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AAFCPAs Wealth Management Shares Proactive Strategies for Investors in a Strong Market

Quote - Good markets allow us to grow and squirrel away money for market corrections that inevitably happenAAFCPAs Wealth Management is constantly reviewing market conditions to be thoughtful, disciplined, and opportunistic to changes that occur over time.  Market volatility is not something you can control, but how you position yourself now will have a lasting impact.

The US financial market is strong.

Rejoice! The bull market continues for the past eight years since the great recession.  Good markets allow us to grow and squirrel away money before market corrections inevitably happen. Diversification is still the most critical attribute that AAFCPAs Wealth Management focuses on so clients may lessen the impact of market adjustments over time.

We encourage our investors to continue to be proactive.

AAFCPAs Wealth Management encourages our clients to analyze their portfolio of investments at the end of every quarter, and to continue to be proactive to best manage wealth.  Consider the following action steps and strategies to best manage your wealth:

  • As we enter the season of giving, consider gifting appreciated investments to charity. In lieu of giving cash, you may give appreciated investments, held for over a year from a non IRA, to a qualified nonprofit or donor advised fund and get a tax deduction for the full market value while avoiding capital gains tax.
  • Combined with low interest rates, it may be favorable to use appreciated assets to set up a charitable trust.
  • If you are fond of a particular investment, it is possible to ‘reset’ the cost basis by donating this appreciated security and then re-purchasing the same security with the result that you have just moved your cost basis to the current market price.
  • If you are over 70.5 years of age, you are required to take a withdrawal from your retirement account (aka Required Minimum Distribution “RMD”) and pay income taxes on these distributions. Recently, an adjustment to the tax code allows for a tax-free transfer if you give your RMD directly to a charity, up to $100,000 each year. Please note, you are not able to use a donor advised fund in this scenario.
  • Reevaluate your estate plan to account for any increase in value as well as the current estate tax based on federal and state exemptions. The federal exemption for 2017 is $5,490,000 for a single filer, and $10,980,000 for joint filers. Additionally, state estate taxes may be a factor, but vary by state. For example, estates over $1,000,000 are taxable in MA.
  • Plan for tax implications of income such as capital gains and year-end fund distributions. Watch for the 3.8% surcharge on investment income if your Adjusted Gross Income (AGI) goes over $250,000, and an additional 5% tax if AGI goes above $450,000.
  • Consider gifting appreciated investments to family members who may be in a lower tax bracket (or no tax bracket in some cases), who may then sell and pay lower or no capital gains tax.
  • Rebalance your overall portfolio to your intended asset allocation by selling appreciated assets (selling high), and buying assets with lower appreciation (buying low). Evaluate individual investments that may represent too large of a concentration. Staying balanced with your overall long term diversified asset allocation will keep your overall portfolio risk in check. If in retirement and drawing money from retirement accounts, use the appreciated investments to fund your spending need, and leave or add to the more stable reserves to draw on when the markets are going down.
  • Review your comprehensive financial plan with your AAFCPAs Wealth Advisor to make sure your plan is still on track. Determine if you should add to reserves, or adjust spending patterns to account for the increase in portfolio values.
  • Continue to add to your investments by dollar cost averaging if you are still in the accumulation phase of your retirement plan.
  • Considering tax consequences, use some of your gains to pay off debt, particularly with expected rising interest rates.
  • Share with your AAFCPAs Wealth Advisor any life changes that may affect your personal financial plan.

If you have any questions about the integration of financial planning and investment management with tax and legacy considerations, kindly reach out to your AAFCPAs Wealth Advisor or Joel Aronson at 774.512.4114, jaronson@nullwealth.aafcpa.com.  Our mission is to provide valuable peace of mind to those who have the awesome responsibility to manage wealth.

About AAFCPAs Wealth Management

AAFCPAs Wealth Management is a boutique, fee-based Registered Investment Advisor (RIA) firm serving individuals & families, retirement plan sponsors, and nonprofits & foundations. As an affiliate of AAFCPAs (Westborough, Boston, Wellesley, MA), AAFCPAs Wealth Management is able to leverage shared knowledge, providing insight into long-range planning, with full consideration for tax implications. AAFCPAs Wealth Management’s solutions are designed for those who appreciate honesty, tax expertise, and personal attention.

Members of the AAFCPAs Wealth Management team are also CPAs, and deep tax expertise is applied to all financial plans and investment management. We provide personal attention and guide our clients toward achieving their goals through informed, objective decisions. Our focus is to educate and enlighten so that you are fully empowered to make the best decisions. Although the decisions are yours to make, we are there for you every step of the way, providing you with perspective and clarity to help you set and achieve your financial planning goals.

About the Author

Joel Aronson, CPA, PFS
Joel has been successfully serving AAF clients since 1975. Joel is directly involved in client service and has been a major contributor to the success of AAF over the years. He provides audit and assurance, consulting and tax services to closely-held businesses, nonprofit organizations, and high-net-worth individuals. He advises his clients on tax and business strategies and consults with them on succession planning and investment management. Joel is nationally recognized for his work with nonprofit organizations. His clients include national association chapters, foundations, grant-making organizations, arts organizations, schools, community health centers, community development corporations and social service agencies.