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Paul J. Carroll, CFP®
Paul J. Carroll, CFP® In Videos

CARES Act – Charitable Giving

2020 is coming to a close. There are gifting opportunities. In fact, the CARES Act has added a few opportunities. Back in March, on the 27th, the CARES Act was passed. And what wasn't really given a lot of attention at the time is that some of the rules regarding charitable giving and deductions were changed. The easiest one for the vast majority of people is now the first $300 is above the line. And what that means in English, is you don't have to be itemizing deductions to allow it to reduce your taxes. That's a great opportunity. And there's also some increased deductions for food donations. As we know right now, the food banks and many other organizations are quite desperate for those donations. Cash donations - always of value - you can now deduct up to 100% of your AGI. So if for some reason with losses...
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Paul J. Carroll, CFP®
Paul J. Carroll, CFP® In Videos

Election Markets – Now What?

So it looks like Biden is on the cusp of taking the White House. And clearly the Republicans are retaining control of the Senate, and the Democrats holding onto the House. What does this all mean for you and your money? So this election has clearly increased pre-existing divisions. Most recently, the hurried installation of a Supreme Court justice added to that divisive atmosphere that's going on. The split government with the Republican Senate and the Democratic House and presidency pretty much means it'll be very difficult to get anything done in either direction. And with everything that's going on with the extremely severe recession for many sectors of the economy, COVID - some of the bigger challenges facing both the country, the planet - it's going to be very hard to get the things done that need to be done. And many of these things need to be "do...
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Paul J. Carroll, CFP®
Paul J. Carroll, CFP® In Videos

The Value Trap

Last week Dimensional released a report that showed an unprecedented negative outcome for value investing over the last few years. What is going on and how can we benefit from this information? So from July, 2010 to 2017 Value outperformed its historic performance by about one and a half percent, which is nice until we discover the Growth outperformed Value in the same period by 7.6%. That's a lot annualized over such a long period. In the last three years, Growth continued yet Value had an average annualized return of -3.3%. This has resulted in annualized spread of over -21%. That's pretty much unprecedented. We know the Value and Growth sort of do the seesaw thing, but right now we see this Growth's up here, Value's down there. Now for those of us who are diversified, who are disciplined, who've had a Value bias since basically the beginning of this...
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Paul J. Carroll, CFP®
Paul J. Carroll, CFP® In Articles

6 Steps to Protecting Your Wealth During Divorce

A divorce is one of the most difficult transitions you can go through. When you add uncertainty about money, that transition can get even more stressful. Here are six steps to help keep your finances intact during—and after—a divorce: Step 1. Assess your finances and make a budget As divorce proceedings get underway, take stock of your finances. Start by reviewing your income, retirement accounts, investment portfolio, and insurance policies. Next, make a budget that reflects your income and projected monthly expenses. Include both your personal debts and debts you share with your soon-to-be ex-spouse. Make sure to factor in expenses such as finding new housing or buying a car on a single income. Identify gaps in your budget where you come up short and see where you can make cuts to cover the difference. Step 2. Target shared debts first Debt on joint accounts can be problematic. Whatever your...
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Paul J. Carroll, CFP®
Paul J. Carroll, CFP® In Articles

Understanding Retirement Income Tax

When you retire, you’ll likely draw your income from several sources—such as retirement accounts, taxable investment accounts, and Social Security Benefits. Each of these sources is taxed according to its own rules. So, in order to accurately plan for your retirement, you need to know what these rules are, whether (and when) you’re required to make withdrawals, and how paying taxes on distributions will impact your overall financial goals. Here’s a breakdown of the most commons sources of retirement income and how they’re taxed: Traditional IRA and traditional 401(k) Withdrawals from traditional tax-deferred retirement accounts are taxed at your normal income tax rate. Once you reach a certain age, you must start taking—and paying taxes on—required minimum distributions (RMDs). The IRS changed RMD rules in 2020. If you reached age 70½ in 2019, you should have taken your first RMD by April 1, 2020. If you reached age 70½ in...
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Paul J. Carroll, CFP®
Paul J. Carroll, CFP® In Videos

How To Protect Against Inflation?

With the central banks throughout the world printing money with abandon, how are we supposed to protect ourselves and our portfolios from the risk, ever-present, of runaway inflation? Central banks are using quantitative easing to print money for good reason. The greatest danger is deflation, but as a result we are awash in cash. And from an asset point of view, we're seeing asset price inflation, acid bubbles. But how do we protect ourselves? We know that deflation is being managed as best as central banks can, but how do we protect ourselves from inflation damaging conservative portfolios? We have a number of options. First, most obvious, is gold. The problem with gold is something called contango, which led to oil prices being negative briefly back in March, the cost of storage and the fundamental volatility. Real estate has its own problems. Again, it's a great inflation asset, but right...
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Paul J. Carroll, CFP®
Paul J. Carroll, CFP® In Videos

IRS Identification Verification Letters – A Scam or For Real?

A lot of our clients have been receiving these IRS Identification Verification notices. Some of these clients have even paid taxes and are wondering "Is this for real; is this fraud?" And if you get one, what should you do about it? So if you get one of these letters and you are owed a refund, you need to ask CPA if the letter appears legit. You can do it online, and we'll include a link at the bottom of this blog post. Or you can call the number on the letter. Something you need to know is the IRS will never call you. So if you have received a call from the IRS, you can pretty much assure it's fraud. And if you are concerned about fraud, with the letter, another thing you can do is you can Google the phone number that's on the letter. If it's the...
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Paul J. Carroll, CFP®
Paul J. Carroll, CFP® In Videos

How Will This Election Year Affect the Markets?

How will the presidential election impact the markets? There's a lot of concern out there. Every four years, I feel like I have the same video. Though this one is a little different. Every four years there's this concern over markets. Democrats are afraid of what happens if the Republicans win; Republicans are afraid of what happens if the Democrats win. But as you'll see in the attached chart, markets clearly don't care who's going to win the election. Possibly a more accurate statement is markets are fairly good at discounting the election outcome. Given how close we are to the election right now, it's increasingly likely the markets have already priced in the outcome. What's interesting though, is politics and economics and the markets all tend to live in separate parallel universes. In many cases, they are totally uncorrelated. This election is particularly heated. There's a deadly pandemic you...
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Paul J. Carroll, CFP®
Paul J. Carroll, CFP® In Videos

What’s Next for the Cares Act and the Economy?

So the Cares Act is beginning to unwind. In fact, without an act of Congress it ends July 31st. Will the economy unwind with it? As the Cares Act unwinds in just the next day or so, is the economy going to unwind with it? We know July 31st the unemployment benefit of additional $600 is expiring. Now there is an interim proposal to keep it going until a negotiated settlement has been reached. I think the Republicans would like to continue the unemployment benefit, but with just an additional $200 instead of $600. And the other issue is evictions. There's been a moratorium on evictions for all properties that are backed by a government-subsidized loan - Freddie Mac, Fannie Mae, all of those. That has actually already hit the sunset provision. Again, if they don't extend it, will there be massive evictions as well as the loss of unemployment...
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Paul J. Carroll, CFP®
Paul J. Carroll, CFP® In Videos

United Airlines Early Out Offer

Probably everybody at the airline knows now that there's a letter of agreement for voluntary pilot separation leave. It's a pretty interesting deal. Is this something that you should take? A couple of pointers about this offer. I mean, I'm not going to go through the whole thing. We'll put a link to it (see below), but the briefings that ALPA’s sent out are pretty darn good, but there are some relevant salient points. One, the pain effect, is when you bid for the package. Why is that salient? The next year it's going to be ugly. Pay cuts may actually happen, or maybe a reduction in the guarantee. And if there's a reduction in the guarantee, for example, then that brings the guarantee down to maybe 60, 61 hours if it's a 15% reduction. That kind of reduction, that's only a 10-hour spread for working versus not working. Also,...
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