Being Smart with $$ - Classic Investor Mistake

A classic mistake investors make:  Waiting to invest until “after the impeachment” or until “after the tariffs are put in place.”  I regularly hear investors express their view that these items must be bad for stock prices in the days following these events so it is best to wait until after they occur.  The problem with this logic is that if you know it is coming, then so does everyone else and the risk may already be priced into stock values.  Today the market is trading up despite the impeachment last night.  In fact, despite the impeachment that has been expected for quite some time, large-company stocks are up over 6% in the last 3 months.  One never knows which days or months the stock market will rise or fall but many of the assumptions people make about the forces impacting stock prices are flawed.  The best chance for making money in stocks is to buy and hold for decades and add regularly with each new paycheck.  Waiting out short-term events can be costly in the long run.  (Past performance may not be an indicator of what to expect in the future and your individual circumstances should be considered in any investment choice.)

Larry Pike, CFA

Client Priority Financial Advisors LLC
www.clientpriority.com

Being Smart with $$ - Year End Moves

There’s only one month left this year to take advantage of financial moves that may be in your favor.  Is your income low this year? If yes, you may consider converting some traditional IRA assets to a Roth and paying taxes at a low rate.  If your income is low enough, you may be able to sell stock at a gain and pay no Fed taxes.  If your income is high, you may want to give a gift of appreciated stock to someone who has little or no income and have them sell it (but maybe not to your minor or young-adult children because of the sneaky kiddie tax).  Or you may want to donate appreciated stock to charity instead of cash.  Do you have stock with unrealized tax losses?  Sell it before year end to offset gains or even reduce earned income.  Did you turn 70-1/2 this year or in a past year? You may need to take required distributions from retirement accounts.   Or maybe you inherited a retirement account? You may need to take a required distribution from this account even if you’re younger than 70 and even if it is a Roth IRA.  Do you have lots of cash? Consider adding more to retirement accounts from your paycheck and use the cash to pay bills.  Do you have money left in a flexible spending account? Spend it! But you may NOT want to spend money in an HSA.  Just beware many of the pitfalls of completing any of these actions incorrectly or it may backfire on you.  Speak to your adviser to make sure you are executing financial strategies properly. 

Larry Pike, CFA
Client Priority Financial Advisors LLC
www.clientpriority.com