Buttonwood Financial Group, LLC

What Should I Do With My Investments During Market Volatility?

Wed, 29 Apr 2026 12:55:03 GMT

What Should I Do With My Investments During Market Volatility?

During periods of market volatility, the most important step you can take is to stay grounded in your long-term strategy. Ironically, reacting emotionally to short-term developments; whether they be tariff rulings, geopolitical escalation, or interest rate speculation, have historically introduced more risk than the volatility itself. A relationship with a fiduciary financial firm can help you maintain discipline and perspective when headlines make that difficult.

Why Are Markets So Volatile in 2026?

If the first few months of 2026 have felt turbulent, you are not imagining it. After a historically strong 2025 that included dozens of record closing highs in major U.S. indices, investors entered this year with elevated expectations. Several developments have since introduced meaningful uncertainty, and the markets don’t like uncertainty!

In February, the Supreme Court ruled that broad tariffs enacted under the International Emergency Economic Powers Act exceeded executive authority. The ruling reduced some trade policy ambiguity, but a new set of tariffs was promptly announced under a separate legal framework, leaving businesses and investors still navigating an evolving landscape. Separately, geopolitical conflict and rising energy prices have added pressure to an already cautious global outlook.

Meanwhile, expectations around Federal Reserve policy continue to shift as new leadership takes the helm. Markets are currently pricing in potential rate adjustments later this year, but the path forward depends on a wide range of economic data that remains unsettled.

Perspective matters: Market pullbacks are a normal and recurring feature of investing. Looking back over the last 50 years, the S&P 500 has experienced an average intra-year decline of about 14%. However, in 35 of 46 calendar years, the index ended in positive territory . Past performance is not indicative of future results, but the historical pattern is worth understanding.

What Should You Consider Doing With Your Investments?

Should I sell my investments during a downturn?

Selling during periods of elevated volatility can feel like the safest decision, but it often locks in temporary losses and creates a new problem: deciding when to reinvest. Markets, forecasting the trajectory of the companies that make them up, have historically recovered from pullbacks, sometimes quickly and unexpectedly, and investors who moved to the sidelines have at times missed meaningful rebounds. That said, every situation is different, and decisions should be grounded in your unique circumstances.

How do I know if my current plan will still work?

Well-constructed financial strategy is built to account for periods of uncertainty. If your plan was designed around your specific objectives, your time horizon (your generation or multigenerational), and a realistic range of market scenarios, short-term volatility does not necessarily mean your plan needs to change. That said, life circumstances evolve, and market environments like we are experiencing in 2026 can be a useful prompt to review whether your financial strategy still aligns with where you are today. This is a conversation your team should be proactive about initiating.

What does rebalancing look like in a volatile market?

Volatility can cause your portfolio to drift away from its intended allocation. Rebalancing is the process of bringing it back into alignment. With the general assumption the economy grows ¾ of the time, market dislocations often create opportunities to rebalance at favorable levels. A rebalance might involve adjusting between asset classes, revisiting diversification across geographies and sectors, or reviewing fixed income positioning in light of changing interest rate expectations. Rebalancing is a disciplined process, not a reactive one, and it should be guided by your overall financial strategy rather than by today's headlines.

Why Does an Independent Fiduciary Advisor Matter?

A financial advisor electing to serve as a fiduciary is legally required to act in your best interest at all times; not their own (for compensation) or their employer’s. This is a higher standard than the suitability standard that governs many broker-dealer or hybrid relationships.

Independence matters alongside the fiduciary standard. An independent firm can be broadly defined as not being owned by a bank, insurance company, or wirehouse. When a firm is independent, there is a lower probability you will receive biased recommendations influenced by proprietary product limitations, corporate sales quotas, and pressures to recommend one strategy over another for reasons that don’t serve you.

In periods of volatility, this distinction becomes especially relevant. At a large firm, your guidance may come from a group of disconnected employees shaped by corporate priorities. At a smaller firm like Buttonwood Financial Group, our Advisors develop and implement strategies in conjunction with our Operations Team. Our output is a financial strategy that is not only customized; the execution of the plan is simplified as well. This happens at Buttonwood because our Team knows you and your family; and our relationship is the foundation of the advice.

Buttonwood Financial Group has served Kansas City families, business owners, and high-net-worth individuals for over two decades as an independent fiduciary. Our service models: Financial Advisory, Family CFO, and Family Office, are structured around the complexity of each client’s situation, not around product tiers or asset minimums.

Frequently Asked Questions (FAQs and More)

What is a fiduciary financial advisor?

A fiduciary financial advisor is legally obligated to act in your best interest at all times. This differs from the suitability standard, which only requires that recommendations be appropriate, not necessarily optimal, for a client.

How do I find a financial advisor?

When evaluating a financial advisor, consider whether the advisor operates as an independent fiduciary, how long they have served the community, whether they offer comprehensive strategy that fits your needs, and whether their team is integrated and has experience with your level of financial complexity. You can verify an advisor’s registration and disclosures through the SEC’s Investment Adviser Public Disclosure database.

Should I change my financial strategy because of tariffs?

In most cases, a well-constructed financial strategy should not require significant changes in response to any single policy shift, including tariff adjustments. Trade policy is one of many variables that affect markets, and reacting to individual policy headlines can introduce more risk than it mitigates. A fiduciary advisor can help you stress-test your strategy against multiple economic scenarios rather than reacting to any single event.

What is unique about an independent fiduciary financial advisor?

Independent financial advisors are not owned by or affiliated with large banks, insurance companies, or wirehouses. This independence, in conjunction with a fiduciary standard, helps ensure your advisor recommends products and strategies that serve your best interest. Independent firms also tend to provide more personalized services.

What are Family CFO services?

Family CFO services provide comprehensive financial strategy and oversight for households and families who need more than Investment management but do not need or want to pay for the staff of their own Family Office. Core Family CFO services include cash flow management, tax coordination, insurance and estate planning coordination and oversight, and support around life's ongoing financial decisions. Our Family CFO Team functions in a similar capacity to a dedicated Chief Financial Officer for your personal financial life.

What does a Family Office do?

A Family Office provides holistic wealth management for individuals and families with financial complexity beyond our Core Family CFO services. This may include developing and managing advanced investment allocation, tax, legacy planning, philanthropic advisory services, risk management, multigenerational financial literacy, and concierge services. Boutique firms, like Buttonwood Financial Group, offer Family Office services with a dedicated Our Team: Your Family relationship.

Let’s Have a Real Conversation

If the world seems to be whirling by or you are questioning whether your financial plan is built for what’s ahead, we welcome a conversation: A straightforward discussion about where you are and where you want to go.

Important Disclosure

This commentary is provided for informational purposes only and reflects general market views as of the date published. It is not intended as investment advice, a recommendation, or a solicitation to buy or sell any security. Asset allocation and diversification do not guarantee profit or protect against loss. Investing involves risk, including the possible loss of principal. Market conditions and investment strategies are subject to change. Please consult with your Buttonwood Financial Group advisor regarding your individual circumstances before making any investment decisions.

Oil vs. Gold: What Today’s Market Signals May Mean for Investors

Thu, 09 Apr 2026 20:10:58 GMT

Quick Takeaways

Oil prices often react quickly to geopolitical developments and may influence inflation trends
Gold prices are influenced by interest rates, currency movements, and broader economic expectations
These assets may respond differently to the same market conditions
Short-term movements do not necessarily reflect long-term roles within a diversified portfolio
Investment decisions should align with a comprehensive financial plan, not short-term market events

Why Oil and Gold Are Getting Attention Right Now

Recent market conditions have brought renewed focus to both oil and gold. Oil prices have responded to geopolitical developments and supply concerns, while gold has experienced periods of both strength and volatility.

Although these assets are often discussed together, they serve different roles in the financial system. Understanding these differences can provide helpful context for interpreting current market conditions.

How Oil Prices May Influence the Broader Economy

Oil is a key input cost across the global economy. Changes in oil prices may:

Affect transportation and production costs
Influence inflation trends
Impact consumer and business sentiment

Because of this, oil is often closely tied to short-term economic narratives and market reactions.

How Gold Prices Are Influenced

Gold is sometimes associated with periods of uncertainty, but its price is also influenced by several additional factors, including:

Interest rate expectations
Movements in the U.S. dollar
Inflation expectations

In certain environments, these factors may offset traditional demand for gold as a store of value. As a result, gold may not always move in the same direction as geopolitical risk.

Recent price action is a reminder that gold doesn’t move for only one reason. Because it’s often influenced by interest-rate expectations, the U.S. dollar, and inflation assumptions, short-term surges can reverse even when uncertainty remains. That’s why, during our March rebalance, we reduced gold exposure after its sharp run-up—locking in gains while keeping the broader diversification intent intact.

Oil and Gold: Understanding the Relationship

One way to interpret current conditions is to view oil and gold through different lenses:

Oil may influence inflation inputs
Gold may reflect market expectations for monetary policy and economic conditions

For example:

Changes in oil prices may affect inflation expectations
Inflation expectations may influence interest rate outlooks
Interest rate expectations may impact gold prices

This relationship does not imply a consistent or predictable outcome, but it may help explain why these assets do not always move together.

Short-Term Market Movements vs. Long-Term Strategy

Short-term price movements in commodities can be driven by a wide range of factors, including geopolitical developments, supply and demand dynamics, and changes in investor sentiment.

Over longer periods:

Oil has historically reflected cyclical economic activity and supply dynamics
Gold has been used by some investors as part of a diversified portfolio, particularly in relation to currency and inflation considerations

However, both assets can be volatile and may not perform as expected.

What This Means for Investors

Periods of increased market attention on specific assets can create the impression that action is required. However, making investment decisions based solely on short-term developments may increase risk.

A more measured approach may include:

Maintaining a long-term perspective
Reviewing portfolio diversification
Evaluating how current conditions align with overall financial goals

Frequently Asked Questions

Is gold still considered a safe haven investment?

Gold has historically been viewed as a store of value by some investors. However, its price can be influenced by multiple factors, including interest rates and currency movements, and it may not always perform as expected during periods of uncertainty.

Why do oil prices affect inflation?

Oil is a key input in transportation and production. Changes in oil prices may influence the cost of goods and services, which can affect overall inflation trends.

Do oil and gold always move together?

No. Oil and gold may respond differently to the same economic or geopolitical conditions due to the different factors that influence their prices.

Should investors adjust portfolios based on oil or gold trends?

Investment decisions should be based on individual financial goals, risk tolerance, and a comprehensive financial plan rather than short-term market movements.

Final Perspective

Oil may be driving much of today’s market conversation, while gold may reflect how markets interpret broader economic conditions.

Understanding how these assets function can provide context—but not certainty—in a changing environment.

If you have questions, your Buttonwood Team is here, and we welcome the opportunity to discuss how these considerations may relate to your individual circumstances.

Important Disclosure

Female Representation at Buttonwood Financial Group

Tue, 31 Mar 2026 23:52:59 GMT

Today is the last day of Women's History Month. And while one month is never enough to capture what women contribute — to finance, to business, to the communities they shape — it is a moment worth honoring before we let it go.

At Buttonwood Financial Group, this March has felt particularly meaningful. Not because we needed a designated month to recognize the women on our team, but because it gave us the chance to say out loud what we already know to be true every day: our women make us who we are.

Buttonwood is a 15-person boutique wealth management firm based in Midtown Kansas City. Six of those 15 people are women — and they aren't clustered in one place. They lead across every corner of this firm.

Our COO manages the operational engine of the business. Our VP of Marketing shapes how Buttonwood communicates with the world. Our Director of Operations keeps everything running with precision. Female representation on our Advisor team brings deep expertise directly to clients' financial futures and support from our accounting team. And our Client Services Specialist is often the first voice clients hear — and one of the most important.

In an industry where women have historically been underrepresented, that kind of presence — spanning C-suite, operations, marketing, wealth management, accounting, and client services — doesn't happen by accident.

This Is What Intentional Looks Like

Wealth management has long been a male-dominated field. Women make up a fraction of financial advisors and senior leaders across the industry. We knew from the beginning that building the team we wanted meant being thoughtful — not waiting for diversity to happen organically, but actively creating an environment where talented women want to stay and grow.

We're not perfect, and we're not done. But we're proud of where we are.

Beyond Wealth: Women, Wealth & Influence

Last year, we launched something we'd been excited about for a long time: Beyond Wealth: Women, Wealth & Influence— a community where women can explore the real intersections of life and money. The response has been remarkable. Women are hungry for this kind of space. One that doesn't talk down to them or assume they need a simplified version of finance — but instead treats them as the intelligent, capable decision-makers they are. We meet, we talk, we learn from each other, and we build the kind of financial confidence that changes lives.

Why It Matters in Wealth Management Specifically

Women control a growing share of wealth in this country. They often outlive their spouses. They navigate career interruptions. They make major financial decisions every day — and they deserve advisors and firms that truly reflect their experience and understand their full picture.

When clients walk through our doors in Midtown Kansas City, they don't just get personalized financial planning. They get a team built to see the whole picture — and that includes the perspective that women bring.

Rooted in Kansas City

Our commitment to this community runs deep. Through Buttonwood Art Space, our nonprofit arm, we've returned over $1 million to local artists and nonprofits — investing in the creative and cultural fabric of the city we're proud to call home. For us, being a good firm and being a good neighbor have always gone hand in hand.

A Word of Gratitude

To the women of Buttonwood Financial Group: thank you. The leadership, the care, the rigor, the relationship-building you bring every single day — that's why this firm is as good as it is.

And to our clients, partners, and Kansas City community: we're more than 20 years into building something worth celebrating. We're just getting started.

Interested in joining Beyond Wealth: Women, Wealth & Influence? Email: info@ButtonwoodFG.com

Buttonwood Financial Group is a boutique wealth management firm in Midtown Kansas City with over 20 years of experience in personalized financial planning. Through its nonprofit arm, Buttonwood Art Space, the firm has contributed over $1 million to local artists and nonprofits.

Investment Policy Committee Updates - March Rebalance

Mon, 30 Mar 2026 23:59:42 GMT

Geopolitics and economic impacts evolve; and thus, we evolve our investment allocations. Our March rebalance consisted of a series of targeted adjustments designed to keep portfolios aligned with our long-term objectives of producing a more consistent rate of return, while adapting to a changing investment environment.

The takeaway is straightforward: we remain firmly invested in growth, but we’re being more intentional about how we are taking risk. The change during this rebalance is a refinement of positioning, not a retreat from our conviction.

Staying Invested, With Better Balance

We continue to maintain a modest equity overweight, as we believe stocks will still outperform bonds. Our logic reflects an economic macro backdrop that remains supportive. Economic growth has been resilient; earnings have held up, and inflation pressures continue to trend in the right direction. These conditions favor stocks and growth rather than stepping aside.

At the same time, the market has begun to reward selectivity over concentration. In response, we trimmed positions that had grown disproportionately large, took profits on recent winners, and reduced some of our most concentrated factor tilts. The goal is not to reduce upside participation, but to pursue it with better diversification and durability.

Tempering Regional Bets

We made modest regional adjustments to improve balance without changing our core views:

U.S. equities: We remain constructive on U.S. earnings power, but trimmed our overweight to the US, after a strong run to reduce concentration risk.
Emerging markets: After meaningful gains, particularly tied to AI and semiconductor supply chain, we again took some profits while maintaining meaningful exposure.
International developed markets: We reduced, but did not eliminate, our underweight, acknowledging that in a broadening market, extreme regional bets can become less efficient.

The result is a more balanced global equity mix, designed to be resilient across a wider range of outcomes.

Broadening Our AI Exposure

The AI trade has been and continues to remain one of the most powerful long-term themes shaping the global economy. However, the opportunity is not evenly distributed. While many companies are experimenting with AI, only a small subset are successfully deploying it at scale in ways that meaningfully improve productivity and competitiveness.

We believe we have strengthened our AI positioning through active investment strategies that seek to identify not only core technology builders, but also early adopters across industries. We have targeted companies that are using AI to create durable advantages rather than simply following the trend: Lessons learned during the .com era. As risks increase and the market becomes more selective, we believe this selective approach matters more than ever.

Adding to Defense, with a Global Lens

We also added to our exposure to defense stocks, reflecting what we believe is a multiyear, policy driven investment cycle tied to modernization and security priorities. Importantly, we shifted from a U.S. centric approach toward a more diversified global strategy, aiming to capture where defense spending is expanding most clearly.

Defense plays a dual role in investment portfolios today: Not only is it a structural growth opportunity; we are also viewing it as a diversifying equity exposure with drivers distinct from traditional economic cycles. An economic recession doesn’t necessarily impact the need for a nation to defend itself.

Strengthening Bonds as a Stabilizer

Within fixed income, our focus during this rebalance was to improve resilience. Credit spreads are historically tight, meaning investors are being paid very little for taking on credit risk. In these conditions, credit (bonds) can behave more like equity (stocks) during market stress.

As such, we reduced credit heavy exposures and added higher quality, longer duration government bonds. The intent is to make our bond allocation a more reliable shock absorber during periods of volatility. At the same time, we would like to preserve the flexibility to add risk later if credit sells off and valuations improve.

The Bottom Line

Our March 2026 rebalance kept portfolios in our ‘barbell’ structure. Assets are both positioned for growth, which has served us very well, while we continue to increase our defensive positioning. We believe defense has been increased by improving diversification, reducing concentration, and strengthening downside protection.

In short, following our March rebalance, assets are positioned to take advantage of opportunities to participate in an overall economically constructive outlook, but we believe are now better positioned to weather uncertainty with greater resilience.

If you have questions about how these changes apply specifically to your cash flows or financial objectives, we welcome the conversation. Thank you for your continued trust and partnership.

Important Disclosure

Before You File: 8 Questions to Ask

Sat, 21 Feb 2026 15:23:16 GMT

Tax season has a way of arriving faster than expected. And for 2026, there’s more worth paying attention to than usual—the IRS has updated key figures for tax year 2025, and enforcement around complex returns has intensified. But before you hand everything off to your CPA, a brief pause to review the right details can make the process smoother—and occasionally surfaces something worth acting on. The questions below are starting points for reflection and conversation, not tax guidance.

1. Did anything significant change last year?

Life moves fast, and the tax code tries to keep up. A new job, a growing family, a home purchase, a business change, or even a large one-time expense can shift your tax situation in ways that deserve attention. This is also worth thinking about through the lens of your broader advisor team—changes that affect your investments, estate plan, or business interests often have tax consequences that only surface when everyone is looking at the full picture together. If it felt significant, it’s probably worth mentioning.

2. Have you collected all your income documents?

Before anything else, make sure the full picture is on the table. W-2s, 1099s, K-1s, Social Security statements, and brokerage summaries should all be accounted for—and reviewed for accuracy, not just collected. A number that looks wrong is worth questioning before your return is filed. One timing note worth flagging: if you hold interests in partnerships, LLCs, private equity funds, or real estate partnerships, K-1s often don’t arrive until mid-March. If your CPA isn’t expecting them, there’s a real risk of filing prematurely without crucial income information

3. Is your paperwork actually ready to hand off?

There’s a difference between having your documents and having them organized. A simple folder—digital or physical—sorted by category saves time, reduces back-and-forth with your CPA, and lowers the chance something gets missed in the shuffle. Five minutes of organizing now can prevent a week of delays later. This matters especially if you work with multiple advisors: your wealth manager, CPA, estate attorney, and business attorney each hold pieces of the puzzle. Information that stays siloed between professionals is one of the most common sources of unnecessary complications at filing time.

4. Are your charitable contributions documented?

Good intentions don’t substitute for good records. Whether you gave cash, wrote checks, or donated property, make sure you have acknowledgment letters, receipts, or bank records to back it up. For larger contributions, the bar is higher: cash gifts over $250 require written acknowledgment from the charity, non-cash contributions over $500 require Form 8283, and those over $5,000 typically require a qualified appraisal. If you donated appreciated stock or gave through a donor-advised fund, your CPA will also need cost basis information and confirmation of fair market value on the donation date—details that may require coordination with your investment advisor. Timing matters too—gifts need to have been completed by December 31 to count for the prior tax year.

5. Do you have a clear picture of your investment activity?

It’s easy to forget about trades made months ago, but we haven't. Sales, exchanges, dividend reinvestments, and distributions can all carry tax consequences. It’s also worth confirming whether any tax-loss harvesting was done on your behalf during the year—those transactions affect your overall gain and loss picture and your CPA should understand them in context. Similarly, if you exercised stock options, received vested restricted stock, or completed a Roth conversion, those activities need to be clearly communicated. Reviewing your year-end statements before you meet with your CPA helps ensure nothing catches anyone off guard.

6. Did your retirement contributions land where you intended?

Confirm that what you planned to contribute actually went in—and in the right accounts. If you came up short on IRA contributions, you may still have time to make it right before the filing deadline. If you own a business or have self-employment income, it’s also worth verifying that any retirement plan contributions made through your business are properly coordinated with your personal return. It’s also worth asking whether your current savings rate still fits your retirement timeline.

7. Are your benefit and healthcare accounts squared away?

HSAs, FSAs, and similar accounts have their own rules and reporting requirements that are easy to overlook. An HSA withdrawal used for a non-qualified expense, for instance, can trigger a penalty. Pull together your account statements and any related documents so your CPA has the full picture. If you own a business, it’s also worth confirming that health insurance premiums paid through your company are being handled correctly on both your business and personal returns—this is an area where coordination between your bookkeeper and CPA matters more than people expect.

8. What do you want to be more intentional about this year?

Tax season is one of the few times most people take a genuine look at their finances. Use that momentum. Beyond filing, consider asking your CPA what your estimated tax payments should look like for 2026, whether any positions on this return carry higher audit risk, and what planning opportunities exist based on what they’re seeing in your return. The IRS has meaningfully intensified enforcement around high-income filers in recent years—particularly around partnership interests, digital asset transactions, and international holdings—so this isn’t a moment to treat compliance as a formality. Whether it’s adjusting your withholding, revisiting your giving strategy, or thinking through a major financial decision ahead, the earlier a conversation starts, the more options you typically have.

A Note on 2025 Figures

The IRS adjusted several key thresholds for tax year 2025. The standard deduction increased to $15,750 for single filers and $31,500 for married filing jointly, with an additional enhanced deduction of up to $6,000 per qualifying individual age 65 or older ($12,000 for married couples where both spouses qualify).

Notably, legislation temporarily increased the cap on state and local tax (SALT) deductions to up to $40,000 for tax years 2025 through 2029 for certain taxpayers who itemize. This expanded cap is subject to income‑based limitations and may phase down for higher‑income filers, meaning the benefit varies significantly based on overall income and deduction profile. As always, whether itemizing or taking the standard deduction makes sense depends on your specific situation and should be reviewed with your CPA.

Estate and gift tax exemptions also saw inflationary adjustments for 2025, which may be relevant if wealth‑transfer planning was part of your year.

How we can help?

We work alongside your CPA—not in place of them. Our role is to help you stay organized, think through priorities, and make sure your financial decisions are working together toward a bigger goal. In our experience, the families who navigate tax season most efficiently are those who proactively connect the pieces across their professional team, rather than assuming the information flows automatically. If it would be helpful to talk through what’s on your plate before you sit down with your tax advisor, we’re glad to do that.

Thank you for your continued trust and for allowing us to provide solutions-not just plans.

This information is provided for general educational purposes only and should not be considered tax advice. Please consult your tax professional regarding your specific situation

Investment Policy Committee Updates - Money Market

Wed, 07 Jan 2026 21:18:18 GMT

As we closed out 2025, our Investment Policy Committee (IPC) continued its work to refine strategies that balance risk, liquidity, and long-term growth. In our previous update , we shared how the inflation shock of 2022 reshaped our approach to fixed income and led to a more nimble, systematic positioning of bond assets. That proactive discipline remains a cornerstone of our investment process. As we wrapped up 2025, our Investment Policy Committee (IPC) continues efforts to refine strategies that balance risk, liquidity, and long-term growth.

With the Fed reducing overnight lending rates for the third time, recent IPC discussions have turned to another critical focus area: cash management.

Why Cash Strategy Matters Now

With interest rates still elevated and market uncertainty persisting, many investors hold larger-than-usual cash positions. While cash provides stability, it also introduces opportunity cost if left idle. One of our IPC objectives is to ensure that excess cash works harder for you, without compromising liquidity for emergencies or near-term cash needs.

Refining Our Cash Allocation Policy

For our clients with larger cash needs (generally more than 5% or $50k of liquid assets in cash or money market funds), we are shifting to a proactive T-Bill management strategy, or other suitable investments based on goals and circumstances. For our clients holding less than $50k in cash or money market, we have retained money market for liquidity, but we have made a switch to the default money market fund we are using.

Risk and Tax Aware Money Market Selection

While yields are similar across money markets today, the underlying investments in each money market fund vary quite a bit. For example, Schwab Prime Money Market (ticker SWVXX) offers a slightly higher yield but invests in asset-backed commercial paper (ABCP), introducing a modest credit risk. In contrast, Schwab Government Money Market (ticker SNVXX), invests primarily in U.S. Treasuries and government-backed securities, making it virtually risk-free and often state income tax-advantaged. With lower risk and only about 10/100’s of 1% yield difference, our IPC has proactively transitioned clients from SWVXX to SNVXX, to prioritize safety and tax efficiency over a marginal yield difference.

Connecting Back to Our Broader Strategy

These cash management refinements build on the fixed income strategy we recently outlined. By reducing exposure to inflation-sensitive bonds and implementing a more systematic approach, we are positioning portfolios to be more resilient across potentially weaker or higher-rate environments. Optimizing cash allocations and minimizing credit risk within money markets reinforces the same core principle—protecting downside risk while prudently capturing incremental return opportunities.

Looking Ahead

As we enter 2026, our investment approach remains focused and disciplined. We continue to prioritize liquidity for cash needs, thoughtful risk management, and systematic investment strategies designed to adapt to evolving market and economic conditions. This proactive framework supports long-term portfolio resilience while remaining aligned with your financial objectives.

If you have questions about how these updates may impact your investments, cash management, or overall financial plan, we encourage you to connect with your financial advisor at Buttonwood. Our team is committed to delivering personalized wealth management and asset allocation strategies—regardless of market or economic uncertainty.

Thank you for your continued trust and for allowing us to coordinate your asset management as part of our Family CFO services.

The Holiday Conversation No One Wants to Have (But Everyone Needs To)

Tue, 23 Dec 2025 15:44:16 GMT

The holidays bring families together—and with them, the perfect opportunity for one of the most uncomfortable conversations: money.

Talking to Your Family about Money Over the Holidays

Whether your family is just beginning to plan or has been navigating financial decisions across generations, these conversations can feel difficult. Even families with a long-standing wealth strategy can struggle to talk about money. A plan may exist, but without open dialogue, it can feel unclear or disconnected from the people it’s meant to serve—especially as life changes and new generations step into the picture.

Too often, they happen only in moments of crisis—forced, emotional, and at times of peak stress. But it doesn’t have to be that way. The truth is, the best time to talk about money is before you’re forced to.

Why This Matters Now

The holidays offer a rare window when everyone's actually in the same room (or house). Use it. Not to ambush anyone over green bean casserole, but to plant seeds for important conversations.

How to Start the Conversation Without Ruining Dinner

Ask, don't tell.
"Mom, Dad—do you have someone helping you manage your finances?" is better than "You need to get your affairs in order."

Make it about peace of mind, not money.
On the flip side, maybe you have a wealth strategy but have been avoiding communicating your plans down to your children, grandchildren, or others. Frame it as reducing stress and uncertainty, not dividing assets.

Offer to help with specifics.
"What if we take a little time in January to organize your documents? I’ll bring lunch over and we can make progress together." -Gives structure without pressure.

Share your own plans first.
"We just updated our will, and it was such a relief. I can’t believe how simple it was and the peace of mind knowing it is taken care of. If you want, I can tell you how easy it was and maybe it will help?” -Opens the door without prying.

Know when to bring in a professional.
Sometimes a neutral third party makes all the difference. That's where we come in.

The Cost of Waiting

We've seen what happens when families wait too long: rushed decisions during medical emergencies, siblings discovering conflicting assumptions after a parent passes, or preventable tax consequences because no one knew the full picture.

These aren't just financial problems—they're family problems. And they're avoidable.

Let's Make This Easy

If your family needs a framework for these conversations, we can help. Whether it's facilitating a family meeting, organizing documents, or simply providing a roadmap for what needs to be discussed, we've guided hundreds of families through this process. Carving out 15 minutes for this conversation now could save your family years of stress later. Perhaps just forwarding this post to them will plant the seed...

We are here to help. Contact us and we'll listen and provide the support you need to start and continue the conversation.

Please note: This summary is for informational purposes only and does not constitute tax or legal advice. Individual outcomes may vary. We recommend consulting with tax, legal, and other advisors before making any decisions. If you don’t already have these professionals in your network, please let us know as we work with many on a regular basis.

Smart Charitable Giving – Time is of the Essence

Fri, 12 Dec 2025 13:10:05 GMT

As year-end approaches, many clients focus on charitable giving—supporting causes they care about while optimizing their tax strategy. This year carries added urgency: the One Big Beautiful Bill Act (OBBBA) will significantly change charitable giving rules in 2026. For high-income donors, 2025 may be the last opportunity to maximize benefits under current rules.

What the One Big Beautiful Bill Act Means for Your Giving in 2026

Starting in 2026, major changes take effect:

Universal Deduction for Non-Itemizers
Non-itemizers can deduct up to $1,000 ($2,000 for married couples)—creating new benefits for everyday donors.

New Floor for Itemizers
Only gifts above 0.5% of AGI will be deductible, potentially eliminating benefits for smaller donations.

Reduced Benefit for High Earners

Top bracket deduction value drops from 37% to 35%.

Corporate Giving Requirements
Businesses must donate at least 1% of taxable income before deductions apply.

Bottom line:
Everyday donors gain opportunities in 2026, but high-income taxpayers should act now to maximize 2025 benefits.

Current Tax Benefits Available Through 2025

Cash Gifts to Public Charities
Deduct up to 60% of your adjusted gross income (AGI) for cash donations to qualified public charities.

Qualified Charitable Distributions (QCDs)
If you're 70.5 or older, transfer up to $105,000 directly from your IRA to qualified charities. QCDs count toward your required minimum distribution but aren't included in taxable income. This is ideal if you don't need the RMD for living expenses.

Consider Making a Donation of Appreciated Assets
Donate stocks, bonds, or mutual funds held over one year directly to charities. You receive a deduction for full fair market value while avoiding capital gains tax.

Consider "Bunching" with a Donor-Advised Fund
PRO TIP: Accelerate multiple years of giving into 2025. Contribute a larger amount to a donor-advised fund now, receive the immediate tax deduction under current rules, then recommend grants to charities over several years. This locks in today's generous deduction limits before the new floor takes effect.

The Personal Side of Giving

The most meaningful charitable giving aligns with your values and creates the impact you want to see. Whether supporting education, healthcare, the arts, or environmental causes, your giving should reflect what matters most to your family. Tax benefits support your legacy—they don't define it.

Ask us to review your charitable giving strategy before December 31st.

We'll assess your situation, identify optimal strategies, and help you navigate the transition to 2026's new landscape—maximizing both your impact and tax efficiency. Contact us to schedule your year-end giving consultation

Investment Policy Committee Update - November 2025

Mon, 24 Nov 2025 21:51:48 GMT

Remaining steady in our mission for more than 20 years, our Investment Policy Committee (IPC) focus is to produce a more consistent rate of return. This, in turn, allows our clients to sleep at night, regardless of what crazy things may be happening in the world. To accomplish this, we focus not only on upside gains but on downside risks and allocate investments proactively based around economic and business cycle conditions. For tactical opportunities, our Core Allocations, often associated with retirement accounts to avoid tax implications, are often rebalanced 4-6 times a year. Our November rebalance focused on our Core Allocations to take advantage of a shorter term pull back in the markets.

Continuing to Climb the Wall of Worry
Developments in 2025 created a constructive environment for risk assets, and after the early Liberation Day Tariff pullback, the stock market has continued to move higher. The last few weeks the undercurrents of the markets have shown quite a bit of uncertainty. From our perspective, there appears to be a disconnect between what is generally po sitive economic data and what the average American is experiencing . Add to that confusion over the path of the interest rates, the voting members of the Fed, and whether the incredible amounts of spending on AI will translate into revenue sufficient to justify the investment. These three themes have helped to propel the stock and other risk asset rally over the last two years and recently, traders have been starting to question these tenets; and the path forward.

We wanted to take advantage of this uncertainty and last week we implemented a rebalance for our Core allocations. Being mindful of risk, we continued our ‘barbell approach’; leaning into the sectors where we have conviction, while adding to defensive sectors as well.

Buying the Dip
After the recent pullback in stocks, we increased our equity overweight from 1% to 3%, reflecting our positive outlook for stocks that is supported by a constructive macro-economic backdrop of cooling inflation, robust earnings, and an improved fiscal and trade policy outlook . A good Q3 earnings season, a more accommodative Fed , and a generally friendlier liquidity backdrop back our logic for staying constructively tilted toward risk. With inflation’s "sticky" components beginning to roll over and multiple economic forecasts projecting 4% real GDP growth in Q4 and the first half of next year, we feel the macro-economic setup supports the increase toward stocks, especially after the recent pullback.

What about the AI Bubble?

This brings us to the 10 trillion-pound gorilla in the room: AI. If an investor didn’t own AI as defined by the ‘Magnificent 7’ over the last few years, returns are much less exciting . In our view, the AI "bubble" chatter is mostly noise, reflecting oversimplified analysis. We are highly attentive to industry risks, but what we see looks far less like a speculative mania and much more like a durable, cash-flow-funded investment and productivity super-cycle. Cash flows and balance sheets for the ‘Mag 7’ are very different than the dot-com era of no earnings .com stocks. The rapid build out of data centers and infrastructure is being paid for by staggering cash flows from some of the most profitable companies in market history, racing to meet voracious, real-world demand for computing power. With data center vacancy rates at record lows and nearly every available GPU being snapped up, the risk likely isn't overcapacity but underinvestment and energy constraints. Yes, many of these companies have higher valuations; however, a decade of 35% compound annual earnings growth is why they are in the ‘growth’ stock category and have the price premium.

Our focus on the U.S. mega-cap and momentum themes naturally tilt us more toward the tech titans. As such, AI is the theme that keeps on giving and continues to anchor our portfolio’s growth engine – for now. This rebalance also brought an addition to Emerging Markets. This addition is designed to capture the semiconductor supply chain playing out across Taiwan and South Korea. 

Hedging enthusiasm responsibly. 

To keep the equity side of the portfolio balanced, we are tempering our growth bets with an increased stake in U.S. value. Consider the addition of value a risk control; a deliberate counterweight to the high-growth theme. The value add softens our style concentration, ensuring we’re not overly exposed to single factor risks – layering in value as a deliberate counterweight to our cluster of growth bets.

During this rebalance, we also deepened our underweight to developed ex-US stocks. We did this by reallocating to companies with superior earnings in the U.S. and the increasingly tech-centric bourses of Emerging Markets. Our logic was backed by stabilizing trade dynamics.

If the U.S. and Emerging Markets are the engines of global AI infrastructure growth, the developed ex-U.S. market may be the old station wagon clunking down the road. While the region’s valuations may appear reasonable (don’t they always?), they don’t look good when it comes to earnings growth and exposure to the defining technological shifts of our time. Because of this, we’re moving further underweight accordingly.

Streamlining Fixed Income

During this rebalance we also streamlined our fixed income positioning. For more aggressive allocations we reduced overall bond exposure by 1% and for more conservative allocations (less than 50% stock), we began to upgrade fixed income holdings. For the upgrade, we added exposure designed to adjust with changing market rhythms and hunt for better-valued credits, while keeping overall duration / maturity close to neutral. Looking forward, With the inflation scare of 2022 mostly in the rearview mirror, we are continuing to exit inflation-sensitive bond positions and consolidating into a more nimble, systematic bond strategy.

In summary, we continue to remain cautiously optimistic
The Fed’s easing stance continues to support measured risk-taking, so we are taking advantage of the recent pullback in stocks. We continue to maintain diversification as one of our risk management tools, focusing on our high-conviction ideas that tie with where we feel we are in the economic cycle. We will continue to tactically balance offense with defensive ballasts. We believe our investment allocations are positioned to navigate uncertainty while capturing opportunities across sectors, styles, and themes.

We will continue to provide ongoing updates on our views and investment positioning through regular IPC posts like this one, and as we meet with you. If you experience changes to your financial situation that will change when or how much cash flow you will need from your investments, please let us know right away. In addition, if you have questions about our strategy, please let us know and we will add your questions to our next meeting agenda. While we don’t recommend fixating on short-term market fluctuations, if you would like to check specific investment performance across all your accounts, our online Orion Portal is available 24/7.

Thank you for your continued trust and allowing us to coordinate your asset management as part of our Family CFO services! 

Investment Policy Committee Update - September 2025

Fri, 26 Sep 2025 16:51:01 GMT

Our Investment Policy Committee (IPC) remains focused on balancing opportunity with discipline as markets continue to react to shifting economic and geopolitical dynamics. Following a volatile start to the year, recent developments have created a more constructive environment for risk assets, though caution remains warranted.

2025 has been anything but ordinary.

Market swings have been driven by a complex mix of macroeconomic uncertainty, trade policy shifts, and geopolitical tensions. The labor market has softened noticeably, with more people now unemployed than there are job openings – the first time since 2021. These developments have prompted a more dovish tone from the Federal Reserve, culminating in a 25-basis point rate cut on September 17th. The Fed’s pivot toward easing has created a more supportive backdrop for risk assets, and our IPC has leaned into this tailwind—though cautiously.

Equities remain a focal point.

We’ve increased our equity overweight by 1%, reflecting confidence in the relative earnings strength of U.S. companies. U.S. equities have not only rebounded in price but have delivered robust earnings growth, with over 80% of companies beating expectations in Q2. In contrast, international developed and emerging markets have seen more muted earnings, with performance driven largely by valuation expansion. Our allocation continues to favor growth over value domestically, and value overgrowth abroad, reflecting sector composition and regional dynamics.

Artificial Intelligence (AI) remains a cornerstone theme.

We’ve deepened our exposure to AI builders and enablers—the “picks and shovels” of the next industrial revolution. With hyperscalers committing over $300 billion annually to infrastructure and adoption rates soaring across industries, AI is both a growth catalyst and a defensive hedge. We view underexposure to AI as a structural risk and are positioning portfolios to capture this multi-decade trend.

Defense and resilience themes have also gained prominence.

Rising fiscal commitments to national security—across shipbuilding, cybersecurity, and infrastructure—are reshaping global investment priorities. We’ve introduced exposure to “national resilience” beneficiaries, recognizing their potential to act as geopolitical hedges alongside traditional diversifiers like gold.

Fixed income and hedging positioning remains tactical.

In fixed income, we’re maintaining a neutral “duration,” which refers to how sensitive bonds are to changes in interest rates. We’re also adding convertible bonds, which offers flexibility by allowing participation should markets rise while providing protection should markets pull back.

In addition, our initial arguments for gold continue to play out so we have, once again, increased our allocation to precious metals. These holdings continue to serve as a hedge against policy uncertainty and geopolitical risk.

Investor sentiment has improved, but caution remains warranted.

While recession fears have eased and markets have responded positively to the Fed’s shift, the full economic impact of tariffs and trade disruptions is still unfolding. We expect continued volatility, driven by alternating phases of escalation and de-escalation in policy and geopolitical developments, and we plan to proactively adjust our allocation as opportunities present themselves.

In summary, we remain cautiously optimistic.

The Fed’s easing stance supports risk-taking, but we’re pressing forward with seatbelts on. We are maintaining diversification, focusing on high-conviction ideas, and tactically balancing offense with defensive ballasts. We believe our investments allocations are positioned to navigate uncertainty while capturing opportunities across sectors, styles, and themes.

We will continue to provide ongoing updates on our views and investment positioning through regular IPC posts like this one, and as we meet with you. If you have updates to your financial situation that would change when you need to access your investments, please let us know right away. In addition, if you have questions about our strategy, please let us know and we can review the details at our next meeting. While we don’t recommend fixating on short-term market fluctuations, if you would like to check specific investment performance across all your accounts, our online Orion Portal is available 24/7.

Thank you for your continued trust and allowing us to coordinate your asset management as part of our Family CFO services!

What the "One Big Beautiful Bill" Means for Small Business Owners

Mon, 21 Jul 2025 18:22:24 GMT

On July 4, 2025, President Trump signed the One Big Beautiful Bill Act into law. For business owners, it delivers both permanent enhancements to depreciation and expensing and expanded tax credits, along with a significantly broader capital‑gains exclusion for certain C Corporation stock.

1. Permanent Bonus Depreciation & Increased Expensing

100 Percent Bonus Depreciation Becomes Permanent
Under current law, bonus depreciation phases down 20 percent per year after 2023. The new law makes 100 percent immediate expensing permanent for qualified property placed in service after January 19, 2025. This provision may allow eligible businesses to reduce taxable income in the year of acquisition, depending on their specific circumstances.
Higher Section 179 Expensing Threshold
The maximum annual Section 179 deduction rises from $1 million to $2.5 million, with the phase‑out threshold increasing from $2.5 million of equipment purchases to $4 million (indexed for inflation after 2025). This change may enable more small to mid-sized firms to expense the full cost of qualifying assets in the year purchased.

2. Expanded Research, Workforce & Energy Credits

R&D Expense Deduction Restored
Previously, domestic research costs had to amortize over five years. The Act reinstates immediate expensing of R&D outlays and allows eligible small businesses (≤ $31 million in gross receipts) to elect retroactive deductions for 2022–2024. This may improve cash flow for innovation-focused firms.
Business Interest Deduction Cap Raised
For 2025 and beyond, “adjusted taxable income” for purposes of the interest‑expense limitation will exclude depreciation, amortization, and depletion. This change may allow businesses with high capital costs to deduct a larger share of interest in the current year.
Paid Family & Medical Leave Credit Made Permanent
The credit, which covers up to 25 percent of wages paid to employees on qualified leave, now becomes permanent. It also expands to include family‑leave insurance premiums, potentially lowering the net cost of offering leave benefits.
Other Notable Credit Extensions & Increases
50 percent deduction for business‑meal expenses remains permanent.
Enhanced advanced‑manufacturing investment credit rises from 25 percent to 30 percent for property placed in service after December 31, 2025.
Employer child‑care credit increases to $500,000 (40 percent of expenses) and adds a small‑employer credit up to $600,000 (50 percent of expenses).
Student‑loan assistance exclusion becomes permanent and indexed for inflation.
Paid Overtime Tax Credit of up to $12,500 ($25,000 joint filers) introduced.
New Markets Tax Credit and certain rural‑loan interest exclusions are extended or introduced.

3. Enhanced Qualified Small Business Stock (QSBS) Exclusion

According to Husch Blackwell, the Act confirms three major updates to IRC § 1202 that may influence your choice of entity selection and capital‑gains planning ( Husch Blackwell ):

Tiered Holding‑Period Exclusions

≥ 3 years held → 50 percent exclusion
≥ 4 years held → 75 percent exclusion
≥ 5 years held → 100 percent exclusion

Higher Per‑Issuer Cap

The exclusion limit increases from the greater of $10 million or 10× basis to $15 million, with annual inflation adjustments.

Increased Gross‑Asset Threshold

Qualifying C Corps may now have up to $75 million in assets (up from $50 million), indexed for inflation.

These changes may make C Corporation status more attractive for startups and growth companies planning liquidity events three or more years out. However, the benefits depend on a variety of factors, including timing, structure, and exit strategy.

4. Next Steps for Business Leaders

Buttonwood Financial Group works with our clients to align their business and personal financial strategies. Here are a few ways we can support you in light of this new legislation;

Model Your 2025 Tax Profile
We’ll work with you and your CPA to project taxable income, evaluate bonus depreciation vs. Section 179 elections, and assess credit phase‑out impacts.
Revisit Entity & Capital Structure
We can coordinate with legal and tax professionals to evaluate whether the expanded QSBS expansion makes C Corp status more favorable for your long-term objectives.
Time Major Purchases & Elections
Strategically timing equipment or R&D investments may allow you to maximize deductions and credits in 2025.
Monitor IRS & Treasury Guidance
As we have done for more than 20 years, we remain aware of regulations that may refine definitions, phase-in rules, or eligibility criteria – and keep you informed.

Let’s Talk Strategy

If you’d like to explore how these provisions might apply to your business or personal tax strategy, our Team stands ready to assist. We’ll work alongside your tax and legal advisors to ensure your plan is both compliant and aligned with your goals. Contact us today to learn more.

Sources:

1. https://www.bizjournals.com/kansascity/news/2025/07/03/slew-of-small-business-tax-cuts-set-to-become-law.html

2. https://www.huschblackwell.com/newsandinsights/one-big-beautiful-bill-act-expands-qualified-small-business-stock-exclusion

3. https://www.congress.gov/bill/119th-congress/house-bill/1

Blind Spots in Business - A Panel Discussion Recap

Wed, 11 Jun 2025 15:46:44 GMT

Insights from Experts in Wealth Management, Insurance, HR, and Legal Strategy

Overview

Business leaders often excel in their areas of expertise, but many overlook critical risks that can impact long-term success. At the recent Blind Spots in Business panel, five industry experts shared actionable strategies to help business owners uncover and address the hidden vulnerabilities in their operations, people management, legal infrastructure, insurance coverage, and personal finances. Their message was clear: by identifying blind spots early and assembling the right team of professionals, business owners can reduce risk, protect assets, and build resilient organizations.

Meet the Experts

Jon McGraw , President, Buttonwood Financial Group, LLC
Serves as Family CFO to successful families and business owners. Specializes in protecting wealth, coordinating complex financial strategies, and preparing clients for life’s biggest transitions.
Tandra Stacer , Producer, Haas & Wilkerson Insurance
Focuses on commercial insurance risk, helping companies align coverage with operational realities so they’re protected when it matters most.
Sara Gertsema , Unit Leader, Personal Lines, Haas & Wilkerson Insurance
Brings expertise in personal risk management for high-net-worth individuals, ensuring business owners protect their personal assets with care.
Michael Griffin , Attorney, Dysart Taylor
Advises businesses on contracts, compliance, and litigation. Helps clients avoid costly exposure and solidify legal foundations.
Roger Dusing, PhD , Senior Consultant, OMNI Human Resource Solutions
Helps organizations resolve HR blind spots, improve leadership, ensure compliance, and align talent strategy with business growth.

Key Insights by Topic

1. HR Blind Spots: Leadership, Culture & Retention

Dr. Roger Dusing highlighted one of the most pressing challenges in today’s workforce: disengagement. According to Gallup, nearly half of employees are actively disengaged and seeking new roles. The root cause? A lack of effective people management.

Supervisors are often promoted based on technical skill, not leadership ability. As a result, many managers lack the training to coach, mentor, and motivate employees. When leadership focuses only on operations and not on culture, businesses suffer high turnover, low morale, and increased risk of compliance violations.

What You Can Do: Invest in leadership development, prioritize emotional intelligence, and ensure your senior managers are building strong relationships with their teams. Culture starts at the top.

2. Insurance: Gaps in Coverage Can Be Costly

Tandra Stacer and Sara Gertsema shared real-world examples of business owners who mistakenly believed they were fully insured. The reality is more nuanced.

Many commercial properties are undervalued, which means businesses may receive far less than expected in the event of a loss. Auto policies often lack Hired Auto Liability coverage, leaving companies exposed when employees use personal vehicles for work. On the personal side, business activities are not covered by a personal umbrella policy - a critical misunderstanding among many entrepreneurs.

What You Can Do: Review policies annually with a broker who understands your operations. Check valuations, exclusions, and title ownership. If you don’t know what a coverage type means - ask.

3. Legal: The Cost of Complacency

Attorney Michael Griffin emphasized the legal risks of doing business with outdated documents or no legal agreements at all. From partnership disputes to vendor relationships, too many businesses rely on informal agreements or internet templates.

Common mistakes include not having a buy/sell agreement among business partners, improperly titled assets, and failing to update shareholder or operating agreements as the business evolves. In worst-case scenarios, these oversights lead to litigation or loss of legal protections.

What You Can Do: Establish core legal documents early and revisit them every 2–3 years. Don’t rely on internal staff or CFOs to draft legal documents—engage an attorney who understands your business.

4. Personal Finance: Concentration Risk & Missed Opportunities

Jon McGraw addressed the importance of separating personal and business finances. Many business owners are overly reliant on their business as their primary asset - a classic case of concentration risk.

Without diversifying wealth outside the company, business owners put their personal financial future at risk. From tax planning to multigenerational transfers, the earlier owners start strategizing, the more options they have to protect their families.

What You Can Do: Start pulling income out of the business and investing in other vehicles. Create a plan for how the business integrates with your broader financial goals, including estate planning and retirement.

5. Transition Planning: Culture, Communication, and Continuity

Both Dusing and McGraw discussed the overlooked risks during leadership and ownership transitions. On the people side, incoming leaders often fail when they don’t embrace the company culture or establish relationships. On the personal wealth side, many owners delay planning until after a sale, missing the chance to structure deals in a tax-efficient and legacy-minded way.

Assumptions about generational succession often go untested. Business documents may assume children will take over, but those conversations never happen. The result? Conflict, confusion, and missed opportunities.

What You Can Do: Start transition planning early. Engage the next generation in discussions. Evaluate leadership fit before a hire and align cultural expectations in the onboarding process.

6. AI & Operational Innovation

The panel briefly touched on the role of artificial intelligence across industries. While AI can streamline workflows, enhance hiring processes, and support legal drafting, it must be used responsibly.

Privacy concerns are paramount, especially in financial and legal settings. Organizations must ensure that sensitive data is never input into public AI tools, and that outputs are always reviewed by qualified professionals.

What You Can Do: Begin exploring AI for efficiency, but with human oversight. Use private, secure environments and develop internal policies around responsible use.

Final Takeaways: What Every Business Owner Should Do Next

Tandra: Make sure your broker understands your operations in detail.
Sara: Conduct annual reviews with your insurance, legal, and financial teams.
Michael: Every multi-owner business needs a buy/sell agreement. Review it regularly.
Roger: Your people managers drive the culture. Train and support them.
Jon: Identify your biggest blind spot and commit one hour a month to fixing it.

Conclusion

Every business has blind spots. Whether it’s a missing legal document, underinsured asset, disengaged team, or lack of succession planning, these gaps are preventable. By assembling the right team of professionals and reviewing your business through a multidisciplinary lens, you can reduce risk and build a business that not only grows, but endures.

Ready to learn more? Contact one of the panelists or your trusted advisor to begin addressing your own business blind spots today.

Disclaimer
This material is intended for informational purposes only and should not be construed as legal, tax, investment, or insurance advice. The views expressed by panelists are their own and do not necessarily reflect those of their respective firms. Before making any financial or business decisions, you should consult with qualified professionals who are familiar with your unique circumstances. Past performance is not indicative of future results.

Investment Policy Committee Update - May 2025

Wed, 28 May 2025 15:48:41 GMT

Our Investment Policy Committee (IPC) once again emphasized the importance of patience and discipline amid market volatility, particularly following the sharp but short-lived selloff earlier this year. Following the lows in early April, the rebound in equities has provided us a strategic opportunity to reduce risk in a more tactical way. While we have reduced risk overall, we do believe the market swings early in 2025 were driven more by sentiment and forced selling than by deteriorating fundamentals.

Since February, global markets have been rocked by a series of rapid and unpredictable trade policy developments. The implementation of tariffs on Canadian, Mexican, and Chinese imports in early March triggered swift retaliatory actions, exemptions, and delays, highlighting the volatile nature of current policy shifts. The situation escalated dramatically on April 2nd with the U.S. announcing sweeping tariffs on nearly all imports (excluding Canada and Mexico), targeting 57 countries. This “Liberation Day” announcement led to a historic market selloff, with the S&P 500 plunging 14% in three days and the Nasdaq entering bear market territory. However, markets rebounded sharply after a partial tariff pause on April 9th, underscoring the extreme sensitivity of investor sentiment to policy headlines.

Beyond trade, markets have been navigating a complex web of geopolitical tensions, inflation shifts, interest rate expectations, and even a U.S. credit rating downgrade. These overlapping uncertainties have created a uniquely volatile environment. April exemplified this instability, with the S&P 500 experiencing a record intra-month swing—falling over 12% before closing the month nearly flat. This backdrop has reinforced the importance of diversification and the need for strategies that extend beyond traditional stock and bond asset classes to manage risk effectively.

Amid heightened volatility, our alternatives as well as gold have proven to be reliable portfolio stabilizers. Since the February rebalance, gold prices surged 11% as investors sought safety. Central banks have continued to accumulate gold reserves, reinforcing their role as a geopolitical hedge. Interestingly, gold has shown a low correlation with Treasury returns, enhancing its value as a diversifier. With this rebalance, our IPC has tactically trimmed its gold position to lock in gains while maintaining long-term conviction in its role. Other diversifiers, such as international developed market value stocks and U.S. Treasuries, have also contributed to portfolio stability, benefiting from regional defense spending and a flight to quality.

Investor sentiment has rebounded dramatically since the lows of early April. The “ Fear and Greed ” index swung from extreme fear to greed, and recession concerns have eased significantly. Despite this optimism, our IPC remains cautious. While we don’t expect long term influence, the full economic impact of tariffs has yet to materialize, and markets remain highly reactive to geopolitical and policy developments. The Committee expects continued volatility, with alternating phases of escalation and de-escalation likely to drive short-term market behavior.

In light of ongoing uncertainty, we are maintaining a cautiously optimistic outlook. While short-term inflationary effects from tariffs are expected, they are seen as transitory and unlikely to derail the broader disinflation trend. The greater concern lies in potential global growth headwinds from disrupted supply chains and shifting business sentiment. As they have in the past, the Fed is generally expected to prioritize economic softness over inflation, potentially delivering further rate cuts. In this environment, for tax deferred assets, we are reducing active risk, focusing on high-conviction ideas, and reinforcing broad diversification to balance upside potential with resilience.

We will continue to provide ongoing updates on our views and investment positioning through regular IPC posts, and as we meet with you. If you have questions about our strategy, please let us know and we can review the details at our next meeting. While we don’t recommend fixating on short-term market fluctuations, if you would like to check specific investment performance across all your accounts, our online Orion Portal is available 24/7.

Thank you for your continued trust and allowing us to coordinate your asset management as part of our Family CFO services!

Your Decade-by-Decade Guide to Retirement Planning

Mon, 19 May 2025 14:45:00 GMT

Starting in Your 40s

Retirement Isn’t a Date. It’s a Strategy.

When most people hear “retirement planning,” they think of a milestone that begins in their 60s. In reality, retirement involves decades of thoughtful decisions layered and adjusted over time.

Starting in your 40s, each decade presents new opportunities to take control of your financial future. The earlier you begin planning, the more confident you’ll feel making the transition into retirement—and the more likely you’ll achieve the lifestyle you envision.

Here’s what effective retirement planning looks like at each stage.

In Your 40s - Build the Foundation

Your 40s are often the prime of your earning years, making it an ideal time to build momentum and take meaningful steps toward long-term goals.

What to focus on:

Maximize Retirement Contributions: Contribute consistently to your 401(k), IRA, or other retirement vehicles. If you’re self-employed, you might explore a SEP IRA or Solo 401(k) to boost contributions.

Start Long-Term Tax Planning: Review how current savings strategies could affect future tax exposure. Roth contributions may be worth considering based on your income and future outlook.

Review Your Risk Coverage: Evaluate life, disability, and umbrella insurance to protect your income and lifestyle.

Begin Estate Planning Basics: Ensure you have essential documents in place—wills, healthcare directives, and power of attorney.

Start Visualizing Retirement: While it may feel far away, it’s helpful to begin defining what retirement looks like for you. Do you want to travel? Start a new venture? Spend more time with family? Your vision will guide your planning.

In Your 50s - Refine and Prepare

The 50s are often a transitional decade—college costs may be winding down, and retirement feels more real. Now is the time to stress-test your plan.

What to focus on:

Run a Retirement Readiness Analysis: Understand where you stand. Project future income needs, anticipated expenses, and how your savings align with your goals.

Evaluate Catch-Up Contributions: Take advantage of higher contribution limits for retirement accounts after age 50. Ensure you understand the rules and limitations associated with these contributions.

Review Investment Allocation: As retirement nears, assess whether your portfolio reflects your risk tolerance and time horizon.

Explore Income Planning Strategies: Think beyond Social Security—explore other potential income sources such as rental property, pensions, or part-time consulting.

Plan for Healthcare Costs: Start estimating what healthcare might cost in retirement and whether supplemental insurance will be needed.

Refine Estate and Legacy Plans: If you have children or aging parents, review your estate plan to ensure it reflects your wishes and supports the people you care about.

In Your 60s - Strategize and Transition

This is the decade where planning turns into action. Timing matters—so does execution.

What to focus on:

Create a Sustainable Withdrawal Plan: Map out how and when you’ll access your retirement assets. Coordinating distributions across different accounts can significantly impact your tax bill.

Social Security Optimization: Consider your options carefully—when you file for benefits can affect your income for life.

Medicare Planning: Understand Medicare enrollment timelines and coverage options to avoid penalties and gaps in care.

Finalize Your Retirement Timeline: Decide if you’ll fully retire, work part-time, or phase out gradually—and adjust your financial plan accordingly.

Revisit Your Budget: Align expected spending with lifestyle priorities. Travel? Downsizing? Helping grandchildren? Plan with intention.

In Your 70s and Beyond - Protect and Preserve

By now, your focus shifts toward maintaining lifestyle, simplifying financial decisions, and ensuring your assets are passed on according to your values.

What to focus on:

Manage Required Minimum Distributions (RMDs): Ensure you meet withdrawal requirements to avoid costly penalties—and consider how RMDs fit into your broader tax strategy.

Update Estate Documents: Life changes—so should your documents. Review beneficiary designations and confirm your estate plan still aligns with your intentions.

Simplify Where Possible: Consolidating accounts and streamlining investments can reduce stress and make things easier for family members down the line.

Give with Purpose: Charitable giving, family gifts, or legacy planning can become a meaningful part of your strategy—both emotionally and financially.

Retirement Planning Isn’t One Big Decision. It’s a Series of Smart Ones.

Your financial future isn’t built overnight—but with the right strategy, each decade can build upon the last. At Buttonwood Financial Group, we believe retirement planning is about more than numbers. It’s about creating clarity, making informed decisions, and aligning your wealth with your goals—now and in the future.

Let’s Build Your Retirement Plan - Together

Whether you're in your 40s, 50s, 60s, or beyond, our Team can work with you to design a plan that works for your life—not just your portfolio.

Schedule a Retirement Strategy Session and take the next step toward the retirement you deserve.

The information provided on this page is for educational purposes only and does not constitute specific financial advice. Buttonwood Financial Group does not guarantee the accuracy or completeness of any information presented. All investments involve risks, including the potential loss of principal. Past performance is not indicative of future results. Please consult with a qualified financial advisor to discuss your individual circumstances and financial goals.

Buttonwood Agreement Day

Wed, 14 May 2025 21:36:44 GMT

The Origins of Wall Street and a Legacy That Guides Wealth Today

Each year on May 17, we commemorate Buttonwood Agreement Day — a moment that shaped not only the history of American finance but also the foundational values that continue to guide trusted wealth management today.

On this day in 1792, 24 stockbrokers and merchants gathered under a buttonwood tree at 68 Wall Street in New York City. There, they signed a simple, yet powerful document now known as the Buttonwood Agreement. Their goal? To bring order, structure, and credibility to securities trading at a time when chaos, speculation, and mistrust threatened the fledgling U.S. financial system.

Why the Buttonwood Agreement Mattered Then (And Still Matters)

The Buttonwood Agreement was created in direct response to the financial crisis of the time. The Panic of 1792, triggered by risky speculation and the collapse of credit due to defaults by prominent financiers, shook the public’s confidence in capital markets. In its wake, these 24 signatories vowed to establish a new standard of integrity and accountability in trading.

The agreement’s two key provisions included:

Trading exclusively among members to avoid unreliable auctioneers.
Charging a standardized 0.25% commission on trades.

These rules set the tone for a more transparent and controlled marketplace – laying the groundwork for what would eventually become the New York Stock Exchange. 1, 2

From a Tree on Wall Street to the World’s Largest Exchange

In the months and years that followed, this modest pact evolved into a formalized marketplace that fueled America’s growth. Within a year, trading moved indoors to the Tontine Coffee House, creating a more structured environment. And by the mid-19 ^th century, the newly named New York Stock Exchange had become a global financial powerhouse.

Though Wall Street looks very different today, the underlying principles that originated under the shade of that buttonwood tree – collaboration, consistency, and ethical practices – remain more relevant than ever.

A Model for Modern Wealth Management

At Buttonwood Financial Group, this origin story resonates deeply. Our name is more than historical homage — it reflects a commitment to the very same values those early brokers stood for: integrity, clarity, and collaboration.

As Family CFO to the families we serve, we bring order to financial complexity, just as the original Buttonwood Agreement brought structure to an unregulated market. Whether navigating generational wealth, preparing for a business transition, or coordinating your estate and tax strategies, we act as your trusted partner — the first call when life happens.

Celebrating May 17 – Looking Back to Lead Forward

As we celebrate Buttonwood Agreement Day, we’re reminded that financial trust is earned through clarity, consistency, and collaboration — the very ideals that gave rise to the New York Stock Exchange in 1792. At Buttonwood, we carry that legacy forward in how we serve families today.

Just as the original signatories brought structure to a chaotic financial system, our Team brings order to the complexities of multigenerational wealth. As your Family CFO, we coordinate every moving part — from investments and taxes to estate planning and philanthropy — ensuring your financial life is built on a strong, enduring foundation.

This May 17, take the next step in building a financial legacy that stands the test of time.

Connect with our Team to experience a more thoughtful, strategic approach to wealth. Our comprehensive services work to ensure your financial legacy is built on a strong, enduring foundation.

1. https://time.com/4777959/buttonwood-agreement-stock-exchange/

2. https://www.investopedia.com/terms/b/buttonwoodagreement.asp

Credit Monitoring in 2025 - What Every Family Should Know

Wed, 30 Apr 2025 20:03:29 GMT

At Buttonwood Financial Group, we operate under the assumption that in our digital world, nearly everyone’s personal information has likely been compromised in some way.

From large-scale data breaches to targeted phishing attacks, it’s increasingly safe to assume that your Social Security Number, birth date, and other sensitive information are already “out there.” Given that reality, protecting yourself is no longer about if you need credit monitoring, but how you use it effectively.

Here’s what you need to know:

The Purpose of Credit Monitoring

Credit monitoring services are designed to alert you if someone tries to use your personal information to open new accounts, take out loans, or access your financial resources.

Early detection is critical. The goal is to catch fraudulent activity before real damage is done – ideally before a new account is even opened.

Credit monitoring won’t prevent your information from being stolen, but it can help you take swift action when something suspicious happens.

Choosing the Right Credit Monitoring Service

There are hundreds of options for credit monitoring. You don’t need them all – you just need one (maybe two) that truly work for your lifestyle.

When selecting a service, consider two major factors:

Lifestyle Fit:
Choose a service that communicates the way you do. If your smartphone is attached to your hip like many of us, using a service that sends text messages, app notifications, and email alerts may be the best option for quick action.
Functionality:
Not all credit monitoring services are created equal. Some are straightforward. Others, like LifeLock, offer comprehensive protection but require more engagement – including updating your profile, accepting terms, and proactively using their platform to maintain functionality.

At Buttonwood, we often recommend services like LifeLock for those seeking a more robust, all-in-one solution. However, LifeLock and similar providers sometimes cross-sell additional services, and it’s important to stay engaged with them – or you risk missing important notifications.

If you are looking for a simpler or even free alternative, there are also more streamlined options available that focus purely on credit monitoring alerts.

The bottom line: Pick a service you will actually use. Staying proactive is more important than which brand you choose.

(Disclaimer: Buttonwood Financial Group does not receive compensation for recommending LifeLock or any other credit monitoring services.)

Credit Freeze vs Credit Monitoring: Do You Need Both?

A credit freeze can offer a deeper layer of protection, making it harder for identity thieves to open new accounts in your name. However, a freeze may also complicate legitimate credit activities – like applying for a new credit card, leasing a car, or securing a loan. Consider your personal financial situation before deciding.

Learn more about the differences between a credit freeze and a credit lock here .

Pro Tip: If you freeze your credit, be sure you can easily “thaw” it when you need access.

Don’t Forget Password Management

Beyond monitoring, a password manager can help protect you by securely storing your login credentials. No more sticky notes, spreadsheets, or folders filled with sensitive information! Choose a password manager that fits your preferences – there are many reputable (and secure) options available today.

(Disclaimer: Buttonwood Financial Group does not receive compensation for recommending any specific password managers.)

Simple Steps to Stay Protected – A Summary

Use at least one credit monitoring service – ideally one that fits your lifestyle and keeps you actively engaged.
Consider a credit freeze for added security but understand the implications for credit usage.
Use a password manager to organize and protect your credentials.
Stay proactive. No service is “set it and forget it.” The key is staying alert and responsive.

Protecting your identity is an ongoing process, not a one-time action.

At Buttonwood, we work with our clients to simplify financial complexity – and that includes staying vigilant against cyber threats.

If you have questions about credit monitoring, protecting personal information, or managing financial risk, schedule a conversation with our Team to learn more.

The information provided in this blog post is for general informational purposes only and does not constitute financial, tax, or legal advice. Please consult with a qualified professional for personalized advice. Buttonwood Financial Group does not receive compensation for recommending specific services mentioned in this blog.

Tax Day is Over - Now the Real Strategy Begins

Tue, 29 Apr 2025 14:24:53 GMT

What You Should Do Before Q4

For most, April 15 marks the end of tax season. But for successful individuals and families, it should mark the beginning of the next — and arguably most valuable — phase of tax planning. If your financial world includes business income, private investments, real estate, or charitable giving, now is the time to step back, evaluate, and strategize.

At Buttonwood Financial Group, we believe the most impactful tax moves aren’t made at the last minute — they’re made when there’s still time to think clearly and act with intention.

Use Your Return as a Roadmap

Before you file your 2024 tax return to the archives, consider what it reveals. Your return is more than a compliance exercise — it’s a diagnostic tool. From gaps in efficiency to missed opportunities, a close review can uncover blind spots that deserve attention. Were you overly concentrated in income-producing assets? Are your charitable deductions aligned with your broader giving strategy? Did you overpay because key decisions weren’t made early enough? These are the types of questions that can lead to meaningful adjustments going forward.

Why Early Planning Matters More Than You Think

It’s tempting to wait until year-end to focus on taxes — but for high-net-worth families, that can be too late. The truth is, many of the details that shape your tax picture don’t become fully clear until Q4. K-1s from private investments often aren’t finalized until late in the year. Business owners may not know their total revenue until Q4. Executives might still be waiting on clarity around bonuses or deferred compensation.

However, by planning ahead now — in Q2 or Q3 — you give yourself the time and flexibility to act once those final numbers fall into place. It’s about setting the stage so when Q4 arrives, you're not scrambling. You’re executing.

Don’t Miss the Window for Opportunity

Some of the most effective tax strategies take time to implement and are highly dependent on market conditions and income levels. For example, gifting during market downturns can transfer significant value to future generations — but those opportunities vanish quickly once markets rebound. Waiting until December to establish a dynasty trust or make a strategic gift could mean missing the window entirely.

Roth conversions are another area where timing is everything. In lower-income years — or when the market pulls back — converting traditional retirement assets to Roth can be a smart move. It’s a way to lock in long-term tax-free growth, especially when you can “fill up” lower tax brackets and keep the tax cost manageable.

Even tax-loss harvesting, which many investors reserve for December, can be far more effective when done throughout the year. Markets move fast — what feels like a loss in April may not be there by year-end. Taking a proactive approach can open doors to better rebalancing and overall tax efficiency.

And if charitable giving is a core part of your wealth plan, it’s worth aligning that strategy well before your CPA is buried in year-end deadlines. Whether it’s funding a donor-advised fund, contributing appreciated stock, or coordinating giving across generations, thoughtful planning leads to more impact — and less stress.

The Power of Integration

Tax strategy shouldn’t be an afterthought. It should be built into every element of your financial life. At Buttonwood, our comprehensive approach brings together your tax, legal, and investment strategies to make sure every move works in concert. That means coordinating with your CPA on income planning, partnering with your attorney on entity structure or legacy design, and aligning your investment strategy with tax-conscious execution — from municipal bonds to asset location and beyond.

This is where true wealth preservation happens. Not in silos, and not in a rush.

Let’s Talk Strategy Before It’s Too Late

If your 2024 return is already filed, now is the time to pause and reflect. What worked? What didn’t? What can still be done this year to improve your long-term financial picture?

Our Team is ready to guide you through a focused session to align your strategy with what matters most to you. Together, we’ll identify opportunities, avoid surprises, and prepare for what’s ahead.

Schedule your conversation with one of our Lead Advisors today — and let’s get ahead of 2025, together.

Investment Policy Committee Update - April 2025

Fri, 11 Apr 2025 18:00:18 GMT

April 8, 2025

As the last few weeks have shown, fear and optimism can have outsized impacts on market conditions. The unprecedented Wednesday morning selloff, followed by a rally not seen since 2008 , has many investors uneasy. However, despite all the noise, we remain disciplined in our investment approach and continue to implement strategies designed to provide a more consistent rate of return over time.

Our Take on Tariffs

It seems likely that baseline tariffs on nearly all US imports are expected to remain, with higher country-specific rates potentially used to negotiate leverage. Despite ongoing and likely continued volatility, along with an increase in recession risk, the likelihood of a full-blown trade war seems limited. The recent market correction likely reflects much of the perceived negative impact on growth and earnings. With more clarity on potential overall tariff ceilings and early signs of less severe retaliatory tariff escalations, the recent market turmoil may represent the peak of trade policy uncertainty.

Market reactions suggest a significant increase in recession odds, but we believe the risk is less extreme than what the early days of April may be predicting. Early concerns are likely to lead to a one-time effect rather than a reflection of deep-seated economic issues. At this time, we see no immediate red flags indicating serious recession catalysts such as overinvestment, deleveraging, or a banking crisis. So far, strong consumer spending data contradicts weakening sentiment surveys.

What We Are Doing and Expect

We continue to monitor credit card spending, job postings, weekly jobless claims and much more to assess the risks. Thinking about this data, we are cautious about jumping to conclusions on inflation impacts. We expect price hikes to be a one-time pass-through, implemented quickly (within six months). Inflation forecasts remain anchored, with 5 and 10-year break-even expectations moving lower post-tariff announcements. Legal challenges may also slow tariff implementation, as they were enacted under the International Emergency Economic Powers Act (IEEPA), raising questions about the law's use for such sweeping actions by executive order.

In Summary

Worldwide, we expect tariff concessions to exceed tariff retaliation in part due to the American consumer accounting for around 1/3 of global consumption . In English, they need our consumer spending, more than we need theirs. Before the Tariff announcement , the general thought was the Administration would impose tariff rates between 8.5% to 10%. The announcement was different than expected; a ‘surprise.’ This brought the consensus tariff rate closer to an average of 25%. And as markets do, both stock and bond markets reacted to a change in expectations by adjusting accordingly. Looking forward, we believe the ultimate effective tariff rate will be in the 10-15% range, potentially serving as an eventual tailwind to markets.

We will continue to provide these ongoing updates on our views and investment positioning through posts like this, and as we meet with you. If you have questions about our strategy, please let us know and we can review details at our next meeting. While we don’t recommend fixating on short-term market fluctuations, if you would like to check specific investment performance across all your accounts, our online Orion Portal is available 24/7.

Thank you for your continued trust and allowing us to coordinate your asset management as part of our Family CFO services!

Life After the DOGE Initiative

Thu, 27 Mar 2025 15:07:37 GMT

Financial Clarity for Federal Workers in Transition

Over the past several months, the federal workforce has experienced a significant shift due to the Departmental Optimization for Government Efficiency (DOGE) initiative. For many, this transition came with difficult decisions—accept a buyout package, prepare for early retirement, or manage the financial implications of an unexpected layoff.

At Buttonwood Financial Group, we understand how disruptive this period has been for many—not only to careers, but to the rhythm of everyday life. While this kind of change can bring uncertainty, it also presents an opportunity: the chance to evaluate what comes next and take thoughtful steps toward a more confident financial future.

Understanding the Financial Landscape After DOGE

Whether you accepted an early retirement offer, were laid off, or are simply reevaluating your next steps, the financial decisions that follow a career transition are critical. Many federal employees now face questions such as:

How should I handle my buyout or severance?
Should I roll over my Thrift Savings Plan (TSP)?
Can I afford to retire now, or should I return to work?
What happens to my federal benefits?
How can I manage taxes on my severance and retirement accounts?

The answers to these questions are rarely one-size-fits-all. They require careful analysis and, often, professional guidance.

Common Questions We're Hearing from Families

We've been working closely with families impacted by the DOGE initiative, and several themes have emerged. Many are navigating new decisions about:

Whether to take monthly pension payments or a lump sum (if offered)
How continued healthcare through FEHB fits into long-term planning
What role the Thrift Savings Plan (TSP) plays in future income strategies
How to manage cash flow and expenses during a job search or early retirement
Evaluating options for spousal or survivor benefits

It’s not just about adjusting to a new financial picture—it’s about reshaping a long-term plan that supports the life you want to live.

How Buttonwood Helps with A Coordinated, Family-Focused Approach

As a Family CFO, Buttonwood works with clients to bring clarity and confidence to their entire financial picture. For those impacted by federal workforce changes, that means coordinating:

Retirement Readiness Planning – Determining whether early retirement is viable, and building a sustainable income plan if so.
TSP & Investment Strategy – Reviewing rollover options, tax implications, and asset allocation to align with your goals.
Tax Strategy – Analyzing the best way to receive buyout or severance funds, and managing distributions from retirement accounts.
Healthcare and Insurance Review – Evaluating FEHB continuation, Medicare integration (when appropriate), and long-term coverage needs.
Cash Flow Forecasting – Building short-term and long-term plans to ensure flexibility and stability.

We collaborate with other professionals—CPAs, attorneys, and insurance advisors—to ensure all areas of your financial life are coordinated. Our role is not to sell products, but to serve as your strategic partner through all seasons of life.

One couple we recently worked with faced the decision of retiring five years earlier than planned after one spouse accepted a buyout. We developed a detailed income timeline, coordinated their TSP strategy, and identified tax savings to support their long-term objectives. (Individual results will vary based on personal circumstances and financial situations.)

Planning for What’s Next - Redefining Your Future

This is more than a career shift—it’s a life shift. For some, it means stepping into consulting work or part-time employment. For others, it’s an opportunity to focus on family, health, or new passions. With a strong financial plan in place, this chapter can be one of the most fulfilling.

We believe that clarity builds confidence. Whether you're unsure what the next year looks like or simply want a second opinion on the path ahead, our Team is here to guide you.

Schedule a Conversation with Buttonwood

If you or someone you know has been affected by the DOGE initiative, we invite you to schedule a conversation with our Team. Our role is to help you simplify complexity and focus on what matters most—your family, your passions, and your future. These decisions require careful analysis and, often, professional guidance to navigate effectively.

Let’s talk about how our Family CFO approach can help you move forward with purpose and peace of mind.

Investment Policy Committee Update - February 2025

Mon, 17 Mar 2025 14:21:08 GMT

We entered 2025 with a decidedly risk-on stance in our portfolios, reflecting an optimistic view of the strength of the overall US economy and a better-than-consensus outlook on the trajectory of corporate earnings. As we move further into March, we have a better perspective around corporate earnings as well as what we may be able to expect from the Trump administration’s policies. Overall, we remain optimistic about Corporate America and are maintaining our preference for stocks over bonds. That said, we are recalibrating the magnitude of our optimism by reducing our equity overweight during our February rebalance. This risk reduction reflects an acknowledgment that markets have moved a bit closer to pricing in our above-consensus earnings forecasts.

Within our stock allocations, we are increasing our exposure to US, relative to international Developed Market (DM) stocks. Specifically, we are emphasizing exposure to large, high-quality US companies with relative earnings strength while fading the recent DM rally as regional forward earnings guidance cools. Our DM earnings signals have softened, and in our view, the European economy remains meaningfully behind in AI infrastructure buildout and will likely continue to face challenging geopolitical issues in 2025. We are also continuing to reduce our already underweight exposure to Chinese equities. Our objective is to mitigate exposure to potential surprises from tariff negotiations as well as aggressive Chinese government stimulus.

To improve defensive portfolio characteristics and diversification, we are adding further to scarce assets with our February rebalance by adding to our gold allocation - funded from fixed income. Gold has delivered strong results since our last addition with our November 2024 rebalance, and we see further upside catalysts from potential global trade disruption and geopolitical conflict. Additionally, within the fixed income sector, we are shortening duration within US treasuries, expecting we will be able to capture similar term premiums and yields but with less volatility by moving away from ultra-long bonds.

Over the past few months, the markets have been on quite a rollercoaster ride, driven by a series of headline-grabbing events. Following the presidential victory of Trump in November, there was a surge in market returns as investors welcomed his pro-business agenda, which included corporate tax cuts and deregulation. However, the initial excitement of the "Trump trade" began to wane, and the Federal Reserve's hawkish stance on future rate cuts led to a market pullback in December. As we moved into January and February, volatility persisted, fueled by a series of market-moving events. We were hit with an AI-related sell-off, as DeepSeek, a Chinese AI lab, released a low-cost Large Language Model that raised concerns over the need for massive AI hardware spending and US AI dominance. More recently, we’ve experienced significant uncertainty over Trump's tariff policy and inflation. We believe these topics will continue to drive volatility moving forward.

As a team, we are very focused on the health of the economy, consumer, and corporate fundamentals as the long-term drivers of markets. The US economy appears strong on many measures. Unemployment has inched up but remains low at 4.1%, with the labor market averaging 186k new jobs per month in 2024. Consumers are showing resilience, and a tight housing market is contributing to historically high home equity values and a related wealth effect. This uptick in headline sensitivity certainly deserves attention, which is one of several items underpinning our decision to trim to our stock position, while still maintaining a strategic overweight to risk assets.

Thank you for your continued trust and allowing us to coordinate your asset management as part of our Family CFO services!

Leasing vs Buying: Which is Right for Your Business?

Tue, 11 Mar 2025 14:30:00 GMT

Which is Right for Your Business?

When it comes to acquiring a vehicle for your business, the decision to lease or buy can be a complex one. Both options have their own set of advantages and disadvantages, and the best choice depends on your specific needs and financial situation. In this blog post, we'll explore the key factors to consider when deciding whether to lease or buy a vehicle for your business.

Advantages of Buying

Buying a vehicle means you own it outright, which can be beneficial for several reasons. First, ownership allows you to build equity in the vehicle over time. This can be particularly advantageous if you plan to keep the vehicle for a long period. Additionally, owning a vehicle may provide certain tax benefits, especially if the vehicle qualifies as a "heavy" vehicle under Section 179 of the tax code. For example, a 2018 Ford F-150 might qualify for this deduction, whereas a smaller vehicle like a Volkswagen Beetle might not.

Advantages of Leasing

Leasing a vehicle can offer greater flexibility and lower upfront costs. When you lease, you typically have lower monthly payments compared to financing a purchase. This can free up cash flow for other business expenses. Additionally, lease payments may be fully deductible as a business expense, whereas only the interest portion of a loan payment is deductible if you finance a purchase. Leasing can also allow you to upgrade to a newer vehicle more frequently, which can be beneficial if you want to take advantage of the latest technology and features.

Considerations for Your Business

When deciding whether to lease or buy, it's important to consider your business's specific needs and financial situation. For example, if you have a high tax bracket, paying cash for a vehicle might be the best option for your balance sheet, as it allows you to avoid both lease and interest costs. On the other hand, if you prefer lower monthly payments and the flexibility to upgrade vehicles more frequently, leasing might be the better choice.

Ultimately, the decision to lease or buy a vehicle for your business depends on a variety of factors, including your financial situation, tax considerations, and how long you plan to keep the vehicle. By carefully weighing the pros and cons of each option, you can make an informed decision that best meets your business's needs. Consulting with a tax professional and/or wealth manager can help ensure you're taking advantage of all available tax benefits.

If you would like to further explore options for your business, our Team of experts is here to guide you through. Together, we can work to identify the right options for your business. Contact us today to schedule a consultation !

This content is developed from sources believed to be providing accurate information. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.

Your Tax Season Checklist

Wed, 19 Feb 2025 22:19:40 GMT

As tax season approaches, it's crucial to get organized and prepared. Whether you're working with a tax professional or handling your taxes on your own, a little planning can go a long way in making the process smoother and avoiding costly mistakes. Here are some essential steps to help you get ready for the 2024 tax filing season:

Step 1: Collect All Necessary Forms

Starting in January, you began receiving the forms needed to complete your tax return. If you're anticipating a significant refund, it's important to ensure you have all the required documents. Once you receive them, review each form for accuracy and contact the issuer if you notice any errors. Even minor mistakes, like a misspelled name, can cause issues with your tax return. Key forms to look out for include:

W-2s from your employer
SSA-1099 for Social Security benefits
1099s for additional income, interest, gains, and losses
1095-A for government marketplace health coverage
1098s for reporting interest and tuition payments
W-2Gs for any gambling winnings
Schedule K-1s for company ownership

Step 2: Organize Your Paperwork

Create a checklist to keep track of all the documents you need. This will help you stay organized and ensure you don't miss any important information that could impact your return. Consider using a folder or binder to keep everything together in one place.

Step 3: Double-Check for Accuracy

Carefully review all your documents for accuracy. Verify your Social Security number, income amounts, and other personal information. If you find any discrepancies, contact the sender immediately to get them corrected.

Step 4: Plan for Deductions and Credits

Make sure you've accounted for all possible deductions and credits. Proper planning can help you get the most out of your tax return and avoid any surprises. Consulting with a tax professional can ensure you're taking advantage of all available tax benefits.

Step 5: File Early

When possible, filing your tax return early can help you avoid the last-minute rush and reduce the risk of identity theft. The IRS typically begins accepting tax returns in late January, so aim to file as soon as you have all your documents in order. Filing early also gives you more time to address any issues that may arise.

By following these steps, you can make the tax filing process smoother and more efficient. If you have any questions or need further assistance, our Team stands ready to assist. We're here to help you navigate this tax season with confidence. Contact us today for a review.

7 Steps to Optimize Your Tax Strategy Before Year-End

Wed, 04 Dec 2024 14:32:30 GMT

As you gear up for a busy holiday season, year-end tax strategies tend to take a back seat, right? We get it, and we’re here to provide a summary of helpful year-end tax tips that are simple to implement!

For successful individuals and families, managing taxes is a nuanced process requiring forward-thinking. By planning in 2024, you can make decisions that will impact the size of the check you may need to write come April 2025. Below, we list a few of the essential strategies you should consider before we ring in the new year:

1. Maximize Charitable Contributions

Giving to causes you care about can provide tax benefits. Consider donating appreciated securities instead of cash to maximize your tax deduction while avoiding capital gains taxes. If you are over age 70.5, think also about gifts from your IRA rather than from after-tax assets. Gifts can be made directly to a Charity, to your own a Donor Advised Fund (DAF) (a charitable account you control) or a Private Family Foundation (PFF) to create a legacy of giving. Charitable planning is an excellent opportunity to engage the next generation in philanthropic efforts, ensuring the causes you care about continue to benefit from your wealth.

2. Evaluate Trust and Estate Planning Opportunities

Year-end is an ideal time to revisit strategy around your estate, especially if you’ve experienced any life changes. Reviewing Trust structures, gifting strategies, and estate tax planning can help reduce taxes (both annually as well as estate tax) to preserve more wealth that can pass to future generations.

Taking advantage of annual gift exclusions or utilizing the current lifetime gift tax exemption to transfer wealth without incurring additional taxes can be an impactful strategy. Trusts, such as Grantor Retained Annuity Trusts (GRATs) or Irrevocable Life Insurance Trusts (ILITs), can be powerful vehicles for asset protection and tax mitigation.

3. Plan for Capital Gains and Losses

Hopefully you’ve experienced gains in your investment portfolio over the last couple of years! If you have, and you would like to keep the risk of your investments in line with your objectives, you have likely taken some profits and now have realized capital gains. Proactive tax-loss harvesting (TLH) strategies and direct indexing can help to manage taxes owed on these gains. When implementing TLH strategies, be mindful of “wash sale” rules, which could disallow a loss if the same or substantially identical asset is purchased within 30 days. Regularly reviewing your portfolio for opportunities to offset gains and losses can be a powerful tool to optimize the risk in your investment allocation without creating material tax implications.

4. Revisit Retirement Plan Contributions and Distributions

For individuals with income that exceeds expenses, retirement account contributions should be a strategic part of your tax management plan. While contributions to certain accounts may reduce taxable income today, required minimum distributions (RMDs) from those accounts will likely increase your tax bill in the future. Understanding cash flows today, as well as in the future are critical. Pretax vs Roth vs Post Tax contributions to 401(k) and 403(b) plans as well as Roth conversions are just 3 options available in many employer plans. For individuals with earned income, don’t forget that regardless of the amount of income you make, you can contribute to an IRA! Assets growing in retirement plans allow for either tax deferred or tax-free growth.

5. Consider Tax-Efficient Investment Strategies

Beyond tax-loss harvesting, explore investment strategies that focus on tax efficiency. Investing in municipal bonds, for example, can provide tax-free income at the federal (and sometimes state) level, which is particularly beneficial to those in higher tax brackets. Treasury Bills, Notes and Bonds provide interest not subject to state tax income. Working with a wealth manager that also focuses on taxes, can provide benefits well beyond an increase in rate of return.

6. Leverage Business Deductions and Deferrals

If you own a business, there are many year-end strategies worth considering to optimize your tax situation. Evaluate whether it makes sense to accelerate expenses into the current year or defer income to the next year, effectively managing cash flow and tax obligations. Your CPA should be talking with you about the efficient use of depreciation and cost segregation and not just using these as a ‘magic bullet’ to wipe out taxes. Remember, there is a tax consequence to “depreciation recapture!” Also consider reviewing your entity structure to ensure it aligns with your overall tax strategy, especially if there are potential benefits from pass-through deductions and/or corporate tax planning.

7. Review Income and Deduction Timing

Strategically timing income and deductions can have a significant impact on your tax liabilities. Depending on your situation, you may want to defer bonuses or other forms of income to the following year or accelerate business deductions by prepaying expenses. This kind of planning requires a detailed understanding of your current and future tax positions, so it’s crucial to consult with your tax advisor and wealth manager for personalized advice.

Planning is an Ongoing Process

There is still time to make strategic moves before year-end! While effective tax planning is a year-round endeavor and proactive tax management can help you keep more of your wealth, it is never too late to start. With thoughtful planning and the right guidance, you can navigate complex tax considerations and optimize your financial outlook for years to come.

Why Successful People Choose Buttonwood

Navigating the combination of investments, estate and advanced tax strategies can be complex and time-consuming. At Buttonwood Financial Group, our Team specializes in creating, managing and adapting as needed, custom tax strategies for successful individuals and families. We do this to help ensure our clients are maximizing opportunities without the stress of handling it alone. Here are just a few reasons our clients selected to work with us:

Expertise

Our Team, in conjunction with a strong network of CPAs are highly skilled in the latest tax laws and regulations. We stay ahead of changes in the tax code and political landscape, allowing us to regularly provide and implement impactful strategies.

Customized Solutions

Every financial situation is unique, so too are the strategies we develop. We take the time to understand your objectives and circumstances, tailoring our approach to ensure each decision supports your broader financial purpose.

Peace of Mind

With Buttonwood Financial Group as part of your team, you will approach year-end tax planning confidently. Using advanced tax and planning software designed to uncover opportunities, we identify, review, and implement strategy in conjunction with your tax and legal team. We generate the ideas, crunch the numbers and complete the paperwork, leaving you more time to spend on your priority items.

Trial Tax Returns

Are you curious if your current tax strategy is leaving money on the table? Contact us today and let us show you the difference proactive planning can make. We would be happy to begin with a complementary “Trial Tax Return Review,” allowing you to see first-hand how we think and what we do.

Investment Policy Committee Update - November 2024

Mon, 18 Nov 2024 15:00:14 GMT

In our September rebalance for nontaxable assets, we adopted a cautiously optimistic stance, decreasing risk slightly due to election uncertainties. Now that we have made it past the election, we are continuing with many of the same themes we have had in place for the last year; leaning back into equities with a 4% overweight position. We believe the continuation of our 2024 trends is supported by positive economic data, including strong real GDP growth and moderating inflation.

While we have had some exposure to gold over the last few years, at this time, we are increasing our holdings, driven by what we believe are two impactful trends. The first is increasing central bank demand around the globe and the second is a shift in global geopolitics – both which we believe will support gold prices in the months to come. We also believe the inclusion of gold should provide a hedge against potential market volatility. Overall, the addition of gold ties into our balance of seeking growth opportunities with risk management.

For equities, we are increasing our exposure to the US market and the momentum factor, due to stronger earnings and positive economic signals. The momentum factor has shown unusually strong earnings surprises compared to other factors, and the current low volatility and economic strength favor this strategy. This position is aimed at capitalizing on the robust earnings environment and a positive outlook for US economy. By focusing on momentum, we expect portfolios to benefit from stocks that are already performing well and are likely to continue their upward trajectory. This approach also aligns with our broader goal of enhancing returns while managing risk.

In the fixed income sector, we are trimming duration and adding to bonds with more upside potential, such as convertible and high yield bonds. These adjustments are designed to lower our duration risk while capturing attractive yields and strong corporate fundamentals. The shift into high yield bonds, despite tight spreads, offers a compelling source of carry in the current market environment. Convertible bonds provide a unique opportunity to participate in equity-like returns with the added security of fixed income. This balanced approach helps us navigate the fixed income landscape while seeking to maximize returns.

Looking ahead, we are optimistic about business and thus the economic outlook, anticipating a wave of renewed business activity and investment following the election. We expect an easing of election-related uncertainties to unleash delayed demand and CAPEX spending supported by strong economic data such as moderating inflation, persistent GDP growth, and low unemployment. This positive backdrop, coupled with an accommodative Fed, provides a favorable environment for equities and risk assets. We expect businesses to ramp up their investments, driving further economic growth and market performance. This optimistic view underpins our strategic decisions and positions us well for the future.

Thank you for your continued trust and allowing us to coordinate your asset management as part of our Family CFO services!

Investment Policy Committee Update - September 2024

Tue, 08 Oct 2024 13:39:57 GMT

After the stock market rally in the first half of the year and amidst the uncertainty of the upcoming election, for assets without tax implications, we are reducing risk by trimming some of the overweight for our active positions. While still in gear, we are lifting our foot from the gas pedal, still preferring stocks over bonds and select areas of risk. Seasonal weakness leading up to the election is the catalyst for us to down-size some of our bets and take gains off the table.

While we believe large cap, growth, and US stocks will continue to outperform, we are reducing our equity overweight to 1% relative to fixed income, down from a prior 4% overweight earlier in the year. We still maintain our exposure to tech and the highest earners in the market but are proceeding with caution. Historically, financial markets regularly see a rise in volatility in October. This increase in volatility is especially pronounced in presidential election years; providing further support for pruning risk in early September.

As part of our March rebalance, we discussed the bullish tailwinds we saw in the market. In June, we doubled down on the momentum. So far, the conviction has paid off, as 2024 has been a positive environment for stocks. We are taking a pause during a historically weak period with elevated risks. Assuming we have a successful election, we expect that markets will move on regardless of which party is in the white house.

Earnings have been relatively strong, yet not extraordinary this season. An unprecedented presidential contest, Fed moves, and recent volatility indicate that from here until November, there lies a path ridden with unknowns that the market will have to digest. We are trimming our US exposure due to these factors, moving closer to the benchmark on international exposure. Within our international exposure, we are also adding to developed market stocks to move closer to benchmark as part of our move to take risk off the table. We also continue to tilt into emerging markets stocks, yet continuing to exclude China.

In early 2024 we stated that we were positioning assets for multiple rate cuts in 2024. Markets have come around to that view, and we are still anticipating more cuts by year end. Historically, when the Fed cuts, there are two types of outcomes for stocks. The first is when there's a recession in the next twelve months, and stocks don't do extremely well. They still tend to have somewhat positive returns, but it’s appropriate that recessions cause underperformance. The second type, if the Fed cuts and there’s no recession, that’s typically fuel for stocks over the next twelve months. Lower borrowing costs and easier monetary policy are unsurprisingly a boon for business.

We find the second scenario to be more descriptive of the current macro environment. The uptick in unemployment and triggering of the Sahm rule make for good headlines, but the current labor softening is primarily driven by expansion of the labor supply rather than job loss. Layoffs are still at historic lows. There would need to be substantially more softening to trigger a recession. Either way, we are cautiously bullish over the next year. 80% of the last 20 Fed cutting cycles have led stocks higher. This gives us reason to hold some of our overweight exposure to stocks and wait for the right entry point for more if we see firms benefiting from a higher liquidity environment.

Shifting from stocks to bonds, we are trimming holdings on either extreme of the curve. Inflation nearing official targets paired with softening in the labor market gives the Fed enough ammunition to embrace a dovish narrative and hint at a stark change in rate path. Our long-duration trade finally paid off as the recent bond rally priced in aggressive Fed cuts in the coming months. We are trimming that position and moving duration towards the belly of the curve.

We continue to provide these ongoing updates on our views and investment positioning through posts like this. If you have any questions about our investment strategy, please let us know and we will make sure to review details at our next meeting. While we don’t recommend fixating on short-term market fluctuations, if you would like to check specific investment performance across all your accounts, our online Orion Portal is available 24/7.

Thank you for your continued trust and allowing us to coordinate asset management as part of our Family CFO services!

Mega Backdoor Roth IRA Strategy

Tue, 20 Aug 2024 15:34:55 GMT

How to remove $150k / year from taxation for life using the Mega Backdoor Roth strategy

You are likely familiar with the Roth IRA and the tax-free growth and withdrawal benefits that come with it. If you have higher income and are unable to contribute to the Roth, you may also be familiar with the backdoor Roth funding strategy. However, for those who want to maximize tax free growth and withdrawal benefits – whether it be for you or your beneficiaries, the Mega Backdoor Roth strategy is an option worth exploring.

The Mega Backdoor Roth strategy allows individuals to contribute to both a Roth IRA and a Roth 401(k), then add a third Roth component to their savings. In this update we share what you need to know about this strategy, and how to work through the details to implement.

Traditional vs. Roth IRA

Contributions you make to your Roth IRA and Roth 401(k) are after-tax dollars, meaning you’ve already paid income tax on these dollars before you contributed them to your account. Assets contributed to a Roth grow tax-free. Because you already paid taxes on the dollars, when funds are withdrawn, you won’t owe additional taxes; even on the earnings. Essentially, by contributing assets to a Roth you are removing assets from income tax for the rest of your life – as well as your beneficiaries!

Alternatively, if you opt for a traditional IRA or 401(k), you are making contributions with pre-tax dollars. As such, the amount contributed is not taxed, which can be a very beneficial strategy when your income is high to reduce your tax bill. Similar to the Roth, assets grow tax-deferred, however, when you make withdrawals from a traditional IRA or 401(k), you will be required to pay taxes on those funds, so they are not tax free.

The IRS sets annual maximum contribution limits for both traditional and Roth accounts. Before contributing, we recommend getting in touch with your CPA or one of our financial advisors to make sure your contribution strategy is optimized.

What is the Backdoor Roth strategy?

You can only contribute to a personal Roth IRA if you have earned income, and that income is not over a specific limit. In 2024, the income limit before you are fully phased out of being able to make a Roth IRA contribution is $161,000 or more as a single filer or $240,000 if you are married filing jointly. 1

If you are making more than these IRS income limits, there is still an opportunity to fund a Roth IRA by taking advantage of the Backdoor Roth strategy. This strategy allows high earners to bypass the income limits and still utilize the tax advantages of a Roth IRA.

Here’s how to implement a tax-free backdoor Roth IRA contribution:

Do one of the following, with the objective being to remove any balance you have from your personal traditional IRA(s):
Convert your traditional IRA(s) to Roth IRA(s). (The amount converted will cause a tax impact!)
Rollover your traditional IRA(s) to an employer 401(k) or similar employer plan.
Once completed, and you no longer have a balance in your traditional personal IRA and all your retirement asset are in employer plans, fund your traditional IRA for the year and report your contribution on form 8606 to let the IRS know you have basis in your traditional IRA.
Request your IRA custodian convert the basis in your traditional IRA to your Roth IRA leaving your traditional IRA with a $0 balance.
Repeat annually.

Of course, these are steps we do for multiple clients each year that can be delegated to your wealth management team .

If you don’t want to pay taxes on a Roth conversion, or you don’t have an employer plan to roll over your personal traditional IRA assets to it’s time to think. We work with these strategies regularly and can explore options that may be available for your unique situation.

What Is the Mega Backdoor Roth Strategy?

The Mega Backdoor Roth strategy adds an additional layer of complexity to receive the Roth tax-free for life benefits up to the IRS Defined Contribution Plan annual limits. [In 2024 this is $69,000 + $7,500 if you are over 50 = $76,500 x 2 for a couple = $153,000 into a 401(k)]. On top of the backdoor Roth contributions. [In 2024 $7,000 + $1,000 if you are over 50 = $8,000 x 2 for a couple = $16,000]. $153k + $16k = $169k

A common misconception we see is those who believe they don’t qualify for this strategy because their current 401(k) doesn’t provide an ‘after tax’ option or they need the cash flow from their employer to cover some of their living expenses.

The Mega Backdoor strategy is generally available to anyone who has the after-tax option in their employer plan, which can include some W2 employees but does include almost everyone who is self-employed. Additionally, for those individuals with a balance sheet, we regularly illustrate cash flow creation that can be developed from multiple sources.

If you’re considering this option, you’ll want to work with an experienced financial advisor or CPA to determine first whether it may be beneficial to you, and if so, the best strategy for you to use as you are implementing.

How Does the Mega Backdoor strategy work?

For W2 employees, the Mega Backdoor Roth will only work if your employer allows for ‘Employee after-tax contributions’ into your 401(k) account. Some traditional 401(k) plans offer this option, but many do not. At Buttonwood we regularly review our clients 401(k) plan documents to determine if this option exists. In addition, for our clients who own businesses, who are self-employed or who have 1099 income, we regularly use 401(k) plans that allow for these types of contributions.

Keep in mind Employee after-tax contributions are separate from regular ‘Employee 401(k) contributions’ (which can be pre-tax (traditional) or post tax (Roth)), and they don’t count toward your Employee 401(k) contribution limit. If pursuing this strategy on your own, you’ll want to confirm with your HR department or plan administrator to determine whether this option is available to you.

Once you know the Employee after-tax contribution options available, you’ll need your 401(k) plan to provide you some flexibility. Ideally you will want the plan to allow you to move the balance of your Employee after-tax account value from the 401(k) plan to the Roth 401(k) portion of your plan, or you will want your plan to allow you to do a tax-free direct rollover of your after-tax money from the 401(k) plan to your personal Roth IRA. In retirement speak, this next leg of the Mega Roth strategy is called an ‘in-service withdrawal’. Either way, the objective is to regularly distribute the balance of your Employee after-tax account out to a Roth account.

If your plan doesn’t permit in-service withdrawals, you may have to wait until you leave your job (in-service) for the opportunity to roll your after-tax money to your Roth IRA account. For most people looking to use a mega backdoor Roth IRA strategy, this reduces the impact of the strategy because the gains in the Employee after-tax account do not grow tax free like they would in the Roth 401(k) or Roth IRA. When they are eventually converted to Roth, the gains are taxable.

Who Does the Mega Backdoor Roth Strategy Work Best For?

Mega backdoor Roth IRA strategies are a bit complex, requiring the right 401(k) plan benefits as well as proactive management to move assets between account types. As such, they aren’t ideal for everyone. This strategy is most beneficial for singles with income over $100k or couples with income over $200k that have after-tax liquid assets they can use while they ‘power save’ their earning to tax-free Roth accounts. If your assets are lower and your income is higher, that can work as well – the key to success is your free cash flow. The more, the better. Traditional W2 employees are dependent upon their employers to offer the right options in their 401(k) plans. For successful business owners and self-employed individuals, this strategy works beautifully.

If this sounds like you, and you are interested in maximizing the amount of assets you can remove from income tax for not only your life, but for your beneficiaries as well, please connect with Macy and she can coordinate a conversation with one of our wealth managers to ensure you are taking advantage of the opportunity that exists in the Mega Backdoor Roth strategy.

If this doesn’t sound like you, you may find utilizing a traditional or Roth IRA and your 401(k) account to save for retirement is the best option.

https://www.irs.gov/newsroom/401k-limit-increases-to-23000-for-2024-ira-limit-rises-to-7000

Keeping Election Year Headlines in Perspective

Fri, 19 Jul 2024 21:27:54 GMT

2024 is set to be one of the most significant years for elections around the world with 50 countries holding major elections. From the Presidential election in the United States, to the European Union Parliament elections, these outcomes will play a pivotal role in shaping the political landscape and global relations in the coming years.

As the 2024 election season heats up in the U.S. it’s natural for us humans to feel a sense of unease. Headlines, based on ‘click for revenue’ business models, scream about policy changes, tax reforms, and political drama, often leaving us afraid of how possible changes will impact their financial lives. But here is something to remember: fixating on sensational headlines can be detrimental to your financial well-being.

Political Shake-Ups

Election years are anything but boring, and so far, 2024 is no different. There have already been political shake-ups in South Africa, India, and Mexico, with things beginning to swing in Europe as well. Some regions and nations are moving toward more conservative parties, as was seen in the European Parliament and Italy, where others are shifting toward more liberal parties, like Turkey and the recent elections in the UK.

While these shifts spark additional headlines, historical evidence shows that markets tend to recover from political events assuming there is a transference of control following an election. Political shake-ups cause uncertainty and thus a possible change in plan. This often leads to short-term volatility while market participants reposition assets to ‘get in front of’ the new winners. The stock market is made up of companies. Over time, the leaders of companies are paid to grow their companies regardless of who the President is or what Congress is, or isn’t, doing. As such, generally markets stabilize following elections and continue to follow the economic cycles over the long run.

Another interesting perspective around elections is one of opportunity. Political events that cause short term implications or political events that occur in one country may have limited impact on global markets. Those with a longer term or global perspective can benefit from these possible opportunities.

The Noise vs The Signal

The Noise: Fear Mongering Headlines

News outlets thrive on sensationalism, and they know fear sells. We often receive emails from folks on both ends of the political spectrum and ironically many of the emails are making the same arguments. During election years, expect a barrage of alarming headlines. Whether it’s a candidate’s radical proposal or a geopolitical crisis, expect today’s media to amplify the noise. Remember, most of the headlines are designed to grab attention, not to provide a nuanced analysis of the situation.

The Signal: A Long-Term Perspective

Our Investment Policy Committee (IPC) will resist knee-jerk reactions and we recommend other longer-term investors do as well. Instead, especially during election years, consider the big picture. Here’s why:

Politicians’ Promises

During campaigns, politicians make grand promises. They vow to overhaul the tax system, regulate / deregulate industries, and reshape the economy. However, once in office, the reality often differs. Compromises, checks and balances, and the slow legislative process often tempers both ambition and ability. So, while a candidate’s proposals might sound radical, actual implementation could be far more moderate.

Historical Context

Look back at past elections. How many campaign promises were fully realized? Not many. The companies that make up the stock market have weathered countless political cycles, and they’ve survived. Companies continue to innovate, adapt, and grow, regardless of who occupies the Oval Office.

Company Fundamentals

Again, remember that the stock market represents companies. These companies are led by CEOs, CFOs, management teams and Boards who focus on running profitable businesses. Their decisions are based on market demand, technological advancements, and competitive landscapes – not just on political rhetoric.

Adaptability

Companies adapt to changing tax policies. If tax rates rise, they explore deductions, credits, and legal strategies to optimize their tax burden. Generally, they don’t simply fold under pressure.

What to do

The word is everywhere, but the strategy remains solid: Diversify your investment portfolio and your income streams. Don’t put all your eggs in one basket. Spread your investments and your income across asset classes, geographies, and industries. It won’t matter until it matters. Diversification assists in mitigating risks associated with not only political uncertainty but economic uncertainty as well.

We thought the graphic above provided a good visual perspective for one asset class; and the relationship between the stock market and elections. For decades, disciplined investors have found consistent rewards in the stock market, regardless of which political party holds power. Attempting to predict market outcomes based on election results or speculative forecasts rarely yields substantial gains; in fact, it often results in costly errors. Hence, there is a compelling argument for investors to adhere to a steady investment strategy – crafting a long-term plan and steadfastly adhering to it.

In an election year, headlines will come and go. Some will be alarming, others hopeful. As a human being, it’s important to shut out the noise. As an investor, it’s important to focus on your specific objectives over the long run. Understand companies make up markets, not politicians. Keep your investment portfolio diversified. Stay informed and proactively adjust your allocation to position your assets for what is going to work – not what has worked in the past. Remember, the noise fades, but the signal – the resilience of the markets – endures. If you would like a professional to assist in this process, contact us today to begin the journey to simplification, even during an election year!

Investment Policy Committee Update - June 2024

Fri, 14 Jun 2024 13:52:23 GMT

As we enter the summer months, our existing bullish stance remains intact. For the most part, the underlying economic facts of our Great Nation haven’t changed since our last rebalance. We are keeping our foot on the gas, leaning into earnings strength and fading the fashionable ‘no rate cut’ narrative. We continue to bias stocks over bonds, US over International, mega-cap over small-cap and growth over value.

As we increase even further, our tilt into growth companies in our June rebalance, we are seeking to amplify exposure to companies who are focused on beating earnings; across both the US and Developed non-US markets. Stocks have continued to blossom in the face of adversity - interest rate volatility, hawkish Fed talk, election uncertainty and an escalating conflict in the Middle East – all of which have been no match for the earnings prowess of the mega cap tech and growth-cohort juggernauts, who continue to defy even the most elevated analyst expectations. Growth stocks are beating their value counterparts by more than 9% so far this year, large-caps are beating small-caps by about 12%. And since our rebalance in March, both portfolio overweight’s have only extended their leads. We expect the impact of the AI renaissance on capex spending and economic productivity to be a long-term structural tailwind for the US economy, further fortifying its position as the economic growth engine of the world.

Shifting to a more forward-looking macro picture, the question du jour for economists and portfolio managers is when, by how much, or even if the Fed will cut interest rates in 2024. It wasn’t that long ago at the start of the year when the market was pricing in expectations for as many as six to seven rate cuts this year. If you recall during our January rebalance, we were expecting a more reasonable base case in line with the Fed’s own projections of 2-3 cuts instead. Fast forward to June and consensus has changed quite a bit, with market expectations (gauged by futures market-implied probabilities as of June 3rd) now suggesting only an 11% probability of 3 rate cuts, a whopping 40% probability of just one cut, and even a 16% probability that the Fed pushes any cuts out past the end of 2024.

Why the dramatic shift in expectations? It has become obvious to us that inflation has risen back to prominence as the top data release for gauging potential Fed policy actions, and it would be fair to say inflation has shown signs of stubbornness over the 1st half of the year. This stubbornness has led to more hawkish Fed talk than previously anticipated which in turn has driven what we believe may be an overreaction with respect to rate cut expectations. The linked dynamic between market expectations for inflation and potential Fed policy response has experienced quite a bit of volatility over the first five months of the year, and just like markets were overly aggressive with their projections at the start of the year, we think this has perhaps swung too far in the other direction today.

Switching to the fixed income side, with our June rebalance, we are making small adjustments to align more closely with how we want portfolios to be positioned in this strong macro environment. With high starting yields, low defaults and interest coverage coming down, there remains some attractive carry within credit. However, the tight spreads mean less compensation for taking on this risk, and therefore we see selectivity as being key and moving more towards quality within credit exposure.

At the start of June, Investment Grade spreads are currently sitting at 86 basis points, and High Yield spreads just over 300 basis points. Therefore, our positioning reflects a strong continued preference for active managers, both in subsectors and within investment grade. While many companies have successfully mitigated the impact of higher rates, strategies that can effectively screen for higher quality and avoid the riskiest borrowers still make sense to us, at least while rates remain in restrictive territory.

Thank you for your continued trust and allowing us to coordinate your asset management as part of our Family CFO services!

The Buttonwood Agreement: Honoring Tradition, Guiding Wealth

Fri, 17 May 2024 13:25:16 GMT

The Buttonwood Agreement

As early as the mid-1700’s, our nation’s financial traders could be found in action on the streets of lower Manhattan. During those years, brokers, merchants, and auctioneers bought and sold to one another in offices, coffee houses, and marketplaces all over town. However, speculative excess combined with the lack of a formal trading structure left the future of our nation’s markets in question.

On May 17, 1792, a group of two dozen traders gathered at their daily meeting place – a Buttonwood tree at 68 Wall Street. Faced with chaotic markets, they made a pivotal decision: to organize their trading. This arrangement, known as “The Buttonwood Agreement,” helped create liquidity and gave birth to The New York Stock Exchange.

Today, Buttonwood Financial Group, founded on the principles of conservative order, brings financial organization to its clientele with a personalized and comprehensive focus. Our commitment to conservative growth portfolios based on asset allocation theory, coupled with specialization in fixed income investments, from estate planning to retirement, to education and business strategies, echoes the lessons taught by our forefathers. We believe in simplifying the financial complexities for families who want to protect and grow their wealth.

Our Approach to Wealth Management

As your Family CFO, Buttonwood proactively manages clients’ wealth. We provide regular reporting and ongoing strategies. Through our forward-looking and backward-looking technology offerings, clients know where everything is, and how it’s all working together, 24/7.

Fiduciary Responsibility

Buttonwood Financial Group, LLC is a fee-only SEC Registered Investment Advisor. We openly accept the legal fiduciary duty of care to put our clients’ needs ahead of our own. Our fee structure is straightforward: a flat retainer fee tied to the complexity of each unique clients’ financial life, in addition to a fee, not to exceed 0.65%, for assets we are managing.

Wealth Management Services

As the CEO of your family, who is your Family CFO? At Buttonwood, we proactively coordinate comprehensive tax, insurance, estate, investment, cash flow, retirement, education, and business strategies to fit into your life, based on your specific goals. Let our Team guide you toward financial success and multigenerational wealth. Contact us today to learn more.

Top Financial Advisor in Kansas City

Tue, 14 May 2024 14:40:20 GMT

At Buttonwood Financial Group, we are excited to announce that we have once again been recognized by Three Best Rated as one of the Top 3 Financial Services providers in Kansas City for 2024. This award reaffirms our commitment to excellence and our dedication to serving our clients with integrity and expertise.

About Us

Since our establishment in 2002, Buttonwood Financial Group has been simplifying the complexities of wealth for individuals and families. Our comprehensive approach focuses on multigenerational financial planning, ensuring our clients receive tailored strategies to meet their unique needs. Here are some key aspects of our services:

Family CFO Services: As your Family CFO, we coordinate and integrate various financial aspects, including taxes, insurance, estate planning, investments, cash flow, retirement, education, business strategies, and more.
Fiduciary Commitment: We operate as fiduciaries, prioritizing your best interests and those of your family.
Beyond Asset Management: Our expertise extends beyond traditional asset management. We address risk management, legacy planning, business strategy, education funding, and anything included in your financial life.
Community Engagement: Beyond financial services, we are passionate about giving back to our community. Our gallery space, Buttonwood Art Space , uniquely supports the arts along with many amazing charitable organizations.

Why Choose Buttonwood as Your Financial Advisor?

Holistic Approach: Our Team collaborates to develop and execute comprehensive strategies that encompass all aspects of financial well-being and success.
Peace of Mind: You can rest assured knowing your financial life is in very capable hands.
Multigenerational Expertise: We understand the unique challenges faced by different generations and tailor solutions accordingly.

Buttonwood Financial Group's consistent recognition by Three Best Rated reflects our unwavering commitment to excellence. As a top financial advisor in Kansas City, we empower our clients to achieve their financial goals and secure their legacies. Whether you're planning for retirement, managing investments, building a business, or seeking expert guidance, Buttonwood Financial Group is your trusted partner on your financial journey. Contact us to explore how our services can benefit you.

Three Best Rated does not accept money from any business/service listed on their website. Companies meticulously are handpicked based on reputation, history, complaints, ratings, proximity, satisfaction, trust, cost, general excellence, reviews, and more.

Maximizing Your Business's Value: Strategies for Entrepreneurs

Mon, 13 May 2024 14:22:05 GMT

As a business owner, you’ve poured your heart and soul into building your enterprise. Now, it’s time to take it to the next level. At Buttonwood Financial Group, we understand that maximizing your business’s value isn’t just about financial metrics; it’s about creating a legacy. In this blog post, we’ll explore actionable strategies that empower entrepreneurs like you to unlock hidden potential, align business strategy with personal wealth management, and position your business for long-term success.

1. Define Your North Star: Your Unique Value Proposition

Before diving into strategies, let’s start with the basics. What makes your business special? What pain points do you address for your customers? Your value proposition is your guiding star. Define it clearly, and let it drive every decision you make.

Example: Imagine you run a boutique coffee shop. Your unique value proposition might be offering ethically sourced, organic coffee blends in a cozy atmosphere. This sets you apart from larger chains and resonates with environmentally conscious consumers. Perhaps you also feature artwork by local artists in your shop. This illustrates your dedication to giving back to your community and makes your business stand out.

2. Craft a Strategic Blueprint

Business strategy isn’t a luxury; it’s a necessity. Here are a few steps to get your strategic blueprint started:

Market Positioning

Understand where you fit in the market. What’s your niche? Who are your competitors? Consider conducting a SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis to gain clarity.

Growth Channels

Identify the most effective channels to reach your target audience. Is it digital marketing, partnerships, or good old-fashioned networking? Your growth channels should align with your overall strategy.

Risk Management

Anticipate risks and have contingency plans in place. Whether it’s economic downturns, supply chain disruptions, or regulatory changes, being prepared ensures resilience.

3. Scalability: The Key to Sustainable Growth

Scalability ensures that your business can handle growth without breaking. Consider:

Processes and Systems

Streamline operations. Automate repetitive tasks. Invest in robust systems that can handle increased demand. These might include enterprise resource planning (ERPs) systems such as financial management, supply chain management, human resources, and customer relationship management (CRM) software.

CRM systems focus on managing customer interactions and relationships. They streamline sales, marketing, and customer service processes. Features typically include lead management, contact tracking, sales forecasting, and personalized communication.

Workflow automation tools are another option to streamline business operations. These tools allow you to design, automate, and optimize your internal processes. They can reduce manual intervention and enhance efficiency.

Human Capital

Invest in your team. Nurture talent and create a culture of innovation. As your business grows, your team’s skills and adaptability become critical.

Implement upskilling for your team. By investing in training programs that enhance existing skills, you can improve productivity and boost employee loyalty.

By clearly defining career paths within your organization, you show employees how they can progress and take on new responsibilities. Additionally, recognition and appreciation are useful strategies in maintaining high employee retention and growth. Acknowledge efforts and achievements and regularly express gratitude for their contributions. Doing so boosts morale and reinforces and positive work environment.

Technology

Leverage technology to scale efficiently. Whether it’s inventory management software or customer relationship management (CRM) tools, choose wisely. More robust tools often have higher costs, but can increase profitability in the long run when properly optimized.

4. Intellectual Property (IP) Protection

Your IP is a valuable asset. Protect it through patents, trademarks, and copyrights. Buttonwood Financial Group can guide you through this process.

Example: If you’ve developed a unique software solution for inventory management, securing the IP ensures that competitors can’t replicate it.

5. Wealth Management: Beyond the Balance Sheet

Business success and personal wealth are intertwined. Here’s how to align them:

Financial Planning

Business ventures involve risks – market fluctuations, economic downturns, and industry changes. Diversifying personal investments (beyond the business) can provide a safety net. If the business faces challenges, personal wealth can remain intact.

Business decisions impact personal taxes. Aligning business strategy with personal tax planning ensures efficient use of resources. Minimize tax liabilities while maximizing wealth accumulation.

Your business’s financial health impacts your personal wealth. We’ll help you strike the right balance. Consider tax-efficient strategies, retirement planning, and diversification.

Succession Planning

Whether selling the business, transitioning to a leadership role, or retiring, entrepreneurs need a succession plan. Ensure a smooth transition when you’re ready to step back. Buttonwood Financial Group can assist with succession planning, ensuring continuity.

6. Customer-Centric Approach

Loyal customers drive business value. Nurture relationships, seek feedback, and adapt based on their needs. Remember, customer lifetime value matters.

7. Look Ahead: Anticipate Trends

Don’t be reactive; be proactive. Stay informed about industry trends, technological shifts, and changing customer preferences. Adapt your strategy accordingly. We’ll actively monitor industry shifts, adapt strategies, and work to keep you ahead of the curve.

Let’s Talk Strategy

At Buttonwood Financial Group, we’re more than advisors; we’re partners in your success story. Ready to take action? Schedule a no-cost conversation with our Team. Let’s discuss how our expertise can elevate your business. Contact us today for a conversation.

Remember, your business’s value isn’t just about numbers—it’s about impact. Let’s maximize it together!

What to Know About the Tax Cuts and Jobs Act

Wed, 01 May 2024 16:54:40 GMT

The Tax Cuts and Jobs Act (TCJA) was an amendment to the Internal Revenue Code that was rolled out in 2018. It had implications for both businesses and individuals. However, most TCJA provisions are set to be sunsetted at the end of 2025. What does this mean for filers?

Let’s look at the TCJA, how it impacts individuals and businesses, and what to expect when some provisions are sunsetted.

What was the Tax Cuts and Jobs Act?

The TCJA was an amendment that “changed deductions, depreciation, expensing, tax credits and other tax items that affect businesses.” 1 They also add that some provisions affecting individual taxpayers can also affect business taxes.

Major elements of the change included reductions in tax rates for businesses and individuals, increases in the standard deduction and family tax credits, and efforts to limit deductions for state and local income taxes and property taxes. 2 The TCJA was the largest tax code overhaul in three decades. 2

How the TCJA Impacted Filers

The TCJA impacted both personal and business taxes. Let’s look at a few of the most notable changes.

Personal Taxes

Lower Tax Rates–The TCJA reduced tax rates for most individuals and families. 3 It maintained seven tax brackets but generally lowered the rates within those brackets.
Increased Standard Deduction—The standard deduction was nearly doubled for all filing statuses. This change meant fewer taxpayers needed to itemize deductions, simplifying the tax filing process for many. 4
Changes to Itemized Deductions—While the standard deduction increased, several itemized deductions were either reduced or eliminated. This includes a cap on the state and local tax (SALT) deduction and limitations on the mortgage interest deduction. 5
Child Tax Credit—The TCJA increased the Child Tax Credit from $1,000 to $2,000 per qualifying child. 6

Business Taxes

Corporate Tax Rate Reduction—One of the most notable changes was a reduction in the corporate tax rate from a maximum of 35% to a flat rate of 21%. 7
Pass-Through Business Deduction—The TCJA introduced a new deduction for certain pass-through businesses, such as partnerships, S corporations, and sole proprietorships. This deduction allows eligible taxpayers to deduct up to 20% of their qualified business income, subject to certain limitations and thresholds. 8

Because this was such a substantial change, we haven’t listed all of the updates here, but they can be found on the IRS website.

What to Expect When the TCJA is Sunsetted in 2025

Now that we understand some of the changes the TCJA included let’s look at what may change if the bill is sunsetted in 2025, as projected.

The SALT deduction would no longer be capped at $10,000 annually but would be subject to phaseouts at higher income levels. 9
The deduction allowed for mortgage interest would increase from $750k of debt to $1M plus $100k in home equity debt.
Miscellaneous deductions could return.
The standard deduction would be cut in half to the level it was before the TCJA. 10
The AMT would apply again to many more taxpayers. 9
The unified lifetime exclusion for estates and gifts would be reduced roughly in half. 11
The TCJA expiration would result in passthrough business income being taxed according to ordinary individual income tax rates without a deduction for qualified business income. 12

Overall, the TCJA’s changes to business taxes aimed to promote economic growth, incentivize investment and make the United States more competitive in the global marketplace. The impact varied depending on the business’s size, structure, and industry. Now, the rollback of these changes will impact many taxpayers. How they will affect you depends on your personal financial situation. We stand ready to assist, and welcome a conversation to plan for these upcoming changes. Contact us today for a complimentary conversation.

Achieving Financial Stability

Wed, 24 Apr 2024 18:20:52 GMT

5 Key Indicators You’re on the Right Track

As a multigenerational Family CFO, we understand financial stability isn’t solely reserved for the ultra-wealthy generation. It encompasses more than just the size of your bank account; it’s about effectively managing your resources to secure your present and future financial well-being.

Here are five indicators that suggest you’re on solid financial ground:

1. Paying Your Bills on Time: Consistently meeting your financial obligations punctually is a hallmark of financial stability. While financial stability related to timely payments of bills may seem obvious, it truly is something to celebrate. Timely payments demonstrate your ability to manage cash flow effectively, preventing unnecessary fees and safeguarding your credit score.

2. Maintaining a Diversified Portfolio: A diversified investment portfolio tailored to your financial goals and risk tolerance is essential for long-term financial stability. By spreading investments across various asset classes such as stocks, bonds, real estate, and alternative investments, you can mitigate risk and enhance the potential for steady returns, regardless of market fluctuations.

3. Establishing Clear Financial Goals: Having well-defined financial objectives underscores your commitment to financial health. Whether it’s saving for investment properties or planning for retirement, defining and actively pursuing these goals reflects strategic financial planning and helps to ensure a path to sustained financial stability.

4. Having a “Real” Estate Plan: A well-structured estate plan is crucial for preserving wealth and ensuring its efficient transfer to future generations. This includes establishing trusts, creating a will, minimizing estate taxes, and designating beneficiaries appropriately. An estate plan designed by professionals provides peace of mind and safeguards your legacy, reinforcing your financial stability over time.

5. Engaging with Financial Professionals: Collaborating with experienced financial advisors who specialize in comprehensive wealth management is a key indicator of financial stability. Professionals offer personalized guidance, strategic wealth management solutions, and proactive risk management strategies tailored to your unique financial circumstances and objectives. By leveraging their expertise, you can optimize investment opportunities, navigate complex financial decisions, and ensure the long-term growth and preservation of your wealth.

Achieving financial stability is worth celebrating, but it’s always advised to remain proactive with your financial health. Our Team stands ready to assist, and we welcome a conversation to explore how our services can benefit you.

Missouri Residential Property Tax Freeze

Tue, 09 Apr 2024 13:57:11 GMT

Missouri counties, including Jackson, Platte, and Clay, have launched a Senior Property Tax Credit Program as a response to the passing of Missouri Senate Bill 190 (SB190) in 2023. This initiative aims to provide significant tax relief to senior citizens within the county, targeting those who are eligible for Social Security retirement benefits. The program's design essentially freezes property taxes on the primary residences of eligible seniors, offering them a more stable and predictable financial future.

Eligibility

To be eligible for the Senior Property Tax Credit Program, applicants must live in the program’s county and be of Social Security retirement age. It's important to note that eligibility does not require the applicant to be currently receiving Social Security benefits, only that they are of the age to do so. The primary focus of this program is to assist seniors in managing their financial obligations more efficiently, particularly in relation to their housing costs. Applicants must be the property owner or have a legal or equitable interest in the home. They must also be liable for the payment of real property taxes on the home.

Another important requirement to note is the market value of the property must be less than $550,000.

Application Process

Interested seniors must apply to take advantage of this tax credit. For Jackson County residents, the initial application deadline for the year is December 31, 2024, providing ample time for eligible seniors to submit their applications. This deadline is crucial for those looking to benefit from the program for the current tax year. Platte County residents can apply between September 1, 2024 and May 15, 2025. Clay County has not yet released application dates.

How and Where to Apply

For those living in Jackson County: Interested applicants may click here to begin the application process online. The paper application can be found by clicking here , or in person at a Collection Department location (Jackson County Courthouse: 415 E 12 ^th St, Suite #100, Kansas City, MO 64106 OR Historic Truman Courthouse: 112 W. Lexington Ave, Suite #114, Independence, MO 64050).

Upon completion of the paper form, the application and supporting documents may be emailed to SeniorApplication@jacksongov.org . Applicants may submit by mail, submit in person, or place in exterior drop boxes at either location above, unless the application was completed online. Applicants will be notified of approval by email or by mail.

For more detailed information on the program in Jackson County, including any required documentation and the complete application process, interested individuals should refer to Jackson County's official website or contact their tax collection department directly. The county's dedication to aiding its senior residents is evident through this program, providing a valuable resource to help manage the financial implications of property taxes.

For those living in Platte County: Applications will open on September 1, 2024, and remain open until May 15, 2025. If accepted, eligible seniors will see their property taxes frozen at the 2024 amount.

Printable applications will be made available on the County’s website in September at www.co.platte.mo.us with hard copies also available at the County Clerk’s office. Questions may be emailed to SeniorTaxCredit@co.platte.mo.us . Citizens may also call the Clerk’s Office at 816-827-4075.

For those living in Clay County: Clay County’s ordinance will take effect January 1, 2025. The County intends to make forms available both online and in-person, with details about how to obtain your form becoming available in the months ahead. Clay County residents are encouraged to frequently visit www.claycountymo.gov for updates.

At Buttonwood, we proactively share updates impacting our clients. If you would like to explore how our comprehensive Family CFO services may benefit you, contact us today .

Do You Have to File Taxes For Someone Who Has Passed Away?

Thu, 04 Apr 2024 17:28:02 GMT

Losing a loved one is an emotionally challenging experience, and the aftermath often includes lots of paperwork, including the daunting task of handling your loved one’s financial affairs. One of these tasks is filing taxes on behalf of the deceased.

If you’re wondering, “Do I have to file taxes for a loved one who has passed away?” the answer is “Yes.” Here, we’ll explore the intricacies of filing taxes for a deceased loved one and shed light on the key steps and considerations involved in navigating this complex process.

Understanding the Timeline

The first step in handling taxes for a deceased individual is to be aware of the timeline. The Internal Revenue Service (IRS) imposes specific deadlines for filing taxes, and this applies even in the event of a person’s passing. Typically, the tax return for the deceased is due on the same date that it would have been if they were still alive.

Filing the Final Tax Return

Filing the final tax return for a deceased individual involves gathering their financial information for the last year of their life. This includes income, expenses, and any deductions they may be eligible for. 1 You will also need to provide the date of death.

If the deceased had not filed individual income tax returns for the years prior to the year of their death, you may have to file returns for those years as well. It’s your responsibility to pay any balance due and to submit a claim if there’s a refund.

If you need extra time to gather everything you need to file your loved one’s tax return, you can request an extension.

Responsibilities of the Executor

If there is an appointed executor for the deceased’s estate, this individual takes on the responsibility of managing all financial affairs, including tax matters. The executor is responsible for filing the final tax return and ensuring that all financial transactions are accurately reported. 2

As an estate administrator, executor, or personal representative of a deceased person, you may need to request information from the IRS. According to the IRS, you can request the deceased person’s: 3

Tax return
Tax transcript
Payoff information
Change of address

Estate Tax Considerations

In some cases, an estate tax return may be required, especially if the deceased individual had a substantial estate. Estate taxes are separate from the final income tax return and have their own set of rules and regulations.

An estate tax return, Form 706, must be filed if the gross estate of the decedent is valued at more than $12.92 million for 2023 or $13.61 million in 2024. 4

Given the intricacies of tax laws and the potential complexities involved in filing taxes for a deceased loved one, it may be beneficial to seek professional advice. Certified public accountants (CPAs) and tax professionals can guide you through the process, ensuring compliance with tax regulations and minimizing the risk of errors.

Filing taxes for a loved one who has passed away is undoubtedly a challenging task. Understand what you need to do and seek professional advice, if needed, to successfully navigate this process.

How Much Money Do You Need to Retire?

Wed, 20 Mar 2024 15:31:04 GMT

"Will I outlive my retirement money?" This is one of the top fears for people who are starting to prepare for their retirement years.

Determining how much money you need in retirement is a process. It shouldn't be a number that you pull out of thin air.

The process should include looking at your current financial situation and developing an approach based on your goals, time horizon, and risk tolerance. The process should take into consideration all your potential sources of retirement income, and also may project what your income would look like each year in retirement.

We all have our "blue sky" visions of the way retirement should be, yet our futures may unfold in ways we do not predict. So, as you think about your "second act," you may want to consider some life and financial factors that can suddenly arise.

You may see retirement as an extension of the present rather than the future.

This is only natural, as we all live in the present, but the future will arrive. The costs you have to shoulder later in retirement may exceed those at the start of retirement. As you may be retired for 20 or 30 years, it is wise to take a long-term view of things.

You may have a health insurance gap.

If you retire before age 65, what do you do about health coverage? You may incur 100% of the cost. Suppose you become disabled or seriously ill, and working is out of the question. How will you make ends meet? Advanced planning with a Team of financial professionals can ease these concerns.

Age may catch up to you sooner rather than later.

You may stay fit, active, and mentally sharp for decades to come, but if you become mentally or physically infirm, you need to find people you can trust to manage your finances. Securing your trusted Team of financial professionals far before you plan to retire is a wise decision.

You could be alone one day.

As anyone who has ever lived alone realizes, a single person does not simply live on 50% of a couple's income. Keeping up a house or even a condo can be difficult when you are elderly. Driving can also be a concern. If your spouse or partner is absent, will someone be available to help you in the future?

These are some of the blind spots that can surprise us in retirement.

They may quickly affect our money and quality of life. If you age with an awareness of them, you will be able to manage the outcome better.

Your workplace retirement account can play a critical role in your overall retirement strategy. However, some people have gone further with such accounts than others, especially recently.

Much has been written about the classic financial mistakes that plague start-ups, family businesses, corporations, and charities. Aside from these blunders, some classic financial missteps plague retirees.

Calling them "mistakes" may be a bit harsh, as not all of them represent errors in judgment. However, whether they result from ignorance or fate, we need to be aware of them as we prepare for and enter retirement.

Timing Social Security.

As Social Security benefits rise about 8% for every year you delay receiving them, waiting a few years to apply for benefits can position you for higher retirement income. Filing for your monthly benefits before you reach Social Security's Full Retirement Age (FRA) can mean comparatively smaller monthly payments.

Managing medical bills.

Medicare will not pay for everything. Unless there's a change in how the program works, you may have a number of out-of-pocket costs, including dental and vision care.

Underestimating longevity.

Actuaries at the Social Security Administration project that around a third of today's 65-year-olds will live to age 90, with about one in seven living 95 years or longer. The prospect of a 20- or 30-year retirement is not unreasonable, yet there is still a lingering cultural assumption that our retirements might duplicate the relatively brief ones of our parents.

Withdrawing strategies.

You may have heard of the "4% rule," a guideline stating that you should take out only about 4% of your retirement savings annually. Some retirees try to abide by it, but others withdraw 7% or 8% per year. Why is this? In the first phase of retirement, people tend to live it up. More free time naturally promotes new ventures and adventures and an inclination to live a bit more lavishly.

Talking About Taxes.

It can be a good idea to have both taxable and tax-advantaged accounts in retirement. Assuming your retirement will be long, you may want to assign this or that investment to its "preferred domain," which means the taxable or tax-advantaged account that is most appropriate for it as you pursue a better after-tax return for your entire portfolio.

Retiring with debts.

Some find it harder to preserve (or accumulate) wealth when you are handing portions of it to creditors.

Retiring with no investment strategy.

Expect that retirement will have a few surprises; the absence of a strategy can leave you without guidance when those surprises happen.

Each of these are considerations you want to make as you determine how much money you need to retire. To help you prepare and plan, take some time to review and refine your retirement strategy with our Team at Buttonwood. Contact us today for an informal conversation.

Your 2024 Tax Filing Season To-Do List

Tue, 12 Mar 2024 14:24:38 GMT

Tax season is officially here. If you haven’t already done so, now is the time to get prepared. Whether you meet with a tax professional or prepare your taxes yourself, proper planning helps the processes go more smoothly and may reduce the risk of costly errors. Check out the tips below and prepare to tackle this tax season with confidence.

To-Do #1: Gather All of Your Forms

Beginning in January, you likely started to receive many of the forms you need to properly complete your tax return. If you are expecting a refund or you expect to owe taxes, you will want to make a list so you don’t forget anything that could affect the final outcome. Once you receive your documents, first give them a scan to make sure they are correct and contact the sender if there are any discrepancies. Remember, even a simple misspelling can cause a flag on your tax return. Inspect all of your documents carefully.

Some of the forms you will need to look out for may include the following:

W-2s from your employer
SSA-1099 for Social Security benefits
1099s for additional income, interest, gains and losses
1095-A for government marketplace health coverage
1098s for reporting interest and tuition payments
W-2Gs for any gambling winnings
Schedule K-1s for company ownership

To-Do #2: Round Up Your Receipts

If you own your business or plan to itemize your deductions, you will need to record expenses so you can take advantage of any available write-offs. Gather all receipts for business expenses, medical expenses, and other expenses that can be listed on your Schedule A or Schedule C. Receipts can be physical receipts or bank and credit card statements that show payments for these items. Once you’ve gathered them, organize them by type so that they are easy to find when you begin filing.

To-Do #3: Acquire Records of All Charitable Contributions

Throughout the year, you may have made donations to tax-exempt organizations. These donations can provide you with charitable contribution write-offs, which typically require itemized deductions and documentation. Most organizations, from churches to fundraisers, can provide a record of your tax-deductible contributions.

To-Do #4: Create a List of All Personal Information

While you likely know your Social Security number by heart, you will want to jot down the Social Security numbers of any dependents you wish to claim. This way, they are easy to access, and you can be sure they’re accurate. Also, make a list of addresses for any properties you own, as well as the dates on which they were bought or sold.

To-Do #5: Get a Copy of Last Year’s Tax Return

If you are using the same preparer as the previous year, they should have a copy of your tax return. If not, find your old copy and have it ready with your other tax items. Being able to reference your previous return can help you see what you filed last year, so you don’t overlook something this year.

To-Do #6: Determine How You Will Spend Your Refund, or Prepare to Pay Taxes Due

If you expect to get a refund this year, you might want to take some time to consider what you plan to do with your return once you receive it. You have the option to apply your payment toward your tax bill next year if you believe you will owe. This can be a good idea for those who pay estimated taxes throughout the year, as it can often put a chunk toward your first installment.

Alternatively, you can choose to send the money directly to a checking or savings account or contribute it to an IRA, health savings account, or education account. If you plan to split the funds between accounts, you will need to complete Form 8888.

If your withholdings and/or estimates weren't properly set up, you may find yourself with a tax bill. At Buttonwood, we offer the opportunity to run a tax report before year-end to provide an estimate on what our clients might owe, along with opportunities to minimize tax liability. If you aren't sure what your tax bill might look like, let us know and we can run a report for you to assess and strategize.

Don’t let tax preparation leave you feeling overwhelmed. Enjoy less stress and a smoother process by preparing everything you need for filing this tax season.

The Benefits of Working with a Wealth Manager

Thu, 29 Feb 2024 14:41:41 GMT

Unlocking Financial Potential: The Distinction and Advantages of Wealth Management

In financial management, two distinct roles often emerge: the asset manager and the wealth manager. While their titles may seem interchangeable, their approaches to financial stewardship and the depth of services they provide set them apart significantly. In this blog, we delve into the differences between these roles and uncover the profound advantages wealth management offers over traditional asset management.

Asset Manager vs. Wealth Manager

At first glance, both asset managers and wealth managers share a common goal: maximizing returns on investments. However, their methodologies diverge significantly beyond this common objective. Asset managers tend to focus primarily on investments. Wealth managers offer a broader, more comprehensive range of services. Wealth managers address their clients’ overall financial well-being as it relates to protection of assets, tax, business, estate, and various aspects of their financial lives beyond traditional stock and bond investment portfolios.

Asset Manager: Managing a Portfolio

An asset manager's primary focus lies within the confines of investment management. Tasked with selecting and overseeing investments within a specified portfolio, their expertise centers on optimizing returns through strategic asset allocation, diversification, and market analysis. Asset managers focus on navigating the intricacies of the financial markets, identifying opportunities, and managing risks to deliver favorable investment outcomes for their clients.

Wealth Manager: Orchestrating Comprehensive Financial Wellness

In contrast, a wealth manager operates on a broader canvas, incorporating all of the above expertise of the asset manager and extending the spectrum of financial considerations. While investment management remains a vital component of their service offering, wealth managers adopt a holistic approach to financial planning, integrating various facets of a client's financial landscape into a cohesive strategy.

Why Choose Wealth Management?

Holistic Financial Planning: Unlike asset managers, wealth managers take a panoramic view of their clients' financial lives. They delve into every facet, from investment portfolios and retirement plans to tax strategies, estate planning, insurance needs, business strategy, and philanthropic endeavors. By addressing these interwoven aspects of financial well-being, wealth managers implement comprehensive plans that impact clients' overarching objectives.
Tailored Solutions, Personalized Guidance: Wealth managers recognize that each client is unique, with distinct financial objectives and life circumstances. As such, they offer solutions and personalized guidance tailored to meet the individual needs and preferences of their clients. This approach ensures that strategies resonate with clients on a personal level, fostering trust and confidence in the advisor-client relationship.
Integrated Services and Seamless Coordination: Central to the wealth management strategy is the seamless integration of financial services. Wealth managers serve as the orchestrators of a collaborative team comprised of financial planners, investment analysts, tax specialists, and legal experts. This interdisciplinary approach ensures that all facets of a client's financial affairs are meticulously coordinated and optimized for efficiency and effectiveness.
Long-Term Relationship and Ongoing Support: Beyond transactional interactions, wealth management often cultivates multigenerational relationships built on trust, integrity, and mutual understanding. Wealth managers stand as steadfast partners, providing continuous support, guidance, and monitoring as clients navigate life's financial complexities. This commitment to long-term collaboration ensures that financial plans evolve in tandem with clients' changing circumstances and aspirations.

In summary, while asset management focuses primarily on managing investments, wealth management transcends traditional boundaries to deliver holistic financial wellness. By embracing a multifaceted approach and prioritizing personalized guidance, integrated services, and enduring relationships, wealth managers empower clients to unlock their full financial potential and embark on a journey toward lasting prosperity and peace of mind. If you aspire to achieve comprehensive financial wellness and unlock the full spectrum of possibilities, wealth management may serve as the catalyst for realizing your financial aspirations. Explore how Buttonwood’s comprehensive Family CFO services can specifically benefit you and your family with an informal conversation today.

Investment Policy Committee Update - February 2024

Tue, 27 Feb 2024 15:00:43 GMT

Our call to “buy the dip” in mid-October, amid the heat of a tumultuous three-month pullback, has aged well. But after the Fed’s surprise dovish pivot and corresponding, Bullcember to Remember, almost-everything-rally, some consolidation is likely warranted as investors reassess valuations and the state of the economy.

This could lead to some market volatility, and to combat that, we’re reducing our active tilts and repositioning to take advantage of possible greater dispersion and potentially more frequent rotations in market leadership. Fundamentally, we remain confident in the strength of the U.S. consumer and the durability of softening inflation. This should provide the Fed with the backdrop to make a soft-landing in 2024. Rate cuts and an early unwind of Quantitative Tightening, along with potential election-year stimulus, could further spur the economy. While we may have reservations in the short-term, we still want to remain leaning toward the side of a risk-on stance.

Given the underappreciated but persistent strength of the U.S. economy, we believe it is possible we could see investor enthusiasm for domestic value factor stocks reemerge. Recent improvements in these companies’ profitability and margins have them showing the best fundamental momentum now. In general, our belief is looser liquidity and higher earnings lead to higher prices for value stocks.

With our February rebalance, we’re also incorporating an actively managed factor rotation strategy to harness the daily trading, transparency, and tax efficiency of the ETF structure, in conjunction with the benefits of single security selection. Following a year of high concentration and narrow stock return breadth, we believe factor makeup and timing within equities may be a key ingredient to driving outperformance in 2024.

However, we don't believe the economy is immune to challenges. Any reversal in inflation trends or deepening of geopolitical conflicts remain risks to our cautiously bullish thesis. The labor market remains tight, but some softening has become visible, with continuing jobless claims reaching two-year highs. This may incentivize the Fed to follow-through with rate cuts but could also arguably be an early indicator of further weakness ahead. We continue to position the bond side of the portfolio as a ballast for protecting against this sort of potential volatility, with the treasury barbell in place and a freshly embedded active fixed income strategy aimed at generating attractive yields and capable of swiftly adjusting to changing market conditions.

We will continue to provide ongoing updates on our views and investment positioning through posts like this and as we meet. If you have questions about investment strategy, please let us know and we will make sure to review details at our next meeting. And while we don’t recommend fixating on short-term market fluctuations, if you would like to check specific investment performance across all your accounts, the Orion Portal is available 24/7. Thank you for your continued trust and allowing us to coordinate your asset management as part of our Family CFO services!

Financial Tips for Snowbirds

Fri, 16 Feb 2024 17:32:37 GMT

The number of snowbirds migrating to enjoy warmer temperatures for the winter continues to grow. The most popular destinations for snowbirds are Texas, Florida, Arizona, and California. Whether you purchase a second home or decide to rent one for the season, a little planning makes the snowbird lifestyle more enjoyable and affordable. 1

Planning your finances and investments can help you to live the lifestyle you choose. Achieving your lifestyle involves implementing the right strategies for your financial situation. Working with a financial advisor helps you make the right move at the right time.

Take a look at your current plan. Did you include the possibility of economic shifts that could affect your snowbird future? More critical, are recovery solutions or alternatives included in the plan? If not, you should consider revising the plan. If you haven’t started planning, it’s time.

Planning a Snowbird Budget

No matter where you choose to spend the winter, the cost of living may have a few hidden surprises. If you have a particular lifestyle in mind, talking with a financial advisor can help you reach your goal. You can’t predict everything, but you can plan for the expected and have a good time in the sun. Start with doing some research on the area and the financial needs for a winter residency.

Your financial advisor can develop budget projections for maintaining both your primary residence and your winter retreat. Long-term financial strategies should include any anticipated economic changes each year.

To Purchase or Rent?

Here’s where meeting with your financial, legal, and tax advisors is essential. They can provide you with information about purchasing a second winter home or committing to a short-term rental. Remember, the reason you planned this move was to get away and enjoy a different lifestyle.

Consider the following pros and cons for each:

Purchasing a snowbird home may come with tax thresholds, estate issues, and passive income if you rent the house after your winter departure.
Renting may be cheaper and more comfortable than maintaining a home.

Before you purchase your winter residence, spend some time in the chosen location and see if it meets your requirements. In some areas, snowbirds add a surge to the local economy, making it possible to get a part-time job as part of the community. The earned income helps pay for living expenses. There may be financial precautions for these earnings. Your income may be subject to the state’s tax regulations if you are a part-time resident.

Secondary Home Expenses

For some, this second home will be the final move when it’s time to downsize. If you’ve planned this decision and your retirement funds are sufficient to cover the day-to-day costs until that time, you should have little to worry about.

As a homeowner, you already know the potential costs of owning residential property. Secondary homes come with a few more expenses and decisions. This investment can generate rental income, tenant expenses, and tax deductions, all helping to offset some of the taxes.

As an absent landlord, you will likely need to engage a property management service unless you’re ready to dedicate your own time to remotely managing the rental property. Either way, rental properties reveal hidden costs of maintaining the home. Are you financially and emotionally ready to handle these added expenses?

Property taxes
Property and tenant insurance
Management fees
Maintenance services

The purpose of planning for retirement is to maintain the lifestyle you want. There are rewards and risks to buying a snowbird home. Talking with your financial advisor helps you weigh the benefits of owning or renting a winter home. One thing is certain—it’s never too late to make changes for your desired lifestyle. Contact us today to get started.

https://www.pacaso.com/blog/snowbird-destinations

Getting Remarried Soon? Consider These Financial Tasks

Tue, 13 Feb 2024 16:56:28 GMT

Embarking on a new journey, like marriage, is exciting. And for those who are entering into their second or third marriage, this can be a time for fresh starts and new possibilities. As the nuptials draw nearer, there are some important financial tasks to tend to first. Approaching your new marriage with honesty, transparency and trust can help build the foundation for a financially sound future together. If you haven’t already, consider adding these six tasks to your “to-do” list before the big day.

Task #1: Ask the Tough Questions

Getting married later in life means having a much more complex financial picture than you did in your 20s or 30s. Before tying the knot, you’ll want to sit down with your partner and ask some tough questions that can help paint a better picture of your combined financial standings.

Some important questions to ask include:

How much debt do you have?
What is your credit history?
What are your assets?
Do you have any obligations from your previous divorce, such as spousal support or child support payments?

If you find it hard to discuss the topic of finance with your partner, remember to approach these questions gently. You’re not accusing them of poor money management, nor are you looking to shame them for debt they’ve accrued. Remind them that you’re in this together, and you want to be mindful of their financial standings as you build this new partnership moving forward.

Task #2: Consider a Prenuptial Agreement

Some people may consider signing a prenuptial agreement, especially when getting remarried. This can be especially true if they’ve gone through a messy divorce in the past, or if they’ve accumulated a significant amount of assets in their lifetime. A prenuptial agreement can protect both parties in the event of a separation, as the terms of divorce are clearly outlined and agreed upon ahead of the marriage.

It can be tough to talk to your partner about “what if” scenarios ahead of the wedding, but a bit of planning now can help prevent headache and heartache later down the road.

Task #3: Reevaluating Your Estate Plan

If you or your spouse have children from a previous marriage, then it’s crucial that you figure out estate planning in the event that you or your spouse passes away. However you want to distribute your funds between children is up to you and your significant other. Take some time ahead of the wedding to discuss your options. Once you’re married, you’ll want to have a clear picture of how your combined estate will be divided among your children and stepchildren.

A financial advisor can help you develop an estate plan that reflects these new changes to your family. Additionally, he or she can work with your children and stepchildren to understand your decision and become good stewards of your wealth.

Task #4: Combining Your Finances

If you’ve had your own savings and checking account for years now, you’ll want to consider how you and your spouse should handle your banking needs. You may find that keeping things separate is easiest for both parties, or you may be more comfortable combining accounts.

Another option is to utilize a “three-pot system.” Each spouse has their own separate account and then they also have a joint account. The combined account is for joint expenses, such as house costs, groceries, etc. Doing something like this allows both parties to have individual expenses and freedom while deciding what they should pay together.

Task #5: Discuss “What Ifs” & Update Your Beneficiaries

Talking through some “what if” scenarios isn’t always fun, but with this life change around the corner, it’s important to do so now. You’ll want your partner to be knowledgeable about any life insurance policies you have, what funeral arrangements to make, how to handle incapacitation, how to access accounts and other assets. It’s possible you may still have your ex-spouse listed as an emergency contact or beneficiary in certain instances, now is a good time to update that information where necessary.

Additionally, you may have adjusted certain coverage like life insurance or long-term care insurance since you were last married. Run through all insurance policies and see where additional coverage may now be necessary, or where coverage may be redundant based on what policies your partner may already have.

Task #6: Consider Inheritance and Additional Assets

Generally speaking, any income or other property that is acquired while married will be considered community property. If you have children already, you may want to consider what they stand to inherit upon your death. These assets may need to be retitled, or funds may need to be kept in a separate account. Your financial advisor can help you understand how your future marriage may affect your children’s inheritance.

While it’s wonderful that you have found love again, there’s plenty to consider before tying the knot once more. As always, if you have any questions, it’s best to speak with an experienced financial professional so that they can help you navigate through this time in your life and plan for a stronger future together. Contact us today to learn how our services can benefit you and your family as you embark on this exciting new journey.

Strategic Financial Moves in 2024 for Individuals and Families

Tue, 30 Jan 2024 23:16:52 GMT

In light of evolving market conditions, economic trends, and potential policy changes, it's essential for successful individuals and families to assess their financial strategies for 2024. At Buttonwood Financial Group, we understand both the unique challenges and opportunities that come with managing wealth. Below, we'll explore key considerations and provide strategic insights to help you navigate the upcoming financial landscape.

1. Economic Outlook:

In the context of the ever-evolving economic landscape, it is imperative to gain a nuanced understanding of where we are in the prevailing economic cycle. Our comprehensive analysis considers current economic trends, potential implications (risk) for investment portfolios, and recommendations for strategic asset allocation adjustments based on economic forecasts. This section serves as a foundation for informed decision-making in the year ahead.

2. Tax Planning Strategies:

Given the potential impact of tax law on investment portfolios and balance sheets, a detailed exploration of both recent tax law changes as well as future tax impacts is essential. Our Advisors provide an in-depth overview of tax-efficient investment strategies, offering guidance on maximizing deductions and credits. This strategy aims to empower high-net-worth individuals to optimize their tax outcomes through proactive and strategic financial planning.

3. Investment Opportunities in 2024:

Uncover the potential for growth in economies entering the early stages of the economic cycle while avoiding high risk sectors in economies in later stages. At Buttonwood, the goal of our Investment Policy Committee is to produce a more consistent return – leading to a smoother financial ride on the roller coaster of life. We regularly engage with industry experts to make certain we have the full perspective needed for our diversified investment strategies. Our asset management is designed to take advantage of opportunities in the evolving investment landscape.

4. Risk Management and Asset Protection:

In the realm of wealth management, understanding and mitigating risks is paramount. Our detailed evaluation of risk and strategies for effective risk management is complemented by insights into asset protection, including considerations for insurance. The importance of periodic reviews around life, disability, home and auto, umbrella, long term care policies are key. In addition, with the possibility of the expiration of the increased Lifetime Exemption at the end of 2025, a review of estate planning documents needs to be emphasized in 2024 to ensure comprehensive protection and preservation of wealth.

5. Retirement Planning:

Tailored to meet each of our clients' unique needs, we offer strategies for managing retirement income. With insights into potential changes in retirement age and Social Security benefits, we provide actionable tips for optimizing retirement accounts and withdrawal strategies. Our goal is to empower individuals to make informed decisions that align with their long-term financial objectives.

6. Philanthropy and Legacy Planning:

For those with a philanthropic inclination, we provide options for meaningful charitable giving. Legacy planning considerations are discussed in detail, emphasizing the alignment of wealth with personal values. Strategies and accounts such as Donor-Advised funds, Private Family Foundations, and other Trust structures are reviewed to facilitate efficient and impactful philanthropy.

7. Market Volatility and the Importance of a Long-Term Perspective:

With elections around the globe and geopolitical uncertainty, 2024 is likely to be a volatile year. Having a trusted Team and real strategy allows you to maintain a disciplined, long-term approach to wealth management. Real-world case studies and examples illustrate the enduring value of a strategic, long-term perspective.

As your dedicated partner for comprehensive wealth management, Buttonwood Financial Group is committed to helping you achieve your financial objectives in 2024 and beyond. By staying informed, adapting to change, and proactively implementing strategic financial moves, together we position your financial life for continued success. If you have specific questions or would like personalized recommendations, our Team is here to assist you on your wealth management journey. Schedule a conversation today.

Navigating the Mortgage Process: Understanding Credit Scores and Their Impact on Lending

Fri, 26 Jan 2024 15:49:51 GMT

In the realm of mortgage lending, one crucial factor plays a pivotal role in determining your eligibility and interest rates: your credit score. Your credit score is a numerical representation of your creditworthiness, and it can significantly influence the outcome of your mortgage application. In this blog post, we will delve into the intricate nature of credit scores and their impact on the mortgage lending process.

Understanding Credit Scores

Credit scores are three-digit numbers that lenders use to assess the risk associated with lending money to an individual. The most commonly used credit scoring models are FICO scores, which range from 300 to 850. The higher your credit score, the lower the perceived risk for lenders, and vice versa. The 3 credit bureaus most commonly used in the mortgage world are Transunion, Experian and Equifax. The biggest difference between a FICO score and the 3 credit bureaus is that FICO is just a score while the 3 credit bureaus give more detailed information about each credit account along with a corresponding score.

Factors Affecting Credit Scores:

Several factors contribute to the calculation of your credit score, including:

Payment History: Timely payments on credit accounts, such as credit cards and loans, positively impact your credit score. Late payments, defaults, and bankruptcies have the opposite effect.
Credit Utilization: This factor measures the ratio of your credit card balances to your credit limits. Maintaining a lower credit utilization ratio is seen as responsible behavior.
Length of Credit History: The length of time you've had credit accounts influences your credit score. A longer credit history can be beneficial, demonstrating a track record of responsible credit management.
Types of Credit: Lenders consider the variety of credit accounts you have, including credit cards, installment loans, and mortgages. A diverse credit portfolio can positively impact your score.
New Credit: Opening multiple new credit accounts within a short period can be viewed as risky behavior and may negatively affect your credit score.

Impact on Mortgage Lending:

Your credit score is a key determinant in the mortgage lending process, influencing several aspects:

Eligibility: Lenders have different credit score requirements for various mortgage programs. Higher credit scores often result in more favorable terms and increased eligibility.
Interest Rates: A higher credit score can lead to lower interest rates on your mortgage. Conversely, a lower credit score may result in higher interest rates, as lenders compensate for perceived risk.
Loan Approval: Lenders may use credit scores as a primary factor in deciding whether to approve or deny your mortgage application. While not the only factor, a high credit score can also be looked at as an additional mark in the borrowers favor and vise versa.

Tips for Improving Your Credit Score:

If you're planning to apply for a mortgage, consider these tips to improve your credit score:

Pay Bills on Time: Timely payments have a significant positive impact on your credit score.
Reduce Credit Card Balances: Aim to keep credit card balances low to improve your credit utilization ratio. A general rule is to keep your credit card balance under 40% of your credit limit.
Check Your Credit Report: Regularly review your credit report for errors and address any discrepancies. Things like this do happen and require your attention.
Avoid Opening New Credit Accounts: Minimize new credit applications before applying for a mortgage.

Understanding the role of credit scores in mortgage lending is crucial for anyone navigating the home buying process. By actively managing and improving your credit score, you can enhance your eligibility and secure more favorable terms on your mortgage. Remember, a well-maintained credit history is not only a key to homeownership but also a foundation for financial success.

Jumbo Loans

In the realm of high-net-worth individuals and families, navigating jumbo loans can present unique challenges. The minimum credit score for a JUMBO loan is 700, making strong credit scores critical when applying for these loans. For loan scenarios where the loan amount exceeds the $766,550 conforming loan limit, innovative solutions become more important.

Mortgage Loan Products for JUMBO Loans

JUMBO loan programs include a 30-year fixed rate mortgage. These loans are currently offered sparingly. The market views them as riskier than a fixed rate conventional loan. Investors and lenders that do offer them usually charge origination points because of the risk associated with them.

In more recent times, a 7-year adjustable rate mortgage loan has been the program of choice for most lenders. For starters, interest rates are usually lower than a fixed rate loan which is a big selling point. These loans are usually kept in a bank’s portfolio to avoid the origination charges associated with a fixed rate JUMBO loan. Portfolio loans are owned and serviced by the bank who originated the loan and have relaxed underwriting guidelines which are more forgiving than a loan sold to an investor.

Bridge Loans

One key strategy to jumbo loans involves utilizing home equity for a down payment with a bridge loan. Fidelity Bank offers up to 80% of the home’s value, enabling clients to use this equity as a down payment or additional down payment for the desired property. This 80% includes both the current loan balance, if any, and the new bridge loan amount. This comprehensive coverage ensures that clients have access to a significant portion of their home’s equity, facilitating a more substantial down payment.

Bridge loans come with a competitive interest rate of 7.5% and a loan term of 1 year. This short-term financial bridge allows clients to secure the necessary funds without committing to a long-term financial obligation. Upon the sale of the collateral house, the bridge loan is promptly paid off. Subsequently, borrowers can leverage our loan re-casting program to pay down the purchase loan balance, providing a seamless transition to a more conventional financing structure.

Purchase Money HELOC

Another avenue to explore is obtaining a purchase money HELOC, offering clients the ability to borrow additional funds while keeping the first mortgage loan amount under the $766,550 threshold. As long as the first mortgage loan amount remains under $766,550, lending can be extended up to a 95% Combined Loan vs Value (CLTV). This increased borrowing capacity provides clients with greater flexibility in structuring their financing.

It's important to note that with the infusion of additional funds, the risk factor increases. As a result, the interest rate for transactions involving a purchase money HELOC is typically 0.125% to 0.25% higher than those without. This slight adjustment reflects the enhanced flexibility and borrowing potential offered by this solution.

Guest blog post provided by Jeff Hargate with Fidelity Bank . If you are interested in applying for a loan with Jeff, click here .

Corporate Transparency Act: What You Need to Know

Tue, 23 Jan 2024 20:09:38 GMT

At Buttonwood Financial Group, we are committed to providing our clients with proactive wealth management strategies and remaining informed of the latest developments in the financial landscape. One such development that will have a significant impact on businesses and individuals alike is the Corporate Transparency Act (CTA). While dating back to 2021, the CTA becomes effective January 1, 2024, and has far-reaching implications for businesses. In this blog post, we summarize the key aspects of the CTA and explain how the Act may affect you and your business.

What is the Corporate Transparency Act?

The Corporate Transparency Act (CTA) is a federal law aimed at enhancing corporate transparency in the United States. It was signed into law on January 1, 2021, as part of the National Defense Authorization Act (NDAA) for Fiscal Year 2021. The CTA establishes new reporting requirements for certain business entities to prevent the illicit use of anonymous shell companies for money laundering, terrorism financing, tax evasion, and other illegal activities. The official website for CTA is the FinCEN website with a direct link here: Beneficial Ownership Information Reporting | FinCEN.gov

Key Provisions of the CTA

Reporting Beneficial Ownership Information : Under the CTA, certain business entities, including corporations, limited liability companies (LLCs), and similar entities, are required to report information about their beneficial owners to the U.S. Department of the Treasury's Financial Crimes Enforcement Network (FinCEN). Beneficial owners are individuals who directly or indirectly own or control 25% or more of the entity.
Registration with FinCEN : Covered entities must submit this beneficial ownership information to FinCEN upon formation or registration, and any subsequent changes to this information must be “promptly reported.” Existing companies have one year from January 1, 2024 to file a Beneficial Ownership Information report. Newly formed or registered companies must file within either 30 days or 90 days of the registration or formation date.
Access to Beneficial Ownership Information : FinCEN will maintain a confidential database of beneficial ownership information. Access to this information will be restricted to law enforcement agencies, financial institutions conducting due diligence, and other authorized entities for specified purposes.

Who Is Affected by the CTA?

The CTA applies to a wide range of business entities, including:

Corporations (both domestic and foreign)
LLCs
Limited partnerships
Business trusts
Similar entities formed under state law

Exemptions from the CTA include publicly traded companies, registered investment companies, and certain other entities that are already subject to robust reporting requirements.

How Does the CTA Impact You?

Compliance Requirements : If you are a business owner or executive, it is essential to understand whether your entity falls within the scope of the CTA and ensure compliance with its reporting requirements. Failing to do so could result in significant penalties.
Increased Transparency : The CTA aims to increase transparency in corporate structures, which may have implications for mergers and acquisitions, due diligence processes, and compliance with anti-money laundering (AML) regulations.
Privacy Concerns : Some individuals and businesses may have privacy concerns related to the disclosure of beneficial ownership information. It is crucial to strike a balance between transparency and privacy within the bounds of the law.

The Corporate Transparency Act represents a significant shift in the regulatory landscape, emphasizing transparency and accountability in corporate structures. As your Family CFO, Buttonwood Financial Group is dedicated to helping you navigate these changes effectively. If you have any questions or concerns about the CTA and its impact on your business, please schedule a consultation or reach out to your Advisory Team for a conversation.

Retirement Contribution Limits for 2024

Fri, 12 Jan 2024 14:48:56 GMT

The Internal Revenue Service has released new limits for the coming year. Here's what you need to know.

Individual Retirement Accounts (IRAs)

IRA contribution limits are up $500 in 2024 to $7,000. Catch-up contributions for those over age 50 remain at $1,000, bringing the total limit to $8,000.

Roth IRAs

The income phase-out range for Roth IRA contributions increases to $146,000-$161,000 for single filers and heads of household, an $8,000 increase. For married couples filing jointly, the phase-out will be $230,000-$240,000, a $12,000 increase. Married individuals filing separately see their phase-out range remain at $0-10,000.

Workplace Retirement Accounts

Those with 401(k), 403(b), 457 plans, and similar accounts will see a $500 increase for 2024, the limit rising to $23,000. Those aged 50 and older will continue to have the ability to contribute an extra $7,500, bringing their total limit to $30,500.

SIMPLE Accounts

A $500 increase in limits for 2024 gives individuals contributing to this incentive match plan a $16,000 stoplight.

Keep in mind that this update is for informational purposes only, so consult with your tax professional before making any changes in anticipation of the new 2024 levels. You can also contact our Team to learn more about your options with these changes.

Why So Many People Make but Don't Keep Their Fitness and Finance Resolutions - and How to Keep Yours

Tue, 02 Jan 2024 19:57:43 GMT

When a new year arrives, many people make resolutions and claim they won’t break them. In reality, many do break their resolutions, but why is this so often the case? One of the biggest reasons we don’t stick to our resolutions is that we over-commit by making resolutions that are unrealistic. Remember, when making your resolutions for 2024, you want them to be reasonable enough that you can actually stay true to them.

4 Tips to Help You Keep Your Financial Resolutions

1. Come Up With a Specific Plan

Sit down and really think about what you want to achieve and how you can achieve it. Whether it’s fitness or financial goals, it all starts with a strategic plan. Set clear goals and a timeline for how you are going to achieve them. Starting with a plan helps hold you accountable. Even better, engage a financial professional who can assist in crafting your customized financial plan.

2. Enjoy the Process

Who said sticking to your resolutions can’t be enjoyable? Make it fun to follow your plan! Find others to join you in your resolutions and make it an activity. Find friends to go to the gym with you or to make financial goals together to help you stay true to your resolutions. Keep your goals in mind and why you chose the resolutions in the first place!

3. Track Your Progress

If you don’t keep up with how you’re doing with your resolutions, you’ll likely lose touch with them and fall off the wagon. Keep a journal of your resolutions’ progress. Not only will this help you to reflect on how you’ve been feeling about your resolutions, it will also help you to hold yourself accountable.

4. Look for Support

Find a few trustworthy friends or family members who can help hold you accountable. This is an essential part of keeping your resolutions. If friends and family see that you’re struggling to maintain your resolutions, they can speak up and help you get back on track so that you can achieve your goals.

Despite popular belief, keeping your New Year’s resolution is possible. If you commit to sticking to them, you can do it! You’ll be surprised how easy it is if you create a strategic plan, make it fun, track your progress, and seek support from friends and family. Make this the year you prove to yourself that you can do it. Go to the gym as much as you said you would. Save as much as you claimed you would. Go do it! You’ll thank yourself later for sticking with it.

What Makes a Good Financial Advisor?

Fri, 29 Dec 2023 23:41:02 GMT

In the complex landscape of personal finance, finding a trustworthy and competent financial advisor is crucial for achieving your financial objectives. Whether you’re planning for retirement, managing investments, or navigating intricate tax landscapes, the right financial advisor can make all the difference. As such, Buttonwood Financial Group provides transparency and personalized strategies, tailored to each of our clients’ unique lives.

In this post, we will explore the essential qualities that define a good financial advisor by addressing common questions and concerns you may have, allowing you to make an informed decision on your financial future.

What Qualifications and Certifications Should a Financial Advisor Have?

When exploring financial advisors, prioritize those with recognized qualifications and certifications. Seek out advisors holding prestigious designations like Certified Financial Planner (CFP) or Chartered Financial Analyst (CFA).

These designations signify a commitment to professional excellence and adherence to high ethical standards. They also showcase the advisor's expertise in financial planning, investment management, and tax strategy – essential qualities for a top financial advisor.

At Buttonwood, our financial advisors possess multiple certifications and are always working toward more. We believe that staying current with industry knowledge is an essential component to providing the best comprehensive guidance.

Experience and Track Record

An advisor’s familiarity with the local financial landscape is invaluable. Assess the advisor’s experience, considering factors such as years in the industry, specialized expertise, and a successful track record with clients in Kansas City and beyond. A seasoned advisor with local insight can navigate regional financial nuances more effectively.

Checking client references and reading reviews can offer valuable insights into an advisor's reputation and the experiences of others. At Buttonwood, we have a rich history of helping clients achieve their financial goals, and our success stories speak for themselves.

Transparency and Fees: A Crucial Aspect for Fiduciary Duty

In the spirit of fiduciary duty , transparency is non-negotiable. Your chosen financial advisor should be forthcoming about their fee structure, ensuring you understand the costs involved and how they are compensated. Whether it’s a fee-based model, commission-based, or a combination, understanding the costs involved is crucial. Transparent communication builds trust and reinforces the fiduciary duty, making certain your advisor’s recommendations align seamlessly with your financial goals.

Fiduciary Duty

A fiduciary duty means that the advisor is legally obligated to act in your best interest. This duty ensures the advice and recommendations provided are not influenced by external factors, fostering a relationship built on trust and integrity.

We take our fiduciary duty seriously at Buttonwood Financial Group, putting your best interests first. We work to set you on the path for the financial future you want. Our fee-only model is aligned with our clients’ interests. When our clients succeed, we succeed.

Personalized Financial Planning

Every person and family has a unique financial situation. A good financial advisor will create a personalized financial plan that is tailored to your specific goals and situation. This personalized approach is necessary for all elements of your comprehensive financial plan, whether it be for retirement planning , estate planning , tax strategy , etc. If you feel like you are working with a financial advisor that isn’t aligning with your needs, it may be time to make a change.

Communication and Accessibility

Clear communication and accessibility are essential. A good advisor should be readily available to answer your questions and provide guidance. At Buttonwood, we meet with our clients on your time and are always happy to answer questions as they arise. We leverage technology to stay connected, ensuring you have the support you need when you need it.

Your Journey to Financial Success Begins with Buttonwood

When looking for a good financial advisor, it’s important they possess a blend of qualifications, experience, and trust. Ensure they are transparent with you, and you feel confident in their ability to always work with your best interests in mind. At Buttonwood Financial Group, we embody these qualities and more.

Our dedicated team is here to help you navigate your financial journey with confidence and peace of mind. We invite you to reach out to us for a consultation and experience the Buttonwood difference for yourself.

Ready to take the next step in securing your financial future? Contact Buttonwood Financial Group today! Whether you're planning for retirement, managing your investments, or achieving other financial goals, we're here to guide you every step of the way. Let’s start planning for your brighter, more simplified financial future together.

Quarterly vs Annual Taxes: Which Will Impact Tax Returns?

Wed, 27 Dec 2023 17:39:48 GMT

Everyone’s accustomed to paying taxes, even if many of us only think about them once a year. But did you know that under certain circumstances, you could be required by the Internal Revenue Service (IRS) to pay estimated taxes throughout the year? Collected once a quarter, these quarterly taxes keep certain taxpayers on top of their yearly tax obligations. Learn more about the difference between annual taxes and quarterly taxes, as well as the impact they may have on your tax returns later.

What Are Annual Taxes?

Annual taxes are determined by the IRS based on your household income. Your tax obligation is then adjusted based on relevant deductions, credits and exemptions you’ve qualified for during the previous year. Typically, those who earn a salary or wages have a portion of their paycheck taken out each month and used to pre-pay their tax obligation regularly throughout the year. Once a tax return is filed during tax season, that person pays the final amount owed to the IRS or receives a refund if they’ve overpaid throughout the year.

What Are Quarterly Taxes?

If you do not have a portion of your paycheck automatically deducted to pay down your tax obligation throughout the year (called withholdings), you may be required to pay estimated taxes quarterly. Alternatively, you may have a portion of your paycheck or pension withheld for taxes, but it is still not enough to cover your tax obligations. Estimated tax is used instead of or in addition to annual taxes in order to pay your income tax, as well as other taxes such as self-employment tax and alternative minimum tax. 1

When Are Quarterly Taxes Typically Required?

As mentioned above, estimated taxes may be required if the IRS has determined the withholdings from your paycheck or pension are not enough. In addition, you may be required to pay estimated taxes if you’ve received additional income such as:

Interest
Dividends
Alimony
Self-employment income
Capital gains
Prizes
Awards 1

Who Pays Quarterly Taxes?

Individuals who are expected to owe $1,000 or more when their return is filed are typically required to pay estimated taxes quarterly. This tends to be business owners and self-employed entrepreneurs, including sole proprietors, partners and S corporation shareholders, according to the IRS. 1

Just as they sound, quarterly taxes are due at the end of each quarter - April, June, September and January of the following year. While you must pay a pre-determined amount by the end of each quarter, you can make payments weekly, monthly or however often is needed to pay down the amount.

How Do I Know if I’m Required to Pay Quarterly or Annual Taxes?

If you currently receive a paycheck, you can ask your employer to withhold more money if you want to avoid having to pay quarterly taxes. The IRS offers their own Tax Withholding Estimator, which they recommend using at the beginning of the year, especially if you’ve recently experienced a major life event - marriage, birth of a child, bought a home, etc. 2 This tool allows individuals and couples to determine how much they could be required to owe when filing their tax return.

According to the IRS, you are not required to pay quarterly taxes if you meet all three of the following criteria:

There was no tax liability for the previous year
You’ve been a U.S. citizen or resident for the entire year
Your previous tax year covered an entire 12-month period 1

How you pay your taxes throughout the year can impact your tax return come filing season. And in certain circumstances, paying estimated taxes quarterly can even prevent you from being hit with a penalty from the IRS. Work with your trusted tax professional to be sure you’re withholding the ideal amount from your paychecks, reducing your tax obligations in a productive way and avoiding potential penalties or big bills during tax season.

If Santa Fell Off the Roof, Would Your Insurance Cover It? Here's How Your Insurance Company Would Handle These Christmas Movie Mishaps

Thu, 21 Dec 2023 16:07:49 GMT

The season isn’t complete until you’ve watched your favorite holiday movie, right? With the holiday season approaching, you may find yourself with some extra time on your hands to relax, unwind and enjoy some Christmas classics.

Let’s have a little fun this holiday season and imagine how an insurance company might handle a few Christmas movie mishaps.

National Lampoon’s Christmas Vacation

There are plenty of mishaps the Griswold family faces around the holidays, but there’s one particularly damaging instance that stands out - at least from an insurance perspective. The Griswold family (well, let’s face it, Clark mostly) is excited to bring home their oversized Christmas tree. And while it makes a beautiful addition to the living room, included is an unwelcomed guest.

A squirrel pops out unexpectedly from the tree on a quiet evening, causing the family to panic, the dog to go wild and chaos to ensue. Subsequently, the Griswold family home is left with some serious damages caused by the dog and squirrel alike. Would these damages be covered by their homeowners insurance policy?

The answer is - typically no. While every policy is different, most homeowners' policies do not cover damage caused by rodents (yes, squirrels are rodents) or damage caused by pets including dogs and cats.

A Christmas Story

“You’ll shoot your eye out, kid!”

And towards the end of “A Christmas Story,” Ralphie nearly does. Luckily, Ralphie doesn’t require medical attention after discharging the Red Ryder BB gun. But he does end up breaking his glasses. Would a replacement pair be covered by insurance?

The Affordable Care Act requires vision and dental care be provided for children through all health plans - whether offered through the Marketplace, an individual insurance market or through an employer-sponsored plan. 1 While there are exceptions for older plans with grandfathered status, the majority of health plans still offer this benefit.

Pediatric vision benefits typically include annual eye exams, corrective lenses (glasses and/or contacts) and vision screening. Depending on the requirements and limits of Ralphie’s health insurance coverage, a replacement pair of glasses very well could be covered - but that doesn’t exempt him from a mouth full of red soap.

The Santa Clause

Nothing’s more traumatizing than seeing Santa fall off the roof - just ask Charlie and Scott Calvin. As most of us remember, this Christmas classic continues with Scott putting on Santa’s suit, growing a beard and a belly and, eventually, moving to the North Pole. While we can presume the original Santa… ahem, kicked the candy cane… for insurance purposes, let’s assume instead he was gravely injured.

How would Scott Calvin’s homeowners insurance handle an injury on his property? These policies include liability coverage, which will typically protect homeowners like Scott from bodily injury lawsuits - if, say, Mrs. Clause wanted to pursue legal action. It’s possible his homeowners policy includes no-fault medical coverage as well, which would help pay the medical bills of the injured party, if they were hurt on your property.

The Grinch Who Stole Christmas

Instances of robbery and personal larceny increase by about 20 percent in the month of December. 2 While it’s unclear whether or not that statistic includes data collected from Whoville, Cindy Lou Who and the rest of the village have plenty of reason to be wary this holiday season.

It’d be pretty remarkable if your household received a visit from the Grinch, but if a burglar does take the presents from under your tree - is the cost to replace them covered by insurance?

It’s likely that if property is stolen from your home (i.e. Christmas gifts from under the tree), your personal property coverage under your homeowners insurance will help cover the cost of replacing them. In this instance, you’ll want to have receipts showing the value of the item (hopefully, the Whos were organized). From there, your insurance company may send out a claims adjustor or use a formula to determine how much you will get back through your insurance claim.

From our family to yours, we hope you enjoyed reliving some cherished Christmas classics and their greatest mishaps. Here’s to wishing you a healthy, and happy holiday season - and one free from squirrels and falling Santas!

End-of-Year Money Moves in 2023

Tue, 19 Dec 2023 19:25:56 GMT

What has changed for you in 2023?

For some, this year has been as complicated as learning a new dance. Did you start a new job or leave a job behind? That’s one step. Did you start a new business? There’s another step. If notable changes took place in your personal or professional life, then you may want to review your finances before this year ends and 2024 begins. Proving that you have all the right moves in 2023 might put you in a better position to tango with 2024.

Even if your 2023 has been relatively uneventful, the end of the year is still an excellent time to get cracking and see where you can manage your overall personal finances.

Keep in mind that this article is for informational purposes only and is not a replacement for real-life advice. Please consult your tax, legal and accounting professionals before modifying your tax strategy.

Do you engage in tax-loss harvesting?

That’s the practice of taking capital losses (selling securities for less than what you first paid for them) to manage capital gains. You might want to consider this move, but it should be made with the guidance of a financial professional you trust. 1

In fact, you could even take it a step further. Consider that up to $3,000 of capital losses in excess of capital gains can be deducted from ordinary income, and any remaining capital losses above that amount can be carried forward to offset capital gains in upcoming years. 1

Do you want to itemize deductions?

You may want to take the standard deduction for the 2023 tax year, which has risen to $13,850 for single filers and $27,700 for joint. If you think it might be better for you to itemize, now would be a good time to gather the receipts and assorted paperwork. 2

Are you thinking of gifting?

How about donating to a qualified charity or non-profit organization before 2023 ends? Your gift may qualify as a tax deduction. For some gifts, you may be required to itemize deductions using Schedule A. 3

While we’re on the topic of year-end moves, why not take a moment to review a portion of your estate strategy? Specifically, take a look at your beneficiary designations. If you haven’t reviewed these designations for some time, double-check to see that these assets are structured to go where you want them to go in the event that you pass away. Lastly, look at your will to make sure it is still valid and up-to-date.

Check on the amount you have withheld. If you discover that you have withheld too little on your W-4 form so far, you may need to adjust this withholding before the year ends.

What can you do before ringing in the New Year?

New Year’s Eve may put you in a dancing mood, eager to say goodbye to the old year and welcome 2024. Before you put on your dancing shoes, though, consider speaking with a financial or tax professional. Small end-of-year moves might help you improve your short-term and long-term financial situation. Contact us today to learn more.

Wintering 101: Your Guide to Seasonal Living

Wed, 06 Dec 2023 15:34:32 GMT

Every year, retirees flock to warmer or colder climates as they seek balmy weather and seasonal entertainment. There's even a colorful name for these intrepid travelers: snowbirds. Depending on where you live, you may have heard this term before. However, over the years, the definition of a snowbird has changed. In the past, this term was applied to those who traveled south in the winter to escape the cold. Now, it applies to anyone, although usually retirees, who travel seasonally to spend time outdoors and enjoy their favorite activities.

What is a "Snowbird?"

Snowbirds are typically retired—or are close to retirement—and have made the decision to spend the winter in a state other than where they normally live.

There are a few different ways you can stretch your fledgling snowbird wings. Some choose to purchase a second home, while others look for a rental property they can return to annually. Others still opt for a winter on the road by purchasing an RV.

Getting Started

Set a Goal

Like most things in life, it's helpful to settle on a goal before you begin. Start with the basics, such as deciding on where you want to go, how long you would like to stay, and, of course, your ideal budget. Some important budgeting concerns to keep in mind may be the following:

Travel Expenses— Basically, how will you get to your destination? If you're flying, have you secured transportation once you have arrived? If you're driving, have you evaluated the cost of fuel, wear and tear, or any potential parking fees?
Activities— Once you've arrived, it can be helpful to have a general idea of what sort of activities you may enjoy. This doesn't need to be a hard itinerary so much as a way to holistically evaluate your daily costs.
Food & Drink— Depending on how you've decided to travel, this can mean anything from meals out with friends to a meal cooked at your winter home.

Choose Your Location

Because you'll be spending a fair amount of the year at your chosen destination, it's important that you identify what matters most to you at this step.

For example, does a 55+ community sound like something you'd enjoy? Age-restricted communities can be found in every state and are often full of activities, fun, and potential new friends. If you enjoy the sun, sand, and refreshing ocean waters, you may want to consider what it would be like living in a beach community. Often, travelers learn there's a large difference between living near the ocean and vacationing near one.

No matter what you choose, this is the point in the process where you should spend as much time as it takes to feel confident in your destination.

Renting vs. Buying

Depending on where you decide to travel, renting on a seasonal basis can cost thousands over the length of your stay. However, the funds you spend on renting could also pay for a year of expenses while you enjoy your new, second home. Sure, buying a home is a significant investment, but it may also open up rental opportunities and give you the freedom to visit your second home whenever you please. To help you make the best choice, your financial professional may have resources that you can access as you consider your decision.

Pros & Cons

Sounds great, right? However, before you begin searching for your perfect winter home, there are a few items to consider. After all, wintering in more temperate locations can often mean more than enjoying the sunshine on your back and warm sand beneath your feet.

Owning a Recreational Vehicle (RV)

The allure of the open road and nearly limitless freedom can appeal to many retirees looking to spend their winters elsewhere. However, sometimes, the reality of RV life can differ from one's perceptions. The following are some items to keep in mind before starting your journey:

Comfort Behind the Wheel— Depending on the size of your vehicle, you may need a commercial driver's license (CDL), even if your RV is a non-commercial vehicle (which most are).
Try before you buy— If you aren't sure which direction to go with the size and type of RV, rent a unit similar to what you are considering. You'll soon know if life on the road is for you.
Ask a (Financial) Pro— A candid conversation with your financial professional may be a smart move before making any permanent decisions. Your RV will most likely depreciate in value over time, and the guidance of a professional can help avoid financial issues that may arise down the road.

Owning a Second Home

If you prefer something more permanent, a second home may be right for you. A second home can allow for longer trips and more entertainment and socialization opportunities; in addition, it may retain—or even gain—value over time. However, just like any major real estate purchase, there are some considerations to keep in mind:

Location, Location, Location (and Price)— The ultimate price for your new home will depend heavily on the location you choose. Even if you have experience in the real estate market, it can be helpful to enlist the aid of a real estate agent in your search. Having an inside source who lives in the area where you wish to purchase your home can make a huge difference.
Televised Inspiration— If you've ever watched a real estate show on any given number of networks, you've already started your search. These shows, although entertaining, can be invaluable as learning tools. Pay attention to the triumphs and mistakes these shows often highlight so that you can hit the ground running.
Enlist a Friend— Anyone who has shopped for a home knows how difficult it can be to remain objective. Sometimes, we see a home and love it so much, its shortcomings can fall by the wayside. Instead, try asking an impartial friend to weigh in on your top choices. It may be a little painful, but what they notice can save you from headaches in the future.

Owning a Rental Property

Many of the same considerations of second ownership apply here as well. The major differences arise when you decide to rent your property while you're not using it. After you've purchased your property, the following are some potential ideas to help make your rental property a success:

Management— A reputable property management company can be one of the largest boons for private rental property owners. For a fee, these companies will maintain the property, handle tenant issues, and make sure your investment is well tended. When you start the search, try asking your real estate agent for a recommendation to get the ball rolling.
Fractional Ownership— Purchasing a rental property can sometimes feel like a large investment. If you're not quite ready to take the plunge, consider fractional ownership. By splitting the investment among multiple owners, you may be able to defray the cost and potential risk of your rental property.
Research Is a Must— For this, the internet is your best friend. Spend some time reading through message boards and posts from other rental property owners. Oftentimes, you can find helpful, actionable tips or ways to avoid mistakes that others have made during their search.

Living the Dream?

No matter where you decide to spend part of your year as a winter guest, it may be helpful to think of your new endeavor as a lifestyle you're creating. This mindset can encourage you to think about the financial and emotional aspects of seasonal living in a more objective way. Who knows? Maybe your new lifestyle will be closer to your dream vacation than you think. Contact us today to learn how we can guide you through this exciting transition.

How to Avoid an Unexpected Tax Bill

Thu, 30 Nov 2023 16:42:52 GMT

Rebounding from a large tax bill

We’ve all been there – the sudden arrival of a large tax bill can be a financial curveball that catches even the most diligent individuals off guard. However, the key to financial resilience lies in how well we navigate such surprises and proactively adjust for the future. Our Team at Buttonwood works year-round to stay on top of tax optimization. If you don’t have a Family CFO managing this piece of your financial life, there are steps you can take yourself. If managing these steps on your own does not appeal to you, consider reaching out for a conversation with our Team.

In this guide, we will explore steps you can take to handle a larger-than-expected tax bill and provide insights on making strategic adjustments before the year-end in 2023.

Step 1: Assess the Situation

First, review your trial tax return and ensure your 2023 projections match what you expect your final return to look like. Common errors include entering a wrong number, adding an extra zero, or entering the same income in two different places. When looking for errors, the best place to start is a line-by-line check, comparing this year’s return to last year’s return. Of course, some numbers will be slightly different, but the differences should match your income increase, reduction in hours, or other life changes.

As you assess your tax bill, understand the reasons behind it – whether it’s due to a change in income, overlooked deductions, or a shift in tax laws. This assessment lays the foundation for effective planning and adjustments.

Step 2: Leverage Retirement Accounts

If you have money in the bank or taxable investment assets and don’t want to pay the IRS, upping your retirement savings could be a solution. Maximizing contributions to retirement plans, such as 401(k)s and IRAs not only increases your long-term financial security, but it can also provide immediate tax benefits by reducing your taxable income.

Don’t forget, you can still open and contribute to an IRA account up until the April 15 ^th tax deadline. If you have already filed your tax return without maxing out your retirement plan contributions, don’t worry; you can still amend your return if you make your contributions in time.

Step 3: Optimize Deductions and Credits

Go back and look for any deductions and credits you may have missed. These could include business expenses, energy efficiency upgrades, child credits, accelerated depreciation, and more.

If you used tax software or a CPA who doesn’t proactively communicate with you or your financial advisor, it’s possible some of the questions asked were skipped, leaving potential tax credits off your return. Research whether there are credits or depreciation opportunities for large expenses you had throughout the year.

Step 4: Strategize with Investments

Consider adjusting your investment strategy to optimize for tax efficiency. This may involve proactive tax-loss harvesting to offset gains, reevaluating your asset allocation, or exploring tax-advantaged investment options.

Step 5: Contribute to Charity

Explore opportunities for charitable giving. Making strategic donations to qualified charities not only supports causes you believe in but can also result in valuable tax deductions.

When deciding which charities to contribute to, it’s important to ensure your donation is tax-deductible. You must donate to a qualified charitable organization, and they must be tax-exempt 501(c)(3) or fall under Section 170(c) of the IRS. You may search in the IRS online database for all of the acceptable charities, or check to see if the organization is designated with GuideStar .

If you are not sure which charities to contribute to, review for the use of a donor advised fund or similar charitable entity. Your financial advisory team can assist in the selection and establishment of such entities.

Step 6: Review Your Financial Plan

Revisit your comprehensive financial plan to ensure it aligns with your current situation and objectives. Identify areas where adjustments can be made to accommodate the larger tax liabilities without compromising your long-term objectives.

Step 7: Plan for 2023 Before Year-End

Looking ahead to December 31 ^st , take proactive steps to avoid surprises. Review your financial situation, update your financial plan, and make necessary adjustments throughout the year. Stay informed about changes in tax laws that may impact your financial strategy or engage a Family CFO to do this for you.

Step 8: Consult with Professionals and Stay Informed

Finally, stay informed about changes in your financial landscape. By engaging a wealth manager with a comprehensive approach, like Buttonwood, you can gain insights into your specific situation from seasoned professionals. We provide tailored advice, work to identify opportunities for tax savings, and remain in touch with the latest tax and estate laws. By partnering with your wealth manager, you greatly increase your odds of avoiding an unexpected tax bill.

Proactive Tax Planning

Handling a larger tax bill requires a combination of strategic planning, proactive adjustments, and a commitment to staying informed. By taking these steps, you can navigate financial surprises with resilience and position yourself for a financially sound 2024 and beyond. Remember, the key to financial success lies in adaptability and a proactive approach to managing your wealth. Contact us today to explore how our Family CFO services can benefit you and your financial life.

Top 5 Reasons to Outsource a Bookkeeper for Your Small Business

Mon, 27 Nov 2023 16:15:46 GMT

When growing a small business, the importance of keeping accurate and up-to-date financial records cannot be understated. Proper financial reports indicate where a business is coming from and where it’s headed. Without them, many small businesses end up in limbo or collapse.

Most owners of small businesses and start-ups consider the daily tasks required to maintain proper financial records a low priority compared to pursuing their company’s core goals. They therefore keep substandard records or hire in-house bookkeepers to help with the situation. But employing in-house bookkeepers is not the best answer to the problem. If you want the best bookkeeping services for your business, consider outsourcing from an experienced and reputable accounting company.

Here are the five top reasons to outsource a bookkeeper for you small business:

1. Saves You Money

Saving money is arguably the number one reason why you should outsource your small business bookkeeping services. Hiring, training, and catering for all the needs of an in-house bookkeeper such as employee benefits can be quite expensive. With outsourced bookkeeping services, you don’t need to worry about renting extra office space to house the accounting department or purchasing accounting equipment to run the operations. Outsourcing ensures you only pay for the work done and frees up much of your funds so that you can commit them somewhere else (e.g., on marketing) to contribute to your company’s growth.

2. Your Business Is in The Hands Of Experts

Outsourcing accounting and bookkeeping services place your business in the hands of skilled, reliable professionals. For example, if you consult a company, you have extensive access to a large pool of resources and teams of top-industry talent that understand your industry inside-out. Seasoned professionals know how best to maintain your financial records and stay up-to-date with upcoming financial matters related to your business, so you don’t have to. They also provide solid financial advice to help you make sound business decisions.

3. Let’s You Focus on Your Business’s Core Operations

Outsourced bookkeeping services take the hassle of maintaining daily financial records away from you. They free up your time and effort – allowing you to entirely focus on running and managing your business’s core operations. Some small business owners see bookkeeping as only a matter of tracking incomes and expenses, but quality bookkeeping encompasses more than that. If they were to do everything right, it would take plenty of effort and time. So why go through all the hassle while somebody else can do it for you at an affordable price?

4. Allows Scalability

Outsourced bookkeeping and accounting services provide exceptional scalability benefits. With these services, you can comfortably expand or cut back your expenditure on accounting operations when and where you see fit. As a small business, outsourcing helps you plan for your current and potential future simultaneously. You receive an ongoing analysis of your business’s finances, and this allows you to make good decisions in preparation for growth or down-sizing.

If your business is seasonal, the flexibility of outsourced bookkeeping also helps you avoid costly expenses that you would have incurred to run an in-house accounting department on a low season.

5. Access to Accounting Systems And Tech

As a small business, it can be difficult to afford the best and latest accounting systems in the industry, but an outsourced professional bookkeeper can. Because they specialize in this field, reputable accounting and bookkeeping firms invest in the best technology available so they can continually offer top-quality services to clients. Leveraging their technology and practices helps to guarantee your business enjoys the best tools for the job - saving you time and money, ensuring accurate record keeping, and making end-year reporting or filing of tax returns smooth & easy.

If you are a small business owner or start-up founder, consider outsourcing your bookkeeping services to a reputable and compatible professional.

6 Must-Knows Before Planning Your Charitable Contributions

Wed, 15 Nov 2023 22:36:22 GMT

As the end of 2023 quickly approaches, a proactive approach to charitable giving is in order. When it comes to holiday contributions, many often feel too stressed with a long list of holiday to-do items to properly focus on researching charities before diving in to gifting. If you're feeling charitable this holiday season, consider these six things before making your donations.

1. Get the Facts Before You Donate

Understanding the charity’s mission and what its true purpose consists of is key when contributing to any organization. Without determining the facts behind where your donation is really going and what it is contributing toward, you may ultimately be giving to the wrong cause.

Knowing the impact of the organization you’re interested in might determine what and how much you decide to give. Start your research by using websites such as Guidestar and Charity Navigator to provide a better understanding of verified nonprofit organizations.

2. Verify the Group’s Non-Profit Status

By taking a look at the financial information behind a particular organization, you’ll gain insight into what its status is and how it truly operates as a non-profit organization. We recommend reading up on the group’s most recent IRS Form 990, which offers a bounty of information. By focusing on a few key areas, these forms won’t feel so overwhelming:

Part One: The organization’s revenue statement.
Part Three: A list of the organization’s largest activities and how much it spends on them.
Part Seven: Compensation for officers and board members.
Part Nine: Functional expenses statement, which outlines costs related to program services, management and fundraising.

3. Donate to the Causes That Mean the Most to You

These might be considered “efficient organizations” or groups that are impactful not only socially but to you as an individual. It’s very likely you already have a few organizations in mind based on your experiences and your network. If not, connect with your friends and family to learn more about their charitable interests and to determine if these align with what you’re passionate about.

Doing web research or collecting news articles associated with causes you’ve already chosen will often highlight similar organizations that are also doing great work.

4. Make Sure Your Donation is Tax-Deductible

Along the lines of doing your research prior to contributing charitably, you should ensure that your donation is tax-deductible. You must donate to a qualified charitable organization and they must be tax-exempt 501(c)(3) or fall under Section 170(c) of the IRC. 1

You may take a tax deduction for contributions made to:

Churches and other religious organizations
American Red Cross, Goodwill, the Salvation Army and CARE
Tax-exempt educational organizations
Tax-exempt hospitals and some medical research organizations
Government agencies, such as a state or division of a state if the funds are used for public purposes
Nonprofit volunteer fire companies
Some veterans' groups and fraternal societies
Some private foundations that distribute the contributions they receive to public charities, and some private operating foundations
Some membership organizations that receive more than a third of their contributions from the general public
Boy Scouts and Girl Scouts of America
Boys Clubs and Girls Clubs of America

Many charitable organizations qualify for tax-deductible donations, but not all, making it important to know whether your chosen organization qualifies. You may search in the IRS online database for all of the acceptable charities, or check to see if the organization is designated with 501(c)(3).

5. Donate More Than Just Cash

While giving a cash value might feel like the most straightforward way to contribute, there may be other forms of assets you can donate in order to get the most back. Depending on the accessibility of your assets, contributions may include forms of property, travel expenses, uniform costs or appreciated assets.

Being creative with your donations offers the opportunity to rid yourself of items that you no longer use but could mean the world to someone with different needs.

6. Feel the Benefits

Giving to those in need and being a voice for organizations that spark passion within you is an amazing feeling. Being aware of the additional benefits that being charitable may offer can be a close second.

Tax Exemptions

Various exemptions apply when donating. Always remember to itemize your deductions, request a receipt when donating, get an independent appraisal, subtract the value of any benefits and talk to a tax professional.

Employer Matches

Very often companies encourage their employees to give back to their communities by matching contributions up to a certain amount. It’s important to speak with your human resources department about these details prior to contributing in order to keep your priorities and your finances in order.

https://www.irs.gov/charities-non-profits/charitable-organizations/exemption-requirements-501c3-organizations

Investment Policy Committee Update - November 2023

Fri, 10 Nov 2023 16:08:47 GMT

As we begin to tie the bow around 2023, we look back at a year of significant events. The banking issues of Spring now seem like a distant memory following action from the Federal Reserve. Textbook oddities like Taylor Swift impacting US economic growth appeared. Market volatility continued as bets were placed on whether the Fed was done with rate increases and global military actions seem to unfold daily. The adage of the markets ‘ climbing the wall of worry ’, so far, seems to be holding true.

Looking at economic cycle positioning as we move into 2024, we believe the ‘climb’ is justified. Our latest rebalance, in late October, continued our trend overweighing equities and increasing our home country bias. We did this by specifically leaning further into growth and technology companies & moving higher in market capitalization . These moves position us to benefit further from the earnings leadership we expect to continue across the largest so called “Tech+” (traditional Tech sector with Communications) companies in the US.

Outside the US, we reduced overall exposure to international Developed Market stocks based on weakening corporate earnings and more pronounced downside vulnerability due to potential rising energy prices and geopolitical turmoil. In addition, we trimmed our emerging markets underweight, adding exposure to Emerging Market countries with the most attractive earnings prospects and/or growth potential (think Taiwan and India), while seeking to insulate the portfolios from a litany of headwinds in China.

On the fixed income side, we increased credit risk in bond-heavy portfolios, an opportunity to capture attractive yield opportunities at current levels. We continue to have allocations positioned in a treasury barbell fashion with a modest overweight to duration , capturing attractive yields on the front end of the curve with ballast on the long end to serve as a shock absorber against our added equity exposure.

In summary:

When we last rebalanced our Portfolios in summer, we highlighted a more optimistic view around US equity markets, earnings expectations, and the increasing attractiveness of bond yields. However, at that time, we recognized the potential for near-term weakness stemming from declining liquidity and seasonal trends as the logic for remaining patient on a more pronounced risk-on stance. Our October rebalance reflects a continuation of our optimistic views coupled with a recognition that we now have an opportunistic moment to lean into risk as we move into year-end.

We will continue to provide ongoing updates on our views and investment positioning through posts like this and as we meet. Should you have questions about our investment strategy, please let us know and we will make sure to review details at our next meeting. And while we don’t recommend fixating short-term market fluctuations, if you would like to check specific investment performance across all your accounts, our Buttonwood Portal is available 24/7. Thank you for your continued trust and allowing us to coordinate your asset management as part of our Family CFO services!

LLC, C-Corp or S-Corp? A Guide to Protecting Your Business Assets

Tue, 07 Nov 2023 15:04:34 GMT

Creating a business is an exciting venture, and choosing a business structure is an integral step. Not only is each business structure taxed differently, but they all offer different levels of protection between personal and business liabilities. Before moving forward on your next step in entrepreneurship, make sure to understand the pros and cons of each business structure and how to protect your assets.

Sole Proprietorship

Owned by a single person and easily established, a sole proprietorship provides no differentiation or protection between the personal and business assets of the owner.

Pros of Sole Proprietorship

Establishing and maintaining a sole proprietorship can be fairly easy to do, as business income is included in the owner’s personal income tax return. 2

Cons of Sole Proprietorship

With no protection between personal and business assets, owners become personally liable for their business’s financial obligations.

Best for?

Easy setup and direct control could make a sole proprietorship ideal for small business owners who can afford the financial risks.

Partnership

Similar to a sole proprietorship, though shared amongst two or more individuals, a partnership passes on business profits or losses to each partner, who then report their share onto their personal income tax return. 3

Pros of Partnership

Partnerships have many of the same advantages as a sole proprietorship, but risk towards personal assets is now shared.

Cons of Partnership

Ownership of the business and its actions are also shared, limiting individual control of the business.

Best for?

Smaller groups of similar or complementary professionals looking for the advantages of a sole proprietorship, while sharing liability and business direction.

Limited Liability Company (LLC)

As the name suggests, an LLC reduces a business owner's liability by creating a separation between personal and business assets. 4 However, an LLC is taxed differently. Owners must pay self-employment taxes to Social Security and Medicare, but profits and losses can become personal income without facing corporate taxes. 1

Pros of LLC

Unlike a sole proprietorship or partnership, an LLC provides owners with protection between personal and business assets.

Cons of LLC

Only certain states allow LLCs, limiting the opportunity to create one depending on where your business operates. 4

Best for?

Businesses that are looking for similar asset protection to a corporation without the same taxes.

C-Corp

C-Corporations function as their own entity, offer the best personal liability protection to the owner and can raise money through the sale of stocks. 1 However, C-Corporations also require more thorough recording and operations procedures, and income can be taxed more than once before reaching a shareholder. 1

Pros of C-Corp

Full personal protection, the ability to generate funds through the sale of stocks and potential tax advantages gives C-Corporations the support to operate for years to come.

Cons of C-Corp

C-Corps are taxed on their profits, which can then be taxed again as personal income tax when shareholders receive their dividends, resulting in a double-taxing. 1

Best for?

Great for the long-term growth and sustainability of a business, while protecting the owner from personal liability.

S-Corp

Offsetting the often double-tax of C-Corporations, S-Corporations provide the same personal liability protection while operating with their own restrictions.

Pros of S-Corp

Owners can enjoy the liability protection of a C-Corporation without the same double-tax issues.

Cons of S-Corp

S-Corporations are not able to tap into some of the tax advantages of a C-Corporation and are required to have no more than 100 shareholders, all of which must be U.S. citizens. 1

Best for?

If the extra requirements are worth it, then businesses can gain most of the benefits of a C-Corporation while avoiding the double-tax issue.

Keeping this information in mind will help you determine the right business structure for you. But remember, this information is not meant to replace the personalized advice and recommendations you may receive when working with a financial advisor or tax professional. Make sure to consult a specialist before moving forward on your business plans. Contact our Team today to explore options with our experts.

401(k) Plan Sponsors: The Importance of Benchmarking Your Plan

Fri, 03 Nov 2023 16:52:53 GMT

As an employer, offering a 401(k) to your employees is a great way to retain a motivated workforce while attracting new talent. But, like most retirement vehicles, there are some legal points to keep in mind.

First, by offering a 401(k) to your employees, you are now considered a plan sponsor. Second, as a sponsor, you have a fiduciary duty to ensure that all fees paid by the 401(k) are reasonable, according to the Department of Labor. 1 An effective way to judge these costs is by asking your financial professional about benchmarking your 401(k).

What Is 401(k) Benchmarking?

Benchmarking is a way of organizing, reviewing and evaluating a 401(k) to learn if it is competitive as well as a good fit for a business. In addition to evaluating the fees associated with your plan, solid benchmarking may also consider the range and quality of services offered. This can help you make an informed decision about what the plan provides or what may need to be updated to make it a better fit for your business.

Here are a few items your financial professional may evaluate when benchmarking your 401(k).

Costs and Expenses

As your company's 401(k) grows, you can expect that the costs involved in maintaining it will grow as well. Some providers do not automatically adjust their plan fees, and in some cases, the plan may outgrow the provider.

Services Offered

Much like plan costs and expenses mentioned above, as your company continues to change and grow, so will its needs. In some cases, evaluating the services offered can uncover if a business has outgrown its plan.

401(k) Design

Your financial professional can evaluate your 401(k)’s design and features to determine potential opportunities for improvement. This could include the terms in the plan document, auto-enrollment or, in some cases, Roth features.

Once the benchmarking is complete, you’ll need to evaluate the results. In particular, you'll want to make sure your business is comfortable with fees being charged or the investment options offered. This is also a good time to take stock of additional features, such as automatic enrollment or automatic escalation. For example, does your 401(k) include a Roth option or the ability to make post-tax contributions? And if not, is this something your business needs?

Decision-Making Based on Benchmarking

Once you and your financial professional have gone through the above steps, it's time to make a determination.

If benchmarking your 401(k) shows that you've found a great fit, then no further action may need to be taken. But if your plan doesn’t fulfill your company's needs, it may be time to make a change. It may be beneficial to approach your plan's provider with the findings of your 401(k) benchmark. Providers are often likely to work with you to find the best fit for your company, especially when provided with documentation of where their product fails to meet the needs of your business.

Finally, remember that a comprehensive benchmark of your plan can be helpful, but it will take some time to complete. However, the value inherent in understanding how you measure up to others in your industry while also fulfilling your fiduciary responsibilities can go a long way toward your business’s long-term success.

If you would like to discuss how the Buttonwood Team can assist in benchmarking or identifying the best plans for your business, contact us today .

https://www.dol.gov/general/topic/retirement/fiduciaryresp

2023 End of Year Financial Checklist

Tue, 24 Oct 2023 19:57:00 GMT

As 2023 comes to a close, it's time to assess your financial standing and take important steps to impact your future. At Buttonwood Financial Group, we understand that effective financial planning is a year-round endeavor. To help you navigate the complex world of personal finance, we've put together an end-of-year checklist to set you on the right track for the coming year. This comprehensive guide will cover a range of topics, from maximizing your retirement savings to ensuring you are financially secure.

1. Backdoor Roth Contributions:

If you're over the income limit to contribute directly to a Roth IRA, consider making a Backdoor Roth contribution. This strategy involves contributing to a traditional IRA and then converting it to a Roth IRA. This way, you can enjoy the tax-free growth and withdrawals that Roth IRAs offer. Be sure to consult with your financial advisor to navigate the rules and tax implications of a pro-rata conversion.

2. Mega Backdoor Roth:

For those with access to an employer-sponsored 401(k) plan allowing after-tax contributions, the Mega Backdoor Roth can be a powerful tool for supercharging your retirement savings. By contributing after-tax funds to your 401(k) and then rolling them over into a Roth IRA, you can potentially grow a significant tax-free nest egg. If you need the income from your paycheck, let your balance sheet do the heavy lifting.

3. Roth Conversions:

Is 2023 a low-income year? Do you want to benefit your next generation with a reduced tax bill? Consider converting traditional IRAs or old 401(k) accounts to Roth IRAs. While this will trigger immediate taxes, it can provide tax-free growth and withdrawals in the future, which can be especially advantageous for retirees. At Buttonwood, we proactively coordinate Roth conversions once income estimates are known for the year. Your financial advisor can help you determine the optimal conversion amount to minimize your tax liability.

4. Don’t Forget Investment Accounts:

In addition to your retirement accounts, maximize contributions to other investment accounts like your brokerage accounts, HSA, and college savings accounts. The more you invest now, the greater your potential future income.

5. Retirement Plan Contributions:

Whether you are working as an employee with access to a 401(k), 403(b), or 457(b) plan through your employer, or you’re a self-employed individual managing your own individual 401(k), it’s crucial to ensure you make your full “employee” contribution – which amounts to $22,500 for those under 50, and $30,000 for those over 50 – by the final day of the year. The additional “employer” contribution, whether made by your employer or yourself (if you are the employer), has a bit more flexibility with a few extra months available for its deposit. Furthermore, certain plans allow for contributions to be made until you file your taxes. However, if your goal is to maximize your annual contributions to your retirement account, it’s imperative to get your money in there promptly.

6. Flexible Spending Accounts:

If you have a flexible spending account (FSA), review your spending and make any necessary adjustments. Use any remaining funds before the year-end, as FSAs often have a "use it or lose it" policy.

7. Insurance:

While there is not a tight year-end deadline to review insurance, it’s important to proactively review as the cost typically increases on your birthday or 6 months prior. Review your insurance policies, including health, life, and property insurance. Ensure that your coverage still aligns with your needs and goals.

8. Charitable Gifts & Tax Credits:

Beyond the positive impact charitable gifts make on your community and the world, there are potential tax benefits to creating a coordinated strategy! If you itemize, there is a significant benefit to making your contributions before the last day of the calendar year. We often see clients who have a hard time choosing between the many charities they support. One option would be to review tax credits . In addition, to alleviate the stress of needing to make an immediate decision, we often suggest contributing to a Donor Advised Fund, allowing you to get the tax benefit and make your specific contribution amount choices later.

9. Prepare for Q4 Estimated Tax Payments:

If you make estimated quarterly tax payments, don't forget your Q4 payment, which is due by January 15. Failure to make this payment could result in penalties and interest. There may also be opportunity to pull your Q4 payment into the current year. Explore options for your business to pay your state and local tax (SALT).

10. Front-Load Expenses and Back-Load Income:

Is 2023 a high-income year? If so, by accelerating your expenses and delaying income, you can potentially reduce your tax liability. If income remains consistent and you are not changing tax brackets, it may make sense for you or your business to pay as much as you can this year and get paid next year. Short-term T-bills are paying more than 5%. Holding your cash and delaying tax payments by as much as a year can provide substantial benefits.

11. Get Free Annual Credit Reports:

Regularly review your credit reports from the three major credit bureaus ( Equifax , Experian , and TransUnion ). You're entitled to one free report from each bureau annually. Check for errors and potential identity theft.

12. Get Social Security Administration Reports:

Request your Social Security statement from the Social Security Administration . Review it for accuracy and to help with retirement planning.

As we approach the end of 2023, taking the time to complete these and other comprehensive financial steps can put you on a path to a more secure and prosperous future. Working with a financial advisor from Buttonwood Financial Group can provide you with the guidance and expertise needed to make the most of these financial strategies. Start now , and you'll be well-prepared for the coming year.

What Is the Difference Between a Tax Credit and a Tax Deduction?

Tue, 24 Oct 2023 15:22:30 GMT

When it comes to preparing your taxes, the idea of tax credits and tax deductions can be music to any taxpayer’s ears. That’s because both are used to lower the amount of taxes someone owes to the government. While they’re both worth getting excited over, it’s important to understand the fundamental difference between these two terms.

What Are Tax Credits?

Simply put, tax credits are reductions on the amount of actual tax owed. Tax credits in no way affect your tax bracket or taxable income. Instead, think of these as reductions that come after the fact - i.e. after you’ve determined how much you owe to the government. There are a few common types of tax credits that can be given based on your income level, whether or not you have children, if you’re a college student and more. These common credits include:

Child Tax Credit
Child and Dependent Care Credit
Lifetime Learning Credit
Adoption Credit
Earned Income Tax Credit
Residential Energy Tax Credit

Tax credits are typically either refundable or non-refundable. Depending on which type of credit it is, this will affect how much you’ll receive back on your tax refund.

Refundable Tax Credits

Refundable tax credits are tax credits that allow you to be refunded the remaining, unused portion of a credit. For example, say you owe $900 in taxes, but your eligible child tax credit is worth $2,000. Not only will this cover the $900 you owe in taxes, but you will also be refunded the remaining $1,100.

Non-Refundable Tax Credits

On the other hand, non-refundable tax credits are limited to the amount of taxes you are liable for and do not exceed that limit. In scenarios where the credit exceeds the tax owed, the surplus is not refunded. For instance, if your tax liability is $900 and you have a non-refundable credit of $2,000, the credit will offset the $900 owed, but the remaining $1,100 of the credit is not reimbursed to you.

What Are Tax Deductions?

Tax deductions are used to reduce the amount of income that’s eligible to be taxed. By reducing this amount, your income may fall into a lesser tax bracket, meaning you’re subject to pay a lesser tax percentage. There are typically two types of tax deductions: itemized deductions and above-the-line deductions.

Itemized Deductions

You can use itemized deductions to help lower your taxable income. Common types of itemized deductions include:

Charitable donations
Medical expenses
Property taxes
Mortgage interest

While people are welcome to add each deduction up separately on their taxes (i.e. itemize them), most will opt for the standard deduction set by the IRS. For the 2023 income tax year, these are the standard deduction amounts:

Single or married but filing separately: $13,850
Married and filing jointly or qualifying widow(er): $27,700
Head of household: $20,800 1

It is common to use a standard deduction because, in most cases, an itemized amount won’t exceed the IRS’s standard deduction rates.

Above-The-Line Deductions

Above-the-line deductions are used to reduce your adjusted gross income (AGI), which can qualify you for certain itemized deductions and tax credits. Your adjusted gross income is determined by subtracting above-the-line deductions from your gross income. This lower AGI can then allow you to claim important tax credits or deductions that may be dependent on income level. Common above-the-line deductions include:

Alimony paid
Educator expenses
Student loan interest
Deductible IRA contributions
Moving expenses of armed forces members

Tax credits and tax deductions can both greatly benefit taxpayers, especially when they work in tandem. Familiarizing yourself with the difference between these two tax terms gives you a great place to start researching and understanding what deductions and credits you and your spouse may be eligible for in the upcoming tax year.

https://www.irs.gov/newsroom/irs-provides-tax-inflation-adjustments-for-tax-year-2023

What To Do When Your Income Reaches 7 Figures

Tue, 17 Oct 2023 21:39:16 GMT

Did you recently add a second comma to your bank balance? Has a recent financial event raised your net worth to the next level? It's an exciting time, whether it's the result of your long-term goals (e.g., from the sale of a business), a windfall transfer of wealth, or a key promotion. You're probably already considering how to protect and manage your wealth.

Keep in mind that this article is for informational purposes only and is not a replacement for real-life advice. Consult tax, legal, and accounting professionals or Buttonwood as your Family CFO before modifying your financial strategies as your income changes.

Estate Strategy on a New Playing Field

You may already have an estate strategy in place. However, reaching a new level of wealth may be an excellent time to revisit your approach. More wealth can mean a larger estate and more complex estate issues. For example, it may be time to consider a living trust. You create a living trust while alive and fund it with the assets you choose to transfer therein. The trustee (typically you) has full power to manage these assets. But using a trust involves a complex set of tax rules and regulations. So before moving forward with a trust, consider working with a professional familiar with the relevant rules and regulations.

Pace Yourself

Many newly wealthy individuals feel like they are in a rush once they have their money. Now that the world is your oyster, you may be better off waiting for the pearl. This means getting accustomed to your new bank balance before putting the money to any practical effect. A few conversations with a financial professional regarding your ambitions may help put things into perspective.

What You Need Today

Your new wealth will create as many questions as it will opportunities. For example, if you've sold your business or are considering leaving your job, you will need to consider health insurance choices for yourself and your household. Other household demands may also warrant consideration, from travel costs to big one-time purchases. You will almost certainly face some unplanned expenses along the way, so be sure that your short-term budget makes an allowance for that.

Risk Tolerance and Time Horizon

Your risk tolerance will be affected in part by your ongoing day-to-day needs. For example, if you're considering buying a new home, money may need to be earmarked for all expenses related to that purchase. The risk takes into account not only the home itself but also your overall strategy. The time horizon determines the lengths of time considered for your various expenditures. Some unexpected expenses may happen within a few months, while others can be put off for up to a year.

Congratulations on that second comma becoming a part of your everyday life. It will mean many exciting things for you and your household, some of which you've prepared for and others you might not have anticipated. A trusted financial professional in your corner may provide answers to your questions along the way. Contact us today for a deep-dive into how our Family CFO services can benefit you.

What To Know Before Retiring Early

Thu, 12 Oct 2023 18:09:10 GMT

Early retirement may seem like a dream come true. However, you need to be well prepared if you want to retire early. If you’re not prepared, you might run into complications. Here are a few things to consider before retiring early.

Will You Have Enough Money for Your Entire Retirement?

Retirees tend to spend more money than expected, especially in early retirement. They might spend more on travel, home renovations, or other retirement-related lifestyle changes. Sticking to a budget early in retirement might not be a high priority compared to enjoying your free time, but you need to consider the later years even as you’re enjoying the early ones. Making a budget with plenty of room for travel and other things you finally have time for will help you strike a balance.

People are living longer than ever before. This means you might need to make your savings last longer than expected. If you talk to any group of retirees or pre-retirees, the prospect of outliving their money is likely to be one of their top concerns. Some people will live past 90 or even to 100. If your retirement lasts 20, 30, or even 40 years, how well do you think your retirement savings will hold up? What financial steps could you take in retirement to try to prevent those savings from eroding? 1

Some retirees address the gap in their finances by working part time in their 60s and 70s. The income from this work can be an economic lifesaver for retirees. What if you worked part-time and earned $20,000–$30,000 a year? You might effectively give your retirement savings five or ten more years to grow. 1

When it Comes to Future Healthcare Costs, You Can Never Save Too Much

Healthcare costs can be high before Medicare starts. Until then, you will have to pay for private health insurance, which can be costly, so one of the benefits of remaining employed is maintaining workplace insurance coverage. How many people retire with a dedicated account or lump sum to address future health costs? Some retirees end up winging it, paying their out-of-pocket expenses out of income, Social Security benefits, and savings.

While couples can save together, individuals may have considerable healthcare costs. People have begun adjusting their retirement expectations by considering projected healthcare expenses, and businesses have quietly made some changes. If you can, you should take advantage of employer-matching contributions.

You Might Face Fees If You Take Early Withdrawals

If you retire before age 59½, you will pay a 10% early withdrawal penalty on most tax-deferred accounts. You will also owe income taxes on the amount you withdraw from traditional accounts funded with pre-tax contributions. 1

Since the Roth IRA came into effect in 1998, its popularity has soared. It has become a fixture in many retirement planning strategies because it offers savers so many potential advantages.

With Roth IRAs, investors make contributions with after-tax dollars. Any potential earnings on investments within a Roth IRA are not considered part of the account owner’s income and, therefore, are not subject to income tax. Instead, they accumulate on a tax-deferred basis and are tax free when withdrawn from the Roth if the distribution qualifies. With a Roth IRA, you can have a tax-free retirement income.

Compound Interest Needs Time to Work

The longer you work and save for retirement, the more money you will have. If you retire early, the power of compounding interest fades away because your investments will not continue to earn interest. Compounding interest works best for those who start saving early and save for as long as possible before withdrawing.

There is an old saying that compound interest “is the most powerful force in the universe,” and there is some truth to this. What makes compound interest special? Compound interest means that you earn interest not only on your principal investment but also on previously accrued interest. The results are not terribly impressive in the short term, but over 30 years or more, compound interest can produce a handsome dividend.

Great minds have been fascinated by compound interest for generations. Founding Father Benjamin Franklin believed that a penny saved was a penny earned, and he decided to put this belief to the test. At his death in 1790, he bequeathed £1,000 each to the cities of Boston and Philadelphia for the purpose of building trade schools and public works projects after 100 years had passed. Compound interest did the trick, netting $572,000 for those cities in 1891. 2

If you place a small sum of money into a bank account offering compound interest and leave it alone for an extended period, your money will grow just as Franklin’s did. For example, $100 left alone in the bank for 30 years at a 10% annual compounded interest rate would increase to $1,744.94. If you were to add money to the account over time, the compounded interest would continue to grow and would create a healthy supplement to whatever other retirement plans you may have. Let’s say that you started with $1,000 in an account offering 15% interest and added $600 per year ($50 monthly). In 40 years, if you kept up your deposits, the account would hold $1,495,435.86. 3

These are hypothetical situations; you may contribute more or less money as time passes, and your account may earn a different amount of interest. Keep inflation in mind as well. A million dollars doesn’t go as far today as it did 40 years ago, and it may not seem like a lot of money once you’re ready to retire. The compounding stops if you take the money out of the bank early.

Your House is Not Necessarily an Investment

You will need to live somewhere in retirement, whether you rent or own your home. Homeownership has associated costs, especially if you plan to sell the house at some point, including making additions and improvements like putting on a new roof. It all adds up.

Is the house you are in now an investment that you might use to finance early retirement? If you buy a house to flip it or as a rental property, the answer is yes. If you buy a home to live in with hopes of selling it later, the answer may be no. Your home is an expression of your lifestyle, a wonderful setting for your life, and a place where you can enjoy privacy and comfort. As an investment, though, it is essentially illiquid, and its rate of return is uncertain.

Home values do not automatically increase over time. Over the decades, real estate values have risen, and they will probably keep growing over the short term, but perhaps not as quickly as some buyers hope. Stocks, unlike your home, do not need upkeep. You will never need to repair, reroof, or repaint a portfolio. Houses need maintenance over time, which can eat into your gains. You must also pay property taxes. If you envision your home as an income-producing asset during your retirement, that means playing landlord on some level. Many are not ready to take that step.

Remember that home values tend to increase gradually. If you see your home as an investment, consider it a long-term one. While every household is different, be careful if you plan to use your house to fund your early retirement.

The Short Version: Look Before You Leap

Early retirement is possible if you can finance your lifestyle from the day you quit working. It’s a worthwhile goal for anyone willing to take the steps to make it both feasible and relatively uncomplicated. You can take these steps in tandem with your trusted financial professional, someone who has helped others pursue their goals and can tell you which situations to investigate and which ones to avoid. Contact us today for a conversation.

Medicare Open Enrollment Begins Oct. 15th. What Does That Mean For Me?

Fri, 06 Oct 2023 13:52:56 GMT

Medicare’s open enrollment period happens once a year between October 15 and December 7. During this time, current Medicare beneficiaries have the option to adjust their coverage for the coming year. This can be a useful option for those who may have recently changed medication, underutilized their current coverage or found they could use additional benefits. 1

How to Search For Medicare Plan Options

It shouldn’t take a ton of research to determine what your current coverage is and what options are available for you during this coming enrollment period. You should receive information from the government regarding your current Medicare coverage each year. Even if your coverage hasn’t changed within the last few years, it’s important to still take time to review your current coverage and identify any areas for improvement.

There are tools available online or by phone to learn more about other plans if you’re thinking about switching or changing coverage. Medicare offers a Plan Finder tool online or you can call 1-800-MEDICARE to find out about new Advantage plans in your area. Or, check out the State Health Insurance Assistance Program site to find help in your state.

Can Anyone Make Changes During the Open Enrollment Period?

Medicare’s Open Enrollment Period is only for those who are already existing Medicare beneficiaries.

If you have yet to sign up for Medicare, your period to do so runs between the three months before and three months after you turn 65. If you miss this initial enrollment period, you can not sign up for Medicare during the open enrollment period beginning in October. Instead, you must wait until Medicare’s general enrollment period, which runs from January 1 through March 31. 2

Are Changes Made During Open-Enrollment Effective Immediately?

No, the changes you elect to make during Medicare’s open enrollment period will not go into effect until January 1, 2024.

What Changes Can Be Made During Medicare’s Open Enrollment?

During the open enrollment period, you are eligible to change your Medicare coverage, and you also have the option to switch between different Medicare plans. Below are a few coverage options you can choose to add, drop or adjust depending on your needs for the new year.

Medigap Coverage

Medigap is a supplemental insurance policy designed to help cover the costs of certain medical expenses that Medicare doesn’t cover. Your Medigap policy may cover expenses such as:

Copayments
Coinsurance
Deductibles
Medical care when traveling abroad 3

Whether you’ve had Medigap coverage in the past or you’d find it beneficial moving forward, you can adjust, add or drop your Medigap coverage during open enrollment.

Medicare Advantage

Medicare Advantage (or Part C) is a type of healthcare plan offered by private companies contracted through Medicare. It’s designed to combine Part A (hospital insurance) and Part B (medical insurance) as well as, in some instances, offer a prescription drug plan or other additional coverage. 4

During open enrollment, you can choose to switch back to an original Medicare plan if you find that Medicare Advantage does not fit your needs. Alternatively, you are also free to switch to a Medicare Advantage plan from an original Medicare plan during this period. Be sure to shop around for different options, as you’ll have several choices from various providers when it comes to choosing a Medicare Advantage plan. 1

Medicare Part D (Prescription Drug Plan)

If you are utilizing a Medicare Advantage plan, this may not apply to you. But for those who have an original Medicare plan, it’s important to check for changes to your Part D coverage every year. Coverage through your plan can change yearly, and your prescription needs may change as well. Make sure your current plan has your needs covered through the next year. If not, now’s the time to look around for new coverage.

Medical expenses can add up quickly, especially if your current coverage is not tailored to address your needs. Use this time to shop around for any changes that could be beneficial for the upcoming year.

Advanced Tax Strategies: Preparing for Year-End

Wed, 27 Sep 2023 14:18:49 GMT

As we enter the 4 ^th quarter of 2023, it's time to shift focus toward year-end financial planning. One of the most powerful ways to maximize your financial potential while minimizing your tax liability is to plan for this year’s taxes – this year! At Buttonwood Financial Group, we view part of our role to serve as your ‘Idea Team’ and provide insight through crucial planning steps. With the clock ticking, now is the perfect time to explore strategy and take action.

The Importance of Year-End Tax Planning

Year-end tax planning is about much more than just filling out forms and sending a quarterly estimated tax payment to the IRS. It's an opportunity to strategically manage your cash flows and optimize your tax burden. By taking advantage of advanced tax strategies, you can keep more of your hard-earned money and channel it towards your financial goals.

Key Strategies to Consider

1. Tax-Loss Harvesting

One effective strategy is tax-loss harvesting. This involves selling investments that have incurred losses to offset capital gains in your portfolio. Not only does this reduce your tax liability, but it can also be a strategic move to rebalance your investment portfolio for the year ahead. For assets we manage, we regularly take advantage of tax-loss harvesting throughout the year. If you have assets you are managing personally and haven’t taken advantage of tax-loss harvesting, now is the time to do so.

2. Roth IRA Conversions

Converting assets in your traditional IRA to a Roth IRA can offer substantial long-term benefits, including tax-free withdrawals in retirement as well as tax-free withdraw implications for your beneficiaries. The tax implications of a Roth conversion can be complex. Consulting with a financial advisor at Buttonwood Financial Group can help you determine if this strategy aligns with your financial goals.

3. Charitable Giving

Year-end is an ideal time to make charitable donations. Not only will you be contributing to causes close to your heart, but you can also benefit from tax deductions. If you are over the age of 70 ½, exploring a Qualified Charitable Distribution (QCD) for gifts to charity (up to $100,000) can provide income tax reductions as well. Additional ‘stack on benefits’ for QCD’s can be found when combining State Tax credits often issued to non-profit organizations. (e.g.: MO NAP Credits ). Buttonwood Financial Group can help you explore various charitable giving strategies that align with your values.

4. Retirement Account Contributions

Maximizing contributions to retirement accounts such as a 401(k) or IRA can help reduce your taxable income. It's crucial to understand the contribution limits, rules and deadlines of the various retirement plans available; and our Team of experts can guide you through these details.

5. Estate Planning / Gifting

For those with material assets, year-end is an opportune time to review and adjust your estate and gifting plan. Each year individuals can give away assets tax-free to both the giver and receiver. Once the new year starts, the prior year gifting window closes and can never be reopened. Effective estate planning can minimize estate taxes, ensuring your wealth is transferred seamlessly to your heirs.

Why Choose Buttonwood Financial Group

Navigating advanced tax strategies can be a daunting task that generally has better outcomes when coordinated with professionals. At Buttonwood Financial Group, our team of experienced Financial Advisors specializes in strategy for individuals and families who want to make the most of their financial success. Here are just a few reasons our current clients work with our Team:

Expertise

Our advisors and CPA network are well-versed in the latest tax laws and financial regulations. We stay up-to-date with the ever-changing financial landscape to provide you with the most current and effective strategies.

Customized Solutions

We understand that every individual's financial situation is unique. We tailor our ideas to your specific goals and circumstances, ensuring the strategies we implement align with your objectives.

Peace of Mind

With Buttonwood Financial Group at their side, our clients proactively approach year-end tax planning with confidence. Using software specifically designed to highlight tax planning opportunities, we review opportunities, generate ideas and work in conjunction with CPA’s to implement strategy. We handle the complex calculations and paperwork, allowing you to focus on what matters most to you.

Start Now!

There's still time to implement advanced tax strategies that can significantly impact your financial future, but the window is narrowing. Some of the most impactful ideas can take a month or more to implement. As such, if you would like to optimize your tax strategy for 2023, please contact Buttonwood Financial Group today and schedule a consultation with one of our expert Financial Advisors . Together, we will develop a personalized plan to optimize your year-end tax strategy and set you on the path to financial success.

Top Financial Fears That Affect Women

Tue, 19 Sep 2023 16:20:22 GMT

Financial fears can paralyze anyone from making a decision about money, but for many women, money matters are particularly terrifying. In fact, one recent survey found that 59 percent of women stress about finances at least once a week. 1

So, why all the fear? What’s holding females back? Here are five of the most common fears women have when it comes to money and ways to overcome them.

1. The Fear They Won't Be Taken Seriously

Women have come a long way in terms of independence and earning power over the last 50 years, but many women still see investing and money management services as an industry geared toward men. This view can leave women feeling intimidated and concerned about how financial professionals will treat them. The good news is their fears are often unfounded, but women may feel more confident simply by learning more about finances or by working with a financial advisor who will guide and teach along the way.

2. The Fear of Running Out of Money

Both men and women are afraid of outliving retirement savings, but women find it a much more pressing concern for one simple reason: women tend to outlive men by as much as five years. 2 This means that women, on average, will require almost a fifth more in their nest eggs than their spouses. Women who think that they don’t have a significant retirement fund may want to work longer and wait until they are entitled to receive their maximum Social Security benefits before retiring.

3. The Fear of Losing a Spouse

No one looks forward to a spouse passing away, but the death of a spouse can have severe financial repercussions for many women. This is particularly true for women whose husbands or spouses were the primary earner in the family. A woman can ease her economic apprehension by getting more involved in money matters as soon as possible. The first step is finding out about all the family’s accounts and investments to make sure she’ll have full access in the event of her spouse's death. It’s also a good idea for the spouse to take out a life insurance policy. Some experts suggest having a minimum policy that can cover between 5 and 10 times what would be the lost annual earnings, plus enough money to pay off any outstanding debts. 3

4. The Fear of Losing a Home

It’s hard for anyone to imagine losing their home after a lifetime of living as upper class, but it can happen. As such, it’s smart to aggressively pay down any outstanding money owed on a home to become mortgage-free as soon as possible. But it’s important to be aware that while a home is an investment, the upkeep of the home is a financial drain. Older homeowners may want to think about downsizing to a home that will require less expensive maintenance before it becomes an absolute necessity.

5. The Fear of Having to Pay for Your Kids Forever

There is no getting around the fact that having children is expensive, but being a great mom shouldn’t mean paying the kids’ bills forever. Parents need to know that setting boundaries when it comes to providing financial support for adult children is healthy and, in the long run, the right choice for everyone.

Money is a complicated topic, and one of the best ways to ease the fears associated with it is to talk with a professional wealth manager who can create a personal plan to help you relax. Our Team stands ready to assist, contact us today for a complimentary consultation.

https://www.forbes.com/sites/kimelsesser/2022/10/04/heres-why-women-are-worrying-about-money-more-than-men-according-to-new-survey/?sh=20f2e7014b5b
https://www.cdc.gov/nchs/pressroom/nchs_press_releases/2022/20220831.htm
https://www.forbes.com/advisor/life-insurance/how-much-life-insurance-do-you-really-need/

Understanding Social Security Benefit Taxation

Fri, 15 Sep 2023 16:56:59 GMT

Receiving Social Security benefits is advantageous in retirement, but like almost every other form of income, these benefits are taxed by the government. To accurately predict your retirement income (and taxes), it’s important to understand how Social Security benefits are taxed.

Here, we explain everything you need to know about Social Security benefit taxation.

How are Social Security Benefits Taxed?

While Social Security benefits are a vital source of income for many retirees, a portion of these benefits may be subjected to federal income taxes. The Internal Revenue Service (IRS) uses a formula—known as the provisional income formula—to determine the taxable amount. 1

Provisional Income Formula

An individual’s provisional income is calculated by adding together their adjusted gross income (AGI), their nontaxable interest, and one-half of their Social Security benefits. The resulting amount is compared to specific thresholds to determine the portion of the benefits that will be subject to taxation.

Taxation Thresholds

The thresholds that determine whether Social Security benefits are taxable are as follows: 2

Single filers with a provisional income between $25,000 and $34,000 may have up to 50% of their benefits subject to taxation.
Single filers with a provisional income exceeding $34,000 may have up to 85% of their benefits subject to taxation.
Married couples filing jointly with a provisional income between $32,000 and $44,000 may have up to 50% of their benefits subject to taxation.
Married couples filing jointly with a provisional income exceeding $44,000 may have up to 85% of their benefits subject to taxation.

It’s important to note that these thresholds are not adjusted for inflation, which means that the benefits of more retirees may become subject to taxation over time.

State Taxes on Social Security Benefits

In addition to federal taxes, some states also impose taxes on Social Security benefits. However, the rules and exemptions vary from state to state. Currently, eleven states tax Social Security benefits to some extent, while the remaining states do not impose state taxes on these benefits. 3

Strategies to Minimize Social Security Taxes

There are several strategies that you can implement to potentially reduce the taxes on your Social Security benefits. Here are a few:

Diversify Your Retirement Income

Diversify your sources of income during retirement. By relying on a combination of Social Security benefits, retirement savings, and other investments, you may be able to reduce your provisional income and lower your tax liability.

Consider Delaying Benefits

Delaying your Social Security benefits can increase the amount of your monthly payment. This strategy can also help you push back the taxation of your Social Security benefits if you anticipate being in a higher tax bracket in the future.

Create a Withdrawal Strategy

Strategically managing withdrawals from your retirement accounts can help optimize your tax situation. By taking distributions from taxable accounts instead of tax-deferred accounts, you can potentially minimize your provisional income and reduce the taxation of your Social Security benefits.

Understand State Tax Laws

If you live in a state that taxes Social Security benefits, familiarize yourself with the rules and exemptions that are specific to your state. Consulting with a tax professional can provide valuable insights into how to minimize your state tax obligations. You may also want to take the different state tax laws into account when you are deciding where you will live when you retire.

As the famous saying goes, there are only two guarantees in life: death and taxes. Social Security benefits aren’t exempt from taxes, and understanding how your benefits will be taxed will help you form an accurate retirement income planning strategy.

Implementing a Financial Wellness Program for Your Employees

Thu, 14 Sep 2023 17:21:16 GMT

Over half of employees are stressed about their finances. 1 As an employee, your career should be a source of financial relief and security—not worry.

Ensuring this rings true for your employees is important to both their satisfaction and performance. There’s a reason why 53 percent of companies have started to offer financial wellness programs. 2 In this guide, we share a full breakdown of financial wellness programs, as well as how to implement one for your own employees.

What Is a Financial Wellness Program?

The name pretty much sums it up. Financial wellness programs are designed to alleviate the financial worries of your employees. They go beyond mere financial understanding; they promote a healthy relationship with money by offering the appropriate tools and guidance. It’s employee-centric education and application combined for better results.

How to Implement a Program

There’s no perfect financial wellness program; the best program for you depends on the nature of your business and the needs of your employees. There are many ways you can go about it: do you want to use a platform specially designed for financial wellness programs, or do you want it to be more of a program customized in-house? What do you want the focus to be? What would best benefit your employees?

Below we’ve gathered our own list of possible steps your company can take to start incorporating financial wellness into the workplace.

Educational Programs

Employees need the information first in order to apply it. Here are a few ways you can make financial literacy resources accessible.

Lecture series. Offering a themed lecture series is informational and enjoyable for employees. People love to learn, especially when it comes to their money. Contact financial professionals, like the Buttonwood Team , well-versed in speaking and organize a series of lectures, webinars or workshops; possible themes include “investing basics” or “saving for retirement.”
Access to financial professionals. Although you’ll likely offer this resource less often, consider having your financial advisor host on-site consultations. Anyone can benefit from the guidance of a financial professional, and it’s a win-win for both your advisor and your employees.
Distribute educational materials. This is an easy step that any small business can take. You can provide your employees with simple resources such as budgeting spreadsheets, helpful articles, or newsletters.

Applicational Programs

Going hand-in-hand with educational programs, these suggestions specifically encourage action. All of these initiatives are meant to offer a roadmap for employees to apply their newfound financial literacy, if they so choose.

Partnerships with financial institutions. This is similar to but not to be confused with having your advisor offer on-site consultations, due to the fact that it offers a direct path for your employees to work with financial professionals. Creating a partnership will require some funding on your end, but benefit your employees and benefit you by centralizing your financial wellness program.
Financial assistance. These programs directly assist employees with their finances. It’s up to you to determine if this is a viable option for your small business, but some businesses offer wellness stipends, discounts, student loan assistance or debt consolidation.

It’s useful for every business to have some form of a financial wellness program. Being intentional about improving the financial health of your employees helps their productivity, performance and happiness overall. Consider if a financial wellness program is right for you, and use these guidelines to get started.

https://www.pwc.com/us/en/industries/private-company-services/library/financial-well-being-retirement-survey.html
https://benefitplans.baml.com/publish/content/application/pdf/GWMOL/WBR-Inforgraphic.pdf

Planning Inheritances for Your Children

Mon, 11 Sep 2023 19:49:51 GMT

As a parent, it can be close to impossible to sleep soundly knowing that your children are not financially stable, whether they are toddlers or adults. That is why you need to start thinking about estate planning, which should not be taken lightly. It is important because it prevents your assets from ending up with beneficiaries that were not intended and eliminates family conflicts when you are gone.

Here are some useful tips when handling estate planning.

Communicate Openly with Your Children

It is common that children underestimate or overestimate the total value of their parent’s estate. Talking to your children about your estate not only gives them a sense of how much they stand to get, but it gives them peace of mind. It also reduces family conflict when the time comes. Discussing inheritance with your children can bring up issues that might prevent the proper distribution of your assets. You also get a chance to explain your decision.

Level the Field

If you have several children, you are probably wondering if they should all get equal amounts. If you wish to minimize fights after your passing, it might be a good decision to give each an equal amount. This does not just mean in terms of assets, but also in matters concerning responsibilities. Under certain circumstances, it can be impossible to leave an equal share but focus on equitable inheritance. Equitable inheritance means each child receives a fair amount given his unique circumstances. For example, if your youngest child has yet to attend college while the others have already graduated from programs where you have footed the bill, you might allocate more money to the youngest child so they have the same educational opportunity. The same logic might apply if you have given one child money for a down payment on a house - instead of just dividing your assets, you could deduct the amount of the down payment from the that child's inheritance.

Distribute Your Estate Yourself

One common mistake parents make is leaving their eldest child as the beneficiary and giving them the mandate to distribute the estate. Estate planning attorneys typically don't recommend this approach as it can cause conflict and hard feelings among family members. To negate and alleviate any fighting, do the distribution yourself. Make a list of everything you own and indicate who actually gets what and the method to be used to distribute what is left.

Eliminate Uncertainties by Creating a Trust

Often, people choose to leave their children's inheritance outright to them, either immediately or at a specific age, such as 25 or 30. However once your child receives their inheritance outright, it is legally considered their own property and will automatically become subject to creditors' claims, including to any spouse during a divorce. That is why many estate planning attorneys recommend you create a trust instead.

It is possible to structure a trust in different ways or even to continue the trust for the child's entire lifetime. If drafted properly, this lifetime "dynasty trust" will create an asset protection barrier between the child and the child's creditors. Trusts also keep your estate out of probate court, saving you (and your heirs) both time and money. In addition, trusts can minimize the amount paid in estate taxes.

Regardless of what you choose, you'll want to discuss your plans and intentions with a good estate planning attorney. Remember, you are ultimately responsible for the successful transfer of your estate to your beneficiaries. Contact us today to learn more about our Family CFO services can benefit you and your family.

A 6-Step Financial Plan for Growth and Wealth Preservation

Thu, 31 Aug 2023 15:07:15 GMT

In the fast-paced and ever-changing world of finance, many individuals and families understand the importance of a comprehensive financial plan to ensure the preservation and growth of their wealth. With numerous investment options, tax considerations, and estate planning complexities, it can be challenging to navigate the financial landscape on your own. That's where Buttonwood Financial Group, LLC comes in, offering expertise and tailored solutions to support our clientele to secure their financial future. In this blog post, we will explore the key components of a comprehensive financial plan and how Buttonwood Financial Group can assist you in achieving your wealth preservation and growth goals.

1. Assess your Current Financial Situation:

The first step in building a comprehensive financial plan is to assess your current financial situation. Like a CFO for a business, Buttonwood Financial Group serves as a CFO for individuals and families. Our Team of experienced financial advisors analyzes your assets, liabilities, income, and expenses to help you gain a clear understanding and visualization of your financial position. We identify areas of improvement, and set realistic goals based on your unique circumstances.

2. Define and Establish Clear Goals and Needs:

Once your financial situation is assessed, our Team works with you to define and establish clear goals for wealth preservation and growth. These goals can include business strategies, development of retirement cash flows, funding for the cost of education, philanthropic endeavors, or simply maintaining a consistent standard of living. Buttonwood Financial Group, LLC works closely to help you define what is important, create a roadmap to achieve them and adjust as life progresses.

3. Create an Investment Strategy Designed to Provide Consistent Returns:

An investment strategy producing consistent returns is the cornerstone of any comprehensive financial plan. Buttonwood Financial Group, LLC has a team of skilled investment professionals who design, implement and proactively adjust investments tailored to your risk tolerance, financial goals, tax needs and time horizon. By utilizing a wide array of investments, such as stocks, bonds, real estate, and private markets, our Team aims to optimize your portfolio's performance while managing risk.

4. Tax Planning and Optimization:

Tax planning is an integral part of wealth preservation and transfer. Buttonwood Financial Group, LLC understands the complexities of the tax landscape and can help you navigate it effectively. By leveraging tax-efficient investment strategies, utilizing tax-advantaged accounts, and implementing appropriate tax planning techniques, Buttonwood can help you minimize your tax liabilities and maximize your after-tax returns.

5. Estate Planning and Wealth Transfer:

Preserving wealth for future generations requires thorough estate planning. Buttonwood offers comprehensive estate planning services to help you create a solid plan for the transfer of your wealth while minimizing estate taxes. Our team coordinates with attorneys to draft Wills, establish Trusts, and implement other strategies to ensure your assets are distributed according to your wishes.

6. Regular Monitoring and Adjustments:

Wealth Management is not a one-time event but an ongoing process. We understand that your financial situation and goals will evolve over time. We have worked with thousands of individuals and families, and we bring that perspective to the table. Our team regularly meets with each client we work with to monitor strategy, assess progress, and make necessary adjustments to keep that strategy on track toward achieving your wealth preservation and growth objectives.

Building a comprehensive financial plan for wealth preservation and growth requires expertise, experience, and a deep understanding of the unique needs of affluent individuals and families. Buttonwood Financial Group, LLC is committed to providing tailored solutions and comprehensive financial services to help you safeguard and grow your wealth. By assessing your current financial situation, setting clear goals, implementing a diversified investment strategy, optimizing tax planning, addressing estate planning concerns, and providing ongoing monitoring and adjustments, Buttonwood empowers you to secure a prosperous financial future for yourself and your loved ones.

Take the first step toward building your comprehensive financial plan with Buttonwood Financial Group, LLC, and embark on a journey to preserve and grow your wealth. Contact our Team when you are ready to schedule an informal conversation to explore the possibilities of having your own Family CFO.

Best Financial Services in Kansas City

Tue, 22 Aug 2023 20:05:51 GMT

Best Financial Services in Kansas City

Buttonwood Financial Group is honored to be considered again among the best financial services firms in Kansas City by Three Best Rated ! Each financial advisory firm reviewed by Three Best Rated face a rigorous 50-point inspection, including: customer reviews, history, ratings, satisfaction, trust, cost, and general excellence.

Businesses do not pay Three Best Rated to list them, ever. Their team believes that local businesses provide better and personal services.

In our role as Family CFO, we provide comprehensive wealth management . We coordinate and integrate your financial life - including tax, insurance, estate planning, investments, cash flow, retirement, education, real estate, and business strategies. We provide the highest level of care possible when it comes to our clients. We are proud to be recognized as one of the best financial advisors in Kansas City . If you would like to explore the benefits of your own Family CFO, contact us today for a consultation!

Thank you to Three Best Rated for acknowledging the Buttonwood Financial Group Team.

Phantom Stock for Company Executives: Why It's Not as Scary as It Sounds

Fri, 18 Aug 2023 14:48:22 GMT

As a high-level executive, your company recognizes your valuable contribution to progress and growth. In response, your compensation package looks a little different - and often more complicated - than lower-level employees. Equity compensation, such as stock options, is a common offering for executives, directors and managers. But the type of equity compensation offered may differ. If your company is offering you a phantom stock plan, or shadow stock, here’s what you need to know.

How Does Phantom Stock Work?

Phantom stock plans essentially give employees the financial benefits of owning shares of stock without actually having any ownership in the company.

The number of shares an employee receives could be based on the perceived value of the employee, meaning different employees are granted different amounts of shares.

Shadow stock may be granted to them upfront or over a certain period of time. The value of the phantom stock mirrors the value of a company’s stocks, meaning the value will fluctuate based on how the company is doing.

Once a phantom stock plan is set in place, the employee must wait a certain amount of time before they see a financial payout. This will be determined by your company, but common lengths of time include two-year and five-year periods.

Types of Phantom Stock

There are two main types of phantom stock, appreciation only and full value.

Appreciation Only

Phantom stock that is “appreciation only” does not include the value of the underlying shares. Rather, it includes the increase in stock over the amount of time that the shares are held. If a company’s phantom stock appreciates over time, employees will receive a cash payment that will equal the difference between the original price and the appreciated price.

Full Value

If a stock is “full value,” it includes the underlying value plus the amount of stock that increased while it was held. This essentially serves as a deferred cash bonus program. At some point, active employees will receive a cash payment that equals the value of the original shares plus the appreciation of the stock.

Important Considerations

Like everything, there are pros and cons to consider regarding this stock option.

Pros of Phantom Stock

Phantom stock can be seen as a motivational tool to keep important executives on board for the vesting period. By giving executives more long-term incentive to drive the well-being of the company, it can also be effective in boosting the overall productivity of a business or firm.

Employees want the stock to appreciate, because when it does, they will benefit, as well.

Cons of Phantom Stock

For the company itself, implementing phantom stock options can require third-party assistance, which may incur additional costs. For executives offered this option, it’s important to consider that a termination of employment may mean forgoing any potential payouts.

Whether you’re a business owner looking to update your benefits package or you’re a high-level executive weighing your options, keep the above considerations in mind. Before making a decision, speak with your trusted financial professional first to determine if this could work for you. Our Team stands ready to discuss - contact us today .

How to Make Your Money Last in Retirement

Tue, 15 Aug 2023 19:30:34 GMT

Since there is no exact timeline on how long we will live or what our future may hold, it’s understandable to have questions and concerns about the road ahead.

Whether you are already retired or just beginning to consider your retirement years, the question "Will I outlive my money" may cross your mind. Thankfully, there are several ways you can increase the odds that your finances will last as long as your retirement chapter. Here are a few options to help your money last and work in your favor during these milestone years...

Have a Retirement Spending Plan

Similar to a budget, a spending plan helps you organize your finances for activities such as traveling, shopping or other leisurely activities. Having a plan that is well thought out and robust will help you establish the details of what you’d like to be able to afford during retirement. Working with a financial planner during this time can help you understand how to support the retirement chapter you’ve always dreamt of.

Without a proper spending plan in place, overspending can occur. This is a common occurrence during retirement years, and is similar to overspending in younger years, with the biggest difference being that many of us are unsure or aware of how to properly plan our income during that time.

For many choosing a withdrawal rate in retirement, 4 percent is considered to be a good starting point. For example, if you saved a million dollars for retirement, the 4 percent rule would have you expecting to earn approximately $40,000 a year in income off your saved retirement dollars, not including any funds from Social Security. 1

Keep Earning

If you’re passionate about your career or enjoy helping others, you may benefit from waiting to retire for an extra year or two. Not only does staying involved increase your overall standard of living, but if you’re healthy enough and willing to continue working, your Social Security could end up being greater in your remaining years.

This will also allow your retirement assets to have an extra year to expand and strengthen. Encouraging your wealth to last throughout your retirement is easier to manage when you’re still earning, and your finances don’t need to work as hard to last.

You may also want to consider transitioning out of the workforce slowly. If you’re in a position to take on less responsibility or work part time, you may find that continuing to work is less of a chore and beneficial in the long run.

Protect Your Health

We all know that being sick can take a toll and is quite costly. Making healthier choices throughout our lifetime can help reduce the odds of suffering from conditions such as diabetes, high blood pressure, arthritis, or other chronic illnesses, in turn lowering healthcare expenses.

As we grow closer to retirement, it’s important to take into account that spending money on a healthy lifestyle, as well as receiving regular screenings and accurate medical care, can help improve quality of life. Spending a sufficient amount on preventative care now can be beneficial to lowering more costly expenses in the future.

Take Control of Your Savings

When it comes to funding your retirement, most Americans use a combination of Social Security, savings and pensions. It’s important to set yourself up for success and think outside of the box since these details may not always meet your expectations.

Keeping in mind the structure of your costs and the details of your income now as a pre-retiree will help you maintain your wealth in the long run and throughout your retirement. Remaining in control of your finances and always being aware of how much you’re spending will allow you to focus your time and energy on the experiences that matter most to you.

https://www.forbes.com/sites/davidrae/2019/09/17/money-last-in-retirement/

The Benefits of Family CFO Services for High-Net-Worth Families: Unlocking Financial Peace of Mind

Fri, 11 Aug 2023 14:20:55 GMT

For high-net-worth individuals, managing complex finances can be a daunting task. From investments and tax planning to estate management and philanthropic endeavors, the responsibilities can quickly become overwhelming. That's where Family CFO services come into play, offering a holistic approach to wealth management. Buttonwood Financial Group specializes in providing comprehensive Family CFO services tailored to the unique needs of affluent families. In this blog post, we will explore the benefits of Family CFO services and how Buttonwood Financial Group can work with high-net-worth individuals to achieve financial peace of mind.

Integrated Financial Oversight

Family CFO services offer integrated financial oversight, acting as a single point of contact for all your financial matters. Buttonwood Financial Group serves as your dedicated partner, consolidating and coordinating various aspects of your financial life. From investment management to estate planning and beyond, their team of experienced professionals takes a holistic view of your finances, ensuring that all components work together harmoniously.

Customized Wealth Management Strategies

High net worth individuals have unique financial goals and aspirations. Family CFO services provide personalized wealth management strategies tailored to your specific needs. Buttonwood takes the time to understand your goals, risk tolerance, and time horizon. With this information, we create a customized financial plan designed to preserve and grow your wealth, aligning investments, tax planning, and estate strategies with your objectives.

Comprehensive Financial Reporting

Staying informed about your financial health is crucial. Family CFO services offer comprehensive financial reporting that provides you with a clear picture of your wealth. The Team at Buttonwood Financial Group leverages advanced reporting tools to present consolidated reports, including investment performance, asset allocation, and cash flow analysis. These reports give you a holistic view of your financial position, empowering you to make informed decisions and track progress toward your goals.

Tax Optimization Strategies

Tax optimization is a key component of wealth management for high net worth individuals. Family CFO services integrate tax planning strategies into your overall financial plan. Buttonwood Financial Group collaborates with tax professionals to identify opportunities for tax savings, minimize tax liabilities, and maximize after-tax returns. By staying up-to-date with tax regulations and utilizing effective tax strategies, they help you optimize your tax position.

Multigenerational Wealth Transfer

Preserving and transferring wealth to future generations is a significant concern for affluent families. Family CFO services provide expertise in multigenerational wealth transfer planning. Buttonwood Financial Group, LLC assists in establishing trusts, implementing gifting strategies, and structuring philanthropic endeavors to ensure a smooth and efficient transfer of wealth in accordance with your wishes.

High net worth individuals face unique challenges when it comes to managing their finances. Family CFO services offered by Buttonwood Financial Group, LLC provide a comprehensive solution that addresses these challenges head-on. With integrated financial oversight, customized wealth management strategies, comprehensive financial reporting, advanced risk management, tax optimization strategies, and expertise in multigenerational wealth transfer, Buttonwood empowers you to achieve financial peace of mind.

Take advantage of the benefits of Family CFO services and unlock the full potential of your wealth. Contact us today to explore how their tailored services can help you navigate the complexities of your financial world and secure a prosperous future for you and your family.

Insurance When You Marry After 40

Thu, 10 Aug 2023 13:54:43 GMT

When you marry, you buy life insurance, right? You buy it out of consideration for your spouse, and also so that in the event of untimely death, your household can be left with some income to shoulder expenses that may not be reduced.

These days, many people are marrying later in life.

Take first marriages, for example. A recent study by the Pew Research Center says the median age for marriage in America is now 30 for men and 28 for women, compared to 23 and 21, respectively, in 1968. Today, 16% of us are waiting until our late forties (or later!) to marry. 1,2

Maybe you are marrying after age 40, or thinking about it.

This might call for other insurance considerations besides having a life insurance policy. Whether you are marrying for the first, second, third or fourth time, your earnings and net worth are probably much greater than they were 10, 20 or 30 years ago, and you also may have some age-linked or business-linked insurance priorities.

These questions are worth discussing as you consider marriage. Are you and your spouse set to run a business or professional practice? Is there a significant pattern of dementia in your family or your spouse’s family history? How about a particular, severe illness? These questions may seem challenging to mull over as you approach the big day, but being pragmatic now is wise for the years ahead.

Some of us will live very long lives, and possibly need assisted living someday.

Marrying at mid-life or later means giving serious thought to life insurance and ways to ensure extended care. The Social Security Administration projects that today, the average 65-year-old male will probably live to age 83, and the average 65-year-old female will probably live to age 85. Advances in health care may mean even longer lifespans for those who turn 65 in 10 or 20 years from now. Some of us may be so “above average” that we live past 100, and that percentage may grow with scientific breakthroughs. 3

Extended care coverage, or coverage that offers the potential to keep a household, can be important in a marriage. It may be wise to have a life insurance trust created for the benefit of one spouse or have one spouse own a particular policy.

Using a life insurance trust involves a complex set of tax rules and regulations. Before moving forward with a life insurance trust, consider working with a professional who is familiar with the rules and regulations.

Several factors will affect the cost and availability of life insurance, including age, health and the type and amount of insurance purchased. Life insurance policies have expenses, including mortality and other charges. If a policy is surrendered prematurely, the policyholder may also pay surrender charges and have income tax implications. You should consider determining whether you are insurable before implementing a strategy involving life insurance. Any guarantees associated with a policy are dependent on the ability of the issuing insurance company to continue making claim payments.

Investment Policy Committee Update - August 2023

Wed, 09 Aug 2023 14:03:35 GMT

As we move into the 2nd half of 2023, equities have been resilient in the face of a number of events since March. Events that would have whipsawed markets and maybe even started a recession in the past, were instead treated as only mildly irritating bumps in the road. Silicon Valley Bank collapse and overall banking crisis? ‘No Problem!’ Approaching the deadline on a government default? *Yawn* Another series of Fed hikes with short-term rates potentially reaching 6%? ‘Bring it on!’ A pleasantly surprising run, heroically led by a narrow set of stocks: the ‘Magnificent 7’ tech giants. Following this dramatic outperformance by those with outsized exposure to the A.I. boom, we’re reducing our tech overweight. We expect risk assets to take a breather in Q3 and the drivers of return to broaden to YTD laggards, like midcaps.

Does all this mean we’re out of the woods? Not necessarily. In our view, while the worst ‘unknown unknowns’ emanating from the bank failures now appear to be off the table and cuts in lending appear less than severe, stocks have been partially propped up by one-time infusions of liquidity – from the Fed’s emergency bank lending program and the US Treasury’s General Account (TGA) balance drawdown – which are now reversing. Between March and June, these infusions more than offset the Fed’s on-going quantitative tightening (QT). But that’s behind us now and commercial bank reserves at the Fed are falling again. We think this is likely to cause some market indigestion later in Q3. This explains our cuts to liquidity-sensitive assets like emerging market stocks and lower quality credit.

Nonetheless, we do believe the odds of recession are lower than 4 months ago. This reflects the lingering power of ‘revenge spending’ by consumers, fueled by post-pandemic pent-up demand and excess savings. But the economy’s impressive resilience may also make the endgame battle against inflation trickier than the 9%-3% freefall in CPI the last 12 months. The Fed appears committed to flexing its rate-hiking and QT muscles into the final rounds of this fight, and Treasury markets have re-priced accordingly (perhaps even overshooting). We’re taking advantage of this surge to add yield via floating rate Treasuries and TIPS, which we see as having higher than normal real yields, complemented with long-term Treasuries. This barbell strategy may help guard against the cumulative effects of Fed tightening potentially proving to be excessive vs an already weakened foe, bringing to fruition what so many have been calling for the last 18 months: the R word.

In summary:

In aggregate, we move to a neutral stock/bond position while reducing overall active risk. In our last trade in March, we shifted underweight stocks vs. our benchmark based upon concerns that regional bank stress would cause broader contagion and liquidity issues across the US economy. Following swift policy response, we saw markets largely shrug off this risk and the concerns of such a snowball effect have been eliminated in our view.

Within equities we are taking profits on year-to-date winners as we expect some broadening out of stock performance away from the top Tech names. We are trimming U.S. tech and rotating into companies we believe will be the beneficiaries of fuller market breadth, like U.S. midcap stocks. We are shifting our regional positioning in favor of the US while reducing emerging market exposure. Our caution on EM companies stems from a backdrop of scarce global liquidity and weak global trade.

On the fixed income side, we are recalibrating the bond sleeve by introducing a treasury barbell – adding a floating position on the front end of the curve to benefit from heightened yield levels, complemented by long end exposure as a ballast to equity risk. Along with this we are reducing credit risk, preferring to move up in quality across our bond exposures.

We will continue to provide ongoing updates on our views and investment positioning. Should you have specific questions about our strategy, please let us know and we will make sure to review details at our next meeting. And while we don’t recommend fixating on short term market fluctuations, if you would like to check specific investment performance across all your accounts, our Buttonwood Portal is available 24/7. Or you can contact us, and we will provide reports specific to your questions and financial life.

Thank you for your continued trust and allowing us to coordinate your asset management as part of our Family CFO services!

Best Practices When Paying Off Medical School Debt

Thu, 03 Aug 2023 15:36:10 GMT

Taking on medical school debt can be a smart investment to increase your future earning potential. However, you still need to pay off that debt in a smart way to make sure that it doesn't cost you any more than it needs to.

1. Don't Throw All Your Cash at Your Debt

This may seem counter-intuitive, but don't throw every last cent from your paycheck towards paying your loans off early. It's always important to keep some cash on hand in an emergency fund, to cover unexpected events like car repairs or health expenses. You don't want to turn relatively inexpensive student loan debt into credit card debt because you had no cash savings to cover an emergency.

Next, think about other goals you have, such as buying a home or getting married. Again, not keeping extra cash to cover these expenses could lead to you feeling pressured to take out new debt at a higher rate.

2. Consider Income-Driven Repayment

Income-driven repayment programs, such as Pay As You Earn, cap your monthly student loan payments at around 10 percent of your income. While you might want to knock your student loans out as quickly as possible, trying to do so during residency or even the first few years of your career could put you in a needless cash crunch.

If you're worried about interest, remember that federal income-driven plans cap the amount of interest that can accrue while you're in the plan. Finally, you can always make extra payments above the minimum when you can afford to comfortably do so.

3. Use Caution When Refinancing

You'll likely be bombarded with offers from private lenders offering to refinance your federal student loans at a lower rate. If these loans were equal, it would be a smart move, but that is not always the case.

Federal student loans have a number of benefits including income-driven repayment options, public service loan forgiveness opportunities, and a more forgiving way of dealing with financial hardships (such as long-term disability). Therefore, if you refinance to a private loan, you're taking on added risk for the lower rate.

4. Avoid Lifestyle Creep

When you start getting a bigger paycheck, avoid the temptation to dramatically increase your spending. Some people say to keep living like a resident, but you don't even need to take it that far.

Prioritize building an emergency fund, mid-term savings goals, maxing out your retirement accounts, and paying down your student loans. Once those goals are met, you can treat yourself a little for your hard work.

5. Budget Your Salary, Invest Your Bonuses

It's a good idea to create a budget based on your fixed salary. Treat any signing bonuses, annual bonuses, or overtime compensation as an unexpected windfall. Use them towards an extra student loan payment or as a way of meeting your savings goals faster.

6. Pay Off Higher Interest Student Loans First

There is no benefit to paying off smaller student loans first, and most of the time you'll only have one monthly payment even with multiple loans. Pay off the highest interest rate loans first to pay less in interest over time.

When you're doing this, watch how your payments are applied. If you set a monthly automatic payment higher than the minimum, it may be divided between all of your loans. The same thing applies if you make an extra payment without specifying the loan it should go towards. If you pay online, there should be an option to select the specific loan you want to make a payment on.

To learn more about how to strategize paying off your medical school debt and how to handle other priorities, like retirement savings, contact us now to set an appointment with a financial advisor.

Estate Planning Essentials: Protecting Your Wealth and Loved Ones

Fri, 28 Jul 2023 16:03:41 GMT

As an affluent individual, you've worked hard to build and accumulate wealth over the years. It's essential to ensure that your assets are protected and distributed according to your wishes. This is where estate planning plays a critical role. Estate planning involves developing a comprehensive strategy to manage and transfer your wealth, while minimizing taxes and providing for your loved ones. Buttonwood Financial Group specializes in estate planning services tailored to the unique needs of affluent families. In this blog post, we will explore the importance of estate planning and how Buttonwood can help you protect your wealth and secure the future for your loved ones.

Maximizing Control and Minimizing Uncertainty

Estate planning allows you to retain control over your assets and make important decisions regarding their distribution. Without a proper plan in place, your assets may be subject to intestacy laws, leaving your loved ones with limited control and potentially causing disputes among family members. Buttonwood Financial Group works closely with you and your estate planning attorney to develop a comprehensive estate plan that reflects your wishes, ensuring a smooth transfer of assets and minimizing uncertainty for your beneficiaries.

Minimizing Estate Taxes

Estate taxes can significantly impact the wealth you pass on to your heirs. Proper estate planning can help minimize estate taxes and maximize the amount of wealth preserved for future generations. Buttonwood has a Team of experienced professionals who are well-versed in estate tax laws and can provide strategic guidance to minimize your tax liabilities. We can assist in implementing various tax planning strategies, such as gifting, charitable giving, and establishing trusts, to optimize your estate plan and reduce tax burdens.

Protecting Assets from Creditors and Lawsuits

Affluent individuals often face the risk of potential creditors and lawsuits. Estate planning can provide a layer of protection for your assets, shielding them from potential claims. Buttonwood Financial Group will work with you to explore asset protection strategies, such as the establishment of trusts or the use of business entities, to safeguard your wealth and ensure it remains intact for your intended beneficiaries.

Preserving Family Harmony

Estate planning goes beyond financial considerations. It also allows you to address family dynamics and preserve family harmony. We understand the importance of open communication and provide a supportive environment for discussing sensitive matters. We can assist you in developing strategies to address potential conflicts, establish clear instructions for the distribution of assets, and ensure your loved ones are taken care of in the manner you desire.

Planning for Incapacity

While planning for the distribution of assets upon your passing is crucial, it's equally important to plan for potential incapacity during your lifetime. Estate planning includes documents such as durable powers of attorney and healthcare directives that designate individuals to make decisions on your behalf if you become unable to do so. We can guide you through the process of establishing these essential documents, ensuring that your wishes are respected, and your affairs are managed according to your preferences.

Estate planning is a vital aspect of managing and protecting your wealth for the benefit of your loved ones. With the expertise and tailored solutions provided by Buttonwood Financial Group, you can navigate the complexities of estate planning with confidence. From maximizing control and minimizing uncertainty to minimizing estate taxes, protecting assets from creditors and lawsuits, preserving family harmony, and planning for incapacity, we will work closely with you to develop a comprehensive estate plan that reflects your goals and priorities.

Take the proactive step of estate planning today to protect your wealth and ensure a secure future for your loved ones. Contact us to schedule a consultation and begin the process of safeguarding your assets and preserving your legacy.

Safeguarding Your Parents' Finances: A Guide for the Sandwich Generation

Wed, 26 Jul 2023 21:41:37 GMT

No one likes to think of their parents getting older and needing assistance, but it is the reality many of us face. If you are in the Sandwich Generation, you may find yourself caught between the responsibility of caring for aging parents and supporting your own children’s needs. Among the many challenges Sandwich Generation individuals face, protecting parents from elder financial abuse is of utmost importance. Baby Boomers and the Silent Generation are getting older, and with their accumulated assets, they have a higher chance of being defrauded than those who are younger. According to one estimate , seniors collectively lose up to $36.5 billion a year to elder abuse. Below, we will delve into the topic of elder financial abuse and offer practical steps you can take to safeguard your parents’ finances.

Understanding Elder Financial Abuse

Elder financial abuse is a distressing reality affecting thousands of senior citizens every year. This exploitation can take various forms, such as scams, fraudulent schemes, undue influence, and unauthorized use of financial resources. Unfortunately, older adults are often targeted due to their vulnerability, cognitive decline, and lack of familiarity with new technology.

Some warning signs of elder financial abuse may include:

Unusual activity in bank accounts; such as large or unexplained withdrawals
Withdrawals from an inactive account
A newly opened bank or brokerage account
New credit card or cards with balances
Bank, credit card or brokerage account statements sent somewhere other than the standard mailing address
Suspicious looking signatures
Closing / cashing in of a Certificate of Deposit or sale of an investment without worrying about penalties

Protecting Your Parents from Financial Abuse

Tip #1: Open Lines of Communication

The foundation of protecting your parents from financial abuse lies in maintaining open, honest, and respectful communication with them. Initiate regular conversations about their finances, estate planning, and financial goals. Create a safe space where they feel comfortable discussing any concerns they may have regarding their financial matters. Listen more than talk.

Tip #2: Educate Your Parents

Many seniors are not fully aware of the potential risks and scams prevalent in the digital age. It’s important to educate your parents about common types of financial fraud, such as phishing emails, fake charities, fake lotteries, and fraudulent investment schemes. The opportunity to ‘teach’ by showing or talking about specific examples can help them know how to identify warning signs. It can be beneficial to regularly emphasize the importance of never sharing sensitive information with those they don’t know.

Tip #3: Monitor Financial Accounts

When reviewing estate planning with your parents, establish a Durable Power of Attorney (DPOA). With your parents' consent via the DPOA, regularly monitor their financial accounts for suspicious activity. Keep an eye out for unusual transactions, large withdrawals, or significant changes in their financial patterns. Stay vigilant, especially if your parents have hired caregivers or others who have access to their accounts.

Tip #4: Collaborate with Trusted Professionals

You may already have a team of trusted professionals, including attorneys and a financial advisor or Family CFO, who assist in your own financial planning. Engage these professionals to help safeguard your parents’ finances as well. If you are interested in a Team to assist and coordinate these steps with you, our Family CFO services provide this type of assistance.

Tip #5: Set Up Automated Systems

Consider setting up automated systems for bill payments and regular expenses to minimize the risk of missed payments or late fees. Automatic deposits can also ensure their retirement income is received safely and consistently. In contrast with the traditional investment focused financial planners, as a Family CFO we can assist with the development and monitoring of ongoing cash flows.

Tip #6: Stay Informed on Scams and Trends

Elder abuse tactics are constantly evolving. Stay informed about the latest scams and trends in financial exploitation to better protect your parents. Regularly update your parents on potential risks and precautions they can take to stay secure. If you suspect elder fraud, don’t wait to call and report the fraud.

Tip #7: Proactively Address Cognitive Decline

It’s unnerving as you notice signs of cognitive decline in your parents, however not taking action can lead to greater challenges. Encourage, or take them to visit their healthcare provider for evaluation and, if necessary, explore options for financial management support. Buttonwood works with professionals like Advocates for Seniors .

Tip #8: Freeze Credit Lines

If your parent is no longer in need of their credit for future purchases due to advancing age or a surplus of assets, you can freeze their credit lines at the three credit agencies: Experian , Equifax , and TransUnion . This can prevent thieves from accessing your parents' credit for fraudulent purchases and credit lines.

Tip #9: Add to "Do Not Call" List

If they are not already registered, we recommend registering your parent for the National Do Not Call Registry and the National Do Not Mail List to remove unsolicited phone calls and junk mail offers.

As the key ingredient to the Sandwich, our Generation is juggling the challenging responsibilities of caring for both parents and children. However, with these responsibilities comes the opportunity to protect your parents from elder financial abuse. Together, we can create a secure financial environment for our loved ones in their golden years. Contact us today to learn more.

Investing in Alternative Assets

Tue, 11 Jul 2023 15:50:39 GMT

Diversifying Your Portfolio Beyond Stocks and Bonds

When it comes to building a strong investment portfolio, diversification is key. While stocks and bonds have traditionally been the go-to investment options, savvy investors are increasingly turning to alternative assets to further diversify their holdings. As a trusted financial partner, Buttonwood Financial Group, LLC understands the importance of exploring alternative investment opportunities. In this blog post, we will delve into the world of alternative assets, highlighting their potential benefits and discussing why they are worth considering for portfolio diversification.

What are Alternative Assets?

Alternative assets encompass a wide range of investments that fall outside the traditional categories of stocks, bonds, and cash. These investments often possess unique characteristics, such as lower correlation with traditional markets, potential for higher returns, and the ability to hedge against inflation. Some common types of alternative assets include:

Real Estate: Investing in residential, commercial, or rental properties provides an opportunity to generate income and benefit from potential property value appreciation.
Private Equity : By investing in privately-held companies, investors can access potentially high-growth businesses that are not publicly traded.
Hedge Funds: Hedge funds employ various investment strategies and often aim to achieve positive returns regardless of market conditions.
Venture Capital: Investing in early-stage companies with high growth potential can be lucrative, albeit typically involving higher risk.
Private Debt: This includes investing in loans, promissory notes, or other debt instruments, offering potential fixed income and diversification benefits.
Commodities: Commodities such as gold, silver, oil, and agricultural products can act as a hedge against inflation and provide diversification benefits.

Benefits of Alternative Asset Investments:

Portfolio Diversification: Adding alternative assets to your investment portfolio helps reduce the overall risk by diversifying across different asset classes. These assets often have low correlation with traditional markets, meaning their performance may not be influenced by the same factors that affect stocks and bonds.
Potential for Higher Returns : Alternative assets have the potential to deliver attractive returns that may outperform traditional investments over the long term. Investments in real estate, private equity, or venture capital, for example, can generate substantial returns if selected wisely.
Inflation Hedge: Certain alternative assets, such as commodities and real estate, have historically shown resilience against inflationary pressures. Investing in these assets can help protect your purchasing power and preserve wealth during inflationary periods.
Access to Unique Opportunities: Alternative assets provide access to investment opportunities that are not readily available through public markets. Investing in private companies or specific industries allows you to participate in exciting ventures and potentially benefit from their success.
Risk Mitigation: Alternative assets, when properly selected and managed, can offer risk mitigation benefits. By diversifying across uncorrelated asset classes, you can reduce the impact of market volatility on your overall portfolio.

Partnering with Buttonwood Financial Group for Alternative Asset Investments:

At Buttonwood Financial Group, we understand alternative assets play a crucial role in diversifying investment portfolios. Here are some considerations for working with the Buttonwood Team as your Family CFO:

Expertise : Our experienced team possesses deep knowledge of alternative investments and can help you navigate the complexities associated with these asset classes. We stay up-to-date with the latest market trends, identifying promising opportunities and assessing potential risks.
Customized Approach: We take the time to understand your financial goals, risk tolerance, and investment preferences. Based on your unique circumstances, we craft tailored investment strategies that incorporate alternative assets, ensuring they align with your overall investment objectives.
Due Diligence : We conduct thorough due diligence on potential alternative investments, evaluating their track records, management teams, and alignment with your risk profile. Our rigorous selection process aims to identify investments with strong potential for success.
Risk Management: While alternative assets can offer attractive returns, they also come with their own set of risks. We employ robust risk management techniques to ensure your portfolio remains well-diversified and aligned with your risk tolerance.

Diversifying your investment portfolio beyond traditional stocks and bonds is essential for mitigating risk and unlocking new opportunities for growth. Alternative assets provide a pathway to diversification, potential higher returns, and the ability to hedge against inflation. By partnering with Buttonwood Financial Group, you gain access to our expertise, personalized approach, and diligent risk management practices, allowing you to navigate the world of alternative investments with confidence. Expand your investment horizons and explore the potential of alternative assets to enhance your financial success. Contact us today to learn more.

Wealth Transfer and Succession Planning: Ensuring a Lasting Legacy

Thu, 06 Jul 2023 15:37:40 GMT

Building wealth is a significant achievement, but ensuring its preservation for future generations is equally important. As a trusted partner in multigenerational financial planning and investment management, Buttonwood Financial Group understands the significance of wealth transfer and succession planning. In this article, we will explore the importance of these essential components in safeguarding your family's financial legacy and provide insights into effective strategies for ensuring a lasting heritage.

The Significance of Wealth Transfer and Succession Planning:

Wealth transfer and succession planning encompass a range of considerations and strategies that aim to protect your hard-earned assets and pass them on seamlessly to future generations. These processes involve the careful management of your estate, business, investments, and other financial assets, ensuring a smooth transition of wealth while minimizing potential tax burdens and legal complications.

Without proper planning, the transfer of wealth can become a complex and contentious process, resulting in potential disputes, family rifts, and unnecessary financial burdens. By engaging in comprehensive wealth transfer and succession planning, you take proactive steps to secure your family's future, preserve your legacy, and provide a solid foundation for future generations.

Key Components of Wealth Transfer and Succession Planning:

Estate Planning: A well-structured estate plan is the cornerstone of wealth transfer and succession planning. It involves the creation of wills, trusts, and powers of attorney, allowing you to specify how your assets should be distributed, who will manage them, and how healthcare decisions will be made if you become incapacitated. Estate planning helps minimize estate taxes and ensures that your assets are protected according to your wishes.
Business Succession Planning: If you are a business owner, an effective business succession plan is crucial for the smooth transition of your company to the next generation of leaders. It involves identifying and grooming potential successors, establishing a clear timeline for the transition, and ensuring the business's financial stability during the process. Our Team at Buttonwood Financial Group can assist you in developing a tailored business succession plan that aligns with your specific goals and objectives.
Tax Planning: Efficient tax planning is a vital aspect of wealth transfer and succession planning. Understanding the tax implications of various wealth transfer strategies can help you minimize tax liabilities and maximize the value of your assets. Buttonwood Financial Group, LLC's experienced team can provide valuable guidance on tax-efficient strategies that align with your overall wealth transfer goals.
Philanthropic Goals: Wealth transfer planning also offers an opportunity to leave a lasting impact on charitable causes that align with your values. Incorporating philanthropy into your wealth transfer plan can provide tax benefits while supporting causes close to your heart, enabling you to create a positive legacy beyond your financial assets.

The Benefits of Partnering with Buttonwood Financial Group:

At Buttonwood Financial Group, we are committed to helping you preserve your wealth and build a lasting legacy. Our team of experienced financial professionals understands the complexities of wealth transfer and succession planning and can provide the expertise needed to navigate this intricate landscape. By partnering with us, you can benefit from:

Customized Solutions: We take the time to understand your unique circumstances, goals, and aspirations, crafting tailored solutions that address your specific needs and objectives.
Holistic Approach: Our comprehensive approach to wealth transfer and succession planning ensures that all aspects of your financial situation are considered, from estate planning and tax strategies to business succession and philanthropic goals.
Expert Guidance: With extensive experience in wealth management and financial planning, our team provides expert guidance, keeping you informed about the latest legal and tax regulations while offering proactive strategies to optimize your wealth transfer plan.
Ongoing Support: Wealth transfer planning is not a one-time event but a continuous process that requires periodic review and adjustments. Buttonwood Financial Group remains by your side, providing ongoing support and making necessary adaptations as your circumstances and goals evolve.

Wealth transfer and succession planning are integral to preserving your financial legacy and ensuring a smooth transition of assets to future generations. By engaging in thoughtful planning with the guidance of Buttonwood Financial Group, you can establish a robust framework that protects your wealth, minimizes tax liabilities, and creates a lasting impact. Take control of your financial future and secure a legacy that will endure for generations to come. Contact us today to learn more.

Maximizing Tax Benefits: Unveiling the Advantages of Health Savings Accounts (HSAs)

Tue, 27 Jun 2023 20:37:02 GMT

In today's ever-changing landscape of healthcare expenses, it is essential to explore strategies to both help mitigate medical costs and maximize tax benefits. One such opportunity gaining popularity in recent years is the Health Savings Account (HSA). In this update, we explore the enticing tax benefits offered by HSAs, shedding light on how they can serve as a prudent financial vehicle for individuals and families seeking to secure their healthcare future and grow their wealth.

Pre-Tax Contributions

One of the most notable advantages of an HSA lies in its pre-tax contribution feature. Generally, when you contribute to an HSA, the amount reduces your taxable income, thus reducing your overall tax liability. This means the money you contribute is not only shielded from federal income tax but also from Social Security and Medicare taxes, resulting in potentially significant savings. By taking advantage of this pre-tax benefit, you can effectively stretch your investment dollars.

Tax-Free Growth

Unlike other savings or investment accounts, interest, dividends, and gains realized within an HSA are not subject to taxation. By allowing your HSA contributions to grow over time, free of annual tax implications, you can harness the power of compounding and potentially accumulate substantial funds for future healthcare expenses. The longer you contribute and not use the assets in your HSA, the greater the potential tax benefits become.

Tax-Free Withdrawals

Perhaps the most compelling aspect of an HSA is the ability to withdraw funds tax-free for qualified medical expenses. When you utilize HSA funds for Qualified Medical Expenses (QME’s), such as doctor visits, prescriptions, or medical procedures, you are not subject to tax on the withdrawals. The list of QME’s is quite extensive. This third tax advantaged feature can provide significant relief when managing unforeseen healthcare expenses or when planning for anticipated medical costs, such as retirement before age 65. Furthermore, there is no time limit to spend HSA assets, allowing you to accumulate and utilize them at your discretion.

Triple Tax Advantage

As described, HSAs offer a unique triple tax advantage. Contributions are tax-deductible, growth within the account is tax-free, and withdrawals for qualified medical expenses are tax-free. This trifecta of tax benefits makes HSAs an attractive option for individuals and families seeking to optimize their healthcare financial planning.

Long-Term Savings Potential

Considering the tax-free growth and tax-free withdrawals for healthcare expenses, HSAs have the potential to serve as a long-term savings vehicle. Assuming you remain in good health and don't exhaust your HSA assets, you can accumulate a substantial balance over time. This surplus can be used for future medical needs, including those in retirement, when healthcare costs often rise.

Maximizing HSA Contributions

Many employers will contribute to your HSA on your behalf, and if you find yourself in this situation, we recommend taking advantage of it! Be aware employer contributions are generally considered part of your overall contribution limit.

Maximizing contributions to your HSA is one of the best strategies to ensure you are getting the best bang for the buck when it comes to tax advantaged savings for medical expenses. Furthermore, many HSA plans offer the ability to rebalance assets into growth-oriented investments. By engaging with a financial advisor who provides strategy across your full balance sheet, the benefits of tax-free compound growth are leveraged.

Health Savings Accounts present a powerful financial strategy to address rising healthcare costs while enjoying significant tax advantages. With their pre-tax contributions, tax-free growth, and tax-free withdrawals for qualified medical expenses, HSAs offer individuals and families a compelling solution to navigate the complexities of today’s healthcare system. By utilizing an HSA, you will have more control of your healthcare future while simultaneously decreasing your tax bill - a win-win situation for your financial well-being! If you would like to explore this strategy further with a member of our Advisory Team, contact us for a conversation.

Weekly Market Commentary: Month Remains Strong

Mon, 26 Jun 2023 16:25:56 GMT

The Week on Wall Street

Stocks took a breather last week as investors digested the previous week’s surge and the month-to-date solid gains.

The Dow Jones Industrial Average lost 1.67%, while the Standard & Poor’s 500 fell 1.39%. The Nasdaq Composite index dropped 1.44% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, tumbled 2.00%. 1,2,3

Rally Stalls

The stock market drifted lower last week as the tug-of-war between bulls and bears played out in a week that was light on market-moving news.

After falling in the first days of a holiday-shortened trading week, stocks rebounded on Thursday to recover some of the week’s losses. Stocks looked past Congressional testimony by Fed Chair Powell, who said two more rate hikes are likely in the wake of interest rate hikes by central bankers in the U.K., Switzerland, Norway, and Turkey.

The retreat continued into Friday, fueled by global growth fears from new economic data indicating more robust economic slowdowns in the eurozone, Japan, and Australia.

Housing Sentiment Improves

Home builders’ confidence edged into positive territory for the first time in 11 months, aided by strong demand, low inventory, and a recovering supply chain. May’s new home sales, which rose 21.7%–the most significant percentage gain since October 2016, validated this confidence. The number of new home starts in May (1.63 million) hit a 13-month high, with both single- and multi-family homes up substantially. 4,5

Sales of existing homes in May rose 0.2% month-over-month while declining 20.4% from a year ago. The existing home market continues to suffer from low inventory and still-high prices. The median price of a home sold in May declined 3.1% year-over-year to $396,100. 6

This Week: Key Economic Data

Tuesday: Durable Goods Orders. New Home Sales.
Thursday: Gross Domestic Product (GDP). Jobless Claims.
Friday: Personal Income and Outlays. Consumer Sentiment.

Source: Econoday, June 23, 2023 - The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

This Week: Companies Reporting Earnings

Tuesday: Walgreens Boots Alliance, Inc. (WBA).
Wednesday: Micron Technology, Inc. (MU), General Mills, Inc. (GIS).
Thursday: Nike, Inc. (NKE), McCormick & Company, Inc. (MKC).

Source: Zacks, June 23, 2023 - Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.

Risk Management Insurance: Property, Casualty, Life, Disability, and Extended Care

Thu, 22 Jun 2023 14:45:21 GMT

When it comes to creating a sound financial strategy, many people think of creating a diversified portfolio or making sure they’re regularly contributing to their retirement plans. But a good financial strategy also includes insuring against the unexpected and making sure that no matter what happens, you’re covered.

If you’re younger and have many years of life ahead of you, you might wonder why you need to consider disability insurance or life insurance. But the point of insurance is to expect the unexpected and make sure that you’ve taken care of yourself and your family if something happens to you.

Each type of insurance has specific coverages and restrictions, and some types of insurance make more sense than others, depending on your age. Talk with your financial advisor to ensure insurance is a part of your strategy.

Property insurance may take the form of homeowners insurance, renters insurance, or insurance against a specific natural disaster, like flood or earthquake insurance. Property insurance typically covers the building itself and the contents within it should something happen. A rental policy will cover your possessions as a renter should something happen to your building. You’ve spent a lifetime building up your possessions; if everything were lost tomorrow, you wouldn’t want to outlay the funds to rebuy everything you own. 1
Casualty insurance protects you against claims or lawsuits made against you by outside parties. Casualty insurance is already bundled in if you have homeowners or auto insurance. For example, if someone falls down deck stairs because you failed to maintain them, the casualty part of your homeowners insurance would cover this type of claim. 2
Life insurance is a way of providing financial support to your loved ones after you’re gone. You’ll pay a premium, typically monthly or annually, and pay a death benefit to your beneficiaries after you’re gone. Death benefit money can be used to pay funeral expenses, mortgage or rent payments, and day-to-day living expenses. Younger people typically overlook this type of insurance, but life insurance should be a part of everyone’s financial plan. 3
Disability insurance protects you if you become disabled and unable to work. It’s helpful to think of disability insurance as insurance for your income. The two types of disability insurance, short-term disability (STD) and long-term disability (LTD), are typically offered as part of or in addition to the insurance options provided by your employer. STD typically covers periods of injury or disability from a few weeks to a year, while LTD usually offers several years of continuous income replacement after a work-ending workplace injury. These policies only typically cover a percentage of your previous income. Still, having at least some of your income covered is better than nothing. 4
Extended care insurance , sometimes referred to as long-term care insurance, is designed to help cover you after age 65 and provide in-patient or at-home care for a chronic condition. Extended care insurance can cover nursing homes, assisted living facilities, home health aides, and private-duty nurses. Extended care insurance is also less expensive the younger you are, so if you’re approaching 50, it’s something to start considering. 5

Insurance is an essential part of your life and financial strategy. By preparing for the worst (while hoping for the best), you’ll be positioned to handle changes in your life and provide yourself with some protection against significant disasters or illnesses. Remember, you can’t control everything that happens in life, but you can create a plan that will support you no.

Keeping Summer Safe: Pool and Spa Safety Tips

Wed, 14 Jun 2023 20:38:19 GMT

The backyard pool can be great summer fun, but it can also be a source of danger for children. Drowning kills nearly 4,000 people a year in the United States. It's also the leading cause of preventable death among children aged 1 - 4. 1,2

If you have a pool or spa, here are seven simple tips to keep your children and their friends safe during swimming season.

1. Adult Supervision

Always be present when children are using the pool. As any parent knows, it takes only moments for children to place themselves in dangerous situations. Stay attentive.

2. Keep a Life Ring Nearby

Have something that can quickly pull someone out of the pool. Always check that it is in good condition.

3. Fence and Alarms

Make sure your pool is protected by a fence. You may even want to add an alarm system that warns you of unauthorized use of the pool.

4. Rope or Float Line

This distinguishes between the shallow and deep ends and serves as a visual reminder to young children not to pass.

5. Lock Your Hot Tub Cover

Young children may not be tall enough to stand up in a hot tub or fully understand how quickly heated water can lead to dehydration and/or other accidents.

6. Safely Store All Pool Chemicals

These chemicals represent a danger not only to children but also to the adults who use them. Find a safe storage area and handle them properly.

7. Cover Pool Drains

Suction entrapment can lead to death. Make sure all drains are properly installed with certified covers. Periodically check to ensure that they are not damaged.

With these simple steps, you can increase the safety of your pool and/or hot tub without decreasing the fun and joy they bring.

https://www.cdc.gov/drowning/index.html?CDC_AA_refVal=https%3A%2F%2Fwww.cdc.gov%2Fsafechild%2Fdrowning%2Findex.html https://www.cdc.gov/healthywater/swimming/safe-swimming-week/feature.html
The information in this material is not intended as legal advice. Please consult legal or insurance professionals for specific information regarding your individual situation.

Upsizing vs Downsizing in Retirement

Fri, 09 Jun 2023 14:03:38 GMT

When the kids leave the nest and the family home seems too big and requires too much work to maintain, many retirees opt for new living arrangements. For many, the dream is to relocate to a warmer climate and a smaller home. Others may decide to stay put and rent out a portion of a large house to help with finances. Many others choose to remain in their current living conditions throughout their golden years.

No matter what living situation you choose, the key is to plan early and plan strategically. Weigh all your options, consider the financial costs, and research new locations carefully.

Let's look at the pros and cons of downsizing and upsizing in retirement to help you make the best choice.

The Benefits of Downsizing

According to TD Ameritrade, 42% of Americans plan to downsize in retirement. Whether that choice is because they want to move to a warmer climate, want to be closer to family, or want to limit their housing expenses, downsizing has many benefits. 1

Here are just a few:

Financial Freedom

Having financial freedom is a top concern for most seniors. Selling big and buying small may free up capital to purchase a new home or condo and invest the proceeds for extra income or pay off outstanding debt.

Less Maintenance

Maintaining and cleaning a smaller home is much easier and requires less upkeep. Townhomes and condos in retirement communities often include yard care and other services for seniors. Most communities have homeowners' association fees, so it's important to understand the yearly or monthly costs and what they cover.

Lower Monthly Costs

Monthly fixed expenses, such as utility bills, property taxes, and upkeep, are less expensive for most small homes. In addition, scaling back to one car will save you money on insurance and auto maintenance.

A Simpler Life

Living simply means that you now have time to enjoy the things you love. Maybe it's picking up an old hobby, attending special interest classes, traveling, or just good old-fashioned relaxing. Having fewer housing costs and maintenance means more time to spend on other things.

The Considerations of Downsizing

Of course, downsizing does have some drawbacks. Here are some to consider:

The Stress of Selling Your Home

Selling your home and moving is stressful. There are no two ways about it! Decluttering, repairs, and staging to get a home ready to sell can be time consuming and costly. It also takes organization and the will to part with what you no longer need or that won't fit into a smaller home. Parting with lifelong treasures can be an emotional ride.

Less Privacy

Less privacy is often the tradeoff of moving into smaller living quarters. There is less room to spread out in the house, and close neighbors are usually one patio or porch away in retirement communities, townhomes, and 55+ neighborhoods.

Less Space and Storage

Space is at a premium in small homes. Cramped quarters and less space are things to consider if you love to entertain and have family and friends over. Storage unit facilities are located near many retirement areas and are an option for those needing extra storage space that a smaller place just doesn't have (but that's one more expense to add to your retirement budget).

Expensive

It's expensive to move. Consider moving costs, real estate transaction fees, and tax liabilities when planning to downsize.

The Benefits of Upsizing in Retirement

One thing that's not often talked about in retirement is seniors choosing to upsize in their retirement, rather than downsize. There are many benefits to buying a bigger and newer home. 2

Less Stress

Newer homes typically need less maintenance and renovations, which may become more difficult with aging. Buying a newer home can take the stress out of worrying about making much needed upgrades to your home.

More Space

Upsizing makes sense if family and friends visit often, or if extended family shares the home.

Option to Earn Extra Income

Earning income from a larger home often makes financial sense for retirees. Upsizing offers an opportunity to rent out additional living space in unused rooms, basement apartments, or a backyard accessory dwelling unit.

Considerations of Upsizing

Of course, while there are some benefits to upsizing, there are also some considerations. The main consideration is how much it will cost to keep your large home. Retirement income planning is the key to living a comfortable retirement, so it's important to run the numbers or work with a financial advisor to determine whether staying in your home is the right decision for you.

No matter whether you choose to downsize or upsize, the strategies for transitioning are the same. Research all financial aspects of a move, consider tax obligations, visit areas, or even rent for a while where you might relocate, and lastly, have all your financial ducks in a row, so no unforeseen problems arise. If you aren't sure which move to make, contact us today for a review of your retirement plan.

Mid-Year Financial Check-In: Are You on Track to Reach Your Year-End Goals?

Wed, 07 Jun 2023 15:43:39 GMT

The summer season is in full force as we near the last half of 2023. Whether you’re excited for the cooler months ahead or enjoying summer activities, midyear is officially here. Now is a great time to slow down and take stock of your comprehensive financial picture and how it’s lining up with your year-end goals. Below are a few ways to check in on your financial health.

Check-In #1: Evaluate Current Debt

Holiday retail sales hit a staggering $943 billion last year, meaning our spending won’t be slowing down anytime soon as we head into the holiday season later this year. In fact, people expect to spend around $867 on Christmas presents alone, and that doesn’t include holiday parties, decorations, travel, etc. With your spending likely to increase toward the end of the year, now is a great time to evaluate any current debt you may have accumulated throughout the year. 1,2

You may want to write down all debt currently owed, including credit cards, student loans, mortgages, and car payments. Be sure to also keep track of the minimum payment amounts and due dates. Once you have everything laid out and organized in one place, you can begin focusing on how to minimize or eliminate certain debts. For example, if you’ve been making regular payments to your credit card company, you could try negotiating a lower interest rate or look into transferring the debt to another company. Seeing all your debt in one place may sound stressful, but it’s an important first step in taking control and minimizing what you can.

Check-In #2: Check Your Credit Score

Can you remember the last time you checked your credit score? It’s possible (and likely) that your credit score is really thought about only when it’s time to apply for a new credit card, take out a loan, or make any other large purchases. If you haven’t given it a good look in a while, now’s the time. Your credit scores can give you a decent overview of how your financial health is doing. In addition, they can help make you aware of any potential red flags, such as missed payments, identity theft, or unauthorized use of your credit cards.

Check-In #3: Readjust Your Retirement Fund

If you contribute to an employer-sponsored retirement fund, such as a 401(k) or 403(b), take some time to check in on your account. This is especially important if you set automatic deposits a year or two ago and haven’t thought about it since. For 2023, the 401(k) contribution limit is $22,500 for those under 50 or $30,00 for those 50 and older. If you’re heading toward retirement and trying to make the most of your employer-sponsored plan, you now have the opportunity to save even more in your account.3

Check-In #4: Refill Your Savings

With family vacations, weekend trips, and summer concerts, enjoying the warmer weather can cost quite a bit. The temptation to tap into your savings is strong, and, if you did, you’re not alone. But as we gear up for the holidays, now’s the perfect time to work on filling it right back up. If you set a savings goal for the year, do a quick progress report. Have you nearly reached your goal? Then you may want to challenge yourself to save even more. If you’re nowhere near it, focus on adjusting your spending habits to better support your savings goal.

Check-In #5: Rethink Your Goals

Think back on everything that’s already happened this year. It’s likely some unexpected events occurred, isn’t it? From unfortunate events, such as divorce, death, or property damage, to exciting celebrations, such as proposals or births, moments large and small can have a significant impact on your financial standing and goals. Revisit the goals you made at the beginning of the year and make sure they are still well aligned with your current standing. If not, take some time to look at your entire financial picture and future needs, and create new goals that better reflect them.

With a bit of time to prepare, you can enter the second half of the year feeling financially confident and on track to meet your goals. As vacations wind down and school starts back up, find some time to yourself to readjust, reevaluate, and rethink as needed to stay on track for the rest of the year.

Unlocking the Future: Education Planning Strategies for Affluent Families

Wed, 24 May 2023 15:00:00 GMT

Education is a lifelong asset that holds the key to personal growth, professional success, and a fulfilling life. As a multigenerational family, you understand the importance of providing the best educational opportunities for your children and future generations. This 9-point summary aims to guide you through effective education planning strategies, with a special focus on 529 plans, to help you secure the brightest future for your loved ones.

Understanding the Importance of Education Planning

Investing in education is one of the most valuable gifts you can give to your children. By proactively planning for their educational journey, you not only support their personal development but also pave the way for long-term financial stability and success.

Education Planning Strategies:

Start Early: Time is a crucial factor when it comes to education planning. The earlier you begin, the more time your investments have to grow. By starting early, you can take advantage of compounding returns, potentially maximizing the funds available for education.
Define Your Goals: Clearly articulate your objectives and expectations for your children's education. Consider factors such as the type of institution, educational expenses, and potential additional costs (e.g., extracurricular activities, study abroad programs). Having well-defined goals will help you establish a solid financial plan.
Explore 529 Plans: One of the most popular and advantageous tools for education planning is the 529 plan. These state-sponsored college savings plans offer tax advantages and flexibility for high-net-worth families. Contributions to a 529 plan grow tax-free, and withdrawals used for qualified educational expenses are also tax-free. Each state has their own lifetime contribution limits per beneficiary. For example, Missouri’s is $550,000 per beneficiary and Kansas’ is $450,000. Many states also offer an income tax deduction for 529 contributions. Each state is unique, making it important to work with your Family CFO to coordinate strategy.
Understand 529 Plan Options: There are two types of 529 plans: prepaid tuition plans and college savings plans. Prepaid tuition plans allow you to purchase future tuition credits at current prices, shielding your investments from potential tuition inflation. College savings plans, on the other hand, function as investment accounts, allowing you to choose from a variety of investment options.
Consider State Tax Benefits: Many states offer additional tax incentives for contributing to their respective 529 plans. These benefits might include tax deductions or credits for contributions, potentially reducing your state income tax liability. Be sure to research and understand the specific benefits available in your state.
Leverage Gifting Strategies: Education planning presents an excellent opportunity to optimize your estate planning efforts. Gifting strategies, such as contributing to a 529 plan, can help you minimize estate taxes by transferring wealth while also supporting educational goals.
Uniform Transfer to Minor Act (UTMA) / Uniform Gift to Minor Act (UGMA): Depending on the state you live in, a UTMA or UGMA provides another opportunity for education savings for your younger generation. The advantage is that assets in this type of account are not restricted to education. Therefore, if your younger generation chooses a path other than higher education, these accounts provide a nest egg for the next phase of life. In addition, the earnings on assets enjoy tax advantages .
Standard brokerage account: There are also benefits to utilizing standard brokerage accounts for education savings. With this, you have access to a wide range of investment options. Additionally, there is no restriction on what the money can be used for. This also provides an opportunity to open the account in your child’s name with their social security number. As such, tax implications are passed to the child, who likely doesn’t have much, if any, earned income. Without (much) earned income, the standard deduction often offsets tax implications until assets become larger.
Seek Professional Advice: Education planning involves complex financial considerations, and it's crucial to seek guidance from wealth management professionals experienced in multigenerational planning . They can help tailor a strategy to align with your specific goals, navigate tax implications, and maximize your overall financial plan.

Education planning is a powerful tool for multigenerational families seeking to provide a secure and successful future for their loved ones. By incorporating 529 plans and implementing effective strategies, you can not only prepare for your children's educational aspirations but also take advantage of tax benefits and wealth transfer opportunities. Remember, planning early and seeking professional advice are key ingredients for unlocking the full potential of education planning. Invest wisely in your children's education, and watch them thrive as they embark on their educational journey towards a brighter tomorrow.

How a Financial Advisor Can Assist in Establishing a 401(k) Plan for Your Employees

Fri, 19 May 2023 18:15:27 GMT

If you're considering offering an employer-sponsored retirement plan, a 401(k) is a popular option for small business and large corporations alike. In 2020 there were about 600,000 401(k) retirement plans with over 60 million active participants. 1 Offering a retirement plan can be an effective tool in attracting talent and keeping employee satisfaction high. If you’re considering offering a retirement plan like a 401(k), you may want some professional guidance from a financial advisor. Here’s what you need to know about the role a financial advisor plays when it comes to building and maintaining a 401(k) plan.

An Advisor Can Help...

Identify & Align Your Business’s Goals and Needs

Each business is different, and it's likely that you and your employees may have unique goals and needs. So how do you choose a 401(k) plan that aligns with those goals and needs? An experienced advisor can go over what you want to achieve and help you choose the right plan. You can also work with a company that provides business valuations in Kansas City to get an idea of the company's worth.

Compare 401(k) Providers for Cost and Value

Overwhelmed by the various options when it comes to 401(k) providers? A financial advisor can provide a breakdown of costs and discuss the value of various providers to help you find a good fit.

Stay Up-to-Date on Legislative Changes

As government policy changes, retirement plan rules can be affected. While you’re busy running your business, your financial advisor will let you know when changes are made to retirement plan rules that could affect your plan or responsibilities as a sponsor.

Educate Participants & Encourage Participation

It’s not just about creating the 401(k) plan, you want your employees to participate as well. By holding information sessions for your employees, an advisor can answer their questions, encourage participation and review the benefits.

Evaluate and Monitor Investments

A financial advisor can guide you when it comes to making informed decisions about your business, your retirement plan and its investments. He or she will have a monitoring process with periodic check-ins to help keep you up-to-date.

Offer Administrative Support

The administrative duties involved with maintaining an employer-sponsored retirement plan can be daunting for small business owners. If you find yourself with limited time and resources to put towards these administrative duties, an advisor can help.

An advisor can guide you, support your needs as a plan sponsor and help align your plan with your business’s needs. If you feel that you need help in any of the areas mentioned above, you may benefit from the additional expertise a financial advisor provides.

A 401(k) plan offers benefits that will help you not only attract but keep good employees at your company. Hiring a financial advisor to help establish and maintain a retirement plan can put you at ease and confirm that you’re checking all the boxes.

https://www.ici.org/faqs/faq/401k/faqs_401k

Buttonwood Agreement Day: A Historic Moment in the Birth of Wall Street

Wed, 17 May 2023 14:35:00 GMT

A photo of the restored mural reimagining the signing of the Buttonwood Agreement at 1792, the bar and restaurant at the New York Stock Exchange. Photo courtesy of the New York Stock Exchange.

The Buttonwood Agreement is an important moment in the history of Wall Street, marking the beginning of organized securities trading in the United States. The agreement was signed on May 17, 1792 , by 24 stockbrokers under a Buttonwood Tree on Wall Street. It laid the foundation for the New York Stock Exchange (NYSE), which would become one of the world’s largest stock markets.

At the time, trading in securities was largely unregulated and the Fin ancial Panic of 1792 brought chaos. Brokers gathered on the streets of lower Manhattan to buy and sell stocks, bonds, and other securities. However, this informal system was inefficient, and there were frequent disputes over trades. The Buttonwood Agreement aimed to create a more orderly and transparent system for securities trading.

The agreement was named after the Buttonwood Tree under which it was signed. The tree stood on Wall Street near the site of the current New York Stock Exchange building. According to records, brokers would meet under the tree to trade securities before the agreement was officially signed.

The Buttonwood Agreement established rules for trading securities as well as creating a system for resolving disputes. These rules helped to standardize trading practices and increase confidence in the market.

The signatories to the agreement included many of the most prominent brokers of the time, including Alexander Hamilton, who would later become the first Secretary of the Treasury of the United States. Hamilton was instrumental in the formation of the agreement and the birth of the NYSE.

231 Years Later

The NYSE would go on to become one of the world’s most important stock markets. It has survived wars, economic crises, and technological revolutions. Today, it remains a symbol of American capitalism and an essential part of the global finance system.

The Buttonwood Agreement marked the beginning of organized securities trading in the United States and established rules and practices that would help to shape the modern financial industry. While the world of finance has changed dramatically since 1792, the legacy of the Buttonwood Agreement continues to influence the way securities are traded and regulated today.

Buttonwood Financial Group, LLC, fulfilling the role of Family CFO, was founded 21 years ago to simplify the complexity created by wealth and success. The Buttonwood Team brings personalized financial organization to each of our clients. Through a combination of both investment management and the implementation of retirement, estate, tax, insurance, cash flow, business and other strategies, the lessons taught by our forefathers come to light every day.

You are the CEO of your family. Are you ready for a Family CFO to design and implement the steps to an organized and coordinated financial life? Contact us today to explore how our services can benefit you and your family.

Weekly Market Commentary: Attention Turns to the Debt Ceiling

Mon, 15 May 2023 20:15:11 GMT

The Week on Wall Street

Stocks were mixed last week as good inflation news was offset by mounting debt ceiling concerns and rekindled regional banking fears.

The Dow Jones Industrial Average lost 1.11%, while the Standard & Poor’s 500 slipped 0.29%. The Nasdaq Composite index rose 0.40% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, fell 0.67%. 1,2,3

Uncertainty Weighs on Stocks

The week got off to a quiet start as investors waited on April’s two key inflation reports scheduled for release on Wednesday and Thursday. When consumer prices rose less than forecasted, stocks broke out of their lethargy and moved higher. Stocks also got a boost on Wednesday afternoon from comments from the White House, hinting at an opening for negotiation on the debt ceiling.

Despite a substantial cooling in producer price increases, stocks turned mixed on Thursday amid a disappointing earnings report from a Dow Industrial component and new data that reignited investor anxiety over regional banks’ financial health. Stocks ended the week the way they began, largely drifting in an otherwise directionless fashion.

Inflation Pressures Ease

Consumer prices rose 4.9% year-over-year, the tenth consecutive month that the headline inflation rate has declined. This was a slight improvement over March’s 12-month increase of 5.0%. April’s monthly inflation rate was 0.4 percent, above March’s 0.1 percent rise. April’s increase was driven by higher housing, gasoline, and used car costs. 4

Inflation progress extended into wholesale prices, which rose 0.2% in April–below the consensus forecast of a 0.3% rise. For the last twelve months, producer prices increased 2.3%, an improvement from last month’s 2.7% year-over-year gain and the lowest recording since January 2021. 5

This Week: Key Economic Data

Tuesday: Retail Sales. Industrial Production.
Wednesday: Housing Starts.
Thursday: Existing Home Sales. Index of Leading Economic Indicators. Jobless Claims.

Source: Econoday, May 12, 2023 - The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

This Week: Companies Reporting Earnings

Tuesday: The Home Depot, Inc. (HD).
Wednesday: Cisco Systems, Inc. (CSCO), Target Corporation (TGT), The TJX Companies, Inc. (TJX).
Thursday: Walmart, Inc. (WMT), Applied Materials, Inc. (AMAT), Ross Stores, Inc. (ROST).
Friday: Deere & Company (DE).

Source: Zacks, May 12, 2023 - Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.

Cost-Saving Strategies for Extended Care

Tue, 09 May 2023 18:39:39 GMT

Extended care, also known as long-term care, can be a significant financial burden for many families. Costs are not straightforward and can include expenses such as in-home care, assisted living facilities, and nursing homes. These add up quickly and may not be fully covered by insurance or government programs.

But there are several cost-saving strategies you can use to help manage the cost of extended care. With planning and creative thinking, you can carry the burden of costs a little more easily. Let’s take a look at some ideas that could help.

First, know what is coming. Plan and prepare for the inevitability of extended care. This includes researching the types of care available, understanding the costs associated with each type of care, and considering options such as long-term care insurance. Research and planning can help you know what’s coming and be ready.

Another cost-saving strategy is to explore home care options. An example is in-home care, which can be more affordable than moving to a nursing home or an assisted-living facility. Many older adults prefer to stay in their own homes as they age, and home care services can provide the necessary support and assistance to make this possible. There are also more options for in-home care than ever and in more places than in the past.

Next, try to save money on extended care by looking into Medicaid. Medicaid is a joint federal and state program that provides healthcare coverage for low-income individuals. It can help cover the cost of nursing home care for those who qualify. There are other solutions for everyone, though. There are strict income and asset limits, so it is important to consult with an attorney or other professional to determine if you qualify and how to apply.

If you are looking for an out-of-the-box solution, consider community-based services, such as adult day care or respite care. These services can provide older adults with the support they need while allowing them to remain in their own homes. They can also provide relief for family caregivers who may struggle to balance caregiving demands with other responsibilities.

And don’t forget to consider the tax advantages of long-term care expenses. It might be possible to make the best of a bad situation and deduct some long-term care costs from your income taxes. But don’t assume this is always the case. It’s always a good idea to speak with your tax professional to understand the benefits available to you.

The cost of extended care can be a significant concern for many individuals and families. Many challenges may require several different solutions. But taking the time to plan can help dramatically. Take the time to explore home care options, look into Medicaid, research community-based services, and find the possible advantage of tax benefits. These steps can help you manage the cost of extended care and ensure that your loved ones receive the care they need.

Monthly Market Insights - May 2023

Mon, 08 May 2023 18:01:07 GMT

U.S. Markets

Stocks overcame recession worries and mixed corporate earnings results in April, ending mostly higher.

The Dow Jones Industrial Average led, picking up 2.48 percent. The Standard & Poor’s 500 Index rose 1.46 percent, while the Nasdaq Composite was flat (+0.04 percent). 1

"Rest at the end, not in the middle." - Kobe Bryant, 18-time NBA All-Star, winner of five NBA championships, and entrepreneur, quoting his high school English teacher on "The School of Greatness" podcast

Recession Watch

While the start of the year revolved around the direction of Fed monetary policy, investors in April began to turn their focus toward the economic impact of the Fed’s year-long series of steep rate hikes.

Throughout the month, growing fears of a recession were bolstered by weak economic data, anemic manufacturing reports, ongoing softness in the housing market, and another monthly decline in leading economic indicators.

Inflation Update

Inflation was a bright spot, however. Consumer prices continued to decrease in a meaningful way, while producer prices—a potential indicator of future consumer prices—also fell, providing some positive relief to investors. Nevertheless, inflation remained above the Fed’s target rate of two percent, and many worried that inflation may remain sticky at these elevated levels. 2

Earnings Update

The first-quarter earnings season commenced in April with much foreboding. Earnings estimates had been cut in the preceding months as Wall Street analysts considered a slowing economy and waning consumer strength. So far, the results have not confirmed the worst fears of investors, but there has been little to excite investors.

Through April 28, with 53 percent of the companies comprising the S&P 500 Index reporting, 79 percent reported profits above estimates (slightly above the five-year average of 77 percent). In total, 20 S&P companies issued positive guidance, while 28 delivered a negative outlook. Despite these mixed results, the first quarter is off to a relatively better start than the previous two quarters. 3

Mega-Cap Tech Names

Positive earnings results from several mega-cap technology companies ignited strong gains in the closing days of the final week of trading, solidifying the month’s gains.

Sector Scorecard

All but one sector rallied, with gains posted in Consumer Staples (+3.68 percent), Energy (+1.29 percent), Financials (+2.00 percent), Health Care (+2.89 percent), Utilities (+2.17 percent), Communications Services (+3.72 percent), Consumer Discretionary (+0.14 percent), Materials (+0.26 percent), Technology (+0.34 percent), and Real Estate (+1.58). Meanwhile, Industrials lost 1.52 percent. 4

What Investors May Be Talking About in May

May kicked off with the conclusion of another Federal Open Market Committee (FOMC) meeting, which may set up a debate about what factors will drive the Fed’s next move with interest rates.

Investor attention may be higher than usual on data that typically do not make headline news, such as the Purchasing Managers’ Index Composite, the Index of Leading Economic Indicators, the Consumer Sentiment Index, and the Institute for Supply Management (ISM) Manufacturing and Services indexes.

Investors may even seek to parse the Fed’s reports on regional manufacturing activity to gauge economic health. Of course, some headline reports will still be watched closely, like those on retail sales and housing.

Also, expect some attention to shift to lending activity by banks, which has fallen since regional banking stresses surfaced in March. Should lending continue to decline, it could portend economic slowdown as businesses and consumers lose access to credit. 5

World Markets

The MSCI EAFE Index gained 2.45 percent in April as resilient economic data outweighed a tightening monetary environment. 6

European markets were mostly higher, with the U.K. adding 3.13 percent, France tacking on 2.31 percent, and Germany climbing by 1.88 percent. Spain and Italy were flat for the month. 7

Pacific Rim markets were also mostly higher, with Japan gaining 2.91 percent and Australia picking up 1.83 percent. However, China’s Hang Seng Index lost 2.48 percent. 8

Indicators

Gross Domestic Product (GDP)

The initial estimate was that first-quarter GDP rose at an annualized rate of 1.1 percent, as solid consumer spending helped offset a decline in business investment and a deceleration in nonresidential investment. Economists estimated 2 percent economic growth. 9

Employment

Employers added 236,000 workers in March, the lowest number in over two years. The unemployment rate fell to 3.5 percent. Wage gains continued to moderate as the three-month annualized rate of growth in hourly income (+3.2 percent) fell below pre-pandemic levels. 10

Retail Sales

Consumer spending at retail stores and restaurants declined by 1.0 percent as consumers slowed their purchasing of autos, electronics, and home and garden items. It was the second consecutive month of contracting retail sales. 11

Industrial Production

Industrial production rose by 0.4 percent in March, driven by a surge in the utility sector as consumers used more heating in response to cold weather. The mining and manufacturing sectors both experienced declines. 12

Housing

Housing starts slipped by 0.8 percent in March, dragged lower by a 5.9-percent decline in multifamily dwelling starts. Single-family home construction increased by 2.7 percent. Permit applications to build fell by 8.8 percent, possibly indicating continued softness. 13

Sales of existing homes slid 2.4 percent from February and 22.0 percent from March 2022 as higher mortgage rates and low inventory impacted affordability. 14

New home sales jumped 9.6 percent to reach their highest level since March 2022. The median price of March 2023 new home sales was $449,800, a 3.2 percent rise from last year. 15

Consumer Price Index (CPI)

The prices consumers paid for goods and services cooled in March, rising just 0.1 percent versus the consensus forecast of 0.2 percent. The year-over-year inflation rate also moderated to 5.0 percent, down from 6.0 percent in February. Decreases in food and energy, along with smaller gains in shelter costs, were the primary reasons for the lower headline inflation number. 16

Durable Goods Orders

Durable goods orders rose by 3.2 percent but increased by a smaller amount (+0.3 percent) excluding passenger plane orders. 17

The Fed

Minutes from the Federal Open Market Committee (FOMC) March meeting were released on April 12. The minutes indicated that the Fed may raise rates at least one more time, citing continuing price pressures and labor market strength. 18

The minutes pointed out that a number of officials were in favor of a half-point increase in March but settled on a quarter-point hike due to the uncertainty created by banking stresses that surfaced in March. 18

The minutes also indicated that the probability of a recession increased as a result of the banking crisis. Fed officials expressed concerns that a recession may occur sometime later in the year. 18

By the Numbers: National Maritime Day

3 cents 19

Cost of a 1944 S.S. Savannah postage stamp

207 hours (over 8 1/2 days!) 19

Length of the S.S. Savannah's first voyage

Wealth Management Kansas City

If keeping up with the everchanging state of the Markets is not high on your priority list, let the professionals take it off your plate! Serving as Family CFO, we can coordinate and integrate your comprehensive financial life - including taxes, insurance, estate planning, investments, cash flow, retirement, education, and business strategies. Contact us today to learn more about our wealth management services and how they can benefit you.

1. WSJ.com, April 30, 2023

2. CNBC.com, April 12, 2023

3. Insight.FactSet.com, April 28, 2023

4. SectorSPDR.com, April 30, 2023

5. NPR.org, April 10, 2023

6. MSCI.com, April 30, 2023

7. MSCI.com, April 30, 2023

8. MSCI.com, April 30, 2023

9. CNBC.com, April 27, 2023

10. WSJ.com, April 7, 2023

11. CNBC.com, April 14, 2023

12. Morningstar.com, April 14, 2023

13. Finance.Yahoo.com, April 18, 2023

14. CNBC.com, April 20, 2023

15. Finance.Yahoo.com, April 25, 2023

16. CNBC.com, April 12, 2023

17. Morningstar.com, April 26, 2023

18. CNBC.com, April 12, 2023

19. Maritime.dot.gov, 2023

20. Gutenberg.org, 2023

21. OfficialData.org, 2023

22. IMDB.com, 2023

23. CNN.com, May 23, 2022

529 Vs Other Educational Savings Programs

Wed, 03 May 2023 18:58:39 GMT

For many people, helping to pay for their children’s or grandchildren’s education is one of their main financial goals. It’s admirable to want to put your wealth toward bettering the next generation.

What education savings programs are right for you? A 529 plan is one of the most common educational investment options, but there are other choices. Let’s explore the different programs to help you determine which one is right for you and your loved ones.

529 Plans

A 529 plan is an investment account that offers tax benefits when used to pay for qualified education expenses for a designated beneficiary. These educational expenses could include a variety of things, including tuition for college or K–12 education, apprenticeship programs, or student loan repayments. 1

The main benefit of a 529 plan is the contributions grow tax free, and if the money is used for eligible educational expenses, the withdrawals are also tax free. In addition, over 30 states offer a tax deduction or credit for 529 plans. For example, in New York, contributions to a New York 529 plan of up to $5,000 per year by an individual and up to $10,000 per year by a married couple filing jointly are deductible when computing New York taxable income. 2

Another benefit of 529 plans is they don’t have any annual contribution limits (although depending on where you live, they may have a lifetime contribution limit). This means you can save as much as you want for your family’s education. However, you may have to pay a gift tax if you contribute more than $17,000 in 2023. 3,4

Finally, the beneficiary for a 529 plan is transferable, which means if your intended beneficiary doesn’t end up using the funds for education, you can transfer the account to another beneficiary in your family. This could include a spouse, in-laws, children, nieces, or nephews, first cousins, aunts, uncles, or in-laws. 5

Educational Savings Account (ESA)

An education savings account, or ESA, is another educational savings program available to people who want to help contribute to their child’s education costs. There are a few main differences between an ESA and a 529 plan.

The first difference, and benefit, of using an ESA is you have more flexibility in how your contributions are invested. You can choose almost any investment (stocks, bonds, mutual funds, etc.). In comparison, in a 529 plan, the assets are invested in mutual funds, ETFs, and other similar investments, and you don’t get a say in how they are invested. This means when it comes to asset allocation, you have more control and flexibility with an ESA.

But while you might have more control over your investments, you also have less flexibility regarding contributions and withdrawals. One primary consideration is you can only invest $2,000 per year per child in an ESA. In addition to this contribution limit, there are income level restrictions. You can only use an ESA if you make less than $110,000 as an individual or $220,000 as a married couple filing jointly. 6,7

Finally, there are more restrictions when it comes to the beneficiary. A 529 plan has no restrictions on the beneficiary’s age. With an ESA, you can only open accounts for beneficiaries who are under 18 and can only make contributions until they’re 18. Also, all funds need to be withdrawn before the beneficiary turns 30. 6

Similar to a 529 plan, your contributions grow tax free and can only be used for educational expenses. One difference is that ESAs include other K–12 expenses outside tuition, while 529 plans do not.

Contributing to your loved one’s education is beneficial for them and can be a smart strategy for saving on taxes for you. Whether you invest in a 529 plan, an ESA, or another option, saving for the future is always a good idea. If you would like to explore how our Team can assist in your next-gen educational planning and beyond, contact us today.

Weekly Market Commentary: Stocks Rally As Attention Shifts to Fed's May Meeting

Mon, 01 May 2023 16:19:53 GMT

The Week on Wall Street

Strong earnings from several mega-cap technology companies offset renewed regional banking jitters and weak economic data, leaving stocks higher for the week.

The Dow Jones Industrial Average gained 0.86%, while the Standard & Poor’s 500 added 0.87%. The Nasdaq Composite index rose 1.28% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, lost 0.60%. 1,2,3

Earnings Drive Rebound

It was a very busy week of earnings reports, but none more important than those from the Big Tech names. After two days of sharp losses on revived regional banking fears and otherwise lackluster earnings results, stocks rallied powerfully on a succession of positive earnings surprises from several mega-cap companies.

Also aiding the sentiment was last week’s first quarter Gross Domestic Product (GDP) report. Though the report showed muted economic growth that fell short of expectations, investors were encouraged by strong consumer spending.

Slowing Growth

In a sign that higher rates are slowing economic growth, first-quarter GDP slowed to a 1.1% annualized growth rate as healthy consumer spending helped offset a decline in business investment and a slowdown in nonresidential investment.

Economists had expected first-quarter GDP growth to come in at 2%. The business inventory investment slowdown reduced the headline GDP number by 2.26%. 4

The initial estimate of GDP also reported some disappointing inflation news as the quarter-over-quarter Personal Consumption Expenditures Price Index, the Fed’s preferred inflation measure, rose 4.2%, which was higher than the 3.7% forecast. 5

This Week: Key Economic Data

Monday: Institute for Supply Management (ISM) Manufacturing Index.
Tuesday: Factory Orders. Job Openings and Turnover Survey (JOLTS).
Wednesday: FOMC Announcement. Institute for Supply Management (ISM) Services Index.
Thursday: Jobless Claims.
Friday: Employment Situation.

Source: Econoday, April 28, 2023 - The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

This Week: Companies Reporting Earnings

Monday: Stryker Corporation (SYK), ON Semiconductor Corporation (ON).
Tuesday: Advanced Micro Devices, Inc. (AMD), Ford Motor Company (F), Pfizer, Inc. (PFE), Starbucks Corporation (SBUX), Marathon Petroleum (MPC).
Wednesday: CVS Health Corporation (CVS), Qualcomm, Inc. (QCOM), Albemarle Corporation (ALB), Barrick Gold Corporation (GOLD).
Thursday: Apple, Inc. (AAPL), Block, Inc. (SQ), Shopify, Inc. (SHOP), ConocoPhillips (COP), Booking Holdings, Inc. (BKNG), Regeneron Pharmaceuticals, Inc. (REGN).
Friday: Cigna Group (CI), EOG Resources, Inc. (EOG), Dominion Energy, Inc. (D).

Source: Zacks, April 28, 2023 - Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.

10% of S&P 500 CEOs Are Women. Here's What We Can Learn from Them & Others

Thu, 27 Apr 2023 16:24:58 GMT

Although more women are serving in senior management positions today, we still see significant disparities: For every company run by a woman, there are ten that are run by a man. The latter number increases even more for women of color. 1

Although women are no less qualified than men to run a business, they’re regularly held to higher standards. Here are some lessons in leadership that we can all take away from women who have achieved and excelled in top leadership positions.

You Don’t Need to Sacrifice Time with Family

There’s a misconception that most successful professionals, particularly female ones, need to shove marriage and family aside to advance in their careers. Yet according to the most recent Pew Research poll available, most women don’t think family responsibilities pose a major challenge to women in leadership roles. 2

You can have a fulfilling family life and still be fully capable of flourishing professionally. Further, you can be a caring, empathetic, and fun spouse and/or parent while also being a responsible and straightforward executive. Those caring, empathetic, and fun qualities don’t even have to disappear when you go into work mode.

Be a Leader of the People

Female leaders excel in ethics and fairness. Exercise toughness when you need to and certainly don’t be passive, but don’t become over-aggressive or narcissistic. Be a leader, not a dictator.

It’s important to be empathetic and understanding. Don’t only be a leader who your employees are proud of; be a leader who helps them grow. In addition, champion compromise and delegation. While you don’t have to do everything yourself, be sure that you effectively distribute tasks and don’t become disconnected from the rest of your company. 2

Encourage Employees to Grow

Research shows that female leaders also prioritize mentorship. It’s important to build up and mentor your employees, both professionally and personally, so that they can hone their skills and develop a passion for their work.

Business executives have their plates full of operational responsibilities, but simply exhibiting a passion for your own work will serve as an important step in instilling that same passion in your employees. Always maintain a line of communication with your company and keep tabs on every department. 2

Know When Not to Take a Risk

Male leaders have an edge over female ones when it comes to risk-taking. Some of the best decisions often involve risk, but there are some situations where the costs are too great compared to the potential reward.

If a decision isn’t risky for you but may be for your peers or coworkers, don’t disregard that. It’s still a cost even if it doesn’t impact you directly. Big moves make big differences, and it's important to think through all your decisions with clarity and tact. 2

Despite roadblocks, including systemic ones, believe in your abilities and use them strategically. Exemplary female leaders are proof of societal progress and the fruits of hard work. In the face of adversity, we all must continue to create goals and work toward them with grit and compassion—that’s the biggest lesson we can take away from these hardworking executives.

6 Ways to Increase Your Probability of Success in the Markets & Overcome Market Psychology

Wed, 26 Apr 2023 16:05:51 GMT

Market psychology can be defined as the reaction to investing. It refers to the emotions, beliefs, and attitudes of investors which influence their decision-making when it comes to buying or selling financial assets. Over time, investment Markets are generally driven by logical and mathematical factors. As such, learning to combat our human emotions is not easy. However, learning how the markets work can reduce the number of surprises and dramatically increase your probability of financial success. Assets rise and fall in value, the more extreme the swing, the stronger the emotional sentiment.

For a path toward a successful financial life, work with a fiduciary financial professional for sound advice and guidelines, all with your best interest in mind. Participation in the markets has its emotional ups and downs, but when you compare non-participation to participation with the right guidance and mindset, historically the long-term returns have been much higher and your probability of a comfortable financial life improves.

1. Equalizing the Costs

The cost of investing includes monetary and non-monetary expenses. Monetary can be comprised of items like management and brokerage fees. Non-monetary is softer; the time spent learning about the markets, emotional investment (loss of sleep at night) and things like keeping up with legal, tax laws, and new investment products.

Today’s modern world full of Artificial Intelligence, social media, algorithms and more require emotional intelligence and a great deal of time to understand. Working with an experienced market professional can allow you to outsource this work and leave time for you to focus on your passions in life. In 2023, it’s not enough to guess or even estimate – educated planning and strategy is necessary.

2. Long-Term and Short-Term

Investment markets reflect the larger economy. Economies around the world experience both times of expansion and contraction. In our world, we have typically seen expansion about 75% of the time, leaving the other 25% of the time in contraction. Our emotions share a similar reaction between excitement and depression. Surges of pleasure with favorable uptrends and neurotic negatives with declines.

Generally, assets are positioned in the markets most appropriate for the time frame in which the capital is needed. Long-term assets often focus on growth, higher returns and have more volatility. Assets needed in the short term generally focus on stability and have both lower volatility and returns. Positioning assets in investment markets following this simple rule can greatly reduce your emotional investment and increase returns over your lifetime.

3. Market Awareness

Start by figuring out your emotional comfort level as well as the rate of return your assets need to earn for you to reach your financial objectives. Then determine which market sectors will provide the rates of return you are seeking and invest. As time passes and your life evolves, continue to review your financial needs, and reposition assets to meet those needs as economic cycles occur. This process takes an honest assessment of your knowledge, means, and objectives. For this reason, working with an experienced professional provides a huge benefit – they are going to help ease the emotional and financial ups and downs and be able to insert logic when it is needed.

There are two noted market trends – bear and bull. They are both related to volume shifts. Bear markets have prices falling and are accompanied by emotions of fear and the urge to sell. Bull markets feel optimistic and emotionally investors are confident; prices go up, but irrational decisions can negatively impact returns.

4. Manage and Control

Unfortunately, a disconnect between logical strategy and emotions can be drivers for selling early (short-term) diminishing the significant gains (long-term). As we go through various phases in life so do the markets. On the average upswing, markets have a lifespan of five years. It doesn't mean earnings stop entirely – but they could settle in with a slower and more steady growth. In contrast, the average recession lasts about 17 months.

Whether in a Bear or Bull market, diversification and logic are necessary for healthy investment returns. When developing strategy, don’t underestimate the value of thinking about all your assets; your entire portfolio and how each of the underlying accounts and investments work together. The probability of hitting the ‘home run’ is low. Just one investment increasing in value generally won’t produce a financially comfortable life.

5. Move Forward

Focus on the future. It's coming with or without your approval – better to be proactive, have a plan and manage the calls so you can reap the benefits. Start by building a blueprint and build trustworthy confidence to reduce the risk and the stress, allowing the market to respond back to you - positively.

Questions to ask yourself: When do you need the money you are investing? This will help you determine if you are in the right markets. Does your plan have a solid strategy built into it? If you have some concern, do yourself a favor and look for help.

6. Change Perspectives

Most individuals take shortcuts and as such don’t always experience success. Our human minds begin to associate financial markets with negative emotions. Acknowledge the market is not just about winning and losing – it’s about strategy and duration.

The market will continue to do three things: it goes up, it goes down, or it stays the same. Talking with a market professional helps to take advantage of the market's pluses while helping to avoid the negatives. Working with one could change your perspectives and broaden the future's outlook. If you would like to talk with one of our Lead Advisors, contact us today.

You're a Woman, a Mother, and a Business Professional. Our 9 Tips for Optimizing a Work-Life Balance

Thu, 20 Apr 2023 15:39:08 GMT

Whether you’re working full-time, part-time, or running your own business, having a job while raising a family is no easy feat. For those always striving for the right work–life balance, here are a few tips to help make your day-to-day more manageable and enjoyable.

Tip #1: Determine Your Priorities

Make a list of your priorities and stick to them. Determine what tasks need to be accomplished and when. Make a note of upcoming meetings or deadlines in a way that can help you keep track of your upcoming responsibilities. If you tend to lose track of time, it could be helpful to set calendar reminders on your phone, alerting you to these obligations.

Tip #2: Optimize Your Workspace

For those who work remotely, it can be difficult to separate your work life from your home life. Creating a dedicated office space can help make this separation clearer while optimizing your productivity during the workweek. Utilizing a room with a door that can be kept shut during work hours can be useful for letting your family know when you will be on calls or when interruptions need to be minimized.

Some ways to optimize your space include:

Checking that your WiFi connection is strong
Having a desk with a comfortable chair
Personalizing it with pictures, a plant, good lighting, etc.
Ensuring it’s quiet and ideal for virtual meetings or conference calls

Tip #3: Stagger Your Schedules

Staggering your schedules doesn’t leave much room for downtime with your partner, but it could be a short-term solution as you balance working from home and caring for young children.

If you can, try waking up at different times in the morning to better work around your child’s schedule. Maybe you can wake up early and finish up any to-do items you have due that day, and then your partner can sleep in late. Then, you can go to bed earlier, while your partner works later into the night. It’s not ideal, but it allows you and your partner to get work finished while also catering to your children’s needs.

Tip #4: Maintain Some Structure

While there are going to be interruptions, try to maintain structure in your daily schedule. When it comes to your family’s schedule, sometimes keeping it simple is best. If you can, try to keep the same routine week-by-week or day-by-day, as this can help you, your partner, and your children feel comfortable and organized even when things are uncertain around you.

Remember to stop working once the day is over, whether that means leaving work at a reasonable time or walking away from your home office.

Tip #5: Delegate Where You Can

If you’re a team leader or manager, consider whether there might be some things you can take off your plate and delegate to others. While it can be difficult to let things go, doing so is important for the sake of balance. If there are tasks someone else on your team can handle, don’t be afraid to ask for help or assign them out.

Tip #6: Communicate With Your Team

Communication is more important than ever when striving to put your life in balance. Miscommunication or a lack of communication altogether can cause time-consuming or costly problems. Be transparent, upfront, and open to regular chats with your team members. When everything’s able to run smoothly, you can feel good about putting more time and effort into things outside of the office.

Tip #7: Learn From Your Mistakes

Your day is rarely going to go as planned, especially when you are juggling family life with a full-time career. If something goes awry, it’s okay to accept your mistakes, move on, and figure out what you did wrong, so you can prevent it from happening again.

Did your child forget to turn in an assignment? It’s going to happen from time to time. Acknowledge the mistake, help your child accept the consequences, and keep moving forward.

Tip #8: Learn to Say 'No'

You can’t do it all. And while it’s hard for many to say no, there are times when you just have to. This goes hand in hand with having the ability to delegate. Rushing to complete an assignment or cutting corners to meet a deadline won’t do anybody any favors.

Also, as much as you’d love to attend that playdate with another mom, but it’s adding more stress than it’s worth, it’s okay to say no or reschedule. There’s a fine line to balance when it comes to managing your daily household routine, your children’s schedule, and your work life.

Tip #9: Say Goodbye to Perfection (Where You Can)

If you’re spending a lot of time working, you may feel as though you are not giving enough to your family. If your children need extra attention, then you may feel that your job is starting to suffer. Understand that now is not the time to be perfect, and it’s okay to cut yourself some slack. If you burn both ends for too long, the long-term damage could be even greater.

We know it’s a balancing act, and some days you’re going to feel as though you can’t get your head above water, while other days you feel as though you have it all together. These tips can help moms looking to maintain their professional careers while raising a family. If you'd like to outsource the financial piece of your life, our Team stands ready to assist. Contact us today for a conversation to learn more.

Why You Should Plan Taxes 2 Years at a Time

Thu, 13 Apr 2023 16:27:46 GMT

Let's face it: Planning for taxes is not the most fun activity without the right Team assisting along the way. There are likely (many) other things you would rather be doing. But accurate tax planning is important for your overall financial health. Planning early for taxes can help you save money, make fewer mistakes, and stress less when tax season arrives.

Let's consider why you should plan your taxes two years at a time, or work with a Family CFO to coordinate strategy for the future.

The Benefits of Proactive Tax Strategy

When it comes to tax planning, it's natural to want to procrastinate and put it off until the last minute. But a two-year tax plan is a smart plan. Approaching your taxes two years at a time allows you to look ahead and implement strategies to maximize benefits and lower your tax liability.

Here are some of the specific benefits of planning your taxes two years at a time:

Early Organization Means Fewer Errors

Any errors on your tax returns are going to delay the process even further, so planning ahead allows you to gather all your documents and avoid potential errors before your taxes are due.

Eliminate Deadline Stress

Taking the time to get important tax documents in order reduces procrastination and eliminates tax deadline stress.

Take Advantage of All Applicable Tax Deductions & Credits

Early planning will ensure that you are claiming all the tax deductions and credits available to you. You can assess where you stand by reviewing your current and projected income levels and making any changes as you calculate your taxes correctly. You can also use the Tax Withholding Estimator on the IRS website to estimate the federal income tax you want your employer to withhold from your paycheck as you think ahead. 1

Have Time to Review Tax Law Changes

Tax laws change frequently, so by planning for two years at a time, you can review these laws and know when they go into effect to be proactive in your tax strategy.

Develop a Payment Plan Strategy

By planning ahead, you can project any tax liability ahead of time and develop a payment plan strategy, if needed. If you are self-employed or receive income from your investments, you will have time to calculate your quarterly taxes and build those expenses into your budget.

Be Strategic With Your Investments

With a two-year plan, you can also reallocate your investments to be as tax efficient as possible. For example, you may want to consider any capital gains and plan to pay taxes on those gains when it's more advantageous for you. It's important to estimate your tax burden before you sell any major asset, such as your home, business, or appreciated stocks.

Plan for Major Life Changes

Planning ahead allows you to adjust to major life changes, such as selling a home, getting married or divorced, retiring, or moving to a different state with different tax requirements.

Plan Your Retirement Contributions

Just like planning for your investment allocations, you can also plan out your retirement contributions to be tax efficient (and to ensure that your plan is funded).

Time Your Charitable Giving

Charitable giving is another way you can use proactive tax planning to your advantage. Use charitable donations as a way to reduce your tax liability by planning ahead.

Find Tax Help

Lastly, planning ahead gives you time to find and work with a trusted professional, if needed, to coordinate tax and financial planning.

Planning out your taxes two years in advance allows you to be strategic about your tax savings and prepare for any tax changes coming your way. When you plan early, you can limit the stress and anxiety that come with last-minute tax planning. No one wants to be gathering important tax documents days before the filing date! Being proactive and looking at your short-term and long-term financial picture will help you approach tax planning more efficiently.

https://www.irs.gov/individuals/tax-withholding-estimator

It's Financial Literacy Month: Brush Up on Your Financial Skills

Mon, 10 Apr 2023 20:38:12 GMT

Did you know April is Financial Literacy Month? Financial Literacy Month is a national campaign designed to bring more financial education to children and adults.

At Buttonwood, we specialize in multigenerational planning. As such, we like to provide tips for younger generations as they grow to be young adults navigating through life. There are many ways to improve financial literacy in your next generation. Here are four to get started.

Make a Monthly Budget

One of the most important steps in ensuring financial success is creating a monthly budget. This may sound simple, but a budget is your financial strategy's foundation.

Creating a monthly budget doesn't have to be complicated. Here's how to ensure you're setting yourself up for financial success:

First, calculate your gross monthly income. This could include your salary, investment income, Social Security, child support/alimony, freelance work, or other income sources. Remember to calculate your net income as well, which is how much is left after taxes and other deductions.
Speaking of priorities, consider your financial priorities and allocate your budget accordingly. In addition to your regular monthly expenses, you might decide to increase your general savings or earmark money toward a large purchase such as a home or car. The important point is to decide what's important and to make sure your budget reflects those values.
Finally, create expense categories for where your money is spent and track each and every expense. It's important to differentiate between wants and needs. You need to pay the rent or mortgage payment, but you want a new pair of shoes or a nice dinner out. By tracking your spending, you can determine whether your budget is aligned with your priorities or if you should make adjustments to meet your goals.

Check Your Credit Score

If it's been a while since you checked your credit score, now is a great time to see where you stand. Your credit score is an important metric when considering your financial health and will play a larger role when you apply for loans, especially mortgages and car loans. If you have a higher credit score, you may qualify for lower-interest debt, which will save you money. The Federal Trade Commission provides information on how to request your free annual credit report.

Reviewing your credit report is important to ensure there aren't any mistakes or incorrect accounts assigned to you. If you notice something on your credit report that doesn't look accurate, such as a loan or credit card you don't remember opening, contact your financial institutions immediately. You can also file a dispute with the credit reporting agencies to report any false information you find.

Understand Your Investment Options

As you become more financially literate and feel comfortable talking about finances, you may consider looking into investments that are aligned with your goals. There are so many different types of investments, and working with a financial advisor can help you understand your options. You should also educate yourself on some of the most common investment types, including:

Stocks
Bonds
Mutual
Funds
ETFs

Don't Be Afraid to Ask Questions

Talking about finances can be intimidating, but we all must start somewhere. This Financial Literacy Month, make it a goal to learn one or two new facts about finance and contact an expert who can help. You can turn to financial advisors and financial publications to get your questions answered without feeling naive or silly. There's no such thing as a dumb question when it comes to becoming more financially literate and secure.

Financial literacy doesn't come from making big leaps but rather from taking one step at a time. Pick one of the options above and start yourself on the path to becoming financially savvy.

Weekly Market Commentary: Hiring Cools; Recession Fears Rise

Mon, 10 Apr 2023 19:58:13 GMT

The Week on Wall Street

Stocks ended a shortened week of trading mixed amid revived recession fears on Wall Street triggered by weak economic data.

The Dow Jones Industrial Average gained 0.63%, while the Standard & Poor’s 500 slipped 0.10%. The Nasdaq Composite index lost 1.10% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, advanced +0.37%. 1,2,3

Recession Fears Resurface

Renewed recession worries dented investor sentiment, and the week kicked off with a weekend announcement by OPEC+ nations of their intention to cut oil production.

The prospect of higher oil prices not only revived inflation fears, possibly hurting the chances of a rate-hike pause by the Fed, but it raised concerns over future consumer spending. Stocks weathered the news well but buckled on weak manufacturing and services data in subsequent days. Stocks trended lower again after a lower-than-expected open-jobs number and a slowdown in private-sector hiring.

Stocks stabilized to close on Thursday, despite an increase in jobless claims and a pick up in March layoffs.

Cooling Labor Market

A string of labor reports last week reflected signs of a cooling labor market, beginning with an unexpectedly significant decline in the number of open jobs (falling below 10 million for the first time in nearly two years). The JOLTs report preceded payroll processor ADP’s employment report that saw a rise in private sector hiring of 145,000 (short of the consensus forecast of 210,000) and smaller wage gains. 4,5

After reports of a jump in initial jobless claims on Thursday and a 15% rise in layoffs in March, Friday’s March employment report showed the smallest increase in nonfarm payrolls (+236,000) since December 2020. 6

This Week: Key Economic Data

Wednesday: Consumer Price Index (CPI). FOMC Minutes.
Thursday: Jobless Claims. Producer Price Index (PPI).
Friday: Retail Sales. Industrial Production. Consumer Sentiment.

Source: Econoday, April 7, 2023 - The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

This Week: Companies Reporting Earnings

Thursday: Delta Air Lines, Inc. (DAL).
Friday: JPMorgan Chase & Co. (JPM), Blackrock (BLK), UnitedHealth Group Incorporated (UNH), Citigroup, Inc. (C), The PNC Financial Services Group, Inc. (PNC).

Source: Zacks, April 7, 2023 - Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.

What to Do When Your Income Reaches 7 Figures

Wed, 05 Apr 2023 20:04:38 GMT

Did you recently add a second comma to your bank balance? Has a recent financial event raised your net worth to the next level? It's an exciting time, whether it's the result of your long-term goals (e.g., from the sale of a business), a windfall transfer of wealth, or a key promotion. You're likely already considering how to protect and manage your wealth.

Keep in mind, this article is for informational purposes only and is not a replacement for real-life advice. If you are ready for customized strategy focused on you and your financial life, we stand ready to assist. You will need to consult tax, legal, and accounting professionals, or the Buttonwood Team as your Family CFO before modifying your financial strategies as your income changes. This article was written to provide insights into a few related factors you may wish to consider.

Estate Strategy on a New Playing Field

Pace Yourself

What You Need Today

Risk Tolerance and Time Horizon

Investment Policy Committee Update - April 2023

Tue, 04 Apr 2023 14:30:49 GMT

As we move forward in 2023, recent events continue to present mixed messages about the economy and future interest rate direction from the Federal Reserve Bank.

The collapse of two sizable US regional banks - and the decisive and unprecedented response by the FDIC and Treasury - showcase the real-world practical consequences of rapid financial tightening. As had been the case in the early 2000’s as well as 2008/9, events involving financial failure may persuade the Fed to soften the tone (and implied actions) of its hawkish messaging. The outcome of which could create more volatility in the short term but is likely to be positive for stocks over the longer term.

Looking at the breadth of the regional banking market; according to Haver Analytics, BlackRock, and Federal Reserve Board as of 2/28/2023, regional banks are responsible for nearly half of American business and consumer lending. Looking forward at possible implications of the failure of SVB and others, regional banks may face the likelihood of heightened cost of capital, further deposit leakage and increased need to overcollateralize. Such cracks across the sector may lead to slowdowns in lending; and less lending could represent real financial tightening. These late-stage economic cycle trends arguably have greater potential to adversely impact the economy than the slow(er) drip of ongoing Fed target rate increases. The FOMC in their statement released March 22 , noted, “Recent developments are likely to result in tighter credit conditions for households and businesses and to weigh on economic activity, hiring, and inflation.”

We believe the elevated banking sector risks and tighter loan availability puts the prospect of additional Fed rate hikes in a new, less favorable light. The volatility already seen in rates between February and March could signal rising economic risk. In our view, the market may not yet properly reflect these risks and their ramifications for the broader economy. Therefore, we have repositioned tax deferred accounts to be more outright defensive with fewer stock bets, less sensitivity to volatility, and a long duration bias as a source of potential outperformance during peak moments of market stress.

In summary:

From our portfolio centric perspective, regardless of whether a formal recession materializes, these recent banking-related developments combined with earnings and economic data suggest potential downside risks for stocks. To be more outright defensive in our tactical positioning for tax deferred assets, we’ve reduced exposure to stocks and added potential diversification in the form of duration from bonds. However with tax implications and the short term technical trends positive, we have not adjusted allocation for taxable assets.

Within our more defensive positioning, we’ve trimmed exposure to small caps, momentum and emerging market stocks while tilting more towards companies with higher quality balance sheets and more predictable cash flows. Also, amidst unusually elevated uncertainty stemming from what we perceive to be the real-world practical consequences of rapid financial tightening, we have positioned for greater resilience and defensiveness from the bond portion of our portfolios by emphasizing the role of duration as a portfolio diversifier and trimming exposure to credit.

Thank you for your continued trust and allowing us to coordinate your asset management as part of our Family CFO services!

Weekly Market Commentary: Banking Crisis Fears Dim; Markets Rally

Mon, 03 Apr 2023 14:30:29 GMT

The Week on Wall Street

Stocks rallied last week on receding fears of a widening banking crisis, led by resurging investor interest in technology and communication services names.

The Dow Jones Industrial Average gained 3.22%, while the Standard & Poor’s 500 added 3.48%. The Nasdaq Composite index rose 3.37% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, advanced by 3.34%. 1,2,3

Tech Leads Rally

An absence of further bad news in the banking sector made for a good week, with high-quality technology and communication services stocks leading the market. While easing banking worries laid the groundwork for the week’s positive gains, growing conviction that Fed rate hikes were ending and positive inflation data out of Europe helped support the renewed enthusiasm for stocks.

Encouraging inflation data on the domestic front on Friday also added to the gathering optimism, igniting further gains to cap a satisfying week for investors.

Inflation Grinds Lower

In an otherwise news-light week, Friday saw the release of February’s personal income and outlays report, which provides insight into inflation and consumer expenditures, the dominant contributor to economic growth.

The Personal Consumption Expenditures Price Index (PCE), the Fed’s preferred measure of inflation, rose 0.3% for the month, below market expectations and below the prior month’s 0.6% jump. The year-over-year increase of 5.0% improved from January’s rise of 5.3%. Energy prices declined, partially offsetting increases in food, goods, and services. Personal income rose 0.3%, while consumer spending increased 0.2%. 4

This Week: Key Economic Data

Monday: Institute for Supply Management (ISM) Manufacturing Index.
Tuesday: Factory Orders. Job Openings and Turnover Survey (JOLTS).
Wednesday: ADP (Automated Data Processing) Employment Report. Institute for Supply Management (ISM) Services Index.
Thursday: Jobless Claims.
Friday: Employment Situation.

Source: Econoday, March 31, 2023 - The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

This Week: Companies Reporting Earnings

Wednesday: Conagra Brands (CAG).
Thursday: Constellation Brands (STZ).

Source: Zacks, March 31, 2023 - Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.

Estate Planning with a Multigenerational Focus

Wed, 29 Mar 2023 18:16:37 GMT

As a comprehensive wealth management firm, we understand there is much more to a holistic financial strategy than just investment management. One key element to any financial strategy is estate planning. Estate planning is not just about creating a will, but a comprehensive process involving preparation for the transfer of wealth from one generation to the next. We regularly hear, “We have estate documents, we’re done with that.” However, you might be surprised how often, upon further review, we find missing beneficiaries, incorrectly titled assets, and other material discrepancies. Below, we will discuss the importance of proactive estate planning, especially as it relates to multigenerational wealth.

Blended Family Estate Planning

Every family is a little different, and that’s what makes families so beautiful! One common family structure is the blended family, which is a family including a couple and their children from previous relationships. According to the Love to Know website, 40 percent of families in the US are blended, with at least one partner having a child from a previous relationship 1 .

Verify Your Beneficiaries

Life has many twists and turns. From losing a partner, to marriage, to divorce, to having biological children or stepchildren, there are many potential changes as life progresses. It is very important to verify your beneficiaries and proactively update your Will and Trusts on a regular basis. For example, at the time of a loved one's passing, or during a divorce, updating beneficiaries on your 401(k) or other assets may not be top of mind. A proactive estate plan with your financial Team can take this off your plate.

Verifying your beneficiaries is essential because when you pass, your assets transfer directly to those people. If there are any mistakes or missed names on your beneficiary list, your surviving family may have to jump through legal and financial hoops to correct your oversight.

Be Specific in Your Will & Trust

Blended families often have unique interpersonal relationships, and these should be reflected in your estate documents. You may leave assets to your surviving spouse, but upon their death, can you be sure your remaining assets will be divided evenly among the children you would like to see benefit? In addition to including monetary assets, sentimental items (Personal Property) should be addressed in your documents as well. There are many details that if not recorded correctly, may put your best intentions at risk. With proper planning and regular updates, the probability for error is greatly reduced.

Regulate the Flow of Money

In a perfect world, all beneficiaries would spend their inheritance responsibly. However, we do not live in a perfect world. Often, one or more of your beneficiaries may need a bit more assistance when it comes to inheriting your assets. For example, a beneficiary may enjoy gambling just a little too much, head straight to Vegas, and bet their inheritance on black. In such cases, you might want to consider a spendthrift trust .

According to the Trust & Will website, a spendthrift trust limits your beneficiary’s access to assets 2 . Rather than receiving a lump sum, the beneficiary receives funds incrementally. This can be great protection against bad spending habits. In addition, with a spendthrift trust, creditors cannot come after an inheritance still held in the trust because it belongs to the trust, not the beneficiary.

Multigenerational Estate Planning

Multigenerational planning involves planning for the transfer of wealth from one generation to the next. One of the main reasons proactive estate planning is so important is it allows families to maintain control over their assets and ensure their wishes are carried out after they pass away. Without an estate plan, the state in which you reside will determine how your assets are distributed. This can lead to unintended consequences and can result in family members not receiving what you intended them to receive. By creating an estate plan, you can ensure that your assets are distributed according to your wishes and your family is taken care of.

Another reason proactive estate planning is important is that it can help families minimize taxes and other costs associated with transferring wealth. Estate taxes, for example, can be a significant burden on families, especially those with high net worth. By creating an estate plan with a focus on tax laws and other financial considerations, families can minimize their tax burden and ensure more of their wealth is passed on to future generations.

It is important to start the planning process early, as it can take years to create a comprehensive estate plan that considers all the unique needs of each family member. By starting early, families can ensure their wealth is transferred in a way which aligns with their values and goals.

Think Far Ahead

It’s important to remember generational wealth planning is a bit different from designating gifts for your kids and grandkids through estate planning. When you begin building your generational plan, you should be considerate of future generations – even the ones you’ll never meet. The point of generational wealth planning is to pass your assets down to those who haven’t been born yet, but it can be hard to consider their needs alongside the family members you already know and love.

Put It In Writing

Putting your plans in writing can rid future generations of potential doubt or confusion regarding your wishes. Your heirs are the ones who will truly be carrying out your generational wealth plan after you are gone.

Be sure to specifically identify how money should be used, how it is accessed and how it is replenished. With proper planning, it’s possible your money could be used to invest in higher education, starting a business or other things to help your family grow their wealth for decades to come.

Create a Support System

Do you know what a sustainable withdrawal rate is for your assets? If you aren’t sure, your heirs won’t be either. Understanding this, along with a number of other technical details, is an important part of maintaining wealth for decades to come. This is why working with the right system of financial professionals could be your greatest chance at successful generational wealth transfer. They will have the advantage of working one-on-one with you to determine your goals, develop and plan, educate your heirs and help them stay on track.

Estate planning is designed to facilitate the transfer of wealth to future generations. By preparing for the future, individuals can ensure that their assets are passed down to their beneficiaries in a way that promotes financial responsibility and sustainability. This can help create a legacy of financial stability and security for future generations. If you would like to explore how the Team at Buttonwood can benefit you and your family, contact us today for a conversation .

When and How to Update Your Retirement Plan

Wed, 22 Mar 2023 21:22:49 GMT

While you and your trusted retirement professional will work to create an overall retirement strategy, this does not mean you won't need to make changes along the way.

So, the question remains: When should you revisit your retirement strategy?

First off, when you've had a major change in your career, it's a good time to talk about your strategy. That change can be getting a new job, quitting, or being laid off. It can also include a promotion or a raise. Whether or not you've had a change in your main job, starting or selling a business is another cause for conversation.

Situations in which there's been a major change in your or your family's lives are good times to reconnect with your financial advisor . Essentially, these events are situations in which your beneficiaries might change. These include marriages, divorces, births, and deaths. Not all these circumstances are life and death; it could be as simple (or complicated) as moving to another state, country, or even just up the street. If one of your family members has become a caregiver, this could be an important conversation starter. Some conversations will happen at set times, such as when you or your spouse turn the key ages of 59, 65, and 70½. Another time to notify your trusted financial professional is if your health has deteriorated; this includes mental and emotional health.

Many of these conversation-worthy situations are financial in nature. For example, if your risk capacity has changed. This includes a change in your ability to weather a financial risk, such as having more cash or wealth at your disposal through some sort of windfall. This can also go in the other direction if you experience a considerable loss. Another consideration is whether the value of your assets has changed, altering your wealth profile for good or for ill. How about gifting, whether within your family or to a charity? A significant gift, such as a philanthropic endeavor, would be a reason to look at your strategy. Have you purchased or sold a major asset on the level of a house or business? How about a major change to your debt profile, whether it's an increase or a decrease? It can even be as simple as a change of mind regarding your estate strategy, including changing beneficiaries or altering gifts you intend for charities and other entities.

There are other reasons to take another look at your financial strategy that may have nothing to do with your financial situation directly but may relate to outside factors. A major change in tax policy or law is one example. Maybe you've made some changes to your legal and financial team or plan to name a different executor to your will. Perhaps you've had a change in your household that has upsized or downsized your lifestyle. Or maybe you've had a major mishap, like misplacing or losing important documents.

Finally, there's always the possibility that it's been a year or two and it's simply time to look over your strategy and see if there's anything that needs attention.

Retirement Planning Kansas City

Whatever the reason, big or small, your Family CFO Team at Buttonwood Financial Group is here to proactively update your retirement planning strategy as life progresses! Contact us to discuss how we can work together to achieve the retirement and overall financial life you want.

How to Set Up Your Small Business So You Can Take a Vacation

Tue, 21 Mar 2023 14:16:13 GMT

As a small business owner, you’re probably familiar with the roadblocks associated with taking time off. We all deserve a vacation every once in a while, but it can be hard to dedicate time to relaxing when there are so many responsibilities on your plate. However, if you never take a vacation, you risk experiencing burnout, which is the last thing a business owner like yourself needs!

According to a recent survey, 42% of business owners have reported feeling burnout recently. As we all know, taking a vacation is usually a good way to avoid burnout, at least for the majority of us. Yet, shockingly, 52% of small business owners haven’t taken a vacation in the past year. 1 If you’re a small business owner struggling to find a balance between work and play, here are some top ways you can ensure you’re able to take a vacation more than once every few years.

1. Create an OOO Plan — and Stick to It

Before you start mapping out when you could ever take a vacation, consider creating an Out of Office (OOO) plan that outlines your strategy for when you’re away. Putting pen to paper will help you visualize what taking time off will look like, therefore helping it feel more attainable. In this plan, you can write down all your responsibilities, such as scheduling or accounts receivable , and what they entail as well as who could cover them for you. Additional information may include project timelines, important contacts, and any miscellaneous notes that could help someone execute the assignment successfully.

2. Cross-Train Whenever Possible

If you have employees, it’s a great idea to cross-train them whenever you can so they have a solid understanding of how you run things. The more your employees know about the nuances of your business, the better. Not only will this help you during times of extreme stress, but it will also give you the peace of mind you need to take that vacation without having to worry about whether or not they know what they’re doing.

Additionally, consider creating a training guide (that someone could easily follow) for each aspect for your business so no detail falls through the cracks. A lot of pre-vacation preparation involves creating outlines for each department and responsibility, which is helpful to have regardless of if you’re in the office or on vacation.

3. Avoid Overcommitting

This may sound obvious, but it can be hard to say “no” when you’re a small business owner. If you want to set yourself up for success, avoid making commitments you can’t keep. This way, once you decide you’re ready for a vacation, you won’t have a bunch of projects you have to catch up on beforehand.

It’s always a good idea to know what your capacity is for work. Otherwise, you’ll find yourself in a cycle of constant stress and worry. If you’re someone who struggles with saying “no” to new work, consider creating a pros-and-cons list that outlines all the advantages and disadvantages of taking on more work than you can realistically handle. Sometimes, seeing something written down gives you the perspective you need to change your habits for the better.

4. Hire from Within

Need to hire someone? Before you head over to job boards, consider hiring within. Because the person has already worked at your company, they’re going to be that much more knowledgeable and prepared for your new job responsibility (even if it requires different skills). When someone has been at your company for some time, they’ll pick up on things that will take a brand-new hire even more time to learn.

By hiring from within, you’re helping your employees be more well-rounded and therefore more prepared to cover for you when you’re away. Not only will you be lessening your workload (and stress) in the long run, but you’ll also be giving your employees a reason to stick around. It’s a win-win situation!

https://www.forbes.com/sites/edwardsegal/2022/01/12/covid-related-burnout-is-having-a-big-impact-on-small-business-owners-survey/?sh=5951760270c8

Complexities of a Laddered Bond Strategy

Fri, 17 Mar 2023 14:53:02 GMT

As a bond portfolio manager, a laddered bond strategy can offer a number of benefits for clients, such as diversification, steady income streams, and flexibility. However, implementing and managing a laddered bond strategy can be complex and require careful attention to detail.

Here are some of the key complexities that may arise when using a laddered bond strategy for a client:

Bond selection

One of the most important aspects of a laddered bond strategy is selecting appropriate bonds for each rung of the ladder. This requires consideration of factors such as credit quality, maturity, yield, and interest rate risk. Different types of bonds may be more or less suitable for different rungs, and it's important to balance the desire for income with the need for safety and stability.

Timing

Another important consideration is the timing of bond purchases and sales. In a laddered strategy, bonds will mature at different times, and new bonds will need to be purchased to replace them. This requires careful monitoring of the bond market and interest rate trends, as well as consideration of market conditions and client needs.

Liquidity

Maintaining a laddered bond portfolio can also require managing liquidity. If a client needs to withdraw funds, bonds may need to be sold before they mature, which can result in lower prices or losses if interest rates have risen. It's important to have a plan in place for managing cash flows and maintaining liquidity while still meeting the client's investment goals.

Monitoring and Rebalancing

Finally, a laddered bond strategy requires ongoing monitoring and rebalancing to ensure that the portfolio stays aligned with the client's investment goals and risk tolerance. This may involve adjusting the ladder as bonds mature, buying or selling bonds as market conditions change, and rebalancing the portfolio to maintain appropriate diversification and risk levels.

Overall, a laddered bond strategy can be an effective way to provide income and diversification for clients, but it requires careful planning, monitoring, and management to be successful.

If you are interested in learning how our Team can serve as your Family CFO and take this complexity off your plate, contact us for a conversation.

Estate Planning for Executives

Wed, 15 Mar 2023 19:50:38 GMT

As an executive, it’s likely that you’re feeling the pressure of putting together an estate plan. Because of the unique way you may be compensated as an executive, there are details to identify that not everyone else needs to focus on.

Your accumulation of assets is more than likely in a variety of contexts, including real estate, private equity and taxable investment accounts. Because these forms of wealth often come with complexities when transferring finances to your beneficiaries, it’s important to make a conscious effort to properly disperse your wealth.

What is Estate Planning?

An estate plan clearly defines what should happen with your wealth and physical well-being should you die or become incapacitated. The objectives of such planning often include ensuring your beneficiaries receive most of your estate, paying the least amount of taxes on your estate and assigning guardians to any minor children, if necessary.

What To Prepare

It’s true that every good plan starts from the initial stages of planning, so let’s jump into the basics of what a thoughtfully developed estate plan should consist of:

Power of Attorney
Property
Healthcare
Will
Beneficiaries
Revocable trust
Guardianship delegations (if applicable)

Your best option, especially if you have a significant amount of wealth and assets to consider, is to work directly with an estate planning attorney to organize these details. They will assist you in addressing these aspects of your finances, as well as discussing any complicated tax strategies in your plan.

Focus on Your Taxes

During your lifetime, there are different taxes that you’ll want to keep in mind. For example, the generation-skipping tax is applied in addition to either the gift tax, if you’re still living, or the estate tax, when you’ve passed. 1

One way to avoid the generation-skipping tax is to use 529 plans for your family members by gifting your grandchildren with educational funds. You can use this plan for each child and a five-year multiple of the current gift tax exemption to make a lump-sum contribution. 2

Keep Insurance In Mind

If you have life insurance, it’s important to keep in mind, if the funds are made payable to your estate, they will be subject to any estate tax your other accumulated wealth will eventually be subject to. 3 Make sure your beneficiaries are updated on all forms of insurance in order for the proceeds to go straight to them when the time comes. We often see this important step missed, which is why we recommend working with a Family CFO, like Buttonwood, to proactively review and work to implement changes as needed.

You’re Not Alone

Estate planning can be difficult for anyone, let alone an executive such as yourself. Make sure you take the time to have conversations with family and financial professionals regarding how to go about it efficiently. The last thing you would want is a large portion of your estate taxed at incorrect (higher) rates. Developing a plan with an advisor that addresses your estate and legacy after you’re gone can be hugely beneficial for you and your loved ones.

Think Flood Insurance & Preparedness this Spring

Wed, 08 Mar 2023 15:14:57 GMT

Floods are among the most frequent and costly natural disasters that are especially prevalent in the spring. Last year alone, excessive rainfall brought flooding to many locations, making it the second deadliest year for flooding in the past five years. 1 As global temperatures continue to rise, extreme rainfall may continue to increase the potential for flooding in the spring. However, this doesn’t mean flood damage and dangers are unavoidable. All it takes to keep your loved ones safe is a little research and preparation.

Here's how to react before, during, and after a flood occurs in your area:

Before A Flood

Assemble an emergency preparedness and home cleanup kit. Depending on where you live, including items like nonperishable foods, purified water, an emergency cell phone, a bucket, rubber gloves, or a shovel can be a great way to get started. Another smart move is to create a household emergency plan. Part of your plan should consider your community’s flood response actions. Above all else, be prepared to evacuate quickly, and know your routes and destinations.

It is also helpful to understand the terminology used during flood season. The difference between a flood watch and a flood warning is a great example. Remember, a watch means a flood is possible in your area, but not yet happening. However, a warning means flooding is already occurring or is sure to occur soon.

Depending on the severity of the anticipated weather event, you may want to consider evacuating any animals as a precautionary measure, especially if you have numerous or large animals. If you’re unable to evacuate your animals, make sure to stock up on extra animal food. Remember, waiting until flooding is imminent is often too late. 2

During A Flood

During a flood, it’s best to stay abreast of the latest developments in your area. Use your cell phone or radio to listen to local area radio, NOAA radio, or TV stations for the latest information and updates. If an evacuation order is given, make sure to follow your community plan, and don’t return until local officials say it is safe.

When evacuating, it can be tempting to take the shortest route possible. However, overflowing rivers, streams, or water-covered roadways all present greater dangers during a flood. Even a small amount of water is enough to sweep you off your feet or your vehicle off the roadway. If you come across a flooded area, turn around and go another way. Finally, avoid water that could have come in contact with floodwaters when washing dishes, brushing teeth, preparing food, washing hands, making ice, or making baby formula. 2

After A Flood

After a flood, it’s time to take stock of your home. Check the outside of your house before you enter. Look for loose power lines, broken or damaged gas lines, missing support beams, and other damage. If possible, don’t use gas or electrical appliances that have been flooded until after they have been checked for safety.

Depending on the severity of the flood, you may need to boil tap water until tap supplies are declared safe. You may also need to dispose of any food, beverages, or medicine that has come into contact with floodwater.

Finally, wear protective clothing, including rubber gloves and rubber boots, and be cautious when cleaning up. Throw out items that have absorbed water and can’t be cleaned or disinfected, including mattresses, carpeting, and stuffed animals. 2

6 Common Payroll Tax Mistakes Small Business Make

Fri, 03 Mar 2023 18:36:33 GMT

Running a small business can be a rewarding experience, but it also often comes with a lot of additional work to make sure everything is taken care of properly. With fewer employees, it means staff often wear multiple hats and sometimes mistakes can happen. While minor mistakes don't always result in costly issues, simple mistakes in business payroll can lead to major problems. Below are six common mistakes small businesses can run into when it comes to payroll.

Improper Employee Classification

When classifying workers, they will fall into one of two main categories: employees and independent contractors. Employees and contractors are completely different when it comes to paying taxes and offering benefits. An employee of a company will often be allowed certain benefits, be able to collect overtime wages, and have their payroll taxes deducted through their paycheck which the employer will then pay to federal and state and local tax entities if applicable.

An independent contractor is expected to report and pay their own payroll taxes and is not subject to minimum wage and overtime laws. They are not considered to be employees and will not receive benefits other employees do. Yet, if you accidentally classify your employee as a contractor, you will be required to pay back taxes for their work along with accrued penalties and interest. You may also owe back wages to your employee.

Calculating the Wrong Overtime Wages

Overtime wages are calculated differently than your employee's regular wages. Federal law states that an employee must be paid time and a half for overtime wages or 1.5 times their regular pay. Different states may have different overtime requirements, so it is vital to stay up to date with state overtime laws as well. If you fail to pay employees their proper overtime wages, you will not only have to give them back pay for the wages they should have earned but may be required to pay penalties and interest on the back pay as well.

Not Paying the Correct Pay Rates

Tax rates are constantly changing, and it is important to stay ahead of these changes, so you do not end up miscalculating the amount you need to pay in. Failure to pay the correct amount can result in interest and penalties that can reach immense sums. You should make sure to stay updated on payroll rates for:

Federal Income Tax
Social Security Tax
Medicare Tax
Federal Unemployment Tax
State Income Tax
State Unemployment Insurance Tax
Local Income Tax

Processing Payroll Late

Payroll will need to be run on the pay frequency you have set. This can include weekly, bi-weekly, semimonthly, or monthly payments. Not only will failing to pay your employees on time erode their trust with you, but it will also make you non-compliant with the state pay frequency requirements. You will need to make sure your payroll is processed at the set schedule as well as in enough time for it to be completed by the pay date. If this becomes an issue, you may want to look into payroll funding for small businesses .

Not Filing Required Reporting

Your business will be required to file regular payroll reports to the various tax entities with the federal, state, and local governments. This includes quarterly reporting on wages of employees and often are accompanied by payments. You will also be required to file reports and pay additional taxes quarterly for unemployment taxes. Failure to pay these taxes or file these reports can put your business in poor standing and often incur expensive interest and penalties.

Not Keeping Proper Records

You are required to keep and maintain payroll records of all your employees. This includes things such as hours worked, wages paid, overtime, bonuses, holiday pay, vacation pay, and sick pay. These records need to be available in the event there is a question about the employee's pay or overtime wages. You will also need to keep these records in the event a tax entity requests documentation to back up your reports and tax payments.

Avoiding the above six payroll mistakes can help reduce your risk of incurring penalties and interest for unpaid or underpaid taxes and help you maintain compliance with your state and federal regulatory bodies. Taking control of your payroll is not only important to your employees but also to your company's bottom line.

Preparing Your Business for the Next Chapter

Tue, 28 Feb 2023 15:28:47 GMT

Whether you are preparing to sell your business , purchasing another, or building your succession plan, planning for the next chapter of your business helps to ensure a smoother transition.

Succession planning is a critical component of any business strategy. It involves preparing for the eventual transition of ownership and leadership of a company. It can be a challenging and emotionally charged process, but it is essential for the long-term success of a business. Following is an overview of succession planning, business valuation, and preparing for the next generation of owners.

Business Succession Planning

First, let's consider the importance of succession planning. As a business owner, it can be challenging to think about giving up control of your company. However, failing to plan for the eventual transfer of ownership can have serious consequences. Without a plan in place, the business may be left in a state of flux, with unclear leadership and direction. This can lead to a loss of market share, reduced profitability, and potentially even the failure of the business.

In contrast, a well-executed succession plan can help to ensure a smooth and successful transition of ownership. It can provide clarity and direction for the business, maintain its competitive edge, and preserve the legacy of the founding owner. By planning ahead, the owner can also ensure that the business is in good hands and that their vision and values will continue to be upheld.

The process of business succession can be comprised of three basic steps:

1. Identify Your Goals

When you know your objectives, it becomes easier to develop a plan to achieve them. For instance, do you want future income from the business for you and your spouse? What level of involvement do you want in the business? Do you want to create a legacy for your family or charity? What are the values you want to ensure, perhaps as they related to your employees or community?

2. Determine Steps to Pursue Your Objectives

There are several options to keep you on track to your goals, including using buy/sell agreements, gifting shares, establishing a variety of trusts, or even creating an employee stock ownership plan if your desire is for employees to have ownership stake in the future.

3. Implement the Strategy

The execution step converts ideas into action. Once it’s implemented, you should revisit the strategy regularly to make sure it remains relevant in the face of changing circumstances, such as divorce, changes in business profitability, or the death of a stakeholder.

Keep in mind, a fundamental prerequisite to business succession is valuing your business.

Business Valuation

The second key component of succession planning is business valuation. A valuation is an essential tool for assessing the worth of a company. It provides a clear understanding of the financial health of the business, its assets, payroll funding , liabilities, and potential for growth. A business valuation can also be used to determine the fair market value of the business, which is critical for estate planning, tax purposes, and other financial matters.

Additionally, a business valuation is necessary when transferring ownership of the business. It can help to determine a fair price for the business, negotiate the terms of the sale, and ensure that both parties are satisfied with the outcome. By obtaining a business valuation early in the succession planning process, business owners can make informed decisions and take appropriate steps to increase the value of the company.

Choosing a Valuation Method

There are five main business valuation methods available to small business owners. These include 1 :

1. Adjusted Net Asset Value

The adjusted net asset is determined by subtracting liabilities from assets while using industry knowledge to adjust both metrics for current value. For example, an asset or liability may be priced lower than its original value due to market fluctuations, therefore adjusting the overall value of the business.

2. Capitalization of Cash Flow

This is determined by dividing your cash flow from your business’s rate of return. Cash flow is an amount of money that entered and exited your business within a given time. 2 Your rate of return, or capitalization rate, is the earnings a buyer can expect to receive.

3. Discounted Cash Flow

Discounted cash flow refers to a complex process used to calculate the value of a business based on its potential growth.

4. Market-Based Valuation

Using this method, similar businesses who have recently been sold are examined to determine the value of your business.

5. Seller’s Discretionary Earnings

Whether you know which valuation method you want to use or not, determining a plan can make the process smoother. Some valuations can be performed on your own, however, for business owners seeking more complex methods, professional assistance may be required.

Consider contacting an advisor, appraiser, or another financial professional to help guide the process and make sure your business is given an appropriate value.

Preparing the Next Generation of Leaders

Finally, preparing for the next generation of owners is crucial for the long-term success of a business. This involves identifying and developing future leaders, providing them with the necessary training and experience, and instilling in them the values and vision of the company. It is essential to cultivate a culture of learning, growth, and innovation within the organization, so that it can continue to thrive in the future.

By investing in the next generation of owners, business owners may ensure their legacy will continue, and their business will remain relevant and competitive. This can also help to attract and retain top talent, as employees will see a clear path for career advancement within the company.

In conclusion, succession planning, business valuation, and preparing for the next generation of owners are critical components of any business strategy. They require careful planning, attention to detail, and a willingness to let go of control. However, by taking these steps, business owners can help ensure the long-term success of their company and preserve their legacy for future generations.

If you are interested in preparing your business succession plan, regardless of your career stage, our Team stands ready to assist. Contact us today to learn more.

5 Rags to Riches Business Leaders

Thu, 23 Feb 2023 21:59:42 GMT

Starting at the bottom and working your way to the top is one of the most celebrated stories known to humankind. Kurt Vonnegut once pointed out that the very telling of such Cinderella stories could build small fortunes. Here are five individuals who may someday be the subject of such legends and songs.

Jan Koum

Born in the former Soviet Union in what is now Ukraine, Koum grew up in modest circumstances. He and his mother and grandmother emigrated with him to California in his teen years. His father had to stay behind, and they were never reunited. However, they stayed in touch. At the time, telephone calls at such long distances were prohibitively expensive. Once Skype came to the fore, Koum was inspired by its ability to make international calling so much cheaper. With this in mind, he developed WhatsApp, which was ultimately purchased by Facebook for $19 billion. Since then, he’s left the Facebook board and shifted his focus to philanthropy. 1

Ursula M. Burns

As a child of a single mother living in public housing, Burns may have started life in poverty, but things took a turn along the way, notably when she took an internship with Xerox in 1980. From there, Burns served in several positions within the company, becoming CEO in 2007. That landmark move made her the first black woman to become a Fortune 500 CEO as well as the first female CEO to succeed as a female CEO on the list. Since leaving Xerox, she’s continued playing executive roles and served on the boards of several companies. 1,2

Ralph Lauren

The man behind one of the best-known American brands in fashion (or any other field) started out as the son of poor immigrants. Born in New York City, Lauren worked in sales at Brooks Brothers when he started his first venture into men's fashion: a European-style necktie. Lauren worked on his own, and when his employers rejected his efforts, he took them across the street to Neiman-Marcus. The risk paid off, and the reward funded his next venture: Polo. Ralph Lauren went from making his own deliveries to department stores to being worn by the elite and fashion forward in very short order. Ralph Lauren remains a major influence, continuing to guide his brand well into his eighties. 3

John Paul Dejoria

The familiar face behind John Paul Mitchell Systems, the high-end hair care brand, was in foster care as a child and even spent a period of his adulthood homeless. Despite this adversity, Dejoria worked most of his life. In childhood, he sold Christmas cards and newspapers to help his family make ends meet. Sometime after his stint in the army, he worked as a janitor. It was with a loan of $700 that he created his famous shampoo, selling it door to door. At the time, Dejoria was living in his car. After John Paul Mitchell Systems' success, Dejoria branched out and began Patron Tequila. 2,3

Maria das Graças Silva Foster

Petrobras, Brazil's massive oil and gas company, is so tied to the South American country's economy that it has been credited with buoying it during difficult financial times. At the head of the company is Maria das Graças Silva Foster, who grew up collecting cans and paper to help her family. After interning at Petrobras, she rose through the ranks and became one of their key chemical engineers. Her reputation for hard work and fortitude earned her the nickname "Caveirao," the Brazilian name for giant police trucks used during riots. 1,3

Weekly Market Commentary: Mixed Results As Interest Rate Concerns Grow

Tue, 21 Feb 2023 15:33:00 GMT

The Week on Wall Street

Growing concerns about further interest rate hikes, prompted by fresh economic data, reversed early-week gains and left stocks mixed for the week.

The Dow Jones Industrial Average slipped 0.13%, while the Standard & Poor’s 500 fell 0.28%. The Nasdaq Composite index advanced 0.59% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, gained 0.52%. 1,2,3

Rate Concerns Weigh on Stocks

Stocks opened last week higher on investor hopes that a continued cooling in inflation might support a more dovish Fed. A higher-than-expected rise in the Consumer Price Index (CPI) and strong retail sales in January initially did little to dent that enthusiasm, as stocks posted solid gains through Wednesday’s close.

But that optimism faded on Thursday as a surprising rise in producer prices and another decline in initial jobless claims triggered worries the Fed would stay the course for longer. Comments from two Fed officials supporting a more aggressive rate hike stance added to the unease, erasing much of the week’s gains. Stocks ended mixed on Friday, capping a choppy week.

Inflation Moderation Pauses

Consumer prices climbed 0.5% in January, fueled by rising shelter costs and energy prices. The increase in the CPI was higher than the 0.1% rise in December and slightly above the consensus estimates of 0.4%. The year-over-year inflation number (6.4%) came in lower than December’s 12-month rise of 6.5%, making it the seventh consecutive month of declining year-over-year inflation. 4

January’s product price report showed a surprise 0.7% increase, higher than the 0.4% rise expected by economists and the biggest jump since June. Year-over year, producer prices rose 6.0%, a slight improvement from December’s number. 5

This Week: Key Economic Data

Tuesday: Purchasing Managers’ Index (PMI) Flash. Existing Home Sales.
Wednesday: FOMC Minutes.
Thursday: Jobless Claims. Gross Domestic Product (GDP).
Friday: New Home Sales. Consumer Sentiment.

Source: Econoday, February 17, 2023 - The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

This Week: Companies Reporting Earnings

Tuesday: Walmart, Inc. (WMT), The Home Depot, Inc. (HD), Palo Alto Networks, Inc. (PANW).
Wednesday: eBay, Inc. (EBAY), The TJX Companies, Inc. (TJX), Nvidia Corporation (NVDA), Diamondback Energy, Inc. (FANG).
Thursday: Block, Inc. (SQ), Pioneer Natural Resources Company (PXD).
Friday: EOG Resources, Inc. (EOG).

Source: Zacks, February 17, 2023 - Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.

What is My Tax Bracket for the 2023 Tax Year?

Sat, 18 Feb 2023 15:33:48 GMT

It's never too early to start looking at your tax obligations for the coming tax season. The information in this article is for the 2023 tax year, which most taxpayers will file in 2024.

The seven 2023 tax rates themselves didn't change (they are the same as those in effect for the 2022 tax year); however, the tax bracket ranges were modified based on inflation. Because of this, it's possible you could be in a different tax bracket for 2023 than the last time you reported your taxes, even if your income has not changed. 1

Reminder: Tax Brackets Are Marginal

The IRS divides income into different tax rates. Each subsequent portion of your income will have an increased tax rate. For example, if you are a single filer who made $44,725 in 2023, your first $11,000 will be taxed at 10 percent. The next portion of your income will be taxed at an increased rate; from $11,001 to $44,725, your tax rate will be 12 percent.

As your income increases, you’ll fall into higher tax brackets and will have a higher tax rate for each portion of your income.

Why Would My Tax Bracket Be Different?

The IRS regularly adjusts tax brackets to take inflation into consideration. This is because, with inflation, people will face higher prices, meaning the purchasing power of their dollar is decreased. Knowing this, the IRS adjusts brackets in order to avoid bracket creep, a circumstance that occurs when inflation pushes your income into a higher tax bracket, or credits and deductions are reduced. In this scenario, an individual may not actually have increased purchasing power or greater disposable income, even with an increase in wages and salaries.

2023 Tax Brackets

Without further ado, here are the 2023 tax brackets according to your filing status and income from the IRS. 1

10% Tax Rate

Single Individuals: from $0 to $11,000
Married Individuals Filing Jointly: from $0 to $22,000
Heads of Households: from $0 to $15,700
Married Individuals Filing Separately: from $0 to $11,000

12% Tax Rate

Single Individuals: from $11,001 to $44,725
Married Individuals Filing Jointly: from $22,001 to $89,450
Heads of Households: from $15,701 to $59,850
Married Individuals Filing Separately: from $11,001 to $44,725

22% Tax Rate

Single Individuals: from $44,726 to $95,375
Married Individuals Filing Jointly: from $89,451 to $190,750
Heads of Households: from $59,851 to $95,350
Married Individuals Filing Separately: from $44,726 to $95,375

24% Tax Rate

Single Individuals: from $95,376 to $182,100
Married Individuals Filing Jointly: from $190,751 to $364,200
Heads of Households: from $95,351 to $182,100
Married Individuals Filing Separately: from $95,376 to $182,100

32% Tax Rate

Single Individuals: from $182,101 to $231,250
Married Individuals Filing Jointly: from $364,201 to $462,500
Heads of Households: from $182,101 to $231,250
Married Individuals Filing Separately: from $182,101 to $231,250

35% Tax Rate

Single Individuals: $231,251 to $578,125
Married Individuals Filing Jointly: from $462,501 to $693,750
Heads of Households: from $231,251 to $578,100
Married Individuals Filing Separately: from $231,251 to $346,875

37% Tax Rate

Single Individuals: over $578,125
Married Individuals Filing Jointly: over $693,750
Heads of Households: over $578,100
Married Individuals Filing Separately: over $346,875

In addition to the tax inflation adjustments, the IRS also altered standard deductions. While the above rates and brackets are at the federal level, different states might have varying brackets and rates.

https://www.irs.gov/pub/irs-drop/rp-22-38.pdf

Student Loan Forgiveness: A Timeline of Events

Fri, 17 Feb 2023 16:30:42 GMT

A lot has happened with student loan forgiveness in the US. In fact, the movement surrounding the topic started over a decade ago! Here, we provide a brief timeline of events that have happened over the past year or so regarding student loan forgiveness.

January 2021

President Joe Biden was inaugurated into office on January 20, 2021. According to Politifact, a website by the Poynter Institute, one of Biden's promises was to forgive student loan debt from public colleges and universities. His exact promise when running was to "forgive all undergraduate tuition-related federal student debt from two- and four-year public colleges and universities and private HBCUs and MSIs for debt-holders earning up to $125,000." 1

August 2022

In August 2022, President Joe Biden announced that he would cancel $10,000 per borrower and $20,000 for Pell Grant recipients. The loan forgiveness was limited to Americans earning under $125,000 per year, or $250,000 for married couples. The relief was also capped at the amount of a borrower's outstanding eligible debt. 2,3,4

September 2022

After this announcement, six states (Nebraska, Missouri, Arkansas, Iowa, Kansas, and South Caroline) sued President Biden and the Department of Education, claiming that Congress had never approved massive student loan cancellation and that the Biden Administration and the US Education Department misused their emergency authority. They argued that the administration improperly used the HEROES Act, a 2003 law that "vests the Secretary of Education with expansive authority to alleviate the hardship that federal student loan recipients may suffer as a result of national emergencies." 5,6

For the next month or so, various other parties sued the Department of Education and President Biden, including the Brown County Taxpayers Association in Wisconsin, college graduates Myra Brown and Alexander Taylor, and the Cato Institute.

October 2022

On October 17, 2022, student loan forgiveness applications opened, despite rising legal challenges.

In October, the Supreme Court dismissed the six states' lawsuit, saying it lacked standing. Shortly after, the 8th Circuit Court of Appeals in St. Louis gave an emergency order temporarily blocking the forgiveness plan after the six states appealed the decision. 7,8

November 2022

Throughout October and November, there were various appeals and dismissals from both sides and on November 11, the Department of Education stopped accepting student loan forgiveness applications. As of December 2022, the message on StudentAid.gov currently reads "Courts have issued orders blocking our student debt relief program. As a result, at this time, we are not accepting applications. We are seeking to overturn those orders." 9

On November 22, the student loan repayment pause was extended to June 2023, or until the debt relief program is implemented or the litigation is resolved.

There's no telling what will happen with student loan forgiveness in 2023, but we can be sure that most Americans will continue to stay updated on the developments in the coming months.

Weekly Market Commentary: Mixed Feelings and Mixed Earnings

Tue, 14 Feb 2023 22:12:12 GMT

The Week on Wall Street

Stocks drifted lower as a week of mixed earnings reports and resurgent worries over Fed monetary policy dragged on investor sentiment.

The Dow Jones Industrial Average slipped 0.17%, while the Standard & Poor’s 500 declined 1.11%. The Nasdaq Composite index lost 2.41%. The MSCI EAFE index, which tracks developed overseas stock markets, dipped 0.30%. 1,2,3

Rally Stalls

Stocks struggled last week, weighed down by rising bond yields, a firming U.S. dollar, geopolitical tensions, and generally unimpressive corporate earnings reports. Perhaps the most consequential overhang was the potential direction of monetary policy.

Initially, traders were relieved by comments made by Fed Chair Jerome Powell earlier in the week that he had not struck a more aggressive tone following the strong employment report released after the Federal Open Market Committee (FOMC) meeting. The relief was short-lived, however, as anxieties over future monetary policy resurfaced, exacerbated by comments by one Fed governor who suggested restrictive monetary policy would be necessary for a few years to tamp down inflation.

Powell Repeats Himself

Investors were particularly eager on Tuesday to hear Powell’s first comments following the strong employment report the previous Friday. The concern was that the surprise job number would change Powell’s outlook coming out of the last FOMC meeting.

Powell instead repeated his post-FOMC meeting remarks, which were that a disinflationary trend was underway, and there remained a distance to travel before the measures taken tamed inflation. The Fed would be data-dependent in making future rate decisions. Powell also pointed out that the robust job growth showed why it might take so long to reduce inflation to the Fed’s target level. 4

This Week: Key Economic Data

Tuesday: Consumer Price Index (CPI).
Wednesday: Retail Sales.
Thursday: Jobless Claims. Producer Price Index (PPI). Housing Starts.
Friday: Index of Leading Economic Indicators.

Source: Econoday, February 10, 2023 - The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

This Week: Companies Reporting Earnings

Tuesday: The CocaCola Company (KO), Zoetis, Inc. (ZTS), Marriott International, Inc. (MAR).
Wednesday: Cisco Systems, Inc. (CSCO), Shopify, Inc. (SHOP), Albemarle Corporation (ALB).
Thursday: Applied Materials, Inc. (AMAT), The Southern Company (SO).
Friday: Deere & Company (DE).

Source: Zacks, February 10, 2023 - Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.

This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.

Before Completing Your 2022 Tax Return, Keep These 5 Filing Tips in Mind

Wed, 08 Feb 2023 16:34:17 GMT

While doing your taxes always feels a bit tedious, these five tips can help you stay the course for filing your 2022 tax return.

Tip #1: Leverage Technology

If you are filing without the help of an accountant or advisor, you may find it beneficial to use tax preparation software for if your tax situation is fairly simple. You can input the information, and the software can populate the numbers for you. Utilizing software can help you meet compliance requirements and help streamline the process, which in turn can potentially speed up the time it takes to receive your tax returns, if you are receiving a return.

Tip #2: Accuracy Over Speed

Getting an early start on the filing process can allow you the time needed to go through your returns several times before mailing or e-filing. When you are claiming deductions, make sure you’re eligible under the current IRS rules, as some rules change year to year.

Have a paper trail ready and simply read from what you have in front of you. Take advantage of automated systems that can funnel reported income, interest or dividends directly into your tax preparation software. Guessing is fine if you want to estimate your refund amount, but not when you report to the IRS. We recommend consulting a tax professional.

Tip #3: Report Everything

You may have made several charitable contributions last year or had several income streams. Perhaps you had a few investments that didn’t yield much. Whatever it may be, you should report all of this on your return.

When using tax software, it will recognize when you’ve given enough or earned enough to affect the amount of taxes you owe. Remember, it’s better to overreport than to leave things off your returns. The IRS is likely to discover how much you’ve earned or received via reporting requirements and will know if you haven’t reported income. If this is the case, then you may have to pay a little more next year.

Tip #4: Choose Between Standard Deduction & Itemizing

The IRS allows a standard deduction amount for those who wish to simplify filing. For the 2022 tax year, the standard deduction amount is $12,950 for single filers, $25,900 for married couples, and $19,400 for head of household. 1 You can reduce the taxable amount on your return using the standard deduction. However, itemizing them may enable you to reduce your taxable amount even more. Some commonly used deductions include:

State and local taxes
Charitable contributions
Casualty loss
Business expenses for which you weren’t reimbursed
Medical expenses
Mortgage interest

If you’re already an itemizer, you should be sure to note how the most recent changes in the tax code may have (or may not have) affected certain deductions.

Tip #5: Understand Tax Credits

Tax credits act as reductions on the amount of tax owed. It’s important to note that they do not reduce your taxable income or change your tax bracket as a deduction might.

An example is the Earned Income Tax Credit, which helps low-to moderate-income workers and their families receive tax relief. If you qualify, you can use the credit to reduce the taxes you owe, which can potentially increase your return. 2

According to a report by the Treasury Inspector General for Tax Administration, approximately 5 million potentially eligible taxpayers do not claim the credit each year, which results in about $7 billion in unclaimed benefits annually. 3 To ensure you are not missing out on this opportunity, you should check for this and other tax credits for which you may be eligible.

If you have any questions this year, be sure to speak with a CPA or other trusted tax professional regarding your situation. An experienced professional can answer your questions and empower you to start the tax season off with confidence.

Business Succession Plan: A Guide for Business Owners

Thu, 02 Feb 2023 19:03:58 GMT

Small businesses serve as the backbone of the economy. If you run a family business, you understand the importance of preparing and openly communicating with those who are slated to take the reins one day.

Family businesses account for 64 percent of the US gross domestic product, yet 43 percent of family businesses have no formal succession plan. 1 With the day-to-day demand business owners experience, it’s no surprise that succession planning tends to get put on the back burner. Nevertheless, neglecting to focus on succession planning can put business owners and their family members at risk.

Why Is Business Succession Planning Important?

There are several reasons for business owners to consider a business succession structure sooner rather than later. Let’s look at two of them.

The first reason is taxes. Upon the owner’s death, estate taxes may be due, and a proactive strategy may help to better manage them. Failure to properly prepare can also lead to a loss of control over the final disposition of the company.

Second, the absence of a succession structure may result in a decline in the value of the business in the event of the owner’s death or an unexpected disability.

The Business Succession Process

The process of business succession is comprised of three basic steps:

Identify your goals
Determine steps to pursue your objectives
Implement the strategy

Identify Your Goals

When you know your objectives, it becomes easier to develop a plan to achieve them. For instance, do you want future income from the business for you and your spouse? What level of involvement do you want in the business? Do you want to create a legacy for your family or a charity? What are the values that you want to ensure, perhaps as they relate to your employees or community?

Determine Steps to Pursue Your Objectives

There are several options that can help you follow the goals you’ve identified, and they include using buy/sell agreements, gifting shares, establishing a variety of trusts, or even creating an employee stock ownership plan if your desire is that employees have an ownership stake in the future.

Implement the Strategy

Keep in mind that a fundamental prerequisite to business succession is valuing your business.

As you might imagine, business succession is a complicated exercise that involves a complex set of tax rules and regulations. Before moving forward with a succession, consider working with legal and tax professionals who are familiar with the process.

Business Planning and Succession in Kansas City

As a small business owner, you know the importance having a strong plan in place for your business. From getting started, to winding down, to valuations, to selling the business or passing to next-gen leaders, there are many steps needed to ensure it all flows smoothly. Our experienced Team at Buttonwood Financial Group stands ready to assist along the way. Contact us today to learn more about how our Family CFO services can benefit you, your family, and your business.

https://www.familybusinesscenter.com/resources/family-business-facts/

Risk Management: Property, Casualty, Life, Disability, and Extended Care Insurance

Thu, 26 Jan 2023 22:28:33 GMT

When it comes to creating a sound financial strategy, many people think of creating a diversified portfolio or making sure they’re regularly contributing to their retirement plan. But a good financial plan includes insuring against the unexpected and making sure that no matter what happens, you’re covered.

If you’re younger and have a lot of life ahead of you, you might wonder why you need to consider disability insurance or life insurance. But the point of insurance is to expect the unexpected and make sure that you've taken care of yourself and your family if something happens to you.

Property insurance may take the form of homeowners insurance, renters insurance, or insurance against a specific natural disaster, like flood or earthquake insurance. Property insurance typically covers the building itself and the contents within it should something happen. A rental policy will cover your possessions as a renter should something happen to your building. You’ve spent a lifetime building up your possessions; if everything were lost tomorrow, you wouldn’t want to outlay the funds to rebuy everything you own. 1
Casualty insurance protects you against claims or lawsuits made against you by outside parties. Casualty insurance is already bundled in if you already have homeowners and auto insurance. For example, if someone falls down deck stairs because you failed to maintain them, the casualty part of your homeowners insurance would cover this type of claim. 2
Life insurance is a way of providing financial support to your loved ones after you’re gone. You’ll pay a premium, typically monthly or annually, and pay a death benefit to your beneficiaries after you’re gone. Death benefit money can be used to pay funeral expenses, mortgage or rent payments, and day-to-day living expenses. Younger people typically overlook this type of insurance, but life insurance is an important part of everyone’s financial plan. 3
Disability insurance protects you if you become disabled and unable to work. It’s helpful to think of disability insurance as insurance for your income. The two types of disability insurance—short-term disability (STD) and long-term disability (LTD)—are typically offered as part of or in addition to your insurance options provided by your employer. STD typically covers periods of injury or disability from 13-26 weeks, while LTD usually offers several years of continuous income replacement after a work-ending workplace injury. However, these policies only typically cover a percentage of your previous income. Still, having at least some of your income covered is better than nothing. 4
Extended care insurance , sometimes referred to as long-term care insurance, is designed to help cover you after age 65 and provide in-patient or at-home care for a chronic condition. Extended care insurance can cover nursing homes, assisted living facilities, home health aides, and private-duty nurses. Extended care insurance is also less expensive the younger you are, so if you’re approaching 50, it’s something to start considering. 5

Insurance is an essential part of your life and financial strategy. By preparing for the worst (while hoping for the best), you’ll be able to handle any changes in your life and provide yourself with some protection against significant disasters or illnesses. Remember, you can’t control everything that happens in life, but you can create a plan that will support you no matter what.

Investment Policy Committee Update - January 2023

Tue, 24 Jan 2023 14:57:42 GMT

After a year of defensiveness to protect against losses from both stock and bond markets, we believe 2023 will require a different strategy. Given what we saw as a later stage market environment, in 2022 we proactively reduced risk – lowering equity exposure and maintaining portfolio inflation hedges like commodities and energy. As we move into 2023, we're now shifting our focus to a setting where inflation, the dollar, and longer-term interest rates look like they have peaked. For our Q1 2023 rebalance the objective was to recalibrate investments to better align with these shifts. In summary, we are taking our first step toward additional risk.

While not a big step, we’ve adjusted portfolios to move back to a slight overweight for equities. Even though the risk of recession is not zero, in our view the broad market positioning and sentiment have been excessively bearish, introducing greater potential for upside surprise. After nearly 18 months from initiating these positions, we have completely removed inflation hedges (commodities, energy, and TIPS exposure), given our belief that inflation is easing. Regionally, we’ve reduced our U.S. equity exposure, adding to both Developed Markets (DM) and Emerging Markets (EM) equities, on attractive valuations, resilient earnings, and the potential for outperformance in a disinflationary environment. We are focused on adding to exposures that do well when rates and the dollar are falling, like DM growth, broad EM equities and EM debt.

On the fixed income side, we continue the themes from Q4 2022 by adding to credit and duration while looking to tap into attractive fixed income sectors; namely US Investment Grade, Mortgage-Backed Securities and Emerging Market Debt. Longer duration treasuries provide a ballast to the other risk-on decisions being made throughout both the stock and bond side of portfolios.

These changes are an important but careful recalibration of the portfolio. The amount of risk we're carrying remains relatively low, but we're reshaping the emphasis of that risk towards what we see as an increased likelihood of an optimistic “soft landing / goldilocks” outcome. This scenario would encompass inflation continuing to decline and Long-Term interest rates in the US falling. These initial 2023 portfolio changes are consistent with that outlook, while remaining relatively conservative in our overall level of risk taking.

Inflation:

Inflation was a dominant story for 2022, and we believe this will continue to be a focus for markets and the Fed into 2023. However, we have started to see inflation slow in the past few months in a meaningful way, which should allow the Fed to pause interest rate hikes sometime in the first half of the year. Headline year-over-year CPI fell from 9.1% in June to 6.5% in December driven by stabilizing energy prices and falling goods inflation. This is despite the services component moving higher, driven by strength in shelter (the single largest component for inflation), which we saw move up by 0.6% Month over Month in November Core CPI. As discussed in our Q4 22 update, shelter inflation is extremely lagged, all our real-time data shows a clear cooling in the housing and rental markets. This will most certainly be a downward force on inflation at least early in the year. Month-over-month CPI services (ex-shelter) has been zero for the past two months and fell to negative in December, which historically has been a good predictor of future inflation. Furthermore, the annualized seasonally adjusted Core PCE, the Fed’s preferred measure of inflation, has averaged just 2.5% in the last 2 months, below even the Fed’s own inflation projections of 3.5% in the SEP ( Statement of Economic Projections ).

The key takeaways here are that while many market participants focus on the year-over-year data, this is looking in the rearview mirror, and we should be focused on the future path of inflation. Additionally, we see a divergence between what the Fed is publicly expecting versus what is in the data (2.5% over the past 2 months) and could lead to changes in monetary policy in the coming months.

What to watch:

Central Banks have made tremendous progress tightening financial conditions since initiating the new rate cycle early last year. Spiking mortgage rates have dramatically reduced new home sales, investor and CEO confidence has plunged, capital spending is being delayed and savings depleted, and rate sensitive sectors like Technology have given back their Covid era gains. Consensus Wall Street estimates expect flat to negative growth in 2023, with average GDP growth expectations ranging from 0.5% to -0.5%, hardly a severe contraction, but not expansionary. Average estimate of U.S. recession probability from the same group is just over 60%.

How could this be a good thing? Well, we believe much of the bad news has already been priced in. Remember that markets are forward-looking discounting mechanisms that anticipate changes in the real economy, typically 6-12 months ahead of when they appear in economic data. Just as financial markets pulled forward the risks of a 2023 recession into 2022, evidenced by the broad declines in markets we saw last year, history tells us that markets can similarly rebound before a recovery in the real economy.

With inflation decidedly cooling, financial conditions sufficiently tight and much of the bad news already priced in, we see risks skewed asymmetrically to the upside. Should a recession materialize, that is already base case and largely reflected in current asset prices. Should it fail to materialize, risk assets should benefit. Of course, there is always risk of a deep recession – i.e. the downward inflation trend stalls or reverses and Fed slams the brakes – which is why we are cautiously deploying risk while hedging equity risk. Our thoughts are that in 2023 inflation comes down and GDP growth doesn’t spend more than one quarter in negative territory. As such, we are engineering a modest active position designed to capture this scenario while keeping active risk low. With this positioning we can risk up further if and when data arrives confirming these thoughts.

Thank you for your continued trust and allowing us to coordinate your asset management as part of our Family CFO services!

Weekly Market Commentary: Mixed Results Following Weak Economic Data

Mon, 23 Jan 2023 16:23:03 GMT

The Week on Wall Street

Stocks showed mixed results last week as recession fears resurfaced in response to weak economic data and a tepid start to a new corporate earnings season.

The Dow Jones Industrial Average skidded 2.70%, while the Standard & Poor’s 500 declined 0.66%. But the Nasdaq Composite index gained 0.55% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, lost 0.50%. 1,2,3

Mixed Economic Data

Stocks weakened to start the week amid discouraging corporate earnings and troubling economic data. Disappointing retail sales and manufacturing reports sparked concerns that the Fed may have gone too far in hiking rates, while a drop in initial jobless claims diminished chances of a near-term pause in rate hikes. Welcome news from two big technology names on Friday powered a strong rally that mixed significant indices.

The start of the earnings season was a drag on investor sentiment. While 69% of the S&P 500 constituent companies that reported earnings by Thursday (48 companies) exceeded expectations, the percentage of “beats” is below the three-year average. More concerning, however, was that average earnings declined by more than 2%. 4

Consumers Retrench

Retail sales fell 1.1% in December, capping an overall weak holiday shopping season. November retail sales were revised downward to -1.0%, from the earlier estimate of -0.6%. Compared to November-December 2021, sales increased by 5.3%, below the 6 to 8% increase expected by The National Retail Federation. 5,6

Many economists viewed these lackluster numbers as evidence of a weakening consumer. A more cautious consumer raises more concerns about a recession at some point this year since the primary driver of U.S. economic growth is consumer spending.

This Week: Key Economic Data

Tuesday: Purchasing Managers’ Index Composite.
Thursday: Gross Domestic Product (GDP). Durable Goods Orders. New Home Sales. Jobless Claims.
Friday: Consumer Sentiment.

Source: Econoday, January 20, 2023 - The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

This Week: Companies Reporting Earnings

Tuesday: Microsoft Corporation (MSFT), General Electric Company (GE), Verizon Communications, Inc. (VZ), Johnson & Johnson (JNJ), Lockheed Martin Corporation (LMT), Texas Instruments, Inc. (TXN), Union Pacific Corporation (UNP), D.R. Horton, Inc. (DHI), Raytheon Technologies Corporation (RTX).

Wednesday: AT&T, Inc. (T), The Boeing Company (BA), Tesla, Inc. (TSLA), International Business Machines Corporation (IBM), Lam Research Corporation (LRCX), Abbott Laboratories (ABT), CSX Corporation (CSX), NextEra Energy, Inc. (NEE), KimberlyClark Corporation (KMB), Norfolk Southern Corporation (NSC), General Dynamics (GD).

Thursday: Intel Corporation (INTL), Visa, Inc. (V), Mastercard, Inc. (MA), Blackstone, Inc. (BX), Northrop Grumman Corporation (NOC), Southwest Airlines Co. (LUV), Rockwell Automation, Inc. (ROK).

Friday: Chevron Corporation(CVX), HCA Healthcare, Inc. (HCA), American Express Company (AXP), ColgatePalmolive Company (CL).

Source: Zacks, January 20, 2023 - Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.

New Year Financial Checklist - 2023

Wed, 18 Jan 2023 15:09:51 GMT

As we look ahead in 2023, many of us are thinking about our financial goals for the months and years to come. Whether you're planning for retirement, considering a business sale, or simply trying to organize your financial life for yourself and your family, there are steps you can take to set yourself up for success. With that in mind, review our financial planning checklist for 2023:

1. Develop a Financial Professional Relationship; Focused on You

Finding the right financial advisor can be a complex process, but there are a few key considerations as you begin your search. First, focus your search on fiduciaries . Working with a fiduciary helps to ensure your financial team acts in your best interest.

Second, determine what type of team you need. There are many financial advisors, including financial planners, investment advisors, and wealth managers. At Buttonwood, we take a holistic approach, placing us in the Wealth Manager category. As your Family CFO, we focus deeper than the standard investment management approach. Instead of focusing primarily on investments, we manage and incorporate your investment strategy into your overall financial strategy while also implementing strategy across key areas of your financial life (tax, insurance, estate, cash flows, balance sheet, business, education, etc). It’s important to consider which level of service you and your family need by looking at your objectives. If your main goal is to invest assets, an investment/asset manager may be the best fit. If you are ready for a coordinated strategy across your financial life and focused on multigenerational wealth, a wealth manager may be the better fit.

2. Determine What to Do with “Extra” Money

Now is the perfect time to begin thinking about your spending for 2023 and beyond. When you find yourself bringing in more money than is going out, exciting opportunities begin to present themselves. From simple things like shifting from a traditional bank account to a cash management strategy, you may more than double or triple your rate of return. Beyond your paycheck, what other income streams are contributing to your monthly cash flows? Perhaps you have investments, real estate, a pension, or maybe it’s your consulting business bringing in the extra cash. Regardless, we strongly recommend tracking your income and comparing it to your expenses.

By doing a comparison, you will be able to determine the amount you can allocate to positively impact your financial life. For example, you may be able to contribute more to retirement accounts (providing additional income throughout your life), charity (reducing your tax bill today), a business (creating additional cash flows and assets), unique investments (targeting growth of assets), or to a future generations’ education (setting up the next generation for success). It’s important to work with your financial team to create and implement a plan to meet your goals while keeping your personal balance sheet strong.

3. Work to Reduce Your Tax Bill and Increase Retirement Income

Forward a summary of your employee benefits to your wealth manager and ask if there are opportunities you have not taken advantage of. Does your employer offer a 457 plan? What about an FSA or an HSA? Are there additional benefits available for your spouse? Will your 401(k) allow for an Employee After Tax contribution (in addition to Pre-Tax)?

Based on the simple impactful concept of compound interest , the earlier you save, the more your financial nest egg will increase. Are you fully funding an IRA or Roth IRA in January? Did you know you can fund an IRA even if you have high income? Additionally, if you are over age 50, are you taking full advantage of catch-up contributions ?

Part of our Family CFO Process includes development of comprehensive strategy based around your unique income, employee (or self-employed) benefits and your tax situation.

4. Review Your Estate Plan

When is the last time you updated your estate documents? This often falls by the wayside as life gets busy and other tasks take priority. However, you may be surprised how much can change in just a few years. As you gather information for your taxes such as reviewing each of your accounts, cash flows, and more, it’s a great time to review your estate plan.

The most common mistakes we see with estate documents is incorrect titling and beneficiary designations. Over the years, tax law changes have materially impacted how inheritance from retirement plans to beneficiaries are taxed. If you have assets in an IRA, 401(k) or similar, you should review your estate documents to address these changes. An integral piece of your estate plan is ensuring your assets are titled to the correct entity and beneficiaries are reviewed for impact after major events.

5. Review Your Risk

Are you taking on more risk than you are comfortable with? When markets are in a “risk off” mode as we saw in 2022, it’s important to proactively address changes in the economic cycle. When the major market indices are unstable due to later stages of the economic cycle, rebalance to protect assets and avoid major losses in a down market. See our Investment Policy Committee Updates for a deeper look into our strategy.

6. Protect Assets and Income

Insurance may be one of the ‘boring’ items that takes the back burner, especially if you haven’t had to make any recent claims. Regardless, it should be on your financial planning checklist. Our Family CFO Process includes a comprehensive review of your Life, Health, Disability, Long Term Care, Home, Auto, etc. policies. We often work with your current insurance providers to ensure you are covered in the event of an unexpected occurrence.

Life & Disability Insurance

Annually, look back on the previous year. Review your roles and responsibilities and how they have changed. If a new baby has joined your family, if you have added or adjusted your mortgage, if your kids have an eye on a more expensive college, you may want to increase your life and/or disability insurance to ensure your dependents are taken care of in the event of the unexpected. If your balance sheet has grown, or if debts and obligations have decreased, you may be able to decrease the amount of life and/or disability insurance you are carrying.

No one ever plans for an accident or illness, but disability insurance ensures you still have income in case you are unable to work for an extended period. While they are relatively inexpensive to insure, we regularly see younger generations ignore disability coverage because they never think it could happen to them. “More than one in four 20-year-olds will experience a disability for 90 days or more before they reach 67,” says Carol Harnett, President of the Council for Disability Awareness .

Keep in mind policies can and should be reviewed regularly. If a family member has medical issues, often employer benefits offer life insurance coverage without medical underwriting. Employer plan benefits can save families thousands of dollars and often go overlooked.

Home & Auto

It can be easy to forget about reviewing home & auto policies, but an annual check-in can save you in the long run. When reviewing auto policies, be sure you have sufficient coverage for all drivers, not only yourself. You may have a new driver on your policy, which may mean it’s time to increase your coverage. It’s also important to think about your driving habits and what the upcoming year entails. If you are planning a long road trip, now may be a good time to increase coverage!

Even if you haven’t made any major changes or improvements to your home, we still recommend regular review of your homeowner’s policy. If 2022 was unlucky for your home, you may have seen flooding, wind damage, hail damage or damage due to large amounts of snow and ice.

Not interested in dealing with the intricacies of each policy? Review the benefits of an umbrella policy . These are all events your insurance agent and Family CFO should know about sooner rather than later.

Long-Term Care

Generally, we’ve found the addition of long-term care (LTC) insurance should be based on a combination of your personal balance sheet and cash flow needs. Similar to life and disability, generally the more assets and cash flow you have, the lower the need for LTCi.

Financial Professional Team Working for You

While these steps combine to be a big project on your to-do list, this is what we do! This financial planning checklist only scratches the surface of the services we provide for our clients. At Buttonwood, we know as wealth builds, life doesn’t get simpler; it becomes more complex. Contact us today to learn more about how our services may specifically benefit you.

SECURE Act 2.0: An Overview

Fri, 13 Jan 2023 23:29:49 GMT

In the final days of 2022, Congress passed a new set of retirement rules designed to make it easier to contribute to retirement plans and access those funds earmarked for retirement.

The law is called SECURE 2.0, and it's a follow-up to the Setting Every Community Up for Retirement Enhancement (SECURE) Act, passed in 2019.

The sweeping legislation has dozens of significant provisions, so to help you see what changes may affect you, we broke the major provisions of the new law into four sections.

New Distribution Rules

RMD age will rise to 73 in 2023. By far, one of the most critical changes was increasing the age at which owners of retirement accounts must begin taking required minimum distributions (RMDs). And starting in 2033, RMDs may begin at age 75. If you have already turned 72, you must continue taking distributions. But if you are turning 72 this year and have already scheduled your withdrawal, you may want to revisit your approach. 1

Access to funds. Plan participants can use retirement funds in an emergency without penalty or fees. For example, starting in 2024, an employee can get up to $1,000 from a retirement account for personal or family emergencies. Other emergency provisions exist for terminal illnesses and survivors of domestic abuse. 2

Reduced penalty. Also, starting in 2023, if you miss an RMD for some reason, the penalty tax drops to 25% from 50%. If you fix the mistake promptly, the penalty may drop to 10%. 3

New Accumulation Rules

Catch-Up Contributions. Starting January 1, 2025, investors aged 60 through 63 can make catch-up contributions of up to $10,000 annually to workplace retirement plans. The catch-up amount for people aged 50 and older in 2023 is $7,500. However, the law applies certain stipulations to individuals earning more than $145,000 annually. 4

Automatic Enrollment. Beginning in 2025, the Act requires employers to enroll employees into workplace plans automatically. However, employees can choose to opt-out. 5

Student Loan Matching. In 2024, companies can match employee student loan payments with retirement contributions. The rule change offers workers an extra incentive to save for retirement while paying off student loans. 6

Revised Roth Rules

529 to a Roth. Starting in 2024, pending certain conditions, individuals can roll a 529 education savings plan into a Roth IRA. So, if your child gets a scholarship, goes to a less expensive school, or doesn't go to school, the money can get repositioned into a retirement account. However, rollovers are subject to the annual Roth IRA contribution limit. Roth IRA distributions must meet a five-year holding requirement and occur after age 59½ to qualify for the tax-free and penalty-free withdrawal of earnings. Tax-free and penalty-free withdrawals are allowed under certain other circumstances, such as the owner's death. The original Roth IRA owner is not required to take minimum annual withdrawals. 7

SIMPLE and SEP. From 2023 onward, employers can make Roth contributions to Savings Incentive Match Plans for Employees or Simplified Employee Pensions. 8

Roth 401(k)s and Roth 403(b)s. The new legislation aligns the rules for Roth 401(k)s and Roth 403(b)s with Roth Individual Retirement Account (IRA) rules. From 2024, the legislation no longer requires minimum distributions from Roth Accounts in employer retirement plans. 9

More Highlights

Support for Small Businesses . In 2023, the new law will increase the credit to help with the administrative costs of setting up a retirement plan. The credit increases to 100% from 50% for businesses with less than 50 employees. By boosting the credit, lawmakers hope to remove one of the most significant barriers for small businesses offering a workplace plan. 10

Qualified Charitable Donations (QCD). From 2023 onward, QCD donations will adjust for inflation. The limit applies on an individual basis, so for a married couple, each person who is 70½ years old and older can make a QCD as long as it remains under the limit. 11

Remember that just because retirement rules have changed does not mean that adjusting your current strategy is appropriate. Each of your retirement assets plays a specific role in your overall financial strategy, so a change to one may require changing another.

Also, retirement rules can change without notice, and there is no guarantee that the treatment of specific rules will remain the same. This article intends to give you a broad overview of SECURE 2.0. It's not intended as a substitute for real-life advice. If changes are appropriate, we will outline an approach and work with your tax and legal professionals, if applicable.

Fidelity.com, December 23, 2022
CNBC.com, December 22, 2022
Fidelity.com, December 22, 2022
Fidelity.com, December 22, 2022
Paychex.com, December 30, 2022
PlanSponsor.com, December 27, 2022
CNBC.com, December 23, 2022
Forbes.com, January 5, 2023
Forbes.com, January 5, 2023
Paychex.com, December 30, 2022
FidelityCharitable.org, December 29, 2022

January is National Financial Wellness Month

Wed, 11 Jan 2023 19:21:53 GMT

January is Financial Wellness Month, which means it’s a good time to plan and update your financial strategy.

Now is a great time to connect with your financial professional to discuss your financial situation and aspirations for the future. You should also assess if your financial strategy needs any adjustments or changes based on your lifestyle.

Defining Financial Wellness

The first thing to do is define what “financial wellness” means for you. This varies drastically from person to person. It is informed by who you are, where you are coming from, and what your experiences with money are. A person who has had serious financial troubles in their life might have different expectations than a person who has enjoyed relative financial stability.

How, then, is “financial wellness” defined? First, ask yourself what you need to feel secure, financially speaking. Here are some questions to consider:

How much should you have saved?
How much income should you be bringing in each month?
Where are you at with your debt/liabilities vs assets?
How fluid is your cash flow when it comes to expenses that are not urgent (taking your family out to dinner or on a small trip) versus larger financial goals (such as buying a new kitchen appliance)?
Is your estate plan properly setup to benefit your younger generation(s)?
Finally, and perhaps most importantly, will you be able to retire at your target age?

Financial Wellness Goals

Thinking about financial wellness is often a matter of setting goals for what you can accomplish now and what you can work on to make it a part of your larger financial strategy. For now, consider taking these actions:

Have a values-based conversation with the decision makers in your household, meaning any tax-paying adult who contributes income and shares responsibility for the bills. This could be your spouse or a family member. Make sure the non-essential things you are spending money on line up with your commitments to meeting your financial needs. This is not a “stop getting lattes” conversation; it is a “are we spending money on the things that matter?” conversation.
Create an emergency fund reflecting 3–6 months of household expenses to establish a stable foundation going forward. If that seems too ambitious, build the fund a month at a time until you reach your goal.
Make regular contributions to your retirement accounts. The 401(k) contribution limit for 2023 is $22,500. 1 Take advantage of any matching contributions you might get from your employer.
Make long-term financial goals. If you are thinking in terms of creating generational wealth, for instance, let that guide your overall financial strategy.
Is becoming totally debt free an achievable goal? It can be, if you make it a priority. That said, being totally debt free can be a difficult task for most households. For that reason, it may be better for you to focus on your other goals first and make debt freedom a target for a later date: for example, being debt free by retirement.

These are, of course, not hard and fast rules. As mentioned above, every individual has their own specific definition of financial wellness. Some of these examples might feel like a long reach. Others, you might already be practicing. The good news is that with careful practice and judicious scrutiny, many people can gain a feeling of satisfaction and even pleasure from maintaining financial wellness.

Wealth Management Kansas City

Having your financial strategy in place can mean not only a great deal to you in the long term but may also provide you some comfort in the short term. If you are ready to implement your coordinated financial strategy, a wealth manager is worth exploring. While we are physically located in the heart of Kansas City, we work with families all over the country and stand ready to assist. Schedule time to discuss with one of our Lead Advisors today.

https://www.irs.gov/newsroom/401k-limit-increases-to-22500-for-2023-ira-limit-rises-to-6500

Financial Books That Have Stood the Test of Time

Tue, 03 Jan 2023 16:03:11 GMT

There are countless financial books out there promising to make you a more intelligent investor, an expert budgeter, or a money guru. But which ones contain solid advice, and which ones should you pass over? There are so many options, it can be hard to tell.

Here, we highlight five financial books that have stood the test of time. These books were written 20+ years ago, but the information gleaned from them is still relevant today. Sound financial habits and strategies never go out of style.

Rich Dad, Poor Dad

Robert Kiyosaki's Rich Dad, Poor Dad was originally published in 1997, but it remains one of the most popular books for investors today. The book outlines the dichotomy of two fathers: one who makes smart financial decisions (rich dad) and one who doesn't (poor dad). 1

Not only does it offer practical investment tips, but it also addresses our financial habits and how these habits can make or break our success. Becoming financially literate is the first step to becoming a successful investor, and Rich Dad Poor Dad breaks this financial literacy down in an easy-to-understand format.

Think and Grow Rich

Think and Grow Rich by Napoleon Hill was originally published in 1937 and was republished in 2016. Its original publication followed the Great Depression and was well received because it provided specific steps to achieve wealth. It also endorses a philosophy of positive thinking, which so many Americans needed at the time (and still need today). Its life-changing tips are timeless and can be applied to modern-day investors just as well as they were applied decades ago. 2

The Intelligent Investor

Originally published in 1949, The Intelligent Investor by Benjamin Graham focuses on the philosophy of “value investing,” the practice of buying an investment that appears to be underpriced relative to its value. For example, a value investor might buy a stock that has a lower price-to-earnings (PE) ratio, which can help illustrate how expensive a company is in relation to its earnings. 3

Throughout the many years since the book's publication, market developments have continued to prove the wisdom of Graham's strategies, making this a financial book that has truly stood the test of time.

The Millionaire Next Door: The Surprising Secrets of America's Wealthy

The Millionaire Next Door by Thomas Stanley was published in 1995, and while it includes some dated references (no one has a Sears credit card nowadays), the principles in the book are still worth examining. The premise of this one is that wealthy people spend less on frivolous expenses—like cars and watches and huge mansions—and spend more of their time investing in appreciating assets to grow richer. 4

Some of the findings are surprising because you wouldn't expect a millionaire or multi-millionaire to drive the least expensive car on the block, but these small choices are how the rich grow richer and why the middle classes often live paycheck-to-paycheck. This is another book that will help you examine your financial literacy and habits. 4

The Richest Man in Babylon

Who knew that there were so many sound financial lessons we could learn from the ancients? George Clason did when he wrote The Richest Man in Babylon in 1926! Many readers consider this book “the greatest of all inspirational works on the subject of thrift, financial planning, and personal wealth.” In it, readers will learn about the famous Babylonian parables, which help outline these concepts in an easy-to-understand way. 5

Are you going to pick up any of these timeless classics? Whether you choose to read about finance from a Great Depression author or a contemporary, learning more about healthy financial habits can help set you on the path to financial success and well-being.

Generational Wealth Planning: Growing and Protecting Wealth for Decades to Come

Tue, 20 Dec 2022 22:32:54 GMT

It’s common for people to want to leave money behind for their children and family members after death. After spending years working, many are proud to leave behind a legacy and help their future generations. But there's a common saying regarding generational wealth - "Shirtsleeves to shirtsleeves in three generations." The idea is, by the time the third generation inherits wealth, it's largely gone. There are things you can do now to proactively protect your wealth and your heirs. Developing a generational wealth plan, communicating with your loved ones, and working with a team of professionals can give your wealth a better chance at lasting for generations.

Following are a few ideas about how the Team at Buttonwood approaches generational wealth / estate planning.

Creating a Generational Plan

The making of a generational plan consists of two parts. First, the legal documents. Second, you will need a detailed plan outlined in a way that clearly states how your beneficiaries should address wealth after your passing. There are several steps you can take now to begin the planning process.

Think Ahead, Far Ahead

It’s important to remember that generational wealth planning is a bit different from designating gifts for your kids and grandkids through your estate plan. When you start a generational plan, you’ll want to be mindful of future generations - even the ones you’ll never meet. It may be challenging, but think of your family as people who you haven't met yet. The goal is to pass your assets to those people, considering their needs alongside the family members you already know and love.

Have Conversations with Your Family

If you want your wealth to last for generations, it’s crucial to communicate your desires with your family. Everyone should be as close as possible to being on the same page when it comes to leaving a legacy for future generations.

As the CEO of your family, you are the best resource for wisdom and guidance when it comes to this, so don’t make the mistake of thinking your money and values need to be kept secret. Take the time to educate your children and grandchildren, sharing your vision with them so they aren’t left feeling confused and frustrated. This is an ideal opportunity to involve your Estate attorney and Family CFO, as they can help you communicate your vision and answer any of the more technical questions your family may have.

Engage Family in Your Philanthropy

A private family foundation or donor advised fund are powerful ways to make a difference in the world, and within your family. If giving back is important to you, instill these values in your family by keeping them involved. By introducing your family to a similar charitable mindset, you are creating a strong foundation of continual giving across generations.

Keep Younger Generations Involved

Giving back warms the heart, regardless of age. Around the age of two is when children begin to develop empathy 1 . Take this opportunity to engage younger generations with charities they care about. Let the children in your family research nonprofit organizations and ask them to select one or two to contribute to. Put 100% of the decision in their court – you may be surprised to find a new charity you also care about! If you enjoy helping those in need around the holidays, ask children to pick out toys to donate to Toys for Tots or a local shelter. Invite them to drop off the toys with you to show them the impact their gifts are making. Encourage giving regularly, teaching them the habit of giving.

Build Awareness & Knowledge

As younger generations reach teenage years, it’s a great time to involve them with charitable giving. Including them in meetings and listening to their thoughts can inspire and motivate them to become a larger part of your plan. Additionally, you can begin instilling a sense of responsibility and leadership qualities!

Family Meetings

Beyond birthdays and holidays, host regularly scheduled family meetings to discuss specifics of your foundation or fund and upcoming plans. Often, this opportunity is missed due to regular contact with family members in a social capacity. It’s important to set aside time to get down to business – and invite everyone involved.

Put It in Writing

Make sure you specifically identify how the money should be used, how it is accessed and how it is replenished. With proper planning, it’s possible that your money could be used to invest in higher education, starting a business or other things that will help your family grow their wealth for decades to come.

Create a Support System

Do you know what a sustainable withdrawal rate is for your assets? If not, it's highly unlikely your heirs will know either. Understanding this, along with a number of other technical details, is an important part of maintaining wealth for decades to come. Therefore, working with the right system of financial professionals could be your greatest chance at successful generational wealth transfer. They will have the advantage of working one-on-one with you to determine your goals, develop a plan, educate your heirs and keep them on track.

If you think you’re ready to start creating a generational wealth plan, remember to have a clear vision and share it with your family members. Put these wishes into legal documents, too. Your estate attorney and Family CFO Team can work with you to begin the planning process, speak to your family members and answer any questions you may have. For additional thoughts and inspiration, you may enjoy The Ultimate Gift book by Jim Stovall .

1. https://www.parents.com/toddlers-preschoolers/development/behavioral/toddler-empathy/

Your Guide to Year-End Charitable Giving

Fri, 16 Dec 2022 14:54:14 GMT

Whatever your reason for giving this year, it’s important to know how your charitable contributions can impact your financial plan. In fact, being strategic and intentional with your charitable contributions can create tax benefits for both you and your chosen charity.

Here’s how.

Research Charitable Organizations

Maximize the impact your monetary donation can have by selecting reputable and transparent organizations. A qualified charity will have 501(c)(3) status, indicating it’s federally recognized as a non-profit organization.

Third-party websites like Charity Navigator , Charity Watch and Give Well offer unbiased, independent ratings and evaluations of charitable organizations. These sites can offer important insights into how donated money is distributed. If you’re considering making a sizeable donation, it may be helpful to speak directly with the chosen charity to discuss how the gift will be utilized.

If you haven’t already, check with your employer about what opportunities they provide in regard to charitable giving. For example, some employers will match employee donations to certain organizations.

Consider Itemizing Your Deductions

To deduct charitable donations, you must itemize them on an IRS Schedule A form. 1 To do this, you’ll need to keep track throughout the year of each donation made to a charitable organization. In most cases, the charity can provide you with a form to document your contribution. If the charity does not have such a form handy (and some do not), you may be able to use other forms of proof including:

Receipts
Credit or debit card statements
Bank statements
Canceled checks

When reporting deductions, the IRS may want to know a few important details such as the name of the charity, the gifted amount and the date of your gift.

Remember, itemized deductions may only have tax benefits when they exceed the standard income tax deduction, so be sure to check on the standard deduction amount for your tax filing status.

Make Non-Cash Donations

Many charities welcome non-cash donations. In fact, donating an appreciated asset can be a tax-savvy move.

For example, you may wish to consider gifting highly appreciated securities. Since selling securities can lead to a taxable event, it may be wiser to transfer appreciated securities directly to your charity of choice.

This transfer can accomplish three things: 2

You can manage paying the tax you would normally pay upon selling the shares.
You may be able to take a current-year tax deduction for the full fair market value of the shares.
The charity gets the full value of the shares, not their after-tax net value.

Utilize Your Life Insurance Policy

Do you have a life insurance policy? If you make an irrevocable gift of that policy to a qualified charity, you can get a current-year income tax deduction. If you keep paying the policy premiums, each payment may become a deductible charitable donation - although deduction limits may apply. 3

If you continue to pay premiums after the gift, that could reduce the size of your taxable estate. The death benefit may be transferred out of your taxable estate, in any case.

You should consider determining whether you are insurable before implementing a strategy involving life insurance. Any guarantees associated with a policy are dependent on the ability of the issuing insurance company to continue making claim payments. Several factors will affect the cost and availability of life insurance, including age, health and the type and amount of insurance purchased. Life insurance policies have expenses, including mortality and other charges. If a policy is surrendered prematurely, the policyholder also may pay surrender charges and have income tax implications.

Whatever your situation, getting advice from a tax or financial professional can help you give wisely as the year comes to a close. If charitable giving is an important part of your financial plan, it’s important to make sure you’re getting the most value out of each donation.

Can You Take Advantage of a Net Unrealized Appreciation (NUA) Strategy?

Wed, 07 Dec 2022 16:00:44 GMT

Many companies offer employer-issued stock as a benefit, in addition to other compensation and benefits. But what happens if you leave a job that offered you employer-issued stock or if you experience another triggering life event (such as turning 59½)?

That's where net unrealized appreciation (NUA) strategies come in. There are a few favorable rules to help you determine what to do with those company stocks to potentially minimize your tax bill.

Let's look at what NUA is, how NUA rules work, and some of the potential benefits of an NUA strategy.

What is Net Unrealized Appreciation?

NUA is the difference between how much you paid or contributed to your company stock and its present market value. For example, if you were issued employer stock at $20 per share and it is now worth $40 per share, you would have an NUA of $20 per share ($40 - $20 = $20).

What are the NUA Rules?

NUA is taxed differently than other payments. According to the IRS, "If the lump-sum distribution includes employer securities, the NUA is generally not subject to tax until you sell the securities." 1

With this rule from the IRS in mind, a participant may be able to transfer company stock from their previous plan into a taxable investment account without having to treat the entire amount as ordinary income. Instead, they would only have to treat the original amount they paid as ordinary income, which could potentially save them money on taxes.

This strategy can be used when taking distributions out of an original account due to a triggering life event, such as retiring or changing jobs.

The Benefits of an NUA Strategy

The main benefits of utilizing an NUA strategy are tax-related. Because you are only taxed on your contribution amount and not any unrealized gains, you may be able to avoid taxation now and receive favorable long-term capital gains taxes later.

According to the IRS, "The tax rate on most net capital gain is no higher than 15% for most individuals. Some or all net capital gain may be taxed at 0% if your taxable income is less than or equal to $40,400 for single or $80,800 for married filing jointly or qualifying widow(er)." Implementing an NUA strategy by rolling your employer stock into a taxable investment account can pay off both in the short term and in the long term. 2

It's important to talk to your financial advisor about implementing an NUA strategy because, in addition to these benefits, there are also some considerations and requirements. You must meet special requirements to take full advantage of an NUA strategy. For example, you must receive the stock as a lump-sum, in-kind distribution and then transfer the stock itself into your investment account. There are also other details to consider, so it's best to work with a financial professional to make sure no details are missed.

Weekly Market Commentary: Easing on Rate Hikes and Job Numbers Cheer Markets

Tue, 06 Dec 2022 16:09:33 GMT

The Week on Wall Street

Stocks ended higher last week as investors navigated the crosscurrents of a potential easing in future rate hikes and continued strength in the labor market.

The Dow Jones Industrial Average edged 0.24% higher, while the Standard & Poor’s 500 gained 1.13%. The Nasdaq Composite index improved by 2.09% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, rose 1.68%. 1,2,3

A Choppy Week

The week started lower on concerns about protests in China over its zero-Covid policy and comments by two Fed presidents that the Fed may continue its aggressive rate hike policy. Stocks then surged on Wednesday following remarks by Fed Chair Powell, confirming the central bank’s intention to slow the pace of interest rate increases, which may begin as early as this month.

Stocks buckled in early trading on Friday’s monthly employment report, which showed a higher-than-expected increase in new job growth and an above-expectations jump in wage growth. But stocks cut their losses by the end of the session to lock in a positive week.

Labor May Be Key

In a presentation to the Brookings Institution, Powell said that it might be time to begin moderating the pace of rate hikes. He cited several areas of progress in the inflation fight, including a deceleration in interest rate sensitive parts of the economy, such as housing and supply chain improvement. He also noted the price declines seen in goods and rents. 4

But Powell suggested the labor market would need to cool down before the Fed could feel confident about making sustainable progress toward its two percent inflation target. November’s employment report showed robust job and wage growth, which indicated any cooling remained in the future. 5

This Week: Key Economic Data

Monday: Purchasing Managers’ Index (PMI) Composite. Factory Orders. Institute for Supply Management (ISM) Services Index.
Thursday: Jobless Claims. Purchasing Managers’ Index (PMI) Manufacturing.
Friday: Producer Price Index (PPI). Consumer Sentiment.

Source: Econoday, December 2, 2022 - The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

This Week: Companies Reporting Earnings

Tuesday: AutoZone, Inc. (AZO), MongoDB, Inc. (MDB).
Wednesday: Campbell Soup Company (CPB).
Thursday: Broadcom, Inc. (AVGO), Costco Wholesale Corporation (COST), Chewy (CHWY).

Source: Zacks, December 2, 2022 - Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.

Dollar-Cost Averaging (DCA): What Is This Investment Strategy and Should You Use It?

Mon, 28 Nov 2022 16:06:08 GMT

One of the biggest fears of any new or seasoned investor is losing money. This fear can actually inhibit some people from ever investing at all, and it might also lead to selling preemptively or opting for a lower risk investment option time and again. To minimize the fear of losing money, investors sometimes choose to go with a risk-reduction strategy, such as Dollar Cost Averaging (DCA).

The majority of academic research has shown that while dollar cost averaging may help to manage risk, on average it just reduces returns (and therefore is inferior to lump-sum investing). However, the popularity of DCA remains high among practitioners and the investing public.

Given that research has shown that the pain of losses is more severe than the joy of gains for investors 1 , risk-averse investors may prefer to dollar cost average simply to minimize the potential regret of not doing so and seeing markets decline shortly thereafter.

What is DCA?

DCA is an investment tactic in which a fixed amount of money is invested at regular intervals. The intended goal of DCA is to provide the investor with a lower average cost of shares over time. Since the investment amount will be the same at each interval, the idea is that more shares will be purchased when the price is low, while fewer will be purchased when the price is more expensive.

Those who support the use of DCA claim that it can provide a lower average purchase price for a risky asset, proposing that purchases of assets (that are higher risk) with DCA when prices are declining will provide better returns than lump-sum investing.

What are the Proposed Benefits of DCA?

Risk Mitigation

By only investing a portion of your lump sum, price drops will not impact your portfolio as heavily had you invested a larger portion or your entire sum. Dollar-cost averaging is meant to mitigate the risks involved in lump-sum investing through which an investor could face major losses if the market crashes or prices fall drastically. 2 Risk-aversive individuals may, therefore, prefer to use DCA.

Managing Emotions

Market fluctuations and losses can greatly affect an individual’s emotional well-being. Further, emotional responses to these ebbs and flows, such as overconfidence or panic, can affect future investment decisions. 3 Since only part of a sum is exposed to the market, losses may not be as drastic. Therefore, many individuals may experience a duller emotional reaction than if all of their sums were to be affected, decreasing the likelihood of their making emotionally-driven investment decisions in the future. 2

As such, DCA may be good option for those looking to minimize the impact of emotion on their investment choices.

What are the Critiques of DCA?

Missing Out on Gains

When employing dollar-cost averaging, portions of your money sit uninvested. The main argument against DCA is that these portions are not given the chance to accumulate any return at all. As a result, some investors and financial professionals may prefer another strategy such as lump-sum investing, which exposes a larger portion of your funds to the market.

Lump-Sum Investing vs. DCA

In lump-sum investing, a larger portion of your money is given the chance to make gains sooner rather than later. However, investing a significant portion of your money also means that you may experience more pronounced losses in a vacuum. Over time, however, you can make up for these losses. This long-term thinking also supports the idea behind dollar-cost averaging. Ultimately, the decision to use either tactic will depend on your unique situation.

When to Consider Using DCA

Investors might choose to employ dollar-cost averaging for a variety of different reasons, including for investments that are historically more volatile. DCA is also a way to potentially regulate emotional responses. Dollar-cost averaging might be used in the following circumstances:

Volatile investments
Other long-term investments, such as 401(k)’s or IRA’s
A time in life where any volatility is not feasible and may cause immediate ramifications (i.e. nearing retirement)
Individuals who are risk-aversive
Individuals who do not have the funds for a lump-sum investment

The alleged benefit of dollar-cost averaging is that it encompasses the unpredictability of the market yet intends to lower the cost of your shares as a result. When choosing how to invest, it is wise to seek the counsel of a financial advisor who can help you make the best choice for your circumstances and future goals.

Weekly Market Commentary: Markets Down Ahead of Thanksgiving Holiday

Mon, 21 Nov 2022 15:39:00 GMT

The Week on Wall Street

The stock market edged lower last week as it digested a crosscurrent of conflicting economic data and contrasting comments from Fed officials.

The Dow Jones Industrial Average was flat (-0.01%), while the Standard & Poor’s 500 declined by 0.69%. The Nasdaq Composite index lost 1.57% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, fell 0.88%. 1,2,3

Stocks Slip

Stocks took a spill after Fed officials' comments cast uncertainty about future rate hikes. The more hawkish comments soured investor hopes of an imminent easing in Fed rate hikes, a prospect that had helped fuel the market rally the previous week.

Concerns over the hawkish comments raised investor worries over recession risks, anxiety exacerbated by weak housing data and layoff announcements from major technology companies. The economic picture, however, included some encouraging news as retail sales rose and producer price increases moderated.

Producer Prices Ease

The Producer Price Index (PPI), which reflects the costs paid by domestic producers, seen as an indicator of future consumer prices, is not typically a market-moving event. That was not the case last week.

October's PPI rose a modest 0.2%, well below the 0.4% consensus estimate. The year-over-year increase moderated to 8.0%, compared to 8.4% in September and the peak of 11.7% in March. The eye-catching element may have been the 0.1% service decline, representing the first decline since November 2020. Excluding food and energy, the PPI was flat for the month and up 6.7% from a year ago. 4

A Final Word

We wish you and your family a wonderful Thanksgiving and express our gratitude for the privilege of working with you. Happy Thanksgiving!

This Week: Key Economic Data

Wednesday: Durable Goods Orders. Jobless Claims. Purchasing Managers’ Index (PMI) Composite. New Home Sales. Consumer Sentiment. FOMC Minutes.

Source: Econoday, November 18, 2022 - The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

This Week: Companies Reporting Earnings

Monday: Dell Technologies, Inc. (DELL), Zoom Video Communications, Inc. (ZM).
Tuesday: Best Buy Co., Inc. (BBY), Dollar Tree, Inc. (DLTR), Autodesk, Inc. (ADSK), Analog Devices, Inc. (ADI).
Wednesday: Deere & Company (DE).

Source: Zacks, November 18, 2022 - Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.

Investment Strategy: The Impact of Inflation

Mon, 21 Nov 2022 15:35:06 GMT

You can't read about investment for very long without hearing about inflation. The concept may be a little difficult to understand, but at its most basic, it comes down to the following: prices rise over time, causing your money to lose some purchasing power. If you could buy a car in 1980 for $5,500 and a comparable make and model for $49,000 in 2022, that speaks to the change in purchasing power. Sure, your 2022 model probably has a nicer stereo and several other value-added gizmos, but for the most part, your $5,500 doesn't have the same purchasing power in 2022 that it had in 1980. 1

In 2022, we're seeing inflation like nothing we've encountered in decades. It's risen above 8% at times, sending prices through the roof. Inflation is charted in part by measuring the changes in what consumers pay through the Consumer Price Index against the Producer Price Index, which measures the prices that producers receive for their products. Through this, the Federal Reserve finds that the rate that indicates ideal employment and prices is 2%. What moves the needle? There are a number of factors, including demand-pull inflation, where demand for a good or service increases, but the supply filling that demand stays the same, causing prices to increase. The opposite can also be a factor with cost-push inflation, where the supply of a good or service is low, causing the prices to go up. 2

What can you, as an investor, do to fight inflation? The general strategy in this case is to weather the storm, which can be helped in some ways by diversifying your investments. This often means a combination of equities and bonds along with other products like REITs and TIPS. However, this typically only works if you are already invested as the inflation rises. Other investors take advantage of the more consistent returns of bonds in these periods. While it's true the returns of bonds are more consistent than other investments, they are also much lower. 1,2

Weathering high inflation periods can be difficult for investors, but sensible strategies and careful management may help you maneuver through the tumult. Find investment banks in Kansas City .

Year-End Tax Strategies - 2022

Wed, 16 Nov 2022 16:19:10 GMT

Near the end of each year, we proactively review opportunities for year-end tax strategies through the lens of a trial tax return. Our objective is to surface strategy for tax management of your financial life. Each family we work with has unique situations. However, each discussion starts around looking at your income and which tax bracket you will fall into. Remember to review for both Federal and State rates.

The following list is a summary of some of the more common strategies we implement. As a disclaimer, please know the information contained is not tax advice and we strongly recommend taxpayers consult with their tax advisor when making tax and financial decisions.

Take advantage of opportunities:

Fully fund IRA / Roth to IRS limits. If income is high, fund an IRA, report as a non-deductible contribution and backdoor Roth convert if possible.
If Self Employed, fully fund 401(k) ( $67,500 in 2022 for those age 50+).
Include: 1) Employee Pretax, 2) Employer Profit Share and 3) Employee Post Tax
Tax loss ‘harvest’ your investments to reset your basis and remove future tax. Sell investments that may have declined in value and use losses to offset gains.
Rather than giving cash, gift appreciated assets to charity.
Gift assets to family to take advantage of the large unified credit limits or take advantage of the $16,000 annual gift tax exclusion amount.
Review your medical plan for an option that allows for a Health Savings Accou nt (HSA). Funding and growing assets in an HSA can open the door for retirement before age 65 (when Medicare starts).
If you are involved with an Irrevocable Trust, consider distributing income out of the trust to the trust beneficiaries in order to reduce the tax rates from the ‘estate’ tax table to individual tax rates. This is commonly known as the 65 day rule .
If you have a business or started a side gig this year:
Even very small businesses can deduct ‘ business expenses ’ like home-office deduction, write-offs for mileage and materials and equipment.
If you have a business close to break even, create a loss by pushing receivables out to 2023, prepaying expenditures in 2022 and maximizing bonus depreciation.
Use bonus depreciation to create a larger Net Operating Loss (NOL). Unlike a Section 179 deduction, bonus depreciation will create a larger NOL.

Increase Income to “fill up” lower tax brackets:

If you took the year off and income is low:

Implement a Roth conversion by moving IRA assets to your Roth. This creates a tax impact today but will remove assets from future taxation.
If Self Employed, invoice clients in advance for services for next year. Incentivize through a ‘prepayment’ discount / package.
The lowest tax brackets have a 0% capital gain tax rate so sell appreciated assets and recognize the gain. If there is a stock with a big gain you still want to own, simply sell and re-purchase the shares.

Decrease income to “drop” to lower tax brackets:

Increase retirement plan contributions. If cash flow doesn’t allow for full 401(k) plan contributions and you have non-retirement assets on the balance sheet, increase 401(k) by $1 and take $1 out of savings to live.
A larger gift in a high-income year allows for the creation of a ‘lifetime giving account.’ Charity can be an actual non-profit organization or it can be your own ‘ donor advised fund ’ , ‘private family foundation’, ‘ charitable gift annuity’ or other option. If you have appreciated assets, remove the capital gains tax and gift these assets directly to the charity ‘in-kind’.
Take advantage of Qualified Charitable Distributions (QCDs). If you are over age 70.5 you can directly gift up to $100,000 per year from your retirement accounts to charity using QCDs.
If you’re on the itemize-or-not borderline, your year-end strategy could focus on timing of charitable gifts and expenses to pull multiple years of gifts / expenses into a single year. The goal is to surpass the standard-deduction amount and claim a larger write-off. If you itemize, lump medical expenses, charitable gifts, state income taxes, payments for long term care policies, etc. into a single year. Use this opportunity to gift things you are no longer using, receive a tax deduction , and allow others to enjoy them.
If Self Employed, pay current year invoices as well as invoices for costs coming next year. Also, review delaying billing of clients until late December, so you won’t receive payment until the next year.
If kids, grandkids, extended family are in, or will be going to school:
Contribute to a 529 Plan for possible state tax deduction
Prepay tuition to take advantage of the American Opportunity Tax Credit, which you can take for students who are in their first four years of undergraduate study, is worth up to $2,500 for each qualifying student. Married couples filing jointly with modified adjusted joint income of up to $160,000 can claim the full credit; those with MAGI of up to $180,000 can claim a partial amount.
Likewise, if you’re planning to take a class next year to boost your own career, consider prepaying the January bill before December 31 so you can claim the Lifetime Learning Credit on your 2022 tax return. The credit is worth up to 20% of your out-of-pocket costs for tuition, fees and books, up to a maximum of $2,500. It’s not limited to undergraduate expenses, and you don’t have to be a full-time student. Married couples filing jointly with MAGI of up to $160,000 can claim the full credit; those with MAGI of more than $160,000 will be phased out .
If someone is disabled or has a ‘special needs’ situation, review an ABLE account. Contributions up to $15,000 a year to an ABLE account, allow people with qualifying disabilities to save money without jeopardizing government benefits (ABLE account beneficiaries can contribute more to their own account). You don’t have to invest in your own state’s plan, but if you are a resident of one of the states that do offer a tax break for ABLE accounts, you can likely deduct your contribution.
If you are interested in alternative energy, a nonrefundable tax credit is available for qualified solar electric property, qualified solar water heating property, qualified fuel cell property, qualified small wind energy property, and geothermal heat pump property. Cooperative and condominium dwellers can claim the credit by splitting the cost of installing equipment with other unit owners. The credit is 26 percent of the cost of eligible property placed in service in 2020-2022; and 22 percent of the cost of eligible property placed in service in 2023. There is also a $500 credit limit with respect to each 0.5 kilowatts of capacity of qualified fuel cell property expenditures for each tax year.

Prevent surprises:

If income has changed materially throughout the year, review withholding tables to make sure there isn’t too little / too much being withheld
Flexible spending accounts (FSA) are subject to a “use it or lose it” rule. Check to see if your employer has adopted a grace period permitted by the IRS, allowing employees to spend 2022 set-aside money as late as March 15, 2023. If not, you can do what employees have always done and make a last-minute trip to the drug store, dentist, or optometrist to use up the funds in your account.

Buttonwood Financial Group serves as multigenerational Family CFO, working with you, as the CEO of your family to uncover and maximize opportunities for tax planning, investments, cash flows and more. If you are in need of year-end tax strategies and a holistic financial plan, contact us today to learn how our Family CFO services can benefit you.

The post appeared first on Buttonwood Financial Group, LLC .

Student Loan Forgiveness

Wed, 16 Nov 2022 16:02:41 GMT

Earlier in 2022, President Biden announced his Administration’s Student Debt Relief Plan. This plan is designed to provide student debt relief to eligible borrowers, allowing a bit more breathing room to middle-class Americans.

As of this writing, courts have issued orders blocking the student debt relief program. As a result, at this time, applications are not being accepted. The Biden Administration is working to overturn these orders. If you’ve already applied, your application will be held. If you would like email updates as this progresses, subscribe here.

Who's eligible

You are eligible if you have most federal loans (including Direct Loans and other loans held by the U.S. Department of Education) and your income for 2020 or 2021 is either:

Less than $125,000 for individuals
Less than $250,000 for households

If you are a dependent student, your eligibility is based on your parental income.

What you might be eligible for

Up to $20,000 in debt relief if you received a Pell Grant in college
Up to $10,000 in debt relief if you didn’t receive a Pell Grant

How it’ll work

In October, the U.S. Department of Education launched a short online application for student debt relief. You won’t need to upload any supporting documents or use your FSA ID to submit your application.
Once you submit your application, we’ll review it, determine your eligibility for debt relief, and work with your loan servicer(s) to process your relief. We’ll contact you if we need any additional information from you.

Biden-Harris Student Debt Relief Update - Protect Yourself From Scams

The Department of Education is sharing critical information on how to protect yourself from scammers trying to take advantage of student loan borrowers.

Here's a list of Do's and Don'ts to protect yourself against scams as you prepare to apply for debt relief.

DON'T pay anyone who contacts you with promises of debt relief or loan forgiveness. You will not need to pay anyone to obtain debt relief. The application will be free and easy to use.
DON'T reveal your FSA ID or account information or password to anyone who contacts you. The Department of Education and your federal student loan servicer will never call or email you asking for this information.
DON'T ever give personal or financial information to an unfamiliar caller. When in doubt, hang up and call your student loan servicer directly. You can find your federal student loan servicer's contact information at Studentaid.gov/manage-loans/repayment/servicers .
DON'T refinance your federal student loans unless you know the risks. If you refinance federal student loans eligible for debt relief into a private loan, you will lose out on important benefits like one-time debt relief and flexible payment plans for federal loans.
DO create an FSA ID at StudentAid.gov . You will not need it for the debt relief application but having an FSA ID can allow you to easily access accurate information on your loan and make sure FSA can contact you directly, helping you equip yourself against scammers trying to contact you. Log in to your current account on StudentAid.gov and keep your contact info up to date. If you need help logging in follow these tips on accessing your account .
DO make sure your loan servicer has your most current contact information. If you don't know who your servicer is, you can log into StudentAid.gov and see your servicer(s) in your account.
DO share these messages with your networks and encourage others to sign up at www.ed.gov/subscriptions to be notified when the Student Loan Debt Relief application becomes available.
DO report scammers to the Federal Trade Commission by visiting reportfraud.ftc.gov .

Having the most up-to-date and accurate information is your best protection against scammers.

You will hear directly from the Department of Education or Federal Student Aid when the application for debt relief is available. if you qualify for debt relief without needing to fill out an application, you will also hear from the Department or FSA directly. For additional information, visit the FAQ page on student debt relief.

To read more about the Biden-Harris Administration’s efforts to protect borrowers against scams, click here. The body content of your post goes here. To edit this text, click on it and delete this default text and start typing your own or paste your own from a different source.

Common Financial Scams That Target Retirees and How to Spot Them

Fri, 11 Nov 2022 17:39:57 GMT

Unfortunately, with the rise of technology, there have been an increasing number of retirees’ accounts being targeted for financial scams to rob them of their wealth or identities. Because scammers have gained an understanding of how to trick and manipulate this older generation, it has become quite common for scammers to gain access to bank accounts, personal information, and, in some cases, assets.

Learning about the common risks and schemes found in today’s world can mean the difference between you or your loved ones remaining protected or playing right into the tricks of scam artists.

Common Scams That Target Retirees and Seniors

Health Insurance Scams

As a citizen who is older than 65, you qualify for Medicare benefits, which can make you a target for health insurance–related scams. Scammers can carry out fraudulent behavior over the phone or even at the door by utilizing insurance provider information, which they can acquire easily.

A few common situations to be aware of include being told that you need a new Medicare card and that to receive one, you need to provide your Social Security information or discussions of new supplemental policies.

Telemarketing Scams

1. Investment Scams

Many retirees are interested in expanding their wealth, especially if they have a legacy to one day leave behind, which can make this group easy prey for faux “investment opportunities” that may not exist at all. Whether it’s offering their finances to a fictional business or buying a vacation property that isn’t real, investment scams have the potential to instantly deplete retirees of their savings.

2. Internet & Email Scams

Because so many retirees aren’t always accustomed to the ever-changing details involved with the internet, these schemes have become incredibly common. Phishing scams, viral pop-ups, and attempts to steal one’s identity are a few examples of some of the things that can be encountered. It’s important to keep in mind that no bank or other business will ask for personal information via email. If you are ever concerned or unsure, visit their website directly or contact them for additional confirmation.

3. Charity Scams

We all know that natural disasters are often unpredictable and happen regularly. With these occurrences, scammers find opportunities to target those who have been affected or want to lend their support. These situations can occur over the phone, through social media, in email, or in person. Always donate to reputable charities; you can learn more using the IRS’s tax-exempt organization search.

4. Help/Grandparent Scams

This scenario often consists of someone calling or emailing the victim either pretending to be a family member in trouble or acting as a person of authority representing the relative who is supposedly in trouble. They then ask for money to be wired to cover certain fees, which you may be all too happy to provide as someone who is emotionally involved. To keep the situation under wraps, you may then be asked not to tell anyone, and soon after this “relative” will never be heard from again, leaving you out of a particular amount of money.

If you find yourself the victim of any of the scenarios above, it’s important to file a complaint with the Federal Trade Commission. By doing so, you may be able to retrieve your funds, but in the end, you will be helping a potential victim from experiencing a similar situation.

Protecting Yourself and Others From Financial Scams

It’s important to protect yourself and those close to you from falling victim to the all too frequent financial scams of today. Taking the time to address these details can help prevent you from encountering devastating theft.

Be suspicious
Ask questions and stay informed
Never give out personal information to unknown sources
Don’t make hasty decisions
Invest carefully

It’s unfortunate, but scammers who often prey on the elderly generally rely on the assumption that retirees and older groups of people are unfamiliar with technology and that they are unaware of the many possibilities of having their personal information stolen.

If you ever feel suspicious of an email, phone call, or other forms of contact, don’t hesitate to go with your gut and do your research regarding the origins of the “company” or group you’re speaking with. Staying aware will help you safeguard your well-being.

Teaching Children Financial Literacy

Tue, 08 Nov 2022 19:46:48 GMT

Parents share a lot of private things with their children in the hope that the information will help them grow into successful adults. But there is one topic most parents try to avoid talking about at all costs. And no, it is not what you are thinking.

For many parents, the idea of having the "money talk" with their kids is a terrifying thought. The biggest reason parents avoid the topic is they don't believe they know enough about money themselves and fear they will give their children the wrong information.

Although discussing the topic of money with your kids can be uncomfortable, it is a necessary step in their development. Few schools teach courses on how to handle money the right way. Without learning money management skills at home, your kids may be in for a few nasty surprises when they get older.

Are you worried about your children's money skills? Start with the following four tips to teach financial literacy to your kids.

1. Let Kids Experiment

One effective way to help kids learn how to make budgets is to give them the chance to make mistakes on their own. A small allowance each week is the perfect incentive for children to learn how to budget. Do they want to blow this week's money on candy and a cheap toy, or save up a few weeks to get something they really want? Of course, some children will still be impulsive and want to spend their funds right away, but better they learn to make mistakes with $10 than $10,000.

2. Include Children in Household Budgeting

Do you have a shopping or entertainment budget each month? Try including an older child on budget planning for the next month. Kids learn quickly when they have to stay home bored for two weeks because they blew the entertainment fund during the first half of the month. Another great idea is to set a grocery budget for an upcoming trip, make your week's list, and then take your child to the grocery store with you. As you place items in your cart, have your child add up the cost of each item until you hit your limit. This is another great exercise in making choices based on limited funds.

3. Gameify It

Turn budgeting and saving money into a game. Give your shopping lists to your younger kids and let them search online or in the newspaper for coupons and sales. Maybe you could promise to put a percentage of the money they save into a bank account for them to purchase something special down the road. You could even encourage older children to learn lifelong investment skills by participating in a stock trading simulator such as The Stock Market Game .

4. Make Them Earn It

Knowing how to save, invest, and spend money is important, but one of the best things you can do for your children is to instill a good work ethic in them by letting them earn money on their own. Whether your teen works part-time at the movie theater or you help your little ones start a lemonade stand, the willingness to work hard and be rewarded is one of the best financial lessons you can pass on to them.

These tips are only the start. Use the opportunity of teaching your kids about financial literacy to learn more about it yourself!

Weekly Market Commentary: Stocks Slip After Powell Comments

Tue, 08 Nov 2022 15:58:57 GMT

The Week on Wall Street

Hawkish comments by Fed Chair Jerome Powell, following the announcement of another 75 basis points interest rate hike last week, cast a pall over financial markets, sending yields higher and stocks lower.

The Dow Jones Industrial Average slipped 1.40%, while the Standard & Poor’s 500 declined 3.35%. The Nasdaq Composite index lost 5.65% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, fell 1.04%. 1,2,3

Powell Disappoints

The official statement released following the Federal Open Market Committee (FOMC) meeting appeared to suggest a potential for future easing of interest rates. Investors cheered the news, sending stocks higher. But the optimism was crushed 30 minutes later on hawkish comments by Fed Chair Powell during his post-meeting press conference.

Losses accelerated into Thursday, led by technology names, which were under pressure due to rising bond yields. The yield on the two-year Treasury note rose to its highest level since 2007. The sentiment took damage from workforce reduction/freeze news from multiple technology companies; some considered it a sign of a pending recession. Stocks managed to erase some of the week’s losses on Friday following a strong employment report and a drop in the U.S. dollar. 4

From Dove to Hawk in 30 Minutes

In the statement accompanying the 75 basis point rate increase, the FOMC said that future increases would consider the cumulative monetary tightening to date and the lag in impact such tightening involves. 5

But in his post-meeting press conference, Fed Chair Powell struck a more hawkish tone. He said that current inflation data did not support any slowdown in rate increases and that the terminal rate (the point at which rates will no longer rise) may be higher than initially expected. 6

This Week: Key Economic Data

Thursday: Consumer Price Index (CPI). Jobless Claims.
Friday: Consumer Sentiment.

Source: Econoday, November 4, 2022 - The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

This Week: Companies Reporting Earnings

Tuesday: The Walt Disney Company (DIS).
Wednesday: Roblox Corporation (RBLX), Occidental Petroleum Corporation (OXY).
Thursday: Becton, Dickinson and Company (BDX).

Source: Zacks, November 4, 2022 - Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.

Open Enrollment Began November 1st. Consider These 4 Tips for Choosing a Health Insurance Plan

Thu, 03 Nov 2022 14:08:47 GMT

Open enrollment (the annual period when you can enroll in major medical health insurance plans), begins November 1, 2022, and will remain open until January 15, 2023. You will need to enroll by December 15, 2022 for coverage that begins January 1, 2023. For someone looking to change or add coverage, this offers a short window of time to decide on and select your health insurance plan. 1 To avoid a hasty decision to meet this deadline, take some time now to review and prepare. Below we’ve rounded up our top tips for choosing the right health insurance plan for you and your family’s needs.

Who Should Utilize Open Enrollment?

The Open Enrollment Period (or OEP) is for anyone looking to make a change to their health insurance coverage, whether through their workplace or the federal market. This could include looking for a cheaper plan with similar coverage, gaining coverage if you previously had none or changing your coverage altogether to better meet your needs.

Tip #1: Assess Your Current Costs

When thinking about changing your health insurance plan, it’s important to reassess your healthcare-related expenses. Take a look at how much you’re currently paying per month for your plan as well as what sort of out-of-pocket expenses you paid over the past 12 months.

These could include:

Routine doctor’s visits
Specialist visits
Prescriptions
Emergency room or urgent care visits

Unless you foresee any major changes in the coming year (such as pregnancy), this could be a helpful indicator when it comes to determining what type of coverage will be cost-effective and appropriate for you.

If you found your out-of-pocket expenses to be too high, now’s your opportunity to search for a plan with lower deductibles (although your monthly premiums will likely rise).

Tip #2: Choose Your Marketplace

You may be able to gain coverage through several marketplaces including:

Your or your spouse’s workplace
Federal marketplace
Local or state marketplace
Private exchange
Directly through insurance providers

If you have the option to gain coverage through your employer, this will likely provide you with the lowest premiums. That’s because your employer pays a portion of the premium, which tends to be lower anyway.

If your employer does not provide healthcare coverage (or you wish to look elsewhere for it), you can gain coverage through the federal or state marketplace. You’ll start at Healthcare.gov , which will then direct you to your state’s marketplace (if applicable). While premiums are likely to be higher, you may be eligible for premium tax credits to help offset the monthly cost.

Tip #3: Decipher Your Available Plan Types

There are four common types of health insurance plans you’ll come across when selecting coverage: HMO, PPO, POS, EPO.

Health Maintenance Organization (HMO)

Pros: HMOs tend to have lower monthly premium costs and out-of-pocket costs as compared to other plan types.

Cons: You’re typically limited to seeing providers only in your network, and these must be coordinated by your primary care provider (unless it’s an emergency). This gives you less overall flexibility.

Preferred Provider Organization (PPO)

Pros: PPOs offer the user more freedom when it comes to choosing healthcare providers and specialists. You can see people outside of your coverage network, although this will typically result in higher out-of-pocket costs. Additionally, you typically will not need a referral from your primary care provider to make appointments with specialists.

Cons: Out-of-pocket costs and premiums tend to be higher for PPO plans, especially when compared to an HMO.

Point of Service Plan (POS)

Pros: With a POS plan, you have the flexibility to visit out-of-network healthcare providers, but typically at a high out-of-pocket cost.

Cons: Similar to an HMO, you will likely need a referral from your primary care provider to see a specialist or have a medical procedure done. Additionally, your primary doctor will coordinate your care for you.

Exclusive Provider Organization (EPO)

Pros: An EPO will typically offer you lower out-of-pocket costs, and a referral is not needed to see specialists or have medical procedures done.

Cons: You will be required to visit specialists within your network unless it is an emergency. An EPO will typically provide less flexibility and freedom when it comes to choosing care providers.

Tip #4: Account For Your Current Providers

As shown above, every plan type either requires you to visit in-network providers or offers lower out-of-pocket costs for visiting an in-network specialist. If you already have preferred providers on your current plan, switching plans could jeopardize your ability to visit them in the future (or cost you more to do so).

When comparing plans, make sure to check whether or not your current healthcare providers are in-network. If they are, you should have no problem continuing to see them as you did before. If they’re out-of-network, you’ll either have to find a new provider or prepare to pay more for every visit.

Picking the right health insurance plan for you and your family can feel daunting, confusing and rushed. With some time left before open enrollment, do yourself a favor and create your plan of action now. Prepare now by determining what type of plan may be right for you, what coverage you know you’ll need and what marketplace you’ll be buying from. When November hits, you’ll be more than ready to make a decision that’s right for your healthcare needs.

https://www.healthcare.gov/apply-and-enroll/get-ready-to-apply/

Buttonwood Investment Policy Committee Update - October 2022

Mon, 31 Oct 2022 14:46:34 GMT

Inflation has continued to be the dominant theme for market prices and monetary policy throughout 2022. While headline inflation has eased, driven primarily by falling energy prices, core inflation has increased, as the shelter and service components have remained stubbornly sticky (as expected).

In general, we believe inflation trends should ease in the coming months. However, this may not happen as quickly as the market (or the Fed) would like so we may not see real improvement in inflation data until Q1 2023. It is worth noting, that the official inflation data we rely on is some of the most lagged of data we get, not only in terms of when it gets reported but also in terms of what it reflects. Even if economic inflation is declining, we won’t see it in the inflation data for months. For example, the ‘rent’ component of the Consumer Price Index (CPI) has historically followed housing values with a twelve-month lag. The best measure we have of national home values – the Case Shiller US Home Price Index - turned negative in July from its peak in June. But historic lags tell us we won’t see rent inflation or so-called owner equivalent rent inflation of CPI turn negative until next summer. As such, we turn to secondary data sources and see the rental market appears to be loosening. Costar reports rents falling by half a percent in the quarter ending September 30th, 2022.

The persistence of elevated inflation has resulted in a Fed that clearly remains committed to combatting inflation with aggressive rate hikes aimed at reducing both aggregate demand and economic growth. The most recent FOMC minutes showed a continuation of comments reflecting policymakers’ concern about doing too little on inflation rather than too much. The rate increase in October and the increases expected in November and December demonstrate this view, though we think it is important to recognize that this type of monetary policy follow the same trends as inflation data; operating with long and variable lags. For example, we likely won’t see the true impact of lowering economic demand for as long as a year from now, in line with historical observations that monetary policy operates with a ~12-month lag. In our view, so long as the prospect of more rate hikes stays in play, we believe stock market volatility is likely to remain elevated and be a source of uncertainty for investors into 2023.

Remember supply chain backlogs that held back deliveries of new cars because they were all waiting on semiconductor chips? These backlogs were present early in the year, a time when retailers often make decisions for big retailing days like Black Friday and Christmas. We now find ourselves in a market where consumer spending is slowing, investors are shifting preferences from goods back to services, and inventories are likely swollen. Retailers therefore have much less confidence on pricing, and we expect big discounts that can dampen inflation drivers from last year. On the topic of supply chains, we’ve seen easing across the board with one example being ocean freight pricing now at a 2-year low. While last September we all enjoyed quizzing our friends at parties about how it costs $20,000 to ship a container from Asia to the US, as of last Friday the average price for a freight container was $2,720. When we look at measures like Intellectual Property, the Institute of Supply Management, the empire survey, etc. we can see a significant shift in the supply chain issues and the pandemic era drivers of inflation coming down. So, while we feel confident that inflation is likely to be softer a year from now, it will take time for these things to play out. In the near term, however, inflation can remain persistent with ongoing tightening, so there is a very delicate balance that the Fed needs to be conscious about if they don’t want to crush the market.

What to Watch

You may be wondering, with all the risks on the horizon, from a hawkish Fed to earnings expectations downgrades… why not transition the portfolios from defensive to bearish, and go underweight to equites?

We believe there are a few bright spots, one of them being the bullish effect of slowing M2 money growth on stocks. You might remember us discussing M2 in our last trade. As the Fed unwinds its $9T balance sheet, money supply growth (M2) has plunged below the 50yr average, which historically coincides with easing financial conditions.

Given our starting point, characterized by high stock market volatility coupled with falling inflation and tight financial conditions, we believe it is not out of line to expect positive stock returns in the next 12 months. Now, this outcome is entirely dependent on the US economy dodging a recession, not just of the technical kind, but of the NBER kind with far reaching impacts felt throughout the real economy. That is of course a big IF… but a bright spot nonetheless

Positioning Investments

With the continued dance between inflation and recession risks, we feel confident in our defensive positioning, hugging the benchmark with room to step into opportunities as they arise.

We hold equities at benchmark weight, leveling out our growth vs. value bet in US equities, still

overweight US but also adding to low vol Emerging Market stocks. Traditional fixed income is still underweighted vs. bench, as we continue to hold exposure to off bench alts like commodities and convertible bonds. We add to Mortgage-Backed Securities and short dated credit, seeking to add higher spread for minimal risk.

This has been a very difficult year for both individual and institutional investors alike. These are the times to stay disciplined and prudent. We continue to make full use of analytics to stress test portfolios and are carefully watching market dynamics to effectively manage portfolios for what may lie ahead. Our current exposure close to benchmark gives us the opportunity to pivot to add back risk or reposition in the coming months.

In summary we have:

1) Continued to reduce overall risk by moving closer to benchmark in almost all respects:

Is bad news actually bad news or good news? The crosscurrent of elevated inflation and potential downward economic and earnings growth has us concerned. In our view, this environment of unusually limited signal warrants a cautious and mixed (but not outright bearish) approach.

2) We have balanced positions for both potential inflation and recession risks:

Reported inflation remains a top concern for markets. We believe markets have only now begun to focus on recession and earnings risk as well. Our October rebalance further prunes previously existing active views, including bringing our longstanding value tilt and underweight to growth closer to neutral, in part by adding to technology stocks.

3) We are continuing our bias of US assets over International:

After marginally reducing the magnitude of our regional tilts, we remain overweight US stocks with a preference for inflation-sensitive Developed Market stocks and low volatility Emerging Market equities, as international economic and inflation outlooks and central bank policy initiatives diverge from the US.

Thank you for your continued trust and allowing us to coordinate your asset management as part of our Family CFO services!

Preparing for a Life of Leisure: Considerations for Retirement Planning

Wed, 26 Oct 2022 15:00:24 GMT

Most dream of a life of leisure, travel, and relaxation during retirement. After decades of work and preparation, you deserve to spend your time enjoying all you’ve worked for. However, as you plan for the retirement lifestyle of your dreams, it’s important to consider and strategize appropriately. From finances to health, planning and preparation continues beyond your date of retirement.

How Much to Save for Retirement

The first step to planning for retirement is of course, your finances. Do you know how much you need for living expenses when you retire? Where does your monthly retirement income come from? Is it enough?

You may see retirement as an extension of the present rather than the future. This is only natural, as we all live in the present, but the future will inevitably arrive. The costs you may incur later in retirement may exceed those at the start of retirement. As you may be retired for 20 or 30 years, it is wise to take a long-term view of things and work with a financial professional to strategize.

Longevity

As you think about how long you will live, it’s important not to underestimate your longevity. Actuaries at the Social Security Administration project around a third of today’s 65-year-olds will live to age 90, with one in seven living 95 years or longer. The prospect of a 20- or 30- year retirement is not unreasonable, yet there is still a lingering cultural assumption that our retirements might duplicate the relatively brief ones of our parents.

Withdrawal Strategies

You have likely heard of the “4% rule,” a guideline stating retirees should only withdraw about 4% of retirement savings annually. Some retirees try to abide by this, but others withdraw 7% or 8% per year. Why is this? In the first phase of retirement, people tend to live it up. More free time naturally promotes new ventures and adventures and an inclination to live a bit more lavishly. If you are going to overspend, be sure you have a strategy to address your retirement savings later in life.

Investment Strategies

You should expect retirement to have a few surprises. The absence of an investment strategy can leave you without money when those surprises arise. Working with a financial professional can greatly increase the probability you are able to live the retirement lifestyle you want.

Social Security Timing

The Social Security Administration calculations show annual benefits rise 8% for every year you delay receiving them. Waiting a few years to apply for benefits can position you for higher retirement income. Filing for your monthly benefits before age 70 can mean comparatively smaller monthly payments.

Retirement Planning Does Not Stop During Retirement

Statistically speaking for those retiring these days, there is good news; you’ll likely live longer and perhaps better than your parents and grandparents did. On the other hand, you may live a longer, more expensive life, too. Planning and strategizing for retirement doesn’t stop when you retire. In fact, they become even more important.

Professional Guidance

Working with a financial professional throughout retirement can provide direction, answers, and clarity, leaving you the time to enjoy your life! You’ll need to regularly adjust investment strategy to ensure your money can last as long as you do. Congress could adjust estate law, you may have health issues requiring long-term care, and more. You will have many questions throughout your retirement years, so work with someone you are comfortable with and trust.

Your Home and Health

As you plan for the future, consider the later years of your life. Is your home accessible for you to live comfortably when you’re 90 years old, or do you have a home with stairs? Who will care for you if you can’t care for yourself? If dementia or other mental health concerns arise, who will protect you from yourself? It’s critical to have a professional assist with real answers to these questions.

Staying Busy in Retirement

While some may see retirement as a 30-year vacation, too much free time leaves many retirees feeling depressed and unimportant. Studies show people who continue working or volunteering after 65 tend to be happier.

Mental Benefits

Remaining active during retirement helps maintain mental agility as you learn new skills, which can help improve your thinking ability. People who pursue meaningful activities say they feel happier and healthier.

Physical Benefits

Staying mobile during retirement years is crucial for continued health. Whether you choose to work full time, or volunteer a few days a week, engaging in some form of work will keep your body moving, and give you opportunities to stay balanced, strong, and healthy.

Financial Benefits

Beyond the extra income, working during retirement may allow you to delay taking Social Security benefits. With a delay, you are reducing the pressure on your investment portfolio and transferring market risk to the Social Security Administration.

Emotional Benefits

Studies have shown a sense of purpose has been found to lengthen lifespan and quality of life. Working on something you care about, starting a new business, or mentoring others in the workplace can ward off depression and provide a healthy sense of fulfillment and direction in your later years.

Social Benefits

One of the risks associated with retirement is increased isolation, which in terms of its impact on your health, has been equated with smoking fifteen cigarettes a day. Working with others reduces this risk, giving you a chance to build connections and enjoy meaningful interactions.

In conclusion, as you prepare for retirement, it is critical to have a real plan in place. With steadfast strategies, our services work to ensure our clients enjoy the retirement lifestyle they’ve always imagined.

If you’re like many others, this can all feel a bit overwhelming. Take the first step by meeting with a financial advisor. Our Team at Buttonwood can assess your retirement needs and develop a plan for your unique situation. With our partnership, we can effectively strategize for the retirement you have worked so hard for.

Weekly Market Commentary: Volatility Reigns; Wall Street Flips the Script & Enjoys a Rally

Mon, 24 Oct 2022 16:42:01 GMT

The Week on Wall Street

A positive start to a new earnings season and late-week hopes for a near-term easing in Fed rate hikes lifted investors’ spirits and powered stocks to gains for the week.

The Dow Jones Industrial Average jumped 4.89%, while the Standard & Poor’s 500 advanced 4.74%. The Nasdaq Composite index added 5.22% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, gained 1.66%. 1,2,3

Earnings, Fed Spark Rally

The stock market narrative shifted last week from Fed interest rate hikes (a persistent drag on investor sentiment) to corporate earnings, which boosted investor enthusiasm with better-than-expected results. Stocks surged in the first two days of trading on the strength of positive earnings surprises, aided by a modest pullback in bond yields and news that the U.K. was scrapping its tax cut plans.

Mid-week, stocks surrendered some gains on a stronger U.S. dollar and rising bond yields. But on Friday, comments by a Fed official that hinted at a possible relaxation in Fed rate hikes sent stocks soaring to close out a good week.

Better Than Expected

Investors were approaching the new earnings season with a fair amount of trepidation amid an environment of higher interest rates and a slowing economy. The concern has been that poor earnings may drag stock prices lower from current levels.

Early earnings results have provided investors with mostly positive surprises. With 88 companies comprising the S&P 500 index reporting, 75% reported profits above analysts’ expectations, well above the 66% long-term average. 4

This Week: Key Economic Data

Monday: Purchasing Managers’ Index (PMI) Composite.
Tuesday: Consumer Confidence.
Wednesday: New Home Sales.
Thursday: Jobless Claims. Durable Goods Sales. Gross Domestic Product (GDP).

Source: Econoday, October 21, 2022 - The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

This Week: Companies Reporting Earnings

Tuesday: Microsoft Corporation (MSFT), General Electric Company (GE), Visa, Inc. (V), Alphabet, Inc. (GOOGL), General Motors Company (GM), The CocaCola Company (KO), Archer Daniels Midland Company (ADM), 3M Company (MMM), Texas Instruments, Inc. (TXN), United Parcel Service, Inc. (UPS), KimberlyClark Corporation (KMB).
Wednesday: The Boeing Company (BA), Ford Motor Company (F), Bristol Myers Squibb Company (BMY), ServiceNow, Inc. (NOW), General Dynamics Corporation (GD), Norfolk Southern Corporation (NSC).
Thursday: Apple, Inc. (AAPL), Amazon.com, Inc. (AMZN), Intel Corporation (INTC), Mastercard, Inc. (MA), Caterpillar, Inc. (CAT), Merck & Co., Inc. (MRK), McDonald’s Corporation (MCD), Northrop Grumman Corporation (NOC), Comcast Corporation (CMCSA), Southwest Airlines Company (LUV).
Friday: AbbVie, Inc. (ABBV), Exxon Mobil Corporation (XOM), Chevron Corporations (CVX), ColgatePalmolive Company (CL).

Source: Zacks, October 21, 2022 - Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.

https://www.wsj.com/market-data
https://www.wsj.com/market-data
https://quotes.wsj.com/index/XX/990300/historical-prices
https://lipperalpha.refinitiv.com/2022/10/sp-500-earnings-dashboard-22q3-oct-20-2022/

A Guide to Helping Your Elderly Parents Choose the Right Financial Products

Fri, 21 Oct 2022 15:51:25 GMT

As people get older, they may need more help from their children when it comes to managing their finances. For example, they may start forgetting to pay their bills on time or struggle to make wise financial decisions on their own. To help, we’ve developed this guide you can use to assist your elderly parents in managing their finances and choosing the right financial products.

Tip #1: Consolidate Basic Financial Information

To start, you’ll want to help your elderly parents consolidate all of their financial information.

Create a document you can use to keep track of the names and numbers of your parents' investments and bank accounts. This document should also include information about their mortgage, outstanding debts, regular bills, insurance and car payments. If your elderly parents are still working, list all of their sources of income as well as account numbers if the income is deposited directly into a bank account. Be sure to keep this document in a safe place. Tell your elderly parents and trusted family members its location and how to access it.

Not only should you help your elderly parents consolidate their basic financial information, but you should also help them streamline their accounts where possible. For example, you can consolidate credit card, checking or savings accounts to make life easier.

Tip #2: Make Sure Legal Documents Are Current

Next, you should make sure that all legal documents are up-to-date and easily accessible. In the event of an emergency, or if your elderly parent becomes incapacitated, it is important that you are able to locate these documents quickly.

If you are unable to locate certain documents, you may not be able to adequately protect their financial assets. Some examples of important legal documents include wills, insurance policies, bank and brokerage statements, Social Security payments, home mortgage, car title, pension records and safe deposit boxes.

Tip #3: Assess Their Insurance Needs

Have a candid conversation with your parents about the future, and how you’re here to help them choose the right financial products for their needs.

Together, you can go over important protection options like:

Long-term care (help cover the costs of elder care)
Life insurance (provides a lump sum to their beneficiaries after their passing)
Disability insurance (covers the cost of medical care and lost income in the event of an injury)

Just as you help your parents determine which of these policies is right for them, it’s equally as important to understand what they may not need coverage for. As an example, your parents may already have a thorough estate plan in place that covers funeral expenses and inheritances for family members. In this case, life insurance may not be a big priority. Alternatively, if your parents have already set aside enough money to cover the potential costs of elder care, long-term care insurance may not be necessary.

When helping your parents decide, consider factors like insurance rates, the extent of the coverage and your parents’ earnings and expenses. With so many providers and options to choose from, this can be an overwhelming decision for older relatives to handle on their one.

Elderly parents often need help from their children when it comes to managing finances and choosing the right financial products. For more information about how to help your elderly parents select the best financial products and manage their finances, don't hesitate to reach out.

Weekly Market Commentary: Volatility Reigns; Inflation Remains Unchecked

Mon, 17 Oct 2022 15:30:39 GMT

The Week on Wall Street

Stocks were mixed last week amid wide intra- and inter-day price swings, as technology shares bore the brunt of the downdraft.

The Dow Jones Industrial Average gained 1.15% for the week. Meanwhile, the Standard & Poor’s 500 slipped 1.55%, and the Nasdaq Composite index dropped 3.11%. The MSCI EAFE index, which tracks developed overseas stock markets, lost 2.48%. 1,2,3

Breathtaking Volatility

An above-consensus consumer inflation number sent stocks tumbling in early Thursday trading before inexplicably surging higher in a stunning reversal that saw the Dow Jones Industrial Average rally 1,500 points from its intraday low. Before reversing, stocks had touched levels last seen in 2020. Friday surrendered much of the previous day’s gains, sending stocks mostly lower for the week. 4

The stock market began the week on a volatile note, with the Nasdaq hitting a two-year low. Recession fears and new export controls may limit U.S. companies from selling advanced semiconductor chips and related manufacturing equipment to China. 5

Sticky Inflation

September’s inflation reports provided little evidence that inflation was moderating meaningfully. The Producer Price Index's first report on inflation showed a 0.4% increase in supplier prices over August and an 8.5% increase 12 months ago. While down from August's 8.7% rise, it was higher than market expectations. 6

The subsequent release of the Consumer Price Index showed consumer prices rising 0.4% in September and 8.2% year-over-year. More troubling was core inflation (excludes energy and food prices), which gained 0.6% in September and registered an increase of 6.6% from a year ago–the biggest 12-month increase since August 1982. 7

This Week: Key Economic Data

Tuesday: Industrial Production.
Wednesday: Housing Starts.
Thursday: Existing Home Sales. Jobless Claims. Index of Leading Economic Indicators.

Source: Econoday, October 14, 2022 - The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

This Week: Companies Reporting Earnings

Monday: Bank of America Corporation (BAC), The Charles Schwab Corporation (SCHW).
Tuesday: Netflix, Inc. (NFLX), Johnson & Johnson (JNJ), The Goldman Sachs Group, Inc. (GS).
Wednesday: Tesla, Inc. (TSLA), United Airlines Holdings, Inc. (UAL), International Business Machines Corporation (IBM), The Procter & Gamble Company (PG), Lam Research Corporation (LRCX), Abbott Laboratories (ABT).
Thursday: AT&T, Inc. (T), CSX Corporation (CSX), Union Pacific Corporation (UNP), Freeport McMoran, Inc. (FCX).
Friday: Verizon Communications, Inc. (VZ), HCA Healthcare, Inc. (HCA), American Express Company (AXP).

Source: Zacks, October 14, 2022 - Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.

https://www.wsj.com/market-data
https://www.wsj.com/market-data
https://quotes.wsj.com/index/XX/990300/historical-prices
https://www.cnbc.com/2022/10/12/stock-futures-are-up-as-investors-await-inflation-data.html
https://www.cnbc.com/2022/10/09/stock-futures-are-down-as-market-exits-rollercoaster-week.html
https://www.cnbc.com/2022/10/12/producer-price-index-september-2022.html
https://www.cnbc.com/2022/10/13/producer-price-index-september-2022.html

Estate Planning: Life Insurance

Mon, 17 Oct 2022 15:27:30 GMT

When it comes to life insurance, there are many choices: Whole life. Variable universal life. Term. What do these descriptions really mean?

All life insurance policies have two things in common: They guarantee that they will pay a death benefit to a designated beneficiary after a policyholder dies (although the guarantee may be waived if the death is a suicide occurring within two years of the policy purchase). All require recurring payments (premiums) to keep the policy in force. Beyond those basics, the differences begin.

Some life insurance coverage is permanent; some not. Permanent life insurance is designed to cover you for your entire life, not just a portion, or "term," of it, and it can become an important element in your retirement planning. Whole life insurance is its most common form.

Whole life policies accumulate cash value. How does that happen?

An insurer directs some of your premium payments into a reserve account and puts those dollars into investments, typically more conservative ones. The return on the investments influences the growth of the cash value, which builds up according to a formula the insurer sets.

A whole life policy's cash value grows with taxes deferred.

After a while, you gain the ability to borrow against that cash value. You can even cancel the policy and receive a surrender value. Premiums on whole life policies, though, are usually higher than premiums on term life policies, and they may rise with time. Beneficiaries can only receive a death benefit and not the policy's cash value when a whole life policyholder dies.

Universal life insurance is whole life insurance with a key difference.

Universal life policies also build cash value with taxes deferred, but there is the chance to eventually pay the monthly premiums out of the policy's investment portion.

Month by month, some of your premium on a universal life policy gets credited to the cash reserve of the policy. Sooner or later, you may elect to pay premiums out of the cash reserve, so the policy essentially begins to pay for itself. If all goes well, a universal life policy may have a lower net cost than a whole life policy. However, if the investments the insurer chooses severely underperform, that can create an issue with the payment of the policy. If the cash reserves dwindle enough, the policy could end up being accidentally canceled if the premiums aren't paid.

What about variable life (VL) and variable universal life (VUL) policies?

VL policies are whole life or universal life policies with a riskier investment component. In VL and VUL policies, you may direct percentages of the cash reserve into investment subaccounts managed by the insurer. Assets allocated to the subaccounts may be put into equity investments of your choice as well as fixed-income investments. If you choose equity investments, you and the insurer assume greater risk in exchange for the possibility of greater reward. The performance of the subaccounts cannot be guaranteed. As an effect of this risk exposure, a VUL policy usually has a higher annual cost than a comparable UL policy.

The performance of the stock market may heavily affect the performance of the subaccounts and the policy premiums. A bull market may mean better growth for the policy's cash value and lower premiums. A bear market may mean reduced cash value and higher monthly payments to keep the policy going. In the worst-case scenario, the cash value plummets, the insurer hikes the premiums to provide the guaranteed death benefit, the premiums become too expensive to pay, and the policy lapses.

Term life insurance is life insurance that you "rent" rather than own.

It provides coverage for a set period, usually 10 to 30 years. Should you die within that period, your beneficiary will get a death benefit. Typically, the premium payments and death benefit on a term policy are fixed from the start, and the premiums are much lower than those of permanent life policies. When the term of coverage ends, you may be offered the option to renew the coverage for another term or to convert the policy to a form of permanent life insurance.

Term life is cheap, but the trade-off comes when the term is up. Just as you cannot build up home equity by renting, you cannot build up cash value by renting life insurance. When the term of coverage is over, you usually walk away with nothing for the premiums you have paid.

Do you need a life insurance policy in retirement?

One school of thought says no. The kids are grown, and the need to financially insulate the household against the loss of a breadwinner has passed. If you are thinking about dropping your coverage for either or both of those reasons, you may also want to consider the excellent reasons to retain, obtain, or convert a life insurance policy after you retire. Take these factors into account and consult with your financial professional before making a decision.

Could you make use of your policy's cash value?

If you have a whole life policy, you might want to utilize that cash in response to certain retirement needs. If you need extended care, for example, you could explore converting the cash in your whole life policy into a new policy with an extended care rider. This might even be doable without tax consequences. If you need additional income, many insurers will let you surrender a whole life policy you have held for some years and arrange an income contract with the cash value. You can access the money, tax free, as long as the amount that is withdrawn is less than the amount paid into the policy. Remember that withdrawing money or taking a loan against a policy's cash value naturally reduces the policy's death benefit.

Do you receive a "single-life" pension?

Maybe a pension-like income comes your way each month or quarter from a former employer or through a private income contract with an insurer. If you are married and there is no joint-and-survivor option on your pension, that income stream will dry up if you die before your spouse dies. If you pass away early in your retirement, this could present your spouse with a serious financial dilemma. If your spouse risks finding themselves in such a situation, think about trying to find a life insurance policy with a monthly premium equivalent to the difference in the amount of income your household would get from a joint-and-survivor pension as opposed to a single-life pension.

Will your estate be taxed?

Should the value of your estate end up surpassing federal or state estate tax thresholds, then life insurance proceeds may help pay the resulting taxes and prevent the need for your heirs to liquidate some assets.

Are you carrying a mortgage?

If you borrowed to purchase your home or have refinanced and are carrying a mortgage, a life insurance policy may make sense. It could potentially relieve your heirs from shouldering some of or all that debt if you die with the mortgage still outstanding.

Do you have burial insurance?

The death benefit of your life insurance policy could partly or fully pay for the costs linked to your funeral or memorial service. In fact, some people buy small life insurance policies later in life to prepare for this expense. Alternatively, you may seek to renew or upgrade your existing term coverage for permanent life insurance.

Which coverage is right for you?

Many factors may come into play when you are deciding which type of life insurance will suit your needs. The best thing to do is to speak with a qualified insurance professional who can help you examine these factors so you can determine which type of coverage you should have.

Retirement Strategy: Money & Longevity

Thu, 13 Oct 2022 18:08:30 GMT

When considering your retirement strategy, how much thought do you give to how long you might live? It can be an uncomfortable reality to consider, but this shouldn't dissuade you from giving it some serious thought.

For many people preparing for retirement, one of the biggest fears is running out of money. If you've lived to 65 years, you will probably live to at least 84 years if you're male and 87 years if you're female, according to Social Security tables. These are only estimates, but it's important to keep in mind that you might live much longer than you expect, and some household members could outlive others by many years. 1

You might, in fact, live to 100 years and beyond: the National Institute on Aging anticipates that the number of centenarians will grow by a factor of 10 during the first half of this century, representing a host of challenges for anyone attempting to devise a retirement strategy. 1

For example, healthcare costs must be incorporated. As you age, your healthcare needs will likely grow from simple doctor's visits to potentially living in an extended care facility. These costs naturally increase over time, whether through inflation, market volatility, or other factors. So, while you can look at today's prices as a guide, you will likely need much more money to cover your healthcare. Medicare will help, but it doesn't cover everything, including a lengthy stay in extended care. 2

Your retirement strategy might include a spending plan that considers the likelihood that you will want to travel, pursue your interests, and spend time with family, as well as that allows for a long life and covers the associated financial expenditures. Unless you are working beyond retirement age, it can be difficult to make up for a market dip, emergency expense, or heavy spending, so your strategy should cover many circumstances.

How much will you need to withdraw per year without diminishing your account too quickly, while still controlling for inflation and other factors? Calculating this as part of your retirement strategy may be essential. While some financial professionals have downplayed the 4% rule in recent years—the amount of your investments used in the first year of retirement—and have revised it upward or downward as needed, the theory is that you may be able to live on your retirement funds for upwards of 30 years or more. 3

Other factors to consider include focusing on tax-efficient withdrawals from your retirement accounts. You might also decide that working longer or taking Social Security later (allowing for larger payouts per month) could extend your retirement strategy further. Of course, these topics and others will be addressed while working with a financial professional to form a retirement strategy and put it into action. If nothing else, you should now appreciate what a significant undertaking your retirement strategy represents, as well as how relieving it will be to have help along the way.

Retirement Planning in Kansas City

One of the most important things to consider when retiring is your financial situation. We work to ensure you have a true understanding of your expenses and how much income you will need to live the retirement lifestyle of your dreams. There are many questions to be answered when developing an accurate retirement strategy. What age do you plan to retire? How much money will you need to live comfortably? How much should you plan for medical expenses? Will you continue working part-time? Or will you rely on pension, social security, investments, and savings?

If you’re like many others, this can all feel a bit overwhelming. Take the first step by meeting with a financial advisor. Buttonwood Financial Group can assess your retirement needs and develop a plan for your unique situation. With our partnership, we can effectively strategize for the retirement you have worked so hard for. Contact us today to learn more.

Weekly Market Commentary: Boost Early in Week Keeps Markets Ahead

Tue, 11 Oct 2022 17:24:00 GMT

The Week on Wall Street

A powerful two-day stock rebound cemented a positive week for investors as a new trading month began.

The Dow Jones Industrial Average rose 1.99%, while the Standard & Poor’s 500 added 1.51%. The Nasdaq Composite index increased 0.73% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, gained 3.42%. 1,2,3

Stocks Start Strongly

Stocks opened the week posting their best two-day rally since March 2020, as the U.K. prime minister’s decision to reverse a tax cut proposal that had upended financial markets the previous week lifted investors. 4

Falling yields further lifted investor enthusiasm, as did new economic data indicating a cooling economy. Losses in the last two days erased much of the gains as concerns about higher rates and recession once again moved front and center. The selling pressure was due to a stream of hawkish comments by Fed officials and labor market data that suggested the Fed would likely stick with its rate-hike plans.

A Mixed Labor Picture

Employment-related reports offered conflicting signals on the state of the labor market. In a sign of cooling, the number of open jobs in August fell 10%, while a subsequent report from Automated Data Processing (ADP) showed continued labor market strength. ADP reported private employers added a higher-than-anticipated 208,000 jobs in September, and annual wages rose 7.8% from a year ago. 5,6

Jobless claims rose to 219,000, up from the previous week’s 190,000 and in line with 2019’s average. September’s employment report showed that employers added 263,000 jobs–slightly lower than expectations. The combination of new hiring and lower labor force participation led to a drop in the unemployment rate to 3.5%. 7,8

This Week: Key Economic Data

Wednesday: Producer Price Index (PPI). Federal Open Market Committee (FOMC) Meeting Minutes.
Thursday: Consumer Price Index (CPI). Jobless Claims.
Friday: Retail Sales.

Source: Econoday, October 7, 2022 - The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

This Week: Companies Reporting Earnings

Wednesday: Delta Air Lines, Inc. (DAL), PepsiCo, Inc. (PEP).
Thursday: Wells Fargo & Company (WFC), Walgreens Boots Alliance, Inc. (WBA), BlackRock, Inc. (BLK).
Friday: JPMorgan Chase & Co. (JPM), UnitedHealth Group, Inc. (UNH), Citigroup, Inc. (C), Morgan Stanley (MS), The PNC Financial Services Group, Inc. (PNC), U.S. Bancorp (USB).

Source: Zacks, October 7, 2022 - Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.

October is Financial Planning Month

Fri, 07 Oct 2022 15:54:56 GMT

As the holiday season draws near, most people are thinking about their finances over the next few months and budgeting for how they can celebrate the most wonderful time of the year. Which is perfect timing because October is National Financial Planning Month!

Let’s use this month to celebrate the importance of proper financial planning and share some tips and tricks on how to get your financial planning in order.

Create a Budget

The first step in understanding and taking control of your finances is creating a budget and sticking to it. Everyone’s budget will look a little bit different, but the 50/30/20 rule is a good place to start. 1

The 50/30/20 rule states that 50% of your budget should go to essentials, such as rent, food, and utilities; 30% should go to wants, such as entertainment or travel; and 20% should go to savings and paying off debt.

There are also a lot of helpful apps to help you stick to your budget, such as Mint, You Need a Budget (YNAB), and Honeydue for budgeting with a partner.

Be Smart With Your Debt

Not all debt is created equal, meaning debt isn’t always a “bad” thing if you are smart with it. For example, taking on a car loan and making all the payments on time can help you afford a car if you don’t have enough money to pay cash and can help you build up your credit score. But be wary of high-interest debt because that can get you into problems quickly.

Understand Interest Rates

Speaking of interest rates, it’s important to understand how they impact your finances and debt. Depending on the current market and your credit score, mortgage rates generally hover between 3% and 6%. In contrast, the average credit card interest rate as of March 2022 was nearly 20%. With that high of a rate, you can see how getting into credit card debt can quickly pile up and make it hard to take control of your finances. 2,3

In addition, understanding interest rates can help you make strategic financial planning decisions. Rather than paying all cash for an asset (e.g., a car or a house), if you can get a low-interest loan, you can consider investing the cash you would have spent on an investment vehicle that could generate a higher return than you are paying in interest.

For example, if you have $10,000, you might consider putting $2,000 toward a car and financing the rest at a 2% interest rate while investing the other $8,000 in the S&P 500, which has delivered a compound average annual growth rate of 10.7% per year over the past 30 years. 4

Get Covered by Insurance

Lastly, another thing you can do to celebrate Financial Planning Month is to ensure that you are properly covered with the right insurance. If you have dependents or people relying on your income, life insurance is a must-have. Life insurance can ensure that the people you love will be taken care of if something were to happen to you. In addition, you should definitely consider renters or homeowners insurance, car insurance, disability insurance, and health insurance.

There are lots of things you can do to take control of your finances for National Financial Planning Month, and these are just a few. Kick off the holiday season by strengthening your financial fitness.

Financial Advisor Kansas City

Our Team at Buttonwood Financial Group stands ready to assist with your financial planning and wealth management needs! We proudly work across the Kansas City Metro and beyond, with clients locally and across the country. If you're ready for a coordinated strategy across investments, tax, insurance, estate, business planning, and more, contact us today.

Weekly Market Commentary: U.S. and U.K. See Financial Turbulence

Tue, 04 Oct 2022 17:37:15 GMT

The Week on Wall Street

Rising recession fears and uncertainty in the bond and currency markets sent stocks to new 2022 lows last week.

The Dow Jones Industrial Average declined 2.92%, while the Standard & Poor’s 500 slumped 2.91%. The Nasdaq Composite index fell 2.69%. The MSCI EAFE index, which tracks developed overseas stock markets, lost 1.94%. 1,2,3

A Tumultuous Week

U.S. stocks were under pressure all week due to recession concerns and unsettled trading in the bond and currency markets. This stress followed economic steps out of the U.K. During the previous week, the Bank of England (BOE) raised interest rates, and its prime minister announced unfunded tax cuts that the markets interpreted as inflationary.

U.S. bond yields rose early last week, sending stocks lower until Wednesday’s rally following news that the BOE would buy U.K. government bonds. U.S. stocks resumed their descent the following two days to close out a disappointing week, month, and third quarter.

The Bank of England Acts

Global bond and currency markets have been volatile recently due to global central bankers raising interest rates to combat inflation. Developments in the U.K. took center stage last week when the BOE announced it would be buying long-dated U.K. government bonds. Upending the financial markets was the previous week’s announcement of tax cuts by the country’s new prime minister, a step many investors viewed as counterproductive to the BOE’s inflation-fighting efforts.

The BOE’s decision to begin temporary purchases of government bonds was well-received by capital markets, sending U.K. bond yields lower and boosting U.K. stock prices in the immediate aftermath.

This Week: Key Economic Data

Monday: Institute for Supply Management (ISM) Manufacturing Index.
Tuesday: Factory Orders. Job Openings and Labor Turnover Survey (JOLTS).
Wednesday: Automated Data Processing (ADP) Employment Report. Institute for Supply Management (ISM) Services Index.
Thursday: Jobless Claims.
Friday: Employment Situation.

Source: Econoday, September 30, 2022 - The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

This Week: Companies Reporting Earnings

Wednesday: Lamb Weston (LW).
Thursday: Constellation Brands, Inc. (STZ), McCormick & Company, Inc. (MKC), Conagra Brands (CAG).

Source: Zacks, September 30, 2022 - Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.

Meet Jon McGraw

Mon, 03 Oct 2022 15:29:06 GMT

Thank you, CanvasRebel for featuring this insightful interview on your website! The interview below was conducted by CanvasRebel and shared on their website - https://canvasrebel.com/meet-jon-mcgraw/

Alright, Jon thanks for taking the time to share your stories and insights with us today. When you were first starting out, did you join a firm or start your own?

20 years ago I started my own firm – with a leap of faith and a handful of friends as clients. At age 28 I had been working in the corporate world for about 5 years when I was transferred from Boulder, Colorado to Kansas City, Missouri to oversee and expand our presence in the Midwest. For the next 5 years I dedicated my life to building what became one of the highest producing regions in the county – second only to our corporate headquarters in NY. Then the firm was acquired by a big bank. I knew my desire to have a positive impact on every client would be crushed by ‘big corporate’ so I walked away from a fat salary to start Buttonwood Financial Group, LLC.

Before the bank acquisition, with several offices in my multi-state region, we serviced more than 25,000 accounts for investors. I had a group of employees who provided outstanding service to our clients. However, if a client had a complex problem, the issue was elevated to me. I quickly learned most of the problems were a result of simply failing to properly plan! Perfect examples include the multi-millionaire father who didn’t have the time to update his estate documents. This led to a nightmare for his kids. He was busy running his company when he had the heart attack. The legal battle following the auto accident that killed a pedestrian; and broke a family. An umbrella insurance policy is cheap, and hopefully never needed.

Was it possible to develop my own firm that could benefit individuals and families by solving these problems? Could we reinvent the financial advisor? Could we follow the same process a CFO might follow when they are invited to join a company? The vision for Buttonwood was formed around the ability to step into a clients life with a high level review through the unique perspective of what they are trying to accomplish. We would look for distinct opportunities based upon their assets and liabilities as well as their income and expenses. What could they be doing but weren’t? What risks were they facing but hadn’t even considered. Working with clients we would prioritize these items, implement strategy, and put in place a process to review and revise as clients transitioned through different stages of life.

I provided this overview to a handful of people I knew, and Buttonwood Financial Group launched in January 2002.

Jon, love having you share your insights with us. Before we ask you more questions, maybe you can take a moment to introduce yourself to our readers who might have missed our earlier conversations?

I have been in this industry for 30 years and I’m still surprised there are so few firms that elect to do what we do – it is so rewarding! I understand the process is complex: It takes a great deal of time and effort to stay on top of trends in tax, insurance, estate, business and the investment markets. Add in meeting with clients and managing a growing company, the workweek can easily stretch across a full 7 days. Without passion and culture at the center, I could have never done it. I’ve always appreciated the saying, “Luck is what happens when preparation meets opportunity”. In 2005 we acquired an amazing historic 1860’s building for our offices. As I was shopping for art in the building, a friend and artist, convinced me we should establish a rotating art gallery rather than purchasing static pieces. Buttonwood Art Space, a community-focused gallery was born. Today we host multiple themed exhibits annually. The theme for each exhibit is based around the mission of a local non-profit. Over our history, sponsorships, and art sale proceeds of more than $750,000, have helped support nonprofits and artists. The business plan for Art Space came from the passion of Financial Group – and we share it openly and regularly with others who want to make the world a better place through the arts.

2022 marks the 20th anniversary for Buttonwood Financial Group. Each year we continue to support our world by committing a percentage of revenue to the non-profit Buttonwood Foundation. Looking back, I can’t imagine any other path as fulfilling. It hasn’t been easy, and the world of business is unforgiving – you either get it right or you’re gone. With the growth we have experienced, the challenges today continue to be larger and the outcome more impactful. However, with the advantage of hindsight, dedicating my time to the things I’m passionate about has led to an amazing life – not only for me, but for our employees, our clients, local artists and our non-profit community.

Have any books or other resources had a big impact on you?

I have been involved with many small business startups. When the phone rings, I often recommend someone starting a business read Gerbers, E-Myth Revisited. While the book dates from the 90’s, the evergreen perspective he shares in “Part I”; the need for a successful small business leader to have 3 interchangeable personalities, is vital for anyone starting a business to understand.

What do you think helped you build your reputation within your market?

As CEO, one of my primary jobs is to make sure we protect our brand. I believe if we live it, we will protect it. Today, our dedicated Team, serves as a strategic CFO to more than 400 individuals and multigenerational families across this great country and overseas. Each member of our Team was asked a common interview question: What is it you are passionate about when you wake up in the morning? If the answer doesn’t have to do with making the world a better place, helping, assisting or giving back, Buttonwood isn’t the place for them. Our reputation has been built by doing the right thing and thinking of others best interests first. The culture at Buttonwood is based around the desire to set the other person up for success, whether that be a coworker, a client, partner or vendor.

Contact Info:

Website: https://www.buttonwoodfg.com/ and https://buttonwoodartspace.com/
Instagram: https://www.instagram.com/jon.mcgraw/
Facebook: https://www.facebook.com/ButtonwoodFinancialGroup
Linkedin: https://www.linkedin.com/in/jonmcgraw/
Twitter: https://twitter.com/buttonwoodfg

Simple Guide to Stepping into Entrepreneurship

Mon, 26 Sep 2022 14:40:12 GMT

If you’re a self-starter with a knack for perseverance, entrepreneurship could be the ideal path for you. Of course, you need a good idea and business skills to succeed long-term, but you can expect to learn a lot on your journey.

As long as you learn from your mistakes and constantly seek to deepen your expertise, you can position yourself for a lucrative, fulfilling career. Below, Buttonwood Financial Group discusses some fundamental tips for becoming an entrepreneur as you re-emerge from the pandemic.

Discover Your Interest

Starting a business is a serious endeavor, and you must ensure you’re interested in your daily work so you can persevere through challenges. You will have to take risks and make sacrifices, and your core commitments will need to be strong enough to endure the ups and downs of entrepreneurship.

Once you have a vague idea of what kind of business you would like to start, zero in on a specific segment of the market. Identify a niche or industry where you can flourish, whether that means you have previous experience, are passionate about the niche, or both. Don’t try to serve everyone everywhere; it’s crucial to target the right people.

Make Your Venture Legal

It won’t take long for you to realize how many legal responsibilities come with starting and operating a company. Avoid procrastinating on these tasks so that you can keep your venture on a solid legal footing. For example, you’ll need to obtain an employer identification number (EIN) so the IRS can identify your business and track your payroll taxes. Having an EIN also makes it easier to file state and federal taxes.

Further, research the various business structures to choose one that will benefit your company the most. Many entrepreneurs establish a limited liability company (LLC) because of the liability protection, tax benefits, and other perks.

Write a Business Plan

Having a unique and promising idea is half the battle. But if you want to succeed as an entrepreneur, you must make a comprehensive and easy-to-understand business plan.

This document should describe your company's values , products, services, audience, marketing strategies, financial needs, and more. Your business plan will help you secure funding while guiding you through various decisions down the road.

Draw Up a Marketing Strategy

Every company must have an impactful marketing strategy in place if it hopes for its products or services to get out there. Your marketing strategy starts with identifying your target audience and developing a visual identity for the brand.

As you’re creating your branding, you might work with a graphic designer, which will likely entail sending multiple files back and forth through email. Make sure you have a tool so you can convert JPG to PDF online. PDFs are much easier to email than JPGs and can hold more information without compromising image quality.

Once you have a visual identity, start building a website that showcases your brand and the products and services it offers. If you plan on doing this yourself , use a top-notch website builder to create a clean, easy-to-navigate site. We recommend WordPress or Duda .

Get Funding

You will need money to launch and run your business. Some startups require a few hundred dollars while others require more than $100,000 for a strong start. Research the estimated startup costs and the funding options available to you, such as:

Bootstrapping (paying your own way)
Crowdfunding
Angel investors
Venture capitalists
Bank loans
Small business grants

As you start developing a solid financial foundation for your startup, consider developing one for yourself, too. Buttonwood Financial Group works with individuals and families to coordinate your financial goals into a unified strategy.

Hire Professionals

You might be able to handle many of your startup tasks yourself (if not all of them). But if you run into any steps for which you’re unequipped or don’t have the time, don’t hesitate to hire professionals. Investing in an expert web designer, graphic designer, content writer, accountant, attorney, virtual assistant, or business coach can be well worth the investment if it helps you lay a firm foundation for your company.

As you work with contractors, it’s important your instructions are clear and you have a sound process for giving and receiving feedback. Having the ability to comment on and edit PDFs can make that process much easier. Try a free PDF editor that will allow you to add text or comments to a document during the drafting process and edit it when the content and formatting is solidified. PDFs are helpful because they retain their formatting across devices, so being able to send, comment on, and edit a PDF is a great advantage when communicating with remote workers.

Launching a business is a powerful way to act on your passions and start something new for yourself. If you have a great idea and a mind for business, consider the tips above for laying the groundwork for your new venture. And each step of the way, remain open to other strategies that can set your business up for success. And be sure to consult with specialists and the financial consultants at Buttonwood Financial Group to ensure you and your business are on the right track for the future.

Guest post provided by Hal Salazar with https://elders.today/

Social Security and Retirement Earnings

Thu, 22 Sep 2022 15:44:46 GMT

The fact that you've decided to retire doesn't necessarily mean you want to stop working. Retirement is a great time to explore alternative career options, try your hand at a new career, or work part-time to add a little extra cash to your bottom line every month.

However, continuing to work while collecting social security can affect your monthly benefits if you claim these before your full retirement age. Your full retirement age depends on the year you were born, so make sure you're aware of this criterion before you claim benefits. 1

The first and most important thing to know is that once you reach full retirement age, or age 70 (the maximum age at which you can continue to accrue benefits), there is no limit to how much you can earn. Once you've reached full retirement age, you are fully vested in the social security system, so your benefits won't be reduced. 2

However, if you continue working after you've retired before your full retirement age and are claiming social security, your benefits could be affected.

Your Social Security benefits might be temporarily reduced. If you opt to work while receiving social security before your full retirement age, you will only be able to receive a certain level of income before your benefit is temporarily reduced. In 2022, the social security earnings limit is $1,630 per month, or $19,560 per year, for someone who has not reached full retirement age. If you earn more than this amount, you can expect to have $1 withheld from your social security benefit for every $2 earned above the limit. 1,2
The Social Security earnings limit depends on your age. Your full retirement age is based on the year you were born. The full retirement age for anyone born between 1943 and 1954 is 66 years old. Individuals born in 1960 or later have a full retirement age of 67. 2,3
You might be eligible for a higher Social Security benefit later. The limit mentioned above changes the year you reach full retirement age. During this year, you lose only $1 of benefits for each $3 you earn above the limit until the month you reach full retirement age. Furthermore, the earnings limit goes up the year you reach this age. For 2022, the earnings limit for the year of full retirement age is $51,860. 4

Your best bet might be to continue to delay taking social security benefits until your full retirement age or later. Talk with your financial advisor to review your situation and determine when claiming social security is right for you and your family.

Why Everyone Needs an Inheritance Strategy

Tue, 20 Sep 2022 23:36:59 GMT

Of the various financial strategies many people have in place, an inheritance strategy is usually not one of them. Discussing estate planning among family members can be uncomfortable even with the best relationships, let alone discussing the contents of an estate and what you may be inheriting after your loved one is gone.

That said, having a plan in place can save big bucks, time and headaches in the future. Losing a loved one is difficult emotionally but having an inheritance strategy in place can make your life, and the lives of your heirs, easier when the time comes to settle an estate.

Inheritance With a Will

A Will often designates guardians and defines beneficiaries of your assets. From pets and children to cars and collectibles, a Will details which of your friends and family will receive your things. Generally, a Will provides instructions to the probate court. As such, if your inheritance strategy involves only a Will, it is likely your assets will transfer through probate, which can be a lengthy, stressful process. Of course, having a Will does not prevent anyone from contesting it, but it does tend to make the transition of things to beneficiaries easier. Knowing if you are one of the designated beneficiaries—and having an idea of what the inheritance looks like—can help you plan for what happens when you inherit assets. 1

Inheritance With a Revocable Living Trust

When thinking about inheritance, we often recommend going a step further than a Will. We often work with our clients and their estate planning attorneys to adopt Revocable Living Trusts . This written document, like a Will, determines how your assets will be handled after your death. However, when you pass, your Trust does not. Thus, if your Trust is the owner of your assets and you have appointed a Successor Trustee for your Trust, the probate court isn’t needed to oversee the transition of your assets to your beneficiaries. In addition, a Trust can often allow for more detailed instructions about who gets what, when and how they get it.

Generally, when a trust is established, it is a ‘revocable living trust’ and you, the grantor, can make changes as needed if you are alive. The day the owner, or grantor dies, the Trust becomes ‘irrevocable’, and no additional changes can be made. This ensures your wishes are fulfilled in accordance with the latest revision of the Trust.

Perhaps the biggest benefit of incorporating a Trust to hold your assets is the ability to avoid probate. With a property funded Trust, your heirs can skip the headaches, time, expense and emotional toll of the probate process. After all, losing a loved one is difficult enough on it’s own.

When No Will or Trust Exists

If you haven’t adopted a Will or Trust, the Government will provide an inheritance plan for you. Not having a will or trust can make receiving an inheritance more complex as the process will follow the "rules of intestacy" for each state in which you own property. Sorting out an estate without direction can result in additional legal fees, complexities with probate, and potential conflict with family and friends. If you’re not sure exactly what is in an estate, it could take months or years to track everything down. Then there’s the personal cost. Even if everyone agrees on how the estate should be settled, the process often takes a financial, mental, and emotional toll. 2

If there are assets other than cash to divide, sorting through an estate without a Trust or Will becomes exponentially more complicated. Life insurance, real estate, and assets other than cash may be subject to different inheritance rules. Spouses often receive additional tax breaks and incentives for an inheritance, but many adult children and other relatives don’t have the same luxury. 2,3

Creating an inheritance strategy allows you to help ensure you or your loved one’s estate is in order. You don’t want to wait until after your loved one is gone to discover, for example, an ex-spouse is still listed as a beneficiary on a life insurance policy.

The Pitfalls of Inheritance

While many of us dream of a lump sum of cash falling into our laps, the reality of inheritance can be a little less rosy. Cash typically doesn’t fall under the heading of taxable income, but if you received the income in the form of royalties or the deceased’s company bonus, that might cause the IRS to view this as a source of income. 4  Inheriting real estate means you now have a property that requires maintenance and upkeep as long as you hold onto it. And while it used to be easy to shelter stocks and mutual funds into a so-called “stretch IRA,” the SECURE Act abolished this option for everyone but a surviving spouse or minor child. 5

Don’t Quit Your Day Job

Just because you’ve received a large inheritance doesn’t mean it’s time to quit your day job and retire to luxurious living on a tropical island. Like many lottery winners, according to the National Endowment for Financial Education, an estimated 70% of people who receive a large inheritance spend it all within a few years. 2  Having a plan and trusted team to work with can greatly increase the probability of inherited assets providing a lifelong financial benefit rather than just a big flash.

Even in the best circumstances, dealing with an inheritance can be complicated. Remember, even if you’re not expecting to inherit or pass along a large amount of money or property from an estate, it still behooves you to have a strategy in place. It’s important not to make any significant decisions or to suddenly change your spending habits just because more assets are now available to you. Working with a skilled financial advisor knowledgeable about the ins and outs of inheritance can help make sure your inheritance is working for you, not against you.

Weekly Market Commentary: Markets Upbeat, Despite Gloomy Inflation Talk

Mon, 12 Sep 2022 18:32:01 GMT

The Week on Wall Street

In a holiday-shortened week of trading, stocks posted healthy gains despite more tough talk on monetary policy from Fed officials.

The Dow Jones Industrial Average rose 2.66%, while the Standard & Poor’s 500 gained 3.65%. The Nasdaq Composite index picked up 4.14% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, lost 1.26%. 1,2,3

Stocks Rise

Stocks fell coming off the Labor Day weekend, dragged down by news that Russia was cutting off natural gas supplies to its European customers. Stocks also were under pressure due to a surprisingly strong report on business conditions, which heightened fears of continued Fed hawkishness.

Sentiment quickly improved as bond yields turned lower and oil prices fell. Investors reacted positively to comments by Fed Vice Chair Lael Brainard, who reiterated the Fed’s commitment to quashing inflation while acknowledging the risks of going too far. Stocks added to their gains on Thursday as the market digested another speech from Fed Chair Powell and a 0.75% hike by the European Central Bank. The markets surged on Friday amid little news, ending a positive week on an upbeat note.

No Inflation Walk Back

In his first public comments since his speech at Jackson Hole that sent markets into a tailspin, Fed Chair Powell did not seek to soften the edges of the Fed’s commitment to fighting inflation. In an interview on Thursday, Powell reaffirmed the need for sustained and robust actions to bring down inflation. He emphasized that it was critical that “the longer inflation remains well above target, the greater the risk the public does begin to see higher inflation as the norm, and that has the capacity to really raise the costs of getting inflation down.” 4

With the Federal Open Market Committee (FOMC) set to meet on September 20-21, these comments may indicate that market expectations of a rate hike of 0.75% this month align with the Fed’s plans.

This Week: Key Economic Data

Tuesday: Consumer Price Index (CPI).

Wednesday: Producer Price Index (PPI).

Thursday: Retail Sales. Industrial Production. Jobless Claims.

Friday: Consumer Sentiment.

Source: Econoday, September 9, 2022 - The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

This Week: Companies Reporting Earnings

Monday: Oracle Corporation (ORCL).

Source: Zacks, September 9, 2022 - Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.

Hiring a Fiduciary

Mon, 12 Sep 2022 18:24:23 GMT

When you’re deciding on a financial advisor to guide you on decisions regarding your financial life (taxes, retirement, investments, insurance, estate planning, and more) you want to ask the right questions. One of the most important questions is whether the advisor, and their firm, serves in a fiduciary role when providing advice. You might assume a financial advisor always has the best interests of the client at heart. That, unfortunately, is not always true.

What is a Fiduciary?

When a person or organization acts as a fiduciary, they are legally bound to act in the best interests of the party to whom they are providing advice. If there are conflicts, those conflicts need to be disclosed. Fee-based investment advisors, held to a fiduciary responsibility, are regulated either by the State in which they operate, or by the Securities and Exchange Commission (SEC). A fiduciary has the duty of “loyalty and care,” which is another way of stating that the client’s interests are always put above their own.

Broker-dealers, on the other hand, operate differently. They are sales representatives, and while they must make “suitable” recommendations to clients, their primary loyalty is to the brokerage firm for which they work, not necessarily the client. Often, brokers and their representatives are paid by commission, which may be in conjunction with additional fees. While there are plenty of honest broker-dealers in the business, there are also those who will direct clients toward high commission offerings rather than those charging no commission. For example, a broker-dealer could sell a client a mutual fund, which charges a commission, while a similar mutual fund without a commission may be available. An advisor acting as a fiduciary cannot do that. The Council of Economic Advisors estimated $17 billion annually is lost by investors overpaying for such investment products.

Asking the Fiduciary Question

When interviewing a financial advisor or wealth manager, inquiring whether they are a fiduciary should be one of the initial questions. If the advisor responds affirmatively, ask them to put it in writing. You should also ask how they are paid for each of their services as the answer will help you learn whether or not they are a fiduciary. In many cases, you are entrusting your life savings to this advisor and as such we believe it is vitally important to ensure they are always acting in your best interest.

Fiduciary Kansas City

At Buttonwood Financial Group, we proudly serve our clients in a fiduciary capacity. When it comes to your financial life, generally investment products don't provide the solution; coordinated strategy does. Our Team develops and implements real strategy designed to protect and grow wealth, leaving our clients time to focus on family, career, and life. Contact us today to learn more about our Family CFO services and our fiduciary duty.

Sept 8 is International Literacy Day. Here's How Literacy Impacts the Economy

Thu, 08 Sep 2022 16:59:54 GMT

September 8 is International Literacy Day, a day to celebrate and demonstrate the importance of education and literacy across the world. 1 In this article, we will examine how literacy affects our local and national economies.

Literacy & the Economy

In the context of this article, literacy is the ability to comprehend written and spoken language. It affects our interactions with the world around us, from casual conversations to financial decisions. For this reason, we can see how literacy and the economy become intertwined. Here are some ways literacy influences the economy.

Income Levels

According to a study conducted by Gallup on behalf of the Barbara Bush Foundation for Family Literacy, there is a significant connection between literacy and income. The study compared average yearly income to average reading levels, finding the following connections: 2

Reading level zero to one: $34,127
Reading level two: $47,596
Reading level three: $62,997
Reading level four to five: $73,284

The same study found that 54 percent of Americans aged 16-74 lack literacy proficiency. Furthermore, the same Gallup study estimates that $2.2 trillion of additional income could be generated if all adults reached a reading level of three or higher. 2

Employment Rates

Just as income is affected by literacy levels, so too is employment; 54 percent of employed individuals have a reading level of three or higher, while 64 percent of unemployed individuals have a reading level of two or lower. 3

Of course, there is a multitude of factors that influence employment, such as economic conditions. However, an increase in overall literacy could affect employment rates, as indicated by these statistics.

Incarceration

An estimated 70 percent of incarcerated people in the U.S. cannot read at the fourth-grade level. 4 This is most likely related to the other factors on this list as crime, employment and opportunities are often intertwined.

Furthermore, the Department of Corrections places the daily cost of incarceration at $112.96 per inmate a day. 5 This cost, alongside the economic loss resulting from incarceration, demonstrates the powerful connection between literacy, the economy and imprisonment.

Healthcare

Literacy also affects our ability to understand, process and follow medical recommendations. And in terms of the economy, U.S. health literacy has shown to result in economic inefficiencies of $106 billion to $238 billion annually. 6

More importantly, low health literacy not only affects our economy but the livelihood of every individual. Literacy, therefore, impacts our healthcare expenses as well as our quality of life.

Improving Literacy in the U.S.

One potential way to improve U.S. literacy could be to provide literary resources to parents. Investing in such programs would not only provide benefits to current generations but also to generations to come.

It may be surprising to see how much literacy and the economy are intertwined. By implementing solutions to improve literacy, we could see drastic changes in healthcare, incarceration, average income, employment and more.

Weekly Market Commentary: Markets Sag, Job Numbers Soar

Wed, 07 Sep 2022 14:24:43 GMT

The Week on Wall Street

The overhang of Fed Chair Powell’s Jackson Hole speech the previous week carried over into last week as investors recalibrated stock valuations amid a seemingly more assertive monetary policy stance.

The Dow Jones Industrial Average fell 2.99%, while the Standard & Poor’s 500 stumbled 3.29%. The Nasdaq Composite index lost 4.21%. The MSCI EAFE index, which tracks developed overseas stock markets, slid 4.90%. 1,2,3

Stocks Extend Losses

Investors remained unnerved by the aggressive tone of Jerome Powell’s speech and subsequent comments from Fed officials suggesting a higher rate hike than the market expected at the Fed two-day meeting ending September 21. The probability of a 75 basis point hike in September rose to nearly 65%, up from just 28% a month ago. 4

Stocks moved steadily lower before finding some footing on Thursday. Friday’s employment report appeared to strike a “goldilocks” note (i.e., labor gains not so strong that it might trigger greater Fed hawkishness but robust enough to allay imminent recession fears). After early gains, stocks turned lower ahead of the holiday weekend.

Employment Shines

Employers added 315,000 jobs in August, maintaining the labor market’s remarkable resiliency amid a contracting economy. The unemployment rate rose to 3.7%, up from last month’s 3.5%. The gain followed an uptick in the labor participation rate, which expanded from 62.1% to 62.4%. Wages continued to grow, rising 0.3% in August and 5.2% from 12 months ago. 5

Sectors seeing the most significant increases in new jobs were professional and business services, healthcare, and retail. Lagging sectors were manufacturing, financial, and wholesale trade. 6

This Week: Key Economic Data

Tuesday: Institute for Supply Management (ISM) Services Index.
Thursday: Jobless Claims.

Source: Econoday, September 2, 2022 - The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

This Week: Companies Reporting Earnings

Thursday: Zscaler, Inc. (ZS), Docusign (DOCU).
Friday: The Kroger Co. (KR).

Source: Zacks, September 2, 2022 - Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.

Labor Day 2022: 5 Ways to Better Your Work-Life Balance

Fri, 02 Sep 2022 15:13:39 GMT

With Labor Day approaching, it’s time to start saying our goodbyes to summer. More than just an extra day off of work, it’s important to remember what Labor Day is really meant to celebrate. In addition to recognizing the hard work of our labor force, we’ll also explore five ways to improve your work-life balance. After all, there’s more in life to enjoy than just our careers.

Why Do We Celebrate Labor Day?

The first Labor Day holiday was celebrated on Sept. 5, 1882, in New York City, in accordance with the Central Labor Union to celebrate workers' contributions to the well-being of our country and the economy. Many years later, on June 28, 1894, President Grover Cleveland signed a law to make Labor Day a national holiday. 1 Now, the first Monday in September is annually dedicated to the hard work and achievements of American workers.

Improving Your Work-Life Balance

We all know how it feels to be overwhelmed by work, and sometimes it can seem like it’s taking over your life. Especially if you own a small business or work from home, it’s easy to feel pressured into making your job your everything. If you find yourself working overtime and constantly thinking about work, it’s time to evaluate how you can change your habits to have a more balanced life.

Plan for Personal Time

Set aside some time for you to do something for yourself. Whether that is going on a hike, reading a book or just unwinding by watching a movie, do something small that makes you happy every day.

Let Yourself Unplug

Stop checking work emails during all hours of the day. Instead, communicate with your colleagues and customers so they can know when you’ll be working and when you won’t be available to respond. Creating, communicating and abiding by these boundaries is crucial when it comes to maintaining a work-life balance. Take a few hours each day to shut off your phone and enjoy the moment.

Prioritize Your Health

Keep yourself physically, emotionally and mentally healthy by taking steps to put your health first. Eat healthy meals, especially breakfast before work, sleep at least seven hours each night and schedule time into your day to exercise and move your body. These practices will help you become more energized and productive while boosting your immune system and overall mood. Running yourself ragged will only push you closer to burning out, which can be hard to recover from.

Invest in Relationships

Don’t let work keep you from your loved ones. Plan for quality time with your family and friends, even if you live with them. Make room in your schedule to see loved ones throughout the week when possible, not just on the weekends.

Leave Work at Work

With some of us working remotely, this can be easier said than done. Wherever you spend your time working, make it a point to stick to your scheduled work hours and have a designated workspace. Making plans for shortly after your workday ends could help you to stop working for the day and get on with the next activity.

Creating a work-life balance doesn’t happen overnight. You need to gradually integrate these healthy habits into your life. Let yourself have fun, relax and prioritize yourself and your personal relationships. You may even see your work and productivity benefiting from these changes. Enjoy your Labor Day weekend, and remember to prioritize your health and happiness this year.

https://www.dol.gov/general/laborday/history

Thinking About Paying Off Your Child's Student Loans? 5 Things to Consider

Thu, 01 Sep 2022 19:29:05 GMT

College tuition is at an all-time high. As of 2022, the average student loan debt is about $39,000 per student, and the average monthly student loan payment is nearly $400. 1 It's no wonder parents want to help their children pay off their student loans as quickly as possible. Paying off this debt could help set your child up for success as they make important financial choices, such as applying for a mortgage.

But is paying off your child's student loans early always the best option? Here are five things to consider when deciding whether to help your child pay off their student loans.

Consider Any High-Interest Debt First

Before helping your child pay off their student loans, you should consider if you have any high-interest debt yourself. Generally, student loans feature a moderately low-interest rate (around 4%-7% depending on the loan).

If you have debt at a higher interest rate, such as credit card debt or a personal loan, you may want to consider paying off that debt first before helping your kids. Prioritizing debt repayment by interest rate can help you decide whether you should help pay off student loans or other debts first.

Your Payments May Qualify as Tax-Free Gifts

Some parents may want to pay off their child's student loans but are afraid of triggering a gift tax. Luckily, there are a few ways around this tax.

According to the IRS, the tuition you pay for someone may qualify as a non-taxable gift. 2 However, this is applicable only when the payment is made directly to the school or university. With that in mind, if your child has any student loans that were issued by the university, payments towards these expenses may be tax-free. Talk to your CPA or a tax professional to be sure.

Another way to avoid this gift tax is to stay within the gift tax exclusion for the year. In 2022, the gift tax exclusion is $16,000. 3 This means that each parent can give up to $16,000 a year ($32,000 total). As long as your gift stays within these parameters, you shouldn't have to pay a gift tax.

Discuss a Repayment Plan

If you are worried about your child's ability to make their student loan payments on time and want to help, it might be worth having a conversation with them, as well as their lenders, to see if there are any repayment plans available. Most loans, especially federal student loans, offer repayment plans that can be stepped up or down depending on your child's income. 4

Research Loan Forgiveness Options

In addition to student loan repayment plans, there are also some loan forgiveness plans available that your child might qualify for. 5 For example, there are student loan forgiveness options for students who pursue certain careers in the public sector.

In the wake of the COVID-19 pandemic, the government rolled out more forgiveness options, including COVID-19 Emergency Relief. Before you create a plan to help pay off your child's student loans, see if they qualify for loan forgiveness.

Don't Forget Retirement

As important as it is to take care of your children, it's also important to take care of yourself. As you get closer to retirement age, it might make more sense to contribute the money you would have used for your child's student loans to your retirement savings. Your children have long careers ahead of them to make payments on their loans. As your earning years come to a close, it's important to prioritize retirement savings because you won't be able to work forever.

Paying off your child's student loans is a generous thing to do, and it might make sense for your financial situation. Before diving in completely, it's important to consider possible repayment plans, loan forgiveness, tax implications, and other debt and savings goals.

Weekly Market Commentary: Powell comments spur sell-off on Wall Street

Mon, 29 Aug 2022 18:58:22 GMT

The Week on Wall Street

A comprehensive sell-off on Friday following comments by Fed Chair Jerome Powell drove stocks to losses for the week.

The Dow Jones Industrial Average tumbled 4.22%, while the Standard & Poor's 500 dropped 4.04%. The Nasdaq Composite index fell 4.44% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, lost 1.10%. 1,2,3

Under Pressure

Stocks dropped on Friday following Powell's remarks reiterating the Fed's inflation-fighting resolve. While his comments did not break new ground, markets reacted severely, perhaps on worries that interest rate hikes may continue into next year.

After starting the week sharply lower on renewed rising interest rates and economic slowdown fears, markets staged a modest turnaround beginning mid-week. Stocks rallied on Thursday, sparked by a revised Gross Domestic Product estimate showing the economy's shrinking less than initially estimated. Thursday's rally also got a boost from regional Federal Reserve Bank presidents, who suggested future rate hikes may be in line with market expectations.

Powell at Jackson Hole

In his much-anticipated speech at the Jackson Hole Economic Symposium, Powell unflinchingly reaffirmed the Fed's commitment to raising rates to lower inflation, even if it results in causing pain to individuals and businesses.

Wall Street focused on Powell's presentation in the hope it might provide greater clarity on future Fed direction, though his remarks ultimately went no further than restating past communications. Powell commented, "We are moving our policy stance purposefully to a level that will be sufficiently restrictive to return inflation to two percent." This statement may have put to rest any thoughts that the Fed would soon pivot on rate hikes. 4

This Week: Key Economic Data

Tuesday: Consumer Confidence. Job Openings and Turnover Survey (JOLTS).
Wednesday: Automated Data Processing (ADP) Employment Report.
Thursday: Jobless Claims. Institute for Supply Management (ISM) Manufacturing Index.
Friday: Employment Situation. Factory Orders.

Source: Econoday, August 26, 2022 - The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

This Week: Companies Reporting Earnings

Tuesday: Best Buy Co., Inc. (BBY), HP, Inc. (HPQ).
Thursday: Broadcom, Inc. (AVGO), Hormel Foods Corporation (HRL).

Source: Zacks, August 26, 2022 - Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.

What the Inflation Act Means for You

Mon, 29 Aug 2022 14:06:51 GMT

The Inflation Reduction Act was signed into law on Tuesday, August 16. While the $430 billion package includes many provisions, this article highlights three key areas where you may benefit the most.

Tax credits for energy-related home improvements - The bill includes a 30% tax credit for installing energy-efficient windows, heat pumps, or newer appliances. There’s another tax credit for installing solar panels, and up to $14,000 worth of rebates for upgrading to new, energy-efficient appliances.
Expanded EV tax credits - If you have an electric vehicle, you’re in luck! New tax credits are immediately available, with up to $4,000 offered for used EVs and up to $7,500 for new EVs. There’s also a tax credit for installing an electric charger in your home (just read the fine print to ensure you qualify).
Prescription drug caps - Some changes don’t take effect right away. For example, insulin payments will be limited to $35 per month for Medicare Part D beneficiaries starting next year. In 2024, overall out-of-pocket drug costs will be limited to $4,000 annually, dropping to $2,000 in 2025.

New legislation can come with benefits as well as new complexities.

This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific situation with a qualified tax professional.

What Is My Tax Bracket for the 2022 Tax Year?

Fri, 26 Aug 2022 15:33:48 GMT

It's never too early to start looking at your tax obligations for the coming tax season. The information in this article is for the 2022 tax year, which most taxpayers will file in 2023.

The seven 2022 tax rates themselves didn't change (they are the same as those in effect for the 2021 tax year); however, the tax bracket ranges were modified based on inflation. Because of this, it's possible you could be in a different tax bracket for 2022 than the last time you reported your taxes, even if your income has not changed. 1

Reminder: Tax Brackets Are Marginal

The IRS divides income into different tax rates. Each subsequent portion of your income will have an increased tax rate. For example, if you are a single filer who made $40,125 in 2022, your first $10,275 will be taxed at 10 percent. The next portion of your income will be taxed at an increased rate; from $10,276 to $41,775, your tax rate will be 12 percent.

As your income increases, you’ll fall into higher tax brackets and will have a higher tax rate for each portion of your income.

Why Would My Tax Bracket Be Different?

2022 Tax Brackets

Without further ado, here are the 2022 tax brackets according to your filing status and income from the IRS. 1

10% Tax Rate

Single Individuals: from $0 to $10,275
Married Individuals Filing Jointly: from $0 to $20,550
Heads of Households: from $0 to $14,650
Married Individuals Filing Separately: from $0 to $10,275

12% Tax Rate

Single Individuals: from $10,276 to $41,775
Married Individuals Filing Jointly: from $20,551 to $83,550
Heads of Households: from $14,651 to $55,900
Married Individuals Filing Separately: from $10,276 to $41,775

22% Tax Rate

Single Individuals: from $41,776 to $89,075
Married Individuals Filing Jointly: from $83,551 to $178,150
Heads of Households: from $55,901 to $89,050
Married Individuals Filing Separately: from $41,776 to $89,075

24% Tax Rate

Single Individuals: from $89,076 to $170,050
Married Individuals Filing Jointly: from $178,151 to $340,100
Heads of Households: from $89,051 to $170,050
Married Individuals Filing Separately: from $89,076 to $170,050

32% Tax Rate

Single Individuals: from $170,051 to $215,950
Married Individuals Filing Jointly: from $340,101 to $431,900
Heads of Households: from $170,051 to $215,950
Married Individuals Filing Separately: from $170,051 to $215,950

35% Tax Rate

Single Individuals: $215,951 to $539,900
Married Individuals Filing Jointly: from $431,901 to $647,850
Heads of Households: from $215,951 to $539,900
Married Individuals Filing Separately: from $215,951 to $323,925

37% Tax Rate

Single Individuals: over $539,901
Married Individuals Filing Jointly: over $647,851
Heads of Households: over $539,901
Married Individuals Filing Separately: over $323,926

https://www.irs.gov/newsroom/irs-provides-tax-inflation-adjustments-for-tax-year-2022

Value-Based Billing vs. Hourly Billing: Which Is Right for Your Business?

Tue, 23 Aug 2022 13:59:45 GMT

If you work with clients, it’s likely you earn compensation (perhaps some or all) by billing them for your services. Hourly billing is a fairly traditional method, and for good reason. But as of late, some business owners have been shifting to a value-based billing method.

What’s the difference between the two? Here’s what you need to know, including how to position your billing method to clients.

Hourly Billing

The concept of billing hourly is fairly simple. As a professional, you charge a flat hourly rate for your services. When working with clients, you may charge by the hour or in increments of an hour. In most cases, your rate is discussed with the client ahead of time, as well as an estimate of how many hours the project may take to complete.

Depending on the type of business you do, you may offer clients pre-determined packages that include a set amount of hours of work.

Hourly Benefits

In most cases, hourly billing is fairly straightforward to calculate. You are required to keep track of your time while you work, and your client is aware of your hourly rate before a project begins.

Because you need to know how many hours you’ll be spending on a project regardless of the way you decide to bill, hourly billing can save you the step of further pricing out projects in other ways.

Hourly Considerations

While hourly is a fairly traditional method of billing, it’s not without its considerations. Depending on the boundaries you’re able to set with your clients, billing hourly may make you seem more available to them than you really are. If a client is fine with being billed, they may reach out often, ask for frequent updates or extend the project beyond its initial scope.

If you estimate how long a project may take, there’s always the risk that the final timeline could extend beyond the original estimation. Even if you provided an initial range, clients can sometimes expect it to take the least amount of hours. For example, you may have estimated four to seven hours for a project to be completed. Say it takes you 5.5 hours, the client may be unhappy because they were expecting it to only have taken you four. Not knowing the exact cost of a project until it’s completed can create tension or anxiety for clients.

Value-Based Billing

With value-based billing (or project pricing), clients will typically pay a flat rate for a service based on the value of what’s being provided. As the professional, you will determine your rates based on the value you believe it brings the client. This could incorporate a number of factors including hours, materials, complexity of the project and expertise.

Value-Based Benefits

Value-based pricing can be helpful for those who want to know how much they’ll be spending before the project begins.

With a flat rate, value-based billing can help professionals (especially creatives) feel less pressured by time constraints and more focused on the value of what’s being provided.

You may find that some clients simply don’t care how many hours it takes to complete a project, they’re only focused on the end result. This is another instance in which value-based billing may better appease your clientele.

Value-Based Considerations

Sometimes it can be hard to put a number to the value you’re bringing to a client. Unlike charging hourly, value-based billing isn’t always black and white. Because of this, you may have trouble communicating or breaking down the “why” behind your costs. This can be an especially hard sell for those who are accustomed to being charged hourly by others in your field or industry.

Unless you’re working with pre-determined package pricing, deciding on the cost of a project upfront can require more work with value-based billing. Beyond estimating hours, you need to determine a flat rate that effectively accounts for your time, materials and expertise.

Which Is Right for Me?

Creatives may find the benefits of value-based pricing more freeing and conducive to the creative process. Those who work in a more technical space may be accustomed to hourly billing and not inclined to change.

You’ll want to review your current pricing model to decide if there’s an opportunity for improvement and consider how your customers may react to a change. In some cases, a mix of both hourly- and value-based billing may be beneficial for your practice. Contact us today to discuss which option is right for your business.

Weekly Market Commentary: Markets Tap Brakes, But Hold Fast Against Downbeat News

Tue, 23 Aug 2022 13:50:29 GMT

The Week on Wall Street

Stocks tumbled on Friday, sending stocks to a weekly loss after an otherwise quiet August week of trading.

The Dow Jones Industrial Average slipped -0.16%, while the Standard & Poor’s 500 lost 1.21%. The Nasdaq Composite index declined 2.62% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, fell 0.88%. 1,2,3

Summer Rally Hits Pause Button

The market rally that began in mid-June paused last week. Despite the week’s losses, stocks exhibited resiliency in the face of a string of troubling economic news that included flat retail sales, weak housing numbers, an inversion in the yield curve, and tepid economic data out of China.

Nevertheless, stocks tumbled on Friday amid hawkish comments about future rate hikes, rising bond yields, and ahead of the annual meeting of global central bankers in Jackson Hole, Wyoming, in which Fed Chair Jerome Powell is scheduled to speak on August 26th.

Expect More Rate Hikes

Minutes from July's Federal Open Market Committee meeting indicated that additional rate hikes would be needed to help manage inflation. Fed officials did acknowledge that further rate hikes risked unintended economic weakness because of the time it takes for higher rates to work through the economy. The committee indicated that they might slow rate hikes to determine the impact of previous rate increases. 4

The minutes also contained the Fed's latest economic forecasts, which projected inflation to decline faster than its June estimate due to a bigger economic slowdown in the year's second half. 5

This Week: Key Economic Data

Tuesday: Purchasing Managers’ Index (PMI) Composite Flash. New Home Sales.
Wednesday: Durable Goods Orders.
Thursday: Jobless Claims. Gross Domestic Product (GDP).

Source: Econoday, August 19, 2022 - The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

This Week: Companies Reporting Earnings

Monday: Palo Alto Networks, Inc. (PANW), Zoom Video Communications, Inc. (ZM).
Tuesday: Intuit, Inc. (INTU).
Wednesday: Nvidia Corporation (NVDA), Salesforce, Inc. (CRM), Snowflake, Inc. (SNOW).
Thursday: Marvell Technology, Inc. (MRVL), Dollar General Corporation (DG), Dell Technologies, Inc. (DELL), VMware, Inc. (VMW).

Source: Zacks, August 19, 2022 - Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.

What Is the Difference Between a Tax Credit and a Tax Deduction?

Wed, 17 Aug 2022 20:37:15 GMT

What Are Tax Credits?

Child Tax Credit
Child and Dependent Care Credit
Lifetime Learning Credit
Adoption Credit
Earned Income Tax Credit
Residential Energy Tax Credit

Tax credits are typically either refundable or non-refundable. Depending on which type of credit it is, this will affect how much you’ll receive back on your tax refund.

Refundable Tax Credits

Non-Refundable Tax Credits

Alternatively, non-refundable tax credits will only cover the taxes you owe, up to the credit’s limit. If there is more in the credit amount than what you owe, you do not receive the excess amount in the form of a tax refund. For example, if you owe $900 in taxes and your tax credit is worth up to $2,000, the $900 will be covered but you will not receive the additional $1,100.

What Are Tax Deductions?

Itemized Deductions

You can use itemized deductions to help lower your taxable income. Common types of itemized deductions include:

Charitable donations
Medical expenses
Property taxes
Mortgage interest

While people are welcome to add each deduction up separately on their taxes (i.e. itemize them), most will opt for the standard deduction set by the IRS. For the 2022 income tax year, these are the standard deduction amounts:

Single or married but filing separately: $12,950
Married and filing jointly or qualifying widow(er): $25,900
Head of household: $19,4001

It is common to use a standard deduction because, in most cases, an itemized amount won’t exceed the IRS’s standard deduction rates.

Above-The-Line Deductions

Alimony paid
Educator expenses
Student loan interest
Deductible IRA contributions
Moving expenses of armed forces members

https://www.irs.gov/newsroom/irs-provides-tax-inflation-adjustments-for-tax-year-2022

Social Security: Past, Present, and Future

Fri, 12 Aug 2022 15:28:08 GMT

Throughout human history, economic security has taken many forms. For the ancient Greeks, it was stockpiling olive oil. Olive oil could be stored for long periods of time; it could also help with nutrition during times of famine. During the Middle Ages, security took the form of guilds and societies that began to pay life insurance benefits to their members. 1

Here, we will explore the history and future development of the Social Security program in the United States: the historical background, the current state, and future projections.

The History of Social Security

The US Social Security program was born out of one of the gravest economic crises in the world: the Great Depression. While the Great Depression affected virtually every country in the world, the United States was hit the hardest. The Great Depression came on the heels of the stock market crash of 1929, also called the Great Crash, and it was the third economic collapse the United States had experienced in less than 100 years (the first in the 1840s and the second in the 1890s).

The previous economic crises had given rise to the development of Civil War pensions and company pensions, but neither of them was comprehensive enough to deal with the strife caused by the Great Depression. Following the Great Crash, unemployment rose to above 25%, about 10,000 banks failed, and the GDP fell by almost half, from $105 billion to $55 billion. These economic strains continued in the 1930s, with over millions of people unemployed and most of the elderly population being dependent on someone to care for them. 1

After several years of continued economic turmoil, President Franklin D. Roosevelt announced his plan to create a Social Security program, and the Social Security Act was officially signed into law on August 14, 1935. The main goal of the Act was to pay retired workers (aged 65 and older) a continuing income and establish several other welfare provisions. 1

How Social Security Works Today

Today, Social Security is considered an integral part of most Americans’ retirement strategies. In 2020 alone, 69.8 million Americans received benefits from programs administered by the Social Security Administration (SSA), with 5.8 million new people receiving some form of Social Security in that year alone. 2

Social Security is funded largely through payroll taxes on a “pay-as-you-go” model, with the current workforce’s contributions being used to fund the benefits for the current Social Security benefits. The plan, as well as the hope, is that by the time today’s workforce is set to retire, the younger generations will still be contributing to the program to fund Social Security for the next generation of retirees. 2

The Future of Social Security

The 2021 annual report of the Social Security Board of Trustees announced that funds for Social Security would be exhausted by 2034. This was a year ahead of the projections made in the previous year’s report. While this announcement may seem catastrophic, what this actually means is that cash reserves for the program will be exhausted, and retirees in 2034 could see their benefits reduced to 78%. 3,4

It is difficult to say for certain what the future of Social Security will be. The hope is that Congress will act in time to resolve this shortage of funds problem. Regardless of what happens to this program, it is important to make sure that you have other strategies in place for your retirement so that, irrespective of the developments in Washington concerning Social Security, you can enjoy your golden years.

Weekly Market Commentary: Mixed Week For Markets; Jobs on the Rise

Mon, 08 Aug 2022 14:05:38 GMT

The Week on Wall Street

Stocks turned in a mixed performance last week as investors struggled with headlines suggesting that the Fed was unlikely to soon ease up on its current monetary tightening policy.

The Dow Jones Industrial Average slipped 0.13%, while the Standard & Poor’s 500 rose 0.36%. The Nasdaq Composite index picked up 2.15% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, gained 0.23%. 1,2,3

Showing Resilience

Ahead of Friday’s employment report, stocks were generally higher, highlighted by a Wednesday rally triggered by fresh earnings surprises and a better-than-expected economic report. The rally was especially notable because it occurred when multiple Fed officials said that the fight against inflation hadn’t ended, perhaps throwing cold water on the idea that the Fed might pivot due to weakening economic activity and the prospect of cooling inflation.

Aside from this single day of enthusiasm, markets were a bit jittery, especially as investors monitored Speaker of the House Pelosi’s visit to Taiwan. A robust employment report on Friday reinforced the idea that the Fed would likely stay the course on monetary tightening, resulting in a mixed market for the week.

Employment Report

The U.S economy added 528,000 jobs in July, doubling the consensus expectation of 258,000. The unemployment rate ticked lower, falling from 3.6% to 3.5%. Coincident with this job creation was strong wage growth, as average hourly earnings rose 0.5% in July and 5.2% from a year ago. 4

Leisure and hospitality, professional and business services, and healthcare lead the way in reported job gains, as seen in most sectors of the economy. Even sectors such as construction, particularly vulnerable to rising interest rates, saw job gains. The labor force participation rate moved slightly lower, slipping to 62.1%--its lowest level this year. 5

This Week: Key Economic Data

Wednesday: Consumer Price Index (CPI). Institute for Supply Management (ISM) Services Index. Factory Orders.
Thursday: Jobless Claims. Producer Price Index (PPI).
Friday: Consumer Sentiment.

Source: Econoday, August 5, 2022 - The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

This Week: Companies Reporting Earnings

Monday: Dominion Energy, Inc. (D), Tyson Foods, Inc. (TSN).
Tuesday: Emerson Electric Co. (EMR).
Wednesday: The Walt Disney Company (DIS).
Thursday: Illumina, Inc. (ILMN).

Source: Zacks, August 5, 2022 - Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.

Retirement Strategy: Preparing to Retire Early

Fri, 05 Aug 2022 16:48:57 GMT

Do you dream of retiring before you turn 60? How about before you turn 50? If so, you might want to think twice before you make the move. If your heart is set on leaving work early, be sure you leave with the right mindset and the right estimation of your financial potential.

Retire with a realistic picture of your income needs.

In late 2006, the Center for Retirement Research at Boston College surveyed 400 private sector employers. Those employers estimated that 25% of their employees between 50 and 60 years old lacked the financial resources to retire even at the traditional retirement age. If you’re like most Americans, your retirement expenses will be roughly 75–80% of your pre-retirement expenses. So, you need to determine if the income derived from your 401(k), 403(b), pension, or other sources can generate that. Remember, you can’t receive any Social Security benefits before age 62 - and if you start at 62 you are forfeiting some of your longevity protection.

Retire with the idea that you’ll live to be 100.

With recent advances in health care, you might become a centenarian! That means your income streams may need to last 20, 30, 40, or even 50 years. Any income you have today may need to be supplemented or adjusted due to unforeseen needs and inflation. Many new retirees make the mistake of withdrawing income at too high a rate in the first few years after leaving work. They live “high on the hog” for a while, only to discover, to their chagrin, that their retirement nest egg is shrinking because they are spending more than their portfolios can earn back. Additionally, you may also have to pay for health insurance if you retire before age 65. All of this may point you in the direction of part-time employment rather than total retirement.

Retire with purpose.

Leaving work behind can be exhilarating. But after the first few months of fun, you may also face the question, “Now what?” Early retirement is better with a plan for purposeful and meaningful living regardless of your finances.

If you do a Google or Yahoo! search with the right keywords, you’ll come across a number of articles about people who chose to retire late. They kept working out of passion or necessity. If that’s not for you, and you don’t want to work much longer, talk with us, and we’ll take a look and see if you are financially prepared to retire.

How do you picture your future?

If you are like many people who are contemplating retirement, your view is likely more pragmatic compared to your parents. This doesn’t mean you must have a “plain vanilla” tomorrow. Even if your retirement savings are not as great as you would prefer, you still have lots of potential to design the life you want.

With that in mind, here are some key things to think about.

What do you absolutely need to accomplish?

If you could only get four or five things done in retirement, what would they be? Answering this question might lead you to compile a short list of life goals. While they may have nothing to do with money, the financial decisions you make may be integral to achieving them.

What would revitalize you?

Some people retire with no particular goals at all. Others are simply burnt out. After weeks or months of respite, ambition inevitably returns. They start to think about what pursuits or adventures they could embark on to make these years special. Others have known for decades what dreams they will pursue, and yet, when the time to do so arrives, those dreams may unfold differently than anticipated and may even be supplanted by new ones.

In retirement, time is your most valuable asset. With more free time and opportunities for reflection, you might find your old dreams giving way to new ones. You may find yourself called to volunteer as never before or motivated to work again in a new context.

Who should you share your time with?

Here is another profound choice you get to make in retirement. The quick answer to this question for many retirees would be “family.” Today, we have nuclear families, blended families, extended families; some people think of their friends or their employees as family. You may define it as you wish and allocate more or less of your time to your family as you wish (some people do want less family time when they retire).

Regardless of how you define “family” or whether or not you want more “family time” in retirement, you probably don’t want to spend your time around “dream stealers.” If you have a grand dream in mind for retirement, you may meet people who try to thwart it and urge you not to pursue it. (Hopefully, these people are not in close proximity to you.) Reducing their psychological impact on your retirement will increase your happiness.

How much will you spend?

We can’t control all retirement expenses, but we can control some of them. The thought of downsizing may have crossed your mind. You can also lose one or more cars (and the insurance that goes with them) and live in a neighborhood with extensive, efficient public transit. Ditching landlines and premium cable TV (or maybe all cable TV) can bring more savings. Garage sales or making donations can have financial benefits while also helping you reduce clutter, either generating cash or a federal tax deduction.

This article is for informational purposes only and is not a replacement for real-life advice, so make sure to consult your tax, legal, and accounting professionals before modifying your overall tax strategy.

Retirement Planning in Kansas City

If you feel you need to prepare more for the future or reexamine your existing strategy in light of recent changes in your life, conferring with a financial professional experienced in retirement approaches is a smart move. Contact us today to learn more.

August Is National "Make a Will" Month

Wed, 03 Aug 2022 14:11:44 GMT

August is National “Make a Will” Month, and it’s a great annual reminder to update your will if needed and create a will if you don’t have one already. A will is an important estate-planning document that can help you transfer your assets with ease. Having a proper will can make the difference between a smooth transfer of assets and a probate nightmare.

Let’s learn more about what wills are, why you need one, and some tips on how to create or update your will during National “Make a Will” Month.

What Is a Will?

A will, or a Last Will and Testament, is a legal document that outlines your intention for the distribution of your assets after your death. It is an integral part of a comprehensive estate plan and helps your loved ones avoid legal and financial loopholes and know what to do with your assets. These explicit instructions are essential and can help everyone avoid a lot of headaches.

Wills vs Trusts

When you’re researching estate planning documents, you have likely come across both wills and trusts. While both documents can help dictate what you want to do with your assets when you’re gone, there is one main difference.

The primary difference between a will and a trust is that a trust takes effect as soon as it’s created and signed, while a will does so only after you pass away. 1 There are also two different types of trusts to consider: irrevocable and revocable.

Irrevocable trusts are trusts that can’t be changed or canceled after they have been signed.
Revocable trusts can be changed, and the grantor has the right to change the terms or even end the trust.

Some other differences between wills and trusts are that a will requires probate to transfer items to beneficiaries, but trusts can avoid probate. In addition, wills are public record and trusts can remain private. Because a trust takes effect right when it’s created, it can be used if you become incapacitated and unable to make decisions independently.

Do You Need a Will?

We face so many financial obligations every day, so should creating a will be at the top of your list? Most financial experts say yes, you need a will. Even if you don’t have substantial assets to transfer, a will can still help your family feel more confident about your wishes. In addition to making the transfer of assets easier, here are a few benefits of having a will 2 :

It allows you to distribute your property and protect your loved ones after you pass away.
It can provide peace of mind to you and your family.
You can plan for those in your care (e.g. naming a legal guardian for your children or pets).
It may prevent family conflict.
It can eliminate confusion over assets.
It can ensure that your assets go to the people you want to have them.
It can help you build a lasting legacy.
You can use your will to benefit charity.

These are just a few of the many benefits of having a will. To celebrate National “Make a Will” Month, let’s look at how to create a will.

How to Create a Will

Creating a will can be a straightforward process, but it often involves the help of attorneys and financial advisors. Also, the process will depend on where you live because every state has different requirements for creating a will.

Generally, the first step in creating a will is to determine what you want to include. You should include instructions for passing along your assets after your death, including ownership and other instructions. You may consider working with an attorney to ensure that your will contains everything it needs.

Next, you will likely sign your will in front of two witnesses, and these two witnesses will also sign your will. Some states require a self-proving affidavit that you sign in front of a notary, other states require your will to be notarized, and some states don’t require any special self-proving documentation as long as you sign and witness your will correctly. 3

Whether you have $10 worth of assets or $10 million, creating a will is a good idea to give your family more guidance after you pass. Wills help make the transfer of assets easier and give you and your family more peace of mind. Consider creating or updating your will this August for National “Make a Will” Month!

Weekly Market Commentary: Market Rally; Earnings Better Than Expected

Mon, 01 Aug 2022 15:16:26 GMT

The Week on Wall Street

Undaunted by another Fed rate hike and news of a contracting economy, the stock market rallied last week on better-than-expected corporate earnings.

The Dow Jones Industrial Average increased 2.97%, while the Standard & Poor’s 500 picked up 4.26%. The Nasdaq Composite index gained 4.70% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, rose 0.95%. 1,2,3

Stocks Rally on Earnings

It was an inauspicious start to the week after a big-box retailer missed earnings and reduced forward guidance on Tuesday, sparking a broad market retreat.

But sentiment improved following mega-cap technology company earnings that proved better than expected. Enthusiasm gathered steam in the wake of the Fed’s 0.75% rate hike, boosted by Fed Chair Powell’s comments following Wednesday’s Federal Open Market Committee meeting. Powell indicated that it might become appropriate to slow the pace of future hikes, and he didn’t believe the economy had entered into recession. Stocks on Thursday shrugged off news of a second-consecutive quarter of negative economic growth to build on Wednesday’s gains as fresh earnings continued to comfort, if not impress, investors. 4

Economy Contracts

The U.S. economy shrank at an annualized rate of 0.9% in the second quarter as consumers pulled back on spending and businesses worked to reduce inventories. It was the second-consecutive quarter of negative economic growth, meeting the technical definition of a recession. Unlike past recessions, hiring has been strong all year, with the unemployment rate near historic lows. 5

The economic slowdown was attributable primarily to decreases in inventories, a deceleration in the housing market, and lower government spending. Consumer spending increased a tepid one percent, well below the inflation rate during the same period. 6

This Week: Key Economic Data

Monday: Institute for Supply Management (ISM) Manufacturing Index.
Tuesday: Job Openings and Labor Turnover Survey (JOLTS).
Wednesday: Automated Data Processing (ADP) Employment Report. Institute for Supply Management (ISM) Services Index. Factory Orders.
Thursday: Jobless Claims.
Friday: Employment Situation.

Source: Econoday, July 29, 2022 - The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

This Week: Companies Reporting Earnings

Tuesday: Advanced Micro Devices, Inc. (AMD), PayPal Holdings, Inc. (PYPL), Caterpillar, Inc. (CAT), Prudential Financial, Inc. (PRU), Starbucks Corporation (SBUX), Marathon Petroleum Corporation (MPC), Marriott International, Inc. (MAR).

Wednesday: CVS Health Corporation (CVS), Fortinet, Inc. (FTNT), PPL Corporation (PPL), Booking Holdings, Inc. (BKNG), Occidental Petroleum Corporation (OXY), Regeneron Pharmaceuticals, Inc. (REGN).

Thursday: Block, Inc. (SQ), Twilio, Inc. (TWLO), Amgen, Inc. (AMGN), Eli Lilly and Company (LLY), ConocoPhillips (COP), Air Products and Chemicals, Inc. (APD), Albemarle Corporation (ALB), Kellogg Company (K).

Friday: Berkshire Hathaway, Inc. (BRK.A).

Source: Zacks, July 29, 2022 - Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.

Tax-Loss Harvesting

Thu, 28 Jul 2022 14:06:06 GMT

While declining markets may not be fun, they do provide an opportunity to reduce your taxes! By regularly reviewing your investments for the ability to “Tax-loss harvest” (TLH), you will be implementing an extremely beneficial addition to your overall financial plan; especially for successful individuals and families paying larger tax bills.

What Is Tax-Loss Harvesting?

Tax-loss harvesting is simply the sale of securities at a loss in order to ‘ recognize ’ (for tax purposes) an ‘ unrealized ’ loss. Once ‘realized,’ a loss can offset both current and future realized capital gains from profitable investments. If an investor doesn’t have capital gains in a particular year, taxpayers can use capital losses to offset ‘ ordinary income ’ up to $3,000 per year. In addition, the IRS allows for losses (over the $3,000 maximum) to be ‘carried forward’ into future tax years: “ Capital Loss / Tax Loss Carryforward .”

The idea of selling securities while markets are down may sound counter-productive to long-term financial plans – and that idea would be correct! However, the second half of a properly executed tax-loss harvesting strategy involves the reinvestment of sale proceeds into similar assets to keep the portfolio’s overall allocation balance. One warning : It is important not to violate the IRS rule against buying a “substantially identical” investment within 30 days, known as the wash-sale rule .

Beware of the Wash-Sale Rule

The wash-sale rule prohibits selling an investment for a loss and replacing it with the same or "substantially identical" investment 30 days before/after the sale. This rule exists for those with unique investment strategies to prevent them from creating losses for the benefit of tax deduction while keeping their position in the same asset that was initially sold.

One strategy we often see partnered with tax-loss harvesting is the use of mutual funds and/or ETFs. For each market index, there are multiple funds tracking similar indexes. As such, these funds, while not substantially identical, have many of the same characteristics and can be used to replace one another while avoiding violating the rule. For example, the sale of an S&P 500 Index fund and the replacement of that fund with a S&P 100 index fund.

Implementing Tax-Loss Harvesting

In a world full of individual strategies that can help your financial life, it’s easy for some to be placed on the back burner and never be implemented. Complexity is the reason we exist – we coordinate the details of financial lives so you can focus on doing what you do. While individuals can certainly implement their own tax-loss harvesting, we, as professionals, have technology and processes in place to implement tax-loss harvesting for each of our clients we know will benefit. We proactively review each taxable investment in accounts we manage, down to the ‘ lot level ’. Our goal is to turn declining market lemons into lower tax bill lemonade.

At Buttonwood, due to the complex nature of this strategy, we offer our tax-loss harvesting strategies as part of our Investment Advisory Services. Contact us today to discuss how the combination of our Family CFO and Investment Advisory Services can benefit you and your family.

Retiring Soon? 5 Tips to Getting Started With the Business Transition Process

Wed, 27 Jul 2022 18:58:27 GMT

At the most basic level, business transition planning is a strategy that can be put into play when a business is sold or changes hands. For company owners nearing retirement, a successful transition plan can play an important part in creating and preserving the value of the business after it has changed hands.

Here are some tips to keep in mind if you want to maximize the return on your investment as you prepare for retirement.

Tip #1: Evaluate Your Market Potential

Take a long, honest look at your business and the broader economic climate when estimating your chances of a successful transition. Consumer confidence in your community, region, or industry may influence the future value of your business. It may also be helpful to note the growth of your enterprise versus the industry overall. Additionally, doing this early and long before you hope to transition your business may help reveal the potential for future growth.

Tip #2: Prepare Your Business

Next, look for anything that may delay or negatively impact the transfer of your business. This may include an evaluation of your personal and business tax returns by a financial professional as well as a review of any potential local or state tax issues. If you have a business presence in multiple states, this may also help avoid potential tax issues.

Now is also an ideal time to contact a tax professional if you're thinking about restructuring your business for tax purposes. They may be able to help you navigate the potential drawbacks and highlight any benefits that may result from a restructuring.

Tip #3: Do Your Due Diligence

If your business’s financial documents aren’t up to date, now is the time to remedy that.

Standard documents to check could include:

incorporation documents
equity ownership records
meeting minutes
tax classification records

If you do have equity holders, do you know whether they are entitled to a right of refusal? Additionally, if your business owns any intellectual property, are you certain it has been properly registered? The answers to these questions may have considerable implications for your transition plan.

This is also the time to start thinking about your existing business relationships. Existing long-term contracts or distribution agreements may need to be evaluated as well.

Tip #4: Include Your Employees

At some point in your plan, it may be helpful to share your transition strategy with those you employ. Have answers ready for some tough questions, as you should prepare to be as transparent as possible. Securing employee buy-in can be a powerful element in your strategy that can lead to essential conversations with those you trust most.

Remember, your business isn’t the only thing that is going to change through your transition. The livelihood of your employees and their families will be impacted as well, meaning it’s important to allow them to voice their concerns. Creating a safe space for open conversations may help alleviate their worry.

Tip #5: Ask For Help

If you’re like most successful entrepreneurs, you already have a dedicated team of professionals to help your business. In addition to the CPAs, insurance agents, or wealth managers you may already utilize, a business attorney and an attorney who specializes in estate planning may be valuable additions to your team.

Choosing one key individual or “transition czar” to lead the group may also be a smart move. Consider designating a single point of contact who can help with the coordination efforts and clear up confusion during the transition period.

Remember, it’s okay if you’re unsure which steps to incorporate into your transition plan first. Just like your business, managing your transition is a team effort; you can’t just rely on a single leader. However, taking an active part in your business transition and actively seeking the advice of financial professionals may increase your chances of success. Contact us today to get started.

Buttonwood Investment Policy Committee Update - July 2022

Mon, 25 Jul 2022 21:30:03 GMT

With recent headlines full of stories about elevated prices and supply chain issues, central bankers today face a stark trade-off as they race to raise rates and contain inflation – Do they crush economic growth or live with higher inflation?

In the most recent inflation release we saw headline inflation continue to surprise to the upside. The CPI print for June showed an increase to 9.1% from the previous month level of 8.6%, driven largely by energy costs approaching 3%. Corporations and consumers still appear strong, and the broadening of inflationary pressures into “stickier” core components such as shelter and services, leads us to believe the inflation story will be more persistent than previously anticipated.

Regardless of what the Fed and other central banks do now, the list of challenges in place seem to be creating global production and supply chain constraints leaning toward higher longer-term inflation. We believe the balancing act required to manage these challenges is likely to lead to a series of shorter and more volatile economic cycles. It’s likely rate hikes will curb demand driven inflation but hinder growth, while a higher tolerance for inflation supports growth but hurts bond prices. In a world where inflation is driven by supply side shocks, management of inflation via an interest rate only policy is an imperfect tool: By raising rates, the Fed can typically slow demand, but they can’t impact inventory or supply chain issues directly.

Beyond generally higher inflation, we continue to believe the current inflation spike is at or near peak levels. We have already witnessed a meaningful reduction in wholesale gasoline prices, oil prices and commodity prices over the past 2 months which should dampen inflation readings in the near term. In addition to a drop in commodity prices, we are seeing signs of supply chain pressures easing (shipping costs and delivery delays are easing, retail inventories are building, used car prices are falling). Bank deposits, which account for approximately 90% of M2 , have fallen into the bottom quartile relative to history, and are heading towards zero growth. If we continue to see M2 growth remain low, this should eventually help decelerate inflation.

Since first quarter GDP growth came in at a surprising negative 1.6% annualized rate, indicating a shrinking US economy, we could experience a “technical” recession with a second quarter of negative GDP growth in Q2. We have seen expectations for Q2 GDP gradually moving lower through the quarter, with some estimates already negative such as Atlanta’s GDP Now forecast showing Q2 growth at -1.6% as of July 19th. The Conference Board , in contrast, see’s Q2 GDP growing at 0.8%.

What to watch

We believe the Fed will be adamant about raising rates until they see a decrease in inflation. Overall, our view is that inflation will likely remain well above recent averages and above the Fed’s target of 2% going forward, but we should start to see a gradual decrease in inflation during the second half of 2022.

Looking forward, we continue to believe wage growth will be one of the keys to determining inflation, Fed interest rate policy, recession risk, and ultimately, the bull/bear case for stocks and bonds. Wage growth is uniquely important today given the influence of pandemic and war-related shocks that are unlikely to repeat in the future. Decreasing wages means some relief on the inflation front and possibly less aggressive Fed tightening. Persistent strength in wages comes with sticky price pressures and a resolutely hawkish Fed.

Positioning Investments

As a result of what we believe will be a longer-term trend between the fight against inflation using higher interest rates and the relating negative impact on economic growth, we have investment assets positioned to be more nimble and deliberate in the management of active risk .

Considering the current outlook for inflation, recession and market crosscurrents, we are increasing the resiliently of our allocation to focus on performance in a lower growth economic environment. For Q3 we have adjusted allocations to continue to broadly reduce risk and even our exposure between growth and value. In the first half of the year, we reduced equity exposure and slowly decreased our equity overweight from 4% to a neutral stance vs. benchmark.

Within equities in 2022, we have maintained our overweight to the US and underweight to Emerging markets. We reduced exposure to European stocks as the war in Eastern Europe began. And after more than a year of higher trends for the energy sector, we began to take profits on our energy stock and commodity positions. We have also continued the course of reducing our sector positions , factor tilts and active risk.

In fixed income , we continued to position ourselves underweight duration (long maturity bonds) in 2022, however we have reduced that underweight as interest rates have risen. We added diversifying opportunities in TIPs and convertible bonds in an effort to increase portfolio resilience.

In summary we have:

1. Balanced investment assets for both potential inflation & recession:

While inflation remains a major concern for markets and our base case continues to be that a recession is not immediately on the horizon, we believe markets have recently begun to focus more on recession risks. We are using this moment to take profits on our inflation focused positions, adding to defensive and core positions.

2. Reduced active risk and pulling stock/bond allocations closer to benchmark:

Conflicting economic data points, continued elevated inflation and rising odds of a recession have, in our view, led to unusually high unpredictability and warrant a more cautious (though not yet bearish) approach.

3. Maintained a preference for US over International:

Despite reducing the magnitude of our regional tilts, we remain overweight the US and underweight International Developed and Emerging Market stocks as the toll of war in Europe and Covid shutdowns in China have caused a drop in regional consumer sentiment and near-term economic prospects outside the US.

Thank you for your continued trust and allowing us to coordinate your asset management as part of our Family CFO services!

Weekly Market Commentary: Markets React to Dim Forecast, 2Q Reports

Mon, 25 Jul 2022 21:03:07 GMT

The Week on Wall Street

Stocks rallied last week as investor spirits lifted thanks to a better-than-expected start to the second-quarter earnings season.

The Dow Jones Industrial Average gained 1.95%, while the Standard & Poor’s 500 added 2.55%. The Nasdaq Composite index jumped 3.33% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, advanced 3.54%. 1,2,3

Earnings Propel Stocks

Earnings season kicked off last week, with major banks reporting second-quarter results. While their results were mixed, they appeared to indicate that consumers and businesses remained reasonably healthy–a perspective that helped erase some negative sentiment overhanging the market.

As the week progressed, stocks gained momentum as earnings results poured in from different sectors of the economy, showing that businesses were navigating higher inflation and slowing growth better than investors feared. Technology and other gloomier sectors were among the market’s best performers for the week. A few disappointing corporate reports and a weak economic report sent stocks lower to close out a solid week.

Cracks in the Foundation

Data released last week indicated more trouble in the housing market. The latest monthly homebuilder sentiment survey showed the single largest monthly drop in its 37-year history, except for April 2020. The sentiment report preceded a drop in June housing starts and issued building permits. Housing starts declined for the second month, falling 2.0% and surprising economists who had expected an increase. 4,5

Housing weakness made itself known through a 5.4% month-over-month decline in June's existing home sales, representing the slowest pace since June 2020. Increasing prices and higher mortgage rates demonstrated drags on buyer demand. 6

This Week: Key Economic Data

Tuesday: New Home Sales.
Wednesday: FOMC Announcement. Durable Goods Orders.
Thursday: Gross Domestic Product (GDP). Jobless Claims.

Source: Econoday, July 22, 2022 - The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

This Week: Companies Reporting Earnings

Tuesday: Microsoft Corporation (MSFT), General Electric Company (GE), Visa, Inc. (V), Alphabet, Inc. (GOOGL), General Motors Company (GM), The Coca Cola Company (KO), McDonald’s Corporation (MCD), Archer Daniels Midland Company (ADM), 3M Company (MMM), Texas Instruments, Inc. (TXN), United Parcel Service, Inc. (UPS), KimberlyClark Corporation (KMB).
Wednesday: The Boeing Company (BA), Ford Motor Company (F), Qualcomm, Inc. (QCOM), Bristol Myers Squibb Company (BMY), Lam Research Corporation (LRCX), Shopify, Inc. (SHOP), ServiceNow, Inc. (NOW), General Dynamics Corporation (GD), Norfolk Southern Corporation (NSC).
Thursday: Apple, Inc. (AAPL), Intel Corporation (INTC), Mastercard, Inc. (MA), Pfizer, Inc. (PFE), Merck & Co., Inc. (MRK), The Southern Company (SO), Northrop Grumman Corporation (NOC), Southwest Airlines (LUV).
Friday: AbbVie, Inc. (ABBV), Exxon Mobil Corporation (XOM), Chevron Corporation (CVX), The Procter & Gamble Company (PG), ColgatePalmolive Company (CL).

Source: Zacks, July 22, 2022 - Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.

Asset Manager vs Wealth Manager: Which is Right for You?

Wed, 20 Jul 2022 16:26:28 GMT

Whether you are currently working with a financial professional or not, fully understanding the difference between an asset manager and a wealth manager is an important step in determining the best strategy to meet your unique financial objectives. In an industry full of financial jargon, it can become daunting to answer the simple question, “Which financial firm is right for me and my family?”

Serving as a Family CFO at Buttonwood, we take a comprehensive approach to wealth management. Our holistic planning and implementation put us squarely in the ‘wealth manager’ category. For those interested in outsourcing the design, implementation and monitoring of multigenerational strategy, a relationship with a wealth manager is ideal. We’ve compiled some key differentiators between wealth managers and asset managers so you can determine what is best for you and your family.

Asset Managers

Asset managers focus first on management of investment assets, as the title suggests. Asset management firms can be fee based “Registered Investment Advisors” (RIA’s) or “Broker/Dealers” (B/D’s). B/D’s are regulated by the Financial Industry Regulatory Agency (FINRA) and their advisors are generally held to a “ suitability ” legal standard of care. Compensation for advisors at asset management firms is often a combination of the traditional commission structure, however in recent years the industry has moved toward fees for assets being managed.

The role of an asset manager is to focus primarily on investments. They may touch other areas, but will generally stay away from comprehensive financial strategy. When contrasting asset management and wealth management, a disadvantage of an asset-management-only focus is a lack of detailed strategy around real-world situations. When implemented properly, asset management can produce great rates of return. However, if assets aren’t titled properly, your estate plan isn’t optimized, or tax implications across all your asset managers and investment accounts aren't coordinated, you can end up with legal and estate issues or a larger tax bill than you should have.

Asset managers are hired to focus on investments and will typically “solve” problems with an investment “ products .” In contrast, wealth managers are engaged to provide solutions, outside of investments, to life’s financial challenges.

Wealth Managers in Kansas City (Family CFO)

Those who focus first on strategy surrounding the wealth of a family are wealth managers. Wealth managers follow the philosophy that financial strategy provides its best impact when all aspects of clients’ financial lives are coordinated into a comprehensive strategy. Without specific strategy to coordinate taxes, estate planning, retirement, cash flows, business, education, inheritance and more, life’s challenges can be like a game of whack-a-mole; and are much more difficult to navigate. If strategy is well designed and works together, financial lives often operate smoothly, like a well-oiled machine.

Wealth management firms are often registered with the Securities and Exchange Commission (SEC) and are held to a “ fiduciary ” legal standard of care, meaning they are required to put their clients' interests ahead of their own, with a duty to preserve good faith and trust. Being a fiduciary thus requires being bound both legally and ethically to act in the other's best interests.

Compensation for wealth management firms has traditionally revolved around the use of flat or hourly fees and/or a fee for assets under management, rather than commissions for product sales.

From Buttonwood’s perspective, the logic for pricing is fairly simple: As you enter into a wealth management-focused relationship, you are partnering with a team to serve as an outsourced Family CFO. Just as you expect the CFO for a business to continually review and proactively implement financial strategy, your Family CFO should be doing the same, day in and day out. This is exactly why Buttonwood has adopted the “Family CFO” model to define who we are and how we serve our clients.

Consumer and industry studies have shown the most successful wealth management relationships, as measured in terms of client net worth and longevity, are focused upon a comprehensive and detailed plan of action. The development of a broad based multigenerational strategy has been shown to make significant headway on the road required to achieving a successful and holistic approach for high-net-worth individuals and families.

Getting Started with a Wealth Manager in Kansas City (Family CFO)

As clients begin their journey toward financial peace of mind, the process often takes regular priority-driven meetings to move things forward. Expect initial meetings to provide the foundation for development of a unique plan built specifically for you. As this plan is implemented, a formal review of progress is conducted at least annually. In addition, modifications to strategy are proactively implemented as tax code, economic cycles, estate laws, and family dynamics change over time.

Which is right for me?

Unlike asset management firms, wealth management firms typically delve much more deeply – not just in your financial life, but in many areas that could impact your financial wellbeing. For example, as part of our Family CFO services, we are often involved with new business startups, retirement transitions from salary to consulting, divorce, marriage, life, and death. From an investment perspective, we manage investment assets with the objective to produce a more consistent rate of return over full economic cycles. With a more consistent rate of return comes more consistent lifetime income and more accurate wealth projections for estate planning. We also focus on strategy designed to maximize the productivity of income, minimize the impact of taxes on family assets, coordinate multigenerational family and estate complexities, and work to protect income, cash flows, and assets.

Regardless of whether you work with an asset manager or wealth manager, families who incorporate a trusted financial advisor into their lives fare better than those who do not. According to the CFP Board, “consumer use of financial advisors has increased significantly in the last five years,” going up approximately 10 percent in the span of just five years.

The root of your decision comes down to one main question: “How complex is my financial life?” For those with less complexity, in the early stages of your career, or for who prefer more control and a narrower investment-only focus, an asset manager may be the better fit. That said, we recommend hiring a “fiduciary” to ensure you are receiving advice with your best interest in mind. If you find yourself with less and less time to manage the many moving parts of a successful financial strategy, a wealth manager / Family CFO is likely the best option. At Buttonwood, we know as wealth and success increase, life doesn’t become simpler – it becomes more complex. A Family CFO can take many of the complexities off your plate allowing you more time on what really matters.

Weekly Market Commentary: Friday Rally Stems Week of Losses

Mon, 18 Jul 2022 17:54:38 GMT

The Week on Wall Street

A record-high inflation report, the prospects of a more aggressive Fed, and growing recession fears sent stocks lower– though losses were pared by a Friday rally.

The Dow Jones Industrial Average slipped 0.16%, while the Standard & Poor’s 500 lost 0.93%. The Nasdaq Composite index dropped 1.57% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, lost 3.49%. 1,2,3

Stocks Slide

As the week opened, recession fears intensified with reports of renewed Covid-related lockdowns in China. Also, the U.S. dollar continued to climb, reflecting global economic weakness.

June's consumer price index report showed price increases accelerating. Year-over-year prices jumped 9.1%, the fastest pace in over 40 years. Speculation grew that the Federal Reserve might contemplate a 100 basis point increase in short-term rates later this month, rather than the 75 basis point hike it earlier signaled. The market rebounded on Friday following comments by an Federal Open Market Committee member who said he favoring a 75 basis point hike. Also helping the Friday rally was a strong retail sales report and additional second-quarter company reports. 4

Dollar Strength

The increasing strength of the U.S. dollar moved to center stage last week as the dollar index (a measure of the U.S. dollar to six other major currencies) reached a fresh high, while the euro fell to parity with the dollar and to its lowest level since 2002. 5

A rising U.S dollar hurts overseas profits when converted into dollars and it also makes U.S. products and services more expensive. It’s a challenge for large, multinational companies that derive a portion of their earnings from overseas markets. Greater insight into the extent of that impact may be gained as companies provide forward guidance with their upcoming reports.

This Week: Key Economic Data

Tuesday: Housing Starts.
Wednesday: Existing Home Sales.
Thursday: Jobless Claims. Index of Leading Economic Indicators.
Friday: Purchasing Managers’ Index (PMI) Composite Flash.

Source: Econoday, July 15, 2022 - The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

This Week: Companies Reporting Earnings

Monday: Bank of America (BAC), International Business Machines (IBM), The Goldman Sachs Group (GS), The Charles Schwab Corporation (SCHW)
Tuesday: Netflix, Inc. (NFLX), Johnson & Johnson (JNJ), J.B. Hunt Transport Services, Inc. (JBHT)
Wednesday: Tesla, Inc. (TSLA), Abbott Laboratories (ABT), CSX Corporation (CSX), United Airlines Holdings, Inc. (UAL)
Thursday: AT&T, Inc. (T), Snap, Inc. (SNAP), Blackstone, Inc. (BX), American Airlines Group, Inc. (AAL), Union Pacific Corporation (UNP), D.R. Horton, Inc. (DHI)
Friday: Verizon Communications, Inc. (VZ), Schlumberger Limited (SLB), American Express Company (AXP), NextEra Energy, Inc. (NEE), PPG Industries, Inc. (PPG)

Source: Zacks, July 15, 2022 - Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.

Celebrities Earn Millions, but They Make Money Mistakes Too. 5 Takeaways from their Financial Snafus

Fri, 15 Jul 2022 14:39:58 GMT

The Week on Wall Street

A comprehensive sell-off on Friday following comments by Fed Chair Jerome Powell drove stocks to losses for the week.

Under Pressure

Powell at Jackson Hole

This Week: Key Economic Data

This Week: Companies Reporting Earnings

Tuesday: Best Buy Co., Inc. (BBY), HP, Inc. (HPQ).
Thursday: Broadcom, Inc. (AVGO), Hormel Foods Corporation (HRL).

https://www.wsj.com/market-data
https://www.wsj.com/market-data
https://quotes.wsj.com/index/XX/990300/historical-prices
https://www.wsj.com/articles/feds-jerome-powell-set-to-speak-on-economic-outlook-at-jackson-hole-11661476059?mod=hp_lead_pos1&mod=hp_lead_pos1

The Importance of Wellness in Retirement

Thu, 14 Jul 2022 16:09:09 GMT

You can do all the retirement planning you need in order to secure total financial freedom in retirement. But without the physical health to enjoy it - you’re missing out on the quality of life you envisioned. Wealth alone does not determine how much you will enjoy retirement. It’s a combination of health and wealth that will help you get the most out of your independence and freedom in retirement. Below are a few ways in which you can work to maintain or improve your overall wellness as you enjoy your time of financial independence.

What Is Wellness?

According to the Global Wellness Day organization, wellness is “a good or satisfactory condition of existence; a state characterized by health, happiness, and prosperity.” 1 The idea of wellness stems farther than physical health, as it is meant to encompass every aspect of your quality of life - mental health, social well-being and physical state. And while developing a retirement plan can help to make sure your financial wellness is covered, it’s up to you to take care of the rest.

Addressing Wellness in Retirement

We’ve broken the biggest areas of wellness down into three categories: mental health, social well-being and your physical state. Below are the reasons why each area of wellness is important in retirement and what you can do to maintain or improve on them.

Mental Wellness

The temptation to turn your brain off during retirement can be a big one. Considering you’ve spent decades problem solving for 40+ hours a week, the idea of relaxing and unwinding in front of the television or along a sandy shoreline can be extra appealing. But in order to stay mentally well and ward off cognitive decline, it’s important to incorporate mental exercises into your daily retirement routine. Staying sharp and keeping an active mind in retirement can help you to enjoy your retirement for longer.

One possible way of keeping your mental health in check? Consider taking on a new job in retirement, even just as a part-time position. A 2009 study revealed that those who were working in retirement had levels of well-being in both health and overall satisfaction that were on par with those who were younger and not yet retired. And beyond satisfaction, working in retirement has proved in some cases to effectively ward off cognitive decline and diseases. A study of nearly half a million retiree-aged participants showed that for every additional year worked, the risk of dementia was reduced by 3.2 percent. 2

Other activities to help your mind stay sharp in retirement could include:

Picking up a new instrument
Learning a new language
Journaling
Reading books
Doing puzzles & games
Social Wellness

Isolation and loneliness are growing issues, especially in older adults. And entering into retirement is a transitionary time in which one’s social well-being may become compromised. Leaving a job means leaving coworkers you see every day, and if you choose to move to a retirement destination, you may be leaving all other neighbors, community friends and even family behind.

Isolation can leave you feeling completely detached from your friends and family, both physically and psychologically. It’s something more than 8 million adults over the age of 50 experience, and prolonged isolation can have the same impact on your health as smoking 15 cigarettes a day. 3

The good news is, there are plenty of ways to find social fulfillment in retirement, they just require some effort and initiative on your part. These could include:

Volunteering in your community
Finding a roommate
Taking or teaching classes
Pursue a hobby or passion that takes you outside of the home
Physical Wellness

You’ve heard the phrase “use it or lose it,” and this saying definitely rings true when it comes to maintaining your physical wellness in retirement. Older adults are already at a bit of a disadvantage physically. As our bodies grow older, we’re facing physical changes such as slowing metabolisms, weakening immune systems and loss of muscle mass (to name a few). But just like your mental health, you may be tempted to enter a state of permanent relaxation in retirement. However, it’s important to take care of yourself physically. Doing so can help prevent both physical and cognitive decline, both of which can dramatically reduce your overall well-being. Some ways to stay physically well in retirement include:

Joining an exercise class
Garden and maintain your yard
Adopting a dog
Enjoying walks around your neighborhood
Creating (and sticking to) an exercise routine

When you put a special focus on maintaining your overall wellness in retirement, it can be some of the greatest years of your life. And while you can work with a professional to ensure your financial well-being is cared for, it’s up to you to make sure the rest is following suit as you head toward retirement.

Weekly Market Commentary: Stocks Rally Despite Mixed Data

Tue, 12 Jul 2022 16:48:49 GMT

The Week on Wall Street

In a holiday-shortened trading week, stocks rallied despite mixed economic data and vacillating energy prices and bond yields.

The Dow Jones Industrial Average increased 0.77%, while the Standard & Poor’s 500 rose 1.94%. The Nasdaq Composite index picked up 4.56% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, edged 0.46% higher. 1,2,3

Stocks Move Higher

In advance of Friday’s much-anticipated employment report, stocks enjoyed successive daily gains despite ongoing concerns about a recession. Recession fears were supported by an inversion in the yield curve and updated second-quarter Gross Domestic Product projections indicating the economy is ready to contract.

Technology shares were the week’s big winners as investors appear to have turned to companies with earnings growth potential during a weakening economic environment. Stocks bounced along the flatline following the strong jobs report on Friday to close out a positive week.

Employment's Mixed Signal

One of the holes in the "imminent-recession" narrative has been the labor market's strength. Historically, recessions have been preceded by or concurrently with a weakening jobs market.

Friday's employment report reflected a job market that continues to belie Wall Street's recession fears. Employers added 372,000 jobs in June, a number that was above economists' estimates of 250,000. Wage gains were robust (+5.1% year-over-year), though still below the inflation rate. The unemployment rate was unchanged at 3.6%. 4

This Week: Key Economic Data

Wednesday: Consumer Price Index (CPI).
Thursday: Producer Price Index (PPI). Jobless Claims.
Friday: Retail Sales. Industrial Production. Consumer Sentiment.

Source: Econoday, July 8, 2022 - The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

This Week: Companies Reporting Earnings

Wednesday: Delta Air Lines, Inc. (DAL).
Thursday: JPMorgan Chase & Co. (JPM), Morgan Stanley (MS), Conagra Brands (CAG).
Friday: UnitedHealth Group (UNH), Citigroup, Inc. (C), Wells Fargo & Company (WFC), BlackRock, Inc. (BLK), U.S. Bancorp (USB), The PNC Financial Services Group, Inc. (PNC).

Source: Zacks, July 8, 2022 - Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.

6 Financial Truths About Self Employment

Wed, 06 Jul 2022 14:27:54 GMT

You may believe it’s easy to become self-employed or to start your own business. Yet, there are several financial realities that should make you stop and think. However, if you are really eager to become self-employed, you shouldn’t let these concerns stop you from reaching your goals. If you have a good financial plan in place, you may be able to avoid pitfalls.

1. Startup Expenses Can be a Barrier

If you were previously a salaried employee, you’ve perhaps not counted the minimal perks you get from the job. Everything you need to do the work is provided for you. You work in a space that someone else pays for. You enjoy the occasional office birthday party with free cake. When you are self-employed, you’ll have to procure the assets you need to do the job yourself. You will have to maintain upkeep on those assets as well as on the space where you do the work. Startup costs can pile up quickly. The costs may include things like commercial banking services and insurance.

2. Health Benefits

As with now having to provide your own tools of the trade, you’re also going to have to make up for other benefits you held previously. You will have to provide your own health insurance. If you have a family, the costs will be significant.

Under the Affordable Care Act, you may have qualified for health insurance premium subsidies in your state. The subsidy will lower the costs of the plan. Still, the plans available to you in the marketplace may be expensive.

The Small Business Jobs Act brings some health insurance cost mitigation to you at tax time. The law authorizes you to deduct an employer-equivalent portion of your health insurance costs from your taxes.

3. Your Tax Situation May Become Complicated

Tax time may present a completely new set of financial issues for you when you become self-employed. For consultant or freelancers who don’t itemize, there won’t be a significant change. You’ll be responsible now for paying the FICA tax, which is included in the self-employment tax rate. It will be in addition to the income tax you owe. You can chose to pay your taxes quarterly or wait until April and pay them all at once.

Conversely, self-employment will allow for new deductions. For example, if you have a home office, you may be able to deduct a portion of that. You can deduct business-related travel expenses. You may also be able to deduct the cost of paying a financial advisor to help you figure it all out.

4. Budgeting Will be a Challenge

Especially when you first start out as a self-employed, you may miss the predictable, regular income stream you had through your old job. Setting a budget is much easier when you know how much will be in your account each month. For some self-employment jobs, like seasonal work, your highs and lows may be predictable. For other jobs, like consulting, it may be hard to gauge how to handle things. The safe bet may be to save during the feast so that you can eat during the famine.

5. Saving for Your Retirement Will be Different

When you’re an employee, the employer looks out for your future by contributing to your retirement plan. Once you’re self-employed, you have to save for your own retirement. On one hand, some self-employment jobs may allow you to work beyond expected retirement years. However, you should ask yourself if you want to continue working at 70.

6. Preparing for the Worst

Somewhat related to issues like the difficulty in budgeting and saving for a rainy day is the possibility your business endeavor may not meet your goals. If you start a food service business, you may be in the position that many people who open restaurants are in; they must close up shop. You will need a plan to prepare for this possibility. Before jumping into the world of the self-employed, talk to one of our Lead Advisors to see how to best proceed.

How to Plan for the 3 Stages of Retirement

Thu, 30 Jun 2022 14:44:14 GMT

One of the most common misconceptions about retirement is that “retirement is a single event.” Not so many people understand that retirement, just like work-life, has stages. Although retirement may be unique to each person, it generally passes through three stages or phases namely; active retirement stage, slow down retirement stage, and inactive retirement stage.

Understanding the different stages of retirement and taking away the assumption that retirement needs are the same throughout retirement can help you plan for your future years effectively. It is important to know each stage has its own expenses, and those expenses greatly depend on your activities, lifestyle and health.

Retirement isn’t a single phase or stage. It has different stages and learning, understanding, and adequately preparing for each stage is imperative for your financial wellness throughout retirement. In order to help you better plan for retirement today, we're taking a look at the three different stages of retirement and how you can plan accordingly for each stage.

Active Retirement Stage

This stage occurs in the early years of retirement, usually between the ages of 60 and 75. At this stage, a retiree is still trying to figure out what to do with their newly found free time while enjoying the fruits of employment. Between this age bracket, retirees are still active health-wise and often find themselves looking forward to taking vacations and enjoying what life has to offer. As a result, the cost of living increases and more money is spent during these earlier years of retirement.

To have control in this stage of retirement, it is always a good idea to let your money continue to grow. Working with a financial planner during this stage can help advise you on the best investments to keep your money growing so that you can remain better prepared for the next two stages of retirement. Considering that this stage of retirement is quite exciting and full of adventure, it's important that you have the cash flow to sustain your budget. Plan accordingly before you retire and list the things you would like to try at this stage even before retiring.

Slow Down Retirement Stage

The slow down stage typically occurs between the ages of 75 and 85. In this stage, the retirement hype experienced in the first stage starts to fade away and you are more into taking-it-easy with life. Here you may find yourself spending most of your time visiting family and friends, and you may also start considering downsizing into a smaller home or moving closer to your grandkids and other family members.

Cash flow is equally important in this stage as it was in the active retirement stage. Although not most of it will be going towards travel and leisure, expenses related to healthcare costs may start to rise as you get older in age. At this stage, you still want your money to grow and therefore it's important to choose investments that won’t risk losing your money.

Inactive Retirement Stage

This last stage occurs from the age of 85 and onwards. Here, your life will change in many different ways. At this stage maybe your energy levels are lower, and you may to call on your family for more help moving around or carrying out various personal activities. During this stage, you may see a reduction in your cost of living because you will not be moving around as often as the previous stages. However, on the other hand your healthcare costs may rise significantly.

During your earlier years of retirement, you need to plan for this stage well. It's important to have a plan in place about how you will want to be cared for in case your health makes you dependent on others. Inform your family about your savings and delegate authority to someone who can make important financial decisions for you in case your cognitive abilities begin to decline. In this stage, deeply focus on yourself and your general well-being in the final years of life.

Taking Care of Your Family After Your Passing: Here's How to Write a Letter of Intent During the Estate Planning Process

Mon, 27 Jun 2022 14:30:00 GMT

Having an up-to-date will is an excellent step in establishing an estate plan. It provides legal protection, structure to loved ones and starts the process of dispersing property. A will distributes a majority of your property, but often leaves out smaller belongings - leaving loved ones to organize what is left.

This is where a letter of intent can be of significant value and help to families. Though it is not a legally binding document, a letter of intent can provide structure and emotional support to loved ones.

What Is a Letter of Intent?

A letter of intent is a personal message designed to reduce the emotional burden of sorting through a loved one's property. But it is also a keepsake and can contain final messages to loved ones.

A letter of intent is not a legal document. It is a letter to loved ones or an executor of a will. It acts as a message from the deceased and can include an array of information from providing organization and outlining last wishes, to detailing information and sending personal messages.

AARP recommends focusing a letter of intent on three categories: 1

Funeral Wishes
Financial Details
Personal Effects

Why Is a Letter of Intent Necessary?

A letter of intent provides support to loved ones. They won’t need to decide who to give personal effects to or where to allocate funds. It frees loved ones to mourn and provides a small piece of comfort during a challenging time.

What Should Be Included in a Letter of Intent?

Here are some specifics to include in a letter of intent.

#1: Updates

We all know things can change in life. That’s why, first and foremost, you’ll want to make sure all information on a letter of intent is up-to-date and accurate. An inaccurate letter with improper information might not provide proper wishes.

#2: Funeral Planning

There’s plenty that goes in to planning for a funeral - location of burial, flowers, music, time of day, etc. Providing funerary information can remove many questions loved ones might have. They won’t have to wonder if something represents a loved one's wishes, as desires will be clearly stated.

#3: Beneficiary Contact Information

A will may contain beneficiaries, but people may move or not know one another. By providing contact information, beneficiaries can easily be located and contacted. Including several forms of communication is best, such as email, cell phone, landline and mailing address.

#4: Financial and Personal Information

Include instructions for accessing information and physical documents. This includes passwords for all digital platforms, from bank accounts to social media. If possible, avoid placing physical documents in an area that would be difficult to access.

#5: Pet Care

Pets are family members for many people, and respecting the wishes of the deceased is important. But taking on the responsibility of pet care is a long-term commitment. Make sure to discuss pet care with loved ones and include plans in any letter of intent, especially if there are several pets in a household. This should include where the pet will go and how to properly care for the pet.

#6: Personal Belongings

Many personal belongings are left to be distributed by the family. But if there are any specific items that one wishes to pass down to a family member, the information should be included. This can be small or large objects from kitchenware and jewelry, to paintings and furniture. Make sure to include instructions for any objects that don’t have a recipient or if anything specific should be donated to charity.

#7: Include a Personal Message

The letter of intent is not just an object for logistics, it’s a message from the deceased to their loved ones. Personal messages to friends and family members should be included. This allows the letter to act as a final message to loved ones, providing guidance and support. It is an opportunity to share life wishes, lessons and beloved moments - the options are endless.

Understanding what to include in a letter of intent can help ease the process of estate planning. And, along with a will, a letter of intent provides some clarity to loved ones and serves as a lasting keepsake for future generations.

https://www.aarp.org/money/estate-planning/info-04-2009/letter_of_instruction.html

Weekly Market Commentary: Fed Rate Hike Triggers Market Dip

Tue, 21 Jun 2022 14:09:03 GMT

The Week on Wall Street

Stocks moved lower last week as recession fears deepened following a Fed hike in interest rates and weak economic data.

The Dow Jones Industrial Average fell 4.79%, while the Standard & Poor’s 500 dropped 5.79%. The Nasdaq Composite index slid 4.78% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, slumped 4.51%. 1,2,3

Stocks Tumble

Stocks were under pressure all week due to inflation worries, higher yields, and rising recession concerns. In advance of the much-awaited mid-week meeting of the Federal Open Market Committee (FOMC), bond yields jumped, and stocks retreated on speculation that the Fed might raise rates by 75 basis points. When the Fed announced a 75 basis point hike on Wednesday, stocks rebounded strongly.

The enthusiasm was short-lived. Stocks resumed their slide on Thursday as global central banks followed with their own rate hikes. Recession fears grew based on a weak housing starts report and a contraction in the Philadelphia Fed Business Index–the first contraction since May 2020. 4

Fed Rate Hike

The Federal Reserve announced a 0.75% hike in the federal funds rate, making it the biggest rate increase since 1994 and signaling its commitment to address inflation. The report from last week’s FOMC meeting also indicated new rate projections, showing that all members expect rates to rise to at least 3.0% by year-end, with half the members expecting rates to rise to 3.375%. 5

The 75 basis point rate increase was a late-developing change from earlier Fed guidance of a 50 basis point increase. The change of heart was in response to recent inflation data and rising inflationary expectations. 6

This Week: Key Economic Data

Tuesday: Existing Home Sales.
Thursday: Jobless Claims. Purchasing Managers’ Index (PMI).
Friday: New Home Sales. Consumer Sentiment.

Source: Econoday, June 17, 2022 - The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

This Week: Companies Reporting Earnings

Tuesday: Lennar Corporation (LEN).
Wednesday: KB Home (KBH).
Thursday: FedEx Corporation (FDX), Darden Restaurants, Inc. (DRI).

Source: Zacks, June 17, 2022 - Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.

Millennials and Retirement: How Do You Stack Up?

Fri, 17 Jun 2022 20:01:45 GMT

No matter the age, many people look forward to retirement - a time when they'll stop working and have the freedom to travel, take up a hobby, and spend time with family and friends. With today's life expectancies, you might have a retirement of 20+ years, you'll need a financial plan to fund your dreams.

But if you're a Millennial, the thought of retirement planning can be overwhelming, especially if you face student loan and credit card debt. You're not alone: one study notes the stresses that Millennials have about retirement 1 :

79% think their generation will have a much harder time achieving financial security than their parents' generation.
80% do not believe Social Security will be available for them when they retire.
53% anticipate their expected income in retirement to be self-funded savings, including 401(k)s, 403(b)s, IRAs, and other savings and investments.
65% believe they could work until 65 and still not have enough money saved to meet retirement needs.

And because your expectations may look different today than they did for prior generations, you'll need to take a proactive approach now to grow your nest egg for the future.

The Good News: Millennials Are Saving, and Are Starting Earlier

In your 20s and 30s, retirement is still decades away, but that doesn't mean you shouldn't prepare now. In fact, many Millennials already are: 58 percent are saving for retirement and 38 percent report contributing more than 10 percent of their pay toward a retirement plan 1 . Many didn't just start, either: The average Millennial started saving at 24, which is much younger than the median age of a Baby Boomer, who began at 35 1 .

And because many anticipate financing their own retirement, some Millennials choose to invest beyond their 401(k). Some are choosing to open Roth individual retirement accounts (IRAs)--an option funded by post-tax income that's distributed tax-free during retirement.

If you're not already contributing to a retirement account, you might want to consider starting, especially if your employer offers a matching program.

Still, You May Need Advice in Order to Achieve Your Goals

Even if you're prudent about saving, it's okay to ask for help. While most Millennials consider themselves to be very involved in monitoring and managing their retirement savings, only a small minority of Millennials are invested in the stock market outside of their retirement account 2 .

In case you're not already working with an advisor, it's something you should consider. Of those who employ an advisor, 89 percent believe they are worth the cost 2 . An open conversation with an expert can alleviate the stress and uncertainty of planning for retirement. If you're ready to get started, reach out to schedule a meeting .

19th Annual Transamerica Retirement Survey of Workers (April 2019)
LendEDU Millennial Retirement Study (April 2019)

Family Travel Plans? How to Protect Yourself While Away

Wed, 15 Jun 2022 18:50:39 GMT

Have you been bitten by the travel bug this year? Summer is officially less than one week away, and you may be dreaming of vacation. Whether your ideal vacation includes hiking through a national park, lounging on the beach, or hitting the slopes, we’ve compiled a list of some of the most desirable luxury vacation destinations for families. Before you finalize your next vacation, you’ll also want to review these tips to keep yourself and your family protected while away.

Family Vacation – Ensure You’re Protected

It’s easy to get caught up in the excitement of an upcoming trip. Before you pack your bags and hit the road (or the sky), take these steps to keep yourself protected while punching out with your loved ones.

1. Have someone you trust watch your home

Beyond having someone stop by to water your house plants, we recommend asking someone you trust to check in on your home regularly while you are out of town. Add an extra layer of surveillance to your home security system and ask a friend or family member to stop in and enjoy the house to themselves throughout your trip!

2. Don’t post until you return

It’s likely you will want to share photos of your trip on social media while you’re on vacation, but you may alert the wrong person that your house is empty.

3. Travel Insurance – To invest or not?

If you are planning a shorter, weekend-long trip, travel insurance may be worth skipping. The cost of the policy could potentially be as much or more than the trip itself. When it comes to plane tickets and hotel bookings, your airline, hotel or credit card may be able to provide reimbursement in the event of last-minute cancelations or offer a credit for future use. Be sure to read the fine print before booking if there is a chance of a change in plans.

On the other hand, travel insurance can be very beneficial if you are taking an expensive vacation with non-refundable fees such as your flight, hotel, transportation, etc. While your credit card may reimburse for a portion of these expenses, you may likely be out of luck on a large part of your vacation expenses. Even if your chosen travel provider offers a reimbursement policy, it may not be as lenient and flexible as what you might get with a travel insurance policy. Travel insurance could reimburse you for a myriad of reasons, including unexpected work requirements, illness and military deployment. The last thing you want on vacation is a medical emergency, but if it were to happen, travel insurance could cover the cost of a Medical Flight back to the U.S. Our local contacts at Brush Creek Partners recommend Allianz Travel for travel insurance.

Speaking of insurance... If you are planning a long trip away from your home, be sure to let your homeowner's insurance company know you will be gone. In the unlikely event of a flood, pipe burst, or other damage, providers may not cover damage without notice of your extended absence.

4. Beware of pickpockets

Whether traveling in the U.S. or internationally, always be wary of pickpockets. Contrary to what you might believe, pickpockets often work in teams. While one swindler approaches to share a travel or pamphlet or even spill a drink on you as a distraction, the accomplice can snatch items from pockets or bags. Be especially alert in highly trafficked areas and popular tourist attractions.

Backpacks are a convenient choice while traveling, but are also convenient for pickpockets. If you carry a backpack, we recommend using one that zips from the back. This way, as long as the bag is on your shoulders, a thief would not have access to outside zippers.

Be cautious, but not too cautious. If you are consistently patting your pockets to check for your wallet or checking in your bag, you are sending a signal to a potential thief that you have something of value to steal.

Top Travel Picks:

Amanyara Resort in Turks & Caicos

The Amanyara in Turks & Caicos is a wellness resort with stunning views of the Caribbean seas that is sure to delight your entire group. They love having families and large groups with many activities for kids to enjoy. Accommodations include large villas with private pools and multiple bedrooms. Charter a quick private flight for your group from Miami to the island to arrive in less than two hours!

Timberline Lodge on Mt. Hood, Oregon

Timberline is the only ski area in the U.S. open ten months of the year. Located near the top of an 11,245-foot volcano, Timberline sits on the tallest mountain in Oregon – Mt. Hood. A night spent in the Timberline Lodge is like traveling back to simpler times but don’t worry, all modern conveniences are still discreetly available. This place isn’t haunted, but you may recognize the exterior as The Grand Overlook Hotel from the popular movie, The Shining , based on the book by Stephen King.

Hotel Can Simoneta, Mallorca

On the coast of Spain in Majorca is the Hotel Can Simoneta . With sea views overlooking the cliffs of Canyamel Bay, the host of spa treatments and activities is spectacular. You can have a traditional spa trip for the whole family, but also do things like horseback riding, golf, cycling and even enjoy the beach. Book the Grand Suite Neptuno which also has its own private pool.

The Biltmore Estate in Asheville, NC

Built on 8,000 rolling acres of greenery is the Biltmore Estate . The historic luxury inn also offers large cottages on the property for larger groups. Embark on a guided hike or hike around the property at your own pace! Explore beautiful gardens, visit the farmyard or explore the Biltmore House itself! Biltmore admission includes access to Antler Hill Village, home to plenty of complimentary activities family members of all ages will enjoy! While at Antler Hill Village, don’t miss out on the world-class winery, which is something to look forward to if you’re a wine connoisseur.

Cruise the Italian Riviera

If you’re going to cruise the Italian Riviera, do it with gusto! Ideally, you’ll want to charter a “superyacht” to take you from Naples all through Capri and down the Riviera to exclusive islands, only accessible by boat. These large yachts can accommodate large groups and families with ease to move around. Dock at different ports to enjoy wine, shopping, and amazing Italian meals. When you get to the smaller island regions, everyone can enjoy swimming, snorkeling, jet-skiing, and other beachside activities.

Travel with Peace of Mind

If travel is high on your list of passions, working with Buttonwood as your Family CFO can allow you to fully enjoy your journeys! Enjoy your time away while the Buttonwood Team takes care of your financial life in the background. Contact us today to learn more about how our services can benefit you and your family.

Weekly Market Commentary - Stocks Dip on Inflation Report

Wed, 15 Jun 2022 14:10:42 GMT

The Week on Wall Street

A higher-than-expected inflation report triggered a sell-off on Friday, leaving stocks in the red for the week.

The Dow Jones Industrial Average lost 4.58%, while the Standard & Poor’s 500 dropped 5.05%. The Nasdaq Composite index slid 5.60% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, declined 1.81%. 1,2,3

Inflation Upends Stocks

Stocks gyrated between gains and losses last week until sliding lower on Friday’s hot inflation report, which heightened worries over a more aggressive Fed and a further economic slowdown. Stocks moved higher to begin the week, despite rising bond yields, a profit warning from a major retailer, and Senate testimony by Secretary of Treasury Janet Yellen, who said that inflation was likely to remain elevated.

Stocks turned lower later in the week on renewed concerns of an economic slowdown, sparked by a downward revision in The Federal Reserve-Atlanta’s real-time estimate of second-quarter GDP growth and a drop in new mortgage applications. Investors lightening up on stocks ahead of Friday’s inflation report may have also contributed to Thursday’s selling.

Inside Inflation

Consumer prices rose 8.6% year-over-year in May, marking the highest rate since December 1981. Price increases over the last 12 months were driven by a 34.6% jump in energy prices and by food costs, which climbed 10.1%. Used car and truck prices, which had seen three straight months of declines, rose 1.8% from April, while airfares soared 12.6% in May. 4

May’s inflation exceeded economists’ forecasts and dashed the hopes that inflation had plateaued. In a separate economic report on Friday, real wages (net of inflation) fell 0.6% in April and were lower by 3% from 12 months ago. 5

This Week: Key Economic Data

Tuesday: Producer Price Index.
Wednesday: Retail Sales. FOMC Announcement.
Thursday: Jobless Claims. Housing Starts.
Friday: Industrial Production. Index of Leading Economic Indicators.

Source: Econoday, June 10, 2022 - The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

This Week: Companies Reporting Earnings

Thursday: Adobe, Inc. (ADBE), The Kroger Co. (KR).

Source: Zacks, June 10, 2022 - Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.

Maximize Your Medicare Deductions

Mon, 13 Jun 2022 15:42:47 GMT

Medicare is a vital resource for many Americans and has many benefits you might not even know about. From free health exams to discounts on prescriptions, learn how you can maximize your Medicare deductions to potentially save money on your healthcare expenses.

How to Maximize Your Medicare Deductions

Here are a few tips to help you maximize your Medicare deductions and make the most out of your health care plan.

Choose the Right Healthcare Provider

The first step in maximizing your Medicare benefits is choosing the right healthcare provider. Of course, you should choose a doctor who treats Medicare patients, but you should also ensure that they accept your Medicare payment as the full payment for services.

Some doctors may be considered non-participating providers, which means that they can charge you up to 15% more than your Medicare payment covers for services. You are responsible for the additional charges. Some doctors may also be “opt-out” providers, meaning they can charge whatever prices they outline in their private contracts with patients.

When searching for a Medicare provider, check the Medicare provider search to find one who accepts your Medicare payments. 1 People with Medicare Advantage plans should also use the search above to confirm their doctor accepts Medicare. Make sure your provider is in-network so you aren’t hit with any additional charges for services.

Compare Your Prescription Options

As a Medicare participant, you have different options when it comes to prescription drug coverage. You can opt into Medicare Part D prescription drug coverage, which may help reduce your prescription co-pay. But, don’t write off cash payments as an option, as well. Sometimes, paying cash can actually save you money versus the Part D copayments because you can choose generic options. Also, some pharmacies and drug companies may offer coupons for certain prescriptions.

Speaking of generic drug options, also consider whether or not you can take a preferred generic medication instead of a brand name. Talk to your doctor to see if there is a comparable drug in a lower tier. Medicare Part D has four tiers: Tier 1 includes most preferred generic prescription drugs; Tier 2 includes preferred, brand-name prescription drugs; Tier 3 includes non-preferred prescription drug brands; Tier 4 is for specialty drugs. 2 Tier 1 (preferred generic) is usually the most affordable tier.

Take Advantage of Free Benefits

In addition to prescription and medical coverage, your Medicare plan may also include a number of free services and benefits many Medicare patients might not even be aware of. According to Medicare.gov, here are some of the many preventative services you may be eligible for 3 :

Yearly wellness exams.
Flu shots.
Diabetes screenings.
Depression screenings.
Cardiovascular disease screening and behavioral therapy (tips from a doctor about how to lower your risk for cardiovascular disease).
COVID-19 vaccines.
Mammograms.

These are just a few of the free preventative services Medicare may include. To truly maximize your Medicare deductions, take advantage of these services if they make sense for you.

Check Your Medicare Summaries

Every quarter, you will receive a Medicare summary showing all the services and supplies that your healthcare providers billed to Medicare. If you notice a claim has been denied, you have the right to investigate the charge. First, contact the provider to make sure the claim was submitted correctly. If it was, you may consider filing an appeal if you think the cost is an error. You can also contact Medicare to verify the charge.

If you’re paying for Medicare, you probably want to get the most bang for your buck! From examining your options for prescription drugs to taking advantage of free services, there are a number of things you can do to maximize your Medicare deductions. Make the most of the resource by knowing your benefits.

5 Financial Planning Tips for the Sandwich Generation

Tue, 07 Jun 2022 14:05:02 GMT

If you're a member of the "sandwich generation," you might be feeling the pressure of caring for both younger and older generations. Today, many people in their thirties and forties are "sandwiched" between two generations that are dependent on them. But with the right approach to financial planning and guidance from Buttonwood Financial Group , you can find financial freedom, even if you're supporting your loved ones. Here's how to manage your finances to live with financial peace of mind.

Organize Your Financial Documents

No matter what your personal financial goals or concerns are, you need to organize any relevant documents, such as your insurance policies, wills, property deeds, or other files concerning legal matters. While it's easy to lose or misplace a physical document, you can digitize records so you'll always be able to access them easily. Watch for State specific rules; Missouri, for example still requires a paper will. Furthermore, you can combine PDFs into one file using a PDF merge tool, which will make it even simpler for you to locate the documents you need at any time. Plus, you can rearrange the pages in the order you want!

Budgeting and Saving

If you have multi-generational dependents, creating a realistic budget and identifying areas where you can maximize savings is key. Make a budget outlining all your income sources, your fixed expenses, and your variable expenses. Cutting back in certain spending categories can make a huge impact on your ability to save.

Cover Childcare Expenses

Do you have young children? If so, you know the costs of childcare can be sky-high . However, you may be able to find ways to save, which will allow you to contribute more to your investment accounts. For example, if your employer offers the options of opening a flexible spending account, you an set aside pretax money for childcare-related expenses. You or your partner could also explore the possibility of working from home or working part-time to eliminate this expense.

Financing Eldercare

Even if your parents created a solid nest egg, paying for eldercare can still get expensive quickly - and they might still need your financial assistance. To keep the costs of eldercare under control, Aging Care recommends looking into long-term insurance policies. You may also want to have the Team at Buttonwood meet with your parents to discuss how you can best allocate their assets to pay for long-term care or to hire a part-time, in-home caregiver. Buttonwood does this regularly - and at no additional cost.

Investing for Your Own Future

Investing is a key aspect of overall financial health. You can use accounts like a 401(k) to invest in target-date mutual funds or index funds for a diversified approach to retirement planning. It's a good idea to talk to a financial advisor if you're ready to enhance your investment strategy - they can help you get started and plan for your future and your children's future. When you've accumulated your assets and eventually get ready to retire, your financial advisor can assist with succession planning, which will enable you to pass on your savings of a family business to your children.

For the sandwich generation, financial planning can be quite complicated. That's why it's important to look for opportunities to save and start investing early. By implementing some of these strategies, you can get your finances on track, even if you're budgeting for the needs of your loved ones, too.

Do you have questions about financial planning? Turn to the experts at Buttonwood Financial Group ! Contact the Team today to schedule a conversation.

Photo via Pexels

Hal Salazar created Elders.Today to lend a helping hand to seniors via carefully curated resources. Hal is newly retired, and as he embarked on planning and preparing for his golden years, he realized there was a lot of information to keep up with so he started gathering it all on his website to help out his fellow seniors. When Hal isn’t working on Elders.Today, he enjoys walking at his local park, testing out new recipes on his wife, Marlene, and playing piano.

Weekly Market Commentary: Stocks Slip on Mixed Economic News

Mon, 06 Jun 2022 16:54:02 GMT

The Week on Wall Street

In a holiday-shortened week of volatile trading, stocks surrendered some of the previous week’s strong gains.

The Dow Jones Industrial Average fell 0.94%, while the Standard & Poor’s 500 declined 1.20%. The Nasdaq Composite index lost 0.98% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, slipped 0.17%. 1,2,3

An Uncertain Market

Stocks experienced wild swings last week, in part, due to ongoing uncertainty over economic health and the path of inflation. Investors seemed conflicted when interpreting the data, in some instances viewing economic strength as a negative since it may mean more aggressive rate hikes from the Fed.

Illustrative of how this uncertainty has played out, stocks surged higher on Thursday despite comments from Fed Vice Chair Lael Brainard indicating it’s unlikely that the Fed will pause on rate hikes. Then on Friday, stocks dropped as a better-than-expected jobs report raised concerns about monetary policy.

Strong Job Growth

The U.S. economy added 390,000 jobs in May, a slowdown from recent months but higher than consensus estimates. Job gains registered in several categories, led by leisure and hospitality, professional and business services, and warehousing and transportation. The retail sector lost jobs. 4

The unemployment rate remained unchanged at 3.6%. Wage growth cooled off, with a 12-month increase of 5.2%, down from April’s year-over-year jump of 5.5%. Finally, the labor participation rate ticked higher again, reflecting how job availability is helping to pull Americans off the labor-market sidelines. 5

If you would like to discuss your investment strategy, contact us today . We proactively rebalance for our clients to produce more consistent rates of return over full economic cycles.

This Week: Key Economic Data

Thursday: Jobless Claims.
Friday: Consumer Price Index (CPI). Consumer Sentiment.

Source: Econoday, June 3, 2022 - The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

This Week: Companies Reporting Earnings

Monday: Coupa Software, Inc. (COUP).
Wednesday: Campbell Soup Company (CPB).
Thursday: DocuSign (DOCU).

Source: Zacks, June 3, 2022 - Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.

Why More Americans Are Retiring Now than Ever

Fri, 03 Jun 2022 16:07:38 GMT

They’re calling it the Great Resignation. This unprecedented phenomenon is observing numerous Americans leave their jobs—some for greener pastures, others for extended periods, and still others, especially older Americans, for retirement. While endless column inches on this matter have been published, one of the big questions is why it’s happening here and now.

The most natural answer is that this is an appropriate response in the wake of the COVID-19 pandemic. It’s difficult to find anyone or anything that hasn’t been affected by the pandemic. While some people are choosing to stay home because they aren’t interested in risking illness to go into the office, the full picture is a bit more complex, especially for those with jobs where remote work isn’t an option. But there’s another factor at play here. It’s been a long time coming but hasn’t been talked about much because of other more pressing world events.

The Baby Boom Meets the Retirement Boom

These last few years have been a bit different than they were in the past. Reaching retirement age now doesn’t mean exiting the workforce completely. Many retirees start businesses, shift to part-time work, or change their focus from their jobs to working for charities or nonprofit organizations. In 2008, the oldest baby boomers reached age 62. This coincided with the so-called “Great Recession,” when the economy declined and perhaps represented a less-than-advantageous time to start retirement. Many people decided to hold off on retiring and wait a few years. In 2021, the economy had distanced itself from those events and faced new developments. Just over half of adults aged 55 or older had exited the workforce and retired. For adult Americans aged 65 to 74, the percentage who had left the workforce was 66.9%, just over two-thirds of this population. 1

Catching Up

So, rather than seeing everyone head to the door simultaneously, what we’re seeing is a bit of a “catch-up” period. We are looking at a picture of what might have been if the Great Recession had gone a bit differently. The pandemic created a transition period in which people decided that it was a natural time to work less, transition to new things, or retire completely. The pandemic has gone on way longer than any of us could have imagined, with the more potent Delta variant making way for the more contagious Omicron variant. Examining this context makes it easier to see why someone reaching the end of a long and rewarding career might choose to exit the pattern of working during COVID-19 and parachute into a less stressful, more enjoyable paradigm.

Is It Your Time, Too?

You might be thinking that this period of mass retirement presents you with an opportunity to cast off the yoke and ease into retirement. Despite the large numbers of people making this big transition, it is important to remember that moving with the crowd isn’t always a justified action.

It’s also possible that now is a great time to transition into a different opportunity for your last few years of work. Maybe you have a business idea you’ve been working on. Now is a great time to put it into action. Or perhaps you want to transition into a new role at work or with a different firm that will be less demanding when you finally transition into retirement. This is also a great idea.

If you think now is the time, your first step is to set up some time to talk with our Team . We can look at your overall financial strategy to give you a better overview of where you stand and the drawbacks and advantages of retiring in the current environment .

https://www.pewresearch.org/fact-tank/2021/11/04/amid-the-pandemic-a-rising-share-of-older-u-s-adults-are-now-retired/

5 Things You Should Do For National Internet Safety Month

Thu, 02 Jun 2022 15:34:25 GMT

In today’s interconnected world, we are sharing more information online than ever before. June is National Internet Safety Month, dedicated to educating people on the importance of staying safe online.

Because of how much personal information is shared online, it’s important to practice internet safety. Here are five tips to keep in mind when you use your computer or phone.

Use Strong Passwords

Gone are the days of being able to use the same password for everything. And no, you shouldn’t use your dog’s name or the street you grew up on as a password. In fact, you shouldn’t use anything that anyone could easily find out about you with a Google search.

According to LastPass, a leader in password security, hackers use software and databases to figure out how to crack your password. After they have enough information, they use two tactics: credential stuffing or password spraying. Credential stuffing involves having bots automatically test every username and password combination in their database to see what works. Password spraying is the act of using known passwords (like password123) to see if they will work with a particular email address. 1

To protect against both of these strategies, use different passwords for all of your logins, and use complex passwords that are hard to guess. The best passwords use a combination of letters, numbers, and special symbols and are at least 12 characters long. 2 You can use a password generator to help you come up with a complex, random password, and then use an online application to help you keep track of all of them.

Always Update Your Software

You may be tempted to always click “Ask Me Later” on those annoying software update notifications, but software and app updates contain important security fixes that can help keep you safe online. According to the Cyber Security Awareness Alliance, these updates address security vulnerabilities, and when your software isn’t up to date, you run the risk of allowing cybercriminals to use those vulnerabilities for malicious intents. 3

To minimize your risk, consider setting up automatic updates, and always update your computer and phone to the newest version.

Be Mindful of Wi-Fi

If you enjoy working at your local coffee shop or café, consider the things you do or don’t do when using their shared Wi-Fi. On an unsecured network, others may be able to see what you’re doing online. It’s much easier to hijack a user’s session on these public Wi-Fi networks than at home.

Because of this increased risk, use the following tips when using public Wi-Fi:

Don’t access your personal or financial information.
Only log in or send personal information to websites that are fully encrypted.
Don’t stay logged into your accounts.
Pay attention to warnings on your computer or web browser if they detect a spammy website.
Change your device settings so it doesn’t automatically connect to Wi-Fi.

Set Up Two-Factor Authentication

Two-factor authentication is a more secure way to sign in to websites, and you should set it up wherever possible. With two-factor authentication (or 2FA), you have to verify your identity on another device to ensure that it’s really you. For example, after typing in your email password, you also have to get a text sent to your mobile device with a verification code.

2FA is a great way to stay safe online. You’ll get notifications every time someone tries to log into your accounts and can flag any suspicious behavior. It also ensures that no one can log into your account without having access to your second method of verification.

Protect Your Personal Information

Take steps to protect your personal information online. In today’s digital age of social media, it’s easy to share information that you might not want out in the world. And on the Internet, everything you put out there lasts forever.

Protect your personal information by not oversharing on social media, using strong and unique passwords, and only entering your information on a secure site with secure Internet access. Before entering any personal information, confirm that the site’s name starts with “https.” This means it’s a secure site.

Hackers are becoming more sophisticated, but you can stay a few steps ahead of them. This National Internet Safety Month, remember to stay safe online by using strong passwords, setting up 2FA, keeping your software up to date, and being cautious of what you share over public Wi-Fi networks.

Gifting vs. Inheritance: Which Is Better For My Beneficiaries?

Wed, 01 Jun 2022 15:07:36 GMT

If you know that you want to leave behind money for your family members, is it better to leave the money as a gift while you are still living or as an inheritance after death? Each of these options have different tax consequences to be aware of before pursuing. We’ve gathered what you need to know in order to compare giving gifts versus inheritances to your beneficiaries.

Receiving Money as a Gift

When your beneficiaries receive money as a gift while you are still alive, they may not be required to pay taxes on the gift. Gifts up to $15,000 per individual receiver fall under a gift tax exemption. 1

For gifts of $15,000 or more per individual a year, the giver will be required to file a gift tax return Form 709. The amount over $15,000 would be deducted from the benefactor's lifetime gift exclusion. For example, if someone gifts $25,000 to another individual, $10,000 would be deducted from the lifetime gift exclusion.

Married couples can give up to $30,000 to each beneficiary by combining their annual exclusions through a process known as gift splitting. A tax or legal professional can provide guidance on what tax forms must be filed when using the gift-splitting election, regardless of the amount of the gift.

To take advantage of this tax exemption, you can spread gifts out over multiple years while still alive. There is a combined federal lifetime gift and estate tax exclusion of $11.7 million for individuals or $23.4 million for married couples. 2

Partial Payment Gifts

There are certain instances where a receiver may pay for a portion of their gift, but not the full value. The most straightforward example may be of a child purchasing their parents' home for less than what the home is worth. If the home is worth $750,000, for example, but a child buys it for $500,000, the $250,000 difference between the purchase price and fair market value is considered a gift and would need to be reported accordingly.

Receiving an Inheritance

Each state has different laws and estate taxes when it comes to inheritances. A few states do have an inheritance tax, which is decided upon based on assets as they are being transferred to beneficiaries. Inheritance tax rates also change depending on the inheritor’s relationship to the giver. This means that spouses, children and siblings could have different inheritance tax rates.

The states that have inheritance taxes include: 3

Nebraska
Iowa
Kentucky
Pennsylvania
New Jersey
Maryland

Each situation is unique. It’s important to evaluate how much money you are looking to leave your loved ones, when you plan on giving them the assets and how much time you have to do so. These considerations, along with the tax consequences, can help you to decide if your beneficiaries would be better off with gifting or inheritance. Contact us today to dig deeper into your available options.

Weekly Market Commentary - Confidence in Fed Helps Spark Market Rally

Tue, 31 May 2022 17:15:52 GMT

The Week on Wall Street

Stocks posted solid gains for the week, buoyed by the release of Fed meeting minutes and upbeat earnings from mid-size and discount retailers.

The Dow Jones Industrial Average jumped 6.24%, while the Standard & Poor’s 500 advanced 6.58%. The Nasdaq Composite index gained 6.84% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, rose 2.09%. 1,2,3

A Good Week

The stock market staged a broad rally last week, ignited by the release of minutes from the May’s Federal Open Market Committee (FOMC) meeting. The meeting notes eased concerns that the Fed might pursue a more aggressive monetary tightening stance than the Street had anticipated.

Investor sentiment rose owing to solid earnings and encouraging guidance from several mid-size and discount retailers, which eased concerns about the health of the American consumer. A smaller rise in the personal consumption expenditures price index, the Fed’s preferred measure of inflation, triggered a strong rally on Friday. The powerful move ended seven straight weeks of stock losses. 4

Fed Minutes

The minutes from May’s FOMC meeting were released last week. They confirmed the likelihood of at least two successive 50 basis point interest rate hikes. The minutes also indicated they might need to raise rates to a level that acts to restrict economic growth, something that Fed Chair Jerome Powell acknowledged might be a painful process. 5

Not all Fed members are fully committed to the more aggressive rate hikes. Last week, Atlanta Fed president Raphael Bostic wrote that a pause in rate increases in September might be appropriate. He joined other members in suggesting that economic conditions may warrant reconsideration of additional rate hikes beyond those already signaled by Powell. 6

This Week: Key Economic Data

Tuesday: Consumer Confidence.
Wednesday: Institute for Supply Management (ISM) Manufacturing Index. Jobs Openings and Labor Turnover Survey (JOLTS).
Thursday: Automated Data Processing (ADP) Employment Report. Jobless Claims. Factory Orders.
Friday: Employment Situation. Institute for Supply Management (ISM) Services Index.

Source: Econoday, May 27, 2022 - The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

This Week: Companies Reporting Earnings

Tuesday: Salesforce, Inc. (CRM), HP, Inc. (HPQ).
Wednesday: MongoDB, Inc. (MDB).
Thursday: Broadcom, Inc. (AVGO), Hormel Foods Corporation (HRL), DocuSign (DOCU), CrowdStrike (CRWD).

Source: Zacks, May 27, 2022 - Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.

Buttonwood Investment Policy Committee Update - May 2022

Tue, 24 May 2022 18:48:53 GMT

Update from Buttonwood's Investment Policy Committee

Inflation: A faster trip through the Economic Cycle

We regularly receive questions about specific headlines in the news and their implications. While each day is unique in time, there are certain trends we can follow. As we provide answers, we do so with a lens toward the impact on the economic cycle . Get the cycle right, and you will be miles ahead.

In our March 2022 post , we provided our positioning trends over the last couple of years. Shifting from a defensive allocation as lockdowns were imposed, to aggressive as we entered the Early stages of the economic cycle. In late 2021 , as we moved toward Midcycle stages, we shifted to less active risk and reduced sensitivity to sector specific exposure.

Where are we now?

While the synchronized decline in both the stock and bond markets has been unnerving, we expected an increase in volatility as the Fed’s hiking cycle commenced; consistent with historical norms. However, as long as inflation is far above the Fed’s comfort zone (2-3%), we believe the Fed will continue to act in disciplined manner to normalize rates, reduce excess demand and bring the labor market into better balance.

Reviewing corporate reports, it seems as if the rapid selloff has directly contributed to the Fed’s objective of tightening financial conditions (stock volatility is up, credit spreads have widened and both short and long term interest rates have risen). In other words, the markets have already provided substantial tightening to cool the economy. While we expect the annual real GDP growth rate to slow to a below trend pace by the end of this year, given the economy’s strong current expansionary readings and the strength in U.S. consumer balance sheets, we don’t expect GDP to dip below zero and move us into the Contraction stage of the economic cycle.

That said, with hot inflation we are seeing the Fed raise rates faster and thus the potential for a recession has indeed increased. As the Fed flirts with this tipping-point amidst its efforts to reduce inflation, we think volatility could remain elevated and, based on simple math , growth-oriented assets could underperform. Further complicating the Fed’s balancing act, we believe a ‘peak inflation’ narrative may begin to take hold over the summer months as new year-over-year inflation reports reflect last year’s Mt. Everest-like base effects.

Recent data shows excess inventories piling up across industries, and decelerating momentum in wage growth, auto prices, and freight activity further support the idea that inflationary pressures will ebb lower. In our view, if the consensus view of inflation begins to decline, it would take pressure off the Fed, potentially lowering the number of hikes needed and leading markets to lower US Treasury bond term premiums, lower mortgage rates and increase stock prices. Yet, risks to undermining this lower inflation thesis are possible; further escalations in Eastern Europe or more lockdowns in China would negatively impact supply chains pushing prices and inflation higher.

Positioning for Midcycle… and beyond

In our recent tactical rebalance (for non-taxable assets), we adjusted for this inflation conundrum in a couple of ways. After a handsome rally, we reduced exposure to both the energy and commodity sectors, yet increased exposure to inflation protected US Treasuries (TIPS). We also continued to hold several other inflation-focused hedges.

While we trimmed our overweight, we still maintain a bias to stocks over bonds. Looking around the globe, we continue to prefer US stocks for their historical relative resilience to a broad range of economic scenarios and as a proxy for quality. That said, we modestly reduced our long-standing overweight to the US to further mitigate exposure to growth and adjust overall risk closer to our benchmark.

Within our US stock holdings, we rebalanced into potentially lower risk exposure via US Infrastructure and dividend focused stocks. This also brought allocations closer to neutral on the value/growth spectrum with an eye toward hardening the portfolio for whatever may come. While, as we highlighted in March, a recession in Europe has become increasingly possible, we believe the European Central Bank will shift policy to be relatively less antagonistic to risk assets and only slowly normalize policy. This trend makes international developed market stocks marginally more attractive, particularly after such a vicious selloff this year.

Thank you for your continued trust and allowing us to coordinate your asset management as part of our Family CFO services!

Should You Be Utilizing Donor-Advised Funds?

Mon, 23 May 2022 14:46:28 GMT

These 4 Tax Benefits May Help Make Up Your Mind

Donor-advised funds, or DAFs, allow families and individuals to make tax-advantaged donations to charitable organizations. Similar to other investment accounts, a DAF allows donors to contribute assets to be donated to charitable organizations. The IRS requires such funds to be operated by 501(c)(3) organizations, or what the IRS deems “sponsoring organizations.” 1

Below we’re breaking down what you need to know regarding donor-advised funds and the potential tax advantages of utilizing one.

Donor-Advised Funds Considerations

One of the most notable differences between a DAF and other investments is that the money in a DAF may not be withdrawn. Once a donation is made, it is not returnable to the donor. This requirement, and others, set up DAFs to provide significant tax advantages.

Here are a few considerations to make when looking at the advantages of a donor-advised fund.

Tax Advantage #1: Multiple Asset Types Are Accepted

Though cash donations do provide the largest deduction, donor-advised funds allow individuals to donate multiple types of assets. Some types are even difficult to liquidate but can still be accepted.

Acceptable asset types could include:

Cryptocurrency
Stocks
Real estate

By no means is this an exhaustive list. It does, however, demonstrate the ability for donors to be able to diversify their donations, which in turn could potentially increase their charitable giving tax deductions.

Tax Advantage #2: Investments Grow Tax-Free

Assets that are donated to a donor-advised fund are allowed to grow tax-free. In addition, you are not required to donate those funds immediately, or even the year you made the contribution. Instead, those funds may stay-in-place and continue to grow over time. This allows you to donate a larger sum to charity while still gaining the benefit of deduction in your taxable income for the year in which the contribution was made.

Tax Advantage #3: Offset Capital Gains Tax

When an investor sells a stock that has made gains, they may be subject to paying capital gains taxes. Depending on the amount, this could account for a significant portion of the stock’s total value.

According to the IRS, this portion could be anywhere from 15 to 20 percent, and beyond, depending on asset type and income. 2

If you are considering a way to offset potential capital gains tax, DAFs allow for stocks to be donated at their full value. This means both the charity and the donor benefit. As the charity receives a larger donation, the donor receives a larger tax break.

Tax Advantage #4: Simplifies Reporting

Normally, if one were to donate to individual charities, they would need to report each charity on their taxes for the year. Utilizing a donor-advised fund can simplify the process, as donors instead report the fund’s earnings and withdrawals as a whole.

Donor-advised funds give individuals an opportunity to max out their charitable contributions. And in some situations, much of the tax savings and account growth that occurs is directly passed on to the charity of your choice. This makes DAFs an enticing strategy for charitable individuals and tax-minded investors.

1. https://www.irs.gov/charities-non-profits/charitable-organizations/donor-advised-funds

2. https://www.irs.gov/taxtopics/tc409

9 Questions to Ask Yourself During the Estate Planning Process

Wed, 18 May 2022 14:33:17 GMT

The estate planning process can feel overwhelming and never-ending - especially if you’re taking it on alone. As you try to address every possible question or pain point your heirs may encounter, here are a few questions of your own to consider.

Question #1: Do I Have a Will or Trust?

A Will or Trust enables you to specify who you want to inherit your property and other assets. A will also enables you to name a guardian for dependents, such as children under 18 or loved ones with special needs. Probate courts use the Will. Trusts are often designed to avoid the Probate process.

Question #2: Do I Have Healthcare Documents in Place?

Healthcare documents spell out your wishes for health care if you become unable to make medical decisions for yourself. They may also authorize a person to make medical decisions on your behalf should it prove necessary.

These documents often called:

Living will
Healthcare Directive
Durable power of attorney for healthcare

Question #3: Do I Have Financial Documents in Place?

Certain documents allow for others to assist if you can’t. If you become unable to make decisions for yourself, these financial documents can be structured to empower a person to make decisions on your behalf.

These documents and assets titling may include:

Joint ownership
Durable power of attorney
Living Trusts

Question #4: Have I Filed Beneficiary Forms?

In some cases, naming a beneficiary for bank accounts, life insurance and retirement plans defines who will receive these assets if you are no longer around. In other cases, a “Payable on Death or Transfer on Death” form may be required.

Question #5: Do I Have the Right Amount and Type of Life Insurance?

When was the last time you assessed your life insurance coverage? Have you compared the life insurance benefit with your financial obligations?

Keep in mind several factors affect the cost and availability of life insurance, including age, health and the type and amount of insurance purchased. Life insurance policies have expenses, including mortality and other charges. If a policy is surrendered prematurely, the policyholder also may pay surrender charges and have income tax implications.

Consider determining whether you are insurable before implementing a strategy involving life insurance. Any guarantees associated with a policy are dependent on the ability of the issuing insurance company to continue making claim payments.

Question #6: Have I Taken Steps to Manage My Federal Estate Tax?

If you have more than $12 million in assets (for 2022), you may want to consider taking steps to manage federal estate taxes. ¹ If the law remains unchanged, this amount reverts back to an inflation adjusted $5 million on January 1, 2026. Steps can be taken by working directly with your financial advisor and CPA.

Question #7: Have I Taken Steps to Protect My Business?

If you’d like your family to continue running the business, do you have a family succession plan in place? If you own a business with others, you may also want to consider a buyout or buy/sell agreement.

Question #8: Have I Created a Letter of Instruction or Intent?

A letter of instruction is a non-legal document that outlines your wishes. A strong, well-written letter may save your heirs time, effort, and expense as they administer your estate.

Question #9: Will My Heirs Be Able to Locate My Critical Documents?

After your passing, your heirs will need access to your documents. It is important to keep these items safe, yet accessible because your documents may contain funeral instructions and other time sensitive details your executor will need to know. While original documents are often kept in a fireproof safe or safe deposit box, at Buttonwood, we scan original documents and have them immediately available.

These documents may include:

Your Will and Trust documents
Life insurance policies and Annuity contracts
Deeds to real estate, and certificates for stocks, bonds and funds
Lists of assets detailing your financial accounts and retirement plans
Information on any debts you have: credit cards, mortgages and loans

Depending on the size and complexity of your estate, preparing can be a complicated process. Consider working with knowledgeable professionals who can address potential tax obligations, division of property, insurance options and more. The Buttonwood Team stands ready to assist, contact us today.

1. https://www.forbes.com/sites/ashleaebeling/2021/11/11/new-higher-estate-and-gift-tax-limits-for-2022-couples-can-pass-on-720000-more-tax-free/

This content is developed from sources believed to be providing accurate information. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.

Buttonwood Agreement Day - May 17th

Tue, 17 May 2022 15:06:43 GMT

May 17th marks 230 since the birth of the New York Stock Exchange

As early as the mid 1700’s, our nation’s financial traders could be found in action on the streets of lower Manhattan. It was during these years which brokers, merchants and auctioneers bought and sold to one another in offices, coffee houses, and marketplaces all over town. In the 1790’s, speculative excess, combined with the lack of a formal trading structure, left the future of our nation’s markets in question.

On May 17, 1792, a group of two dozen traders gathered at their regular meeting place, a buttonwood tree at 68 Wall Street, and made the decision to organize their trading. “The Buttonwood Agreement”, as this arrangement would later come to be known, helped to create liquidity and gave birth to The New York Stock Exchange. Membership on the NYSE has been held as a valuable property since 1868. Until recently, members could only join by purchasing existing seats, which were limited to a total of 1,366. In April 2006, the NYSE went both electronic and public, by merging with the already publicly traded Archipelago electronic stock exchange. According to ADVFN , “The New York Stock Exchange (NYSE) is the leading stock exchange in the world. The exchange trades stocks for some 2,800 companies ranging from blue chips to new high-growth companies.”

230 Years Later

Buttonwood Financial Group LLC, fulfilling the role of The Family CFO, was founded 20 years ago to simplify the complexity created by wealth and success. The Buttonwood Team brings personalized financial organization to each of our clients. Through a combination of both investment management and the implementation of retirement, estate, tax, insurance, cash flow, business and other strategies, the lessons taught by our forefathers come to light every day.

You are the CEO of your family; are you ready for a Family CFO to design and implement the steps to an organized and coordinated financial life? Contact us today for a conversation focused on you and your financial needs.

Are You Eligible for Catch-Up Contributions?

Thu, 12 May 2022 18:22:25 GMT

A recent survey found that 23% of people were very confident about having enough money to live comfortably through their retirement years, but 33% were not confident. 1 That’s a third of the population that is unsure whether or not they’ll have enough money to last them throughout retirement.

To help remediate this issue, Congress passed a law that can help older workers make up for lost time with catch-up contributions. But few may understand how this generous offer can add up. 2 Let’s learn more about what catch-up contributions are and help you determine whether or not you’re eligible.

What are Catch-Up Contributions?

Catch-up contributions allow workers who are over age 50 to make contributions to their qualified retirement plans in excess of the limits imposed on younger workers.

Contributions to a traditional 401(k) plan are limited to $20,500 in 2022. 3 If permitted by the 401(k) plan, participants age 50 and over can also make catch-up contributions. You may contribute additional elective salary deferrals of $6,500 in 2022 to traditional and safe harbor 401(k) plans.

Setting aside an extra $6,500 each year into a tax-deferred retirement account has the potential to make a big difference in the eventual balance since these contributions are elective deferrals that exceed the regular limits. These limits may be imposed by the IRS and/or the plan itself.

Now that you understand what catch-up contributions are, let’s look at the eligibility requirements to make these contributions.

Requirements for Catch-Up Contribution Eligibility

The main requirement of being a catch-up eligible participant is that you are at least 50 years old. But you may actually be able to take advantage of these contributions even before your birthday. The IRS states that “a participant is catch-up eligible with respect to a plan year if the participant turns age 50 by the end of the calendar year in which the plan year ends.” 4

This means that even if your birthday is in July, if your plan has a plan year of January–December, you may be deemed “age 50” in January and can therefore make catch-up contributions starting at the beginning of your plan year.

Another important aspect of catch-up contributions is the eligibility of your retirement plan. Catch-up contributions may be made to a 401(k) plan, a 403(b) plan, a governmental 457(b) plan, a SARSEP, a SIMPLE 401(k) or a SIMPLE IRA, but you should check the specific terms of your retirement plan to understand your catch-up contribution eligibility as plans can be set up differently.

A last note about catch-up contribution eligibility is that just because you are 50 years old or older doesn’t mean that you are eligible for catch-up contributions in the form of the regular $6,500 stated above. For example, your 401(k) plan might have its own elective deferrals, an employer match and a profit sharing contribution. As of 2021, the dollar limitation on annual additions according to the IRS is $55,000. If all of these contributions together add up to more than $55,000, that difference counts as your catch-up contributions if you are over 50, up to $6,500. Meaning, you don’t then get an additional contribution.

As you near retirement, it’s important to understand how much you can (and should be)

contributing to your retirement plan, as well as other tax and deferral implications. Working with a qualified financial advisor can be illuminating as you prepare for this important life milestone.

1. https://www.ebri.org/docs/default-source/rcs/2019-rcs/2019-rcs-short-report.pdf

2. https://www.congress.gov/bill/107th-congress/house-bill/1836

3. https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-401k-and-profit-sharing-plan-contribution-limits

4. https://www.irs.gov/retirement-plans/401k-plan-catch-up-contribution-eligibility

Financial Caregiving: 10 Ways to Go About It

Thu, 12 May 2022 17:01:38 GMT

Every day, millions of people give their time, energy, and even money to the task of taking care of others. This workforce is not managed by governments, corporations, or well-known nonprofits. Instead, average folks from all backgrounds, income levels, professional sectors, and geographic locations volunteer their time and resources to help others.

On average, family caregivers spend 26% of their income on caregiving activities. This money may be used to pay bills or copays, to buy food, for transportation, or to provide time and personal attention at someone else’s home. 1 If you are new to or already involved in financial caregiving, here are some tips to manage the situation and make sure it doesn’t significantly disrupt your personal life:

1. Consider for Whom and When Your Role May Apply

Set aside half an hour to think carefully about the people in your life for whom you may find yourself providing care in the future. Most folks tend to think of their spouses, children, and relatives. How about your close friends? Will you commit to caring for them as well?

2. Make Early Insurance Decisions

Long-term care insurance addresses what normal health insurance does not: all the care expenses that occur after immediate hospital treatment and drug prescription. Taking out long-term care insurance can also make a big difference in terms of personal care. It is worth thinking about paying a low cost now versus paying higher costs later due to indirect charges from a care service.

3. Educate Yourself

Spend 10–20 minutes each day learning about finance for caregiving. This could involve reading books or listening to audiobooks from libraries while commuting to work. Both will greatly expand your knowledge.

4. Don’t Forget Yourself

Caring for someone is an immense job and commitment, and it can overwhelm your own life. Don’t forget to protect yourself and your own wellbeing by maintaining your health and getting enough sleep.

5. Don’t Stop Working

You may feel that your care commitment is essential and that your spouse’s income can cover you both while you care for someone else. Therefore, you may think that it is best to stop working. Don’t do it. If you can maintain some earning power, this will help to preserve your Social Security benefits, retirement savings, income that may be needed to pay bills, and assets that you will need when it’s your turn to seek care.

6. Consider How to Control and Protect

If you will likely oversee someone else’s finances, which is a significant responsibility with several risks, make sure you have a plan for checking that every expense is valid and that you protect yourself with documentation. Don’t take it all on yourself, either; work with a family partner or a trusted individual so that you have appropriate support if there is any dispute.

7. Don’t Guess, Get Help

Find a trained financial professional from whom you can seek advice and counsel on how to proceed. This could be a lawyer, financial adviser , banking adviser, or financial expert. They can provide an objective perspective on how to deal with tough issues and protect yourself at the same time.

8. Consider a Tax Approach

You may wish to incorporate the person needing help as one of your dependents. 2 For example, if they are a relative. This is a considerable commitment, but it could allow you to gain a valuable tax benefit for expenses that you may otherwise not be able to deduct. It is vital that you talk with a tax adviser before following up on this option.

9. Know When to Stop

You cannot solve every problem. You need to know your limits and be prepared for when you must say no to a request. This will be emotionally hard, but it can be a little easier when you have your limits defined ahead of time.

10. Share the Burden

Too often, especially in families, one person takes most of the care burden, while others just enjoy visits and good times. Be bold and direct; when a burden should be shared, make sure to engage those who should be involved.

In all cases, make sure to keep your finances well-organized and separate from those of whom you care for. Even though it’s easy to combine resources, be disciplined about keeping cash, accounts, and payments separate. This will help avoid a legal mess later, for example, if relatives come hunting for inheritance alternatives that they think they are owed from your bank account.

Risk Management: Understanding Diversification

Wed, 04 May 2022 20:09:05 GMT

When you created your investment strategy , your asset allocation reflected your goals, time horizon and tolerance for risk.

Over time, however, any of these three factors may have changed, and your portfolio may need adjustments to reflect your new investing priorities.

Diversification

The saying “don’t put all your eggs in one basket” has some application to investing. Over time, certain asset classes may perform better than others. If your assets are mostly held in one kind of investment, you could find yourself under a bit of pressure if that asset class experiences volatility.

Keep in mind, however, that diversification is an approach to help manage investment risk. It does not eliminate the risk of loss if an investment sees a decline in price.

Asset allocation strategies are also used in portfolio management. When financial professionals ask you questions about your goals, time horizon, and tolerance for risk, they are getting a better idea of what asset classes may be appropriate for your situation. However, like diversification, asset allocation is an approach to help manage investment risk. It does not eliminate the risk of loss if an investment sees a decline in price.

Determining an Appropriate Mix

Appropriate asset allocation is determined by each individual's situation. Here are three broad factors to consider:

Time

Investors with longer timeframes may be comfortable with investments that offer higher potential returns but also carry a higher risk. A longer timeframe may allow individuals to ride out the market’s ups and downs. An investor with a shorter timeframe may need to consider market volatility when evaluating various investment choices.

Goals

They come in all shapes and sizes, and some are long-term, while others have a shorter time horizon. Knowing your investing goals can help you keep on target.

Risk Tolerance

An investor with higher risk tolerance may be more willing to accept greater market volatility in the pursuit of potential returns. An investor with a lower risk tolerance may be willing to forgo some potential return in favor of investments that attempt to limit price swings.

Have Your Investing Priorities Changed?

If so, this is all the more reason to review and possibly adjust the investment mix in your portfolio. Asset allocation is a critical building block of investment portfolio creation. Having a strong knowledge of the concept may help you when considering which investments are appropriate for your long-term strategy.

A Guide to Understanding Complexities of Equity Compensation

Tue, 19 Apr 2022 19:48:46 GMT

Equity compensation is an alternative compensation strategy designed to provide employees

with investment opportunities through company-based stock options. Over the years, this

strategy has become increasingly popular. In fact, according to Harvard Law School, roughly 58

percent of CEO compensation is a mix of equity and cash as of 2019. 1

An equity compensation strategy is typically utilized in businesses seeking growth without

drawing on a larger budget. This creates long-term ownership incentives at the cost of some

income stability. Let’s dive into how equity compensation works and examine some of the

different options available to employees.

Types of Equity Compensation

Each compensation option has a different set of opportunities, costs and taxes associated with

it. Also, be aware of the term “exercise,” as this is used often in equity compensation and refers

to the conversion of an option into stock. We recommend considering the differences in equity

compensation strategies when deciding whether equity compensation is right for you.

Equity compensation typically comes with a vesting schedule, a period of time in which stocks

fully become yours. This schedule will depend on the company and equity type. We have

worked with clients who have had no vesting schedule out to 6 years.

Standard Stock Options

With standard stock options, you can purchase a limited number of shares of the company you

work for, generally at a reduced price. After your vesting period, options can be exercised and

converted into shares. Be aware, stock options are typically exercisable for a limited amount of

time and follow different tax rules between pre-vested and vested shares. It’s important to

note that an employee with options is generally not considered a shareholder.

Non-Qualified Stock Options (NSOs)

A non-qualified stock option (NSO) is a type of employee stock option wherein you pay ordinary

income tax on the difference between the grant price and the price at which you exercise the

option.

Incentive Stock Options (ISO’s)

An incentive stock option (ISO) is an option that gives an employee the right to buy shares of

company stock at a discounted price with the added benefit of possible tax breaks on the profit.

The profit on qualified ISOs is usually taxed at the capital gains rate, not the higher rate for

ordinary income.

Restricted Shares

Unlike stock options, which you may receive before your vesting schedule provides full control,

restricted shares are limited by the employer based on your vesting schedule. Instead, you will

receive these stocks when they vest. The rate at which restricted shares are received will

depend on the company, just as the vesting schedule does.

Performance Shares

As the name implies, employees receive performance-based stock grants according to a set of

goals. These goals may vary and will depend on your company.

ESOP

An employee stock ownership plan (ESOP) is an employee benefit plan that gives workers

ownership interest in the company; this interest takes the form of shares of stock. ESOPs give

the sponsoring company—the selling shareholder—and participants various tax benefits,

making them qualified plans. Employers often use ESOPs as a corporate-finance strategy to

align the interests of their employees with those of their shareholders.

Net Unrealized Appreciation (NUA) Strategy

A beneficial strategy for employees with appreciated equity compensation in a retirement plan

is the NUA. Using NUA, employees with low basis company stock can significantly reduce taxes.

The IRS allows for a one-time opportunity to execute NUA distribution of company stock from

ESOP / 401(k) or qualified plan.

When using the NUA strategy, you’re essentially distributing shares of company stock from your

retirement plan with the cost being taxed at income tax rates and the gain at capital gains rate.

Contrast this with distributions from a retirement plan at income tax rates. Once the NUA is

executed, assets are outside your retirement plan, and no longer subject to Required Minimum

Distributions (RMDs) 2 .

To dive deeper, here is an example: Your employer offers an ESOP for it’s employees. You own

company shares in your 401(k) valued at $10 million. At retirement you will have a significant

amount of money in your 401(k) which is subject to RMDs (nearly $700,000 per year). These

RMDs, as well as other distributions from the plan, are taxed at regular income tax rate (37.5%

top Fed rate) plus state and local taxes. Using NUA, you distribute shares out of your 401(k) and

deposit them into a regular investment account. Your cost basis in the distributed shares is

subject to ordinary income tax in year of distribution. Now that the shares are outside the

retirement plan, you pay capital gains taxes (20% top Fed rate) on any gains, as shares are sold

now or in the future. Based on current tax law, the reduction from ordinary income tax rates to

capital gains rates could amount to material tax savings.

Additionally, when implementing the NUA, we often pair a gift of company shares to a

charitable entity, Family Foundation, Donor Advised Fund 3 , or similar to recognize a tax-

reducing charitable contribution in the same year as the tax-causing distribution. The funding

of a charitable entity establishes a pool of assets you can use to support charitable endeavors

for the rest of your life. Make the world a better place and create a significant tax deduction to

offset tax implications: An additional win-win.

Understanding the differences between equity incentive plans and strategy minimize taxes can

provide you the tools to determine benefits and implications of traditional vs equity

compensation. Remember to keep this summary in mind when offered equity by an employer.

If you’re unsure of what the best move may be for your current and future financial needs, we

stand ready to assist. Contact us today to learn more.

1. https://corpgov.law.harvard.edu/2019/04/16/2019-u-s-executive-compensation-trends/

2. https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-required-minimum-distributions

3. https://www.irs.gov/charities-non-profits/charitable-organizations/donor-advised-funds

Top 5 Things to Consider Before Buying an Airbnb Investment Property

Wed, 06 Apr 2022 17:37:00 GMT

An Airbnb investment property may seem like one of the easier ways to become a real estate mogul. A growing number of people are jumping in, even the current real estate moguls. They see the potential for a great return on the investment. Yet, is the Airbnb business for everyone? It’s important to do some research before jumping into the home-sharing craze.

Understanding the Market

Before investing time, sweat and equity into operating an Airbnb, it is important to know and understand the current environment. Conduct research into what kind of profit investors are actually making. Will what you gain in rental price eclipse your initial investment over the long-term? Are visitors to your city using the Airbnb service? Consider talking to an investment bank in Kansas City for more guidance.

The Airbnb market space is becoming more crowded as big money players are now entering home-sharing game. In recent times, multifamily property developers like Tricon Capital are able to come in and pay cash for homes in middle class neighborhoods according to a Tennessee State University researcher Ken Chilton. ¹ The associate professor of business said in a presentation that many individual investors may not be able to keep up with the near bottomless resources of those developers and may have to look towards less potentially valuable investment properties.

Local Laws Can Have an Effect

The local ordinances and legislation governs where and how Airbnb rentals can operate. Zoning laws determine whether a neighborhood will be residential, for business or dual use. You may not be able to operate an Airbnb in certain neighborhoods. If it is allowed, you may need to engage the bureaucracy and get a permit or license to begin renting space.

There Will Be Costs

Whether you are looking for an Airbnb investment property to use for the Airbnb or you’re using the spare bedroom, there’s no doubt that you will incur start-up costs.

If you’re buying a new property with cash, that’s great, you’ve covered the initial hurdle. On the other hand, many will have to take out a second mortgage. If you’ve ever purchased a home you are well aware of all of the costs associated with the first mortgage. On top of that five-figure price tag, you’ll have to furnish the place and provide good working appliances. Even if you use your residence for rental space, you will likely need to make a few improvements. How much you spend is up to you.

Another cost you may not have considered is the cost to secure the property. This applies whether you have a rental property or if you’re using your residence. If you have a separate property, you may want to think about buying a home security system with cameras you can monitor remotely. If you are using your home, you may want to install new locks on places to which you want to restrict access. And don’t forget the additional insurance to protect it all.

There will of course be operating costs. You’ll need to keep the lights on and perhaps have a cable service and broadband Internet with WiFi. The property will have to be maintained. It’s something you can do yourself; however, you may need to hire someone. It’s likely that there will also be a fee for processing payments when someone rents from you. The state and local tax board will want their share of the revenue as well.

Slow Down and Save Up

You’ll have to ask yourself if you can weather the storm during the slow months. Can you afford the upkeep of two properties when there is no revenue coming in from the rental? It may be a good idea to have a sizeable amount saved above what you estimate what it would take to purchase a rental property or make improvements on your residence.

Taxes, Fees and Insurance

The IRS and your local and state revenue agencies will have rules on how rental income is reported. Unless you’re only renting for a few days out of the year, you will have to report the income to the IRS. If you’re using your personal property, you will have few deductions. If you are using a rental service like Airbnb they will also take a portion or percentage of your profits as well as asking for a sign-up fee. Your current home insurance policy may cover infrequent visitors. However, if your door becomes a turnstile you may need a business policy.

Before you make a monumental move, talk to a financial advisor about your options so that you’ll be ready for anything. If you’d like to schedule a no-obligation conversation with one of our Lead Advisors, contact us today.

The post Top 5 Things to Consider Before Buying an Airbnb Investment Property appeared first on Buttonwood Financial Group, LLC .

Weekly Market Commentary – Markets Weigh Menu of Uncertainty

Mon, 04 Apr 2022 18:27:00 GMT

The Week on Wall Street

Stocks spent last week digesting the sharp gains of previous weeks as investors assessed a tightening yield curve, the war in Ukraine, and an uncertain outlook for economic growth and inflation.

The Dow Jones Industrial Average slipped 0.12%, while the Standard & Poor’s 500 was flat (+0.06%). The Nasdaq Composite index led, picking up 0.65% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, rose 1.02%. ^1,2,3

Stocks Pause

Stock prices bounced around following strong gains in two previous weeks as money managers appeared to reposition their portfolios ahead of the first-quarter close. Oil was under pressure all week as prices fell on news that Shanghai imposed a strict lockdown due to COVID infections. President Biden announced a sustained release of oil from the country’s strategic petroleum reserve.

Bond yields reversed their recent climb. The flattening in the yield curve triggered some concerns about economic growth and the possibility of a recession.

Labor Market

With economic growth worries overhanging the market, last week’s employment reports showed continued strong demand for workers. The Job Openings and Labor Turnover Survey reported the number of open positions remained near record highs, with job openings exceeding the number of available workers by a record five million. Afterward, the Automated Data Processing employment report saw private payrolls grow by 455,000 in March, slightly above consensus expectations. ^4,5

Finally, the government’s monthly jobs report showed that employers added 431,000 jobs in March, lowering the unemployment rate to 3.6%. That’s approaching the 50-year low of 3.5% reached in February 2020. ⁶

If you would like to talk with one of our Advisors about your investment strategy and overall financial life, please contact us today.

This Week: Key Economic Data

Monday: Factory Orders.
Tuesday: Institute for Supply Management (ISM) Services Index.
Wednesday: Federal Open Market Committee (FOMC) Minutes.
Thursday: Jobless Claims.

_{Source: Econoday, April 1, 2022 – The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.}

This Week: Companies Reporting Earnings

Wednesday: Levi Strauss & Co. (LEVI).
Thursday: Conagra Brands (CAG).

_{Source: Zacks, April 1, 2022 – Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.}

The post Weekly Market Commentary – Markets Weigh Menu of Uncertainty appeared first on Buttonwood Financial Group, LLC .

Weekly Market Commentary – Confidence Grows in Resilient Economy

Mon, 28 Mar 2022 19:36:00 GMT

The Week on Wall Street

With growing confidence in the economy’s resilience, stocks posted another week of solid gains.

The Dow Jones Industrial Average rose 0.31%, while the Standard & Poor’s 500 advanced 1.79%. The Nasdaq Composite index picked up 1.98% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, added 0.27%. ^1,2,3

Stocks Extend Gains

Markets bounced around all week as investors grappled with the crosswinds of rising yields, continued hostilities in Ukraine, and hawkish comments from Fed Chair Jerome Powell. After suffering declines in two of the first three trading sessions of the week, stocks turned higher on a good jobless claims number that investors interpreted as continuing economic strength.

Stocks drifted higher as the week came to a close amid rising bond yields, which on Friday saw the 10-year Treasury yield rise for the 13th time in 16 trading sessions. ⁴

Labor Market

Many economists speculated that the invasion of Ukraine would likely shave economic growth in the short term as hostilities worsened supply chains and increased inflationary pressures. The impact, so far, has not been seen in the labor market.

Last week’s initial jobless claims fell by 28,000 to 187,000, the lowest level since December 1969. The number of people on state unemployment rolls fell to 1.35 million, from 1.42 million the previous week, while open jobs are at a near-record high of 11.3 million. Employers’ need for workers suggests that the demand for products and services has remained resilient despite the events in Eastern Europe. ⁵

This Week: Key Economic Data

Tuesday: Consumer Confidence. JOLTS (Job Openings and Turnover Survey).
Wednesday: Gross Domestic Product (GDP). Automated Data Processing (ADP) Employment Report.
Thursday: Jobless Claims.
Friday: Employment Situation. Institute for Supply Management (ISM) Manufacturing Index.

_{Source: Econoday, March 25, 2022 – The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.}

This Week: Companies Reporting Earnings

Tuesday: Micron Technology, Inc. (MU), lululemon athletica, inc. (LULU), Chewy (CHWY).
Wednesday: Paychex, Inc. (PAYX).
Thursday: Walgreens Boots Alliance, Inc. (WBA).

_{Source: Zacks, March 25, 2022 – Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.}

The post Weekly Market Commentary – Confidence Grows in Resilient Economy appeared first on Buttonwood Financial Group, LLC .

Successful Planning for Multiple Generations: When and How to Get Started

Wed, 23 Mar 2022 17:47:00 GMT

Developing a succession plan should be top of mind when considering the future of your business and assets. Eventually, you will want (or need) more flexibility in your daily life, and rather than waiting until that time comes to decide what to do, it is prudent to define a strategy now.

Family business succession planning can be complicated. Discussion around succession can be uncomfortable because family businesses aren’t generally transitioned equally. One or two of the kids may be involved, but others may have no interest at all. To set yourself and your family up for success, you’ll need to implement a realistic plan.

Passing Down Assets

You have worked your entire life building and want to ensure assets are passed down to those you love and/or to a charity you are passionate about. There are several considerations when planning for an eventual transfer.

Real Estate: If you own real estate, it’s important to determine if your heirs, or charity, are prepared to take on management responsibility. For example, you might own 10 houses and spending time managing the properties is what you do. However, is your next generation willing to take on such a large project? Can your charity of choice even ‘own’ them? If not, your succession plan should include strategy around the sale of the properties.

Individual Retirement Accounts: If you have assets in traditional IRA’s, your beneficiaries will likely need to distribute all the assets (and pay taxes on the distribution) within a 10-year period. To avoid big tax bills for your beneficiaries, Roth conversions during lower income years, or fulfilling charitable gifts with IRA assets, can be very impactful and can potentially provide considerable tax savings.

When planning for a transfer of assets, you may consider putting them into a Trust and allowing assets to remain in Trust for your beneficiaries throughout their lifetime. This strategy allows you to protect assets as they move to future generations. For example, if one of your beneficiaries gets married, assets inherited in trust may protect against division in the event of a divorce. If one of your kids starts a business that fails, assets in trust can also protect from creditors.

If the language in the trust isn’t drafted correctly or up to date with the current tax law, the Trust may not provide the protections you were initially seeking. Required Minimum Distributions (RMDs) for retirement assets in a Trust have become quite complex .

Family Business Succession Planning

Management vs. Ownership

If you are considering transferring a business, it’s important to first realize control, management and ownership are not the same. For example, you may decide you’d like to transfer the management of your business to one person or group of persons, while transferring ownership to your kids, whether they are actively involved in the operation of the business or not.

Regardless of how you define control, management, and ownership, you will want to work closely with financial professionals and lawyers who specialize in business succession planning. Together they will be able to offer advice and strategies focused on the details of your business, including how to potentially minimize taxes when the transfer does take place. This is crucial, as failing to have a proper strategy in place is one of the primary mistakes we see when it comes to business succession planning and your own retirement.

For many businesses, family is the primary consideration in succession planning. From the future management of your company to ownership details and tax liability, your decisions will ultimately have an impact on one or more members of your family. Here are a few tips to keep in mind during this transition:

Tip #1: It’s Never Too Early to Begin Planning

The sooner you begin preparing your business succession plan, the sooner you can begin implementing the details. You may have been advised to build an exit strategy directly into your business plan, which can be beneficial in the long run but can be complex to change if you later find a dated strategy no longer optimal. The time you invest on succession planning, will likely be rewarded with a smoother transition.

Tip #2: Involve Family Members

Creating a succession plan quietly on your own (and then “announcing” it to all those who will be affected) can be a recipe for disaster. Instead, we see the most successful strategies pulling together family members early on so that you can discuss and strategize together. Together early will also provide time for real discussion around major career decisions involving the family business or the pursuit of other interests.

You may also discover during this time that some family members are passionate about certain components of the business while others are most capable of handling other aspects. Most importantly, by involving your family members, you may realize that a succession plan which keeps the business in the family may not be the best decision after all and, ultimately, it would be best to sell. Communication is key to creating and implementing strategy that will help your business thrive while keeping your family dynamic strong.

Tip #3: Train Your Successors

You’re more likely to achieve success with your transition plan by working with your successors for an ample amount of time before you hand over full responsibility. Beyond the day-to-day, also consider involving your successors in strategic planning and decision-making five or ten years out. While it may be difficult to give up some control while you are still very much “in charge,” allowing your successors to be a key part of strategic initiatives will greatly improve their ability to continue to handle this after your exit.

Tip #4: Acquire Outside Help

A variety of professionals, including lawyers, accountants, financial advisors, etc., can help you organize and develop a successful succession plan. With expertise, you may find yourself analyzing options and considering details that you wouldn’t have thought of otherwise. By partnering with professionals, like Buttonwood, who have been involved with family business succession planning, you’ll have the added benefit of someone to facilitate the process of working through potential issues.

Do What’s Best for the Family

At the end of the day, it’s important to take into consideration what will ultimately be in the best interest of your family. Multi-generational asset and business succession planning can be complicated because it requires you to make difficult decisions with your loved ones in mind. By connecting with professionals and utilizing a process that outlines the details involved, you’ll be able to ensure an effective, more efficient, and successful plan to help your business maintain growth over time. If you would like to speak with one of our Advisors, contact us today.

The post Successful Planning for Multiple Generations: When and How to Get Started appeared first on Buttonwood Financial Group, LLC .

Are Higher Education Expenses Tax Deductible? A Quick Reminder for Parents

Tue, 22 Mar 2022 16:29:00 GMT

Parents and grandparents of high school students have a wistful feeling about the child they’ve watched grow up, as well as a concern for what lies in their future. It’s only natural to want to help that future scholar navigate the financial hurdles to a great education. That said, you have a few hurdles of your own. It would be good to know how to financially help the child in your life while avoiding any extra tax burdens.

What School Expenses Qualify?

If you’re helping your child fund their education, the IRS offers education credits. These can be claimed for qualified expenses paid with cash, check, credit card, debit card or with loan money. However, if you are paying with money from a loan, your credit applies only to the year you make the payment. ¹

These qualified expenses include: ²

Bear in mind, the AOTC has phase-out limits for households with a modified adjusted gross income of over $160,000 for married couples filing jointly or $80,000 for single filers. You can still get a partial credit up to the total phase-out limit of $180,000 for couples or $90,000 for those filing as single. ²

For those who qualify, the AOTC offers up to a $2,500 credit on items assigned for study, such as: ²

These items do not necessarily need to be purchased directly from the school or their bookstore to qualify for the credit, but they must be assigned to the student.

What Expenses Aren’t Qualified?

Expenses for sports, games, hobbies and courses without credit are not qualified. However, there is an exception for these expenses if they are necessary for the student’s degree. ¹

The following items are not qualified, even in situations where you’re paying the school directly for them: ¹

It’s also important to remember that if you’re taking money from a tax-advantaged account, a scholarship or a grant with no tax requirements, you’re disqualified for the amounts used. For instance, if the student in question had a $5,000 scholarship, you’d subtract that amount before taking any deductions. ¹

Tax-Advantaged Accounts

As you consider how you’ll cover the costs of college, starting with tax-focused saving strategies can help. Here are several college savings vehicles with important tax considerations you may want to consider.

529 College Savings Plans

Offered by states and some educational institutions, these plans allow you to save up to $15,000 per year for your child’s college costs without having to file an IRS gift tax return. A married couple can contribute up to $30,000 per year. However, an individual or couple’s annual contribution to a 529 plan cannot exceed the yearly gift tax exclusion set by the IRS. ³ You may be able to front-load a 529 plan with up to $75,000 in initial contributions per plan beneficiary – up to five years of gifts in one year – without triggering gift taxes. ⁴ Unlike the tax deductions above, 529s can be used for books, supplies, equipment, room and board, and even computers or tablets and education software.

Remember, a 529 plan is a college savings plan that allows individuals to save for college on a tax-advantaged basis. State tax treatment of 529 plans is only one factor to consider prior to committing to a savings plan. Also, consider the fees and expenses associated with the particular plan. Whether a state tax deduction is available will depend on your state of residence. State tax laws and treatment may vary. State tax laws may be different than federal tax laws. Earnings on non-qualified distributions will be subject to income tax and a 10 percent federal penalty tax.

If your child doesn’t want to go to college, you can change the beneficiary to another child in your family. You can even roll over distributions from a 529 plan into another 529 plan established for the same beneficiary (or another family member) without tax consequences. ^3,4

Grandparents can also start a 529 plan or other college savings vehicle. In fact, anyone can set up a 529 plan on behalf of anyone. You can even establish one for yourself. ^3,4

Coverdell ESAs

Single filers with modified adjusted gross incomes (MAGIs) of $95,000 or less and joint filers with MAGIs of $190,000 or less can pour up to $2,000 into these accounts annually. ⁵ If your income is higher than that, phaseouts apply above those MAGI levels. Money saved and invested in a Coverdell ESA can be used for college or K-12 education expenses. They cover the items mentioned above for 529s and can even be extended to tutoring and transportation related to education. ⁵

Contributions to Coverdell ESAs aren’t tax-deductible, but the accounts enjoy tax-deferred growth and withdrawals are tax-free, so long as they are used for qualified education expenses. Contributions may be made until the account beneficiary turns 18. The money must be withdrawn when the beneficiary turns 30 or taxes and penalties may occur. ^5,6

UGMA & UTMA accounts

These all-purpose savings and investment accounts are often used to save for college. They take the form of a trust. When you put money in the trust, you are making an irrevocable gift to your child. You manage the trust assets until your child reaches the age when the trust terminates (i.e., adulthood). At that point, your child can use the UGMA or UTMA funds to pay for college; however, once that age is reached, your child can also use the money to pay for anything else. ⁷

Using a trust involves a complex set of tax rules and regulations. Before moving forward with a trust, consider working with a professional who is familiar with the rules and regulations.

Imagine your child graduating from college, debt-free. With the right kind of college planning, that may happen. Talk to one of our Lead Advisors today about these savings methods and others.

Weekly Market Commentary: Stocks Rally in Changing Landscape

Tue, 22 Mar 2022 16:13:00 GMT

The Week on Wall Street

With the Fed embarking on a new course of monetary tightening amid continued fighting in Ukraine, stocks staged a powerful, broad-based rally last week.

The Dow Jones Industrial Average jumped 5.49%, while the Standard & Poor’s 500 gained 6.16%. The Nasdaq Composite index soared 8.18% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, advanced 5.17%. ^1,2,3

Stocks Roar

After surrendering gains on Monday, stocks surged higher for four consecutive days. The rally was propelled by strong economic data, the outcome of last week’s Federal Open Market Committee (FOMC) meeting, and reports that Russia made interest payments on its sovereign debt, avoiding technical default.

The uptrend began with a drop in oil prices and a lighter-than-expected wholesale inflation report. Stock prices initially buckled following Wednesday’s hawkish FOMC announcement, but turned higher as investors interpreted the Fed’s news as a welcome plan to combat inflation. Stocks extended their gains into the final two trading sessions, cementing their best weekly performance since November 2020. ⁴

The Fed’s Plan

For the first time since 2018, the Federal Reserve hiked the federal funds rate, increasing it by 0.25% and signaling that it expected to raise rates at a faster pace than originally outlined in December. Based on its projections of future fed fund rates, the Fed may implement seven quarter-point rate hikes this year and another three to four next year. ⁵

In a statement following the FOMC meeting, Fed officials expressed rising concerns over inflationary pressures made more acute by the war in Ukraine. Members also indicated that they would soon announce a plan to reduce the Fed’s $9 trillion balance sheet. ⁶

If you would like to discuss your investment and financial strategy with one of our Advisors, contact us today.

This Week: Key Economic Data

Wednesday: New Home Sales.
Thursday: Jobless Claims. Durable Goods Orders. Purchasing Managers’ Index (PMI) Composite Flash.
Friday: Consumer Sentiment.

_{Source: Econoday, March 18, 2022 – The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.}

This Week: Companies Reporting Earnings

Monday: Nike, Inc. (NKE).
Tuesday: Adobe, Inc. (ADBE).
Wednesday: General Mills, Inc. (GIS).

_{Source: Zacks, March 18, 2022 – Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.}

The post Weekly Market Commentary: Stocks Rally in Changing Landscape appeared first on Buttonwood Financial Group, LLC .

Buttonwood Investment Policy Committee Update – March 2022

Fri, 18 Mar 2022 14:06:00 GMT

An active world calls for proactive asset management:

Buttonwood’s core investment allocations are designed to take advantage of longer-term investment views with the flexibility to take advantage of shorter-term trends. We believe combining these strategies will allow us to produce a more consistent rate of return through economic cycles.

Following lockdowns, in early 2020 we focused on our theme of “participate but defend.” We rebalanced portfolios to bring allocations in line from the market volatility caused by covid. We also proactively took advantage of tax benefits from tax loss harvesting. By early 2021 we continued to add to stocks based on strong underlying fundamentals and were leaning further into cyclicals as part of the recovery. In mid ’21 we were expanding exposure to sectors we believed would benefit returns with rising inflation; commodities, energy, corporate credit and TIPS. Late year , with several stock sectors starting to show weakness, we remained with our reflationary themes, but shifted to less active risk and reduced sensitivity to sector specific exposure.

On our path to more consistent returns, generally we tend to stay within 10% of target allocations. For example, our overall stock exposure in a 60% stock/ 40% bond allocation will typically fall between 55% and 65% at any given point in time. We use this 10% to adjust exposure to regional, sector, factor or changing investment themes.

As we moved into 2022, we believe we are continuing the transition from earlier stages of the economic cycle to mid cycle stages. Not unexpected, we have seen major stock indices join sub sectors, and stock markets as a whole decline. In early February we completed our first rebalance of the year (for both taxable and retirement account assets) to reduce our overweight to stocks and exposure to Europe. We also reduced credit exposure in bonds and added duration to act as a ‘shock absorber.’

Positioning for the fluid implications of the Russian/Ukraine conflict in Eastern Europe

In response to the events unfolding in Eastern Europe, our March rebalance (only for retirement account assets) focused on recalibrating exposures to reflect the changing macro environment. While the immediate trajectory of the conflict remains highly uncertain, it is likely to have lasting economic and financial consequences.

In summary, we expect weaker European industrial production and higher commodity prices to be the primary macro transmission channels – adding fuel to the supply-constraint-driven-inflation phenomenon already impacting global economies.

In Europe, interruptions in trade are interfering with industrial production schedules, and dampening investment, while pronounced energy price increases are depressing consumer disposable spending and causing more cost-push inflation. Globally, while less severe relative to Europe, commodity price increases place net negative pressure on real growth. Based on these impacts, we are reducing European-heavy developed market equities and cutting growth-outlook-sensitive global financial equities to fund increases in US equities and commodities.

Thank you for your continued trust and allowing us to coordinate your asset management as part of our Family CFO services!

The post Buttonwood Investment Policy Committee Update – March 2022 appeared first on Buttonwood Financial Group, LLC .

How Your Money Mentality Should Change in Retirement

Thu, 17 Mar 2022 15:47:00 GMT

Reaching retirement can feel like crossing the finish line at the end of a 30-, 40- or even 50-year-long marathon. Therefore, many of us look forward to the endless vacation days and the rest and relaxation of retirement. Although a life with no alarm clock is something many may dream about, the truth is that retirement really throws a wrench in how we view our money, and the switch from receiving structured, employment-driven income to drawing down investment accounts can be harder than we realize. You may be looking for retirement tips to begin the transition; let’s review how your money mentality should change.

If you’re retired (or nearing retirement), you’ve worked long enough to see a vastly transformed economy. Factors like offshored workforces and manufacturing, corporate acquisitions, and the transition from a manufacturing-based economy to one of service, information and technology-based has fundamentally changed employment dynamics.

With some public-sector and rare private business exceptions, defined benefit plans like pensions have gone the way of the dinosaur. This means the burden of saving for retirement has shifted to you. And just as your money mentality has changed over the course of your career, so too should it change when you retire.

Changing Your Money Mentality in Retirement

You used to ask yourself if you were saving enough money for retirement. Now you’ll have to ask yourself how long you need that money to last for both you and your partner.

You used to set retirement savings goals. Now you look at your money in an entirely different way, and your goal is to set budget goals that make sense for your lifestyle.

You used to optimize your portfolio to reflect your growth needs and risk capacity. Now that you’re retired, you may look at dips in the market and other risks in an entirely different way.

You (probably) used to work full-time for your primary source of income. Now, luckily, you have a lot more flexibility. Do you want to work part-time? Consult? Or do you want to pursue a retirement career that reflects one of your passions?

Retirement Mindset Means More Than Just Money

When you think about it, suddenly moving from working 40+ hours a week to zero can be a real shock to your system. Although it may sound great in theory, the truth is that we’re creatures of habit—and we don’t always react well to quick and dramatic changes. Some employers will allow you to ease into retirement by gradually shortening your workweek over a year or a couple of years. This can be a great way to get your toes wet before diving right into full retirement. Use your days off to discover new hobbies, start volunteering, meet with friends and begin developing a new routine you can expand on throughout retirement.

If your current place of employment does not offer a gradual retirement option, you could search for a part-time job, perhaps something that’s more laid back or of interest to you. Or, you could begin consulting work in your field. Easing into retirement not only helps reduce the shock but also can be a great way to continue earning income without committing to a full workweek.

Everybody Needs a Helping Hand Sometimes

If you’re struggling with your money mentality, there are some retirement tips that can help. For many, this starts with making sure they’re aligned with their passions—friends, family, travel, hobbies, volunteering and so much more. Some look for role models, people like them who are wonderful examples of thriving in retirement. Others get help from their financial professionals to set and meet their retirement goals. If you would like to explore how we can work toward retirement peace of mind, contact us today.

The post How Your Money Mentality Should Change in Retirement appeared first on Buttonwood Financial Group, LLC .

Weekly Market Commentary: Ukrainian War Impacts Global Economy

Tue, 15 Mar 2022 19:49:00 GMT

The Week on Wall Street

Intensifying hostilities in Ukraine continued to unsettle markets, as investors grappled with the war’s impact on the global economies.

The Dow Jones Industrial Average lost 1.99%, while the Standard & Poor’s 500 dropped 2.88%. The Nasdaq Composite index fell 3.53% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, gained 0.90%. ^1,2,3

Markets Remain Stressed

Markets gyrated last week as Russia escalated its attacks on Ukraine, the U.S. banned imports of Russian oil, and more companies announced the suspension of business in Russia. Eastern Europe has added complexity to Fed’s plans for raising interest rates to manage accelerating inflation, which has been exacerbated by a sharp rise in energy and other commodity prices.

The stock market saw brief moments of respite. Stocks rallied Tuesday on a news report that Ukraine would promise not to pursue NATO membership, but lost momentum before the close. Stocks rallied on Wednesday as oil prices tumbled, but were unable to follow-through on Thursday and then faded further into Friday’s close.

A Four-Decade High

Consumer prices rose 0.8% in February as energy and commodity prices pushed higher. This latest monthly report showed a year-over-year inflation rate of 7.9%, the highest level since January 1982. Excluding the more volatile food and energy prices, the 12-month increase was 6.4%, a slight bump from last month’s 6.0% year-over-year increase. ⁴

Many economists hoped that inflation pressures would ease, but February’s inflation number suggested that the impact of sanctions and supply-chain disruptions due to the invasion of Ukraine may likely feed further price increases for the foreseeable future.

If you would like to talk with one of our Lead Advisors about our investment management and Family CFO services, please contact us today .

This Week: Key Economic Data

Tuesday: Producer Price Index.
Wednesday: Retail Sales. Federal Open Market Committee (FOMC) Announcement.
Thursday: Housing Starts. Jobless Claims. Industrial Production.
Friday: Existing Home Sales. Index of Leading Economic Indicators.

_{Source: Econoday, March 11, 2022 – The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.}

This Week: Companies Reporting Earnings

Monday: Coupa Software, Inc. (COUP).
Thursday: FedEx Corporation (FDX), Dollar General Corporation (DG).

_{Source: Zacks, March 11, 2022 – Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.}

The post Weekly Market Commentary: Ukrainian War Impacts Global Economy appeared first on Buttonwood Financial Group, LLC .

What Is a Living Trust?

Mon, 14 Mar 2022 14:50:00 GMT

A living trust is a popular consideration in many estate strategy conversations, but its appropriateness will depend upon your individual needs and objectives. Learn more about what a living trust is and some of the potential benefits of a living trust to help you determine whether a living trust is right for your situation.

What Is a Living Trust?

A living trust is created while you are alive and funded with the assets you choose to transfer into it. The trustee (typically, you) has full power to manage these assets. A living trust will also designate a beneficiary, or beneficiaries, much like a will, to whom the assets may be automatically passed on upon your death.

If you create a revocable living trust, you may change the terms of the trust, the trustee, and the beneficiaries at any time. You can also terminate the trust altogether.

Using a trust involves a complex set of tax rules and regulations. Before moving forward with a trust, consider working with an estate planning professional.

Why Create a Living Trust?

The living trust offers a number of potential benefits:

The Drawbacks of a Living Trust

Living trusts are not an estate planning catch-all. They won’t accomplish some potentially important objectives, including:

Revocable vs. Irrevocable Trusts

Sometimes, you might hear a living trust referred to as a revocable trust , meaning that you can make changes to it after it’s created. These changes could include changing beneficiaries or trustees, changing the assets that are included in the trust or modifying any stipulations.

This is in comparison to an irrevocable trust, which is a trust that can’t be changed after it’s created. Generally, irrevocable trusts remove assets from your estate, which may limit estate tax upon your death. Irrevocable trusts require a qualified attorney to set them up.

Is a Living Trust Right for Me?

Every estate planning situation is different, so consider working with a financial advisor or attorney who understands your unique situation. But these questions may offer further insight into whether a living trust is right for you:

Living trusts are just one piece of the larger estate planning puzzle. Ensure your assets are protected and organized upon your death by working with a qualified estate planning professional, or contact us today to see how we can assist in coordinating your estate plan.

Weekly Market Commentary: Ukrainian War Stresses Economy

Mon, 07 Mar 2022 14:52:00 GMT

The Week on Wall Street

War in Ukraine weighed on stocks as investors assessed the economic impact of continued hostilities, expanding economic sanctions, and potentially higher inflation due to rising oil prices and new stresses on the global supply chain.

The Dow Jones Industrial Average fell 1.30%, while the Standard & Poor’s 500 lost 1.27%. The Nasdaq Composite index slid 2.78% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, dropped 3.21%. ^1,2,3

Another Volatile Week

The uncertainty introduced from Russia’s invasion continued to whipsaw the financial markets last week. Intensifying hostilities early in the week sent stocks sharply lower as oil prices surged and a flight to safety drove investors to buy bonds.

Stocks rebounded mid-week following the release of positive economic data and Congressional testimony by Fed Chair Jerome Powell, who said the Fed is likely to move forward on rate hikes, but would proceed cautiously. Investor enthusiasm was short-lived, however, as stocks resumed their decline on Thursday into Friday despite a strong employment report.

Powell Testifies

Fed Chair Powell told Congress on Wednesday that he would propose a 25 basis point increase in the federal funds rate when the Federal Open Market Committee meets in mid-March. He conceded that the invasion of Ukraine and the economic sanctions against Russia introduced a level of uncertainty and that the Fed would proceed carefully with monetary tightening.

Powell also testified that he would not have the Fed’s strategy to shrink its balance sheet finalized before the mid-March meeting. Alluding to the urgency of fighting inflation, Powell left the door open to more aggressive rate hikes later in the year. ⁴

This Week: Key Economic Data

Wednesday: JOLTS (Job Openings and Labor Turnover Survey).
Thursday: Consumer Price Index. Jobless Claims.
Friday: Consumer Sentiment.

_{Source: Econoday, March 4, 2022 – The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.}

This Week: Companies Reporting Earnings

Tuesday: Guidewire Software, Inc. (GWRE).
Wednesday: Asana, Inc. (ASAN).
Thursday: JD.com, Inc. (JD), Ulta Beauty, Inc. (ULTA), DocuSign (DOCU), Rivian Automotive, Inc. (RIVN).

_{Source: Zacks, March 4, 2022 – Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.}

The post Weekly Market Commentary: Ukrainian War Stresses Economy appeared first on Buttonwood Financial Group, LLC .

Weekly Market Commentary: Inflation and Ukraine Fears Cool Markets

Tue, 15 Feb 2022 16:46:00 GMT

The Week on Wall Street

A hot inflation print and the growing concern of a Russian invasion of Ukraine sent stocks tumbling late in the week, leaving major indices lower for the five-trading days.

The Dow Jones Industrial Average skidded 1.00%, while the Standard & Poor’s 500 retreated 1.82%. The Nasdaq Composite index slumped 2.18%. The MSCI EAFE index, which tracks developed overseas stock markets, advanced 2.26%. ^1,2,3

A Double Whammy

Mid-week, a fresh batch of positive corporate earnings surprises lifted investor sentiment, helping stocks claw back losses with technology stocks posting some of the sharpest gains. But January’s inflation report, set for release on Thursday morning, remained investors’ biggest concern.

When the report hit, it showed accelerating inflation, and stocks dropped and bond yields bounded higher. Stocks managed to recover from the initial reaction to the unexpectedly high inflation number. But when the President of the Federal Reserve Bank of St. Louis commented that the Fed may consider a more aggressive move against inflation, stocks resumed their slide lower. The stock skid accelerated into Friday on White House reports that an invasion of Ukraine by Russian forces may be imminent. ⁴

Inflation Sizzles

Prices of consumer goods accelerated in January, rising 0.6% from the previous month and 7.5% year-over-year. This annual inflation rate was the highest since 1982. Core inflation, which excludes the more volatile food and energy prices, was 6.0% higher from last January. ⁵

Many economists and market analysts had expected inflation to moderate, but driven by a surge in prices of used cars, gasoline, and energy, inflation remained at elevated levels. The persistence of inflation at these heights has fueled investor concerns that the Fed might consider a more aggressive 50-basis points increase in short term interest rate.

This Week: Key Economic Data

Tuesday: Producer Price Index (PPI).
Wednesday: Retail Sales. Industrial Production. FOMC Minutes.
Thursday: Housing Starts. Jobless Claims.
Friday: Existing Home Sales. Index of Leading Economic Indicators.

_{Source: Econoday, February 11, 2022 – The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.}

This Week: Companies Reporting Earnings

Tuesday: Zoetis, Inc.(ZTS), Devon Energy Corporation (DVN), Marriott International, Inc. (MAR), ViacomCBS, Inc. (VIAC).
Wednesday: Nvidia Corporation (NVDA), Cisco Systems, Inc. (CSCO), Applied Materials, Inc. (AMAT), Shopify, Inc. (SHOP), DoorDash (DASH).
Thursday: Roku, Inc. (ROKU), Walmart, Inc. (WMT), The Southern Company (SO).
Friday: Deere & Company (DE).

_{Source: Zacks, February 11, 2022 – Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.}

The post Weekly Market Commentary: Inflation and Ukraine Fears Cool Markets appeared first on Buttonwood Financial Group, LLC .

5 Questions to Ask Before Hiring a Financial Advisor

Thu, 10 Feb 2022 10:00:00 GMT

Hiring a financial advisor is an incredibly personal – and important – decision. This is someone who will be perusing the intimate details of your financial life and could potentially hold your future retirement success in their hands. Most experts agree that anyone would benefit from working with a financial advisor, no matter their level of income. However, not all financial advisors will be a good fit for you. Before you start working with a financial professional, it’s a good idea to ask them these five questions.

1. Do you have experience working with others in my life situation?

Your financial advisor isn’t there to judge you, their job is to help you make the best of any financial situation. This could mean helping you manage aging parents and younger children, preventing financial potholes, building a succession plan for your business, developing a new plan now that you are divorced, or figuring out how to retire early. Finding a financial professional with experience working with other clients similar to you, with a comparable attitude towards risk and similar needs, is a good first step.

2. What is your net worth, how did you make your money, and how is it growing?

The best option is to learn from an individual who has already proven their chops on their own money, before they decide to test out their theories on your retirement account. Far from being rude, your financial advisor is likely to expect this question and probably has an answer ready to share. Hearing their strategy for growth may help you determine whether or not they would be a good fit for your long-term goals.

3. Are you willing to sign binding fiduciary and non-disclosure agreements?

A fiduciary agreement, also known as being held to a fiduciary standard, means that your financial planning professional is required to place your interests above their own — even when it means they make less money on a trade or sale. Non-disclosure agreements are especially important for high net worth individuals, as this reinforces the standards of privacy required for anyone handling your personal and financial information.

4. How are you compensated for helping me?

Financial advisors are often making money from a variety of sources: direct hourly or flat-fee payments from clients for managing financial interests and a percentage or cost for assets under management. It’s important to know exactly how your advisor is compensated before you make a final decision (but it’s important to remember that you often get what you pay for!)

5. Tell me about a client’s success (and a failure!)

While most professionals are interested in telling you about fantastic success stories, understanding where something went wrong is just as important to future learnings. Having a candid discussion up-front about how things can go wrong or what helps them go right is an important conversation and will also help you determine if you can trust the advisor.

Most people find working with a financial planner to shed light on many financial factors they had not considered. You may learn more about financial principles and ways to improve your family fortune – or simply get a plan in place that leaves you feeling more comfortable about your future.

If you would like to schedule a conversation with one of our talented Lead Advisors, contact us today.

Tax Filing Season To-Do List

Tue, 08 Feb 2022 15:24:00 GMT

The tax season is officially here. If you haven’t already, now is the time to get prepared. Whether you meet with a tax professional or prepare your taxes yourself, proper planning helps the processes go more smoothly and may reduce the risk of costly errors. Check out the tax filing to do list below and prepare to tackle this tax season with confidence.

To-Do #1: Gather All of Your Forms

Beginning in January, you should have started receiving the forms you need to properly complete your tax return. Most CPAs will provide you with a tax organizer. However, if you are self-preparing, it’s important to make a list of needed forms to help ensure you are properly recording income, expenses, and deductions. Once you have received your documents, first give them a scan to make sure they are correct and contact the sender if there are any discrepancies. Remember, even a simple checkmark in the wrong box can flag your tax return. Because of reduced staff, the IRS has reverted to using computers to inspect returns. If the IRS receives a 1099 from a company and you don’t report it, the computer will notice, possibly triggering a letter. With a backlog of 6 million 2020 Forms 1040, 2.3 million amended returns filed on Form 1040-X, plus millions more in business and payroll tax returns, the IRS is telling taxpayers not to file a second return or contact the IRS. It is critical to carefully assess all your documents and ensure you have received required forms to prevent major delays. As Family CFO for our clients, we regularly work with CPAs, and because of our in-depth focus on tax strategy, are aware of many of the tax forms required.

Some of the forms you will need to look for include:

To-Do #2: Round Up Your Receipts

If you plan on itemizing your deductions, you will need to record expenses so you can take advantage of any available write-offs. Expenses might include: Medical and dental expenses, state and local taxes (SALT), SALT real estate taxes, SALT personal property taxes, home mortgage interest, gifts to charity, and more. ¹ If you are self-employed, think about items reported on Schedule C such as: Advertising, car and truck expenses, commissions and fees, contract labor, insurance (other than health), interest, mortgage, legal and professional services, office expenses, pension and profit-sharing plans, rent or lease, and more. ² Receipts can be physical receipts or bank and credit card statements that show payments for these items. Once gathered, organize them by type, so they are easy to find when you begin filing.

To-Do #3: Acquire Records of All Charitable Contributions

Throughout the year, you may have made donations to tax-exempt organizations. These donations can provide you with a charitable contribution write off. Traditionally, this could only be done if you choose to itemize your deduction. However, because of the CARES Act, filers who choose a standard deduction may be able eligible to write-off up to $300 in charitable contributions. ³

Donations greater than $250 will still require an itemized deduction and documentation. Most organizations, from churches to fundraisers, will provide a record of your tax-deductible contributions.

To-Do #4: Create a List of All Personal Information

While you likely know your Social Security number by heart, you will want to jot down the Social Security numbers of any dependents you wish to claim. This way it is easy to access, and you can be sure it’s accurate. Also, make a list of addresses for any properties you own as well as the dates on which they were bought or sold.

To-Do #5: Get a Copy of Last Year’s Tax Return

If you are using the same preparer as the previous year, or have engaged with a Family CFO like Buttonwood, they should have a copy of your tax return. If not, find your old copy and have it ready with your other tax items. Being able to reference your previous return can help you see what you filed last year, so you don’t overlook something this year.

To-Do #6: Determine How You Will Spend Your Refund, or Prepare to Pay Taxes Due

If you expect to get a refund this year, you might want to consider what you plan to do with your refund once you receive it. You have the option to apply your payment towards your tax bill next year if you believe you will owe. This can be a good strategy for those who pay estimated taxes throughout the year as it can often put a chunk towards your first installment.

Alternatively, you can choose to send the money directly to a checking or savings account, or contribute it to an IRA, health savings account or education account. If you plan to split the funds between accounts, you will need to complete a Form 8888.

If your withholdings and/or estimates weren’t properly set up, you may find yourself with a tax bill. At Buttonwood, we offer the opportunity to run a tax report before year-end to provide an estimate on what our clients might owe, along with opportunities to minimize tax liability. If you aren’t sure what your tax bill might look like, let us know and we can run a report for you to assess and strategize.

Don’t let tax preparation leave you feeling overwhelmed. Enjoy less stress and a smoother process by preparing everything you need for filing this tax season. If you would like to simplify your tax preparation this year or into the future, contact us today to learn how a Family CFO can benefit you.

This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Buttonwood Financial Group, LLC and its employees are not CPA’s or Attorney’s. Please consult your tax and/or legal advisor before implementing any tax or legal strategies.

The post Tax Filing Season To-Do List appeared first on Buttonwood Financial Group, LLC .

Buttonwood Investment Policy Committee Update – February 2022

Mon, 07 Feb 2022 19:16:00 GMT

Frustration: Covid and Inflation

Following historical trends of early economic cycle returns, on the back of low interest rates and economic stimulus, the S&P 500 once again posted solid gains in 2021. As 2022 rolled in, increasing concerns about the future of the economy had investors in a mood to take profits.

On our path to more consistent returns, generally we don’t take big bets and tend to stay within 10% of target allocations. For example, our overall stock exposure in a 60% stock/ 40% bond allocation will typically fall between 55% and 65% at any given point in time. We use this 10% to adjust exposure to regional, sector, factor or changing investment themes.

As we move into 2022, we believe we are continuing the transition from earlier stages of the economic cycle to mid cycle stages. Not unexpected, we have seen major stock indices join sub sectors, and stock markets as a whole decline. In early February we completed our most recent rebalance to take advantage of stock market weakness. Overall, we remain optimistic on the economy and thus the stock market but continue to transition investments toward base allocations and increase our hedges against stock market risk.

Positioning for mid cycle

After a dramatic rise in equity market prices in the covid economic recovery, we have seen an unprecedented level of volatility to start 2022. We believe the source of that volatility is largely centered around a combination of pandemic related uncertainty coupled with a change in direction of Fed policy, spurred by resurgent inflation. We believe the change in Fed policy marks the change from early to the mid-stage of this economic cycle.

When the Fed starts to raise rates, we tend to see stock market volatility. Statistically, a decline of 10% is not uncommon. Between 1980 and 2020, the S&P 500 experienced 17 corrections . The markets generally don’t like uncertainty: How many hikes? For how long? How fast, and more can leave the markets guessing. Eventually these answers start to congeal and the focus returns to the underlying economy and earnings. Despite these unknowns, we still see many positive signs of economic strength and remain generally risk-on in our portfolio positioning.

For our most recent rebalance in February 2022, we focused on four key themes:

In the year ahead, we expect to see significant reversals of pandemic-driven economic trends – notwithstanding the always-present risk of a negative growth shock (e.g., a more lethal strain of Covid emerging). In our view, these reversals represent normalizations, with more muted inflationary impulses in 2022 particularly in the second half of the year; many of the goods and supply chain shortages responsible for more than half of the high price pressures have either already faded or are beginning to fade. These now-stale inflationary catalysts include the Fed’s aggressive quantitative easing and near-zero-interest-rate-policies, stimulus checks and expanded unemployment benefits, prospects of excessive fiscal stimulus, and severe supply-chain disruptions made worse by a disproportionate surge in “stay-at-home” demand for goods. While we still expect above-average inflation to persist, current market expectations exceed our proprietary forecasts and embolden us to begin to unwind some of our most inflation-sensitive hedges.

We know from history that the beginning of the Fed’s tightening cycle can precipitate elevated levels of volatility and warrant a heightened sense of caution. To compensate for this uncertainty, we have scaled down some sector bets and are leaning a bit more into quality but remain risk-on. Our conviction is backed by expectations of an exceedingly strong jobs market, real wage growth, robust consumer balance sheets, and corporate capex initiatives – all of which can boost economic activity and potentially drive continued relative strength in U.S. stocks. We believe companies that are asset heavy and more insulated from rising rates, with strong operating leverage, wide margins, and growing earnings stand to outperform – namely value-oriented, small cap, and energy stocks.

Regionally, we maintain an overweight to U.S. stocks based on resilient fundamentals and corporate earnings strength. We continue to reduce our exposure to international developed market stocks, as Eurozone manufacturing weakness and vulnerability to oil price pressures as a heavy net importer of energy can likely weigh on economic activity and earnings. After a material decline, we are incrementally adding to emerging market stocks on marginally improving analyst estimate revisions and China’s policy commitment to targeted easing and steady growth – but remain meaningfully underweight due to a still challenging macroeconomic backdrop of rising rates, elevated inflation, and Covid disruptions.

Watching risk

While we have sought out what we believe are attractive opportunities in both the stock and bond markets, we continue to watch the growing list of risks. From new covid variants, inflation, supply chain and labor market shortages, to POTUS and international entanglements, uncertainties seem to be everywhere. As a result, we believe it is prudent to continue to gently reduce risk and hedge volatility a bit.

Thank you for your continued trust and allowing us to serve as your Family CFO!

The post Buttonwood Investment Policy Committee Update – February 2022 appeared first on Buttonwood Financial Group, LLC .

Weekly Market Commentary: Stocks Extend Rally; Eyes on Tech

Mon, 07 Feb 2022 18:54:00 GMT

The Week on Wall Street

Stocks managed to gain ground last week as investors turned their focus to corporate earnings.

The Dow Jones Industrial Average rose 1.05%, while the Standard & Poor’s 500 gained 1.55%. The Nasdaq Composite index picked up 2.38% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, tacked on 2.73%. ^1,2,3

Earnings In Focus

At the start of the week, stocks extended the previous week’s rally with some high-growth companies leading the move higher. Strong company profits fueled the market the middle of the week, until an earnings disappointment from a mega-cap company took investors by surprise. The earnings miss deflated sentiment as it heightened worries of what it may portend for other technology companies yet to report. These anxieties led to a sell-off that reverberated across the market.

Subsequent earnings beats from several technology and social media names, and an above-consensus rise in new payrolls on Friday, helped the market close with week with a solid gain.

Omicron and Unemployment

A string of employment reports pointed to a generally healthy labor market, despite the Omicron surge late last year. The Job Openings and Turnover Survey (JOLTS) showed a hiring slowdown, with near-record high job openings and worker resignations. The ADP (Automated Data Processing) employment report saw private payrolls shrink by 301,000. That was the first monthly decline since December 2020. ^4, ⁵

More encouragingly, initial jobless claims declined, while continuing jobless claims reached their lowest level since 1973. A strong January employment report showed 467,000 jobs added during the month, with upward revisions to previously released November and December. ^6,7

Learn more about how hiring Buttonwood as your Family CFO can elevate your financial strategy by scheduling a conversation today .

This Week: Key Economic Data

Tuesday: Consumer Price Index (CPI). Jobless Claims.
Friday: Consumer Sentiment

_{Source: Econoday, February 4, 2022 – The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.}

This Week: Companies Reporting Earnings

Monday: Amgen, Inc. (AMGN).
Tuesday: Pfizer, Inc.(PFE), Chipotle Mexican Grill, Inc. (CMG), Sysco Corporation (SYY).
Wednesday: CVS Health Corporation (CVS), The Walt Disney Company (DIS), Twilio, Inc. (TWLO), Yum Brands, Inc. (YUM), O’Reilly Automotive, Inc. (ORLY).
Thursday: Twitter, Inc. (TWTR), The CocaCola Company (KO), Illumina, Inc. (ILMN), Duke Energy Corporation (DUK), PepsiCo, Inc. (PEP), Kellogg Company (K), Expedia Group, Inc. (EXPE).
Friday: Dominion Energy, Inc. (D).

_{Source: Zacks, February 4, 2022 – Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.}

The post Weekly Market Commentary: Stocks Extend Rally; Eyes on Tech appeared first on Buttonwood Financial Group, LLC .

VoyageKC Hidden Gems: Meet Jon McGraw of Buttonwood Financial Group

Fri, 04 Feb 2022 21:03:00 GMT

Thank you VoyageKC for a great interview with Buttonwood Financial Group President, Jon McGraw!

“Today we’d like to introduce you to Jon McGraw. He and his team share their story with us below:

Born in Boulder and raised in Colorado Springs, Colorado, Jon McGraw has led a life of leadership and positive impact. Obtaining a Bachelor of Science in Business Administration from the University of Northern Colorado, McGraw began smart investing at a young age. It didn’t take long to realize his passion for starting and growing businesses.

Fast-forward a few years and McGraw joined Quick & Reilly, where he focused on servicing high net worth clients, their cash flows, and bond portfolios. McGraw transferred to Kansas City, Missouri in 1996 and quickly moved into the role of Area Manager for the midwestern region until the firm’s merger with Bank of America in 2002.

While his talent was incredibly valuable to the firm, he realized the “quantity over quality” game was not for him. Rather, McGraw sought to provide real value and service to families who had a need for simplification and coordination of their financial life: Families seeking a firm who could serve as their Family CFO. Thus, Buttonwood Financial Group was born.

In the beginning, Buttonwood Financial and McGraw focused on a few families with significant wealth. He knew as wealth and success continued to build, life doesn’t get simpler, as many believe, it becomes significantly more complex. McGraw followed his passion and vision. He, along with the growing staff at Buttonwood was fulfilling a unique niche; serving as the Chief Financial Officer for multigenerational affluent families.
Today, thanks to McGraw’s leadership and entrepreneurial spirit, the Team at Buttonwood Financial Group manages about $600 Million for more than 375 families across the country and Europe. Additionally, Jon McGraw dedicates a significant amount of time serving on nonprofit Boards, volunteering, and providing significant financial support to a range of nonprofit organizations in Kansas City and beyond.

I’m sure you wouldn’t say it’s been obstacle-free, but so far would you say the journey has been a fairly smooth road?

Any entrepreneur knows the road to a successful business is anything but smooth.

But Buttonwood is a reflection of my passion for building, organization, and process. With a culture of support and service at the core, the Team at Buttonwood and our clientele is truly my extended “family.” There have been plenty of 16+ hour days, and there is always something new to learn; both in the business of wealth management and about serving as a leader of a business.

More than two decades ago, I recognized the need for an affordable Family CFO to coordinate families’ financial lives. Since then, we have focused on consistent, steady organic business growth rather than rapid growth through acquisition. We are excited to celebrate 20 years of Buttonwood Financial Group in 2022 and will reflect on how far we have come.

We have an incredible Team and Buttonwood wouldn’t be what it is today without each of them. For that, I am thankful every day.

Thanks for sharing that. So, maybe next you can tell us a bit more about your business?

Buttonwood Financial Group, LLC, is a comprehensive wealth management firm located in Midtown Kansas City. At Buttonwood, we believe in the fact that as wealth builds, life doesn’t get simpler – it gets more complex. Our goal is to simplify the financial process for families who would like to protect and grow their money.

Today, many individuals spend a significant amount of personal time managing the various aspects of their financial lives, or they simply aren’t sure what they should be doing to maximize savings and growth opportunities. We ask, what if, like a business, you could have your own Chief Financial Officer?

This is the role Buttonwood fulfills for families and individuals every day! As your Family CFO, we focus on the creation, implementation, and ongoing strategy in your financial life. We provide comprehensive tax, insurance, estate planning, investments, cash flow, retirement, education, and business strategies – all integrated into your life and based around your specific goals.

As fiduciaries, we always advise our clients and implement strategies with their best interests at heart. We don’t sell products; we provide comprehensive solutions to families and individuals. Other financial advisors often focus only on investments, rather than looking holistically at each of the details that make up the big picture.
We have a strong reputation for serving our clients efficiently, effectively, and kindly. We are fortunate to work with such wonderful clients. We are also proud of our reputation in the KC community. Through our Team’s time serving on nonprofit Boards, volunteerism, and through our community-focused art gallery, Buttonwood Art Space, our team loves to give back.

Our office serves as a community-focused art gallery, Buttonwood Art Space. Hosting multiple art exhibitions each year, Buttonwood Art Space gives back to support local artists and nonprofits. Each exhibition hosted at Buttonwood generally provides 50% of sale proceeds to artists and the remaining 50% directly to a partner nonprofit organization.

A few organizations we have partnered with include: Ronald McDonald House Charities of KC, Great Plains SPCA, Kansas City Parks & Recreation, Jewish Family Services, Halo Foundation, Reconciliation Services, Kansas City Community Gardens, and many more. In 2021, Buttonwood Art Space reached a major milestone; $750,000 raised for artists and nonprofit organizations since its start in 2005!

Are there any apps, books, podcasts, blogs, or other resources you think our readers should check out?

Because we are unique in our industry there aren’t many mainstream feeds that we rely on to continue to develop the Buttonwood model. We tactically develop service offerings directly from the feedback we receive from our clients.
That said, expanding niche technology offerings have helped us to provide more services at lower costs to clients for years.

Pricing:

• Because we have two distinct areas of focus, we have two separate costs.
• Assuming we are managing assets, we have an annual tiered Investment Advisory Cost. Generally, the first tier is 65 basis points (65/100ths of 1%) for the first $500,000 in investment assets we are managing. As assets increase above $500,000, our cost decreases.
• Our Family CFO Service Cost covers everything else (unlimited meetings, calls, emails and our full suite of service offerings). Family CFO Services starts at $1,000 per quarter and increases with financial complexity.
• As a multigenerational Family CFO, often our most impactful work is implemented when we are working up, down and across family generations. As such we can also establish a multigenerational Family CFO Service agreement at the family level.
• For specific details and pricing, please schedule an informal conversation with one of our Lead Advisors.”

Read the full interview at VoyageKC – https://voyagekc.com/interview/hidden-gems-meet-jon-mcgraw-of-buttonwood-financial-group-llc/

Learn more about our Family CFO services by scheduling a meeting with one of our Lead Advisors!

The post VoyageKC – “Hidden Gems: Meet Jon McGraw of Buttonwood Financial Group” appeared first on Buttonwood Financial Group, LLC .

Weekly Market Commentary: Volatile Week Ends on Rebound

Tue, 01 Feb 2022 18:23:00 GMT

The Week on Wall Street

An exceptionally volatile week, marked by wide intraday price swings, whipsawed investors with stocks ending higher following a surge to the upside on the final trading day of the week.

The Dow Jones Industrial Average rose 1.34%, while the Standard & Poor’s 500 gained 0.77%. The Nasdaq Composite index ended flat (+0.01%) for the week. The MSCI EAFE index, which tracks developed overseas stock markets, declined 3.54%. ^1,2,3

Market Volatility

Rising bond yields, Federal Reserve uncertainty, and escalating tensions on the Ukrainian-Russian border unsettled markets all week. The week opened with two successive days of deep early losses that were erased by furious, late-afternoon rebounds. The following two-trading sessions that started with strong gains that evaporated with late-session selling.

The most dramatic session was Monday, in which stocks ended slightly higher after hitting intraday lows that saw the NASDAQ fall 4.9%, the Dow shed 1,115 points, and the S&P 500 moved into correction territory. Technology was at the epicenter of the volatility all week as rate fears weighed on the sector. Stocks rebounded strongly on Friday, managing to conclude a week on an upbeat note. ⁴

Fed Readies Market for Rate Hikes

Last week’s meeting of the Federal Open Market Committee (FOMC) left rates unchanged, though officials signaled short-term rates would likely be raised at its next meeting in March. As expected, the Fed also approved one last round of bond purchases, bringing quantitative easing to an end by March. ⁵

Left a bit more nebulous were details on the pace and timing of reducing the Fed’s balance sheet, a lingering worry of some investors. But Fed Chair Powell indicated that shrinking the Fed’s asset holdings may occur at a faster rate than in past periods of balance-sheet reductions, such as in 2014 and 2017. ⁶

If you would like to talk with our Team to learn more about our investment strategy and Family CFO services, contact us today .

This Week: Key Economic Data

Tuesday: ISM (Institute for Supply Management) Manufacturing Index. JOLTS (Job Openings and Labor Turnover Survey).
Wednesday: ADP (Automated Data Processing) Employment Report.
Thursday: Factory Orders. Jobless Claims. ISM (Institute for Supply Management) Services Index.
Friday: Employment Situation.

_{Source: Econoday, January 28, 2022 – The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.}

This Week: Companies Reporting Earnings

Tuesday: Alphabet, Inc. (GOOGL), Advanced Micro Devices, Inc. (AMD), Exxon Mobil Corporation (XOM), PayPal Holdings, Inc. (PYPL), General Motors Company (GM), Gilead Sciences, Inc. (GILD), Starbucks Corporation (SBUX), United Parcel Service, Inc. (UPS), Stanley Black & Decker, Inc. (SWK).
Wednesday: Meta Platforms, Inc. (FB), AbbVie, Inc. (ABBV), Qualcomm, Inc. (QCOM), Thermo Fisher Scientific, Inc. (TMO), Spotify Technology (SPOT), TMobile US, Inc. (TMUS), D.R. Horton, Inc. (DHI).
Thursday: Amazon.com, Inc. (AMZN), Ford Motor Company (F), Snap, Inc. (SNAP), Eli Lilly and Company (LLY), Fortinet, Inc. (FTNT), Skyworks Solutions, Inc. (SWKS), Honeywell International, Inc. (HON), Prudential Financial, Inc. (PRU).
Friday: Air Products and Chemicals, Inc. (APD), Bristol Myers Squibb Company (BMY).

_{Source: Zacks, January 28, 2022 – Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.}

How To Pass On Your Financial Values to the Next Generation

Tue, 25 Jan 2022 15:26:00 GMT

No matter how much wealth you plan on passing down to your children or grandchildren, you should make it a priority to pass on your financial values to the next generation.

Have a Fully-Developed Plan

Many people don’t have a fully fleshed-out plan in place to transfer wealth to their children or grandchildren. Thinking about and planning for life after we have passed is something we as humans often put off, and thus parents are often hesitant to discuss money and finances with their children. Unfortunately, this silence can have dire consequences.

Imagine a situation where an individual knows nothing about personal finances, and then they suddenly receive an inheritance of $10 million. Such an heir may find themselves wasting the money or leading a dangerous lifestyle. Sudden wealth can destroy an individual emotionally if they’re not ready for both the privileges and responsibilities that come with the money. Therefore, it is essential that you start preparing your heirs long before you pass away. At Buttonwood, we specialize in multigenerational planning . We know the importance of preparing your younger generation for the future.

Work with Professionals

If you’re not sure how to go about financially educating your children or grandchildren, you could consider working with professionals, like the Buttonwood Team! The best teachers are often those who work in finance – bankers, financial advisors and wealth managers. This is particularly true because your heirs may find themselves turning to these professionals for help upon receiving the inheritance later.

Consider holding family meetings about finances and invite financial professionals to join so they can pass on some knowledge to your children. We regularly welcome younger generations to join client strategy meetings to provide a sense of parental financial values. The families that tend to be the most successful with transferring wealth often set up trust accounts with third-party trustees for their children. Your heirs should start learning about these trusts as soon as possible.

Teach Your Children To Save

It is essential that you teach your children the power of saving. The best way to show your children the value of saving is by teaching them about compounding interest. One way you can encourage your children to save is by promising to match their savings dollar for dollar. Receiving an extra $20 for every $100 saved will make your children excited about saving. The goal is to turn your children into committed savers by the time they receive their inheritance. That way, they will understand the importance of not wasting the inheritance on frivolous things.

Work and Allowance

As soon as your child is old enough to receive an allowance, you can start educating them about finances. If you’re a business owner, the best way to teach your children about finances is by involving your young children in your business. Hands-on experience is often the best way for children to learn about finances. If your child is older, you can even put them on a payroll so that they learn to put money aside. If your children are younger, an allowance for performing their chores is a great way to start teaching them about finances, saving, and spending.

The most important thing that you can pass on to your children is your financial values and not your money. Therefore, it is essential that you start teaching your children about finances when they are young. That way, when they receive their inheritance, they will have the knowledge and skills needed to build on the wealth for the next generation. For more information about how to pass on your financial values to the next generation, please contact us .

The post How To Pass On Your Financial Values to the Next Generation appeared first on Buttonwood Financial Group, LLC .

Weekly Market Commentary: Rate Hike Talk Sink Stocks

Mon, 24 Jan 2022 23:02:00 GMT

The Week on Wall Street

Stocks extended their January retreat as worries over inflation and rising bond yields continued to exert downward pressure on prices.

The Dow Jones Industrial Average slid 4.58%, while the Standard & Poor’s 500 sank 5.68%. The Nasdaq Composite index dropped 7.55% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, slipped 0.61%. ^1,2,3

Another Turbulent Week

After the holiday weekend, stocks found little respite from this month’s selling pressures. The week began with the 10-year Treasury yield hitting a two-year high that triggered a broad retreat in stocks, with technology and other high-growth companies bearing the brunt of the losses. The Nasdaq Composite officially entered correction territory and closed below its 200-day moving average for the first time since April 2020. ⁴

Stocks struggled throughout the week, rallying in early trading on both Wednesday and Thursday on solid corporate earnings and stabilizing bond yields, only to end lower on late-day selling. While last year may have been distinguished by “buying on the dip,” this week reflected a different mindset, “selling on the rebound.” Stocks extended their losses in the final hours of the Friday trading session to conclude a difficult week.

Rate Hike Expectations Rise

Recent market volatility has stemmed predominantly from inflation concerns and how aggressive the Fed will be in fighting it. This reaction reflects the market’s pricing of rate hike probabilities, and their estimation of the Fed’s reaction.

Last week’s interest rate futures suggested that investors expect four or five rate hikes this year, up from three to four the previous week. Markets are pricing a 32% probability of 4-5 rate hikes by December and a nearly 28% probability of 5-6 rate hikes by year-end. Of course, the Fed will act independently of the market, but it provides insight into the recent run-up in yields and continuing pressure on high-growth stock valuations. ^5,6

If you would like to discuss your investment strategy with one of our Lead Advisors, please contact us today.

This Week: Key Economic Data

Monday: Purchasing Managers’ Index (PMI) Composite Flash.
Tuesday: Consumer Confidence.
Wednesday: New Home Sales. FOMC Announcement.
Thursday: Gross Domestic Product (GDP). Durable Goods Orders. Jobless Claims.
Friday: Consumer Sentiment.

_{Source: Econoday, January 21, 2022 – The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.}

This Week: Companies Reporting Earnings

Monday: International Business Machines (IBM).
Tuesday: Microsoft Corporation (MSFT), General Electric Company (GE), Verizon Communications, Inc. (VZ), Johnson & Johnson (JNJ), Lockheed Martin Corporation (LMT), Texas Instruments, Inc. (TXN), American Express Company (AXP), Capital One Financial Corporation (COF), Raytheon Technologies Corporation (RTX).
Wednesday: AT&T, Inc. (T), Intel Corporation (INTC), The Boeing Company (BA), Tesla, Inc. (TSLA), Abbott Laboratories (ABT), ServiceNow, Inc. (NOW), KimberlyClark Corporation (KMB), Norfolk Southern Corporation (NSC).
Thursday: Apple, Inc. (AAPL), Visa, Inc. (V), Mastercard, Inc. (MA), McDonald’s Corporation (MCD), Northrop Grumman Corporation (NOC), Blackstone, Inc. (BX), Southwest Airlines Co. (LUV), The SherwinWilliams Company (SHW), Mondelez International, Inc. (MDLZ).
Friday: Caterpillar, Inc. (CAT), Chevron Corporation (CVX), ColgatePalmolive Company (CL).

_{Source: Zacks, January 21, 2022 – Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.}

The post Weekly Market Commentary: Rate Hike Talk Sink Stocks appeared first on Buttonwood Financial Group, LLC .