Prepare for the Sunset

Planning Article

January 2024 – By Bob Veres

When the Tax Cuts and Jobs Act (TCJA) Act passed in 2017, we were told that all of the provisions—lower tax rates, much more generous estate tax exemption—would sunset at the end of 2025.  That seemed a long way off back then.  But now it’s 2024, less than two years before what could be a jarring shift in our tax regime.  Soon, the top marginal tax rate is due to revert back to 39.6%.  The standard deduction will drop to roughly half of today’s $14,600 (single) or $29,200 (joint).  Most significantly, the estate tax exclusion—the amount that can be passed on to heirs without being taxed at the federal level—will drop from $13.61 million this year to somewhere around $6.5 million.

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Cash is Only King in the Short Run

Market Memo

January 2024 – By Kyle Rohrwasser

Between 2009 and 2022 the average Federal Funds rate for a given year was never over 2.2%, with many of those years averaging well under 1% at essentially zero. That created a situation that we like to call TINA (there is no alternative) which moved most investments into equities. When cash or short-term fixed-income instruments pay very little, one of the only ways to get “real growth” is through the equity markets.

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Fed Funds Rate Watch

Market Memo

December 2023 – By Bob Veres

Most of the investing world is a bit weird about the Federal Open Market Committee meetings, which is where the nation’s central bank announces its latest interest rate policy.  The announcement concerns the overnight borrowing rate for banks that need short-term financing if they run (temporarily) short on liquidity.  The idea is that if the Fed raises or lowers this rate, then interest rates throughout the economy will bounce up or down accordingly, raising or lowering the cost of financing for America’s corporations and potentially leading to recession (and lower stock prices) or economic prosperity (and higher stock prices).

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