TPW Trending Today

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

What else is happening with the Towerpoint Wealth family?

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

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

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

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

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

Useful and interesting content we read the past two weeks:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

• Texas state residents are asked to conserve energy amid predictions for record-high temperatures, and are warned of potential rolling blackouts.
• California Governor Gavin Newsom visits the White House for a series of meetings centering on abortion, climate change, and gun control.
• The euro reached parity with the dollar for the first time in twenty years.
• The Washburn Fire threatens the Mariposa Grove of Giant Sequoias in Yosemite, but the ancient trees are being protected by sprinklers!
• Lockeford, a small San Joaquin County town just east of Lodi, will be the guinea pig for Amazon drone delivery.
• WHO chief urges ‘bring back face masks’ as COVID pandemic ‘nowhere near over’.
• North Carolina is #1, California ranks #29 in CNBC’s annual ‘America’s Top States for Business in 2022’.

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

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

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

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We will happily donate $10 to it!

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

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

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

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

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

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

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

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

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

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

2. They provide inflation protection for your cash.

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

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

• For instance, I Bonds have a 30-year maturity, and are not redeemable for at least 12 months.

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

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

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

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

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

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

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

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

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

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

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

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

Click the Wealth Management Philosophy thumbnail image below to learn more

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

What’s Happening at TPW?

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

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

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

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

What else is happening with the Towerpoint Wealth family?

TPW Taxes – Section 1031 Exchanges

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

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

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

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

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

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

TPW News You Can Use

Useful and interesting content we read the past two weeks:

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

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

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

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

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

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

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

TPW Chart of the Week

Shark attack!

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

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

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

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

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

Should you should care?

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

Do you feel naïve about your Social Security benefits?

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

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

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

Quote of the Week

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

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

Trending Today

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

• Making good on his “super bad feeling,” Elon Musk’s layoffs at Tesla reflect his concerns about the economy
• Battles over abortion have now shifted from the Supreme Court to state courts
• The most popular social media platforms have hidden some posts that mention abortion in any context
• Don’t plan to party at your rented Air B&B. It’s now banned
• LEGO puts its first US manufacturing plant in Virginia
• Ukrainian President Volodymyr Zelensky addresses NATO, demands more arms, money, and support
• The whispers of Hillary Clinton 2024 have started

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

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

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

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

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

Right now, there are many people saying to themselves “What’s the point?” when thinking about investing during inflation. Does the below photo conjure up familiar feelings right now when checking your accounts?

There is no question that today’s market, economic, and political environment is scary, volatile, disconcerting, and our favorite adjective to use, unsettling. Saving and investing during inflation seems to hold no basis in logic, and can feel like throwing good money after bad. And no matter how old you are, there are at least five things going on right now that are affecting how you are thinking about what to do (or not do) with your money, including:

• The dawn of “crypto winter” this summer.
• The official arrival of a bear market (a 20% decline from its peak) for stocks.
• Soaring gas prices that are closing in on a $5/gallon national average, and rampant overall inflation.
• Skyrocketing interest rates, making it much more expensive to borrowing money.
• A quickly cooling and slowing real estate and housing market.

Add to this consumer prices rising more than they have in the past 40 years, and these events start to sound like reasons to run. Investing during inflation is emotionally difficult, but extremely important! Don’t use these events as excuses or rationalizations to withdraw, unless you have a magic crystal ball that will accurately predict these two important things.

1. When, exactly, to get out of the stock market, before it assumedly drops more, and

2. When, exactly, to get back in to the stock market, when circumstances are even scarier and prices are lower than they are today

We’ve seen people get #1 right, or #2 right, but rarely does anyone consistently and accurately get both right.

What to do to ensure we are investing during inflation, and not turning our backs?

1. Recognize this is an emotional time, and give yourself space – it’s normal to feel worried, desperate, fearful, anxious, and even angry.

We are human beings, and we are hard-wired to be emotional. However, at Towerpoint Wealth, we understand that allowing emotions to dictate financial decision-making is the most common and problematic mistake made by many investors. And we also understand that it is immensely detrimental to growing and protecting one’s net worth and assets.

As investors (and humans), we all harbor cognitive biases, and having the fortitude to recognize and not give into our biases is essential.

2. Be humble about your ability to predict the future, and disciplined in systematically rebalancing your portfolio.

Trying to sell right at the top, and buy right at the bottom, is an exercise in futility, and is an expectation that no reasonable investor should harbor. We believe the sooner you recognize that accurately predicting the future is something human beings are not very good at, the better off you will be.

Instead of repeatedly flailing with attempts to time the market and accurately predict the future, have a plan to systematically rebalance your portfolio (we advise semi-annually). This forces you to sell high and buy low, add to areas that are undervalued, and reduce areas that are overvalued. The chart below provides empirical evidence of the benefits of rebalancing.

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

3. If you are working, be disciplined in dollar-cost averaging (DCAing) funds into your portfolio and nest egg while the markets are temporarily weak.

Investing during inflation does not have to be any more complicated or sophisticated than investing during more “normal” times, and this certainly includes being systematic in investing during inflation.

It is important to understand that the key to dollar-cost averaging is NOT timing the market, a concept that can be difficult to internalize! The emotional temptation to terminate a DCA program becomes greater when the value of your accounts are declining, as it feels like you are throwing good money after bad, as we mentioned previously. However, the opposite is actually true, as you are adding more capital to your portfolio when prices are low, therefore building a stronger overall base to your nest egg – it just doesn’t feel very good at the time!

You can also consider value averaging if you and/or your advisor have the time and the expertise.

4. If you are retired, be mindful about where in your portfolio you are withdrawing funds from while the markets are temporarily weak.

Having a plan to derive sustainable retirement income, during both good economic environments and bad, is essential. Follow a systematic retirement income plan like this basic example:

• Establish a cash and emergency fund (your “feeder” fund) that holds enough cash to cover approximately two years of general lifestyle expenses
• Regularly backfill your feeder fund with investment income from your investment accounts, i.e. interest and dividends, as well as guaranteed pension and Social Security income
• Backfill your feeder fund by selling investments that have appreciated when the financial markets are doing well; pause and avoid selling investments at a loss when the markets are temporarily weak and in decline

Would you like to discuss specific ideas on where to invest your money during an inflationary environment?

What’s Happening at TPW?

Today we are excited to welcome Luis Barrera to the Towerpoint Wealth family as our new Marketing Specialist.

We look forward to having Luis apply his marketing skills and experience to help Towerpoint Wealth connect in new ways with new and existing clients.

Click the photo below to learn more about Luis and his background, and be sure to ask him about his two Australian Shepherds, Bella and Blue, in reaching out to him with a warm “welcome aboard!”

A big congratulations to our Director of Research and Analytics, Nathan Billigmeier, for earning his Certificate in Blockchain and Digital Assets from the Digital Assets Council of Financial Professionals just last week!

What else is happening with the Towerpoint Wealth family?

TPW Taxes – 2022

While the IRS has historically provided significant tax breaks to real estate investors, the 2017 Tax Cuts and Jobs Act created another avenue of advantage for these investors through the creation of the Opportunity Zone program. By investing in an Opportunity Zone (OZ) through an investment vehicle called a Qualified Opportunity Fund (QOF), investors are provided with a unique opportunity to potentially defer, reduce, and eliminate capital gains taxes!

Click the image below to open and review a well-assembled white paper we recently published on the specifics of Opportunity Zones and Qualified Opportunity Funds, the tax advantages of investing in Qualified Opportunity Funds, as well as other considerations for an investor contemplating a QOF.

Curious if you might benefit from an OZ or a QOF in 2022?

TPW News You Can Use

Useful and interesting content we read the past two weeks:

1. The Markets and Households Lose Faith that the Fed Can Handle Inflation – The Washington Post – 6.14.2022

The Federal Reserve’s missteps in waiting too long to tackle the greatest run-up in prices in four decades has shaken trust across the markets and the American public that it is up to the task of curbing inflation.

2. For Families Deeply Divided, A Summer of Hot Buttons Begins – AP News – 6.16.2022

For families fractured along red house-blue house lines, summer’s slate of reunions, trips and weddings poses another exhausting round of tension at a time of heavy fatigue. Pandemic restrictions have melted away but gun control, the fight for reproductive rights, the Jan. 6 insurrection hearings, who’s to blame for soaring inflation and a range of other issues continue to simmer.

For families fractured along red house-blue house lines, summer’s slate of reunions, trips and weddings poses another exhausting round of tension at a time of heavy fatigue. Pandemic restrictions have melted away but gun control, the fight for reproductive rights, the Jan. 6 insurrection hearings, who’s to blame for soaring inflation and a range of other issues continue to simmer.

3. From Great Resignation to Forced Resignation – Tech Companies Shift to Layoffs After a Huge Ramp Up in Hiring – Marketwatch – 6.15.2022

Thousands of layoffs in the tech sector, compounded by hiring freezes and a slowdown in hiring, highlight the abrupt shift in fortunes over the past several months as a result of rampant inflation, fear of stagflation and recession, supply-chain interruptions, the war in Ukraine, an ailing stock market and other red-alert economic factors.

Chart / Infographics of the Week

The Fed raised rates 75 basis points (3/4 of a point) on Wednesday. This is the biggest rate hike since 1994!

One of the main reasons for the Fed’s hike was the massive increase in consumer inflation projections in the next year.

TPW Educational Video : Are You Really a Long Term Investor?

An essential, yet frankly sometimes annoying, question to ask in today’s current difficult market environment:

✅ Are you *really* a long-term investor?

Click the thumbnail below to learn what you may be doing wrong

Quote of the Week

An excellent quote below from author, entrepreneur, and photographer James Clear. Famous for his #1 NY Times best seller Atomic Habits, Clear focuses on habits, decision-making, and continuous improvement in his work.

Trending Today

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

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

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

Follow us on any of these platforms, message us there and let us know your favorite charity.
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Towerpoint Wealth is a fully independent wealth management firm based in Sacramento. Our fiduciary advisors are working to helping you remove the hassle of properly coordinating all of your financial affairs so you can live a happier life and enjoy retirement. 

This statistic makes us particularly happy, honored, and proud to be celebrating our fifth anniversary as a boutique, fully-independent wealth management firm. After 18 years managing the constraints of being employees for a major Wall Street firm, we launched Towerpoint Wealth on May 26, 2017. Can you believe five years have passed?

And as we eclipse this milestone, we continue to be resolute in focusing on and advancing our mission:

Helping you remove the hassle of properly coordinating all your financial affairs, so you can live a happier life and enjoy retirement

We are very humbled by this milestone, and offer a sincere thank you to our clients, partners, colleagues, family, and friends for your confidence, trust, and support. You represent our lifeblood, as we certainly would not be where we are today as a fully-independent firm, nor would we have grown, matured, and advanced as much as we have without all of you entrusting us to help you navigate the very unsettled world we live in. And while much work remains to be done (both for us as a fully independent firm and also for us, in our joint effort with you within each of our partnerships), we are eager and excited for what the next five years has in store!

The phrase “fully independent firm” holds as much significance for you as it does for us. What few people know about working with a fully independent wealth management firm is the much stronger professional and personal responsibility we have to you – specifically, a legal fiduciary obligation. As your fiduciary financial advisor, we are legally responsible to put your personal and financial interests before our own and always act in your best interests, 100% of the time. This is the definition of fiduciary. Are all financial advisors fiduciaries? Absolutely not. This is an extremely important distinction, and was not an obligation we were bound to while we were employed by a major Wall Street firm. It is one that we were eager and have been happy to embrace, every day, for going on six years.

This all begs a very important question: What does having a fiduciary financial advisor mean, and why should you care?

Full independence means fiduciary advisors with a legal duty to you

Putting aside the very important fact that a fiduciary relationship is generally viewed as the highest standard of client care available under law, below are three of the most common considerations when deciding whether to partner with a fiduciary financial advisor:

1. The suitability standard (doing what is suitable for a client) is MUCH different than the fiduciary standard (doing what is in a client’s best interests always).

Investment brokers who work for broker-dealers (such as Merrill Lynch, UBS, Morgan Stanley, and Wells Fargo), and investment advisors who work for fully independent registered investment advisory (RIA) firms like Towerpoint Wealth, both offer financial and investment planning, counsel, and advice. However, they are not governed by the same standards

• Investment advisors work directly for clients, and must place clients’ interests before their own, according to the Investment Advisers Act of 1940 – this is known as the fiduciary standard.

• Investment brokers work for, and serve, their broker-dealers, and must only ensure that their recommendations are suitable for their clients – this is known as the fiduciary or suitability standard.

It is accepted as fact that the fiduciary standard is better and more comprehensive than the suitability standard, that a financial advisor with a fiduciary responsibility is rising to a much higher level of duty and care, and deals with no competing interests, a higher quality of investments, full disclosure, fee transparency, and client-centered advice 100% of the time.

Peter Lazaroff from Forbes has excellently summarized this important differentiation in his April 6, 2016 article. We believe this meme does too.

2. If you do not have a fiduciary financial advisor, you have fewer legal options in the event you discover your interests haven’t been fully served.

A breach of fiduciary duty occurs when a financial advisors fails to act responsibly or in the complete best interests of a client. Usually, the actions are alleged to have benefitted the fiduciary’s interests or the interests of a third party instead of the interests of the client.

By law, a plaintiff must show that a fiduciary duty existed. If a breach of duty case proceeds to the courts, major consequences can result. A successful breach-of-fiduciary-duty lawsuit can result in monetary penalties for direct damages, indirect damages, and legal costs. A court ruling can also lead to discrediting, the loss of license, or removal from service.

You do not have this legal recourse if you are not working with a fiduciary financial advisor (see Point 3 below).

3. If you have a relationship / partnership with an advisor who works for a major Wall Street firm, you do not have a fiduciary financial advisor.

We should know – we worked for a major Wall Street firm for 18 years! Please do not misconstrue our comment, as we firmly believe that most advisors who work for one of the four largest “wirehouses” (Morgan Stanley, Merrill Lynch, UBS, and Wells Fargo) do good work. However, it is impossible to act in a client’s best interests 100% of the time when operating within the constraints of the employee-employer relationship. This advisor inherently has a primary obligation first to their employer.

Don’t believe us? Feel free to confirm for yourself: Ask your current wirehouse advisor if he/she would be willing to attest to and sign this simple Code of Ethics document stating that they are a legal fiduciary to you, and see what they have to say!

It is important to understand that the only requirement to be called a financial advisor is that you dispense financial advice. It is also important to understand that no rule, label, or regulation will completely stop those who have intent to disregard doing what is right (Bernie Madoff was technically a “fiduciary” for the last two years of his career).

Despite this sad fact, engaging a fiduciary financial advisor tilts the odds in your favor; you are much more likely to wind up with a professional who takes seriously their legal fiduciary obligation to you when they are fully independent.

For the past six years, we have embraced the role of fiduciary financial advisor in our clients’ lives. It’s been a responsibility we fully honor, take seriously, and recognize is a tremendous privilege.

Interested in learning more about how we help our clients build and protect their net worth?

What is Happening at TPW?

The TPW family shared a fun day of teambuilding a few weeks ago, soaking in a sunny day of Sacramento River Cats baseball at Sutter Health Park.

Hey Joe and Steve, slow down and calm down, those hot dogs aren’t going anywhere…!

Did somebody say Italian??!!

Apparently fresh risotto makes for a happy Lori and a happy Michelle, as the ladies of Towerpoint Wealth enjoyed a bite to eat together last week at Il Fornaio on Capitol Mall!

What else is happening with the Towerpoint Wealth family?

TPW Taxes 2022

How do you find opportunity during a market pullback, and make lemons out of lemonade when account values are temporarily depressed?

As investors emerge from a tumultuous market over the first five months of 2022, the current volatility may pose an opportunity for IRA account holders. Considering a partial conversion to a tax-free Roth IRA may be advantageous right now.

This Kiplinger article outlines two reasons to consider a Roth conversion now, plus a few traps to avoid.

Curious if you might benefit from a partial Roth IRA conversion in 2022?

TPW News You Can Use

Useful and interesting content we read the past two weeks:

1. Top-Paid LA Lifeguards Earned Up to $510,000 in 2021 – OpenTheBooks Substack – 5.31.2022

Who knew that LA lifeguards – who work in the sun, ocean surf, and golden sands of California – could reap such unbelievable financial rewards? It’s time we put Baywatch on pay watch!

2. Why Most Americans Are Losing the Battle of Getting into Pre-COVID Shape – NY Post – 6.1.2022

Squeezing back into a pair of jeans bought before March 2020 is a challenge for lots of Americans — and a new study found that injury may be to blame. The study of 2,000 adults, by OnePoll in partnership with CURAD, found that seven out of 10 respondents said they stopped working out during the thick of the COVID-19 pandemic.

3. From Ukraine’s Front Lines, Bravery and Wreckage – New York Times – 6.1.2022

Amid the roar of artillery and bone-rattling explosions, New York Times photographers have borne graphic witness to the fight to survive.

These are their stories and images.

Chart / Infographic of the Week

As we have repeatedly stressed, dividends matter!

A compelling chart below, supporting the philosophy that owning and investing in dividend-paying equities (the purple line) is rarely a bad idea, especially during times of extreme market volatility like we have experienced in 2022…

TPW Educational Video : The Importance of Estate Planning

Why is it ESSENTIAL to have an up-to-date estate plan?

Click the thumbnail below to watch an excellent video that focuses on the benefits of estate planning to avoid probate, and to ensure that your assets are distributed according to your wishes and in a timely fashion.

What do you want for your loved ones when you are gone? A protracted, expensive public legal process (known as probate), or a tax-efficient and streamlined disposition of the assets in your estate?

Trending Today

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

• A Warriors dynasty reborn or a Celtics 18th banner? Experts’ NBA Finals picks
• Trump threatens to sue Pulitzer Prize Board if NY Times, Washington Post prizes are not rescinded
• To combat inflation, the Federal Reserve starts experiment of letting its $8.9 trillion balance sheet and portfolio shrink
• Average US gas prices rise another five cents, to a record high of $4.67/gallon
• The Fed is losing control of the inflation narrative
• How the world is paying for Vladimir Putin’s war in Ukraine
• In worsening drought, SoCal water restrictions take effect

Quote of the Week

Below is found one of our favorite quotes from investing legend Shelby Davis. His philosophy can be difficult to grasp when prices (and account values) are temporarily declining; however, we (and Shelby Davis) believe that you will make more money in a down market by being disciplined in doing two things:

1. Not giving into fear by selling low, and

2. Being courageous in buying and investing more when prices are low

These are simple but certainly not easy concepts to understand and practice, yet we are confident that doing so will pay the greatest ultimate rewards over time.

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

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

Are you searching for a Sacramento Wealth Advisor near me? We serve clients primarily in the Northern California region. Glad you’re here! Please contact us with any questions you have about our services. 

Joseph Eschleman
Certified Investment Management Analyst, CIMA^®

Jonathan W. LaTurner
Wealth Advisor

Steve Pitchford
CPA, Certified Financial Planner^®

Lori A. Heppner
Director of Operations

Nathan P. Billigmeier
Director of Research and Analytics

Michelle Venezia
Client Service Specialist

Luis Barrera
Marketing Specialist

 Megan M. Miller, EA
Associate Wealth Advisor

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

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

Right now, do you trust your investing instincts?

Or, as Jerry said to George in one of the highest rated episodes of the iconic Seinfeld series, “If every instinct you have is wrong, then the opposite would have to be right!”

Do you think the stock market is a safe place to invest money right now? Is now a good time to channel your inner George Costanza?

Yes, we are currently in an extremely unsettled and unpredictable investment climate, and yes, it stinks when economic and investment “visibility” is poor, account balances are declining, and the daily headlines are less than sanguine.

On the flip side, the labor market is extremely tight – so described when there are more job openings and fewer unemployed people. Indeed, the unemployment rate is extremely low. Consumer activity continues to pick up on the back of the “global reopening,” and China has resumed both monetary and fiscal stimulus. And in a true contrarian sense, we believe the financial markets have fully “priced in” today’s extremely high oil and gas prices, and an ongoing war in Ukraine- if either shows signs of abating, it could be an unexpected source of positive stimulus.

Putting aside the negatives and positives of the current investment and economic climate, we will go out on a very small limb and make the assumption that many of you have some level of internal temptation right now to “stop the bleeding” or “take a breather” from what seems like anything but a safe place to invest money right now: today’s stock market.

It is not only understandable, it is natural to feel this way. It’s human nature to fix an injury, to stanch bleeding, and lately, most investors are feeling punctured. In this environment, the temptation to sell when prices are low can manifest quickly, begging the question – do you have the intestinal fortitude to:

1. Not give in to the compulsion to sell

2. Go against the herd, making yourself feel even more uncomfortable, and a la George Costanza, do the opposite of what feels right (read: buy when prices are low)

To be clear, everyone has a unique set of personal and financial circumstances, and everyone has different sensitivities to market gyrations and investment risk. This message to “do the opposite” is not intended to be prescriptive. We are not making blanket recommendations to thousands of different people, nor are we specifically directing anyone to head out for a pre-weekend stock market shopping spree. We are simply attempting to convey the importance of the idea of contrarianism, and how going against the herd, while quite difficult, can pay large dividends over time.

While buying low is simple, it certainly is not easy. It definitely falls into the easier said than done category. Yet doing so has proven to pay the largest dividends over time, supporting two timeless quotes from two extremely successful investors:

Is the stock market a safe place to invest money? While safe is a binary word, and while there is no exact, correct binary answer to that question, we strongly encourage you to remind yourself that the stock market is always a safer place to invest when prices are lower.

What’s Happening at TPW?

Our President, Joseph F. Eschleman, CIMA® , spent an intensive three days last week at the Massachusetts Institute of Technology (MIT), learning (and practicing) how to be a better leader and CEO as an invitee and participant in Dynasty Financial Partners’ Advisor-to-CEO program.

• Click the link and scroll to see the full MIT Advisor-to-CEO event agenda.
• Visit the Towerpoint Wealth YouTube page (don’t forget to click the SUBSCRIBE button!) to see a video “short” containing a full panoramic recap of another incredible visual white board from the course curriculum, similar to the one seen below!

Administered through the MIT Sloan School of Managementt, the Advisor-to-CEO program contained a spectacular curriculum of experiential executive coursework on a variety of topics, including diversity & inclusivity (D&I), leadership, entrepreneurship, and strategic design thinking, as well as:

✅ Collective ambition
✅ Leadership and culture
✅ The longevity economy
✅ Adaptability quotient (AQ)
✅ Client experience and innovation

Our firm, and ultimately and most importantly, our TPW clients, will undoubtedly benefit from Joe’s continued growth as the President of Towerpoint Wealth, as we are already beginning to integrate a number of ideas that Joe brought back with him from Boston!

Click the image below to watch a short YouTube video and learn about the visual work management and visual project design (a.k.a. Post-It Note project planning!) that Towerpoint Wealth is implementing.

What else is happening with the Towerpoint Wealth family?

TPW Taxes – 2022

The word audit can strike immediate fear into a person, even if they are on the “up-and-up” and haven’t fudged their income taxes. And although the chances of being audited are rare (the IRS audit rate has dropped from 0.93% in 2010 to 0.39% in 2019, to a low of 0.20% in 2020 due to a number of COVID-19 concerns), and half of all audits happen to those people making over $1,000,000, it is certainly still useful to know what triggers the IRS.

Click the image below to read an excellent article from Bloomberg Tax that itemizes some of the more common characteristics of a return that may make it more likely to be selected for audit, including some features highlighted in the IRS’s 2022 Annual Audit Plan.

TPW News You Can Use

Useful and interesting content we read the past two weeks:

1. The Crazy Housing Market Is Finally Slowing Down – Axios – 5.16.2022

The red-hot housing market is starting to cool this spring, after nearly two years of soaring prices and shrinking inventories. Homebuyers and renters should begin to have more choices and fewer bidding wars, if only just a little.

2. Twisted Diary of Alleged Buffalo Shooter Reveals His Online Radicalization – NY Post – 5.17.2022

The avowed white supremacist who killed 10 people at a Buffalo supermarket first became radicalized during the early days of the COVID-19 pandemic by scouring extremist internet messaging boards, according to his twisted online diary.

The 18-year-old spent months reflecting on his plans to conduct a mass shooting in the digital journal and said his exposure to 4Chan, an online message board known as a hotbed for extremism, kept him motivated to stick to his plans.

3. How a Trash-Talking Crypto Bro Caused a $40 Billion Crash – NY Times – 5.18.2022

Do Kwon, a South Korean entrepreneur, hyped the Luna and TerraUSD cryptocurrencies. Their failures have devastated some traders, though not the investment firms that cashed out early.

TPW Chart of the Week

Year-to-date returns on US bonds (as measured by the Bloomberg US Agg) through May 6 have been worse than any calendar year on record since 1976.

Over time, inflation hurts purchasing power – A LOT.

An excellent graph below from our friends at Bespoke Investment Group, reflecting the forward one-year price return of the S&P 500, subsequent to a five-month decline of greater than 15% (i.e. what has happened so far in 2022):

Quote of the Week

No caption needed…

Trending Today

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

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

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

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