Understanding that the world of investing and wealth-building is filled with opportunity, not only for growth but also for errors,  at Towerpoint Wealth we believe our role is to raise awareness and help our clients and friends avoid investing mistakes as they work to build and growth their net worth and move toward a more prosperous financial future.

To that end, we’ve created a special four-part educational video series, focusing on 20 of the most common investing mistakes to watch out for, as identified by the CFA Institute.

Are you aware of, or even making, any of these common investing mistakes?

In this, our first video of the series, we look at the first five investing mistakes people make and answer these questions:

• How can we manage having impractical expectations?
• What does it mean to have a shorter-term focus?
• What is performance blindness?
• What’s the best way to react (or not react) to bad news?
• And, what exactly does emotional investing mean?

Like taking a penalty in hockey or a personal foul in basketball, building and protecting net worth requires avoiding mistakes as much as it requires careful consideration, discipline, guts, strategic planning, and sometimes even a little luck. In the second video of our series on the 20 most common investing mistakes to avoid, we focus primarily on risk management.

Since committing common investing mistakes can directly interfere with getting your money’s best performance, part three of our four-part series focuses on five investing mistakes we know we shouldn’t make, but sometimes do anyway.

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In our final video of the series, Joseph Eschleman, answers these questions:

• What does it mean to do a portfolio checkup?
• How regularly should you do a portfolio checkup?
• Why is it important to account for inflation within your investment portfolio?
• Why in the world would an investor buy high and sell low?
• What can be consistently controlled within your financial and investment plan?

If you would like to discuss your financial portfolio, how we help clients build and protect their net worth, or learn more from our wealth management firm’s white papers, blog posts, and educational videos, click below.

Compare Treasury bill —T-bill— rates with bank CD best rates. T-bill rates today are often as competitive, and oftentimes more competitive, than the interest rates offered on CDs. But this is only one reason why, if you’re looking head-to-head at T-bills or CDs, Treasury Bills may be a superior safe investment.

Let’s look closely at T-bill yields and three other reasons why Treasury bills—short-term government bonds issued by the US Department of the Treasury—often emerge as the superior choice over Certificates of Deposit, or CDs.

Primarily, T-bills almost always carry virtually all of the benefits of CDs with a number of additional features and economic benefits—including tax benefits.

Taxes: Who wins, T-bills or CDs?

T-Bills Carry Tax Benefits

The interest income from T-bills, while still taxable at the federal level, is exempt from state and local taxes, presenting a notable advantage for investors in states with moderate-to-high state and local income taxes.

This state and local tax exemption enhances the after-tax yield of T-bills—the money you get to keep—and helps to contribute to more efficient returns on investment (ROI).

Conversely, the interest paid by CDs is fully taxable at the federal, state, AND local level, potentially reducing the net returns for investors. The tax-favored treatment of T-bill interest enhances their appeal as a tax-efficient investment, particularly for those seeking to optimize their returns while minimizing tax liabilities.

Liquidity: Who wins, T-bills or CDs?

T-Bills Have Exceptional Liquidity

Treasury bills are renowned for their exceptional liquidity in the financial markets. They are easily bought and sold, and offer distinct liquidity advantages over CDs.

As short-term bonds issued by the US Treasury, T-bills are actively traded in the secondary markets, enabling investors to easily buy or sell them—if they want—at prevailing market prices, even before their maturity.

This dynamic secondary market presence provides a high degree of liquidity, enabling investors to swiftly convert T-bills into cash without incurring significant transaction costs.

On the other hand, while CDs offer some liquidity, they often come with significant penalties for early withdrawals. T-bills carry no such penalties.

Safety and Risk: Who wins, T-bills or CDs?

T-Bills are Extremely Safe Investments

While we think of CDs as being the safest investment, Treasury bills hold a distinct advantage over certificates of deposit when considering safety and risk. T-bills are issued by the US Department of Treasury, and are backed by the full faith and credit of the US government. This government guarantee makes T-bills virtually risk-free, as, despite periodic political noise, the likelihood of US default is exceedingly low. This level of security provides investors with a safe haven for their capital, particularly during uncertain economic times. Conversely, CDs offered by banks are subject to the credit risk of the issuing bank, and as we know, it’s not unheard of for banks to fail.

T-Bills Have No FDIC Insurance Limits

With a bank CD, FDIC insurance limits are relatively low ($250,000 per depositor, per FDIC-insured bank, per ownership category), especially when compared to the limit-free US government insurance that T-bills provide.

Money earned: Who wins, T-bills or CDs?

T-Bill Yields are Often More Competitive

T-bill yields are often as competitive, and oftentimes more competitive, than the interest rates offered on CDs with comparable maturities, especially during periods of economic uncertainty or when interest rates are low. Take a look at T-bill rates today, compared with bank CD best rates, and see for yourself.

Though it might look like there is a clear-cut winner here, truth is, there are a lot of moving parts, and it’s important to consider all the elements involved. Before making any changes to your investment strategy, it’s a good idea to reach out to a certified, independent financial planner. One that is a fiduciary, that is—legally bound to act 100% in your best interests. All your life you’ve been working so hard for your money. It’s time to get THAT money to work for you.

Empower yourself with this strategy for financial independence, early retirement, and peace of mind.

More than a hot trend, FIRE investing principles have been guiding wealthy, independent people towards financial independence and early retirement for many decades. Implementing the Financial Independence Retire Early strategy takes discipline and commitment.

In this video, Towerpoint Wealth’s President, Joseph Eschleman, lays out the basics of this financial strategy. Click on the video image below to watch the video.

Consider: are you optimizing your lifestyle? Are you saving aggressively? Are you investing strategically? Will you be able to maintain a sustainable withdrawal rate post-retirement? These are essential pieces of the financial independence early retirement (FIRE) financial strategy.

Developing a customized financial and wealth management plan and strategy now will help you advance towards your personal and financial goals, grow net worth, and ultimately help you retire on your schedule. Time is money. Partnering with an advisor that understands you means you may spend less time worrying about this aspect of your life.

Are you curious about whether a FIRE investment strategy could work for you? Towerpoint Wealth serves clients primarily in the Northern California region with an annual household income exceeding $250,000. Please contact us with any questions you have about our wealth management process.

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

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

Whatever the number you settle on as “enough,” click below for five steps you can take immediately to build and protect your net worth.

To learn more, download our white paper “Is $2 Million Enough to Retire?“

Are you looking for a high quality financial advisor? There are literally thousands of people who hold themselves out as financial advisors just in California alone. How can you possibly figure out who is right for you? What questions to ask when hiring a financial advisor.

Don’t be overwhelmed in your search hiring a financial advisor or wealth manager. Just start with six important questions to make sure they are the best fit for you, your life, and your financial situation.

Hiring a financial advisor shouldn’t totally stress you out. But you know the benefits of hiring a financial advisor, and your financial future is serious business. They need to have your best interests front and center. This is the definition of fiduciary.

How do you know you are talking with a high quality financial advisor?

Trust

Do you trust them with not only the personal details of your financial accounts but also with the personal details of your life? A high quality financial advisor engenders trust.

Experience

Do they have a history of successful performance and a network of happy clientele who are willing to step forward and vouch for their professionalism and knowledge? A high quality financial advisor has experience.

Fiduciary Standard of Care

Are they legally bound to serve in your best interests? The definition of fiduciary is that they aren’t beholden to the company that employs them or to a service provider (such as an insurance company) in order to earn an income. A high quality financial advisor acts as a fiduciary.

Finding out whether a financial advisor has these basic three requirements—trust, experience, a responsibility of fiduciary care—are the reasons for asking a potential financial advisor the six questions. Questions 1 and 2 speak to their experience and trustworthiness. Questions 3 and 4 speak to whether they will 100% of the time be acting in your best interests rather than their own—that they meet the definition of fiduciary. Questions 5 and 6 assure that the services they provide match your needs and your philosophies.

Here are the six questions to ask when hiring a financial advisor

1. What is your education and experience?
2. Do you have any compliance or regulatory infractions?
3. Are you required by law to operate within a fiduciary or suitability standard of care? 
4. How exactly are you compensated?
5. Do you provide comprehensive financial plans?
6. What is your financial planning and investment philosophy?

If the advisor you’re interviewing doesn’t answer these six questions in an articulate way, you may want to continue your search.

What does a financial manager do? Helps you better manage and coordinate your financial affairs, obviously. Breaking this down, the point of finding a fiduciary financial advisor with experience, and who you trust will be a good partner for you increases your odds of successfully growing and protecting your net worth and assets over time, especially these days with how unsettled the markets, economy, and politics all continue to be.

If you’re looking for a new financial advisor—even if you’re currently working with one—asking them these six questions to ask when hiring a financial advisor, and doing your due diligence to assure they’re answering truthfully, will help you ensure you’ve got the right financial advisory partner on board.

Are you considering hiring a financial advisor? Do you think that our Sacramento wealth management firm might be a good fit? Please, use this link to set up a no-obligation consultation.

And please, visit us on Social Media.

Most investors know, exposure to real estate in a financial portfolio provides opportunities to grow net worth. In America, there are basically two tax systems: one for those in the know, and one for those not in the know. What you don’t know CAN hurt you.

Towerpoint Wealth Management Joseph Eschleman and Associate Wealth Advisor Megan M. Miller recently presented “The 9 Tax Planning Secrets Real Estate Investors Wish They Had Known” to the West Sacramento Real Estate Investment Meet Up group. Here is a recap of the presentation, and the nine tax tips for real estate investors.

Would you like to discuss your specific scenario with us?

Schedule some time with Megan or Joseph!

Are income taxes dragging you and your portfolio down, and at the same time reducing your real overall return? 

Do you know how much you are paying in fees and investment expenses?  

As an investor, what exactly are you supposed to do to reduce and manage expenses and income taxes? They are unavoidable, and will always be part of your net worth building journey.  

However, there is definitely good news – both of these necessary evils of investing are controllable, they are minimizable, and there are strategies to help you reduce them.  

In this video Joseph Eschleman, President of Towerpoint Wealth, a boutique Sacramento Wealth Management firm, explains nine specific ways to keep expenses and income taxes in check, including: 

• Five strategies to minimize the impact of income taxes on your portfolio  
  
• Four strategies to keep more of your money working for you  

Is the United States economy on the verge of slipping into a recession? Or is the exact opposite happening – is the economy continuing to recover, and is more robust than it is getting credit for?

Are we looking towards an economy in recession, or are we more recession proof than many economists believe?

While our economy is by no means recession proof, it should come as no surprise to our clients and to TPW friends and colleagues that we take this volatility with a grain of salt, as we pay attention, but rarely react, to these short-term movements. Is a recession coming? Perhaps, but there is anything but consensus on what happens next.

What we do know is this:

1. While the economy is by no means recession proof, economic expansions tend to be much more robust than recessions.

2. Even if we are facing an economy in recession, that over the past 73 years, bull markets have lasted longer (50 months, on average) than bear markets (13 months, on average), and have more than made up for periodic market declines.

This all begs the question: If we are facing an economy in recession, what can YOU do to recession-proof your portfolio?

Watch this educational video for FIVE specific strategies to help you recession proof your portfolio, even if we are facing an economy in recession!

Compensation packages for directors, VPs, software engineers, or other employees of technology based firms almost always contain restricted stock units, or RSUs. If you own RSUs, you may be asking one or more of the most common questions about RSUs:

Maximize stock compensation
Stock options vs RSU
How are restricted stock units taxed?
RSU selling strategy to mitigate the tax burden
Does your RSU selling strategy grow net worth?

Maximize stock compensation | RSUs in your compensation package can become a substantial part of your overall net worth.

RSUs, also commonly known as restricted stock units, are a form of stock compensation, whereby an employee receives the right to own shares of stock in the company they work for, subject to certain restrictions. Initially, these units do not represent actual ownership, however, once the restrictions are lifted and your RSUs vest, the units convert into actual company stock, and you, the employee, then have vested stock – you own the shares outright.

The “restricted” in RSUs is generally based on a vesting schedule. Most vesting schedules will fall into one of two categories: Time based or performance based.

Stock options vs RSU

When most people think of stock compensation they typically think of vested stock OPTIONS, or the right to buy a company’s stock at some future date, but at a price established TODAY.

RSUs and stock options have some notable differences. (More about stock options vs RSUs in our white paper, link below.)

How are RSU, restricted stock units, taxed?

RSUs are taxed when the restriction lifts, at which time shares vest and become part of an employee’s taxable income, taxed at the fair market value of the total amount of shares that vested. The taxation of restricted stock units is identical to normal wage income, included on an employee’s W-2.

The shares of vested stock are subject to federal, state, and local income taxes, as well as Social Security and Medicare taxes.

When an employee sells their vested stock, they will pay capital gains tax on any appreciation over the market price of the shares on the date of vesting. If the shares are held longer than one year after vesting before being sold, the sales proceeds will be taxed at the more favorable long-term capital-gains rates.

RSU selling strategy to mitigate the tax burden  | RSU tax selling strategy

While you must pay ordinary income taxes when your RSUs vest, and also must pay capital gains taxes upon selling appreciated RSUs, you can mitigate the tax burden. Your RSU tax selling strategy could include targeted charitable giving, utilizing capital losses to offset capital gains, and outright gifting of vested shares are three ways.

When can RSUs have a negative effect on your net worth? Does your RSU selling strategy grow net worth?

While restricted stock units complement a traditional compensation package, and can contribute to your net worth, there are risks involved in managing RSUs.

The primary risk is that you have too much of your net worth concentrated in one individual stock, and one individual company.

How can we help maximize stock compensation?

Please call, 916-405-9166, or email spitchford@towerpointwealth.com our certified financial planner Steve Pitchford, CPA, CFP^® nd Director of Tax and Financial Planning, to discuss the following:

• How to properly manage your Restricted Stock Units.
• How to structure a tax-efficient RSU unwind strategy.
• How to analyze your non-traditional / equity-based compensation.

To learn more about RSUs, please also click the image below to download our recently-published white paper. What is an RSU?

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

In this video, Towerpoint Wealth’s president and Sacramento wealth manager Joseph Eschleman addresses the following:

• Common concerns about the cryptocurrency future, and why we believe that crypto is here to stay and not going away.
• What decentralized finance, or DeFi, is, and how cryptocurrency is shaping its future (look out, banks!).
• Mainstream crypto adoption trends and the Great Wealth Transfer.
• Why cryptocurrency is potentially a good alternative investment to better diversify your portfolio (is it time to tiptoe towards that crypto?).

Bitcoin is by no means new –if you can believe it, it has been more than 13 years since the digital currency officially launched! As of June 2021, more than 220 million people owned digital assets. The blockchain technology that supports it continues to prove its value. Last year, Bitcoin settled over $13.1 trillion in transactions, up 470% from 2020, a figure that represents over half of the US’s GDP for the year, and more than what Visa, one of the largest payment processors in the world, settled last year. This bodes well for the cryptocurrency future!

Throughout history, civilizations have used cattle, squirrels, jewels, wine, and seashells as money. And before sovereign currencies took hold, gold was the medium of trade for many nations (and to this day still is a very good store of value). Compared to gold, Bitcoin is a baby, and many other cryptocurrencies are still in their infancies. However, each day crypto remains accepted, active, secure, and continues to grow in popularity and usage, it will become more and more mainstream. To be clear, bank notes and credit cards were not made for today’s digital age – but crypto was!

Global finance is moving away from being centralized (money being held by banks, which have the goal of earning profits) to being decentralized, where blockchain technology eliminates the need to use profit-seeking intermediaries and third-parties to lend, spend, trade, and borrow. As a group, both Millennials and Gen Xers have a much higher level of interest in decentralized finance and a lower level of trust in traditional institutions. Now, 83% percent of millennial millionaires own digital assets. Over $68 trillion is set to be transferred from Baby Boomers to Millennials and Gen Xers over the next 25 years.

We believe that the adoption of cryptocurrency will be much like the adoption of other successful technology: It usually starts off slow and measured then quickly accelerates! Consider the internet: In 10 years, the internet growth went from a handful of users to practically the entire world. In 2021, consumers spent more than $871 billion online, a 44% increase from 2019. A digital future likely means a cryptocurrency future.

In the past two years, the US created 29% percent of its current money supply. Governments and central banks around the globe create money when they need it. The result? Monetary, price, and asset inflation. But Bitcoin has programmed scarcity–one of the benefits of bitcoin is that its supply cannot be manipulated or devalued by fiscal or monetary policy.

Questions about how to integrate crypto into your longer-term investment portfolio? We welcome opening an objective dialogue with you about the advantages, disadvantages, risks, and considerations involved. Contact Towerpoint Wealth