Blog

Thoughts and musings from my desk to you.

Roller Coaster Market 2022

Roller Coaster Market 2022

inflation, Market Volatility, stock market

The market continues its roller coaster ride for 2022. Typical stock mutual funds are down 20%. This decline is problematic enough, but adding insult to injury, taxes are about to make it worse for fund owners.

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Why Are ETFs Better Than Mutual Funds?

Why Are ETFs Better Than Mutual Funds?

ETF, funds

Exchange-Traded Funds (ETFs) are taxed based on each individual’s tax basis in the shares, and the activity of other investors does not result in shared taxation. This offers ETF investors a significant advantage when seeking long-term compounded return.

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Rising Rates

Rising Rates

economy, inflation, stock market

The poor economic policy of the past is coming home to roost in the form of rising rates and spiraling inflation. To make matters worse, policy leaders spent months gaslighting us all, denying inflation’s presence when the signs were in plain sight. This lag in taking action has surely exacerbated the situation because it’s best to nip inflation in the bud before it blooms. Too late for that.

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Segment Unveils Initiatives to Navigate Market Volatility

Segment Unveils Initiatives to Navigate Market Volatility

Behavioral Finance, Investing, Market Volatility

With almost 40 years of investing experience, Baumgarten is revealing how he applies keen knowledge and his eye for tracking the latest financial developments to Segment Wealth’s advisory practice.

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Resist ESG Investing

Resist ESG Investing

ESG, Investing

Environmental, Social & Governance (ESG Investing) is the new popular trend in investment evaluation whereby investors use non-financial factors to screen investment options. As it gains popularity for its feel-good effects, it is currently enjoying outsized results as investors jump on the bandwagon.

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Dubious Economic Thought

Dubious Economic Thought

economy

As economic thought has shifted toward mathematical rather than empirical evidence, economic conclusions are at risk of shifting toward “accuracies” while being wrong all the while. The economy functions as a self-aligning organism due to the harmonic motivations of value decisions within each of us. If we turn that into a math equation, we get outcomes nobody could foresee.

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Protecting Gains? It’s Complicated.

Protecting Gains? It’s Complicated.

Tax Strategy, Unrealized Gain

Clients generally understand how our low-turnover methodology equates to better returns over time. For example, with enough tax deferral, an 8% return can be augmented to a 10% return (in dollars). But that’s not all. Preserved gains that remain untaxed until death are tax-free in many circumstances. This can make low-turnover methodologies even more compelling. Despite the power of these factors, protecting gains and principal is still the first order of business at Segment.

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Roth Conversions

Roth Conversions

IRAs, Tax Strategy

Roth conversions remain one of the most underutilized tax planning strategies around.

Imagine the limited benefits of continued tax deferral for a 90-year-old retiree with a $500,000 IRA and an income of $100,000 a year. That income is comprised of pension distributions, IRA required minimum distributions (RMD), and some dividend income. Let’s say she has two grown children in their 60s, each earning $600,000 a year in a 41% tax bracket. Since Mom’s tax bracket peaks at 24% (up to around $170,000 worth of annual income), it would make perfect sense for her to do annual $70,000 Roth conversions, whittling down her $500,000 IRA and avoiding that next bracket of 32% above $170,000 in gross income.

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Estate Taxes & IRAs – Collision Course

Estate Taxes & IRAs – Collision Course

IRAs, Tax Strategy

There are very few tax issues more complicated than the intersection of estate taxes, income taxes, and IRAs. Very few couples exceed the $24million exemption amount to begin with, and even fewer get this part of their planning correct. If not navigated well, this confluence of factors can conspire to cause 80% of an IRA or 401k to be lost to taxes. There are solutions, including going back three years to amend returns if this causes an aha moment.

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Frankenstein Tax Policy

Frankenstein Tax Policy

Tax Strategy

Mr. Biden’s new tax policy has proposed yet another angle to get more tax revenue from the “millionaires and billionaires.” This time he’s circling back to see if he can get a tax on unrealized (unsold) taxpayers’ gains after all. The new twist is that this tax policy is limited to those folks with more than $100 million in net worth. Under current law, only assets that are sold for a profit are taxable, and they are never taxed if held to death. Mr. Biden claims this is an “unfair” loophole incentivizing taxpayers to avoid sales.

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Gil's Musings

Learn about the world of investing from a 38-year industry veteran. Gil's Musings are inspired by Gil's thoughts on timely finance topics, stock market trends and the psychology behind smart investments.

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