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

 

 

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

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

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

In investing, what is comfortable is rarely profitable.

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

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

 

 

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

Historical Analysis of Crisis Events and the Markets

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

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

 

 

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

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

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

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

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

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

The Psychology of Fear and Overreaction

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

 

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

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

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

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

 

 

 

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

JOIN US!

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

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

Click HERE or the image below to RSVP!

 

 

 

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

 

 

Four Reasons to Choose T-Bills Over CDs!

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

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

 

 

 

 

Changes to Retirement Account RMDs

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

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

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

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

 

 

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

Have questions about your upcoming 2023 tax return?

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

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

 

 

 

 

 

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

Thanks to Investopedia for the graph.

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

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

Jonathan W. LaTurner
Wealth Advisor

Steve Pitchford
CPA, Certified Financial Planner^®

Lori A. Heppner
Director of Operations

Nathan P. Billigmeier
Director of Research and Analytics

Michelle Venezia
Client Service Specialist

Luis Barrera
Marketing Specialist

 Megan M. Miller, EA
Associate Wealth Advisor

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Picture this: It’s a brisk Monday morning, and as you groggily shuffle to the kitchen for your daily caffeine fix, a friendly voice chimes in from your countertop speaker, “Good morning! Your cappuccino is already brewing, and your schedule is all set. Don’t forget your jacket and umbrella, it’s 46 degrees out and rain is expected this afternoon. It’s going to be a great day!”

No, it’s not your roommate trying to brighten your day; it’s your trusty AI-powered virtual assistant, making your daily routine not just manageable but downright delightful. In a world where artificial intelligence (AI) is seamlessly woven into our daily lives (whether we’re aware of it or not), the question isn’t whether we can do something with AI; it’s more likely to be, “I can do THAT with artificial intelligence?” Welcome to the future where AI isn’t just a buzzword; it’s your everyday companion, your digital sidekick, and your key to a smoother, smarter, and more enjoyable daily routine.

Click the image below to read an excellent report on AI from Tech Republic.

We’ve been receiving a regular stream of questions from our clients and colleagues about AI. So if you’ve ever wondered about how AI brings “magic” to your daily life, and where the AI user experience can make your life easier and more convenient, then read on!

As we seek to answer the “I can do THAT with artificial intelligence?” question, dive into the world of the AI user experience, and identify the myriad of ways that artificial intelligence is making our daily routines smoother, smarter, and dare we say it, a lot more fun!

What sets the AI user experience apart from regular ole’ user experience (UX)? Imagine traditional UX as the friendly server at your favorite restaurant who knows your “usual.” They remember the go-to meal you typically like to order, talk with you about your family, bring you your favorite dessert, and make your dining experience a lot more pleasant. Now, think of the AI user experience as that server, but with a twist—they not only remember your usual, but also anticipate when you might want to try something new, and they bring it to you with a smile. In a nutshell, the AI UX is not just about personalization, but also about prediction and unparalleled convenience. Here are some specific examples of how we are, or can be, incorporating the AI user experience in our daily lives.

The AI-Powered Virtual Assistant

Let’s kick things off with our trusty AI companions: virtual assistants! Siri, Alexa, Google Assistant—these “folks” have become an integral part of our daily lives. They’re like the BFFs who help us navigate the digital world effortlessly.

Take, for instance, the moment you groggily wake up and wonder about the weather. Instead of fumbling for your phone, you simply ask, “Hey Siri, what’s the weather today?” Voilà! You’ve got your daily weather report served on a digital platter. From setting task reminders and keeping shopping lists, to controlling smart home automation and making personal media recommendations, AI-powered virtual assistants make life more convenient and time-efficient, one voice command at a time.

Predictive AI: Making Life Easier

One of AI’s superpowers is its ability to predict your needs before you even realize them. Have you ever noticed how your smartphone suggests the next word you’re about to type? It’s not just reading your mind—it’s AI in action! Predictive text saves you time and makes messaging a breeze.

But predictive AI goes beyond text. It’s the reason your smart thermostat adjusts the temperature before you even get home or why your favorite ride-sharing app seems to know exactly where you’re headed. It’s like having a personal assistant who’s always one step ahead.

Chatbots and Conversational AI

Remember the last time you had a question about a product or needed assistance with an online purchase? Chances are, you interacted with a chatbot, and while sometimes annoying, they can actually be surprisingly helpful! Chatbots are like the friendly customer support agents who never take a coffee break.

Whether it’s answering FAQs, troubleshooting tech issues, or even helping you place an order, chatbots are the unsung heroes of the online world. They’re available 24/7 and always ready to assist you.

Healthcare and Wellness: AI as a Health Assistant

AI isn’t just about making life more convenient; it’s also a health buddy. It’s there to help you stay fit, monitor your health, and even detect potential issues before they become major concerns.

Think about wearable devices that track your heart rate and sleep patterns. They’re not just counting steps; they’re using AI to provide insights into your overall well-being. And let’s not forget the AI-powered diagnostic tools that assist doctors in making quicker and more accurate diagnoses. AI isn’t replacing healthcare professionals; it’s enhancing their capabilities, making sure you receive top-notch care.

Creativity and Content Generation

Here’s where things get really interesting! AI has started getting creative, and the results are nothing less than mind-blowing. From generating art to composing music and even writing articles, AI is proving that it can wear the writer’s and artist’s hat (or should we say, code?)!

Imagine an AI-generated artwork that looks like it was painted by a master artist, or a song that sounds like it was composed by your favorite musician. AI isn’t just mimicking; it’s creating something entirely new and exciting.

Ethical Considerations in AI User Experience

Of course, we can’t talk about AI without addressing the elephant in the room—ethics. With great power comes great responsibility, and AI is no exception. Artificial intelligence can sometimes exhibit bias, invade privacy, or even make questionable decisions. It’s crucial that we develop AI responsibly, ensuring fairness, transparency, and accountability. After all, we want AI to be our trusty sidekick, not our supervillain!

The Future of AI User Experience

Imagine AI that understands not just what you say but also how you feel. It can detect your mood and offer comforting words when you’re down or share in your excitement during celebrations. The future holds AI that’s not just intelligent but emotional as well.

We’re also looking at AI that enhances collaboration between humans and machines. Picture a world where AI isn’t just a tool but a true partner in creativity and problem-solving. It’s a future where AI amplifies human potential rather than replacing it.

As we wrap up this AI adventure, one thing is clear: AI isn’t just a tech buzzword anymore. It’s your daily companion, your personal assistant, your creative muse, and so much more. Whether it’s simplifying tasks, offering recommendations, or adding a touch of magic to your daily life, AI is here to stay, and it’s making our world a more exciting place.

So, the next time you find yourself wondering, “I can do THAT with artificial intelligence?” just remember – it’s only the beginning. AI is on a journey of endless possibilities, and we’re all along for the ride!

How has AI improved your daily life? Have any AI-powered experiences surprised you lately? Please reply to us, and share your thoughts and stories – we’d love to hear from you!

Click the thumbnail image below to watch a fun video recap below of our 2023 Client Appreciation Gala held at the SMUD Museum of Science and Curiosity, as our “Out of This World” event was a blast!

We can’t thank our incredible clients, friends, colleagues, and industry partners enough for joining us. Your presence transformed this event into a true success! At Towerpoint Wealth, we recognize that our journey is intertwined with your triumphs. Your unwavering trust and confidence drive our shared success story. The joy of your company, the shared celebrations – it all meant the world to us. Here’s to the ongoing collaboration, respect, and trust that define our exceptional partnership.

Thank you for making this evening unforgettable! A very special thank you to SMUD MOSAC for the hospitality, Sergio Serrano for the great music, Ginger Elizabeth Chocolates for the TPW-branded chocolate, and our friends at Mulvaney’s B&L for the delicious bites!

Click HERE to see a full photo gallery of the event!

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

Look at T-bill rates today compared to bank CD best rates, and also consider that T-bill interest is state tax free, and it becomes easier to understand why owning a Treasury bill trumps owning a certificate of deposit, all else being equal.

Click the thumbnail image below to watch a brand-new educational video we produced that dives into this important T-bill vs. CD distinction in greater detail!

4Q, 2023 Tax Planning

Now that we’re officially into October, doing some proactive fourth quarter tax planning is essential for individuals and businesses to optimize (read: minimize) their tax liability for the current tax year. Here are some tax planning ideas to consider for the fourth quarter:

For Individuals

1. Maximize Retirement Account Contributions: Contribute the maximum allowable amount to your retirement accounts such as 401(k)s, IRAs, or self-employed retirement plans like SEP-IRAs or Solo 401(k)s. These contributions can directly reduce your taxable income.
2. Harvest Investment Losses: Review your investment portfolio for assets that have declined in value compared to when you originally purchased them, and consider selling them to offset current-year (and possibly future-year) capital gains. Capital losses can reduce your overall tax liability.
3. Charitable Giving: Make charitable contributions before year-end to qualify for potential deductions. Consider donating appreciated assets, like stocks, to maximize tax benefits.
4. Health Savings Accounts (HSAs): If you are eligible for an HSA, consider making contributions before the end of the year to reduce taxable income. Ensure you are within the annual contribution limits.
5. Flexible Spending Accounts (FSAs): Spend down your FSA funds before they expire. These pre-tax dollars can be used for qualified medical expenses.
6. Review Tax Withholding: Check your tax withholding to ensure it aligns with your tax liability. Adjust your withholding if necessary to avoid underpayment penalties or overpayments.
7. Consider Gifting: Take advantage of the annual gift tax exclusion by making gifts to family members or loved ones. Consult with a tax professional for strategies related to larger gifts or estate planning.

For Businesses

1. Capital Expenditures: Consider making necessary business equipment purchases before year-end to take advantage of Section 179 expensing and bonus depreciation deductions.
2. Review Employee Benefits: Ensure that your business is providing tax-efficient employee benefits, such as retirement plans, health savings accounts, and flexible spending accounts.
3. Estimated Tax Payments: Calculate and make any necessary estimated tax payments for your business to avoid underpayment penalties.
4. Inventory Management: Review your inventory and consider strategies to reduce it before year-end to lower your taxable income.
5. Charitable Contributions: Businesses can also make tax-deductible charitable contributions. Ensure you keep proper records and documentation.
6. Depreciation Strategy: Consider adjusting your depreciation strategy to maximize deductions or take advantage of any changes in tax laws.

Whether as an individual or as a business, remember to consult with a proactive tax professional! Every person and business is unique, and consulting with a tax professional or accountant to develop a comprehensive tax plan tailored to your specific situation is essential, time well-spent, and yet oftentimes overlooked.

Additionally, remember that tax laws can change, so staying up-to-date and working with a qualified tax advisor is crucial for effective tax planning. These ideas provide a starting point for your fourth quarter tax planning, but your specific circumstances may warrant different strategies.

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

Whether as an individual or as a business, remember to consult with a proactive tax professional! Every person and business is unique, and consulting with a tax professional or accountant to develop a comprehensive tax plan tailored to your specific situation is essential, time well-spent, and yet oftentimes overlooked.

Additionally, remember that tax laws can change, so staying up-to-date and working with a qualified tax advisor is crucial for effective tax planning. These ideas provide a starting point for your fourth quarter tax planning, but your specific circumstances may warrant different strategies.

Have questions or concerns about filing your 2022 tax return?

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

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

Failures teach people lessons that are often more valuable than their successes.

US 10-year Treasury yields (read: interest rates), a key measure of the interest cost for future government borrowing, as well as consumer borrowing such as mortgages, have shot up to their highest levels in 16 years! The benchmark yield leaped on Tuesday, surpassing 4.8%, driven by the latest jobs report from the US Labor Department. The survey revealed a surge in job openings, raising the expectation that the Federal Reserve will have to maintain an interest rate regime of “higher for longer.”

The move spooked investors, with the S&P 500 Index dropping 1.4% on Tuesday, and the tech-heavy NASDAQ shedding nearly 2%.

Apart from hurting your stock portfolio, treasury yields that shoot up and stay up are a big deal for the government’s ability to borrow more debt. Borrowing a few extra billion, or trillion, with a promise to pay it back in 10 years will now come with a 4.8% interest rate for Uncle Sam — while only 3 years ago, the rate was just 0.8%.

Thanks to Chartr for the graph and commentary!

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

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

Joseph Eschleman
Certified Investment Management Analyst, CIMA^®

Jonathan W. LaTurner
Wealth Advisor

Steve Pitchford
CPA, Certified Financial Planner^®

Lori A. Heppner
Director of Operations

Nathan P. Billigmeier
Director of Research and Analytics

Michelle Venezia
Client Service Specialist

Luis Barrera
Marketing Specialist

 Megan M. Miller, EA
Associate Wealth Advisor

 Connect with Towerpoint Wealth, your Sacramento Financial Advisor, on any of these platforms, and send us a message to share your preferred charity.

We will happily donate $10 to it!

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While many of us were “stuck” in our offices tied to our computer screens last week, three of Towerpoint Wealth’s finest were in Surf City USA, soaking in not only the sun, but also the speakers, content, education, and networking of the world’s largest wealth management festival, Future Proof 2023.

Akin to South By Southwest, Future Proof 2023 was a true departure from the “traditional” wealth management conferences we have previously participated in. For starters, Future Proof was held not in a stogy indoor hotel ballroom, but instead on The Boardwalk, a special ½ mile stretch of outdoor promenade, constructed specifically for the festival and directly next to Huntington Beach. With almost 3,000 attendees and more than 200 (!) world-class guest speakers, it was truly an enormous wealth management event – arguably an extravaganza – as the vision, creativity, and scale of the festival were unlike anything any of us at Towerpoint Wealth had ever experienced.

The energy and excitement of the festival were palpable from beginning to end, as our President, Joseph Eschleman, our Partner, Wealth Advisor, Jonathan LaTurner, and our Director of Research and Analytics, Nathan Billigmeier rubbed shoulders with the entire wealth management ecosystem during an arduous but invigorating four days.

Future Proof 2023

What exactly made the Future Proof 2023 “next level?” To quote Josh Brown, CEO of Ritholtz Wealth Management, who, along with Advisor Circle, co-created the wealth management festival, now in its second year:

“There’s something about the outdoor, beachfront setting that makes Future Proof different. I learned more – and shared more – at Future Proof… than at any other conference ever. This year’s event is going to be ridiculous. The agenda is incredible, the music is amazing, and the audience is shaping up to be a who’s who of this industry.”

Michael Kitces, co-founder of CY Planning Network and Chief Financial Planning Nerd for Kitces.com, suggested that the overall spirit of the festival was to “explore all aspects of the future of wealth,” seeking to “connect people, purpose, and ideas through the lens of wealth, technology, culture, and impact.”

Future Proof 2023 was an immersive journey into the ever-evolving wealth management universe, intended to ignite innovative conversations, and think outside of our normal Towerpoint Wealth perspectives. The festival centered around three key themes, all directly shaping the future of wealth management:

1. Alternative Investments
   
   As alternative investments grow both in size and complexity, there’s an increasing need to sharpen our understanding. You know the drill: with great power (or, in this case, assets) comes great responsibility (or need for education). Future Proof industry expert speakers broke down this seemingly convoluted topic and transformed it into a growth opportunity through actionable insights and cutting-edge strategies.
   
   
2. Artificial Intelligence
   
   Have you wondered what AI means for the larger economy, what implications it has for wealth management, or even on your regular day-to-day life? You’re not alone – these were some of the top-trending Google searches in 2023. The Future Proof conference took a deep dive into the world of AI, demystifying its complexities and spotlighting its profound potential.
   
   
3. Macro Outlook
   
   A number of Future Proof 2023 speakers discussed the impact of the Fed’s actions, the weakening dollar, and the overall outlook for the global economy. It’s not just about predicting the future – it’s about how you are positioned to thrive in it.

Curious about some of the content that Joseph, Nathan, and Jonathan soaked in? Below you will find a curated summary of the festival highlights, as well as some of the events, breakout sessions, podcasts, and presentations that our TPW family participated in!

Sunday, September 10

1 minute video recap:

• The Biggest Financial Decision Your Family Will Ever Make, with NYT Bestselling Author Ron Lieber & Ann Garcia
  
  An exciting and thought-provoking Q&A session with Ron Lieber, Your Money columnist in the New York Times and author of The Price You Pay for College, and Ann Garcia, author of How to Pay for College. This session delved into the rising cost of education in the United States, and explored the factors driving these costs, the relationship between education expenses and career opportunities, and the actions that can be taken to tackle this complex issue.

• Baby Equity: Restoring Capitalism Through Inclusivity at Birth, with Josh Brown, CEO, Ritholtz Wealth Management, and Brad Gerstner, founder and CEO, Altimeter Capital
  
  Click the link above to hear about their plan to seed 3.8 million newborns with a $1,000 stock account at birth, as a direct means to help all “new” Americans have a foundation to build their personal net worth!

Monday, September 11

1 minute video recap:

• Morningstar’s The Long View Podcast, with Christine Benz, Director of Personal Finance and Retirement Planning, and Jeff Ptak, Chief Ratings Officer, Morningstar, and guest Nizar Tarhuni, VP of Institutional Research, PitchBook
  
  In a live podcast recording attended by Joseph, Nathan, and Jonathan, Benz and Ptak interviewed Tarhuni on key trends in the market and the implications they have for the evolving investor that advisors aspire to serve.
  
  Based on PitchBook’s independent analysis, Nizar’s advice to advisors is, “if you want meaningful results from adding an alternatives sleeve to your clients’ allocation, you can’t just dip your toe in. You have to be ready to commit for an extended period of time, over multiple vintages, with significant capital capacity in order to access quality managers and achieve your return and diversification objectives.”

• Using Generative AI to Create Unique Experiences That Clients Crave, with Christine Simone, President, Caribou
  
  Artificial intelligence (AI) has revolutionized the way businesses engage with their clients by enabling the creation of unique and tailored experiences. Through advanced machine learning algorithms, AI can analyze vast amounts of data, from customer preferences to past interactions, to gain valuable insights. This data-driven approach allows companies to personalize their products and services, predicting and meeting individual needs and desires. Whether it’s recommending personalized content, optimizing user interfaces, or providing real-time assistance, AI empowers organizations to build deeper, more meaningful relationships with their clients. By harnessing the power of AI, businesses can offer seamless, one-of-a-kind experiences that leave a lasting impression and foster loyalty in an increasingly competitive market.

• Driving Growth with Direct Indexing: Insights From 3 Industry Giants, moderated by Ian Wenik, editor, CityWire, Ben Hammer. Head of Client Development – Vanguard Personal Indexing, Vanguard, Brandon Haas, Head of Direct Indexing and Model Portfolios, S&P Dow Jones Indices, and Ari Rosenbaum, Principal, Director of Private Wealth Solutions, Canvas Custom Indexing
  
  Direct indexing is a modern investment strategy that allows investors to build customized portfolios of individual stocks or securities to closely mimic the performance of a particular index, such as the S&P 500, while also offering greater flexibility and tax efficiency compared to traditional index funds or exchange-traded funds (ETFs). With direct indexing, investors can select and own the individual components of an index directly, rather than investing in a fund that holds those components. This approach offers advantages like the ability to optimize for tax efficiency by managing capital gains, harvesting tax losses, and incorporating environmental, social, and governance (ESG) criteria into the portfolio. Direct indexing has gained popularity as technology and platforms have made it more accessible, allowing investors to tailor their investments to align with their specific financial goals and preferences.

Tuesday, September 12

1 minute video recap:

• Powerhouse Perspectives – Scott Wapner, anchor and reporter, CNBC, and Jeffrey Gundlach, CEO, Doubline Capital
  
  Jeffrey Gundlach is a prominent American investor and financial expert known for his expertise in fixed income investments and his role as the founder and CEO of DoubleLine Capital, a leading investment management firm. Gundlach has gained renown for his astute market insights, particularly in the realm of bonds and interest rates. He has often been referred to as the “Bond King” in the media. Gundlach’s investment strategies and predictions are closely followed by investors and financial professionals alike, and he has received numerous accolades for his contributions to the field of finance. His ability to navigate complex financial markets and provide valuable investment perspectives has solidified his reputation as a significant figure in the world of asset management.

• Powerhouse Perspectives: U.S. – China Relations, with Former U.S. Ambassador David Adelman, Managing Director & General Counsel, Kraneshares
  
  U.S.-China relations have long been characterized by a complex interplay of cooperation, competition, and occasional tension. As the world’s two largest economies and major global players, their relationship carries significant weight in shaping the geopolitical landscape. Over the years, both nations have collaborated on issues like trade, climate change, and regional stability, but they have also grappled with disagreements over human rights, intellectual property, and territorial disputes. David Adelman did an excellent job of discussing how the evolving dynamics of this crucial bilateral relationship continues to influence not only the Asia-Pacific region but also global politics, economics, and security, making it a focal point for international diplomacy and strategic maneuvering.

Wednesday, September 13

½ day final day!

• Case Study: Revolutionary Cash Management for High Net Worth Clients, with Rob Burgess, technology reporter, Wealth Management magazine, Ben Cruikshank, President, Flourish Cash, Brett Orvieto, Managing Director, Senior Wealth Advisor, Dakota Wealth Management, and Lindsay Brock, Wealth Advisor, Stearns Financial Group.
  
  Many studies have tried to determine whether active management of equities can generate outsized returns relative to a stock market index. But what about cash? Can a more active approach to managing bank accounts generate higher returns? Active cash management oftentimes can deliver real ‘alpha’ on cash. For investors holding cash, cash management programs like Flourish Cash can offer clients higher interest rates, broader FDIC coverage, and streamlined account opening. Cash is no longer boring, and advisors need to ensure that their clients cash is maximized!

Joseph’s, Jonathan’s, and Nathan’s heads are still spinning with all of the information and insight from the festival, and our Towerpoint Wealth team cannot wait to roll up our sleeves and apply what was learned towards helping you better build and protect your wealth, and better helping you properly coordinate all of your financial affairs.

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

Earlier this week our President, Joseph Eschleman, connected with two excellent TPW clients, Jeff and Sabrina Murphy, at Fieldwork Brewing in downtown Sacramento for a strategy session on what it might take for Jeff and Sabrina to open a new brewery or taphouse!

Seems logical that the three of them felt that drawing inspiration for a new brewery should only be done while imbibing a little at one of the best breweries in Northern California!

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

Click below to watch a short and fun “mashup” video of Joseph, Jonathan, and Nathan’s experience at the Future Proof 2023 wealth management festival!

Charitable Remainder Trusts (CRTs)

Charitable remainder trusts (CRTs) are a powerful financial planning tool that provide both philanthropic benefits and significant tax advantages. These trusts allow individuals to transfer assets, typically appreciated securities or real estate, to a trust while retaining an income stream for themselves or their beneficiaries for a specified period, often for life. One of the most attractive tax benefits of CRTs is the immediate charitable income tax deduction. When the assets are transferred to the trust, donors can typically claim a deduction for the present value of the charitable remainder interest. This deduction can help reduce the donor’s taxable income in the year of the gift, potentially lowering their overall tax liability.

Another substantial tax benefit of CRTs is the avoidance of capital gains taxes. Since CRTs are tax-exempt entities, they can sell donated assets without incurring capital gains taxes. This is particularly advantageous when the assets have appreciated significantly over time, as it allows donors to avoid a substantial tax hit that they would face if they sold the assets directly. By avoiding capital gains taxes, donors can reinvest the full proceeds from the sale, potentially leading to greater income for themselves or their beneficiaries. Additionally, CRTs can provide estate tax benefits by removing the donated assets from the donor’s taxable estate, potentially reducing the estate tax liability upon their passing. In essence, charitable remainder trusts offer a dual benefit of supporting a favorite charitable cause while optimizing the donor’s financial situation through favorable tax treatment.

Click the image below to download an excellent resource from Vanguard, summarizing the major charitable giving tools we regularly utilize at Towerpoint Wealth.

Have questions or concerns about filing your 2022 tax return?

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

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

The Federal Reserve Board (“the Fed”) kept interest rates unchanged at its Wednesday meeting.

The chart below from Morningstar highlights that a Fed “pause” has historically been bullish (positive) for equities over the past five rate cycles dating back to 1990.

Meanwhile, Fed interest rate cuts are historically bullish for bonds as well.

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

Joseph Eschleman
Certified Investment Management Analyst, CIMA^®

Jonathan W. LaTurner
Wealth Advisor

Steve Pitchford
CPA, Certified Financial Planner^®

Lori A. Heppner
Director of Operations

Nathan P. Billigmeier
Director of Research and Analytics

Michelle Venezia
Client Service Specialist

Luis Barrera
Marketing Specialist

 Megan M. Miller, EA
Associate Wealth Advisor

 Connect with Towerpoint Wealth, your Sacramento Financial Advisor, on any of these platforms, and send us a message to share your preferred charity.

We will happily donate $10 to it!

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Could it be that Benjamin Franklin was wrong when it comes to the American Dream?

Is achieving the American Dream easier after earning a college degree? Or is a college education overvalued, and no longer worth the associated time, costs, and energy?

The skepticism about the true value of earning a degree is real. Pundits and authorities are offering up a myriad of seemingly sensible and legitimate reasons to skip school and eschew an eventual cap and gown fitting.

•  56% of Americans say earning a four-degree isn’t worth the cost, according to a recent Wall Street Journal survey.
• College enrollment in the United States has declined over the past decade, dipping from 21 million students in 2011 to 18.7 million in 2021.

• Declining college affordability can be a significant barrier for many individuals, as the high costs of tuition, fees, housing, and living expenses associated with college can be prohibitive.

• Student debt has spiraled, acting as a deterrent for many individuals considering higher education. The prospect of accumulating significant student loans and entering the workforce with a mountain of financial obligations has reshaped the way people view the value of a college degree.

In addition to the above-listed obstacles and impediments, personal considerations such as alternative career goals, family obligations, individual learning styles, political ideologies, entrepreneurial pursuits, and the desire for immediate income (“why learn when you can earn”) can also factor into whether or not a college degree is considered an important component in the pursuit of the American Dream.

 But wait! Our commentary and our graphs are not meant to be a screed against the importance of obtaining a college education in pursuit of the American Dream; instead, at Towerpoint Wealth, we believe that perception is not always reality, and while there certainly are upfront opportunity costs (economic and otherwise) of pursuing a college degree, the evidence that a college degree significantly improves one’s employment prospects and earnings potential is overwhelming:

1.     Higher weekly/monthly earnings

Even in the best economic times, data show that workers who have higher levels of education typically earn more and have lower rates of unemployment compared with workers who have less education.

2.     Higher lifetime earnings

Your earning potential is extremely likely to increase with your level of education. College graduates on average make $1.2 million more over their lifetime than those whose highest degree is a high school diploma.

3.     You’re more likely to have a job

College graduates are half as likely to lose their jobs as compared with people who have just a high school diploma.

4.     You’re less likely to be poor

The incidence of poverty declines significantly as the level of education increases – only 4% of people with a Bachelor’s degree or higher were living below the poverty line in 2021.

5.     More access to job opportunities, and to jobs with better benefits

Having a college degree opens up opportunities that might otherwise have been inaccessible. College graduates see 57% more job opportunities than non-graduates, and the number of job postings requiring a Bachelor’s degree has increased significantly.

Even if you don’t start in a career that requires a college diploma, your degree can greatly expand the scope of your future opportunities to promote and earn.

Better-paying jobs which usually require a college degree oftentimes also offer better perks, such as 401(k) and retirement contribution matching, health insurance, tuition reimbursement, and commuter benefits.

While it’s important to acknowledge the drawbacks and challenges associated with pursuing a college education while pursuing the American Dream, it’s equally essential to recognize that the benefits often far outweigh these concerns, and we agree with Congressman Bobby Scott (D, VA):

The list price of tuition does not tell the full story, as the net price of college is often much less than the “sticker price”.  A college  degree can serve as a gateway to expanded opportunities, higher earning potential, and a broader perspective on the world. Beyond the academic knowledge, college offers a platform for personal growth, critical thinking, and networking that can be invaluable in both professional and personal spheres. Moreover, the diverse range of experiences, exposure to different cultures and ideas, and the development of essential life skills can contribute to a more well-rounded and fulfilled individual. While the decision to attend college should be made with careful consideration of individual circumstances, the potential rewards of a college education, both in terms of career advancement and personal enrichment, often make it a worthwhile investment of time and money.

 Episode 04: Reducing the Necessary Evils of Investing Expenses and Taxes

In this episode, our President, Joseph F. Eschleman, CIMA^®, and our Director of Tax and Financial Planning, Steven Pitchford, CPA, CFP^®, unravel the complexities of managing and reducing the “necessary evils” of investing: expenses and income taxes.

Click the below image to listen! Joseph and Steve share valuable insights and practical strategies to empower you as an investor. Discover how to take control of your financial destiny in your pursuit of the American Dream by minimizing expenses and optimizing your tax planning.

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

Alternative Investments

For virtually all investors, 2022 was a challenging and frustrating year. 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. After increasing more than 31% in 2019, 18% in 2020, and 28% in 2021, the S&P 500, an often-cited proxy for the stock market, declined 18.32% in 2022. And to make matters worse, the bond market, as measured by the Bloomberg U.S. Aggregate Bond Index, suffered through declines not experienced in more than 50 years.

Put differently, investing in conventional stock and bond asset classes did not work very well in 2022. Not surprisingly, these declines led to an increase in demand for “supplemental” investment opportunities outside of these traditional areas, and led more and more people to inquire about alternative investments. 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 investment plan to include them.

Click the thumbnail image below to watch a webinar that we recently produced, and learn answers to the following questions:

• 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?
• I heard alternative investments can be expensive – is that true? Does it matter?
• What are the risks and benefits of adding alts to your investment strategy?

Tax Credits (and a Deduction) for College Students

Tax credits for college students are a crucial component of the financial aid landscape, offering much-needed relief to students and their families grappling with the soaring costs of higher education. These credits, often referred to as education tax credits, provide eligible individuals with an opportunity to offset a portion of their qualified education expenses, thereby reducing their overall tax liability. Two prominent tax credits that have significantly eased the financial burden of college attendance are the American Opportunity Tax Credit and the Lifetime Learning Credit. The American Opportunity Credit, which is usually available for the first four years of post-secondary education, grants a credit of up to $2,500 per eligible student. This credit covers expenses like tuition, fees, and required course materials, making it especially beneficial for undergraduate students pursuing a degree. On the other hand, the Lifetime Learning Credit offers a more flexible option, applying to a broader range of educational pursuits, including graduate studies, continuing education courses, and skill enhancement programs. With a potential credit of up to $2,000 per tax return, this credit accommodates students seeking to further their education throughout their lives.

You can also take a tax deduction for the interest paid on student loans that you took out for yourself, your spouse, or your dependent. This benefit applies to all loans (not just federal student loans) used to pay for higher education expenses, with the maximum deduction being $2,500 a year. If you are single, head of household or a qualifying widow(er), your student loan interest phase-out starts at $75,000 MAGI, and ends at $90,000. If you are married you can make $150,000 before phase-out begins. You can earn up to $180,000 which is the level at which the phase-out ends.

View our 2023 Tax Reference Guide, and download an excellent resource intended to help you stay on top of and organized with your tax planning this year! 

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

Worried about whether you have enough set aside to retire? Check out our “Retiring with 2 Million Dollars” guide to learn five specific steps you can take immediately to work to grow your net worth!

Joseph Eschleman
Certified Investment Management Analyst, CIMA^®

Jonathan W. LaTurner
Wealth Advisor

Steve Pitchford
CPA, Certified Financial Planner^®

Lori A. Heppner
Director of Operations

Nathan P. Billigmeier
Director of Research and Analytics

Michelle Venezia
Client Service Specialist

Luis Barrera
Marketing Specialist

 Megan M. Miller, EA
Associate Wealth Advisor

 Connect with Towerpoint Wealth, your Sacramento Financial Advisor, on any of these platforms, and send us a message to share your preferred charity.

We will happily donate $10 to it!

Follow TPW on LinkedIn
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“It’s not so much who wears the pants, but how much money is in the pockets.” 

Money and marriage often dance together in a delicate waltz of financial decisions and shared goals. For better or worse, money plays a significant role in the dynamics of a marital relationship. From (sometimes) merging bank accounts and setting joint budgets to navigating financial disagreements, couples must learn to communicate openly and honestly about their financial attitudes and priorities.

Money can either be a source of stress and conflict, or an empowering tool for building a solid future together. By working as a team and aligning their financial values, couples can unlock the true potential of their partnership, achieving not only financial security but also a deeper understanding and connection with each other. Ultimately, finding a harmonious balance between love and money becomes the key to a successful and fulfilling marriage. 

While money and marriage can be complicated, there are many financial benefits of marriage that are undeniable, and can help with the decision to tie the knot. For some, it’s like having a built-in financial advisor and budgeting buddy, except they’re also your forever Netflix partner. Imagine splitting the bills, sharing expenses, enjoying two incomes, and budgeting together – minus Monty Hall, it’s like a never-ending game of “Let’s Make a (Financial) Deal!” 

While the financial benefits of marriage should probably not be the number one priority when deciding whether to tie the knot, if the money and marriage connection is of interest to you, below you will find some of the key economic advantages to getting hitched! 

1. Two incomes, shared cost

Combining two incomes often leads to increased financial security and a higher standard of living. With two individuals earning an income, there is more money available to cover essential expenses, build savings, and invest for the future. This can make it easier for couples to achieve their financial goals, such as buying a home, paying off debt, or saving for retirement. 

In addition to combined incomes, the benefits of shared costs in a marriage extend far beyond just splitting expenses. Sharing costs as a married couple can lead to a more efficient and effective use of resources, fostering financial stability and security. It also enables spouses to pool their resources, which can lead to increased purchasing power and potential savings on everyday expenses, from groceries to utility bills. Moreover, sharing costs can alleviate financial stress and reduce the burden of individual financial responsibilities, promoting a sense of teamwork and mutual support within the marriage. Ultimately, when considering money and marriage and by sharing costs, couples can build a stronger financial foundation and navigate life’s financial challenges as a united front, reinforcing the bond that comes with being partners in both love and money. However, many of the cost benefits of tying the knot become moot when kids enter the picture! 

2. Tax Benefits 

Marriage also provides opportunities for tax benefits, as mentioned in greater detail in the TPW Taxes section below. Compared to single filers, couples filing jointly can potentially lower their overall tax liability and access various tax credits and deductions that might not be available to single individuals. This can result in significant savings. 

3. Insurance 

When you’re married, health insurance and employee benefits can be more advantageous. Many employers offer benefits packages that cover spouses, which can lead to better healthcare coverage and reduced medical expenses. This can be particularly valuable if one spouse’s employer provides superior health insurance options compared to the other’s. Additionally, married couples oftentimes qualify for lower premiums on automobile, homeowners, and other insurance policies, as rates can go down when you get married. This is because insurance companies consider married couples more financially stable and risk-averse. 

4. Access to credit 

It can be more cost-effective to obtain credit when you are married, thanks to the combined financial strength of the couple. Lenders often take into account both spouses’ incomes and credit histories when evaluating credit applications, which can lead to more favorable terms and lower interest rates. With a higher combined income, the couple may qualify for larger credit limits and better loan terms, such as lower APRs on credit cards or mortgages. Additionally, if one spouse has a stronger credit score than the other, their financial credibility can positively impact the overall creditworthiness of the application. This can translate into more competitive offers and increased access to credit options, ultimately making borrowing more affordable for the couple as they embark on shared financial endeavors. 

However, it is important to note that when it comes to money and marriage, getting married doesn’t impact your individual credit score, and credit reports are not combined. 

5. Social Security 

Social Security benefits can be more lucrative when you are married, thanks to certain spousal benefits and strategies. For instance, a married individual may be eligible to receive a spousal benefit, which allows them to claim Social Security based on their spouse’s work record. This can be especially useful if one spouse has a significantly higher lifetime earnings history. Additionally, married couples can strategically coordinate their claiming strategies to maximize their combined benefits. For example, the higher-earning spouse can delay claiming their Social Security, allowing their benefit to grow over time, while the lower-earning spouse can start claiming earlier, providing some income for the couple. By leveraging these spousal benefit options and optimizing their claiming strategies, married couples can enhance their overall Social Security income and ensure a more financially secure retirement together. 

Click the image below if you would like us to assemble a fully-customized andcomplementary Social Security Optimization Analysis for you and your spouse. 

To be clear, love comes first! However, when it comes to money and marriage, the financial benefits of taking the plunge can be substantial. From the potential for lower tax liability and enhanced access to tax credits, to increased earning potential and improved savings opportunities, marriage can provide a solid foundation for a couple’s financial well-being. Sharing costs and combining resources can lead to a more efficient use of income, empowering couples to pursue shared financial goals with greater ease. Moreover, the ability to strategize and optimize benefits, such as Social Security and retirement accounts, further strengthens the financial advantages of being married. While every individual situation is unique, the potential for financial stability, increased security, and shared prosperity makes marriage an appealing option for many couples seeking to build a brighter financial future. 

Click the Wealth Management Philosophy thumbnail image below to learn more about exactly how we help our clients save and invest for retirement while minimizing taxes.

This past Tuesday, most of the Towerpoint Wealth team participated in The Cathedral of the Blessed Sacrament’s Brown Bag Lunch Program in downtown Sacramento. In response to the growing numbers of downtown homeless needing food, nourishment, and kind words, the TPW team prepared and then handed out nutritious brown bag lunches (consisting of a protein, a fruit, a healthy carb, and a bottle of water) to feed approximately 150 homeless men and women.  Click on the video and watch a small recap of our morning.

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

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What is a Fiduciary Financial Advisor?

A fiduciary financial advisor is a trusted professional who operates with the utmost integrity and puts their clients’ best interests above their own. Unlike other financial advisors, an advisor with a fiduciary duty has a legal and ethical obligation to act solely in the best interest of their clients, ensuring that any advice or recommendations provided are completely unbiased and aligned with the client’s personal and financial goals and needs. The highest standard of care in the wealth management industry, it instills confidence in clients, knowing that their advisor is committed (and legally obligated) to transparency, honesty, and prudent financial practices. 

Are you working with or considering working with a broker, who is only obligated to the suitability standard?If so, it is essential to understand how the fiduciary duty that a fiduciary financial advisor has to their clients is different. 

Click the image below to watch an excellent educational video, designed to help you learn more! 

Click HERE to browse TPW’s library of other wealth-building and wealth-protecting educational videos.

Marriage and Uncle Sam

Married couples who choose to file their taxes jointly can enjoy several significant tax benefits. One of the primary advantages is the potential to lower their overall tax burden. When filing jointly, couples can often take advantage of more advantageous tax brackets, which means they may pay a lower percentage of their income in taxes compared to filing separately. Additionally, the standard deduction, as well as certain tax credits and deductions (such as the Earned Income Tax Credit (EITC) and the Child Tax Credit), can be more accessible or higher in amount for couples who file jointly. These benefits can directly reduce the amount of tax owed or result in a larger tax refund. Want proof? See the 2023 IRS income tax brackets found below: 

Another key benefit of married filing jointly is the ability to contribute to Individual Retirement Accounts (IRAs) and Roth IRAs, even if one spouse does not have earned income. Funding a “spousal IRA” allows a working spouse to contribute to a non-working spouse’s retirement account. This can be an effective strategy to boost overall retirement savings and potentially reduce the couple’s taxable income. By pooling their resources and filing jointly, married couples can often optimize their tax situation and maximize the financial advantages offered by the tax code. However, it’s essential for couples to carefully evaluate their specific financial situation and consult with a tax professional to determine the most beneficial filing status for their needs. 

View our 2023 Tax Reference Guide, and download an excellent resource intended to help you stay on top of and organized with your tax planning this year!  

Have questions or concerns about filing your 2022 tax return?
We welcome connecting with you and are happy to help. Click the banner below to message Steve Pitchford, Steve Pitchford, Certified Financial Planner.

Thanks to Chartr for the caption and the chart! 

Data from Pew Research reveals that an astonishing 25% of 40 year olds in the US have never been married, marking a record high share. In 2010, the corresponding figure was 20%, and if we go back to 1980, just 6% of 40 year olds had yet to tie the knot. 

The data fits with the longer-term trend in marriage — people have been getting married at a lower rate and generally later in their lives. Indeed, the typical age for men to say “I do” was just over 30, while women typically married a few months after their 28th birthday, according to the US Census Bureau. Both these ages have increased by around 5 years since the turn of the century. In 2000 the median age for men and women to get married was 26.8 and 25.1, respectively, and if you go back to the 1950s, women were typically getting married just after they turned 20. 

In light of how unsettled the economy and markets are, are you concerned or worried about

the bonds in your portfolio, and/or the overall level of risk you are taking in your portfolio? Message us to discuss your circumstances.

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

Worried about whether you have enough set aside to retire? Check out our “Retiring with 2 Million Dollars” guide to learn five specific steps you can take immediately to work to grow your net worth!

Joseph Eschleman
Certified Investment Management Analyst, CIMA^®

Jonathan W. LaTurner
Wealth Advisor

Steve Pitchford
CPA, Certified Financial Planner^®

Lori A. Heppner
Director of Operations

Nathan P. Billigmeier
Director of Research and Analytics

Michelle Venezia
Client Service Specialist

Luis Barrera
Marketing Specialist

 Megan M. Miller, EA
Associate Wealth Advisor

 Connect with Towerpoint Wealth, your Sacramento Financial Advisor, on any of these platforms, and send us a message to share your preferred charity.

We will happily donate $10 to it!

Follow TPW on LinkedIn
Follow TPW on YouTube
Follow TPW on Facebook
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Follow TPW on X
Follow TPW Podcast

ROI, or return on investment, measures the profit earned on an investment after all costs of the investment are deducted. ROI for real estate is simply a measurement of the return on an investment property.

Your real estate ROI is a critical metric that every real estate investor should know and compute regularly, yet many fail to do a real estate ROI calculation when determining whether to purchase, or continue to hold, an investment property.

Here are five key things to consider when doing a real estate ROI calculation, all extremely important and useful when evaluating whether or not it is prudent to buy, or hold, a piece of investment real estate:

1.     Income generation

Real estate investments almost always generate income through rental properties, such as residential apartments, commercial spaces, or vacation rentals. The ROI for real estate in this case is calculated by dividing the net income (“top line” rental income minus expenses like maintenance, taxes, insurance, and vacancy rates) by the initial investment. A higher real estate ROI indicates better income generation potential and increased profitability.

2.     Appreciation

Real estate values have historically appreciated over time, allowing investors to benefit from capital appreciation. A real estate ROI calculation should take into account the increase in property value when determining returns. To calculate real estate ROI based on appreciation, subtract the initial investment cost from the final sale price of the property and divide it by the initial investment. A higher ROI signifies a significant appreciation in the property’s value.

3.     Cash flow

Positive cash flow occurs when your rental income exceeds your property expenses and mortgage payments, and is an essential component of ROI for real estate. Positive cash flow allows investors to recoup their initial investment while still generating income, while negative cash flow can reduce real estate ROI, as it means the investment is not generating enough income to cover all expenses.

4.     Leverage and financing

Real estate investments often involve leveraging (borrowing) money through mortgages or loans. This allows investors to maximize their returns by using other people’s money. The ROI for real estate calculation considers both the initial investment and the costs associated with financing. However, it’s important to assess the risks associated with leverage, such as interest rates, market fluctuations, and debt service coverage ratios.

5.     Time horizon

The time frame in which an investment is held can significantly impact your real estate ROI calculation. Real estate investments are generally considered long-term, and ROI for real estate calculations should reflect this perspective. Over time, real estate investments can experience fluctuations in income and value. It’s crucial to consider the overall return over the holding period rather than shorter-term variations.

Click the image below for an excellent and downloadable template spreadsheet to use when doing an initial real estate ROI calculation.

Real estate ROI is a comprehensive tool for investors to gauge the profitability of their real estate investments. By considering factors such as income generation, property appreciation, cash flow, leverage, and the investment’s time horizon, individuals can make informed decisions and assess the potential risks and rewards associated with real estate investments. However, it is important to remember that real estate markets can be dynamic and subject to various economic and market conditions. Therefore, thorough due diligence, proper risk assessment, and ongoing monitoring are essential for optimizing a real estate ROI calculation.

By leveraging the power of ROI for real estate, investors can navigate the complexities of the real estate market and strive to maximize their returns while building a robust and diversified investment portfolio.

Click the Wealth Management Philosophy thumbnail image below to learn more about exactly how we help our clients save and invest for retirement while minimizing taxes.

Last Thursday the entire Towerpoint Wealth team headed to Oakland for a teambuilding event, watching the A’s take on the Yankees at the Oakland Coliseum. While the home team did not bring home the ‘W,’ the TPW team enjoyed a full day of ballpark activities and each other’s company.

Congrats to the Yankees on their victory, making both Nathan and Michelle very happy!

Click HERE to message us with any questions or concerns you may have about your retirement right now.

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

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The Sacramento Housing Market is Heating Up!

Right now, the Sacramento housing market is experiencing a scarcity of available homes. This lack of supply, coupled with inflation and higher interest rates, is making it more expensive for borrowers to obtain loans. As a result, many homeowners with low mortgage interest rates are hesitant to sell and move. Concurrently, our limited housing supply has led to increased demand, providing support to home prices, even with money being more “expensive” now.

Put differently, our real estate market here in Sacramento continues to be both a challenging one, and an unusual one, to unpack and understand.

Despite these challenges, the Sacramento housing market is still better than some might perceive. Click the image below and enjoy taking a few minutes to watch a recent discussion our President, Joseph Eschleman, shared with ABC10 news anchor Lora Painter, as the two shine light into some of the more recent developments in the greater Sacramento real estate market, and the impact they’re having on homeowners, renters, and investors like you.

Click HERE to browse TPW’s library of other wealth-building and wealth-protecting educational videos.

The (Higher) Standard Deduction

Taxpayers often get frustrated when they are unable to itemize their taxes due to the higher standard deduction. Itemizing allows individuals to list and deduct specific expenses, such as mortgage interest, property taxes, medical expenses, and charitable donations. It gives them a sense of control and the opportunity to potentially reduce their taxable income. However, with the introduction of a higher standard deduction, many taxpayers find that their itemized deductions no longer exceed the standard deduction threshold, making it less advantageous to go through the itemization process.

Realistically, a higher standard deduction has many advantages and can be beneficial for many taxpayers. It simplifies the tax filing process by eliminating the need to gather and itemize numerous expenses, which can be time-consuming and complicated. Additionally, a higher standard deduction increases the threshold at which itemizing becomes advantageous, allowing more taxpayers to benefit from a reduced tax liability.

Overall, a higher standard deduction promotes fairness, simplifies the tax system, and provides a broader reach of tax benefits to a larger population.

Click the image below to view our 2023 Tax Reference Guide, and download an excellent resource intended to help you stay on top of and organized with your tax planning this year! 

Have questions or concerns about filing your 2022 tax return?
We welcome connecting with you and are happy to help. Click the banner below to message Steve Pitchford, Steve Pitchford, Certified Financial Planner.

While the shorter-term returns of the stock market over the last year have handily exceeded the long-term average (see 1-Year column below), performance over the last two years has been equally extreme in terms of underperformance.

Quoting Bespoke Investment Group (thank you to them for the chart as well):

“As easy as it is to say the market has gotten ahead of itself, it is just as easy to look over a different time period and say that it has fallen behind. It all depends on your timeframe.”

In light of how unsettled the economy and markets are, are you concerned or worried about

the bonds in your portfolio, and/or the overall level of risk you are taking in your portfolio? Message us to discuss your circumstances.

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

Worried about whether you have enough set aside to retire? Check out our “Retiring with 2 Million Dollars” guide to learn five specific steps you can take immediately to work to grow your net worth!

Joseph Eschleman
Certified Investment Management Analyst, CIMA^®

Jonathan W. LaTurner
Wealth Advisor

Steve Pitchford
CPA, Certified Financial Planner^®

Lori A. Heppner
Director of Operations

Nathan P. Billigmeier
Director of Research and Analytics

Michelle Venezia
Client Service Specialist

Luis Barrera
Marketing Specialist

 Megan M. Miller, EA
Associate Wealth Advisor

 Connect with Towerpoint Wealth, your Sacramento Financial Advisor, on any of these platforms, and send us a message to share your preferred charity.

We will happily donate $10 to it!

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In the realm of investing, where opportunities crackle and fortunes are forged, there exists an incandescent area known as FIRE investing. FIRE is an acronym for Financial Independence, Retire Early, and as the flames of financial independence burn brightly, FIRE investing embraces the goal of a self-sufficient life, early retirement (many FIRE investing adherents target a retirement in their late 30s or 40s), and liberation from the shackles of traditional employment.

Embracing a philosophy of intentional living, sacrifice, disciplined saving, and strategic investment to fuel the flames of wealth accumulation and financial independence, FIRE investing maintains a fervent focus on frugality and aggressively saving money. FIRE followers focus on living well below their means so they can save and invest large portions of their income, all in the interests of achieving an early retirement and complete financial independence.

Think you have the discipline, tenacity, desire, and guts to become a FIRE investing disciple? The first rule is to calculate your FIRE number, and then practice the four key tenets.

Computing your FIRE number is akin to figuring out the approximate amount of money you need to reach financial independence. While this is a very subjective analysis with many variables to account for, the very general rule of thumb is to multiply your anticipated annual expenses by 25.

This FIRE number equation is simply an estimate, it does not account for inflation, increased medical expenses, pensions and Social Security, real estate equity, anticipated inheritances, and a myriad of other variables. But it’s a starting point, and once you have determined it, you can then begin practicing the four key tenants of FIRE investing:

1.     Aggressive savings – between 40% to 70% of your annual income!

FIRE practitioners aim to maximize savings by adopting a frugal lifestyle and by tracking and minimizing expenses (see tenant four below). They usually create a disciplined budget and look to increase their earned income by asking for a raise, finding a higher-paying job, or adopting a side-hustle, all in the interests of increasing their capability to save, and accelerate the growth of their portfolio and net worth.

2.     Strategic investing

FIRE investors recognize the power of strategic investing to generate wealth over the long term. They diversify their investment portfolio across different asset classes, such as stocks, bonds, real estate, and possibly alternative investments. By following a disciplined investment approach and taking advantage of compounding returns, they aim to maximize their investment growth and income generation and compounding.

The proper prioritization of saving and investing is also important for FIRE investors, as taking advantage of free money (via various employer matching programs) and tax-advantaged accounts are central doctrines not to be mismanaged.

3.     Sustainable withdrawal rate

Once financial independence is achieved, maintaining it is just as important. Developing a sustainable withdrawal rate from your portfolio plays a crucial role in FIRE investing, serving as a guiding principle for supporting a desired lifestyle after retiring early. A general rule of thumb for how much you can sustainably take from your portfolio once retired is around 3-4% of your investment portfolio annually.

This rate is meant to strike a balance between meeting ongoing retirement and lifestyle expenses, while preserving the long-term viability of your investments. By adhering to a conservative withdrawal rate, FIRE investors aim to ensure that their funds last throughout their retirement years. This requires diligent monitoring of expenses, and the flexibility to allow for adjustments to the withdrawal rate as necessary, considering factors such as investment performance, inflation, and potential unforeseen expenses. By carefully managing their withdrawal rate, FIRE investors can confidently pursue their early retirement dreams while maintaining financial independence and the freedom to enjoy a fulfilling post-career life.

4.     Lifestyle optimization / economic discipline

Also known simply as “living below your means,” lifestyle optimization is a pivotal aspect of FIRE investing, and focuses on the strict minimization of discretionary expenses. Personal fulfillment is defined quite differently by each of us, as accelerating your journey towards financial independence comes with the tradeoff of a frugal lifestyle and mindset. Making a long-term commitment to nurturing a sense of contentment and forgoing excessive consumerism may sound good in theory, but can be challenging in practice.

While achieving financial independence early is the central goal of FIRE investing, the FIRE lifestyle is certainly not for everyone. Making the strict sacrifices needed to retire early can be quite difficult, as the lifestyle trade-offs of a reduced budget, downsized housing, and foregone luxury and comfort items are not palatable for many individuals. However, for those who have the fortitude and the discipline, FIRE investing can be rewarding and extremely empowering, as it is impossible to put a price tag on the peace associated with financial independence!

Click the Wealth Management Philosophy thumbnail image below to learn more about exactly how we help our clients save and invest for retirement while minimizing taxes.

Our Associate Wealth Advisor, Megan Miller, EA, and Director of Tax and Financial Planning, Steve Pitchford, CPA, CFP^®, worked hard together earlier this week collaborating on a client’s customized financial plan.

We are fortunate to have an on-staff CPA, CFP^®, and EA, and both Steve and Megan have had a huge impact on the level and sophistication of the planning and wealth management work we regularly do with clients.

Our clients and our firm are lucky to have both of you, Steve and Megan!

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

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Crypto making a comeback!

Despite economic uncertainty and a regulatory crackdown on some crypto exchanges, bitcoin prices have nearly doubled since last December, and have risen ~ 20% just this week, with the price eclipsing $30,000 for the first time since mid-April.

At Towerpoint Wealth, we recognize that digital assets like bitcoin and Ethereum will continue to exhibit short-term volatility as a new asset class.

We also continue to believe that the entrance of major Wall Street institutions into the digital assets market indicates a significant shift in the financial landscape. In particular, Bitcoin’s acceptance as a mainstream asset class offers investors a diversification opportunity, while its unique properties position it as a potential digital gold.

Click below to watch a recent educational video we produced about digital assets and cryptocurrencies, and learn why we believe that crypto is here to stay, and not going away

Click HERE to browse TPW’s library of other wealth-building and wealth-protecting educational videos.

Organizing Your Financial Records

Many people struggle every time they open their mail or email. “Is this important? Do I need this? Should I keep it? Should I throw it away?”

When it comes to managing your financial records, it’s crucial to strike a balance between keeping necessary documents and disposing of those that are no longer needed. Certain financial records such as tax returns, W-2 forms, and supporting tax documentation should be retained for a specified period to comply with legal requirements and for personal reference.

It is advisable to shred any discarded documents that contain personal or sensitive information to protect against identity theft. Ultimately, maintaining an organized system for financial record-keeping ensures that you retain the necessary documents while minimizing clutter and unnecessary storage.

Click the image below or view our new Wealth Management Resources webpage, and download an excellent resource from MFS that should help you stay organized and purge with confidence! 

Have questions or concerns about filing your 2022 tax return?
We welcome connecting with you and are happy to help. Click the banner below to message Steve Pitchford, Steve Pitchford, Certified Financial Planner.

Where are Americans moving to?

Internal migration within the United States has been a significant phenomenon that has shaped the country’s demographic and economic landscape. Often driven by factors such as job opportunities, politics, lifestyle preferences, cost of living, and family considerations, migration has been a constant feature of American society.

Individuals and families frequently relocate from one state to another in search of better employment prospects, improved living conditions, or a change in environment. For instance, people may move from rural areas to urban centers in search of employment in industries such as technology, finance, or entertainment, or from urban centers to rural areas due to a desire for a quieter and more peaceful lifestyle away from the hustle and bustle of urban areas, the allure of a closer connection to nature, more affordable housing, and the opportunity to enjoy outdoor activities such as gardening, hiking, or farming.

Surprisingly, while the pandemic did not disrupt the decline in the rate of people moving, Chartr’s graph below highlights the fact that those who do decide to pack up and switch states contribute to regional variations in population density, cultural diversity, and economic activity, as people gravitate toward areas that align with their aspirations and needs.

In light of how unsettled the economy and markets are, are you concerned or worried about

the bonds in your portfolio, and/or the overall level of risk you are taking in your portfolio? Message us to discuss your circumstances.

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

Worried about whether you have enough set aside to retire? Check out our “Retiring with 2 Million Dollars” guide to learn five specific steps you can take immediately to work to grow your net worth!

Joseph Eschleman
Certified Investment Management Analyst, CIMA^®

Jonathan W. LaTurner
Wealth Advisor

Steve Pitchford
CPA, Certified Financial Planner^®

Lori A. Heppner
Director of Operations

Nathan P. Billigmeier
Director of Research and Analytics

Michelle Venezia
Client Service Specialist

Luis Barrera
Marketing Specialist

 Megan M. Miller, EA
Associate Wealth Advisor

 Connect with Towerpoint Wealth, your Sacramento Financial Advisor, on any of these platforms, and send us a message to share your preferred charity.

We will happily donate $10 to it!

Follow TPW on LinkedIn
Follow TPW on YouTube
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Follow TPW on X
Follow TPW Podcast

Predicting the future is an intriguing and complex endeavor that has captivated human imagination throughout history.

And although the Simpsons have somehow consistently done it well, in real life it has also repeatedly been proven to be next to impossible to do. We strongly urge you to express humility about your ability, or anyone else’s, to accurately prognosticate.

“Nothing is sure tomorrow, nothing is sure next year, and nothing is ever sure, either in markets or in business forecasts, or in anything else.”

– Warren Buffett, at Berkshire Hathaway’s annual shareholder meeting, May 6, 2023

In the same vein, predicting the stock market is often regarded as a futile and risky endeavor, and there are several important reasons why relying on predictions can be extremely detrimental to investors. The stock market is a complex system influenced by numerous factors, including economic indicators, geopolitical events, and investor sentiment. Attempting to accurately forecast these variables is an incredibly challenging task, even for seasoned professionals. While there are many who prognosticate, the inherent uncertainty and volatility of each variable make it nearly impossible to consistently predict market movements with precision.

The reliance on predictions can also tempt investors who profess to be objective, and “longer-term,” to engage in speculative behavior, and can lead to irrational investment decisions. When individuals become fixated on trying to forecast the shorter-term movements of the market, they may overlook the longer-term fundamentals of a company or investment. This speculative mindset often results in impulsive buying or selling, driven by fear or greed, rather than by careful analysis of the underlying value of an investment. Such behavior can lead to market bubbles and crashes, as prices become detached from the true worth of the assets.

Additionally, the availability of prognostication in today’s 24/7 news cycle can create a false sense of security among investors. Some may rely heavily on what “the experts” have to say about the future, and to overvalue this forecasted information, and make investment decisions based on these predictions. However, predictions are inherently subjective, and are usually prone to biases. Even sophisticated predictive models are almost always flawed, as they are oftentimes built on historical data that may not accurately reflect unknown future market, political, and economic conditions. Listening to those who prognosticate, and blindly following predictions without considering other relevant factors, can expose investors to unnecessary risks and potential losses.

Here at Towerpoint Wealth, we believe that the inclination to predict the shorter-term future movements of the stock market undermines the core principles of longer-term wealth building, investing, and value creation. Successful investing is about being disciplined, having and objectively following a well-thought-out plan, and remaining objective during periods of market, economic, and political extremes. By focusing too much on predictions, investors may lose sight of the importance of patience, diversification, and confidence in a well-thought out financial and investment plan. We believe that those who remain committed to their investment thesis over time will be well-rewarded, as opposed to those who constantly chase and flip-flop based on short-term market fluctuations and well-articulated stories.

Relying on predictions to navigate the stock market is fraught with risks, oftentimes leading to poor investment decisions. The inherent complexity, uncertainty, and volatility of the market make accurate predictions a formidable challenge, at best. Furthermore, an overemphasis on predictions can promote speculative behavior, foster irrational decision-making, create false security, and detract from the fundamental principles of longer-term investing. Instead of fixating on predictions, investors are better off focusing on sound investment strategies, thorough research, and a disciplined approach to create value in their portfolios.

While the bashing of forecasting is easy, at Towerpoint Wealth we believe it remains necessary, as predicting the future easily sells in today’s media-driven culture. People are inherently drawn to “talking heads” who authoritatively prognosticate about what is going to happen in the market and the economy over the next day, week, quarter, or even year. Open any newspaper or turn on any financial news programming (and we use that term lightly), and it is easy to find an expert with a strong opinion about what lies around the corner.

Rather than listening to these “experts” prognosticate, we encourage you to instead take your cues from the true masters of wealth building:

• “We should be very cautious in what we expect of our prescience.”

– Howard Marks

• “I figure that I want to swim as well as I can against the tides. I’m not trying to predict the tides.”

– Charlie Munger

• “There is very little value added trying to predict where the market is going or guessing whether it’s overpriced or underpriced.”

– Bill Miller

And finally:

Click the Wealth Management Philosophy thumbnail image below to learn more about exactly how we help our clients save and invest for retirement while minimizing taxes.

While attending the annual Professional Fiduciary Association of California (PFAC) conference in San Francisco last week, our Partner, Wealth Advisor, Jonathan LaTurner, and our Associate Wealth Advisor, Megan Miller, hosted a number of our professional fiduciary clients on a Foodie Adventures walking food tour of North Beach and Chinatown in San Francisco.

In addition to two full days of fiduciary education (here is the conference agenda), it looks like Jonathan and Megan did an excellent job of mixing a little pleasure with business while in SF!

Click HERE to message us with any questions or concerns you may have about your retirement right now.

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

Retiring with two million dollars.

A 2020 survey from Schwab Retirement Plan Services found that the average worker expects to need roughly $1.9 million to retire comfortably. Is $2 million enough to retire? Is retiring with 2 million dollars a reasonable goal? There certainly are a myriad of moving parts involved in answering the question of whether retiring with $2 million is enough, and a number of things to consider.

Is $2 million enough to retire if you plan to live off interest alone? Is $2 million enough to retire if you plan to embark on expensive hobbies? Where you will live, and how? What will you need to cover health costs? These are just some of the financial complexities when you consider retirement.

Whatever the number you settle on as “enough,” click below to watch our latest educational video, and learn five specific steps you can take immediately to grow your net worth.

Click HERE to browse TPW’s library of other wealth-building and wealth-protecting educational videos.

Worried about whether you have enough set aside to retire? Check out our “Retiring with 2 Million Dollars” guide to learn five specific steps you can take immediately to work to grow your net worth!

The MEGA Backdoor Roth 401(k)

How would you like to stash an extra $43,500 into a tax-free account?

The Mega Backdoor Roth 401(k) is a strategy that allows high-income earners to contribute significant amounts of after-tax money into their employer-sponsored retirement account, and then immediately convert those funds into a Roth 401(k). While traditional Roth IRA contributions are subject to earned income limits, the Mega Backdoor Roth 401(k) offers a way for individuals to surpass those limits and leverage the tax-free growth a Roth 401(k) provides. By utilizing this strategy, individuals can contribute significant sums of money beyond their standard 401(k) contribution limits, potentially turbocharging their retirement savings.

Here’s how the Mega Backdoor Roth 401(k) works: First, max out your regular contributions (either “traditional” pre-tax or Roth) to your 401(k) account – for 2023, the ceiling is $22,500 if you are under age 50, or $30,000 if you are over age 50.

Then, if your employer allows it, you make additional after-tax contributions, beyond the aforementioned annual contribution limits. For 2023, the total combined 401(k) contribution limit, including this Mega Backdoor Roth 401(k) strategy, is $66,000, or $73,500 for individuals 50 years old and older. Once these extra after-tax contributions are made, the funds can then be immediately converted into a designated Roth 401(k) account via an in-plan conversion. This in-plan conversion allows these “extra” contributions to grow tax-free, and qualified withdrawals from Roth 401(k) accounts in retirement are also tax-free. It is important to note that the Mega Backdoor Roth 401(k) strategy may not be available in all employer-sponsored retirement plans, so it’s crucial to check with your plan administrator to determine if this option is available to you.

We encourage you to contact us to discuss whether or not your 401(k) plan allows for Mega Backdoor Roth 401(k) contributions, and whether or not this strategy would be a worthwhile tool to utilize within your current wealth management plan.

Have questions or concerns about filing your 2022 tax return?
We welcome connecting with you and are happy to help. Click the banner below to message Steve Pitchford, Steve Pitchford, Certified Financial Planner.

Bond INCOME Is Most Important!

The swift price declines in the bond market in 2022, caused primarily by aggressive increases in interest rates, were upsetting for some investors.

However, the longer-term performance of bond investments has come mostly from income return, not price return!

Put differently, bonds (and in particular, the income that they generate) are still a hugely important component of a properly-diversified portfolio, and higher interest rates can generally be *beneficial* for longer-term bond investors!

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

Looking for a Sacramento Wealth Advisor to discuss your circumstances? Message us today.

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At Towerpoint Wealth, we help you remove the hassle of properly coordinating all of your financial affairs, so you can live a happier life and enjoy retirement. If you are worried about how the 2024 election could affect your financial future, we welcome talking further with you about your personal situation.

Joseph Eschleman
Certified Investment Management Analyst, CIMA^®

Jonathan W. LaTurner
Wealth Advisor

Steve Pitchford
CPA, Certified Financial Planner^®

Lori A. Heppner
Director of Operations

Nathan P. Billigmeier
Director of Research and Analytics

Michelle Venezia
Client Service Specialist

Luis Barrera
Marketing Specialist

 Megan M. Miller, EA
Associate Wealth Advisor

 Connect with Towerpoint Wealth, your Sacramento Financial Advisor, on any of these platforms, and send us a message to share your preferred charity.

We will happily donate $10 to it!

Follow TPW on LinkedIn
Follow TPW on YouTube
Follow TPW on Facebook
Follow TPW on Instagram
Follow TPW on X

Michael Douglas won critical acclaim and the 1988 Academy Award for Best Actor in a Leading Role for playing him in Oliver Stone’s Wall Street. And whether you love or despise the notorious Gordon Gekko, the ambitious, manipulative, charismatic, and cold-blooded character became an icon in popular culture, representing the archetype of the ruthless and GREEDY corporate villain. 

Seeing how despicable he is, is it possible that Gekko on some level may actually be correct? We can confidently state that it sure doesn’t feel right, or virtuous, or moral, to say that greed is good, so how is is possible that it actually might be? 

“Of course, none of us are greedy. It’s only the other fellow who’s greedy.” 

Below is a thoughtful, provocative, and intellectual two minute conversation between the great economist, Milton Friedman, and the great American media personality, Phil Donahue, discussing the drawbacks and merits of greed. Donahue’s questions are excellent, and agree or disagree with Friedan’s perspective, the dialogue challenges the conventional viewpoint that greed is bad. 

The clip has some excellent Friedman quotes: 

• “Tell me, is there some society you know that doesn’t run on greed? Do you think Russia doesn’t run on greed? Do you think China doesn’t run on greed?”  
• “The world runs on individuals pursuing their separate interests.” 
• “In the only cases in which the masses have escaped from the kind of grinding poverty you’re talking about, the only cases in recorded history, are where they have had capitalism and largely free trade.” 
• “Is it true that political self-interest is nobler somehow than economic self-interest?” 
• “And just tell me: Where in the world do you find these angels who are going to organize society for us?” 
• “There is no alternative way so far discovered of improving the lot of people than the productivity of free enterprise.” 

We believe that Friedman is a giant in the world of economics because he does not just work within theories in a vacuum sitting in some office, but instead directly accounts for human nature and behavior. Warren Buffett holds very similar views about human behavior and investor sentiment: 

Greed (and its counterpart, fear) is so widely recognized as an influencing factor in the financial and investment markets that CNN created an index for it: 

Everybody has an incentive to maximize their lot in life. And certainly while unchecked greed can lead to unethical behavior and harm others, a certain level of ambition…greed…can be a powerful motivator for individuals to work harder, take risks, and push beyond their comfort zones. It fuels a desire for personal advancement and success, inspiring individuals to set ambitious goals and make determined efforts to achieve them. This drive and motivation can lead to personal growth, innovation, and the accomplishment of remarkable feats. 

Greed, when harnessed within the framework of a competitive market, can stimulate economic growth and foster innovation. Entrepreneurs driven by a desire for wealth and success often start businesses and develop new products, services, and technologies to satisfy market demand and to improve society as a whole. This entrepreneurial spirit can create job opportunities, drive technological advancements, and enhance overall productivity, benefiting society as a whole. 

Fully recognizing the importance of striking a balance between ambition (dare we say greed), and ethical considerations, and that the pursuit of wealth aligns with integrity and social responsibility, at Towerpoint Wealth we also fully understand Gordon Gekko’s point, and work to recognize, capitalize on, and leverage how greed, as a natural human emotion, can oftentimes create opportunities for our clients as we help them develop and execute on a disciplined plan to build and protect their wealth. 

Click the Wealth Management Philosophy thumbnail image below to learn more about exactly how we help our clients save and invest for retirement while minimizing taxes.

Big TPW news! 

Last weekend our Director of Tax and Financial Planning, Steve Pitchford, tied the knot to his beautiful fiancée, Katie. 

The couple had an exquisite wedding at Rancho Roble Vineyards, surrounded by friends, family, and of course the whole TPW family! 

Join us in wishing the newlyweds a very happy and prosperous life together! Congratulations Steve and Katie! 

Thinking about getting married? Currently a newlywed? 

Click HERE to message us with any questions or concerns you may have
about your new financial circumstances. 

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

Is crypto worth investing in?

Did you see Joseph Eschleman, CIMA® on ABC10 last week??!! 

Lora Painter interviewed our President about “The Truth about Crypto” and how it can be considered as a potentially complementary part of a properly diversified investment portfolio.

Thanks for having us back ABC10 – we love informing viewers about money and spreading the “financial gospel.” Click the video above and learn more about crypto currency.

Click HERE to browse TPW’s library of other wealth-building and wealth-protecting educational videos.

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One of our favorite wealth-building and wealth-protecting quotes of all time, from legendary investing great Peter Lynch.  

Pooled Income Fund

A pooled income fund (PIF) is a type of charitable giving vehicle that allows donors to make contributions to a common fund, which is then invested by the fund manager. The income generated from the investments is distributed to the individual donor(s) based on their share of the fund. Pooled income funds are often established by nonprofit organizations, such as universities or foundations, to provide a structured and efficient way for individuals to support charitable causes, but are oftentimes established by “regular” retail investors as well. 

One of the key benefits of pooled income funds is the ability to receive income for life. When donors contribute to a pooled income fund, they typically receive a regular income stream from the fund’s investments for the remainder of their lives. This can be particularly advantageous for individuals who want to support charitable organizations while also ensuring a steady income during retirement. 

Additionally, donors may receive a charitable income tax deduction for their contributions to the pooled income fund, which can provide additional tax and economic benefits. 

Overall, pooled income funds offer a unique opportunity for individuals to combine their philanthropic goals with financial planning. By contributing to a common fund and receiving income for life, donors can make a lasting impact on charitable causes while also enjoying the financial security of regular lifetime income. 

We encourage you to click the image below to learn more, and to contact us to discuss whether considering a pooled income fund would be a worthwhile tool to utilize within your current wealth management plan. 

Have questions or concerns about filing your 2022 tax return?
We welcome connecting with you and are happy to help. Click the banner below to message Steve Pitchford, Steve Pitchford, Director of Tax and Financial Planning.

The debt ceiling

While we remain confident that a debt ceiling deal will be reached, how (un)sustainable is the overall level of our borrowing as a country? 

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

If you want to feel confident in your retirement planning decisions, reach out to us and schedule a 20-minute “Ask Anything” call – we are confident it will be time well spent!

At Towerpoint Wealth, we help you remove the hassle of properly coordinating all of your financial affairs, so you can live a happier life and enjoy retirement. If you are worried about how the 2024 election could affect your financial future, we welcome talking further with you about your personal situation.

Worried about whether you have enough set aside to retire? Check out our “Retiring with 2 Million Dollars” guide to learn five specific steps you can take immediately to work to grow your net worth!

Joseph Eschleman
Certified Investment Management Analyst, CIMA^®

Jonathan W. LaTurner
Wealth Advisor

Steve Pitchford
CPA, Certified Financial Planner^®

Lori A. Heppner
Director of Operations

Nathan P. Billigmeier
Director of Research and Analytics

Michelle Venezia
Client Service Specialist

Luis Barrera
Marketing Specialist

 Megan M. Miller, EA
Associate Wealth Advisor

 Connect with Towerpoint Wealth, your Sacramento Financial Advisor, on any of these platforms, and send us a message to share your preferred charity.

We will happily donate $10 to it!

Follow TPW on LinkedIn
Follow TPW on YouTube
Follow TPW on Facebook
Follow TPW on Instagram
Follow TPW on X