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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!

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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
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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!

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

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!

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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

What’s the deal with the debt ceiling in America, and is it important for investors?

A dramatically accelerated timeline for lawmakers to negotiate was established on Monday, as Treasury Secretary Janet Yellen said that the debt ceiling in America could be reached as early as June 1 if President Biden and Congress do not come to an agreement to raise or suspend it. Put differently, the US could run out of money to pay its bills, and default on its debt, if this contentious political and economic issue is not solved soon. Here we go again… 

We’ve been here before regarding the debt ceiling in America. Congress on the brink of another deadlock. Debate raging between Democrats and Republicans. Concerned citizens. Grandstanding politicians. Worried investors. And here at Towerpoint Wealth, while we feel the end result is obvious (the limit will be increased), there will be no shortage of brinksmanship as both parties do their song and dance, yet ultimately heed the advice Ms. Yellen offered in her May 1 letter to Congress: 

The last time this issue came to the forefront was December of 2021, when Congress ended up increasing the debt ceiling in America to $31.38 trillion. 

Since 1960, politicians have moved to raise, extend, or revise the definition of the debt ceiling in America 78 times – including three just in the last six months. The debt limit was first introduced in 1917, as a way to give the government flexibility to raise money during the First World War. In theory it gives Congress a way to check in on spending. But fights over the ceiling have become increasingly fractious, as political polarization increases and US debt has skyrocketed, roughly doubling in a decade. When the debt ceiling is reached, the government must either cut spending or raise taxes to reduce the deficit. This is often a difficult and unpopular choice, and it can lead to government shutdowns and economic instability. 

The debt ceiling in America has often been a source of political conflict – in 2011, for example, the debt ceiling debate led to a downgrade in the US credit rating and a period of economic uncertainty. One of the main arguments against raising the debt ceiling is that it encourages government spending and makes it easier for politicians to avoid making tough choices about budget cuts and tax increases. Some politicians argue that the debt ceiling should be lowered or eliminated altogether to force the government to live within its means. However, many economists and financial experts warn that defaulting on the national debt would have catastrophic consequences for the US and global economy, including a possible recession or depression. 

Overall, the debt ceiling crisis is a complex issue that requires a delicate balance between fiscal responsibility and economic stability. While the government must be held accountable for its spending, it is important to avoid defaulting on the national debt and to work towards a sustainable financial future for the country. 

What can YOU do as an investor as the debt ceiling in America becomes a more acute and pressing issue? Be disciplined, have a plan, remain objective, and keep two things in mind: 

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 Friday, our Marketing Specialist, Luis Barrera, represented Towerpoint Wealth at the California Future Business Leaders of America (FBLA) state conference at the SAFE Credit Union Convention Center. 

Luis connected with high school students from all over the state, who were eager to learn about what a wealth management firm is all about, and how we help our clients properly coordinate all of their financial affairs. Thank you to FBLA for having us! 

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!

As seen on TV!

Our President, Joseph F. Eschleman, CIMA®, was the go-to financial expert on ABC10 News’ March 20 feature story. 

A guest on ABC10’s Dollars and Sense segment, Joseph explained the four different taxes people need to be aware of when they inherit money through an estate, revocable trust, or will: estate taxes, gift taxes, inheritance taxes, and income taxes. 

“Nine times out of 10, when you inherit money – be it from a friend, be it from a family member, doesn’t matter – the act of…inheriting it is not taxable to the beneficiary,” said Eschleman. 

There’s more, of course, to the story. Click on the video below to watch Joseph in the ABC10 video, or reach out to us here at Towerpoint Wealth to discuss any questions you have related to your estate planning, estate taxes, or income taxes. 

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.  

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Health Savings Accounts (HSAs) are tax-advantaged savings accounts that allow individuals who qualify for a high-deductible health plan (HDHP) to save and invest money for qualified medical expenses. One of the key benefits of an HSA is that contributions made to the account are tax-deductible, which can lower your taxable income and reduce the amount of taxes you owe. Additionally, any interest or investment earnings on the account are tax-free, which means you can grow your HSA without having to worry about paying taxes on the earnings. Furthermore, withdrawals from the account that are used for qualified medical expenses are also tax-free, which allows you to use your savings to pay for healthcare expenses without having to pay taxes on the money you withdraw. 

Another significant tax benefit of HSAs is that the account can be used as a long-term savings vehicle for retirement. Once you reach the age of 65, you can withdraw money from your HSA for any reason, not just medical expenses, without penalty. However, if you withdraw money for non-medical expenses, you will have to pay income tax on the amount withdrawn. Their overall tax treatment makes HSAs an attractive option for individuals who want to save money for healthcare expenses in the short-term, while also planning for their long-term retirement needs. 

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.

1.     TV’s Streaming Bubble Has Burst, a Writers Strike Looms, and “Everybody Is Freaking Out”

Vanity Fair – 5.1.2023

“People are just desperate,” says David H. Steinberg, a writer and showrunner. “I’ve been doing this for over 20 years, and I’ve never been in a situation where people are like, ‘Oh, no one’s buying anything right now.’ We just can’t sell.”

2.     The Glorious Return of a Humble Car Feature

Slate.com – 4.26.2023

The touch screen pullback is the result of consumer backlash, not the enactment of overdue regulations or an awakening of corporate responsibility. Many drivers want buttons, not screens, and they’ve given carmakers an earful about it. Auto executives have long brushed aside safety concerns about their complex displays—and all signs suggest they would have happily kept doing so. But their customers are revolting, which has forced them to pay attention.

3.     With Playoff Knicks Hot, Madison Square Garden ‘Flooded with Requests From Celebrities’

NY Post – 5.3.2023

It’s once again the most coveted ticket in town.

On Tuesday night, Madison Square Garden’s Celebrity Row was overflowing with A-listers cheering on a hot Knicks squad, who defeated the Miami Heat in Game 2 of the Knicks second-round playoff series.

“The team has been flooded with requests from celebrities, with some saying they will fly in from out of town if they can get tickets,” a source close to MSG told The Post. “There’s way too many asks to address.”

How long will it take until I double my money?

The Rule of 72 is a simple mathematical concept that helps individuals estimate how long it will take for their investments to double in value. To use the rule of 72, divide the number 72 by the annual rate of return (ROR) you expect to earn on your investment.

The result? An approximation of the number of years it will take for your investment to double in value. For example, if you expect to earn a 6% annual return on your investment, dividing 72 by 6 gives you 12 years. This means that it would take approximately 12 years for your investment to double in value at a 6% annual return. The rule of 72 is a helpful tool for investors to quickly estimate the potential growth of their investments and make informed financial decisions.

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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
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Most of us recognize that taking a diversified approach to investing is a sound philosophy. There are a myriad of different ways for investors to build and grow their net worth, each with its unique set of risks, rewards, tax consequences, and considerations. Traditionally, in addition to building a portfolio of stocks, bonds, and mutual funds, one of the best and most popular avenues to diversify your investments is to own and invest in real estate.

In addition to adding diversification, real estate investing can provide numerous benefits to investors, including the potential for long-term appreciation, debt paydown, inflation protection, and passive cash flow. 

And let’s not ignore the tax benefits of real estate investing. Investing in real estate does provide a unique advantage, as the tax benefits of real estate investing can oftentimes be superior to those of stocks, bonds, and mutual funds. To be clear, we believe that reducing your taxes should never be a primary goal when investing and building net worth; however, we also believe that it is hugely important to recognize that it’s not what you make, but what you keep that builds financial security. To ignore the significance of minimizing your obligation to Uncle Sam is a huge mistake. 

Additionally, the tax benefits of real estate investing are one its most appealing aspects. These tax benefits can significantly reduce an investor’s tax liability, and increase their net, after-tax return on investment. The tax benefits of real estate investing can range from deductions for expenses related to the property to the ability to do tax-free Section 1031 exchanges of properties and avoid capital gains. In this way, real estate investing can be a tax-efficient strategy for both building wealth and generating income.

Itemized below are nine strategies to maximize the tax benefits of real estate investing. These are elaborated upon in the presentation that our Associate Wealth Advisor, Megan Miller, and President, Joseph Eschleman, recently delivered to the West Sacramento Real Estate Investor Meet Up group.

Click the image to watch the full presentation, and reference the list of the most compelling tax benefits of real estate investing!

1.     Start a real estate business – it’s easy.

2.     Leverage business expense tax deductions and credits.

3.     Take advantage of Qualified Business Income (QBI).

4.     Make it a family business!

5.     Utilize the “Double Dip” on rentals.

6.     Move in! Leveraging the primary residence capital gain exclusion.

7.     Know and take advantage of cost segregation.

8.    Consider Section 1031 exchanges and Delaware Statutory Trusts (DSTs).

9.    Open and fund a tax advantaged retirement account.

While this list is by no means an exhaustive one, we believe it is clear that the tax benefits of real estate investing provide a myriad of opportunities to keep Uncle Sam at arm’s length while striving to maximize profits and compound the growth of your net worth. 

It is important for investors to consult with qualified tax and financial professionals to ensure they are taking advantage of all available tax strategies while staying compliant with relevant tax laws and regulations. The tax benefits of real estate investing  make it a lucrative and attractive investment and diversification option for individuals and businesses alike.

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.

What’s the fastest path to retiring with $2 million?

A 2020 survey from Schwab Retirement Plan Services found that the average worker expects to need roughly $1.9 million to retire comfortably. Are you almost there? Have a long way to go? Is retiring with 2 million dollars a reasonable goal for you?

Is this enough for you to be happy and comfortable? We’ve put together 5 steps you can take to increase the size of your nest egg and considerations for a well-thought out, customized, retirement income plan in this white paper. We’re happy to offer it to you here.

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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Are you really a long term investor? 

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

In this video, our President, Joseph F. Eschleman, CIMA^®, discusses exactly what it takes to truly behave like a long term investor, and what specific long term investing strategies and philosophies need to be developed and internalized to be a successful long term investor. Trying to successfully build, and protect, your wealth and “nest egg?” Watch this video to listen to Joseph outline seven key long term investing strategies and philosophies, as well as the exact emotional and behavioral characteristics needed to be a successful long-term investor.

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

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Sometimes, it’s just easier to keep it simple! Credit to Michael Kitces for the quote.

Gifting to UTMA accounts

An UTMA, or Uniform Transfers to Minors Act, is a legal arrangement that allows parents or guardians to transfer assets to their children. One of the main advantages of using an UTMA is the potential tax benefits. UTMA accounts are taxed at the child’s tax rate, which is typically lower than the parents’ tax rate. This means that investment gains and income generated by assets held in an UTMA account can be taxed at a lower rate, allowing for more tax-efficient growth. Additionally, the first $1,250 of unearned investment income generated by an UTMA account is tax-free, and the next $1,250 is taxed, but at the child’s usually lower tax rate.

Another tax benefit of an UTMA is the ability to shift assets out of a parent’s estate for estate tax purposes. By transferring assets to an UTMA, parents can remove those assets from their estate and potentially reduce their estate tax liability. In addition, the assets in an UTMA account are considered the child’s property, not the parent’s, which can be advantageous for financial aid purposes. Up to $17,000 can be transferred, per person, into an UTMA account without being subject to gift taxes. Overall, an UTMA can be a valuable tool for parents looking to minimize their tax liability while transferring assets to their children.

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.

1.     The Robots Have Come for This Newsletter | Wall Street Journal – 4.13.2023

Okay…maybe the bots haven’t come for this newsletter just yet. But recent advances in artificial intelligence certainly have many of us scrambling to predict what’s next. For centuries, new waves of automation have been greeted by warnings of widespread job loss and disruption, and those predictions have proven to be wrong. But the revolutionary nature of ChatGPT begs us to consider the possibility that this time could be different.

According to some industry executives, it already is.

2.     Babe Ruth Bat Sells for Record $1.85M After ‘Photographic Corroboration’ | ESPN – 4.5.2023

Hunt Auctions has announced the private sale of a bat used by Babe Ruth circa 1920-21 for $1.85 million, a record price for a baseball bat. The previous record also belonged to a Ruth bat, one that sold privately for $1.68 million by Heritage Auctions last August.

According to Hunt Auctions, the new record holder is the “only known example to offer photographic corroboration.”

3.     Rupert Wins Again | Politico – 4.18.2023

If it seems fairly daft to congratulate Rupert Murdoch on settling the Dominion Voting Systems defamation case at a cost of $787.5 million, you probably need to be brought up to speed on how the tycoon excises malignancies when they threaten his core businesses.

For the media mogul, the massive Dominion settlement fee is just the cost of doing business.

A wonderful cartoon illustrating how emotions can trump objectivity during volatile periods in the economy and markets!

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

Message us to discuss your circumstances.

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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
Follow TPW Podcast

Following the deep wounds created by the still-fresh memory of the Global Financial Crisis (GFC) of 2007-2008, many are wondering if another bailout for banks is as regulators attempt to stave off a banking crisis that has spread across global markets.

This is leading people to rightly wonder: Has this created a moral hazard? Moral hazard is when you knowingly take a risk in the expectation that if it goes wrong, others will bear the consequences. While there are assuredly similarities, and depending on what your definition of a bailout for banks is, today’s banking crisis is much different than the circumstances that led to the GFC. One of the primary differences: depositors at Silicon Valley Bank, Silvergate Bank, and Signature Bank, rather than the three banks themselves, were rescued.

Amongst a continued whirlwind of debate and discourse about all of these issues, at Towerpoint Wealth we believe there are three central key points for discussion.

• What FDIC insured means.
• What constitutes a bailout?
• Does what’s happening now constitute another bailout for banks?

Most agree that an emergency government rescue of the individuals and companies who held deposits at Silicon Valley Bank (SVB) and Signature Bank was needed, as many SVB and Signature clients held funds at the bank in excess of the $250,000 FDIC insurance maximum, and a total wipeout of these depositors’ funds would have almost assuredly led to contagion in the financial system and a massive run on banks throughout the country. That is, everyone would want to withdraw their cash at the same time.

At Silvergate Bank, depositors did not need a government rescue, as the bank went through a voluntary liquidation, and the bank was able to sell its assets and investments and return all deposited money to its customers.

Let’s explore these three important points:

• What FDIC insured means. 

It used to be a simple question with a simple answer. Per the FDIC’s website:

FDIC deposit insurance protects bank customers in the event that an FDIC-insured depository institution fails. Bank customers don’t need to purchase deposit insurance; it is automatic for any deposit account opened at an FDIC-insured bank. Deposits are insured up to at least $250,000 per depositor, per FDIC-insured bank.

However, over the past two weeks, the goalposts have changed regarding this $250,000 deposit insurance cap. Officials at the US Treasury are studying ways to guarantee all bank deposits, especially if these problems in the banking system create a domino effect.

• What constitutes a bailout?

Quoting author and equities analyst Barry Ritholtz, a bailout is:

“When an individual or company, through their own behavior and risk management, suffers a disastrous loss — but is then somehow made fully (or even partially) whole, and they do not have to suffer the impact of their own decision-making.”

Sounds very similar to moral hazard, doesn’t it?

The concept that you are responsible for the results of your own handiwork is so old, it’s biblical:

The US government has facilitated bailouts for banks and other institutions for more than 200 years, beginning with the Panic of 1792, and more recently, with the Troubled Assets Relief Program (TARP) that authorized the US Treasury to purchase up to $700 billion of toxic assets from banks and other companies teetering on the brink of insolvency. Bank of America, Citigroup, Fannie Mae, Freddie Mac, Bear Stearns, and AIG received both direct and indirect Federal intervention and economic assistance. In other words, a bailout for banks. 

Bailouts for banks and other institutions are primarily criticized for a number of reasons: taxpayers can suffer losses, they may not work or take too long to be effective, they create moral hazard, they are perceived as political in nature, and they are rushed and may not work as intended.

Privatized gains and socialized losses anger virtually all of us, as that is not how capitalism is supposed to work. Is that what is happening today?

• Does this constitute another bailout for banks?

Are Silicon Valley Bank and Signature Bank depositors getting all their money back through FDIC insurance, even if they had more than the guaranteed $250,000 in deposits, the same thing as a bailout for banks?

People are questioning what FDIC insured means primarily because while authorities don’t yet see full, limitless FDIC coverage as necessary, they are clearly worried that if another regional bank becomes insolvent, there will be a run on deposits. Without unlimited FDIC insurance, this would almost assuredly send significant additional capital (billions of dollars!) to the largest banks in the world, known as systemically important banks, or SIBs. In other words, away from small and mid-size banking institutions. 

As businessman and investor Kevin O’Leary said to Yahoo Finance earlier this week (emphasis added):

This was not a 2008 Lehman Brothers situation. These are just idiot bankers with an incompetent board. It’s that simple.

…we’re sitting in a horrible moral place today, where every single account in every single bank, regardless of who is running it, is guaranteed by the taxpayer. I’m not happy with the outcome. I can do anything I want as a bank manager, I can swing for the fences… but I can take inordinate risk to move that stock price (up), and never worry about what I do with the depositors’ money. Does that sound like a good idea to you?

While support for a motion to guarantee all bank deposits is growing, there is a strong chorus of those who are firmly against a universal Federal guarantee of all bank deposits. A two-day Reuters/Ipsos poll found 84% of respondents – including strong majorities of Republicans and Democrats – think taxpayers should not foot the bill when problems are caused by bank mismanagement.

Additionally, the government is already handing out money to banks in the form of a new lending program launched this month, the Bank Term Funding Program (BTFP), complementing the discount window, both of which allow banks to borrow money from the Fed to meet cash shortages and function as a safety valve to relieve pressure in the financial markets. 

U.S. banks have borrowed a combined $164.8 billion from these two backstop facilities, which has eclipsed the money that was borrowed during the 2008/2009 financial crisis.

The effects of this bank borrowing will be wide-ranging, including real estate loans, corporate loans, personal loans, mortgages, credit card interest rates, the U.S. Prime Rate, and every other type of lending that you can consider.

Does all of this constitute a bailout for banks, or is it simply essential support for our US banking system? Send us a note and let us know what you think!

Click the thumbnail image below if you are interested in learning more about the details of what happened at Silicon Valley Bank.

What’s Next?

Investors, depositors, and market participants are all hopeful that the game of “whack-a-mole” but with a similar feel, will end soon. Considerations about the overall health of the economy persist. While moves by Treasury Secretary Janet Yellen and Fed Chair Jerome Powell will hopefully limit contagion in the banking industry, economic activity will almost certainly be slowed by tightening standards and greater scrutiny and regulation of lenders, and rising interest rates from the Fed firmly tip the odds in favor of a recession. 

For now, it seems as though consumers are comfortable with the current state of things; at least people aren’t searching Google to find information on bank withdrawals today as often as they were just a week ago.’

Secretary Yellen has also promised to intervene and provide further support for banks if needed, helping consumer fear abate further.

Veteran banking analyst Dick Bove said “…if you go back in history, you know that time before the Federal Reserve was formed, that’s what was done to preserve stability in the banking industry.”

He also said that he believes the banking crisis is finished. At Towerpoint Wealth, we believe the more important question is – do you?

Crises will always be a part of life and will always occur, and this latest one is by no means a reason to hit the panic button. Prudent and successful longer-term investors will recognize this period as simply another entry on their wealth-building and wealth-protecting resume (earning another investment “stripe,” if you will), and just another part of our schizophrenic business cycle.

“This too shall pass” is a quote attributed to both King Solomon and Abraham Lincoln, and an excellent reminder to be humble during good times and resolute during periods of uncertainty and fear. Markets will go up, and they will go down, all of which is out of our control – what matters is how you respond to these challenges (read: opportunities), which just so happens to be in our control. We will persevere as we always do, as we remind our Towerpoint Wealth clients and friends that having a disciplined investment approach and a properly-diversified portfolio will always remain essential, independent of our external environment.

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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.

Are you a real estate investor?

Would you like to learn how to reduce and minimize the income taxes you pay on your real estate portfolio?

Please join us on March 28 at the Kick’n Mule, as our Associate Wealth Advisor, Megan Miller and Joseph Eschleman, as they join The West Sacramento Real Estate Investor Meetup group to talk about how to better manage the tax liability of your real estate investing! 

The event is free to attend. Click the thumbnail image below to learn more about the upcoming event!

Here are some of our top trending moments at Towerpoint you might have missed on our social platforms.

Click the images below!

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What else is happening with the Towerpoint Wealth family?

Will my investments and assets at Schwab be OK?

Recent news about three large regional bank failures – Silicon Valley Bank, Signature Bank, and Silvergate Bank – has been concerning and unsettling to say the least. Here at Towerpoint Wealth, we have recently had a few clients ask us about how the fallout may affect our primary custodian that we have partnered with to hold and custody our client assets – Charles Schwab.

While no financial institution has completely escaped the consequences of this crisis, we are confident that Schwab is fundamentally different in many ways from those banks in the news. Our confidence in Schwab is underpinned by Schwab’s:

• Conservative balance sheet.
• Strong liquidity position.
• Diversified base of more than 34 million account holders.

Click the thumbnail below to watch a recent CNBC interview of Walt Bettinger, Charles Schwab’s CEO, as he discusses these recent events, and why he (and we) believe that Schwab remains a safe port during this temporary storm

The August Rule

Is this the IRS rule that feels too good to be true?

The “Augusta Rule” is the nickname for Section 280A(g) of the IRS tax code. It allows business owners to rent their personal residence to their business for up to 14 days per year, making the rental income tax-free and allowing the business to write off the expense.

To benefit from the Section 280A deduction, schedule legitimate business meetings at your home, ensuring they do not exceed 14 days and are not for entertainment purposes.

Be sure to charge fair market rent, document the meetings by taking corporate minutes, and submit them to the IRS to protect the deduction!

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Are you searching “certified financial planner near me”? You’ve found Sacramento wealth advisor Steve Pitchford, CPA, CFP® and the Towerpoint Wealth Sacramento financial advisor team.

We serve clients primarily in the Northern California region. Glad you’re here! Please contact us with any questions you have about our wealth management services.

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

California Lawmakers Call For an Audit of Spending on Homelessness

KCRA3 – 3.21.2023

The state spends billions of dollars each year trying to address the homeless crisis, but is it working? There is a new bipartisan effort among California lawmakers to try to find out.

The Incredible Tantrum Venture Capitalists Threw Over Silicon Valley Bank

Slate – 3.13.2023

If the technological innovation coming out of Silicon Valley is as important as venture capitalists insist, the past few days suggest they haven’t been very responsible stewards of it.

The collapse of Silicon Valley Bank may have resulted from a perfect storm of ugly events. But it was also emblematic of a startup ecosystem and venture-capital apparatus that are too unstable, too risky, and too unmoored from reality to be left in charge of something as important as the direction of our technological development

The Biggest Lie the Rich Ever Told? That Money Can’t Buy You Happiness

The Guardian – 3.14.2023

News just in: Money does buy you happiness. Duh, you might say. Anyone could have told you that; it’s hardly a Nobel-prize winning insight. Well, actually, it kinda is: In 2010, Daniel Kahneman, a Nobel prize-winning economist and psychologist, came out with the theory that there was a monetary “happiness plateau”. Once you hit an annual household income of $75,000, earning more money didn’t make you any happier. 

In 2021, the happiness researcher Matthew Killingsworth released a dissenting study, showing that happiness increased with income and there wasn’t evidence of a plateau. Now the pair have teamed up in a process known as “adversarial collaboration” and released a new study finding that they were both sort of right, but Killingsworth was more right: for most people, earning more money makes you happier.

Since the 1970s, over 90 banks in the United States with $1 billion or more in assets have failed.

The Yahoo Finance list below is based on assets at the time of failure of banks insured by the FDIC.

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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!

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

---

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
Follow TPW Podcast