Objective Financial Advice

Spring is in full force, so we’re bringing you rejuvenating reminders and spring cleaning ideas for your finances.

We have had a phenomenal 12-month return in the market with the S&P 500 up just under 30% at the end of March.* The market has recently bobbled in April as a response to three consecutive reports with inflation exceeding expectations, as well as geopolitical issues. Keep on reading for a full investment update below.

Without action from Congress, we are set to see many of the 2017 Tax Cuts and Jobs Act provisions expire at the end of 2025. For most taxpayers, this would mean an increase in 2026 to their federal marginal income tax bracket between 3-4% on average. While we don’t know if this “sunset” will occur, there are likely some tax planning opportunities that are at least worth considering. For accumulators, you may wish to consider whether it’s most beneficial to make your contributions as pre-tax or Roth, or it may be time to realize some capital gains on stock you've been watching grow. For retirees, you may wish to accelerate Roth conversions these next two years. If you're unsure of how this sunset could affect your planning strategies, please reach out so we can help you strategize and work to minimize your lifetime tax burden.

We have some updates on our team. Patty Priddy, a beloved financial planner with our team since 2017, retired at the end of March. We miss her already and wish her all the best! If you worked with Patty on a project basis, we’ll help you get reassigned to one of our other team members when it’s time for your next review. We also have a new team

member joining us -- Stephen Ropes will be starting an internship this May after completing his Bachelor’s in UNT's financial planning program.

Please read on for other actionable planning ideas. We will be closed for Memorial Day (Monday, May 27th), Juneteenth (Wednesday, June 19th) and Independence Day (Thursday, July 4th). We plan to send the next newsletter out in mid-July. We'd love to hear from you on questions or suggestions for topics you’d like to see covered in the future.

What are You Listening to?

In our world today, there is a lot of noise in the finance arena. If you are tuning a lot of this out, fantastic! We don't recommend listening to stock tip or active trading podcasts and trying to act on them, but there are a lot of inspiring and educational financial podcasts out there.

We get asked pretty regularly what we listen to when it comes to financial podcasts, so we wanted to share some of our favorites. I know a few of us can also share some true crime shows if you're interested, but we'll stick to finance here. This is not investment advice; we may not agree with everything said (and may even emphatically disagree), nor are we receiving any compensation for the inclusion of the podcasts mentioned below:

Acquired: A mix of history and finance, this podcast goes in-depth (3-4 hour episodes) on the successes and failures of various companies. While technical, the podcast feels more like a conversation between the two hosts: Ben Gilbert and David Rosenthal.

Bogleheads on Investing: Aptly named after Vanguard founder, John C. Bogle, this group of "Bogleheads" follows the investment philosophies of low-cost, simple investing. Led by Rick Ferri, this group educates DIY investors at all levels of experience.

DIY Money: If you're looking for something short and sweet, give this podcast a try. Quint Tatro and Daniel Czulno cover all things money from Social Security timing to helping your kids build credit.

How I Built This: This podcast is similar to Acquired but with less of a time commitment (most episodes are a little more than an hour). Guy Raz interviews entrepreneurs who share their stories in the building of their brands.

Quartr: This client-recommended app isn't necessarily a podcast, but it allows you the ability to listen in on earnings calls (live or recorded) with a podcast-type feel. You can search for companies you are interested in as they cover over 9,000 at this time.

The Ramsey Network: Dave Ramsey has a following. Whether it's The Ramsey Show itself or Smart Money Happy Hour, you will be entertained and may pick up some helpful hints. Maybe you've been on The Ramsey Show yourself.

Feel free to chime in and share what you're listening to. We'd love to hear from you!

Financial Spring Cleaning Opportunities

Did you have a surprise when you completed your taxes for 2023? Higher interest rates on savings accounts and other cash-like vehicles caused some larger payments or smaller refunds than in 2022. Now may be a good time to reset for the 2024 tax year by increasing withholdings or quarterly tax payments.

Did your employer change custodians for your employer plan (401k, 403b, H.S.A., etc.)? Be sure to review your beneficiary elections on these accounts. Employees are often surprised to find out that their prior elections did not convey from the prior company. This is an easy thing to review and correct.

March and April tend to be more popular months for stock grants and vests. If you are receiving stock compensation, be sure to monitor your concentration in a single company. If you'd like help in this divesting effort, please reach out to us and we can help you find that balance in your portfolio.

Planning Ahead

In a financial planning office, you'd expect to find a bunch of planners, and you'd be right. This encompasses other facets of our lives, as well. We have our meal planners, vacation planners, and even wedding planners here. Ultimately, when we think about planning ahead, it's not always related to our finances.

A handful of us have very recently gone through our estate plans and made some updates. We encourage you to review yours from time to time to ensure that they still reflect your wishes and current situation. If this is something on your to-do list, consider this your nudge to either update or create your estate plan.

Below are some helpful (and free) things you can do outside of your standard will package you may have completed through your attorney:

Trusted Contact: You may have been prompted by your brokerage firm to name a trusted contact as someone to reach out to if you cannot be reached or if there is a concern about fraud on the account. This is someone you trust who can act for you to protect you as an investor.
Advance Designation of Representative Payee: Social Security offers you the option to add up to 3 individuals who could serve as a representative payee if the need ever arose for someone to be appointed to manage your benefits for you. This option is available for adults and emancipated minors applying for or currently receiving benefits.
Financial Directive: We provide this to clients to grant our firm the authority to contact designated individuals you provide to us in the event that we observe diminished financial decision-making capacity. This allows us to raise our hand to notify someone you trust if we notice a change in our interactions together. If you'd like to complete one of these, the form is available here.

If you choose to implement any of these three supplemental planning tools, we encourage you to review these elections as part of your estate plan review.

Investment Market Update

Investors closed out the first quarter of 2024 in positive territory. If you haven't looked at your investment reports for the last quarter, much like your honor roll student's report card, they are for the most part "fridge-worthy." Even with the dip so far in April, the S&P 500 is up 7.9% year-to-date as of Friday, April 12.*

The S&P 500 returned 10.56% in the first quarter. Small cap stocks pulled back after last quarter's rally to 5.18% and large cap value stocks came in right between small and large cap stocks at 8.99% for the quarter.

Developed market stock were just ahead of small cap U.S. stocks at 5.78% for the quarter. Emerging market stock posted positive returns as well for the last 3 months at 2.37%.

Our bond funds ranged from slightly negative to slightly positive for the quarter because interest rates increased as investors recalibrated expectations on the timing of Fed rate cuts. The US aggregate bond index lost -0.78%. Shorter-term bond funds provided small gains at 0.29% for the quarter. Even with this lackluster quarterly performance, bond funds are in positive territory for the 12-month period because of starting higher coupon rates. Today's interest rate starting point gives us a cushion to absorb additional market-driven rate increases as they occur. It's been a painful few years to be a bond holder, but bond funds are positioned now to contribute much more positively to the portfolio going forward.

If you're looking for some special investment advice from us because it's an election year, here it is: stay the course, continue with your regular rebalancing schedule, and try to avoid all of those emotional decisions when it comes to your investments. As you've probably heard us say before, markets have shown positive returns regardless of who's in office, so we don't need to predict the winner to be successful.

With conflicts escalating in the Middle East between Iran and Israel, you may be asking the same question ... should we be doing something different? To react to this news by making moves in your portfolio is not recommended. Many times market downturns are short in their reactions to news like this, and the truth is we do not know the impact of global events on an investment portfolio. This is not to minimize the tragedy and numerous other costs of war. We know following this advice is easier said than done sometimes when it comes to your own hard-earned money, so please let us know if we can help.

*Source for investment returns is Morningstar. Quarterly returns are as of March 31, 2024. S&P 500 TR USD for S&P 500. Russell 2000 TR USD for small cap stock. Russell 1000 Value TR USD for large value stocks. MSCI EAFE NR USD for developed international markets. MSCI EM NR USD for emerging markets stock. Bloomberg US Agg Bond TR USD for the US aggregate bond index. Bloomberg US Government 1-3 Yr TR USD for short-term bonds.

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