

Curious to learn more? Either ask your CPA (recommended), or click the image below!

Schedule K Form 1065

Are you confused about certain aspects of completing your tax return?

News You Can Use

Useful and interesting content we’ve read over the past two weeks

1. £9,724.54/Megawatt Hour – How London Paid a Record Price to Dodge a Blackout – Bloomberg – 7.24.2022

How London Paid a Record Price to Dodge a Blackout

Just last month, unbeknown to many outside the power industry, parts of London came remarkably close to a blackout — even as it was recovering from the hottest day in British history.

On July 20, surging electricity demand collided with a bottleneck in the grid, leaving the eastern part of the British capital briefly short of power. Only by paying a record high £9,724.54 (about $11,685) per megawatt hour — more than 5,000% higher than the typical price — did the UK avoid homes and businesses going dark.

2. California Moves Toward Banning Sales of New Cars Running Only on Gas– The Washington Post – 8.24.2022

California Moves Toward Banning Sales of New Cars

The decision, to take effect by 2035, will very likely speed a wider transition to electric vehicles because many other states follow California’s standards.

California’s governor Gavin Newsom described the move as the beginning of the end for the internal combustion engine.

3. Serena Williams’ Last Ride Only Thing That Matters With US Open A Week Away – NY Post – 8.22.2022

Serena Williams’ Last Ride

The draw isn’t staged until Thursday, but everyone in tennis knows the unseeded Serena has never been more vulnerable. Her long quest to tie or break Margaret Court’s all-time record of 24 Grand Slam titles has turned into a pipe dream.

But as one USTA insider says, “As has been said many times throughout her unparalleled career, never count out Serena Williams. That still applies in her final tournament.’’ Are the tennis gods listening?

Towerpoint Wealth Chart Of The Week

Current levels of new-home sales are now down more than 50% from their peak in August of 2020. Every time this 50% drawdown has happened, a recession occurred.

New Home Sales Decline

The CDC released fresh data this week, and it was sobering. Estimates for life expectancy at birth fell across every state in the countryThe US life expectancy dropped by 1.8 years (!) at the national level, with COVID-19 and drug overdose deaths being the two major contributing factors.

The chart below plots the somber yet unsurprising correlation between higher incomes and longer life expectancy.

higher incomes and longer life expectancy

Are you concerned about outliving your income or your investment portfolio? Let’s talk about it.

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Quote of the Week
Camad Hall Quote

It is essential to be humble, and recognize you will never fully “master” the world of investing – it is a continual learning curve and journey.

If you speak with someone who is concerned or unsettled about their investments or advisor, we welcome talking with them.

Trending Today Towerpoint Wealth Financial Advisor

As the 24/7 news cycle churns, twists, and turns, a number of trending and notable events have occurred over the past few weeks:

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 reach out to us at any time (916-405-9140, info@towerpointwealth.com) with any questions, concerns, or needs you may have. The world continues to be an extremely unsettled and complicated place, and we are here to help you properly plan for and make sense of it.

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

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 TPW on LinkedIn
Click HERE to follow TPW on Facebook
Click HERE to follow TPW on Instagram
Click HERE to follow TPW on Twitter

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Inflation Reduction or Addition? 08.12.2022

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What We Know about the $740 Billion Inflation Reduction Act

The Inflation Reduction Act of 2022 (IRA) passed the Senate on a 51-50 party-line vote on Sunday (with Vice President Kamala Harris casting the tiebreaking vote), and is expected to get a final vote in the House today. And while it is a far cry from President Biden’s original and wildly ambitious $3.5 trillion Build Back Better Act, this $740 billion spending package marks a significant legislative victory for the President and for Democrats.

Inflation Reduction New York Times Climate Action

The IRA legislation is an excellent representation of today’s polarized and partisan political landscape, and a microcosm of the “fact or fiction?” question surrounding the integrity of and spin found within today’s journalism.

  • Speaker of the House, Nancy Pelosi: “It’s a great bill. It’s historic.
Speaker of the House, Nancy Pelosi: - Inflation Reduction
  • House Minority Leader Kevin McCarthy: “They’ll spend more money, which brought us into this problem.”
House Minority Leader Kevin McCarthy | Inflation Addition

Putting aside whether we agree with the intent and myriad of provisions found within the bill, we can all acknowledge it is broad-based, comprehensive, and confusing. And while inflation reduction remains a key point of contention surrounding the legislation, our focus is to pointedly address the question: “What’s in it for you, our clients?

First, what is not in it for you.

1. Direct payments or checks in the mail.

2. A “clean vehicle” tax credit of up to $7,500 (see below) if the vehicle you purchase does not meet all of the requirements for electricity power and mineral or battery components.
-This credit would be cut or eliminated if your vehicle is not sold by a “qualified manufacturer” and/or the final assembly did not take place in North America.

3. A tax (which was removed from the final version of the legislation) on carried interest payments to private equity and hedge fund managers.

Next, what is in it for you:

1. If you are a Medicare beneficiary, your yearly out-of-pocket Part D drug expenses capped at $2,000/year (starting in 2025).

Today, there is no cap.

2. Also for Medicare beneficiaries, a $35 monthly cap on the cost of covered insulin products (starting in 2023).

According to a Health Affairs study published just last month, spending on insulin has reached catastrophic levels.

3. An extension of a key Affordable Care Act (Obamacare) subsidy that reduces annual medical insurance premiums by $800 through 2025.

  • This was set to expire this year, and makes health insurance more affordable for Americans who buy it on their own.

4. Potentially less expensive prescriptions. For the first time, Medicare could, beginning in 2026, negotiate bulk discounts with drug companies for pharmaceuticals (something many private insurers currently do).

  • This is getting publicity because policymakers have been trying for years to give Medicare managers some ability to bargain with pharmaceutical companies. However, these new negotiating powers are only applicable for 10 drugs per year.

5. A new “clean vehicle” tax credit of up to $7,500.

This credit applies and is earned as follows:

  • New clean automobiles that cost up to $55,000.
  • New trucks, vans, and SUVs that cost up to $80,000.
  • You must earn less than $150,000 (single) or $300,000 (married filing jointly).

6. A used “clean vehicle” tax credit of up to $4,000.

This credit applies and is earned as follows:

  • Used clean vehicles (two years old or older) that sell for $25,000 or less, the credit is up to $4,000.

7. Energy-efficient home credits.

  • The credit for installing qualified goods (such as Energy Star products including solar electric, solar water heating, fuel cell, small wind energy and geothermal heat pumps) at non-business properties increases from 10% to 30%.
  • A lifetime cap on these credits is replaced with a $1,200 annual credit ceiling ($600 for energy-efficient windows, $500 for energy-efficient doors).
  • A $2,000 energy-efficient home credit would be offered for biomass stoves and heat pumps.
  • Existing credits would also be enhanced to cover home energy audits (up to $150) and electrical panel upgrades (up to $600).
Inflation Reduction US Net Greenhouse Gas Emissions Energy

Last, how is it paid for?

1. New taxes.

  • A new 1% levy on stock buybacks by publicly-traded companies (will this be increased in the future?).
  • A new 15% alternative minimum tax on larger corporations (will this be immediately passed on to consumers and stockholders?), some of which report significant profits, but pay little or even nothing due to credits or deductions.

2. Collection of unpaid taxes.

  • The IRS will be adding thousands of new agents to go after tax cheats, increasing the need for labor (but where will these new employees come from, understanding the tight labor market?).
  • This is expected to substantially increase the audit rate on those earning more than $400,000 annually.

3. Drug savings / price controls.

  • As discussed above.

Many have asked “Where is the inflation reduction?” that this legislation claims to produce. According to initial estimates, the measure would raise a total of $739B in revenue, and spend a total of $433B, reducing the budget deficit (and therefore, inflation) by roughly $300B over a decade.

The non-partisan Congressional Budget Office also found that the package would reduce the deficit by about $102B over the next 10 years, and would be in-line with the deficit reductions claimed by Sens. Chuck Schumer and Joe Manchin if revenue from tax enforcement was included in the calculations.

Sens. Chuck Schumer and Joe Manchin

It is also important to understand that if Republicans end up regaining control of the Senate in January 2023, they might be able to zero-out any Inflation Reduction Act taxes, tax break amounts, or other Medicare benefits change amounts in future must-pass budget or spending packages.

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

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What's Happening At TPW - Trending today

The entire Towerpoint Wealth Team came out on Community Volunteer Day to lend a hand to the American River Parkway Foundation program to clean up trash along Sacramento’s urban gem.

Spanning 23 miles and covering 4,800 acres, the Parkway is a mecca for outdoor enthusiasts and those looking to refresh themselves.

In 2021, more than 200 fires burned over 15% of the parkway. The Parkway in Peril program created by the Foundation aims to mitigate fire risk by cleaning up trash. Volunteers play an essential role in conservation of the parkway.

Guided by Alex Watson, the TPW team hauled out ~ 1,400 lbs. of old bicycles, couches, and what felt like a ton of plastic waste in sweltering temperatures.

Click the thumbnail below to watch an inspiring video where you can see the TPW team all hard at work helping preserve this Sacramento treasure!

American River Parkway Foundation - Community Day

The Towerpoint Wealth Investment Committee (TPWIC) is working hard for our clients every day, evaluating our model portfolios and debating new ideas, investments, and tactical economic trends.

The ultimate goal? Helping YOU to remove the hassle of properly coordinating all of your financial affairs, so you can live a happier life and enjoy retirement. Click below to watch a video “short” of TPWIC’s most recent meeting!

watch a video “short” of TPWIC’s most recent meeting | Sacramento Financial Planner

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Towerpoint Trending Today Banner Images Taxes.png

$4,104,725,000,000!

Thanks in part to an ongoing recovery from the pandemic, spiking inflation, and Americans who are receiving higher wages than ever before, tax receipts for the IRS have broken a record.

According to the monthly US Treasury statement, the federal government collected more than four trillion dollars in total taxes in the first ten months of fiscal 2022 (October, 2021 – July, 2022), up almost 14% from what the US Treasury collected in taxes in the first ten months of fiscal 2021 and setting a new record.

However, don’t forget about federal government outlays, as we spent $4,830,844,000,000 in the same time period, resulting in a deficit of more than $726 billion.

Inflation Reduction federal government budgeting and spending

Are you generally happy with the federal government’s budgeting and spending, or do you think there is room for improvement?

Sacramento Certified Financial Planner | Steve Pitchford, CPA, CFP® Director of Tax and Financial Planning
News You Can Use

Useful and interesting content we read the past two weeks:

1. Yes, China Would Go To War Over Taiwan – The Cato Institute – 8.2.2022

Yes, China Would Go To War Over Taiwan

U.S. officials in four administrations disregarded Moscow’s increasingly pointed warnings, and we are now witnessing the tragic results in Ukraine. It is imperative that Washington not make the same blunder with respect to China’s warnings about Taiwan.

China is as likely to use military force to defend a vital national security interest as Russia was to repel U.S. meddling in Ukraine. Washington needs to take the PRC’s escalating warnings about outside powers interfering in Taiwan much more seriously than it has to this point.

2. Trump’s Bond with GOP Deepens After Primary Wins, FBI Search – AP News – 8.10.2022

Trump’s Bond with GOP

This week’s rapid developments have crystalized the former president’s singular status atop a party he has spent the past seven years breaking down and rebuilding in his image. Facing mounting legal vulnerabilities and considering another presidential run, he needs support from the party to maintain his political career.

But, whether they like it or not, many in the party also need Trump, whose endorsement has proven crucial for those seeking to advance to the November ballot.

3. Electric Cars Too Costly For Many, Even With Aid in Climate Bill – The NY Times – 8.9.2022

Electric Cars Too Costly

Battery-powered vehicles are considered essential to the fight against climate change, but most models are aimed at the affluent.

And experts say broader steps are needed to make electric cars more affordable and to get enough of them on the road to put a serious dent in greenhouse gas emissions.

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Quote of the Week
Bertha Calloway Quote Wind Sail

Not everyone handles market volatility the same way. If you happen to be speaking with someone who is concerned about their investments or advisor, we welcome talking with them.

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Trending Today Towerpoint Wealth Financial Advisor

As the 24/7 news cycle churns, twists, and turns, a number of trending and notable events have occurred over the past few weeks:

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 reach out to us at any time (916-405-9140, info@towerpointwealth.com) with any questions, concerns, or needs you may have. The world continues to be an extremely unsettled and complicated place, and we are here to help you properly plan for and make sense of it.

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

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

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We will happily donate $10 to it!

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Managing Expectation – Why Bad News Can Be Good for the Stock Market! 08.01.2022

Investing vs speculating | The US Federal Reserve (“the Fed”) has a target inflation rate of 2%. However, inflation is running wild right now, at a 9.1% annualized rate!

And Jerome Powell, the Chairman of the Fed, is not fooling around – using the Fed’s most potent weapon to douse the flames of this inflationary “fire” – increasing the short-term Fed Funds interest rate, which is the rate that banks and other depository institutions charge each other to borrow or lend excess reserves, usually on an overnight basis.

Fed Funds interest rate

And, after hiking short-term rates by a quarter point in March, half point in May, and three-quarter point in June, the Fed on Wednesday unanimously voted to again raise rates, for a fourth time this year, by another three-quarter point! This took the Fed’s target rate from a range of 0% – 0.25% at the beginning of the year to 2.25% – 2.50% as of today.

Investing vs speculating federal funds

These back-to-back 0.75% (or 75 basis point) interest rate hikes were very aggressive, as the Fed hadn’t increased rates by a combined 1.5% in consecutive meetings since the 1980’s. Additionally, Fed officials have said by the end of 2022 they expect the benchmark rate to hit a range of 3.25% to 3.50%, the highest level since 2008, in an effort to be unflinching in its battle against the most intense bout of inflation in 40 years.

In a vacuum, none of this can be classified as positive economic news. However, the S&P 500 rallied 102.56 points (+2.62%), and the Nasdaq rallied 469.85 points (+4.06%) on Wednesday, seemingly flying in the face of these aggressive interest rate increases and a slowing US economy. This begs the question – WHY?

The simple answer: It’s all about managing expectation.

The simple answer: It’s all about managing expectation.

The Fed’s fourth 0.75% interest rate increase shouldn’t have come as a surprise to anyone, and was actually considered relatively good news (!) for the following reasons:

1. Powell said that today’s current 2.25% – 2.50% Fed Funds rate is at the “Neutral Rate” (neither restrictive nor accommodative to US economic growth).

➢ This is a relatively positive signal, and the first indication of what the Fed Chair believes to be the neutral rate.

2. Powell said it is reasonable to assume the Fed needs to get to a “moderately restrictive” interest rate level by the end of 2022, or 3.25% – 3.50%.

➢ This is a very positive signal, as hearing Powell actually state his expectation that rates will settle at or below 3.5% by the end of 2022 was a welcome RELIEF for markets.

3. There was underlying trepidation that the Fed would go well beyond an interest rate of 3.5% to get inflation under control.

➢ For now, Powell’s indication that he doesn’t seem interested in going beyond this point is another RELIEF for markets, and helps investors to manage expectation.

➢ Powell was quoted as saying “We’re trying to do just the right amount. We are not [emphasis added] trying to have a recession.”

Phew, another RELIEF. The markets responded well to hearing that Powell is mindful about sending the US economy into a complete tailspin in order to get inflation under control, and that his preference is to avoid doing so.

4. Powell said that he “does not believe we are currently in a recession,” and referenced the strength of the labor markets.

➢ Expectations for a market rebound or recovery would be extremely muted if Powell instead suggested that he believed the US economy was in worse shape.

Wednesday’s “relief rally” is a clear example that oftentimes bad news “prices” into the market early, and it takes just a hint of an expectation of acceptable (or better), news to manage expectation and relieve any remaining selling pressure.

Anticipating and analyzing the market’s reaction to any economic news always carries a certain amount of nuance. At Towerpoint Wealth, we believe the market trades based not on what is currently happening in the economy, but instead what is expected to be happening three, six, or even twelve months (or more) in the future. Put differently, as the great Wayne Gretzky said:

Skate to where the puck is going not where it has been

Important point of clarification: By now virtually all of our Trending Today readers know that here at Towerpoint Wealth we are strict adherents to maintaining and following a disciplined and coordinated longer-term wealth-building and wealth-protection plan and philosophy, and espouse the investing ideals of Warren Buffett, Sir John Templeton, and Peter Lynch. While today’s newsletter focused on the shorter-term vicissitudes and relationship of the economy and the stock market, most of our clients do not (or should not) get too excited, nor too worried, about shorter-term market fluctuations, either upwards or downwards.

Look at Market Fluctuations expectations exceeded

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

Wealth Management Philosophy
What's Happening At TPW - Trending today

The entire Towerpoint Wealth team came out last week on Community Volunteer Day to lend a hand to the American River Parkway Foundation program to clean up trash along Sacramento’s urban gem. Spanning 23 miles and covering 4,800 acres, the Parkway is a mecca for outdoor enthusiasts and those looking to refresh themselves.

In 2021, more than 200 fires burned over 15% of the Parkway. The Parkway in Peril program created by the Foundation aims to mitigate fire risk by cleaning up trash, as volunteers (like us!) play an essential role in the conservation of the Parkway.

The TPW team hauled out approximately 1,400 lbs. of old bicycles, couches, and what felt like a ton of plastic waste in sweltering temperatures. Click the thumbnail below to watch a fun two-minute video of all of us hard at work helping preserve this Sacramento treasure!

American River Parkway Foundation - Community Day

This past Sunday, our President, Joseph Eschleman, CIMA®, ran the 10.5 mile Blood, Sweat, and Beers trail run in the American River Canyon in beautiful Auburn, CA a with friend of the firm, John Palombi.

Nice work, Joe and John – looks like you earned that post-race SacYard IPA!

10.5 mile Blood, Sweat, and Beers trail

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TPW Taxes Asset Location

Did you know that the type of account you invest in is almost as important as the investment itself?

Generally speaking, it is not advantageous to implement your portfolio asset allocation plan uniformly across each of the accounts you own, but instead to be mindful of owning, or “locating,” the more tax-inefficient components of your overall diversification inside of your tax free (Roth IRA, Roth 401K) and tax deferred (Traditional IRA, Traditional 401K) accounts. A tax-inefficient investment is one that pays a significant amount of interest income (taxed at higher, ordinary income rates), or has a high turnover ratio and is more likely to incur capital gains, distributed out to investors who are responsible for paying taxes on them.

It is usually more advantageous to locate the more tax-efficient components of your diversification inside of “regular” taxable accounts (ones that issue a 1099 every year). Tax-efficient investments pay little in dividends and/or interest, and typically also minimize capital gains distributions.

While implementing an appropriate asset location strategy oftentimes entails as much art as science, when done properly it can add up to 0.75% to an investor’s average net, after-tax annual return, according to Vanguard.

Tax Efficient Place Anywhere investing vs speculating

Curious about how Towerpoint Wealth is directly collaborating with our clients’ CPAs to do proactive tax planning?

Steve Pitchford, CPA, CFP® Director of Tax and Financial Planning
News You Can Use

Useful and interesting content we read the past two weeks:

1. The US is Sweltering – The Heat Wave of 1936 Was Far Deadlier – The Washington Post – 7.20.2022

The US is Sweltering – The Heat Wave of 1936 Was Far Deadlier

The U.S. and much of the world are currently baking in a brutal heat wave. But in much of the central United States, summer of 1936 was even hotter. However, 1936 had such a frozen start to the year that the idea of a heat wave would have seemed like wishful thinking!

2. Kamala Harris is Stuck – The NY Times – 7.25.2022

The Heat Wave of 1936 Was Far Deadlier – The Washington Post

Vice President Kamala Harris, who was a first-term senator from California before entering the White House, hasn’t been given the immersive experiences or sustained, high-profile tasks that would deepen and broaden her expertise in ways Americans could see and appreciate.

If other presidents have formed substantive partnerships in office with their VPs and made efforts to deepen their experience, President Biden and Ms. Harris have been unable or uninterested in bringing about a similar transformation. From the outside, there’s little evidence that the Biden White House feels urgency to enhance the role and preparedness of the person who might inherit the presidency at any moment.

3. Mark Zuckerberg Has a Plan to Rescue Meta, But Can He Convince His Employees? – The Verge – 7.26.2022

Mark Zuckerberg Has a Plan to Rescue Meta, But Can He Convince His Employees?

As Meta’s growth slows, Mark Zuckerberg is pushing even harder. Will his employees melt under the pressure? The company he founded 18 years ago is facing existential threats on multiple fronts, and Zuckerberg sees that fixing his company’s culture is critical to surviving the tough times ahead.

Towerpoint Wealth Chart Of The Week

Netflix shed nearly 1 million subscribers, according to its second quarter earnings report.

NFLX shares are down almost 63% for the year (as compared with the S&P 500’s 17% dip), a slump that has wiped out roughly $70 billion of the content streamer’s market capitalization.

The question is: Are you still Netflixing and chilling?

Are you still Netflixing and chilling?

Let us know – Do you still chill out with Netflix?

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TPW Featured Investors Business Daily

Holding and intelligently divesting cash during a market rough patch has both pros and cons, and evaluating these risk/return tradeoffs are even more challenging with rampant inflation just another issue to consider.

With confidence low and inflation high, our President, Joseph Eschleman, CIMA®, shared his perspective with Investors Business Daily reporter Kathleen Doler on where to “stash your cash” right now.

Click the thumbnail image below to read Doler’s article.

Where to Stash Your Cash

Have additional questions about how to position yourself and your portfolio to better protect against and possibly even profit from inflation?

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Quote of the Week

A longer-term upward trajectory is much more important than what is indicated by daily metrics. It can be very easy to get caught up in the minutiae of shorter-term outcomes, yet the importance of maintaining focus on your longer-term overall progression cannot be overstated.

James Clear quote about current trajectory | investing vs speculating
Trending Today Towerpoint Wealth Financial Advisor

As the 24/7 news cycle churns, twists, and turns, a number of trending and notable events have occurred over the past few weeks:

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 reach out to us at any time (916-405-9140, info@towerpointwealth.com) with any questions, concerns, or needs you may have. The world continues to be an extremely unsettled and complicated place, and we are here to help you properly plan for and make sense of it.

Download Newsletter Towerpoint Wealth

– Joseph, Jonathan, Steve, Lori, Nathan, Michelle, and Luis

Towerpoint Wealth Sacramento Wealth Management Team 2022

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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The Twitter Musk Soap Opera – Should We Actually Care? 07.15.2022

Coming as a surprise to virtually no one, and as you have probably read or heard, Elon Musk is attempting to terminate his $44 billion takeover of Twitter.

The Twitter Musk Soap Opera – Should We Actually Care?

The Twitter Musk “saga” has certainly been an interesting and increasingly outlandish one. On one hand, Musk said that Twitter rebuffed his efforts to obtain information and details surrounding fake users and accounts (aka bots, or automated accounts that can do the same things as human beings), alleging that the company is not as valuable, and is not as profitable, as their current official 400MM user count suggests. Twitter’s stock has plummeted on the news that the world’s richest person intends to revoke his offer of $54.20 per Twitter share.

Twitter Musk

On the other hand, Twitter says they have “played ball,” have continued to act in good faith, and have justified not sharing the information with Musk by saying that it was worried he would build a competing platform after abandoning the acquisition. Additionally, with Twitter fully intending to call the bluff on Musk’s “billionaire vanity project,” and with Twitter stock now trading in the mid 30’s, a $54.20/share takeover offer is way too sweet to let Musk walk away!

Semi-ironically (considering that Twitter never wanted to be acquired in the first place), Twitter filed a much-anticipated lawsuit earlier this week to force Elon Musk to close his acquisition of the company. With the lawsuit set to begin in mid-September, what happens next with Twitter Musk is anyone’s guess, but for some, it will be must-see TV (and must-see Tweeting, as evidenced by the clickable image below).

Elon Musk They Said I Couldn't Bug Twitter

How could this Twitter Musk soap opera end? Here are eight ways it could happen.

Perhaps more importantly, why does this Twitter Musk stuff even matter and why should you care? Five important considerations may answer that question:

1. Free speech – Musk said in his news release announcing his purchase that “Free speech is the bedrock of a functioning democracy, and Twitter is the digital town square where matters vital to the future of humanity are debated.”

2. Advertising – Many are concerned that advertisers would be less willing to spend advertising dollars on Twitter if Musk removes content moderation to further promote free speech. Additionally, advertisers could move to other platforms like YouTube, TikTok, or other online channels.

3. Donald Trump – Would or wouldn’t Musk let Trump back? Few people if any did a better job of dominating the “media ecosystem” via Twitter than Donald Trump prior to his ban in early 2021. Love him or hate him, Musk said at an April, 2022 TED conference that he prefers timeouts for “offending” Twitter users, and would be very cautious with permanent bans. It seems difficult not to argue that nothing would stoke the Twitter Musk soap opera more than a Trump reinstatement…

4. Tesla – Would acquiring Twitter put too much on Musk’s plate? Musk is planning on using TSLA stock as collateral for a loan to finance the takeover. Do Tesla shareholders really want to see Twitter stock added to the Tesla portfolio, and have their visionary CEO shoulder even more responsibility?

5. Current Twitter users – Alternative social media platforms (WeChat, Facebook, YouTube, Truth Social, WhatsApp, Snapchat, and Instagram come to mind) abound in today’s digital ecosystem. Additionally, would Twitter be nearly as viable if its largest users (Barack Obama, Justin Bieber, Katy Perry, Rihanna, Cristiano Ronaldo, Taylor Swift, Lady Gaga, and Elon Musk himself) decided to close their account and move to another platform?

Twitter continues to be an extremely popular communication and information dissemination platform, and we certainly expect this saga to carry on for quite some time. Being humble about our ability to consistently and accurately predict the future, our preference at Towerpoint Wealth is to simply sit back with some popcorn and watch these important and entertaining twists and turns of the Twitter Musk soap opera as they unfold.

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

Sacramento wealth management firm
What's Happening At TPW - Trending today

The Towerpoint Wealth crew was well represented at the American Century Celebrity Championship last weekend, as our Director of Research and Analytics, Nathan Billigmeier, his wife Jessica, our President, Joseph Eschleman, his son Henry, and our Partner, Wealth Advisor, Jonathan LaTurner, and his wife, Katie McDonald, all “crashed” Edgewood Tahoe Golf Course in South Lake Tahoe, NV

A lineup of more than 80 athletes and celebrities, including Steph Curry, Justin Timberlake, Charles Barkley, Jerry Rice, Patrick Mahomes II, and Nick Jonas, competed in the three-day tournament, won for a third time by former Dallas Cowboys quarterback Tony Romo on the second hole of an exciting playoff!

Edgewood Tahoe Golf Course in South Lake Tahoe, NV!
former Philadelphia Phillies player Shane Victorino
Joseph and two-time all star and former Philadelphia Phillies playerShane Victorino 
(aka The Flyin’ Hawaiian) pose for a selfie!

Earlier this month our new Marketing Specialist, Luis Barrera, visited Morelia, Mexico to spend some family time with his cousin (and designer, TV host, and businesswoman), Rossana Salgado, at her wedding to Jose Luis Higuera.

Rossana Salgado, at her wedding to Jose Luis Higuera

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Towerpoint Trending Today The Golden States Warriors

While having little if any effect on your personal income tax return or liability, the recent $346 million spending spree by the Golden State Warriors has placed the 2021-2022 NBA Champs knee-deep into the NBA luxury tax, an incremental tax meant to control team spending and penalize owners who go over the NBA salary cap.

Largest NBA Luxury Tax Bills In History

Understanding the Warriors have been anything but shy about spending money in order to maintain the roster that has helped them win four NBA titles since 2014-15, their spending on player salaries, while legal, has not sat very well with many NBA owners, and was a hot topic at the recent NBA owners’ meeting in Las Vegas

Steph Curry earns close to $50 million/year. Klay Thompson, Andrew Wiggins, and Draymond Green combine for almost another $100 million in salary. Star center Kevon Looney just signed a new three-year, $25.5 million contract, and up-and-coming star Jordan Poole expects to earn a contract extension upwards of $100 million.

Is all of this fair? Well, it’s legal. But click the thumbnail below for an excellent commentary on why this is such an important issue, and what the league may, or may not, do about it:

NBA Warriors

Curious about how Towerpoint Wealth is interfacing with our clients’ CPAs to do proactive and collaborative tax planning?

Steve Pitchford, CPA, CFP® Director of Tax and Financial Planning
News You Can Use

Useful and interesting content we read the past two weeks:

1. We Don’t Have a Microwave Democracy – com (Myron Clifton) – 7.6.2022

We Don’t Have a Microwave Democracy

Democracy isn’t made in a microwave. Democracy takes time. Democracy requires an investment in process. And Democracy requires sharing across generations to sustain progress and pass along lessons that should not be forgotten.

Every vote is your most important vote. You will not always get your way, but you significantly increase your chances of improving our nation and perfecting our democracy when you exercise your inherited civic duty.

If you want your way there’s only one way to get it: Vote and vote every time you have the opportunity to and ensure future Americans have more and better rights, laws, and government.

2. Pension Funds Plunge Into Riskier Bets – Just As Markets Are Struggling – The Wall Street Journal – 6.26.2022

Pension Funds Plunge Into Riskier Bets – Just As Markets Are Struggling

US public pension funds don’t have nearly enough money to pay for all their obligations to future retirees. A growing number are adopting a risky solution: Using leverage and investing borrowed money in an effort to earn higher returns and close big funding gaps.

As both stock and bond markets struggle, it’s a precarious gamble.

3. How Justice Amy Coney Barrett is Wielding Enormous Influence on the Supreme Court – USA Today – 7.13.2022

 How Justice Amy Coney Barrett is Wielding Enormous Influence on the Supreme Court

After a term in which the court’s conservative majority overturned Roe v. Wade, set a tougher standard for assessing gun regulations, and redrew the line separating church and state, Americans are debating whether the court is putting forth an honest effort (even if one you ultimately don’t agree with) to determine what the Constitution and precedent requires, or if it is purely results-driven and designed to impose the policy preferences of the majority.

This discussion inevitably leads back to Barrett herself – and her influence on the nation’s highest court.

Towerpoint Wealth Chart Of The Week

In order to successfully achieve their longer-term financial and investment goals, it is essential that investors make rational, informed, and unemotional decisions – easier said than done sometimes!

Warren Buffet Be Fearful When Others Are Greedy. Be Greedy When Others are Fearful.

As human beings, we fall victim to the emotional roller-coaster of a typical market and economic cycle, with the investor sentiment lifecycle delineated below.

Investor Sentiment Lifecycle : Source Barclays

Let us know where you currently find yourself falling within the above chart!

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Trending Today Featured In Sacramento Bee

Our President, Joseph Eschleman, CIMA®, dove into a number of specific opportunities and valuable money-saving tips to navigate today’s inflationary environment with Sacramento Bee reporter Hanh Truong, in her recent article: “Should You Keep Cash On Hand as Inflation Rises? California Adviser Gives Money-Saving Tips.”

As inflation continues to be a challenge for virtually all in the Sacramento area, many residents harbor significant concerns that today’s prices on the rise will persist for some time.

Click the thumbnail image below to read Truong’s article, as Eschleman contributes specific strategies for possible relief and protection from this rampant inflation.

Towerpoint Wealth’s President featured in the Sacramento Bee

Have additional questions about how to position yourself and your portfolio to better protect against and possibly even profit from inflation?

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Quote of the Week

Today’s rampant inflation continues to be a central economic issue of interest and concern, as June’s Consumer Price Index (CPI) reading of +9.1% was the highest on record since November of 1981.

Today’s post-COVID increased consumer demand and spending, coupled with trillions of dollars of recent government COVID stimulus, and today’s continued supply chain constraints, equal a perfect recipe for inflation. And while fighting inflation is now a central goal of our government, successfully doing so can be a challenge.

Inflation is like toothpaste. Once it's out, you can hardly get it back in again. Karl Otto Pohl
Trending Today Towerpoint Wealth Financial Advisor

As the 24/7 news cycle churns, twists, and turns, a number of trending and notable events have occurred over the past few weeks:

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 reach out to us at any time (916-405-9140, info@towerpointwealth.com) with any questions, concerns, or needs you may have. The world continues to be an extremely unsettled and complicated place, and we are here to help you properly plan for and make sense of it.

Download Newsletter Towerpoint Wealth

– Joseph, Jonathan, Steve, Lori, Nathan, Michelle, and Luis

Towerpoint Wealth, Sacramento - Financial Planning Services

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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Are These Bonds to Invest In? Is 9.62% Really the Rate for I Bonds? 07.01.2022

What if you could profit from inflation rather than suffer from it?

Inflation would only be Temporary

While interest rates on most traditional bond investments remain near historical lows, there currently are bonds to invest in that are AAA rated and yielding 9.62% (as of 7.1.2022)! They are called I Bonds, and they have gained in popularity and garnered significant attention over just the past year or so, paralleling inflation’s rapid ascent.

Series 1 saving bonds issued

While on the surface the government guarantee and high interest rate may seem too good to be true, like most things in life (investing certainly included), there is more to I Bonds than initially meets the eye, and while they may be bonds to invest in for some people, there is lots to consider, and they do not come without risks.

Offered by the US Treasury and guaranteed by the full faith and credit of the United States government, Federal Series I Savings Bonds, commonly known as “I Bonds,” have become an increasingly popular investment. The way I Bonds accrue interest is somewhat unique: the actual rate of interest, or yield, for I bonds is determined with an equation using the ”Fixed Rate” + the “Inflation Rate.” This total “Composite Rate” is then re-established every six months.

With inflation soaring this year, the rate for I Bonds is now 9.62% (as of 7.1.2022).

This high (yet potentially temporary, depending on what inflation does throughout 2022 and into next year) interest rate for I Bonds, and the security of the full faith and credit of the United States government, are two reasons people are focusing more of their attention on this place to invest their money.

Two additional reasons why I Bonds may be good bonds to invest in include:

1. The interest that I Bonds pay is federally taxable (but deferrable!), but not taxable on a state level.

While federal taxes are owed on I Bond interest, you have the choice to defer reporting the interest until you cash the bond in (or the bond stops earning interest because it has reached final maturity). You also can report the interest every year on your tax return, but we typically would advise against that.

Additionally, because no state taxes are owed on I Bond interest, this makes the rate for I Bonds even more attractive for residents of high tax states like California, New York, and Oregon.

individual income tax rates in state

2. They provide inflation protection for your cash.

Want to create a small but direct inflation-adjusted rainy-day fund that is virtually risk free? Owning I Bonds and leveraging the current 9.62% interest rate (as of 7.1.2022) may be worth considering.

The security of the US government guarantee, coupled with the attractiveness of the current 9.62% rate for I bonds, give them great “curb appeal.” However, the drawbacks and downsides of I Bonds may mean they are not the best bonds to invest in.

  • For instance, I Bonds have a 30-year maturity, and are not redeemable for at least 12 months.
bonds to invest in Series 1

Put differently, you will have no access to your funds for one full year. For some, that is not a big deal, but for others, it could be an important consideration.

  • Also, investors will forfeit the last three months of interest if they redeem an I Bond between one year and five years after issue.
  • In addition, I Bonds are not marketable securities, and the maximum investment amount for an I Bond is “only” $10,000 annually.

You cannot buy and sell I Bonds at will like you can with regular stocks, bonds, and most mutual funds.

At Towerpoint Wealth we believe that for some investors, the $10K investment ceiling limits the I Bond “payoff” and may make it not worth the time and energy required to open and fund an account directly with TreasuryDirect. Additionally, many investors are looking to streamline their financial situations and not complicate them, and the additional hassle of having another account custodian and 1099 come tax time may not be worthwhile.

We believe the I Bond $10K annual investment limitation makes it difficult for some investors to accumulate enough to truly move the needle. However, for smaller accounts focused on wealth preservation, I Bonds may make a lot of sense.

  • All of this to say, I Bonds are less-than-easy to purchase through TreasuryDirect’s antiquated website, and cannot be purchased through an independent financial advisor or broker.

Quoting a CNBC article from Wednesday, “It’s like going to the DMV online.”

Add extra account numbers to your list, as well as extra passwords TreasuryDirect also may require additional identity verifications and account authorization forms, not to mention signature guarantee requirements and additional paperwork for simple bank account changes.

  • Finally, the rate for I Bonds is variable, changes every six months, and could easily adjust downwards depending on the rate of inflation.

While recency bias may lead us to believe that inflation will continue to surge, there are already signs that it may be moderating. The stock market strongly rebounded last week due in part to plunging commodity prices, a positive sign for potentially slowing inflation:

Spot Commodity Price Change Inflation

If, or more likely when inflation calms, the rate for I bonds are apt to decline.

Say What Inflation I bonds interest rate

Does the full faith and credit of the United States government, coupled with the 9.62% rate for I Bonds, make them attractive enough to explore further? After reading this newsletter, are you thinking about passing on them, or are you considering them as an investment? Click the thumbnail image below if you want to check out the official I Bond Treasury Direct website, and hopefully your experience won’t be as “DMV-ish” as mentioned above!

Series I Saving Bonds to invest in

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about how we help our clients build and protect their net worth

Sacramento wealth management firm

What’s Happening at TPW?

Two excellent and long-time TPW clients, Kristi and Dan Spector, connected with our President, Joseph Eschleman, CIMA®, for a comprehensive financial review meeting at our downtown headquarters this past Friday.

From the looks of their smiles, it appears that Dan and Kristi appreciate our commitment to the TPW mission statement:

Kristi Dan Spector TPW Clients

At Towerpoint Wealth, we do everything we can to defend our clients against fraud and cybersecurity threats, have implemented a strong cybersecurity plan which we regularly update, and consistently conduct employee education efforts aimed at identifying and stopping fraud attempts.

It can be difficult to protect our clients from scams they may encounter through channels such as email, social media, and even dating apps, all of which have been used by criminals to steal data and assets. So just last month, the TPW team participated in an interactive presentation from Charles Schwab where we learned about different types of scams that may target our clients. We also absorbed a few tips for helping clients identify and avoid them, as well as how to respond in the event that they fall victim to a scam.

Towerpoint Wealth Family Meeting in Sacramento California

What else is happening with the Towerpoint Wealth family?

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TPW Taxes – Section 1031 Exchanges

Do you own appreciated investment real estate? Torn between doing a 1031 and deferring all of the taxes, or selling and paying all of the taxes now?

A global pandemic and swiftly increasing interest rates have not (yet?) hampered the positive outlook of the residential and commercial real estate markets. In 2021, there was more than $100 billion in tax-free 1031 exchange volume, and transactions have been strong in 2022 as well. If you are considering the sale of investment property, rather than pay a tax liability of up to 40%, you may utilize a 1031 exchange to defer the following taxes:

1. Capital Gains Tax – Your rate will vary based on your taxable income. For 2022, your long-term Federal capital gains rate may be as high as 20% if your taxable income exceeds $459,750 (filing single) or $517,200 (married filing jointly).

2. Net Investment Income Tax (NIIT) – If you have income from investments, including capital gains, you may be subject to an additional 8% net investment income tax on your adjusted gross income in excess of $200,000 ($250,000 if married filing jointly) in 2022.

3. State tax –You will probably also be subject to state and/or local income taxes. State tax rates are quite variable, from 0% in some states to as high as 3% in California.

4. Tax on unrecaptured section 1250 gains – An IRS tax provision where previously recognized depreciation is recaptured into income when a gain is realized on the sale of depreciable real estate property.

Click Here Capital Gain Estimator
Exchange Agreement 1031 Investor
Steve Pitchford, CPA, CFP® Director of Tax and Financial Planning

TPW News You Can Use

Useful and interesting content we read the past two weeks:

1. Could This Be an Antebellum Age? – The Wall Street Journal – 6.23.2022

Could This Be an Antebellum Age

In John Milton’s “Paradise Lost,” Lucifer—who only yesterday had been God’s favorite—consoles himself with this thought: “The mind is its own place and in itself / Can make a Heav’n of Hell, a Hell of Heav’n.” The United States of America, another of God’s erstwhile favorites, now and then performs the same trick of the mind.

At the moment, the country seems committed to the second option, as if united in a natural preference for hell.

2. A Turning Point in Cancer – Eric Topol / Substack – 6.10.2022

A-Turning-Point-in-Cancer

Scientists have released an unprecedented series of breakthroughs related to cancer treatment, covering a wide range of therapies and types of cancer which could have huge impacts on overall mortality and quality of life.

3. The Vanishing Moderate Democrat – The NY Times – 6.29.2022

The Vanishing Moderate Democrat

Is there an existential crisis among moderate Democrats? While some of them remain reluctant to publicly concede the reality that the Democratic Party has indeed shifted left — either out of fear of angering their fellow Democrats or validating Republican attacks — they will readily acknowledge that voters perceive the party as having drifted out of the mainstream. And they are convinced that this is threatening their political survival.

TPW Chart of the Week

Shark attack!

The chart below from Charles Schwab shows what stock market *shark attacks* look like, using the relative performance of 1.) U.S. stocks vs. 2.) international stocks.

The two lines are just the ratio of one index divided by the other.

  • When the blue line is rising, international stocks are outperforming U.S. stocks.
  • When the orange line is rising, U.S. stocks are outperforming international stocks.

Do you think U.S. stocks appear to be overvalued vs. international stocks right now?

Shark Attack US vs International

What does this U.S. vs. international stock dichotomy mean? 

Should you should care?

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TPW Educational Video : Feeling Naive About Your Social Security Benefits?

Do you feel naïve about your Social Security benefits?

  • Are you confused about when to take Social Security?
  • Is it best to take your Social Security early or wait?
  • Are you concerned about the solvency of the Social Security system, and how that might affect your benefit?
  • Have you heard about Social Security spousal benefits but not sure you understand how they work?

Click the thumbnail image below to watch our President, Joseph Eschleman, answer each of these questions, and more! And if you enjoy the video, please subscribe to our YouTube channel, give us a thumbs up, and click on the bell if you want to be notified when we release our next one!

Social Security Benefits Explained

Have questions about how exactly to optimize your Social Security benefit?

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Quote of the Week

Consistent with Towerpoint Wealth’s theme of evaluating and managing risk, but not avoiding it altogether, is William Shedd’s quote below.

William Shedd Quote

Its meaning is clear, and its applicability to building and protecting wealth, and to investing in general, cannot be ignored: It’s better to get out, take intelligent risks, and act, than to sit and do nothing.

Trending Today

As the 24/7 news cycle churns, twists, and turns, a number of trending and notable events have occurred over the past few weeks:

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 reach out to us at any time (916-405-9140,info@towerpointwealth.com) with any questions, concerns, or needs you may have. The world continues to be an extremely unsettled and complicated place, and we are here to help you properly plan for and make sense of it.

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– Joseph, Jonathan, Steve, Lori, Nathan, Michelle, and Luis

Towerpoint Wealth, Sacramento - Financial Planning Services

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