Wealth Management Spotlight

As our clocks struck midnight this past Saturday, advancing from 2022 into 2023, many investors were eager to turn the page on what was a grinding, unsettled, and very difficult year in the financial markets. The only good news that can be taken from the 2022 investor experience? Fortunately, past performance is no guarantee of future results!

• Stocks, as represented by the S&P 500, finished 2022 down just shy of -20%:

• Bonds, typically the “Steady Eddies” of a properly diversified portfolio, did not fare much better, with 2022 being one of the worst years for bond returns in h The US Federal Reserve raised (“tightened”) its target short-term interest rate seven times to fight inflation, from 0.25% to 4.50%, representing an unprecedented pace of increases in such a short period of time for the 109-year-old central bank. 
  
  This interest rate tightening led to historically poor returns for bonds in 2022. Long-term US Treasuries were down -31.2%, and the Bloomberg US Aggregate Bond Index (the Agg), a broad measure of the overall bond market, had its worst year on record, down -13%.

Except for those holding cash, or commodities or energy stocks, 2022 was an awful year for the capital markets, one that virtually all of us would like to forget. This has caused many investors to ask – with 2022 as bad as it was, will 2023 be similar?

Below we will explore how recency bias can lead to poor and irrational financial and investment decision-making, oftentimes because investors FORGET that past performance is no guarantee of future results!

As we exit 2022, what were the major headlines for the year that drove this volatility?

Here at Towerpoint Wealth (TPW), we believe what’s past is prologue, and in light of the difficult year that investors had to endure in 2022, we are certain that many will exhibit recency bias when thinking about the future of their investments, portfolio, and overall status of their personal net worth. 

We also believe that doing so is a mistake.

Is it reasonable to believe that 2022’s poor market performance repeats itself in 2023? We believe no. Does having recency bias oftentimes lead to short-sighted and poor financial planning and investment decision making? We believe yes. And while historical patterns are important, and will always shape how investors feel about the future of their portfolios and investments, our core TPW wealth management philosophy leads us to counsel and work with our clients to be disciplined, to remain level-headed, to have a plan, and to objectively execute on it. 

The common investment disclaimer rings particularly true to us here at Towerpoint Wealth as we move into 2023: Past performance is no guarantee of future results.

Put more succinctly: We strongly encourage you to not fall prey to recency bias!

Lastly, there will always be the temptation to deviate from your plan, to not be disciplined, and to capitulate and sell to “stop the bleeding.” Much more often than not, these choices are strongly influenced by recency bias, and considered at the worst possible time – when prices are temporarily low. If you notice yourself feeling this way right now, we encourage you to reach out to us, and/or click the report found below.

Here’s to a productive and hopefully profitable 2023. We can’t wait to see what the new year has in store for all of us!

Have questions or concerns? Message us to share them,
and let us know you’re interested in learning more.

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 TPW family continues to grow as we prepare for an exciting new year in 2023!

Just three short weeks ago, we happily welcomed our new Associate Wealth Advisor, Megan M. Miller, EA, to the firm.

We feel extremely fortunate to have this experienced, caring, talented, highly ethical, engaged, and organized professional joining the Towerpoint Wealth team, and encourage you to click the image below (and also hit that thumbs up button on YouTube!) to find out more about Megan. Hint – she’s awesome!

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

Click the images below!

What else is happening with the Towerpoint Wealth family?

He is one of the most successful investors in the world for a reason – Warren Buffett is the epitome of value and disciplined investing!

Click the image above to watch an excellent video reel of Warren, riffing on his optimism about America, the importance of buying low (and also when people are scared), and why trying to predict the future is futile. A few excerpts:

“I bought stocks after 9/11.”  |  “I bought stocks in 1987 after the big crash and the fall.”  |  “The country’s not going to go away.”  |  “The country will grow in value over time.”  |  “Now… who gets it is another question!”  |  “It’s a terrible mistake to buy or sell stocks based on what you think business are going to do next month, even next year.”

Are you self-employed? Looking for opportunities to lower your taxable income while building personal net worth?

Traditional employees with W-2 income usually have an omnipresent income tax deduction available to them: Making traditional, pre-tax 401(k), 457, or 403(b) contributions.

Conversely, if you are self-employed, you are not an employee, and will not have a company-sponsored retirement plan to contribute to. However, all is certainly not lost if you are a sole proprietor, as there are a number of powerful self-employed retirement plan options available to you to reduce your taxable income while growing your portfolio and nest egg, arguably better than the traditional retirement plans offered to W-2 employees!

Click the image below to better understand the differences, advantages, and disadvantages of “crawling” via a

1.) SIMPLE-IRA, “walking” via a

2.) SEP-IRA, “running” via a

3.) OnePersonK or Solo 401(k), and “flying” via a

4.) personal defined benefit plan (DBP), as each type of account offers self-employed individuals a tremendous opportunity to save money on taxes and build wealth.

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

Are you self-employed, and would like to learn more about strategies still available to you to REDUCE your 2022 income taxes? Click below to begin a dialogue with Steve Pitchford, Director of Tax and Financial Planning.

1. How SpaceX’s Starlink terminals first arrived in Ukraine

Quartz – 12.22.2022

Weeks before Russia invaded Ukraine, the US began scrambling to find satellite communications equipment that could keep the Ukrainian government connected to the rest of the world, new documents reveal.

Those efforts resulted in thousands of satellite-antenna terminals that connect to SpaceX’s Starlink broadband internet network being sent to Ukraine. They have proven vital to Ukraine’s war effort, but became a source of controversy for both SpaceX and the US over the service’s cost, and who is paying for it.

2. Lawmakers Say McCarthy Speaker Fight Portends Debt Ceiling Crisis

The Hill – 1.6.2023

The messy, drawn-out battle over electing the next Speaker is raising the danger of a debt limit crisis later this year, lawmakers in both parties warn.

Conservative rebels in the House are demanding that the next Speaker, whether it’s Rep. Kevin McCarthy (R-Calif.) or someone else, make a stand against passing a clean debt limit increase, which would set up a major fight with Senate Democrats and President Biden.

3. Freudenschaude (Freudenfreude)

Barry Ritholz, The Big Picture – 1.2.2023

As the new year begins, perhaps we would all be better off if we engaged in less Schadenfreude and more Freudenfreude. Let’s stop taking delight in other people’s misfortunes, and recognize that there but for the grace of God go I. Let’s recognize how rare and fragile success is, and revel in it – even if that means there is no increase in our bank accounts, our follower numbers, or our status among the neighbors.

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

For this edition of Trending Today, it’s not a chart, but a graphic.

“For success, attitude is equally important as ability.”

– Walter Scott

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

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

• Saturday, January 7 – Los Angeles Lakers vs. Sacramento Kings – Golden1 Center
• January 6-8 – SacAnime Winter 2023 – SAFE Credit Union Convention Center
• Now – January 16 – Folsom Historic District Ice Rink – Folsom
• January 13 – 22 – Dine Downtown – Downtown Sacramento
• Valentine Run/Walk: Race for Justice – Sacramento

As always, we sincerely value our relationships and partnerships with each of you, as well as your trust and confidence in us here at Towerpoint Wealth. We encourage you to 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 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

You’ve probably noticed, the Sacramento housing market is falling asleep!

Understanding that real estate is an important part of the net worth of virtually all of our clients, and whether you are in the market to buy, sell, or just hold real estate, a combination of metrics right now has people in Sacramento almost expecting real estate prices to drop. This is certainly a different, weaker market than what it was seven short months ago.

In our own April 22, 2022 Trending Today newsletter, Will Homeowners Frown with Housing Prices Going Down?, we wrote of legitimate reasons for housing “bulls” to say that the “pandemic housing boom” had room to run. There was:

• Virtually no inventory!
• Demand remained strong.
• Buyer urgency remained high.

We also mentioned what the housing and real estate “bears” were warning us about – a hawkish US Federal Reserve, surging interest rates on 30-year mortgages, horrible affordability, and homebuilder stocks that were completely out-of-favor.

Yes, things are different now.

Sacramento home prices are declining, and interest rates are much higher. Both sales volume and sales prices are down. Will these declining prices continue? Is there a bottom yet to come in this housing cycle, as the image below would indicate?

This weakness is not just here in Sacramento, it is occurring throughout the Western US and virtually the entire country:

Migration is one factor that is not causing real estate prices to drop here in Sacramento, as we are still much more of an inbound destination, which provides some support for the value of Sacramento housing:

While nice to see, this migration data has not mitigated a slowdown in sales here in Sacramento, as November real estate sales were the worst in two decades for the Sacramento region, down close to 50% from last year’s November sales number.

In light of much of this bearish news about Sacramento housing, let’s keep some perspective – since a combination of reasons have caused real estate prices to drop, the market is much more attractive and affordable now if you are a buyer!

If you are looking for more perspective and perhaps a forecast of what to expect for 2023, this timely Realtor.com article has a lot to say!

Have questions or concerns? Message us to share them, and let us know you’re interested in learning more.

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

Our President, Joseph Eschleman, recently conducted an extremely productive financial, investment, and retirement comprehensive review meeting with two excellent and long-time TPW clients, Dan and Sue Britts.

Dan, Sue, it was great to see and connect with both of you – LOVE your big smiles, and glad to hear how enjoyable your recent trip to Ville de Sanary-sur-Mer was!!

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

Click the images below!

What else is happening with the Towerpoint Wealth family?

Is a recession around the corner? Quite possibly…

Are you worried your portfolio will suffer further declines? Just about everyone is…

Do you wonder: How can I better protect my investments from the pain a US recession might bring?

Have you considered: Are there ways to take advantage of a recession if and when one occurs?

Well, we have some answers for you!

Click the image below to watch our newly-published educational video, “The Top 5 Ways to Recession-Proof Your Portfolio.”

Required Minimum Distributions

Dreading a Required Minimum Distribution, or RMD, from a retirement account? No doubt, it’s because of T-A-X-E-S.

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

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

Have you considered how to plan around taking your 2022 RMDs? Click below to message Steve!

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

1. #NeverTesla – Elon Musks’s Twitter is Full of People Swearing off Tesla

Bloomberg – 11.29.2022

The belligerent and erratic performance in his new role as “chief Twit” has raised Elon Musk’s already stratospheric public profile to new heights. If Twitter is a global town square, Musk has transitioned overnight from one of its loudest orators to equal parts mayor and sheriff, with the potential to irritate far beyond the echo chamber of his 118 million followers. For owners and potential buyers of Tesla cars, it has become all but impossible to find neutral ground on the controversies that surround Musk.

2. Tiger Woods Concedes He’s Almost Done Playing Golf, Unloads on LIV’s Greg Norman

Yahoo Sports – 11.29.2022

Tiger Woods’ playing days are almost done. But his influence on the game will clearly continue long after he’s holed his last putt.

Woods spoke Tuesday morning in advance of the Hero World Challenge, his own tiny-field tournament in the Bahamas, and as has become the norm at this event, he was unusually open and forthright, both about his own game and the state of the sport in general.

3. Crypto Creep Claims No Fraud!

CNBC – 11.30.2022

Former FTX CEO Sam Bankman-Fried, in possibly the understatement of 2022, said Wednesday, “I’ve had a bad month.”

The former billionaire added that he “didn’t do a good job” at upholding his responsibilities to regulators, customers and investors in a hotly anticipated conversation with CNBC’s Andrew Ross Sorkin at the DealBook Summit.

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

September, 2022 was one of the worst months in the stock market, as represented by the S&P 500, since 1950.

The good news? In looking back at the worst 15 individual months for the S&P 500, stocks have historically rebounded, with 1-year forward returns averaging more than +23%.

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

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

• November 25 – January 1 – Enchant Sacramento – Sutter Health Park
• November 18 – January 2 – Imaginarium – Light Up the Night – Cal Expo Center
• December 4 – Chicago Bulls vs. Sacramento Kings, December 4, Golden1 Center
• December 7 – Adam Sandler, LIVE – Golden1 Center
• December 10, 11 – The Nutcracker with Live Orchestra – SAFE Credit Union Performing Arts Center
• December 11 – Kevin Hart: Reality Check Tour – Golden1 Center

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 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

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

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

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

Necessary Evil 1 – Taxes

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

Things to consider:

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

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

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

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

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

Necessary Evil 2 – Investment Costs

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

Things to consider:

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

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

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

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

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

Have questions or concerns? Let’s talk.

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

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

Keeping our professional saw sharp! Click to read more

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

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

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

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

Click the images below!

What else is happening with the Towerpoint Wealth family?

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

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

Joseph and Jay specifically touch on:

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

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

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

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

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

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

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

1. Republican Infighting Roils Congress As Midterms Fallout Continues

Washington Post – 11.15.2022

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

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

Hollywood Reporter – 11.16.2022

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

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

NY Post – 11.15.2022

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

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

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

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

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

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

• Napoleon Dynamite: A Conversation with Jon Heder (Napoleon Dynamite), Efren Ramirez (Pedro), and Jon Gries (Uncle Rico) – November 19, Crest Theater
• UC Davis Symphony Orchestra – November 19, Mondavi Center
• Detroit Pistons vs. Sacramento Kings, November 20, Golden1 Arena
• Van Gogh: The Immersive Experience – West Sacramento, Jefferson Boulevard
• Crafts and Drafts – November 26, Drakes: The Barn
• Trans-Siberian Orchestra – November 29, Golden1 Arena

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 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

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

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

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

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

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

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

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

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

Two important reasons we have this viewpoint:

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

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

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

Have questions or concerns? Let’s talk.

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

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

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

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

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

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

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

Click the images below!

What else is happening with the Towerpoint Wealth family?

Are you a technology director, VP, or engineer? Are you receiving restricted stock units, or RSUs, as a meaningful component of your overall compensation package?

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

Joseph specifically touches on:

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

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

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

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

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

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

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

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

Have we reached peak inflation?

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

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

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

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

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

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

• The 2021-2022 NBA-champion Golden State Warriors visit the Sacramento Kings on November 13
• The Beatles Guitar Project, celebrating the 55th anniversary of the Beatles 1967, visits the Sacramento Memorial Auditorium on November 13
• The Book of Mormon continues its tour at the SAFE Credit Union Performing Arts Center, through November 13
• Betty Wine Bar and Bottle Shop set to open in November
• Comedian Whitney Cummings, live at the Punch Line from November 17-19

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 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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Click the images below!

What else is happening with the Towerpoint Wealth family?

Are you really a long term investor?

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

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

Watch our educational video on YouTube!

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

• The October 15 deadline for 2021 income tax returns on extension is right around the corner.
• The December 31 deadline for many 2021 tax planning opportunities is also right around the corner.

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

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

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

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

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

Have we reached peak inflation?

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

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

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

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

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

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

• These 33 restaurants just opened around Sacramento. Check out new dim sum, burgers, and more. (open in private/incognito mode)
• The Sacramento Turn Verein is hosting its 53rd Annual Oktoberfest!
• The Aftershock Festival continues, with Papa Roach and My Chemical Romance on Saturday, and Shinedown and Muse on Sunday.
• 2nd Saturday Art Walk in Natomas is Saturday, October 8.
• The 4-0 Sac State Hornets put their undefeated record on the line vs. Northern Colorado on Saturday, October 8 at 6:00PM.
• Rock With You – a Michael Jackson Tribute, at Swabbies on the River, Saturday, October 8.
• The Sacramento Natural Foods Co-Op’s 2022 Harvest Festival is this Saturday, October 8, from 1-5PM, on the top floor of the 28th & S Street parking garage!
• The Sacramento Greek Festival is back (!), from October 7th – 9th.

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 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

What We Know about the $740 Billion Inflation Reduction Act

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

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

• Speaker of the House, Nancy Pelosi: “It’s a great bill. It’s historic.

• House Minority Leader Kevin McCarthy: “They’ll spend more money, which brought us into this problem.”

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

First, what is not in it for you.

1. Direct payments or checks in the mail.

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

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

Next, what is in it for you:

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

Today, there is no cap.

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

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

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

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

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

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

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

This credit applies and is earned as follows:

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

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

This credit applies and is earned as follows:

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

7. Energy-efficient home credits.

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

Last, how is it paid for?

1. New taxes.

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

2. Collection of unpaid taxes.

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

3. Drug savings / price controls.

• As discussed above.

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

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

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

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

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

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

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

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

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

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

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

What else is happening with the Towerpoint Wealth family?

$4,104,725,000,000!

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

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

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

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

Useful and interesting content we read the past two weeks:

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

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

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

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

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

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

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

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

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

Feeling overwhelmed by the responsibility of discerning financial noise from financial information. Are you unsure of how to utilize and leverage financial information to your advantage?

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

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

• House Democrats introduce the Billionaire Minimum Income Tax Act
• California’s largest wildfire, the McKinney Fire, is still burning but is about 60% contained
• The father and son who killed Ahmaud Arbery were sentenced to life in prison for hate crime convictions
• Ukraine’s nuclear chief warns of ‘very high’ risks at Russian-occupied nuclear power plant
• FBI director Christopher Wray doesn’t offer much in his first public comments about raid of former President Trump’s Mar-a-Lago home
• Amazon shrinks staff by 100,000, joining Netflix and Google in hiring slowdown
• US gasoline prices fall below $4/gallon, the first time since March

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