Quarterly review of financial planning assets

Quarter in Review

By Jeb Graham CFP®

The first quarter of 2019 has come to a close. Following the fourth quarter of 2018, the market was due to bounce back from a rough quarter, and it did exactly that. The major market indexes are all up for year so far and have come close to returning to all time highs. While this is good news, it is still a wise idea to brace for more volatility in the coming months as the economy continues to move into the latter part of the business cycle. As always, our strategy will be to continue to hold quality assets with the goal of income and long term appreciation.

We are at the end of tax season and many of our clients have seen different results in the size of their return or how much they owe for the 2018 tax year. The new tax plan has proven to be more beneficial to small business owners and from what we have seen, not quite as friendly to people that work for an employer in a W2 earnings capacity. The standard deduction went up, which is keeping many people from itemizing personal expenses and there are also limited deductions on Home Equity Loans, Mortgages, and State and Local Taxes, which has played a role in changing outcomes for tax payers. For small business owners, part of the new tax plan allows for flow through entities (S Corp, LLC, Partnership) take a 20% deduction on business income, which did not exist in the past, and has proven to be beneficial.

All of this said, one thing that is always a dollar for dollar deduction on your taxes is the money that you put into your employer sponsored retirement plan and tax sheltered accounts. This is all the more reason to maximize the amount that you are putting into your 401K, 403b, SEP IRA, SIMPLE IRA, Traditional IRA (if you are eligible for the deduction). Now is a great time to begin planning for the 2019 tax year and finding ways to lower your tax bill. The maximum contribution limits have also increased on many of these retirement plans for the 2019 tax year.

We look forward to seeing what the remainder of 2019 will have in store for the markets. We have a new capability that allows for scenario planning in portfolios that will give us possible gains/losses based upon historical scenarios in the market and we will be incorporating this into our review process. If you would like to go through this process prior to our next meeting, please do not hesitate to reach out.

Contact Jeb at jeb.graham@metcalfpartners.com