2020 Quick Timeline (Excluding the deaths of Kobe & 007, plagues, murder hornets, politics, locusts, and wildfires)

• S&P continues upward pace in Jan and Feb
• Covid becomes a global pandemic
• Economy Shuts Down
• Markets plummet
• The race to a vaccine is in Operation Warp Speed
• Fed reacts quickly to give stimulus packages
• Stay at home trade rebounds, while most of the rest of the market does not
• More stimulus held up in Congress
• Election and the contentious division of America
• The return to work stocks start a rally, mostly companies that have been left behind since March
• Pfizer Vaccine approved by FDA
• Moderna’s Vaccine is proven to be highly effective and is recommended to the FDA for approval

For a complete…and I mean COMPLETE…and really cool timeline, Click HERE

2020 will forever be an unforgettable year.

As we approach the end of this twilight zone period, we try and focus on the positive.  Clearly, financial markets are looking to the light at the end of the tunnel, and economic forecasts for 2021 are supportive.  But as we look forward to brighter days, let us not forget all the incredible sacrifices and incredible acts of volunteering, adjusting, and community support we experienced in the last 10 months.  While there is no shortage of negative news out there, and our hearts go out to those who had unfortunate loses during this difficult time, we also urge people to look at all the great things that happened and we experienced this year.  "A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty." – Winston Churchill

We are not out of the woods yet…..

While equity markets are clearly getting ready for a return to normalcy, we still have a tough number of months ahead.  Fitch Ratings, well known for rating bonds, recently revised up its global growth forecast to 5.3% for 2021, with the U.S. being a strong contributor to that upward revision (to 4.5% annual GDP from 4.0% in September).  These forecasts take into account continued weakness in the immediate months ahead, but stronger growth in the second half of 2021.

Fitch also revised up its 2022 global growth forecast to 4.0% from 3.6%.  This is really a great story for the future, and we think sets the foundation for continued strength in markets.  Even though we know case rates will continue to climb, economic estimates for the future continue to move higher and extend for longer.  If we do see a sell off over the next few months, don’t be surprised if “buy the dip” is the mantra you hear and the action you see in the markets.

Risk On…..

To say it simply, markets are on a tear and seem to already have developed COVID immunity.  Since the end of the election and positive news toward the vaccine, we have seen higher prices in equities across the board, and also in some other risk assets like cryptocurrencies (shameless plug digression; don’t forget to check out our post on cryptocurrencies).

Further confirming the strength and likely follow through of this rally is poor performance in safety assets.  We have watched bond yields rise over the past few months and gold waffle.  This is not entirely intuitive since monetary and fiscal policy is still expected and required to support the economy in its current fragile state.

Common Questions We Have Been Hearing

• Countries are still not 100% open and the economic impact has been hard. How can the market keep going up?  For the most part, the companies that are outperforming on ones that have solid business models in a pandemic world, have adapted to succeed in the pandemic, have had a lot of cash in their reserves, and were not as impacted by de-globalization that has transpired over the past 9 months.  These companies are valued on forward earnings, meaning what they are anticipated to earn in the future.  With interest rates near zero and low risk assets giving no real ability to outpace inflation, risk on assets like stocks have adjusted as well.  The earnings are now based on a post Covid world, a timetable that keeps shifting out to justify the prices being paid.  Some of these valuations have rightfully gotten out of line, which we are aware of.  However, some of these companies/industries that are trading on new multiples deserve it, each for their own reasons.

• Stocks seem pricey and there has to be a correction. What would you invest in?  Similar to the response in the above question, some stocks have gotten a bit rich in their valuation.  There are also some stocks that have and continue to be undervalued.  However, just because they are undervalued does not mean that they are a good buying opportunity.  Most of why they are undervalued is because of their ability to adapt, they are in a dying market and they simply don’t have the growth opportunities they may have once had.  Look for a lot of M&A activity, which is another market segment our tactical clients have exposure in.

• Taxes are going to go up in the new administration, how can company valuations and Wall Street sentiment remain high? Most companies are not as impacted by the rise in the corporate rate, and the rate anticipated is still a very low rate.  A tax overhaul has a lower likelihood in the next 2 years if the republicans retain control of the Senate.  Companies will find ways of utilizing profit in a tax favorable way for shareholders.  This isn’t a large concern of ours.

• There has been no additional COVID-19 Relief. What about all the bankruptcies that have yet to happen?  As long as the Federal Reserve supports the economy, which it has done a great job of doing since the pandemic, we believe the companies that trade in the stock market will continue to fare well.  We have an incoming Treasury Secretary, Janet Yellen, who in her time as Fed Chair was known as being very dovish.  This means the likelihood of lower rates and focus on propping up the economy is high.  Whether or not this will become a burden for later generations to bear will be a future tale, but if Modern Monetary Theory wins the day, the impact the Fed is having on todays economy will be a win for Americans.

For Property Managers, Real Estate Investors, Collateralized Loans, Non-Profits, Foundations, ESOP's, Corporate Cash Reserves.

Gone are the days of fair interest rates on cash reserves.  The Federal Reserve has signaled that interest rates will remain low in the future.  The new administration has appointed Janet Yellen as Treasury Secretary, who is popular for her dovish monetary policy (essentially meaning she is known for keeping interest rates low).  Additionally, the backdrop of COVID-19 and the economic impact has steered reserve dollars into alternative assets outside of cash like instruments.

We recently put out a blog about the rise of cryptocurrency and what it is, how it is traded, and how is it priced.  https://grwealthplan.com/blog/the-bitcoin-craze/.  We wrote the blog because we have seen another spike in activity in cryptocurrency  because it has gained popularity and a sense of legitimacy due to major investments from large corporations and notable affluent investors adding the currency to their portfolios.  We are not encouraging or recommending cryptocurrency, this is just an example that indicates that fiduciaries are looking in alternative places for yield and/or appreciation with interest rates near zero.  Cash is becoming a deteriorating investment that can not outpace inflation growth.

One would not expect a return to a 4% interest rate on cash.  The traditional thinking of reserve cash and how it is handled in foundations, association, and corporations needs to evolve in a world where 0% interest rates are not only a concept, but a reality that is with us for the indefinite future.  The rules behind being a fiduciary on cash reserves typically require the fiduciaries to act in a fair and reasonable fashion looking out for what is best for the entity and not for your own benefit or wellbeing.  In that definition, there is no statement that one must protect principal, but must act in the best interest of the entity they represent.  Some investment philosophies are defined and put restraints on the types on investments that can be used.  Most do not have a true outline, and most should be updated.

When placed with the responsibility of cash reserves, weighing out the pros and the cons of the current environment is essential.  Is it in the best interest of the entity to keep the money in low interest bearing cash as opposed to finding other methodologies of safely investing the funds?  That can be challenged, even though it can also be reasoned that it is appropriate.  The reform of money market funds in 2016 provided safety in these higher yielding investments versus that of a savings account.  Planning around the needs of the funds and making prudent investment decisions based upon the goal of the entity is quintessential to success.  Use that plan to outline the investment philosophy.

Alternative Investment Ideas:

• SIPC vs FDIC – SIPC is insurance for default of brokerage versus FIDC for cash
  • SIPC firms can buy up for higher than the $500k.  FDIC limits $250k
• Money Market Funds or Ultra Short Duration Funds
• Municipal bonds
• Select ETF’s (exchange traded funds)
• Laddering out CD’s (certificates of deposit) and bonds
• Consider having a small amount of the funds invested for growth if the rest of the operating portion is reserved as cash
• Even bitcoin can be considered in this new environment.

What to consider staying away from?

• Individual Equities and Penny Stocks
• Stock Mutual Funds
• Unregistered securities
• Illiquid Securities
• Private Placements

Consult your legal documents, bylaws, CPA, attorney, and professional fiduciary investment managers before making any decisions on how to invest your cash reserves.

Green Ridge Wealth Planning is a registered investment adviser.  Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies.  Investments involve risk and, unless otherwise stated, are not guaranteed.  Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.

Market Trend update from Jordan Kaufman, CFA, CFP:

Over the last month, and especially over the last few weeks, we have seen increasing shifts in sentiment towards the “reopening trade”.  The market has seemed to favor sectors of the market that benefit from a “return to normal” versus a long-term shift to the “stay at home trade” that has outperformed through the year.

In particular, we see technology stocks having mixed performance while “old economy” stocks, which offer significantly better valuations, have begun to outperform.  While we certainly understand that there is a tough winter of lock downs and restrictions ahead, we also know that the market is a discounting mechanism that is looking 6 months ahead.  This is a time when vaccines are likely to be in distribution and containment measures likely to be showing benefits.  We urge market participants to observe and adapt to these market shifts.

We also notice that “risk on” assets like U.S. small cap stocks and emerging market stocks are starting to outperform.  We could also lump crypto-currency into this bucket.  At the same time, “risk off” assets are underperforming.  One of these observations is interesting when taken independently, but when combined, they send a strong message.  Expectations have been consistent that a strong recover looms less than 12 months out, and taking a more aggressive approach in anticipation for that recovery may make sense.  See the following post from our friends at Goldman as additional insight.  https://www.goldmansachs.com/insights/pages/macro-outlook-2021.html

We also would point to the relative underperformance in gold as an issue worth addressing.  This seems somewhat contrary to intuition given the strength in crypto-currencies and the expectation of continued central bank irresponsible spending.  The simple explanation is that gold has too much of a defensive characteristic in the face of strong growth, confirmed through the strength in other commodities like oil (technically strong this time of year) and crypto-currencies (a possible gold alternative, but with much less volatility).  While the bull market in gold is too early to call over, it is worth noting that gold has been weak in an environment that should be supportive of its price. We are not bearish on gold, but we don't anticipate adding to positions.

No one can fully understand how you feel while going through a divorce, from the emotional turmoil to the fear of uncertainty—it’s a living nightmare. What is important to remember is that you do not have to go through the divorce process alone. From financial planning to counseling, there are many organizations offering help lighten your burden.

Nobody wants financial problems. Unfortunately, however, circumstances out of our control, such as job loss, are what cause financial problems. For many people, this is a serious concern that is more than financial hardships.

Think about this statistic from the United States Census Bureau for a minute when it comes to what causes financial problems: one in eight Americans lived below the poverty line in 2018, which is actually an improvement. In total, this equates to more than 38 million people earning $25,465 for a family of two adults and two children, while the median household income was at $63,179.

Why does this matter? Consider your daily costs. Now weigh the struggles when you have little in savings and experience financial hardship derived from a medical expense or are trying to pay for college—two of the biggest debt-creating problems, according to the Census Bureau’s annual poverty report.

As a family or an individual, slight changes in your economic situation can lead to what causes financial problems that have a lasting impact.

Read on for more information about what causes of financial problems and how to prepare before tough times arise.

The High Price of Education Causes Financial Problems

The average cost of a college education in the U.S. ranged from $10,100 for public in-state to $36,800 for a private institution in 2019. Some higher-learning institutions can fetch more than $50,000 per year. As a result, families and students have accumulated tens of thousands of dollars in debt, $1.4 trillion countrywide to be exact.

The average student loan debt is approximately $35,400. By the time these learners graduate, they are already experiencing one of the biggest money issues that are part of what causes financial problems—and will likely work to pay off that debt for more than a decade, at best.

The Impact of Healthcare Causes Financial Problems

The depth of medical debt is serious and astonishing. A Kaiser Family Foundation report found that 26 percent of Americans said they had a problem paying medical bills. The impact goes beyond what causes financial problems because some of these individuals have to make choices about paying their medical bills versus buying food or delaying health treatments.

There are almost 43 million Americans with some level of medical debt. The worst-case scenarios result in millions declaring bankruptcy. Part of the problem was that they had to leave or work fewer hours to take care of a loved one.

Other Situations That Causes Financial Problems

Beyond healthcare and academia, there are other reasons for financial problems in the United States. Some of these include:

• Investments
• Retirement planning
• Debt
• Tax planning

Poor Investments

Real estate and the stock markets can provide high returns on investments. Wealth diversification is sound financial planning method. However, there is also a great risk, which can drain your bank account because of not being prepared to fail.

Lack of Retirement Planning

This is more about not planning for your future. At some point, you will stop working and will likely need extra income. It’s never too late to start planning for your days post-employment to mitigate the causes of financial problems while living on a fixed income.

Too Much Debt

Bills mounting from education and medical expenses certainly add to your debt. Falling behind on credit card, mortgage, and auto loan payments are also a problem. Debt growth has led to economic problems largely fueled by our consumerism and once you fall far behind it becomes difficult to get out of the hole.

Wealth Management and Tax Planning

There are tax advantages for owning a business. Financial experts can help you develop a plan to avoid your retirement or investment portfolios from being swallowed up by taxes by finding ways to reduce your liabilities.

Avoiding What Causes Financial Problems

There is no magic solution, but there are methods you can implement to avoid what causes financial problems. One simple tip is to create and follow a budget so you are not spending beyond your means.

Green Ridge Wealth Planning will work with you to address your immediate needs but also prepare you for future expenses. Contact us today.

When planning not to run out of money in retirement, there is a lot more to consider than the current year’s tax deduction, which is the most common method for people preparing for retirement.

What are the vehicles and how do they work?

Individuals who are determining how invest for retirement are often proposed 2 options:  Roth or Traditional Retirement Accounts.  These 2 options usually come to the forefront of retirement planning because of the tax incentives that are associated with each.  In this blog I will address the 2 types, a loophole in the IRS code, as well as the 3 things to consider when trying to determine the right option for you and your plan.

What is the difference between ROTH and Traditional?

When discussing both types of accounts, we must identify that these accounts can be either in a employee sponsored 401k or an Individual Retirement Account (IRA).  The basic tax benefits are the same with a few slight differences in contribution limits as well as the 401k not having income limitations like the IRA.  If making the decision in a 401k, although some of the nuances are different, the tax rules and considerations are the same.

ROTH is an account that is available to US taxpayers to help them ready for retirement.  There are some basic differences that the ROTH has versus the traditional.

• ROTH accounts have tax free benefits, unlike its Traditional counterpart. With the ROTH, the participant takes dollars in which they earned in the current year and contributes those dollars after tax to a retirement account.  Those dollars can then be invested, most often using stocks, bonds or funds and grow tax free.  Here you pay the taxes today for tax free distributions in the future.
• The ROTH has income limitations when in an IRA (when in a 401k there are no income limitations). For a single person, the limit is $137,000 in gross income for the year 2020.  For a married tax filer, the total household income cannot be more than $207,000 in 2020.  If you make more that those amounts, you will be unable to contribute to a ROTH IRA.  If you do not qualify because your income is too high, you may find benefit in a ROTH conversion, or a loophole in the IRA rules (see conversion).

Traditional IRA is also an account that is available to US taxpayers as an alternate way to prepare for retirement.  Traditional IRA’s are treated differently by the IRS than its ROTH counterpart.

• Traditional IRA’s are accounts in which the participant will contribute for retirement in an account that is tax-deferred. The idea is that any contributions that you make in the current year will be reduced from your income on your tax filing for the year of contribution, thereby lowering the amount of income you have to pay taxes on for that year.
• Income limitations are a bit different from the ROTH. With the IRA, if you or your spouse have an employer plan available, the participant will phase out from being able to take a deduction, ultimately leading to no real benefit.  Most individuals that have an employer-based plan cannot contribute to both plans, regardless if income.  If there is no employer plan, there is a full deduction up to your limitations.  See www.irs.gov for the different rules based upon how you file your taxes.

For both plans, they follow the same contribution limits.  The maximum annual contribution for 2020 is $6000.  There is a special catch-up contribution that you can make if you are over the age of 50 in the amount of $1000, totaling $7000 for individuals over 50 years of age.  until the participant reaches the age 59 ½.

NOW - What are the 3 things to consider when choosing which is right for you

1. Longevity – Taxes is the biggest wealth killer in your plan. So you may have to use more than you think you will, especially if taxes are higher in the future. Given the deficit and all that is going on with COVID-19, do you feel taxes will be higher, the same, or lower in the future?  Before we get into forecasting, let’s take a look at how taxes work on the money you earn, in a very basic format.  We have a tiered tax system, meaning that your tax rate changes as you go up in tax brackets.  If we look at 2020 tax brackets on that money, if you make $200,000, then your taxes will look something like this if you file married:

$0-$19,750 @ 10%

$19,751-$80,250 @ 12%

$80,250- $171,050 @22%

$171,050 - $200,000 @ 22%

What that means is you pay a different rate as you go up in earnings, you don’t just jump up to 22% on all $200,000.  When you look at retirement, if you need to have $200,000 in order to pay your lifestyle, how do you get that money?  If you are taking social security plus all tax deferred retirement accounts, all of your income is taxable, and you have to take more out on an annual basis than you thought.

But what if you had another account, like a ROTH.  That leads us to…..

2. Weighting - How much you currently rely on your tax deferred dollars? In the above example, what if you could save the 22% on the $28,950 (200,000-$171,050) on an assumed distribution in 2020? Then in retirement, you have to pull out $6,369 (the 22% taxes on $28,950) less that can stay in your tax deferred account.  Those are the dollars that we want to pull out in the lowest brackets, saving you on taxes.  If you are contributing to a retirement account, these tax brackets play a huge role in how much to contribute to a traditional account.

A different way of looking planning which retirement account to contribute to is to consider the future possible tax rates.  If we are at 22% on those dollars in 2020, what if rates go back to the year 2000’s tax brackets.  If you take a 22% break today, to pay a future rate that mimics 2000, then your tax bracket would be $132,000-$200,000 @ 36% tax rate.  That’s 14% additional in taxes.  Perhaps taking the break today in the current environment may not be as beneficial as you thought?  The good news and bad news……the current tax rates are due to sunset in 2025, meaning in 2026 we go back to the same brackets in 2015 or a new tax bracket based upon that future administration.  Good news is to take advantage of the low taxes today, bad news is that those rates are not here forever.  In the future, taking the deduction may be more appealing.  So how can we contribute to a ROTH IRA considering above you had mentioned we cannot if we make too much money?

ROTH Conversion – The IRS has a loophole that allows you to take existing IRA dollars and convert them into a ROTH account, paying the taxes today for future tax-free distributions.  Something that you should consult your financial advisor and tax advisor to see if it makes sense for your plan.

3. Inheritance – The SECURE Act was passed in December of 2019 and changed the inheritance rules around IRA’s. (Currently, and in the past, the spouse can inherit the IRA and use it as though it is theirs, so this does not apply to a spousal inheritance). In the past, a beneficiary, or the person that inherits the IRA, could take distributions based upon their life expectancy, depending on how old the decedent was at time of death.  This was called a stretch-IRA, which allowed the beneficiary to draw down dollars under circumstances that could be more tax advantageous than their other 2 options; draw down in 5 years or take in one lump sum.  Under the current rules, a beneficiaries longest stretch option is only up to 10 years to take the distributions to bring the account to $0.  If that is a child with an already high income, those dollars get added to their current income level, possibly giving more to the IRS and less to that beneficiary.  From an inheritance standpoint, tax deferred dollars are the worst to leave behind.

There is a lot to take into consideration when planning for retirement.  If you have any questions on how to plan for your retirement, please reach out to schedule a free consultation with Bobby.  If we are a fit for one another, we can help you to determine a map through your retirement to help you meet all of your goals and make your dream retirement a reality.

Historically, how does a presidential election fare on the markets?  We have all been told that buy and hold is the long term strategy.  Through different Presidential Elections, the US has been through a number of landmark events.  Some tend to forget, fearing that the present is different then the past.  Let's take a look in the rear view mirror at some of these landmark events, including war, impeachment, depressions and recessions, deficits and surpluses, all the way back to 1932.  One thing that doesn't change is human emotion toward earning and spending, which makes up the economy of our market.

Check out this interesting piece that may shed light as to how you should think of investing during an election cycle.

Click here :Elections Brochure

Welcome to the first GRWP Quarterly Newsletter

I hope you are enjoying your summer!  To add more value and color to our communications, I look forward to providing you with a quarterly update that we will email, post on our site, as well as add them in with your quarterly statements.  These are to keep you abreast of market news that is relevant, firm news, fun facts, and commentary on things going on that quarter.

The change to Fidelity:

Our clients come to us with a picture in their head of what their future looks like.  It is our job to give them the planning and advice that will help make that picture a reality.  That is how we came to the mission of the firm:  Helping our clients reach their goals by advising them in all aspects of their financial life, not just investments.

Part of that mission is staying true to our client’s needs.  The benefit of working with an independent firm is that we have the ability to make changes based upon such needs and feedback.  Technology from LPL was not holding up to our standards and we needed to make a move.  With that, I am pleased to announce that we have partnered with Fidelity to custody our accounts.  Fidelity will be a great partner so that we can leverage some of their industry leading technology, products and research.  Everyone will receive a new username and password for the Fidelity site.  We believe this will help you form an overall experience, as well as help to drive some of the fees lower because we will have access to more fee compressed etf’s and funds.

Technology Enhancements

I am also proud to announce another reinvestment I have made into the firm:

Black Diamond – Better Reports!  Connectivity with other accounts at other institutions, if you choose to use it.  This benefit will allow us to see what other investments you have so that we do not overlap in strategy as well as allow you to keep track of it all in one spot.

Emoney Planning - software we upgraded at the beginning of the year that includes the Morningstar Advisory Research integration, will open up the technology experience for those who chose to leverage these tools.

If it is too much tech, that’s ok!

The real benefit is how we use it on our side to provide you with the best level of service and results. 

Remember, you can always go onto our website, www.grwealthplan.com, to connect to all your portals!

We want to make sure you are comfortable with the software you are interested in using.  I would like to schedule time to go over with you how it all works.  You can schedule a call with me at your convenience by going on go.oncehub.com/robertmascia and picking a time that works for you.  If we don’t hear from you in the next 30 days, Ginger will reach out to schedule something.

Housekeeping: 

We have been working on getting everyone scheduled in the beginning of the year for all of their reviews for the calendar year moving forward.  We have yet to perfect that process, but I ask that everyone please take a quick 5 question survey to help us improve this process.  This will be sent out in the next week via email.

New to the Firm!!

I am happy to announce that we have added a new member to the firm that will help with Client Relationship Management. Some of you have already heard from or have met her, Virginia “Ginger” Hourihan.  Ginger has joined the team as of May 29^th.  Her role is to assist with most of your needs to enhance your overall communication and experience with the firm.  She has spent her career working with executives in banks and pensions as an executive administrator.  She is extremely pleasant, professional, and capable to help assist you with most of the needs you may have.  I believe your interactions with her will meet the expectations I have just set.  I have included her picture and bio for your reading pleasure.  Kim’s role has changed, and she will be helping with other projects within the firm.  She is excited for the extra help and will start redirecting most of the client relationship items to Ginger.

We will have more exciting news as the year progresses.  Stay tuned!

Stay Connected:

Find us on your social media for all updates and commentary.  All links can be found below and on our website:

www.instagram.com/greenridgewealthplanning/

www.facebook.com/grwealthplan

https://twitter.com/wealthgreen

Speak with you soon!

Robert J Mascia, CFBS

Do you really know the value of your business? It’s OK if the answer is “no.” When it comes to smaller business owners and the value of their business, value is a broad term that focuses more on the customer, while the big corporations are concerned about their market worth and share. This is not a knock on the big corporations. They became hugely successful for a reason—which is partly due to their ability to leverage value to grow.

But business owners not knowing the value of their business is an incredibly poor idea. Why? Well, for several reasons—one of which is this: making important choices about how and when to raise capital or even buying another company to boost your offerings can be difficult.

When it comes to business owners and the value of their business, a 2018 Business Owner Perspective Study found that 70 percent of business owners generally don’t have an accurate sense of their companies’ worth, let alone valuation of intangible assets. The valuation process they use is based on past performances and industry competitors instead of seeking valuation advisory services.

As an owner, you may not need to expand, or want to raise capital, and that’s fine. In business, everything has value—customers, employees, physical structure, etc. It is important for business owners to know the value of their business to protect the hard work and investment when making critical financial decisions.

What is the Importance of Accurate Business Valuations

The benefits of business owners knowing the value of the business vary depending on needs, ranging from obtaining credit to maximizing a retirement fund for later in life.

• Credit – Financial lenders want to see an accurate picture of the business’s worth in addition to revenue numbers when determining borrowing capacity.
• Later-life – Handing the business keys to an heir is common, but not always the case. Using valuation advisory services, for example, can help avoid taking an unnecessary financial hit if the owner decides to sell to fund their retirement.
• Buy-sell deal – Having an accurate valuation is critical to parties involved in a buy-sell agreement being treated fairly.

The Valuation Process

When it comes to business owners and the value of their business, valuation service providers are typically trained professionals. The process can be completed online with a mix of in-person contact.

• Groundwork – Determine why you are seeking a valuation and provide information that will help create a valuation.
• History matters – Past financial documentation, such as statements and balance sheets, are necessary for companies that provide value advisory services. Three to five years should be enough to help create an estimate for business owners and the value of their business.
• Find the right method(s) – There are various valuations you can undertake, such as asset, market or income. A value advisory service provider helps with the selection process. Using multiple methods provide a check-and-balance, this way you know the valuation is correct.
• Apply the method – With a process decided, a business owner and the value of their business now has a more accurate and clear assessment of worth, aside from any differences. If there are discrepancies, your value advisory services provider can help you continue to reconcile worth.

What is the Value of Intangible Assets?

Intangible assets are not physical by nature, and are not easily transformed into hard cash when it comes to business owner and the value of their business.

Examples of intangible assets include:

• Patents
• Copyrights
• Customer lists
• Brand recognition

Intangible assets do provide value as a mechanism to generate revenue, especially patents if licensing deals are involved. A value service provider calculates the worth of intangible assets through the CIV (calculated intangible value) process.

The Takeaway …

When it comes to business owners and the value of their business, there are several steps and options available to accurately determine financial worth. While it may seem laborious and unnecessary, keep in mind some of the points above. The reality is at some point you will leave your business. Valuation service providers will help determine the company’s worth as you transition into your next phase running the business or decide to tackle the next chapter of your life.

For more information on valuing your business for a future sale reach out to Green Ridge Wealth Planning to schedule a call today.

Going through a divorce is unquestionably a stressful and emotional situation. However, planning financially for a divorce helps protect your well-being as you move forward. Preparing for divorce in advance can help you to save time and money, ultimately removing some of the stress involved.

How to Financially Plan For a Divorce

Seek Out Advice – Bills related to a divorce can quickly add up, especially if you’re no longer living in the same residence. A financial advisor will help you with how to plan financially for a divorce, such as setting a budget to follow until the separation is legally finalized.

Know Your Banking Holdings – Many couples tend to have joint banking accounts, but it’s not uncommon for partners to have individual accounts. Either way, obtaining copies of those statements are helpful for your financial advisor and attorney. Also, know what’s in any safe-deposit boxes. Items in there may have monetary value that needs addressing while planning for divorce financially.

Keep the Spending in Check – You’re planning for divorce financially, so making extravagant purchases will not help your bottom line. It can also cause financial dilemmas when going through the process. Keep in mind that while getting a divorce, you are still tied to your spouse. A big purchase (even if necessary) like a car could result in that item going to your spouse.

Stay Home (If Safe) – This is a tough one. You’re divorcing your spouse for a reason, and it is common to no longer want to be near them. However, leaving your residence can impact your efforts when planning for divorce financially. One problem is that by leaving your home as the prime income earner, you may be responsible for paying half of the expenses associated with the house. If you’re not the prime earner, you may not have enough income or alternative arrangements for housing. Of course, if you’re in an abusive relationship, get out, and worry about planning for divorce financially later.

Know Your Assets – Stocks? Bonds? Retirement investments? Knowing what your investments are when planning for divorce financially is important. A financial planner will help you determine if those assets are jointly owned or not. That person can also help determine which of those assets are worth letting go of to your spouse and the ones that you need.

Receiving or Making Child and Spousal Support – Plain and simple, if a court decides you must pay child support, you will have to find a way to make it happen. When you’re determining how to financially plan for a divorce do not overlook monetary support to your soon-to-be former spouse and the kids – depending on custody outcomes. How much you will have to pay, or receive, is a state-by-state court decision. Your financial planner and an attorney can help estimate payments but you should factor these mandated obligations into your financial planning for a divorce budget.

What Else to Ask When Planning for a Divorce Financially

• How will employee benefits work after a divorce is finalized?
• What are the tax implications, for example, when it comes to receiving or paying for child and/or spousal support, and property assets?
• If you own a home or other properties, what will happen to them?

These are a few of the questions that can develop when financial planning for a divorce and the answers will depend on the state where you reside. Attorneys, financial planners, and other similar professional service providers can help you navigate through the complexities.

For more information about planning for divorce financially, contact Green Ridge Wealth Planning today.

This pandemic has changed the social habits of many.  According to Digital Commerce, there has been a 49% increase in online spending from March to April.  USPS and FedEx have reported an increase in deliveries and 58 million Americans are spending more money during the pandemic than they were pre-COVID 19.  Entertainment and alcohol lead the charge, accounting for 52% of the non-essential purchases during COVID 19 quarantine. 

Starting a business is one of the most exciting times in your life. It is the realization of a concept to provide a necessary service to people either within your local area or beyond. However, there are risks and the failure rate is high—approximately 50 percent of new businesses close within the first five years and two-thirds by year ten.

Why do so many new and young businesses fail? A huge reason is bad decisions, from the location in a saturated market to failing to have a sound financial plan.

Read on for more information on financial planning for business owners as well as personal financial planning for business owners.

Understand, There Are Risks in Business and Financial Planning for Business Owners

Owning a business comes with great risk—remember half of new businesses fail within the first five years. A natural disaster could happen, lawsuits, or worse death of a key person. A proper legal structure and financial planning can help you develop a strategy if something goes wrong.

Considerations in Financial Planning for Business Owners

As with any profession, there are known and unknown risks. Financial planning for business owners is not immune to the ups and downs in the market and trends on the street.

A few things to consider:

• Manage the business’s finances
• Determine your financial goals
• Use taxes in your favor
• Save and plan for your retirement
• Diversify your assets
• Take an income

Managing the Business’s Finances

As a new business owner, tracking your finances down to the penny is crucial to getting off the ground. Limit your debt, otherwise, you might not have the funds to grow. There are dozens of books on financial planning for business owners that may provide some insight.

What Are Your Financial Goals?

Having a financial plan as a business owner is smart, but what about you? What do you hope to accomplish as a business owner? Setting personal goals is hard, but financial advisors, friends, and family can help you map out what is possible and how it will happen.

Take Advantage of Tax Benefits for Business Owners

The 2017 tax law makes it possible for a business owner to leverage their contributions for the best benefit as both the operation and individual. Certainly, talk with a professional tax expert or an entity that provides financial planning for business owners.

Protect Your Assets by Diversifying

While you should take a salary, it is normal to limit your income based on your strategy or method. To adjust for those early sacrifices and to protect your retirement, diversify your investments. Financial planning for business owners includes determining how to diversify your assets so you can spend more of your time on the business and less time watching the market.

Take an Income

Taking an income falls in line with planning for your retirement. From a tax perspective, having little income helps your planning. However, you cannot save for retirement if you’re not earning an income or other goals. Financial planning for business owners includes earning a fair income as the owner of your business.

Saving and Planning for Your Retirement

Watching your business’s bottom line may help you stay open, but don’t forget about your future. Your personal financial plan should include saving for your retirement. Set aside money, at least each year, for life after you’ve sold your business or handed the keys to an heir.

Prior to leaving the company you’ve created, part of your financial planning approach should include a succession plan. This may help to avoid leadership issues and other financial complications.

Work With a Financial Advisor

Idea creators are not always savvy at financial planning—and that’s fine. The good news is that resources like a financial planner or advisor helps you avoid unnecessary expenses. There are professionals that specialize in financial planning for business owners.

An advisor also helps with developing an integrated financial plan for business owners to maximize the success of your operation and achieve your personal goals.

Rather than searching for “financial planning for business owners near me,” contact Green Ridge Wealth Planning to learn more about securing your financial future.

I had a prospective client come to me the other day. His question: How much can I get for my company? However, it isn't that simple and a company is only worth what someone is willing to pay. So, you may find yourself in 6 scenarios with 6 different ways to sell your company. Here are a few considerations as you start to develop your growth strategy or consider your exit.

1. Internal sale to a family member - This can be the most simple or the most difficult. Control, expectations, and emotions are what drive that end result. Additionally, not planning out the seller and buyers future financial picture can lead to stress if the buyer assumes responsibility for the selling family member in the future (parents or surviving parent). In some instances, the seller determines the price so that the buyer will succeed. Current and future tax consequences need to be weighed out, control and transition should be designed well in advance, and open and honest communication needs to be in the equation. Continuity plans, advisory boards, options for the success of the next generation should be designed well in advance of your exit, 2-5 years being ideal. Mismanaged transition planning often leads to infighting, mismatched expectations, the buyer walking away, terrible Thanksgiving dinners, and stress to the family that can be easily avoided. In the end, the price can be more tax favorable over time, leading to a higher output for the seller.

2. Internal sale to a partner(s) - If you haven't already put together a partnership agreement - stop reading, call your attorney, and get underway.   Better yet, call me and I will direct you to the right attorney for the job.  Too many partnerships have dissolved because of this.  A predetermined exit formula to price the business and sell out should already be set.  These can be revised as the business grows, but should never be left to chance and trust of the other party, especially in the case of one of you prematurely passing.  Your family may never get the true value of all your hard work.

3. Internal sale to employee(s) - there are a few ways that you can set up internal sales. Two of the most popular are direct sale or employee stock ownership plans (ESOP's) - Depending on the size of your company and if you have identified a true successor (or a few), you may be presented with these 2 options.

• Employee Stock Ownership Plan, or ESOP, is an expensive but tax favorable method and usually works best with larger, more profitable companies.  They are complex, but if you haven't identified one true successor to purchase your business, your organization can continue to run with a leader who has ownership along with employees who have smaller shares of ownership.  This makes all parties in the company beneficiaries of the company's success.
• Direct internal sale's can be similar to number 1.  Sellers beware - take the emotion out of the transaction and use a professional to broker the deal (CPA, attorney, broker, or experienced financial advisor).  Common "blow ups" result from the seller's need for control, arrogance/pride of ownership leads to emotional responses, seller gives too much upfront information leading the buyer to feel like he/she is in the driver's seat.

4. External sale to a new business acquirer - Selling it to someone who wants to get into your business or wants to use your business to get out of a job can be a lucrative situation.  However, depending on the type of business you have, they will be taking on all of the overhead as well.  This could lead to a compromised sale price.  Additionally, if the buyer can not come up with all of the money and the seller needs to help finance it, the seller may end up getting the very business back that they were hoping to be rid of.  This could create for a lucrative opportunity (keeping any up front money, taking the company back at a discount, then rebuild), but generally leads to more stress and more often is not a money making proposition.  Understand the variables that are at play and the experience of the buyer, especially if they can not come up with all of the money.

5. External sale to an established company - this is where you look for a synergistic company that can take on your business and fold it into their existing business.  Depending on your market, that could call for a greater valuation because of the increased profitability of which the acquiring company can reap the benefit.  This also means the acquirer is more sophisticated and knows your business better than an outsider, so they will pick apart the business and try and look for the best deal possible.

6. Liquidation - this will be the value of whatever assets are left if the business is not sale-able.  This can be especially trying in the case that the owner predeceases a good exit strategy plan and the family is unable to do something in time to keep the business going.  I would add a fire sale in this category as well.  That is when the acquirer knows the level of desperation the seller has and takes advantage of it to get the best price. Avoid this by planning your continuity when you open your business and revise it as time goes on. Learn how to engage your key people, create an advisory board, and put together a buy/sell with a partner, key person or friendly competitor.

Be in the driver's seat.  Get a continuity plan together, develop your team, and understand when and how you want to exit your business.  The educated and prepared business people get the better deals!  They also understand what dollar amount needs to be on the check for them to live the life they want.  It's never to early to plan.

To learn more, contact us for a complementary consult: https://grwealthplan.com/contact/

Wealth diversification may sound like a complicated term and practice. Watching TV business programs, financial experts drop these and other terms, making you believe that you’re illiterate when it comes to financial literacy.

The reality, though, diversification, or in this case wealth diversification, is very simple. Just focus on the word diversity. Chances are you’ve already experienced some form of diversification because of your 401K or the non-profit equivalent.

Wealth diversification is merely spreading out (diversifying) your money through multiple investments—versus putting all your eggs in one basket. While diversifying your assets is a wise strategy, it does not guarantee a profit or protect you from loss.

Why Should I Diversify My Wealth?

When investing in the financial markets, it is smart to have a diversified portfolio. Ideally, with wealth diversification, your financial investments will grow since they are exposed to more opportunities, and because of this wealth management fundamental strategy, you are lowering your risk.

Diversifying Your Portfolio

Your wealth diversification strategy is up to you and best done with an experienced and reputable financial planner. At the basic level, you might invest in the stock market, spreading your money between large and small companies that are domestic and international. Your bond wealth diversification strategy should follow a similar approach. You can also invest in alternatives such as commodities. These investments aren’t as risky but don’t have the high-reward potential as stocks. Commodities generally are agricultural products such as coffee, corn, cotton, but also include metals like copper.

Depending on how you’ve invested tax diversification methods are also an option. You can put your money into taxable accounts that return a divided or tax-deferred, similar to a retirement fund, that is taxed when money is withdrawn. You also have to factor time into the equation. If you need the money sooner, rather than later this will impact tax payments, but also how much your investments have grown.

Wealth Management Questions and Answers

Naturally, you have questions about wealth diversification. Here are some questions and answers to help you become a better investor when trying to find a firm to diversify your money.

What’s the Wealth Management Business Model?

The model does matter. Whether the firm is privately held or publicly traded, their wealth diversification strategy determines how they will manage your investments.

What Is the Relationship with Their Clients?

While wealth management falls within the financial industry, these planners are still providing a service—to you. Working with a financial firm for your wealth diversification strategy is a long-term investment by them into you. A company should place a high value on you and your goals and develop a plan to meet them.

Asking about their client-service model is an indicator of how they will help you grow your investments versus only caring how to extract your money for their bottom line.

What Else to Consider When Choosing a Wealth Diversification Portfolio?

• What are the services offered?
• What services don’t you offer?
• How do they approach investing?
• With whom will I work?
• What are your fees?
• Are they helping you to manage your wealth or your investments?
• Where is your money being held?
• What is your timeline, tax, and risk?

Wealth diversification is not a method to get rich quick. The idea is to invest in a wide range of areas to protect your hard-earned money should the market crash and to plan for your future, whether that is a retirement plan, kids’ college tuition, or whatever your needs.

Diversifying your investments is an essential wealth management fundamental and one that you do not have to figure out alone. It is not as complicated as the business reporters on TV make it seem. While knowledgeable, they can also make wealth diversification overly complicated.

Consider short-, mid-, and long-term financial planning and goals. You want to use time as an advantage to earn the gains for your portfolio and risk target. Depending on your entire portfolio of assets (real estate, business, employment and retirement plans, and the future), preparing for today’s tax environment and potential future tax environments can help increase your money.

Contact us for more information. Green Ridge Wealth Management is here to help you grow your investments to use when the time is right.

Planning for retirement is not like it used to be. Today, people live longer after they retire. As a result, saving for retirement is more critical than ever.

The benefit of this new reality is that there are more qualified experts to help you prepare for retirement. Some of these financial planners are well-versed at leveraging regulations and laws to create a retirement approach free of tax.

However, it’s not that simple. A tax-free approach requires several methods, particularly retirement asset management.

Your retirement approach should include a diversified portfolio. This goes beyond a 401K, and is how retirement wealth advisors help.

Start a Roth IRA

Through a Roth IRA, you can contribute up to $5,500 per year and approximately $1,000 more if older than 50. You will pay taxes upfront. However, if looking for a retirement approach free of taxes, this is a safe investment. You will not have to pay taxes on it once you retire or while it grows.

Retirement wealth advisors help you determine the best ways to maximize a Roth IRA.

You Pay Property Taxes—Why Not Benefit From Municipal Bonds?

Townships sell bond anticipation notes all the time to raise capital for big-ticket items. These bonds are not federally taxed and are generally safe. However, the payout is lower than taxable bonds. These are not a solid retirement approach free of tax, but it does help to diversify your assets.

Enroll in a Health Savings Account

You are probably familiar with this concept, depending on where you work, also called an HSA. The benefit for a retirement approach free of tax through an HSA is using it to reimburse yourself for medical expenses—if your insurance provider allows.

Withdrawals from it are tax-free, but make sure to keep your receipts and talk to retirement wealth advisors to maximize this potential benefit.

There Are Other Roth Options for a Retirement Approach Free of Tax

If a Roth IRA is not right for you, consider a Roth 401(k) or 403(b). These options can help make your retirement approach free of tax possible. Your investments in these plans grow tax-free, and there is no tax on withdrawals. You can contribute up to $18,500 per year, and if older than 50 add an extra $6,000.

Use Life Insurance for Your Retirement Plan

Some life insurance plans may actually help with your retirement approach free of taxes. There are plans that allow you to take advantage of the cash benefits currently and are possibly free of tax once you retire.

What to ask Retirement Wealth Advisors?

Having someone to help achieve the goal of a retirement approach free of tax is necessary to find the legal avenues to take advantage of current regulations. Don’t shy away from asking advisors questions to determine the best fit. Consider asking the following questions:

• How do wealth advisors make money?
• Is your wealth advisor currently involved in any legal or regulatory matters?
• Where are the investments held?
• How does your wealth advisor manage a retirement portfolio?
• Does your wealth advisor offer financial planning?
• What are the risks of retirement?

Review Your Main Expenses for Retirement

Whether you are high net worth retirement planning, middle class, or a low-income earner, understanding your monthly expenses before you retire helps you manage your finances after the annual income is gone. Track where you are spending money to find ways to trim your costs and stretch that budget.

Retirement Asset Management

Knowing your monthly income and assets will not help your plan for a retirement approach free of tax, but it is a factor for preparing to live without an annual salary. This breakdown should be precise and include your monthly expenses. Your assets, such as investments, can provide a boost from time to time, but that can also decline.

Tax-Free Final Thoughts

There is a lot to consider when planning to retire. Ideally, a retirement approach free of tax is the most desirable result, but this is not always possible. Manage your money, work with retirement or financial planning advisors, and diversify your cash holdings and investments. A retirement plan is not based on one revenue source.

Contact Green Ridge Wealth Planning today to plan your retirement approach free of tax.

The divorce process sucks!  It can be a whirlwind of emotions with many decisions that have to be made. Separating the emotions with the decision making is typically the hardest. Studies show that women often make out financially worse than their male counterparts, and more of the costs often fall on the women then the men. Here are some items should be front and center when making decisions that can be a large impact on your financial stability in the future:

Happy New Year!  I hope everyone had a great end of the year and are geared up for a new decade!  Every year I like to reflect on the past to appreciate where I am and gain clarity on what I want for the year ahead.  This past year for us has been very similar to the markets:  few bumpy roads but a consistent push forward.

2019:

Coming off an awful 2018 quarter 4 decline in the market, US domestic indices came back quickly in Q1 2019.  We had spoken about the irrational decline in the market at the end of 2018 and the rebound showed us that staying the course was the right move.  Stock market fundamentals have improved significantly over the past year. We’ve received clarity on the biggest market uncertainties: U.S.-China trade relations, the Federal Reserve (Fed) pivoting from rate hikes to rate cuts, and the United Kingdom’s exit from the European Union (Brexit). We’ve also seen a leadership transition at the European Central Bank and more production cuts by Saudi Arabia-led OPEC to help stabilize oil prices. These actions plus reduced trade tensions in other key international economies could be viewed as evidence that economic growth outside the United States has stabilized and may even be starting to pick up a bit, although it is not assured.

Our shift toward some defensive positions have helped, as well as keeping an eye on the market for value opportunities.

Retirement and How Things Have Changed in 2019:

December of 2019 brough us the official passing of a bill named The Secure Act.  This bill has changed the retirement rules a bit.  Key takeaways from the act are:

• Repeals the maximum age for traditional IRA contributions, which is currently 70½.
• Increases the required minimum distribution (RMD) age for retirement accounts to 72 (up from 70½).
• Allows long-term, part-time workers to participate in 401(k) plans.
• Offers more options for lifetime income strategies.
• Permits parents to withdraw up to $5,000 from retirement accounts penalty-free within a year of birth or adoption for qualified expenses.
• Allows parents to withdraw up to $10,000 from 529 plans to repay student loans.

The biggest change of all – loss of the Stretch IRA.  What does that mean?  In the past, if you died with money in your retirement account and left that money to your children, they would have the option to take the required minimum distributions over a lifetime, exhaust the account in 5 years, or take it out in one lump sum (paying taxes when every dollar comes out).  Now, if you pass away 2020 or later, your children will have to take over 10 years, which is a major tax issue for a lot of families.

What should we do to plan that our family’s get more money than the IRS?  We have discussed tax planning all along and now my argument is even stronger.  We are in the lowest tax brackets in history, so planning the way we have been planning is proving to be the right course of action.  Working the tax environment at any point in time to our benefit, and planning for what we deem may happen, will keep us ahead of the curve the whole way!

2020:

Investors have priced in a lot of this good news, and it’s possible that some potential 2020 gains have been pulled forward into late 2019. Stocks may need to be repriced over the next several months as investors wait for the economy and corporations to deliver against pricing, and that wait could be uncomfortable at times. Corporate earnings growth will likely be the driver of stock market gains, but that still may depend on more progress in trade negotiations. Negotiations on “phase two” of the U.S.-China trade talks could become bumpy, and that could lead to additional turbulence in the stock markets. Inflation could also pick up and trigger renewed fears of Fed rate hikes, although a slight increase in inflation is a sign of a healthy economy. Fallout from the impeachment, international economic data in decline, and the potential for a highly charged U.S. election also could lead to increased market uncertainty this year.  We will continue to look for value as we invest your money into 2020.  Most importantly, we will follow the plan we have put in place to invest the money according to the timing of your need for that money.

We are constantly monitoring market conditions so that we remain good stewards of your money.   Although there may be volatility in the short term, we need to continue to keep our eye on the future.  Timing the market is an impossible task. The best of the best have failed.  There are two things we can do to take advantage of changing markets:

1.) Monthly contributions

2.) The “time” component of our investment philosophy.

Contributions on a monthly basis allow us to deploy cash to buy in down markets.  Having your Short, mid and long-term allocations set up will give you the comfort of knowing that the capita

l you may need in the short term will be minimally affected in the case of a downturn.

Planning for 2020:

Tax Season – As your tax forms start coming in, keep a folder to retain all the needed information for you accountant.  Start gearing up early, and don’t push it of until April. If you need help with your taxes, please let us know so we can guide you toward the best solutions for you and your situation.  While you are collecting mail – keep an eye out of all your insurance documentation that will be coming in as well.

Which leads me to the next topic for Q1,

Insurance -  Every year, insurance policies change, as do your family’s needs for asset protection.  If you are like me, you are constantly receiving mail regarding your homeowners, auto, life insurance, disability, business insurance, etc.  There are 2 components that we need to be aware of:  Are we sufficiently protecting our assets and are we getting the best service/price for that protection?  More often then not, people just pay the insurance bill and don’t revisit their coverage, policy changes, and how changes of life should evolve with a lot of your policies.

Although we do not sell policies, we can help with the advising.  We also have partners in the field that can help do the legwork to find the best coverage options.

We had a few successful mortgage refinancing stories from last quarter to help people save money.  Let’s build the momentum with insurances as well.

Robert J Mascia, CFBS

CEO

Stay Connected:

Find us on social media for all updates and commentary.  All links can be found below and on our website:

www.instagram.com/greenridgewealthplanning/  www.facebook.com/grwealthplan

https://twitter.com/wealthgreen   www.linkedin.com/in/robert-j-mascia-cfbs-79a74536

I hope you’re back in the swing of things and out of that post-summer blues.  There are a few things I would like to address in this newsletter as we gear up toward the end of the year.

GRWP:

By now, most of you have been able to view your accounts online. I have heard great feedback regarding the new views and technology versus LPL.  All the mechanics seem to be up and running, and we are just working on client contributions and catching up with the in-between work.

Black Diamond has been working well, which is the reporting software behind your quarterly reporting.  You will all receive a login to Black Diamond once we have rolled out the client user side and worked out the kinks.  It is a very easy dashboard that will act as a scorecard for your investments.

Kim and Ginger were rock stars getting everything in order to make this move possible and add the Fidelity resources to the firm.  I want to make personally acknowledge the integral roles they played through this entire transition. Kim has done a stellar job for the firm on behalf of the clients.  In collaboration with the partners at Gladstone, I’ve been able to offer Kim a full-time position, which will be a great opportunity for her and her family.  While I will miss working with Kim full time, she still is a resource for us when we need her.

I have heard that the paperwork form LPL is still coming in truckloads, but that will stop shortly.

Your money and the news:

There are some questions that have come up over the past quarter that I thought made sense to address in this newsletter.

First, I would like to start off by saying that the sizzle is what sells in the world of network news.  Try to tune out or take a break from the noise.  With talk of inverted yield curves, recession, impeachment, trade wars, etc., it’s important to remember—good investment philosophy needs to drive decision making

Interest Rates – The Fed has now lowered interest rates twice.  There is talk of rates dropping to 0%. What does this mean?

The Federal Reserve controls the monetary policy – the flow of money into the economy.  Reducing the rates are a way to encourage banks to loan more.  We live in a low interest rate world, including negative rates abroad.  With an aging economic cycle, central banks seem to intensify an effort to reduce interest rates to fight off slowdowns in the economy.  This is not new, and while the news in the moment may seem completely different, it really is just a continuation of policy we have seen since the financial crisis.  We are monitoring the changes and watching as things develop, but until we see a major shock in the system, we are staying the course.

What is our take on the market?

It’s been an interesting year in the markets thus far.  If we look from September 2019 to Sept 2019, the S&P 500 is basically flat.  Most of the gains we saw in the beginning of the year were from the rebound off the cliff the market jumped off of Q4 last year.

So, what is going on?  The big question for the past 2 years is:  Are we in the late cycle of the economic cycle and how close are we to a recession?  What is in store for the rest of the year?

We have seen some talk about markets rising relating to an acronym that has been tossed around, TINA (There Is No Alternative).  The average P/E ratio of the market at about 18-19 (P/E = price/earnings per share– a metric the street uses to determine historical and forward valuations).  We, and a lot of our analysts and economists, don’t feel the market is overvalued to the point where a major pull-back in equities is needed.  We have been treading with caution over the past year and some of the short-term investment prospects we consider need constant observation.  You will see in your portfolios we have taken a few positions in late cycle investments around consumer staples, energy & utilities.   We are constantly monitoring market conditions so that we remain good stewards of your money.   Although there may be volatility in the short term, we need to continue to keep our eye on the future.  Timing the market is an impossible task. The best of the best have failed.  There are two things we can do to take advantage of changing markets:

1.) Monthly contributions

2.) The “time” component of our investment philosophy.

Contributions on a monthly basis allow us to deploy cash to buy in down markets.  Having your Short, mid and long-term allocations set up will give you the comfort of knowing that the capitol you may need in the short term will be minimally affected in the case of a downturn.

What is our exposure given the Impeachment proceedings?

Politics aside, there are several concerns that could arise as a result of this happening or not.  For now, I would advise as to not be as concerned about things we cannot forecast.  We are aware of the political environment and how it can change, and when there is something, we feel we should advise to make changes to, we will do so.  For now, the tea leaves have us staying the course.

Gearing up for the Last Quarter:

Refinance - Interest rates are low and that has been reflected in the mortgage rates.  I have seen a lot of refinances being done sub 4%.  This isn’t a good idea for everyone, but it is a good idea to have a discussion with me about it.  What to take into consideration:

• Closing costs
• Where you are in your loan repayment?
• Do you need cash out?
• How long are you planning on staying in that property?

Let’s move on this discussion ASAP, as rates have a tendency to change.  I do not handle mortgages, but I can help you make an informed decision that can add to additional cash flow.

Estate Planning – The end of the year is a good time for us to review your estate planning to make sure you have everything in order.  If you have a Will and all the accompanying documents, then we typically will review them every 3-5 years, unless something major occurs, such as a new child, divorce, marriage, inheritance, new business, etc.

A typical estate plan consists of a Will, Power of Attorney, Living Will/Healthcare Proxy and HIPAA authorization. The Will is key in spelling out where your assets will go and in what proportions and WHO will care for your children. A Power of Attorney and Living Will/Healthcare Proxy are important documents to allow another person to assist you in the event of an emergency.  If you do not have one or all of these documents, or you have questions about whether something is right for you, then let’s address that by year’s end, check it off as a 2019 win.

Additionally, if you have aging parents with health concerns or family members with special needs, we should have a conversation to help you identify how best to help and protect your loved ones, including planning for long-term care needs and asset preservation.  I have an attorney in-house, Constantina “Deana” Koulosousas who will review everything with you and have a conversation about your options.  This is part of the benefit you have by being a member of the firm, so take advantage of it.

Tax Loss Harvesting – If you have brokerage accounts with me, outside of retirement accounts, then we will be looking to take advantage of tax benefits that will come from selling out of gains and losses.  This helps to minimize your overall tax burden within your portfolio over the long haul.  As we prepare for our Q4 review, please keep statements for all accounts you may have that we do not manage here at the firm.  This way we can coordinate between the accounts to help maximize the benefit.

Taxes – We have also added in-house tax services with Robert Greulich, CPA as our specialist.  If you would like to review these services, please call the office or reach out to me directly.

Happy Halloween and I look forward to meeting with you before Thanksgiving!!

Robert J Mascia, CFBS

CEO

Stay Connected:

Find us on social media for all updates and commentary.  All links can be found below and on our website:

www.instagram.com/greenridgewealthplanning/

www.facebook.com/grwealthplan

https://twitter.com/wealthgreen