News

May 11, 2023

FDIC- HOW IT WORKS AND HOW TO MAXIMIZE YOUR COVERAGE

The Federal Deposit Insurance Corporation (FDIC) is a US government agency that provides deposit insurance to banks and thrift institutions. This means that if a bank fails, depositors are insured up to a certain amount, and their money is protected. In this article, we will discuss the importance of FDIC coverage and how to maximize it. The FDIC was established in 1933 in response to the Great Depression, and its main purpose is to maintain public confidence in the banking system. By providing deposit insurance, the FDIC helps prevent bank runs and ensures the stability of the banking system.
May 9, 2023

ARE DIVIDEND REINVESTMENT PROGRAMS RIGHT FOR ME?

Dividend Reinvestment Programs, or DRIPs, are investment vehicles that allow investors to use their dividends to purchase additional shares in a company. This is an attractive option for long-term investors who are looking to increase their holdings without having to make additional purchases with cash. In this essay, we will explore the advantages and disadvantages of DRIPs, how they work, and who can benefit from them. DRIPs allow investors to automatically reinvest their dividends into additional shares of the same company, without incurring any commission fees. This can be particularly beneficial for investors who are just starting out, as they can begin to build a portfolio without having to invest large amounts of money up front. DRIPs also offer a way to compound investment returns over time, as the reinvested dividends generate even more dividends in the future.
May 9, 2023

WHAT DO PICKLEBALL AND INVESTING HAVE IN COMMON

When you think about it, pickleball and investing have a lot in common. Both require strategy, quick thinking, and the ability to adapt to changing circumstances. And, of course, both can be incredibly fun and rewarding if you do them right. Let's start with strategy. In pickleball, you need to think ahead and anticipate your opponent's next move. This means analyzing their playing style, predicting where they'll hit the ball, and positioning yourself accordingly. Similarly, in investing, you need to develop a strategy that aligns with your goals and risk tolerance. This might mean diversifying your portfolio, analyzing market trends, and adjusting your investments as needed.
May 7, 2023

CONVEXITY- A USEFUL TOOL TO ASSESS BOND RISK

With the recent significant rise in interest rates we are getting a lot of inquires about bonds. Many clients utilize bonds as a diverisfyer to stocks. Some clients are interested in the income they provide. Traditionally bonds are less risky than stocks. However, like all investments, fixed income portfolios are subject to various risks, including interest rate risk. Interest rate risk refers to the risk that changes in interest rates will impact the value of the fixed income portfolio. When interest rates rise, the value of existing fixed income securities decreases, as investors can now purchase new securities with higher yields. Conversely, when interest rates fall, the value of existing fixed income securities increases, as investors must pay a premium to obtain higher yields elsewhere.
May 7, 2023

DURATION- A TOOL TO ASSESS INTEREST RATE MOVES ON PORTFOLIO VALUE

Investing in a bond portfolio can be a great way to diversify your investments and generate steady income over time. However, it's important to understand the risks associated with bond investing, and one key metric to measure these risks is duration. Duration is a measure of a bond portfolio's sensitivity to changes in interest rates. In simple terms, it tells you how much the price of the portfolio will change if interest rates go up or down by a certain amount. The longer the duration, the more sensitive the portfolio is to interest rate changes. To calculate duration, you need to know the weighted average time to maturity of all the bonds in the portfolio, as well as the coupon payments and the current yield. There are also online calculators that can help you do this.
May 7, 2023

A SHORT PRIMER ON MUNI BONDS

Municipal bonds, also known as "munis," are debt securities issued by state and local governments or their agencies to finance public projects such as schools, hospitals, and infrastructure. These bonds are a popular investment option for those seeking tax-free income, as the interest earned from municipal bonds is generally exempt from federal income taxes and in some cases, state and local taxes as well. Municipal bonds come in various forms, including general obligation bonds and revenue bonds. General obligation bonds are backed by the full faith and credit of the issuer, meaning that the government entity issuing the bond has pledged to use all available resources, including tax revenues, to repay the bondholders. Revenue bonds, on the other hand, are backed by specific revenue streams, such as tolls or fees from a particular project or facility.
May 7, 2023

TAXABLE MUNI BONDS- WHAT ARE THEY, WHY ARE THEY?

Taxable municipal bonds, including Build America Bonds (BABs), are a type of municipal bond that are subject to federal income tax. Unlike traditional tax-exempt municipal bonds, the interest earned on taxable municipal bonds is taxable at the federal level, although it may still be exempt from state and local taxes. One advantage of taxable municipal bonds is that they generally offer higher yields than tax-exempt municipal bonds, making them an attractive option for investors seeking higher returns or to utilize in a tax deferred account such as an IRA. This is because issuers of taxable municipal bonds may be able to offer higher interest rates than tax-exempt bonds due to the broader investor base for taxable bonds.
September 20, 2022

NEW TAXATION ON CORPORATE BUYBACKS

On 8/16/2022 President Biden signed the Inflation Reduction Act into law which encompassed a wide range of topics that arise during client conversations. We plan to touch briefly on various aspects of this large fiscal package because these changes will impact clients directly and indirectly. One such example of a direct financial impact are the tax credits on electric vehicles (EVs). There are several Indirect impacts to portfolios via new tax policies on corporations. Today we discuss the 1% surcharge on corporate buy backs.
July 29, 2021

2021 DEFERRAL LIMITS

Welcome to the midway point of the year. As we are heading into the final months of the year, checking in on tax-saving strategies is always a good idea. Below is a list of some of our most frequently asked limits for Contribution Accounts.