Hello, At Amelia’s school she has two recesses. I could have used two recesses when I was a kid, because I had trouble paying attention in school. We were talking at the start of the year about the importance of goal setting with her, and we asked her what her goals were for this year. Apparently, there is a really tall slide in the school’s playground and she was too fearful to go down the tallest slide. She said she was going to make it a goal to go down the big slide. The cool thing about goal setting and discussing your goals out loud is that I believe our subconscious mind begins working in the background to help us accomplish our goals. What we dwell on we become. Ansley came by to visit me at lunch yesterday. That's always a highlight of my day!

You may think it’s hokey, but the next time you want to accomplish something, talk about it. State it out loud to another person. What we put into our minds comes out. Scripture talks about this in Luke when it says, “A good man brings good things out of the good stored up in his heart, and an evil man brings evil things out of the evil stored up in his heart. For the mouth speaks what the heart is full of.”   A few weeks later I got a video from Mallory that she recorded of Amelia, excited she had finally worked up the courage to go down the big slide. It’s a little thing but it’s a good lesson for a six-year-old in goal setting. She wasn't going to cooperate for a picture. She was more interested in playing jokes...

One of our goals for our clients that we plan for in down markets is taking advantage of tax loss harvesting opportunities. We plan for it like we are planning our goals for the year. We know the market is usually up, but for the 20 or 25% of the time the market goes down we want to be poised to make strategic moves.   And down markets open up opportunities for tax planning. Especially for folks who have after tax accounts which are sometimes called taxable accounts or non-qualified accounts. Basically, this is money where we have paid the taxes on the principal and the gains are the only taxable portion. Let’s talk about how it works and demonstrate how you should be taking advantage of this strategy if you have one of these accounts. Amelia got to build bears for a school fundraiser this week.

In January 2020 the market was trading at all-time highs and some may say the economy was firing on all cylinders, but come February everything changed. The Coronavirus pandemic began in haste and the market began selling off on fear of the unknown.   The S&P 500 was down well over 30% that year. We may be able to take advantage of a black swan event like COVID-19. Think about it this way. I grew up in a two-story house, and sometimes I’d take my Slinky and start at the top of the stairs and watch it fall to the bottom. A Slinky expands out. Many of our accounts expanded out in the decade after the Great Recession in 2008, then when Covid hit they contracted. Ansley got outside for some fresh air after all the rain!

Let’s say you have $100,000 in your taxable account and it gets cut in half to $50,000. Sell the asset at a loss. You would book the loss on paper, then you have a year to pair that loss with a gain. If you have a significant position that has appreciated and now it’s at a loss, you can book the loss, then in 31 days you can either buy the asset back or buy a similar but different asset.   We can wait in our money market account with our money in cash ready to buy back the same stock or asset. But remember with the COVID correction the rebound happened quickly. So, it may make sense to buy the similar but different asset in order to get back in the market in order to prevent missing the swing back up. This allows us to offset up to $3,000 of ordinary income taxes, and we can carry forward losses over $3,000. This is called tax loss harvesting. Until next week, David C. Treece, Financial Planner

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Clients Excel, LLC is an independent financial services firm that utilizes a variety of investment and insurance products. Investment advisory services offered only by duly registered individuals through Creative One Wealth. Creative One Wealth and Clients Excel, LLC are not affiliated companies. Neither the firm nor its agents or representatives may give tax or legal advice. Individuals should consult with a qualified tax professional for guidance before making any purchasing decisions. Clients Excel, LLC is not affiliated with or endorsed by the U.S. Government or any governmental agency. Clients Excel, LLC has a strategic partnership with tax professionals and attorneys who can provide tax and/or legal advice. Published on 02.14.2024.