Paul J. Carroll, CFP®

Real estate as an investment asset class. What are the merits? What are the pitfalls? How do you avoid them? From the beginning of the century through the end of 2021, the FTSE NAREIT All Equity REITs Index gained 9.6% versus 7.7% for the S&P 500. It has been one of the best investment asset classes out there. Now, that's not been as true since interest rates started climbing, but when this interest rate cycle is over, we can expect improved performance from real estate. Now that's important. What I gave you were statistics for the entire real estate environment, and it does vary by sector. Office properties may not be the best properties to be invested in in this post-covid environment. For those of you who are interested in investing in real estate, you have a choice between physical real estate and what are called REITs, real estate investment...

Interest rates are finally reverting to some sense of normalcy. For savers that's great news. Now the question is, what's the best harbor for your cash today? As you're probably aware, everyone's talking about higher interest rates. After years and years of sub 1% returns all of a sudden we see 3.3, 3.5, 4. But with interest rate hikes not yet over, let's talk about what the options are out there and keep in mind that all choices come with trade-offs. There's no such thing as a free lunch when it comes to this treacherous field. So when we're trying to figure out what to do with cash, we have a lot of interesting options. In summary, there are banks, money market, mutual funds, ultra short term bonds and CDs. So let's go over to the board and take a look at how these options pan out. Let's talk about...

Well, now that the holiday season's over, we're already looking at filing tax returns once again. We're going to talk today about how do we minimize the pain and mitigate the suffering that goes along with filing your taxes each year. At Avion Wealth, our focus is mitigating your taxes and maximizing your cash flow, and part of that is helping the client with their taxes. In fact, throughout the year, we're looking at tax strategies. One of the issues that we get at this time of year is that the CPAs want documents as early as possible, but you don't have them. And if you send a document every time you get it, the CPAs are likely going to charge you every single time they get a communication from you, because they have to open the file and file that document. It's very inefficient for them. It can be...

  So, in the last couple of videos we've talked about the Secure Act 2.0. Today, we're going to talk about an intergenerational gift from Washington DC that's buried into this act and it's the 529 to Roth sleight of hand. Effective 2024, these new rules, which are slightly complicated, suggest that if you have kiddos and you don't have a 529, get one and put a dollar in and you'll see why. Because now $35,000 of unused funds in a 529 can now be rolled over into a Roth IRA for the beneficiary. In the past, the concern has been what do we do if we overfund? Will there be a withdrawal penalty? That concern has now flipped to, "Oh, wouldn't it be nice to have too much money, up to $35,000, and be able to roll it into a Roth IRA for the kid?" Now, there's a lot...

  Secure Act 2.0. This is the second in the series of videos talking about all the goodies in the latest Secure Act with regards to IRAs and other retirement accounts. The big conversation for today is how are the new required minimum distributions going to affect you and your family? The good news is, we already had the required minimum distribution age bump up from 70 and a half to 72. Now, in 2023, if you haven't already started required distributions, that age increases to 73. If you've already started distributions, you have to follow the current schedule that you're on, but 73 is nice. The good news is, those who are under 63 will be able to use the 2033 rule, where you don't even start required minimum distributions until you're 75 years old. So those who are just barely reaching Social Security age or younger, you're looking...

  Today we're going to talk briefly about some of the bright spots on the horizon for 2023, recap some of the highlights of last year, and finally talk about the new Secure Act and all the goodies that are embedded in that law. So as we know, 2022 was one of the worst year for portfolios, in fact since 1937 by some measures. And that's because not only was it a bear market in stocks, but also bonds were down 17%. In fact, it was the worst performance in the history of the Morningstar Core Bond Index. That's pretty bad.  Some of the accompanying charts show the pain quite graphically. We have, however, seen the pendulum swing from growth to value. My Partner, Sarah, wrote a white paper titled "The History and Future of Value Investing".  You'll find the link to the document HERE. Whether or not the value...

  Since the Great Depression in 1926, we haven't seen such awful returns for balanced investors. 12 month returns this year, for people who are 100% in stocks, were actually better than those who are 50/50, 60/40. The bonds are the problem. Diversified portfolios have had a stunningly difficult year. Stocks didn't have a great year, but bonds really failed to cushion the blow. We're very fortunate with our portfolios that we reduced the duration, the weighted average maturity of the bond portfolios, so our clients haven't suffered anything like the average for a 60/40 investor. But despite that, it's been a bad year, and we know why: the era of cheap money is over. It's been going on for over a decade. Alan Greenspan, Ben Bernanke, all of these people, if ever the market turned down, print a little more money. Interest rates were low; we could get away...

  Bonds. Let's talk bonds. Interest rates are climbing, and that translates to bondholder losses. You've seen them on your statement, but we are getting increased yields. So, what's the bottom line? Inflation has caused interest rates to climb. The fed's fighting it relentlessly, and when interest rates climb, bond yields are expected to go up with them. And when bond yields are expected to go up, fixed income bonds lose value. This is textbook material. Interest rates go up, bonds lose value. So, with interest rates, there's been an interesting phenomenon. Long term bond rates are not going up as much as we would expect, same with intermediate, given the severity of the hikes. What this means is that the losses actually could be worse, and they're not. It also means that the market feels these rates are coming back down, and that inflation is going to be under...

After the depleting drop off of the last few weeks, this morning we've enjoyed a little bit of a rally in the markets. Of course, the famous question is, is this really just a dead cat bounce? Well, markets price in the future, so have they done pricing it in? Really, nobody knows. So let's switch the conversation from returns to risk. Today's world is very much one of risk selection rather than risk avoidance. What do I mean by that? Well, let's explain by differentiating the different asset classes that are out there and discuss the risk associated with each and every one of them. Your typical risk-free asset is cash. When we talk about putting cash under the mattress, we're thinking, "Okay, that's safe." Of course, if you took $100 in 1920, threw it under a mattress, today, I don't know what it's worth, 10, 20 bucks? It...

  What a great day to rebalance. The market's down. It's 1:00 PM. It's down 3% for the S&P 500. Why did the market react as it did? So consumer price point numbers came out for August, and prices were up 8.3% year over year. It's actually a slight deceleration from the month previously due to a 10% drop in gas prices. However, what the market really cares about is core inflation. And core inflation came in at 6.32% versus about 6.1 for estimates, and I think it was 5.8% the month before. So core inflation is still gaining steam. That means it's pretty much guaranteed that at the next Federal Open Market Committee, there's going to be another 75 basis point rate hike. When there's a 75 basis point rate hike, interest rates go up across the board. Treasuries are already going up in anticipation, and when yields go...