On October 1, state health care insurance exchanges are scheduled to open, in the first major implementation of the Patient Protection and Affordable Care Act—also known as the ACA or Obamacare.
There’s a lot of conflicting information in the media about how the exchanges will impact consumer health insurance. The highly reputable CFP Board’s Consumer Advocate blog has published several helpful articles, discussing the known or expected impacts for three distinct groups:
For Medicare recipients, the impact will be smaller. The law makes no changes to Medicare eligibility or enrollment, and reduces the “doughnut hole”—the gap in prescription drug coverage. By 2020, the gap is scheduled to be eliminated. The law also includes free preventative care, including some vaccines and screenings.
We will continue to monitor the changes in health insurance, and will pass along helpful resources to you as we have access to them.
From Bob Smrekar, AIF®
Wealth Advocate
Investment News interviewed Jerry earlier this week for an article about how advisors are once more seeing opportunity in emerging markets.
Describing them as a “screaming long-term buy,” Jerry shared some of our recent moves in that area, which we discussed in an earlier blog post.
Read the full Investment News article. Investment News is a national newspaper covering the financial services industry.
The timing of purchases and sales of assets affect whether they are subject to special long-term tax treatment or considered part of ordinary income. People with variable income from year to year should pay special attention to when they pay bills or accept income.
For example, some expenses can be prepaid or paid early to maximize a deduction, such as property taxes.
Bonuses and stock awards could be deferred from one year to the next if you are likely to be in a lower tax bracket in the future year.
This ability to move income from one period to the next underlies the benefit of tax-advantaged retirement savings: Defer payment of taxes in high-tax earning years until the low-tax, lower income retirement years.
This is part of an occasional series of tax tips from Tom Brunberg, head of Wade Financial Group’s Year Round Tax Planning Service.
Last week, we recognized a potential long-term opportunity in emerging markets…and we seized it.
A price gap—now almost a 50 percent difference—has grown between U.S. and emerging market equities and bonds.
At this point, we believe that emerging market equities and bonds are undervalued…and therefore present a long-term investing opportunity.
Sensing this, we took immediate action, adding emerging market exposure to our Paid to Wait®, Foundation, and Lifestyle Income Bond accounts.
For our Foundation accounts, this move was in addition to our normal rebalancing schedule, as we felt we needed to act quickly and proactively. We will perform the full rebalancing on this account as scheduled.
Also, for those clients with Wade Financial Group-managed 401(k)’s, we performed our regularly quarterly rebalancing a month early, so that we could increase exposure to available emerging market funds.
This move exemplifies our Contrarian Value (ConVal®) investment approach, with its focus on identifying and purchasing undervalued assets as we invest with a long-term view.
We continue to eye potential opportunities in emerging markets and elsewhere, and will continue to research and seize potential investing opportunities on your behalf.
Adequately documenting your income and expenses is essential for correct analysis and calculation of the taxes you owe. Throwing receipts into a desk drawer or relying upon memory is a sure way to understate deductions and overpay taxes.
Monthly statements from banks, brokers, mutual fund managers and others who provide financial information should be filed for easy retrieval and safely stored.
Remember, the IRS can go back a minimum of three years in a tax audit, and even six years in some serious violation cases, from the date a return is filed. It's prudent to not only maintain good records to file correctly, but to keep them for at least six years after the filing date in case of an audit.
This is part of an occasional series of tax tips from Tom Brunberg, head of Wade Financial Group’s Year Round Tax Planning Service.
Investors have experienced a choppy, volatile bond market in 2013. For many bondholders this has led to negative total returns for the year. For example, the AGG (or iShares Core Total US Bond Market ETF), which is widely seen as a proxy for the U.S. investment-grade bond market, is down -3.5% year to date.
We have had a defensive posture in our Lifestyle Income Bond (LIB) strategy since the beginning of the year, focusing on 1) keeping maturities short and 2) investing in high-yield bonds. We also entered 2013 with a floating rate fund that invests in bonds whose interest payments reset upward as interest rates rise. These moves have helped counter the down performance of bond funds, such as industry legend Bill Gross’s Pimco Total Return Fund (PTTRX), now down -3.5%; and the Pimco Real Return Fund (PRRIX), down -9.03%. Year to date, our LIB account is down -0.38%, net of the highest management fee charged, and is up 0.61% gross of fees.
While bonds will still provide an essential long-term anchor for many portfolios, we expect that the volatility and instability will most likely continue in the short term. At this time, it appears that the 10-Year Treasury Yield is heading towards a rate of 3.00%. Reaching that level will drive down bond prices still further.
With this outlook in mind, we still favor bonds with shorter maturities, as well as over-weighting high-yield individual bonds and floating rate bonds. For both our Foundation and our LIB models, we have also invested in the Pimco Credit Absolute Return Fund (PCARX), a more conservative fund that seeks to generate return in any market.
In addition, we are adding a stake in the Pimco Emerging Local Bond Fund (PELBX), as our ConValTM process has identified emerging market bonds as undervalued. Expect to hear more about our investments in emerging markets in an upcoming blog post!
If you have any further questions please feel free to contact your wealth advocate or our investment department.
Everyone agrees that the tax code is too complex. While the need for tax reform is a common refrain in Washington, the likelihood of a substantial change is low. Too much is invested in the status quo. While everyone complains about the other guy's deduction, they are loathe to give up their own.
Remember that our complex, often confusing tax code benefits those who take the time to learn its details and use it to their advantage. I will offer occasional tax planning tips designed to help ensure that you pay only the taxes you owe.
Tip #1: Remember that tax planning is a year-round exercise
In some ways, tax planning is similar to maintaining real property: Proper diligence ensures that repairs are kept small, with minimal damage.
Tax planning and actions to reduce taxes can be made throughout the entire year — January through December — to ensure you pay only the taxes you owe.
If you are self-employed, or if your income fluctuates, you should consider using quarterly tax payments requirements to review your investment assets and each asset's impact on gross earnings; as well as your current income from self-employment.
For example, you might want to sell securities to establish short-term losses or long-term gains, alter or fund retirement plans, or incur or defer medical expenses based upon balances in a flexible medical savings accounts.
Don’t wait until April of next year to make decisions! Instead of being reactive, proactively plan now to take advantage of all the possibilities.
From Tom Brunberg, head of Wade Financial Group’s Year Round Tax Planning Service.
