In case you missed it, here is the link to our Five Star award in the November issue of Chicago Magazine.
Here is the link to the November 7th issue of Crain’s Chicago Business featuring D3.
In early December, we will be uploading our annual Estate Review for our Affordable Family Office clients. We will email you when the reports are on your portal.
For our Advanced Portfolio Management clients, we recommend taking some time over the next month to review your estate documents. It is especially important to review your beneficiary designations on your IRAs, 401ks, and life insurance. If you need any help with this, please call Patty to set up an hourly meeting with Don.
If anyone is having any issues logging onto or navigating your new client portal, please give the office a call. Any of our staff will be able to assist you.
Many feared an indiscriminate flight to quality (i.e. a stock market sell-off) in the event that Donald Trump was elected President. As we expected, the markets have had a more rational reaction to the Trump presidency and the Republican-controlled Congress. We summarize below the market movement and our thoughts regarding some select Exchange Traded Funds representing certain asset classes since November 9th through November 23rd.
- Fixed Income (AGG) – Down 2.2%. Trump’s proposals include increasing government spending and tax cuts, which will likely lead to more U.S. government bond issuances. This has caused a selloff in bond markets as evidenced by rates on the U.S. 10-year treasury bond rising from 1.88% to 2.31% during this time. Bond market sell offs have historically been significantly less frequent and less volatile than stock market selloffs.
- U.S. Large Cap Stocks (IVV) – Up 2.9%. Fiscal stimulus is expected to contribute to U.S. economic growth, increasing corporate earnings and future stock prices.
- U.S. Small Cap Stocks (IJR) – Up 12.2% – U.S. small cap stocks could benefit from the potential fiscal stimulus, as well as a reduction in global free trade. Because small cap U.S. companies rely less on foreign demand, this asset class is expected to benefit most from Trump’s proposals.
- Developed International and Emerging Markets (EFA & EEM) – Down 2.2% & 1.2% respectively. Any reduction in global free trade will be a headwind for increasing profits of non-U.S. companies.
Due to the almost eight-year rally that we have experienced in the U.S. stock market, we anticipate significant capital gains to be distributed by the mutual funds and ETFs we use in your portfolios. We explain a strategy we will be using to minimize taxes, if possible, below.
In December, we will be focusing on “tax alpha” through tax loss harvesting for all clients with taxable accounts. Our goal, if possible, is to eliminate capital gains and to generate up to $3,000 in tax losses while still maintaining your portfolio asset allocation. If you are in the 25% marginal tax bracket, this will save you an estimated $750 on your 2016 income taxes.
For Advanced Portfolio Management clients, after we have finished this process, we will notify you if you still have significant realized capital gains remaining. We recommend that you furnish this information to your tax preparer to determine if you need to be concerned about making estimated tax payments.
For our Affordable Family Office clients, we will do tax loss harvesting as well as implement some of the tax saving strategies we identified in your financial plan update. You will be hearing from us in December regarding these strategies and tactics. We will also be updating your estimated tax projections to see if any changes need to be made before the January 15th, 2017 payment.
Last, but not least, we will also be focusing on updating our asset class investment return forecasts and reviewing our asset allocation models. There will be more to come on this topic in future client updates.
We have a new President-elect. Hopefully we will have some cooperation to get things done to between the Legislative and the Executive branch.
Don’t hesitate to give us a call if you have any updates or concerns.
In this time of Thanksgiving, we are thankful for your confidence in D3 Financial Counselors.