Single Point of View

Single Point of View is our way to occasionally share planning ideas relating to personal finance. Our goal is to pass along concepts that you may not be exposed to on a daily basis.

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Market Predictions vs. Reality

Every year the big Wall Street banks publish their year-end targets for the S&P500.  Think of these as a gauge of Wall Street’s collective wisdom. Their well-paid researchers crunch a ton of market and economic data.   I will save you the suspense – their forecasting ability would be laughable, if it wasn’t for the fact that millions of families rely on them to manage their retirement funds.    We recently asked our Bentley intern Janee Merritt to pull together last year’s list just to see how the banks’ picks turned out.  There were 16 banks in total, including the usual suspects – Goldman, JP Morgan, BofA, etc.  Their average forecast was for the S&P500 to end 2017 at 2,362…. So with the S&P clocking in at 2,743 – the under-shoot of 14% is massive…  considering the annual return for the year ended up at +20%.    Even more troubling...
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Update: Year-End Tax Reform Planning

Last week we summarized the House and Senate proposals for the Tax Cuts and Jobs Act (http://www.spcfo.com/single-point-of-view-blog/entry/singlepointofview/year-end-tax-reform-planning.html) including Action Steps relating to your year-end tax planning.  Since then, the House and Senate reconciled a final tax bill and, as of yesterday, the bill has been approved by Congress.  Below are the details of the final bill. Standard Deduction The standard deduction will increase from $6,350/$12,700 to $12,000/$24,000 for single filers and married filers, respectively.  State & Local Tax Deductions Individuals are entitled to take state and local tax deductions, including property taxes, up to $10,000. Mortgage Interest Deduction Mortgage interest will be deductible on up to $750k of principal loan amounts.  Existing mortgages taken out as acquisition debt will be ‘grandfathered’ in under the old rules (deductible up to $1M of acquisition debt).  Home equity indebtedness will not qualify for the mortgage interest deduction and existing equity loans will not be...
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Year-End Tax Reform Planning

Given the passage in both the House and Senate of the Tax Cuts and Jobs Act, the stakes for year-end tax planning are higher than usual.  We do not know what final legislation will look like when it comes out of reconciliation but there are themes in the House and Senate tax bills that give us insight into beneficial tax moves to make prior to year-end.  We’ve highlighted some of the proposed changes and related planning opportunities to consider. Deductions Both the House and Senate plans agree on increasing the standard deduction amount, nearly doubling the current allowance:   Current (2018) House Senate Single $6,500 $12,200 $12,000 Married $13,000 $24,400 $24,000 Head of Household $9,550 $18,300 $18,000 On the flip side, the proposed legislation makes significant changes to expenses that are allowed as itemized deductions.  Some notable changes include: Medical expense deduction – the House bill eliminates the deduction completely while...
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The Conversation Project


Many of us will be enjoying the next few days surrounded by family and friends.  I'm thankful to have this time to spend with mine.  There will be conversations about kids, sports, work, and I'm guessing in many houses in America, politics (hoping to avoid the last one at our Thanksgiving dinner).  There is another conversation that most families avoid because it is very uncomfortable, however, it is an important one: Death.  Or better put, how we want to live at the end of our lives.  The care we want. The care we don't want.  Who is going to decide.  It's Estate Planning for the heart. There is a wonderful non-profit group, The Conversation Project, who are dedicated to helping people talk about their wishes for end of life care.  It's always too soon to talk about it, so they've tried to help make the conversation easier.    It's very hard for...
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Roll-BACK Your IRA?!

A quick Google search yields HUNDREDS of articles explaining why you should roll a 401(k) to an IRA – but as our Chief Investment Officer, Rene, alluded to in his recent post “The Twisted Logic of IRA Rollovers”, there may be reasons to keep retirement assets in an employer sponsored qualified plan (401(k), 403(b), etc.) or roll the balance to a new employer’s plan.  Depending on the plan, potential benefits of an employer sponsored qualified plan that are not afforded to Rollover IRAs include: -          Loan capabilities -          Additional creditor protection -          Access to funds without penalty as early as 55 -          Possible access to lower cost investments (typically via larger company plans) -          Roth conversions for nondeductible IRA contributions (avoid pro-rata tax treatment) -          Delaying required minimum distributions if you work past 70   Simply put, while a Rollover IRA may make sense in many situations,...
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