Clients, this week we’ve got a little behind the scenes tour: what happens in our in-house research process?
Here are some of the things we like to think about (so that you don’t have to!).
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Maybe you’ve heard of a mental wellness day, or maybe you’ve taken one yourself! It’s an intentional break for work, school, or regular commitments to unplug from the world and take a breath. We know that it is impossible to be hustling and grinding every minute of every day. It’s nice to set aside time every once in a while just to relax—and remind us what we are working so hard for.
What if we incorporated the idea of a mental wellness day into a day of financial planning? Why not schedule yourself a financial wellness day?
Instead of looking at a review as just another chore, we can make a day of it! We can get our minds right and get our plans in order. We could take some time away from work, grab breakfast at our favorite spot, and get some perspective on our financial lives. For those with kids at home, maybe trade some babysitting with another family to buy a few weekend hours of focus. For partners, consider scheduling a financial wellness date!
No matter how you make it happen, focusing on financial wellness doesn’t have to be intimidating. You could work your way into reflection by asking a few questions:
You could start with a list or spreadsheet that includes a sketch of your monthly inflows (income) and outflows (spending). Jot down your current account types and their balances, as well as any other assets. If they’re weighing on your mind, you can also include any major outlays or projects coming up.
You can go as deep as you’d like: review the last 3 months or the last 12. Choose whatever level of detail will help you get the major parts of your financial life on the table. What kind of snapshot do you want to review?
You may notice that there are things that “don’t add up,” places where how things have been going is not lining up with your values or your goals. Maybe you’re spending more in one area than you would’ve guessed—and would much rather have those resources going somewhere else. Maybe you’ve been focused on the long-term more than you need to and can loosen up in some areas; maybe you’ve been thinking about the short-term more than you’d like.
So, what’s working well? What could use some more thought? This is a great time to get perspective on the big picture and start dreaming up any bigger plans that will take some runway.
For any list-lovers out there, this could be the time to collect any tasks that have popped up during the process: double-checking an employer’s retirement plan match or other benefits, naming beneficiaries or working on legacy planning, or canceling any subscriptions or services you’re no longer using.
Or consider giving yourself just one follow-up action. It could be as simple as a calendar reminder, set for a week or two after your financial wellness day, that says “call a friend to tell them about what I’m learning from my financial planning day.” The key is to plant a seed for yourself.
We know that these topics sometimes bring a little apprehension, so it pays to set yourself up for success. Figure out what will help you get into the right headspace—and where you might start.
We can also take heart that tending to our finances is one of the ways we take care of ourselves and the people we love. Time spent like this can pay dividends.
Have questions before or after your financial wellness day? Reach out, any time.
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We can make flexibility a part of our lives and our financial planning. Our day-to-day is forever changing, and so it’s important to take some time to re-evaluate and make sure we are on track to get where we want to be. If our lives require a different plan, we make one! No one can white-knuckle their way to their dreams.
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There’s nothing wrong with wanting more… unless it clouds the beauty in what we already have. We can be grateful for what we’ve built and still be ambitious to make ourselves and the world around us better.
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When we were a young family, two things seemed to belong in the the same mythical category as unicorns and leprechauns: spare time and extra money. These ideas sounded magical to us!
We usually had enough time and money to get by—usually—but life was often harried and hurried, and children have needs that sometimes require money to obtain. Then our children grew. The joys and pains of that chapter subsided over time, replaced by new circumstances and challenges.
There’s been an interesting theme to a few recent conversations with clients who are about my age—call it “sixty-something.” Reviewing their overall position, one person remarked they never planned on having so much money.
Another was trying to get perspective on the sense of buying a new vehicle to replace one with 100,000 miles. We came to the conclusion they had $600,000 more than they needed in their long-term portfolio.
And then there are folks scratching their itch to be more generous to causes and people than they ever imagined, with wealth they had never dreamed of.
It seems we caught the leprechaun. We saw the unicorn. There is such a thing as extra money. And the way compounding works, an extra half-million now might turn into an extra million, then two, if we live long enough. No guarantees, but in our opinion we’re liking the general trajectory.
This phenomenon brings deeper meaning to our refrain “invest wisely, spend well.” If you find yourself ahead of schedule on your goals, we’re more likely to put it this way: “Don’t pass up too many chances to have fun.”
Life is short, we’ve discovered.
Interestingly, the people we know with extra money now seem to have one thing in common: they invested 1) effectively 2) over a long period. They did not fall for the smoother ride to a poorer future; they knew that the ups and downs are an inherent part of striving for real investment market returns. In bad markets, they were not scrambling to sell out. They stayed the course—or added more!
No guarantees about the future, of course. Clients, if you would like to talk about whether or not you might be on track, please email us or call.
Oh, one more thing about spare time: it has remained elusive. Maybe it’s still out there, somewhere, with the leprechauns and unicorns.
Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss.
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For a show where “nothing happens,” there’s still something captivating about Seinfeld! Maybe it’s how the characters show up for each other and keep at it, even when life is absurd. Is our own support system pointing us in the right direction?
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by Caitie Leibman, Director of Communications
We never make decisions alone.
No—we’re not talking about all the different people we might consult when making a decision. We’re not talking about the family members, loved ones, or trusted counselors in our lives that help us navigate the big stuff.
Instead, we’re talking about what happens in our own minds. We never make decisions alone because there are always at least three different versions of us in the mix! This idea has been explored by a number of researchers who study the psychology of happiness, and writer Laura Vanderkam has summarized it really nicely in her work.
Basically, our decisions are always happening by committee:
The challenge is that only one of these people has to live out the costs of each choice: the experiencing self. Consider an everyday example… Should I go for a walk this morning?
“Nah, too cold,” says the experiencing self. “I’m tired.”
“But think of how energized we’ll feel after we walk,” says the anticipating self.
“Yeah, that’s how we felt last time we didn’t want to take a walk but then we did,” says the remembering self.
“Yeah, but you bozos don’t have to find clean socks, or bundle up, or drag your behind out there, or clean the floor after we track our shoes inside. I do!”
And that darn experiencing self isn’t wrong. But it doesn’t mean she should get the final say every single time. Do you hear the good points the other two have to offer? They’re not wrong either.
The experiencing self—the one that lives here, does a lot of the lifting, and has to deal with discomfort—has a disproportionate impact on two other really important people: your anticipating self and your remembering self. It’s a huge opportunity.
That anticipating self is teeing up some good stuff for you. She’s planning for retirement, investing wisely so that you might spend well. Making the most of those chapters of life is something you can do to honor her effort.
The remembering self might be savoring your choices for decades. What kind of experiences do you want to give her to work with? How do you want her to look back on you?
It’s not about getting every little thing in life just right. Sometimes, a walk is just a walk. A sandwich is just a sandwich. A paycheck is just a paycheck.
But from time to time, it’s good to zoom out and see how these three people are getting along. When our plans, experiences, and memories are working together, life can feel very rich.
What are you savoring from the past, enjoying in the present, or looking forward to in the future?
No matter where you find yourself, we’re wishing (all three of) you some peace, comfort, and joy today.
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The start of the New Year is a natural time to take stock—and appraise the opportunities and threats we investors may face.
Many Wall Street firms, market pundits, and fellow investment advisors like to weigh in on what lies ahead. Some are quite detailed about which sectors of the market may shine or fade, whether interest rates are going to go up or down, and what the economy or the markets or the Federal Reserve are likely to do.
Here at 228 Main, we have a slightly different approach. Because our time horizon extends beyond the months ahead, we are thinking about how the next seven, fourteen, or twenty-one years are going to play out.
Just a few of our Research Team’s theories about companies, industries, and society illustrate this expansive timeline:
You may note that none of these depend on any of the details that most “2024 Outlook” reports focus on. We’re not all tied up in knots about the possibility of recession because we already know that the next one is coming (and so is the recovery which will inevitably follow.) And what will the Federal Reserve do? It literally does not matter, over our time horizon and yours.
The opportunity in 2024 is the same as always: to employ a longer time horizon than others, to be more patient with fluctuating markets, and to focus on the fundamentals of specific opportunities—not the frenzy about things outside our control.
And the threat in 2024 is also the same: the risk of getting caught up in short-sighted ways of looking at things, of following the crowd, of letting persistent pessimism into our brains.
In our opinion, it’s more fun our way!
All of us here at 228 Main want you to know that in 2024 we are going to continue with the values and principles that brought us to this moment, always seeking to refine our strategy and tactics as the future unfolds. That’s our “2024 Outlook.”
Please email or call, if there are things on your radar for 2024 that we should know about.
Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss. Past performance is not a guarantee of future results. This material contains forward looking statements and projections; there is no guarantee that any forecasts made will come to pass.
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Approaching this season of holiday cheer, we are thinking about William Roth—and may even raise a glass in his honor.
Senator Roth was instrumental in creating something new. It appeared in the Tax Reform Act of 1997. And it has some wonderful features. It’s…
The Roth IRA, as we know it, is a useful addition to the plans and planning of many people. Contributions may be made by those with earned income (but not too much earned income: there is an upper limit.) Conversions from traditional IRAs may be made by anyone willing to pay tax on the converted amount.
You may be eligible to put up to $6,500 into a Roth IRA for 2023, anytime until tax filing time in 2024. And the limit for 2024 is $7,000. And those of us lucky enough to be 50 years old or older could contribute an extra $1,000 beyond that as a catch-up.
If you have traditional retirement accounts, you may be eligible to convert part to a Roth IRA. There are no income limits on conversions; if you believe tax rates may be higher for you in the future, it might make sense to do a conversion. These happen on a calendar year deadline, however, so 2023 conversions must actually be done in 2023, for example.
Although a Roth IRA may not be right for everyone, the concept was and is right for me. I’m getting tax-free capital gains, tax-free dividends on blue chip stocks, and tax-free interest because I have investments inside a Roth IRA.
And I can take funds out and spend them (or give them away), any day, with zero tax.
If this might be right for you, please email us or call.
Traditional IRA account owners have considerations to make before performing a Roth IRA conversion. These primarily include income tax consequences on the converted amount in the year of conversion, withdrawal limitations from a Roth IRA, and income limitations for future contributions to a Roth IRA.
A Roth IRA offers tax deferral on any earnings in the account. Qualified withdrawals of earnings from the account are tax-free. Withdrawals of earnings prior to age 59½ or prior to the account being opened for 5 years, whichever is later, may result in a 10% IRS penalty tax. Limitations and restrictions may apply.
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If you are of a certain age and have certain retirement accounts, you probably need to know about the annually required withdrawals from those accounts. The IRS calls them “Required Minimum Distributions”—RMDs.
One special note: Clients, many of you are already treating your retirement account like an orchard, taking out the fruit crop each year to live on. The RMD is not an “extra” amount on top of the crop: it is just a minimum. If you are already taking out 5% in monthly payments to fund your retirement, you don’t need to worry about what happens at age 73.
We’ll talk about the details here, then how it works out in practice.
People born in or before 1950 with any form of retirement account (other than Roth IRA) have already begun doing this RMD process each year (or should have). People born in 1951 or later will have to begin by the year they turn 73.
The actual amount required is a function of age and the prior year-end balance. For example, a 73-year-old has to take out a little less than 3.8%. In round numbers, this would be $3,800 per $100,000 in the account. But that fraction goes up a little every year: 80-year-olds are closer to 5%, 90-year-olds have to take out more than 8%.
Basically, the RMD needs to be calculated for each retirement account you have (except Roth IRAs). You must take out the total amount required by December 31, and you will receive a 1099-R showing taxable income.
Clients, you know we pay attention to this and strive to keep you informed about what needs to be done. But there’s one thing to be careful of: take this as an opportunity to check whether there is some account somewhere that we don’t know about, like a 401(k) from a former employer, an odd IRA balance somewhere, 457 or 403(b) plans, and so on. It happens, but it would be a pain to get yourself into some trouble over an account that’s been out of sight, out of mind.
Some people may choose to use the onset of RMDs as a time to consolidate all of their retirement funds into a single rollover IRA, to make this process simpler going forward.
One of the advantages of Roth IRAs is that they have no RMD requirement. As a matter of good planning, it may make sense to convert partial IRA balances to Roth, pay tax when you choose, and whittle down that balance that is subject to RMDs in traditional retirement accounts.
There are lots of ways to handle things! If you’d like to talk about it, we’re here for it. Email us or call.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
To determine which strategies or investments may be suitable for you, consult the appropriate qualified professional prior to making a decision.
This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.
Traditional IRA account owners have considerations to make before performing a Roth IRA conversion. These primarily include income tax consequences on the converted amount in the year of conversion, withdrawal limitations from a Roth IRA, and income limitations for future contributions to a Roth IRA. In addition, if you are required to take a required minimum distribution (RMD) in the year you convert, you must do so before converting to a Roth IRA.
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